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The road to hell is paved with good intentions. In this case the good intentions were to introduce mandatory rehabilitation for very short term prisoners by coupling time spent in custody with a release period under licence. This was known as custody plus. Hell is a fair description of the problem of statutory interpretation caused by transitional provisions introduced when custody plus had to be put on hold because the resources needed to implement the scheme did not exist. The problem arises when sentences of less than 12 months and more than 12 months are imposed consecutively. The 1991 Act Early Release In explaining this problem I shall refer only to the most relevant of statutory provisions thereby simplifying the picture. The Criminal Justice Act 1991 (the 1991 Act) introduced for the first time a scheme in which it was mandatory for the Secretary of State to release prisoners part way through the period of their sentence. A prisoner sentenced to less than 12 months imprisonment had to be released unconditionally after serving half his sentence (section 33(1)(a)). A prisoner sentenced to between 12 months and 4 years imprisonment had to be released on licence after serving half his sentence (section 33(1)(b)). A prisoner sentenced to a determinate term of 4 years or more imprisonment had to be released on licence after serving two thirds of his sentence (section 33(2)). This early release scheme might have raised problems in relation to the practice of imposing sentences to be served consecutively. These problems were solved by section 51(2) of the 1991 Act, as amended by section 101 of the Crime and Disorder Act 1998, which provided: For the purposes of any reference in this Part, however expressed, to the term of imprisonment to which a person has been sentenced or which, or part of which, he has served, consecutive terms and terms which are wholly or partly concurrent shall be treated as a single term if (a) the sentences were passed on the same occasion; or (b) where they were passed on different occasions, the person has not been released under this Part at any time during the period beginning with the first and ending with the last of those occasions. Section 33(5) of the 1991 Act defined prisoners sentenced to less than 4 years imprisonment as short term prisoners and prisoners sentenced to 4 years imprisonment or more as long term prisoners. For the purpose of this appeal the more significant distinction is between prisoners serving sentences of less than 12 months, whom I shall describe as under 12 month prisoners and prisoners serving sentences of 12 months or more, whom I shall describe as over 12 month prisoners. Home Detention Curfew In 1998 under the Crime and Disorder Act additional provisions were inserted by amendment into the 1991 Act, which added a degree of complication to the release provisions for short term prisoners serving a sentence of imprisonment of three months or more. Under section 34A after such a prisoner had served the requisite period the Secretary of State was given power to release the prisoners on licence under conditions that required them to live at home, subject to a curfew. I shall describe this as HDC release. The requisite period was so defined as to produce a sliding scale under which the prisoner might be released before what would otherwise have been his mandatory release date. The longer the sentence the longer the potential period of HDC release until this peaked at its maximum of 135 days in respect of a sentence of 18 months or more. A charitable interpretation of the purpose of the introduction of HDC would be that it was intended to facilitate rehabilitation in the community. A more cynical view would be that it was intended to provide the Home Secretary with a safety valve to deal with the pressure on prison accommodation. At all events the Home Secretary made such generous use of this power that short term prisoners were able to look forward with some confidence to being granted HDC release. Licence expiry Section 37 of the 1991 Act provided that, for both short and long term prisoners released on licence, the licence would remain in force until three quarters of the sentence period had elapsed. When an under 12 month prisoner was released under HDC his licence period ended once half the sentence period had elapsed. The appellants sentence I now turn to the position of the appellant Miss Rebecca Noone. On 23 May 2007 she was sentenced at Stafford Crown Court for a number of offences as follows: (a) Theft 22 months imprisonment. (b) Three further offences of theft 4 months imprisonment on each count concurrent to one another but consecutive to the 22 month sentence. (c) Contempt of Court 1 month imprisonment consecutive to all the other sentences. Had the provisions of the 1991 Act been applied to this sentence, its implications would have been easy to appreciate. The sentences would have been aggregated pursuant to section 51(2) to produce a total of 27 months. The appellant would have been entitled to be released after serving half this sentence, that is on her conditional release date. But she could have looked forward with confidence to HDC release 135 days before that date. On 24 May 2007 the appellant was given a release date notification which advised her that this was precisely what she could expect that is: Eligibility for HDC: 15.1.2008 Conditional release date: 28.5.2008 This notification also informed the appellant that her licence would expire on the same day that her sentence would expire that is 13 July 2009. This conflicted with the provision of section 37 of the 1991 Act under which the licence would have been due to expire after three quarters of the sentence period. On 18 July 2007 the appellant was given a fresh notification which put back the date of her eligibility to HDC to 20.4.2008 but advanced both her licence and her sentence expiry date to 10.2.2009. The appellant brought these proceedings in order to challenge this notification. The reason for the confusion as to the date when the appellant would become eligible to HDC and the date on which her licence and her sentence would expire was that those in Drake Hall Prison responsible for the appellants release were grappling with the implications of the Criminal Justice Act 2003, to which I now turn. The Criminal Justice Act 2003 One particular objective of the Criminal Justice Act 2003 (the 2003 Act) was the rehabilitation of offenders. With this objective in mind, those who drafted the Act set out to achieve, among other things, the following: 1) 2) the introduction of custody plus for under 12 month prisoners, and the increase of the licence period to make this co extensive with the period of the sentence. Rather than attempt to summarise the relevant provisions of the 2003 Act, I shall set them out verbatim. Section 181 was the section which made provision for custody plus. It began as follows: Prison sentences of less than 12 months (1) Any power of a court to impose a sentence of imprisonment for a term of less than 12 months on an offender may be exercised only in accordance with the following provisions of this section unless the court makes an intermittent custody order (as defined by section 183). (2) The term of the sentence (a) must be expressed in weeks, (b) must be at least 28 weeks, (c) must not be more than 51 weeks in respect of any one offence, and (d) must not exceed the maximum term permitted for the offence. (3) The court, when passing sentence, must (a) specify the period (in this Chapter referred to as the custodial period) at the end of which the offender is to be released on a licence, and (b) by order require the licence to be granted subject to conditions requiring the offenders compliance during the remainder of the term (in this Chapter referred to as the licence period) or any part of it with one or more requirements falling within section 182(1) and specified in the order. (4) In this Part custody plus order means an order under subsection (3)(b). (5) The custodial period (a) Must be at least 2 weeks, and (b) In respect of any one offence, must not be more than 13 weeks. (6) In determining the term of the sentence and the length of the custodial period, the court must ensure that the licence period is at least 26 weeks in length. (7) Where a court imposes two or more terms of imprisonment in accordance with this section to be served consecutively (a) the aggregate length of the terms of imprisonment must not be more than 65 weeks, and (b) the aggregate length of the custodial periods must not be more than 26 weeks. Section 182 set out the various requirements that could be imposed by way of licence conditions. Custody plus has never been introduced and it is very unlikely that it ever will be. For this reason sections 181 and 182 have not been brought into force. The provisions of section 181 impacted on subsequent provisions of the Act, including the following provisions for release on licence. 244 Duty to release prisoners (1) As soon as a fixed term prisoner, other than a prisoner to whom section 247 applies, has served the requisite custodial period, it is the duty of the Secretary of State to release him on licence under this section. (2) Subsection (1) is subject to section 245. (3) In this section the requisite custodial period means (a) in relation to a person serving a sentence of imprisonment for a term of twelve months or more or any determinate sentence of detention under section 91 of the Sentencing Act, one half of his sentence, (b) in relation to a person serving a sentence of imprisonment for a term of less than twelve months (other than one to which an intermittent custody order relates), the custodial period within the meaning of section 181, . (d) in relation to a person serving two or more concurrent or consecutive sentences none of which falls within paragraph (c), the period determined under sections 263(2) and 264(2). Section 244(3)(b) has not been brought into force. Section 246 of the 2003 Act makes provision for eligibility for HDC in terms of even greater complexity than those of section 34A of the 1991 Act: 246 Power to release prisoners on licence before required to do so (1) Subject to subsections (2) to (4), the Secretary of State may (a) release on licence under this section a fixed term prisoner, other than an intermittent custody prisoner, at any time during the period of 135 days ending with the day on which the prisoner will have served the requisite custodial period, and (b) release on licence under this section an intermittent custody prisoner when 135 or less of the required custodial days remain to be served. (2) Subsection (1)(a) does not apply in relation to a prisoner unless (a) the length of the requisite custodial period is at least 6 weeks, (b) he has served (i) at least 4 weeks of his sentence, and (ii) at least one half of the requisite custodial period. (3) Subsection (1)(b) does not apply in relation to a prisoner unless (a) the number of required custodial days is at least 42, and (b) the prisoner has served (i) at least 28 of those days, and (ii) at least one half of the total number of those days. (6) . the requisite custodial period in relation to a person serving any sentence other than a sentence of intermittent custody, has the meaning given by paragraph (a), (b) or (d) of section 244(3); Section 249 deals with the duration of a licence. It provides: (1) Subject to subsections (2) and (3), where a fixed term prisoner is released on licence, the licence shall, subject to any revocation under section 254 or 255, remain in force for the remainder of his sentence. Section 250 makes provision for licence conditions in relation to both under 12 month and over 12 month sentences. Section 263 deals with concurrent sentences. It provides: 263 Concurrent terms (1) This section applies where (2) Where this section applies (a) a person (the offender) has been sentenced by any court to two or more terms of imprisonment which are wholly or partly concurrent, and (b) the sentences were passed on the same occasion or, where they were passed on different occasions, the person has not been released under this Chapter at any time during the period beginning with the first and ending with the last of those occasions. (a) nothing in this Chapter requires the Secretary of State to release the offender in respect of any of the terms unless and until he is required to release him in respect of each of the others, (b) section 244 does not authorise the Secretary of State to release him on licence under that section in respect of any of the terms unless and until that section authorises the Secretary of State to do so in respect of each of the others, (c) on and after his release under this Chapter the offender is to be on licence for so long, and subject to such conditions, as is required by this Chapter in respect of any of the sentences. (3) Where the sentences include one or more sentences of twelve months or more and one or more sentences of less than twelve months, the terms of the licence may be determined by the Secretary of State in accordance with section 250(4)(b), without regard to the requirements of any custody plus order or intermittent custody order. Section 264 is a critical provision in the context of this appeal. It deals with consecutive sentences. It provides: 264 Consecutive terms (1) This section applies where (a) a person (the offender) has been sentenced to two or more terms of imprisonment which are to be served consecutively on each other, and (b) the sentences were passed on the same occasion or, where they were passed on different occasions, the person has not been released under this Chapter at any time during the period beginning with the first and ending with the last of those occasions, and (c) none of those terms is a term to which an intermittent custody order relates. (2) Nothing in this Chapter requires the Secretary of State to release the offender on licence until he has served a period equal in length to the aggregate of the length of the custodial periods in relation to each of the terms of imprisonment. (3) Where any of the terms of imprisonment is a term of twelve months or more, the offender is, on and after his release under this Chapter, to be on licence (a) until he would, but for his release, have served a term equal in length to the aggregate length of the terms of imprisonment, and (b) subject to such conditions as are required by this Chapter in respect of each of those terms of imprisonment. (4) Where each of the terms of imprisonment is a term of less than twelve months, the offender is, on and after his release under this Chapter, to be on licence until the relevant time, and subject to such conditions as are required by this Chapter in respect of any of the terms of imprisonment, and none of the terms is to be regarded for any purpose as continuing after the relevant time. (5) In subsection (4) the relevant time means the time when the offender would, but for his release, have served a term equal in length to the aggregate of (a) all the custodial periods in relation to the terms of imprisonment, and (b) the longest of the licence periods in relation to those terms. (6) In this section (a) custodial period (i) in relation to an extended sentence imposed under section 227 or 228, means the appropriate custodial term determined under that section, (ii) in relation to a term of twelve months or more, means one half of the term, and (iii) in relation to a term of less than twelve months complying with section 181, means the custodial period as defined by subsection (3)(a) of that section; (b) licence period, in relation to a term of less than twelve months complying with section 181, has the meaning given by subsection (3)(b) of that section. Subsections (4) and (5) have not been brought into force. Section 265 provides: 265 Restriction on consecutive sentences for released prisoners (1) A court sentencing a person to a term of imprisonment may not order or direct that the term is to commence on the expiry of any other sentence of imprisonment from which he has been released early under this Chapter. This reflects sentencing policy that a prisoner should not be released under licence under one sentence before the commencement of the custodial period of a consecutive sentence. The Transitional Provisions The Criminal Justice Act 2003 (Commencement No.8 and Transitional and Saving Provisions) Order 2005 brought into force as from 4 April 2005 provisions of the Act that related to over 12 month sentences, as set out in Schedule 1. At the same time sections 32 to 51 of the 1991 Act were repealed. Schedule 2 set out Transitional and Saving Provisions. Paragraph 14 provided: Saving for prisoners serving sentences of imprisonment of less than 12 months 14. The coming into force of sections 244 to 268 of, and paragraph 30 of Schedule 32 to the 2003 Act, and the repeal of sections 33 to 51 of the 1991 Act, is of no effect in relation to any sentence of imprisonment of less than twelve months (whether or not such a sentence is imposed to run concurrently or consecutively with another such sentence). The interpretation of this paragraph (Paragraph 14) lies at the heart of this appeal. Paragraph 14 serves one obvious purpose. Because section 181 and section 244(3)(b) had not been brought into force and sections 32 to 51 of the 1991 Act were repealed there was no provision for early release, or eligibility for HDC release, for prisoners serving under 12 month sentences. Paragraph 14 was clearly intended to make provision for such sentences, at least when not imposed concurrently or consecutively with over 12 month sentences, to continue to be dealt with exclusively under the 1991 Act. If imposed consecutively to other under 12 month sentences, these would be aggregated pursuant to the provisions of section 51(2) of the 1991 Act and the provisions of section 33 and section 34A applied to the aggregate. This would produce a similar result to that produced by sections 244 and 246 of the 2003 Act in relation to over 12 month sentences. The Enigma The terms of paragraph 14 raise two questions: 1) What is the object and effect of the words in brackets (whether or not such a sentence is imposed to run concurrently or consecutively with another such sentence)? 2) Where sentences of under and over 12 months are ordered to be served consecutively, how are they to be linked together and how are provisions as to early release, release on HDC and licence to operate in relation to each sentence? The words in brackets focus on the effects of concurrent and consecutive sentences. One object that they may have been intended to serve is to make it clear that the provisions of sections 263 and 264 of the 2003 Act are to have no application to sentences which are all of less than 12 months. It is plain, as Mr Giffin QC for the respondents conceded that the word such in the sentence in brackets relates to sentences of less than 12 months. The fact that the words in brackets do not relate to under 12 month sentences which are imposed to run consecutively with over 12 month sentences helps, I believe, to answer the second question that forms part of the enigma. Before turning to this I shall set out the way in which the Secretary of State suggests that this question should be answered and then summarise the answers to it given by the courts below. The Policy of the Secretary of State The National Offender Management Service, setting out the policy of the Secretary of State, gave the following instructions to prison establishments as to how to calculate sentences and administer the HDC scheme: the 1991 Act applies (and the 2003 Act does not apply) to all sentences of under 12 months whenever the offences are committed, and so the provisions of the 1991 Act are applied to single term all [sic] sentences of under 12 months, the release date to be calculated in accordance with that Act. The 2003 Act plainly applies for this purpose to all sentences of 12 months or more where the offence was committed on or after 4 April 2005, and so the custodial periods of such consecutive sentences of 12 months or more must be aggregated, the release dates calculated in accordance with that Act. There will of course be transitional cases where a number of consecutive sentences are given, some being 12 months or more and some being under 12 months. We take the position that the 1991 Act therefore applies to those sentences under 12 months and the 2003 Act applies to those of 12 months or more where the offence was committed on or after 4 April 2005. The consecutive sentences that are single termed under the 1991 Act, and the aggregated sentences under the 2003 Act are treated as two separate sentences ie one 1991 Act sentence and one 2003 Act sentence. Eligibility for HDC is calculated by reference to the custodial term being served. So for example under the 1991 Act, a prisoner is not eligible for release on HDC until he has served the requisite period ie the requisite custodial term, as specified in section 34A(3) of the 1991 Act. Similarly, a prisoner sentenced under the 2003 Act is not eligible for HDC until he has served the requisite custodial period in section 246 of the 2003 Act . A prisoner only becomes eligible for HDC after the requisite custodial part of the last sentence has been served. Under these instructions the licence period and the HDC eligibility depended entirely on the order in which the consecutive sentences fell to be served. As to this prison governors were instructed to proceed on the basis that sentences were to be served in the order imposed by the court. Mitting Js decision Mitting J [2008] EWHC 207 (Admin) held that the Secretary of State could not lawfully lay down such a policy. He held at para 32: The only policy capable of giving effect to the policy of the 2003 Act and to the rational expectations of prisoners dealt with under both Acts is to ensure that they are not disadvantaged in relation to Home Detention Curfew, but are subject to the maximum period of licence on release which can lawfully be imposed. Mitting J directed the first respondent forthwith to consider whether the appellant should be released on HDC, and she was so released on 8 February 2008. The decision of the Court of Appeal The leading judgment of the Court of Appeal [2008] EWCA Civ 1097; [2009] 1 WLR 1321 was delivered by Scott Baker LJ. He agreed with Mitting J that the Secretary of State had had no jurisdiction to issue the policy direction. He held, however, that fortuitously the Secretary of States policy direction reflected the position in law. It was for the judge in his discretion, recognised by section 154 of the Powers of Criminal Courts (Sentencing) Act 2000, to direct how and in what order consecutive sentences should be served, but in the absence of any express direction there was a inference that sentences should be served in the order in which they were imposed. His conclusions appear in the following passage of his judgment: 53. Assuming the judge has said no more than that one sentence is to be consecutive to another, it is necessary to construe in a common sense way what section 154 direction the judge is to be taken to have given as to when the second sentence should commence. It seems to me obvious that the second sentence starts at the point at which release from the first sentence would otherwise occur as of right ie the conditional release date of the first sentence. The other theoretical options are unrealistic. The judge could not intend the second sentence to start when there is merely the possibility of release on a discretionary basis from the first sentence and the direction might or might not be exercised in the prisoner's favour. Nor could the judge intend the second sentence to start only at the sentence expiry date of the first sentence because the consequences would be that the prisoner would be released on licence from the first sentence and later recalled to start serving the second sentence. Accordingly, the second sentence begins, by virtue of the section 154 direction, at the conditional release date of the first sentence and the prisoner is to be treated as eligible for release on HDC and/or release on licence in accordance with the statutory provisions applicable to the second sentence. Those provisions will be those of the 1991 Act where the second sentence is less than 12 months and those of the 2003 Act where the second sentence is 12 months or more. Submissions Mr Weatherby for the appellant made the following powerful attack on the result reached by the Court of Appeal. i) It is at odds with the legislative intention. It produces a result which differs from the uniform approach to consecutive sentences of both the 1991 Act and the 2003 Act. The transitional provisions could not possibly have been intended to produce this result. ii) It leaves a legislative lacuna as to the way in which consecutive sentences should function where some are for less than 12 months and some are for more. iii) To infer that an order that two sentences are to be consecutive directs that the second should start when the custodial part of the first ends has no basis in law and converts a sentence that is directed to be consecutive into a sentence which is in part concurrent. There is force in these submissions. To them could be added that the decision of the Court of Appeal opens the door to the possibility of capricious results, places a near intolerable burden on the sentencer and does not readily cater for the position where a series of sentences is imposed of which some are over and some are under 12 months. Mr Weatherby submitted to us, as he did to the courts below, that it was possible so to interpret paragraph 14 as to provide that the 1991 Act determines the release date, and thus the custodial period and eligibility to HDC, of all under 12 month sentences, but that when such a sentence is imposed consecutively to a sentence of over 12 months, the effect of the two together is determined by section 264 of the 2003 Act. Mr Giffin did not seek to challenge the submission that the decision of the Court of Appeal, and the prior policy of the Secretary of State, produced capricious and anomalous results. Nor did he suggest that there was any principle or policy that justified such results. He simply submitted that it was not possible on the wording of the relevant provisions of the 2003 Act and of paragraph 14 to reach the solution for which Mr Weatherby contended. Conclusions The decisions of the courts below and the submissions of Mr Giffin offer no explanation whatsoever for the words in brackets in paragraph 14. I have already said that I think it significant that those words draw an implicit but clear distinction between under 12 month sentences imposed concurrently or consecutively with other similar (such) sentences and under 12 month sentences imposed concurrently or consecutively with sentences of over 12 months. The clear indication is that they are to receive different treatment. The draftsman has been too economical with his language to make his intention readily apparent. I have reached the conclusion that to give true effect to the wording of paragraph 14, and in particular the words in brackets, it should be read as follows: The coming into force of sections 244 to 268 [of, and paragraph 30 of Schedule 32 to, the 2003 Act], and the repeal of sections 33 to 51 of the 1991 Act, is of no effect in relation to any sentence of imprisonment of less than twelve months (other than a sentence which is imposed to run concurrently or consecutively with a sentence of twelve months or more). The effect of this is that the provisions of the 1991 Act apply to sentences of under 12 months provided that these are not imposed concurrently or consecutively with sentences of 12 months or over, and the 2003 Act will apply to sentences of under twelve months that are imposed concurrently or consecutively with sentences of 12 months or over. I believe that this reading clarifies the intention of the draftsman of paragraph 14, but some problems remain in relation to the application of the 2003 Act to concurrent and consecutive sentences which combine sentences of less than and more than 12 months. I turn to the 2003 Act to examine how these can be resolved. Concurrent sentences: sections 244 and 263(2) Section 244 deals with the duty of the Secretary of State to release on licence. This duty applies when the prisoner has served the requisite custodial period. What is the requisite custodial period in the case of concurrent sentences? Section 244(3)(d) applies so it is necessary to refer to section 263(2). Section 263(2) requires reference back to section 244 to see when the Secretary of State is required to release the prisoner on licence in respect of each individual sentence. Section 244(3)(a) provides that, in the case of a sentence of 12 months or more, this is after serving one half of the sentence. There is, however, no provision that supplies the answer in respect of sentences of less than twelve months, because section 244(3)(b) has not been brought into force. We are, however, dealing with the hypothetical question of when the Secretary of State would have been required to release the prisoner had his sentence not been imposed concurrently with the longer, over 12 month, sentence. Section 33(1) of the 1991 Act applies in that hypothetical situation and provides the answer that the prisoner would have to be released after serving half his sentence. Thus section 244, when read with section 263(2) must be read as requiring the prisoner to be released on licence when he has served one half the shorter and one half the longer of the concurrent sentences. In practice, of course, it will always be the longer, over 12 month, sentence that constitutes the relevant custodial period which governs release, so the problem of ascertaining the release date for the shorter sentence is somewhat academic. Consecutive sentences: sections 244 and 264(2) Once again section 244(3)(d) applies. This time it is necessary to refer to section 264(2) in order to identify the requisite custodial period in the case of consecutive sentences. This subsection requires one to identify the custodial period in relation to each sentence. Section 264(6)(a)(ii) provides the answer in respect of the over 12 month sentence. It is half the sentence. But there is no definition of custodial period for the under 12 month sentence or sentences, because section 181, which would have determined this, has not been brought into force. The custodial period in relation to an under 12 month sentence is, however, obvious. It is the half of the sentence that the prisoner would have had to serve before release, had his sentence not been imposed consecutively with an over 12 month sentence. The relevant custodial period is the amalgam of all the individual custodial periods. HDC release: section 246 This section gives the Secretary of State power to release a prisoner on licence up to 135 days before the day on which he will have served the requisite custodial period, subject to the restrictions in subsections (2), (3) and (4). Section 246(6) provides that requisite custodial period has the meaning given by paragraph (d) of section 244(3) in the case of a prisoner serving consecutive sentences. Thus this period is determined in the manner that I have described in the previous paragraph. The effect of this interpretation of paragraph 14, coupled with the relevant provisions of the 2003 Act, provides uniformity of approach, regardless of the order in which the individual sentences were imposed, qualifies the prisoner for the maximum grant of HDC release, but at the same time subjects the prisoner to the latest sentence and licence expiry date. on 24 May 2007, was correct. process of reasoning. For these reasons I would allow this appeal. I am encouraged that Lord Mance has reached the same result by a similar In the present case, the first release date notification, given to the appellant LORD SAVILLE I would allow this appeal. For the reasons given by Lord Phillips and Lord Mance, I have no doubt that by one route or another the legislation must be construed so as to avoid what would otherwise produce irrational and indefensible results that Parliament could not have intended. judgment. I would also associate myself with the observations of Lord Brown in his LORD BROWN In common with Lord Phillips and Lord Mance I too would allow this appeal. The construction of this legislation, in particular the transitional and saving provisions of the 2005 Order, adopted hitherto has led to the most astonishing consequences which no rational draftsman can ever have contemplated, let alone intended. Suppose the judge passes an 18 month sentence with 6 months consecutive: the prisoner becomes eligible for HDC release 45 days before his mandatory release date. But suppose the sentence had been imposed as 6 months imprisonment with 18 months consecutive (i.e. pronounced in a different order): HDC eligibility is then 135 days before the same mandatory release date. Or suppose the sentence is passed as 2 years imprisonment for the more substantial offence with 6 months concurrent for the lesser offence: again, HDC eligibility is 135 days. Or suppose that a prisoner whilst still serving the custodial part of an 18 month sentence (with the prospect of HDC release 135 days before his mandatory release after 9 months) is sentenced to a consecutive term of 1 month imprisonment. He would thereupon lose all prospect of HDC release, there being no such eligibility on a term under 3 months. These examples can easily be multiplied but the point is surely obvious: it can never have been Parliaments intention that HDC eligibility (and, as a corollary, the licence period following release) should depend on such vagaries of sentencing practice. One can but pay tribute to the succession of judgments which have sought to grapple with the intractable problems of construction thrown up by these ill conceived transitional provisions notably those of Dobbs J in R (Highton) v Governor of Lancaster Farms Young Offender Institution [2007] EWHC 1085 (Admin), Scott Baker LJ (concurred in by Wall LJ and Sir Anthony Clarke MR) in the present case, and Hughes LJ, President of the Criminal Division of the Court of Appeal, giving the judgment of that Court in R v Round [2009] EWCA Crim 2667 and, of course, one understands why they felt driven to the conclusion they arrived at. But the judgments serve also to underline the absurdities of that conclusion. As, indeed, Hughes LJ observed in Round (para 51): We are very conscious that the varying, not to say erratic, effect of the existence of two differing statutory regimes applying to the same defendant is to create real and disturbing anomalies between prisoners who ought in fairness to be treated similarly. To my mind the problems created by the Court of Appeals construction of this legislation are, quite simply, intolerable. Nor, generally, has it been open to sentencing judges to mitigate them. To quote again from the Courts judgment in Round (para 49): Our clear conclusion is that it is not wrong in principle for a judge to refuse to consider early release possibilities when calculating his sentence or framing the manner or order in which they are expressed to be imposed. We are quite satisfied that it is neither necessary nor right, nor indeed practicable, for a sentencing court to undertake such examinations. Ordinarily, indeed, it will be wrong to do so, although there may be particular cases in which an unusual course is justified. The judge must be left to express his sentences in the most natural and comprehensible manner possible. Very often that will no doubt mean that the principal, and longest, sentence comes first. In other cases it may not, for example because, as in Dunne, the judge follows the chronological or indictment order of offences. In these circumstances the Senior Presiding Judges letter circulated to all Crown Courts, referring to the Court of Appeals decision in the present case and enclosing a note from the Prison Service explaining how these sentences are in fact dealt with, could do little if anything to improve the situation. Either sentencing judges should pay heed to such information and adjust their sentencing practices accordingly to produce what they conceive to be the fairest result, or they should ignore it and carry on as usual. They cannot do both. That, however, is essentially by the way. Henceforth, on this courts construction of the legislation, the order in which sentences are imposed will make no difference whatever. As to the precise route by which this plainly preferable construction is to be reached, I am entirely content to follow that taken by Lord Phillips and Lord Mance or, indeed, supposing there to be any substantial difference between them, either of these routes. Both judgments to my mind offer perfectly cogent approaches to the various legislative provisions in play and, so absurd is the alternative conclusion hitherto arrived at, almost any coherent alternative construction will suffice. Had paragraph 14 of Schedule 2 to the 2005 Order really been drafted unambiguously to refer to all under 12 months sentences, even those imposed consecutively or concurrently with over 12 months sentences, there just might have been no alternative but to accept the Court of Appeals construction and dismiss this appeal. As both Lord Phillips and Lord Mance amply demonstrate, however, that is very far from the case. Indeed, for this to be the case, to my mind it would have been necessary for the words in parenthesis in paragraph 14 expressly to include, rather than (as they appear to do) implicitly exclude, consecutive or concurrent terms of both under 12 months and over 12 months. It is, after all, precisely this situation which produces the bizarre consequences which Mr Giffin QC recognises, indeed asserts, flow from his contended for construction of paragraph 14. The appeal must accordingly be allowed. LORD MANCE The appellant was on 23 May 2007 sentenced for five offences, all committed on or after 4 April 2005, the date when much of the Criminal Justice Act 2003 came into force. For one offence of theft, she received 22 months imprisonment, for three further offences, 4 months imprisonment on each, concurrent to one another but consecutive to the 22 months sentence, and for contempt, 1 month consecutive to all the other sentences: a total of 27 months. Prior to sentence, the appellant had been on remand in custody for 40 days, i.e. since 13 April 2007. The appeal concerns the inter relationship of provisions in the Criminal Justice Acts 1991 and 2003. The 2003 Act was conceived as a coherent whole, containing sentencing provisions replacing and making irrelevant reference to those of the former Act. In the event, certain provisions particularly those governing early release under sentences of less than 12 months have never (for resource reasons) been brought into force. The 1991 Act, and in particular sections 33 to 51 relating to early release, thus had to be given a continued application in relation to sentences of less than 12 months. The appeal arises from the fact that the appellant was sentenced both to sentences of less than 12 months and to a longer (22 month) sentence. The issue is, in short: how far, and how, does either or both of the schemes in the 1991 and 2003 Acts apply? The issue does not affect the appellants conditional release date (CRD) the date when she was entitled to be released. But it does affect the earlier date upon which she became eligible for home detention curfew (HDC) as well as her sentence and licence expiry date (SLED) after release. The effect can be illustrated by the prison authorities own change of mind. On 24 May 2007, the appellant was given a notification slip informing her of a HDC date of 15 January 2008, a CRD of 28 May 2008 and a SLED of 13 July 2009. On 18 July 2007 this was replaced by a slip notifying her of a HDC date of 20 April 2008, a CRD as before of 28 May 2008 and a SLED of 10 February 2009. The dates on the first slip were arrived at by combining all the sentences (giving a total term of 27 months), taking the half way point of that term (28 May 2008) as the CRD under section 244(3)(a) of the 2003 Act and deducting 135 days from that point under section 246(1)(a) in order to arrive at the HDC date of 15 January 2008. The licence period was treated as running to the end of the full 27 month term under sections 249(1) and 264(3). The appellant maintains that this approach was correct. The dates on the second slip were arrived at by treating the 22 month sentence as subject to the 2003 Act, and the four shorter sentences as subject in all respects to the 1991 Act and by treating the longer term as commencing first because the sentencing judge pronounced it first. Thus, the 22 month sentence, running first as a separate sentence subject to the 2003 Act, reached its CRD under section 244(3)(a) after 11 months, i.e. on 13 March 2008. The four short sentences subject to the 1991 Act fell by section 51(2) of that Act to be treated as a single term of 5 months. This term was treated as running from the CRD under the 22 month sentence, i.e. from 13 March 2008, and as having under section 34A(4)(b) of the 1991 Act a HDC date after a period equal to one quarter of the term, that is after 1 months, and so on 20 April 2008. The SLED date was stated as 10 February 2009, when the 22 month sentence expired (the 5 month term of the shorter sentences having by then long since expired, on 13 August 2008). Mr Giffin QC for the Secretary of State accepted in oral submissions that even the second slip might not strictly be correct, since, if the 22 month sentence is treated as a separate sentence running independently until 13 March 2008 and the remaining 5 months sentences only began running from that date, then strictly the 22 month sentence should under section 246(1)(a) of the 2003 Act have attracted its own HRD 135 days before 13 March 2008 (i.e. on or about 1 November 2007). However, he submitted that the Secretary of State would never in fact have exercised a discretion to release a prisoner on home detention curfew between 1 November 2007 and 13 March 2008 when the 5 month sentence remained to be served after 13 March 2008, with the result that the second slip could, for practical purposes, be taken as correct. The existence in law, but the loss for practical purposes, of the period of eligibility for HRD under the 22 month sentence is only one of a number of striking anomalies arising from the general approach taken by the second slip. An offender would be deprived of a substantial period during which he might otherwise ask for release on home detention curfew, simply because he was made subject to a second, consecutively running sentence, however short. This second sentence might indeed be imposed at a later date while the offender was already serving the first sentence, and its effect would then be sharply to reduce the period of eligibility to HDC, or even (since there was under s34A(4)(a) of the 1991 Act no eligibility to HDC in the case of any term of less then 3 months) to eliminate it altogether. A second anomaly is that the approach in the second slip treats the 5 month term, as from the CRD of the 22 month sentence, as running concurrently with the 22 month sentence. Such a result could be achieved, by express direction under section 154(1) of the Powers of Criminal Courts (Sentencing) Act 2000. But here it would, on its face, be contrary to the sentencing judges direction that the sentences should run consecutively. It also has the effect that any licence period under the 5 month term (in particular, the licence period which would run until the two and a half month point, if the offender were to be released under section 34A(4)(b) on his HDC date after serving one quarter of that term) runs concurrently with the longer licence period under the 22 month sentence, and is effectively submerged in it and lost. The matter is even more complex, because there may well be cases where, for example, the first and third sentences passed during a judges sentencing exercise are for periods of 12 months or more, whereas the second and fourth sentences are for periods less than 12 months. The solution to this advanced by the Secretary of State and Court of Appeal is to combine all sentences of 12 months or more and treat them as commencing with the first such sentence passed, and likewise to combine all sentences of less than 12 months and treat them as commencing with the first sentence of less than 12 months passed. But this solution is only achieved by departing from the rule otherwise adopted under the approach of the second slip, that sentences should be taken in the order pronounced. A third anomaly is that the approach in the second slip has radically different effects according to which sentence is treated as being served first. If the 5 month term of the four shorter sentences were taken first and the 22 month sentence were treated as running from the CRD (after 2 months, on or about 28 June 2007) of that 5 month term, then the offender would under section 264(1)(a) be eligible for home detention curfew 135 days before the half way point (28 May 2008) of the 22 month sentence, i.e. on 13 January 2008. Which way around sentences are treated as being served depends, on the construction advanced by the Secretary of State and accepted by the Court of Appeal, upon which way around the sentencing judge expresses them, or at least (see the previous paragraph) in which order he expresses the first sentence with which he deals in each category (less than 12 months and 12 months or more). Judges in their sentencing remarks commonly take the longest sentence first, which leads to the least favourable result regarding HDC for offenders in the situation presently under consideration. Mitting J thought that the third anomaly should have been resolved by the Secretary of State adopting a policy ensuring that offenders were subject to the maximum period of licence on release which can lawfully be imposed (para 32). He declared invalid the Secretary of States existing policy (according to which the first imposed sentence was treated as running first), and the Secretary of State thereupon decided to release the offender on HDC on 8 February 2008 (later determining that the time spent on release would count towards the custodial part of her sentence, whatever the outcome of any appeal). The Court of Appeal considered, rightly, that the Secretary of State had no power by way of policy statements to dictate matters such as eligibility for release on licence or the amount of time spent on licence with liability to recall. However, it also considered that the Secretary of States policy of taking the sentences in the order passed reflected the correct legal position. In R v Round and Dunn [2009] EWCA Crim 2667 the Court of Appeal loyally followed the authority of the Court of Appeal in the present case, and, after comprehensive examination of the complexities and possibilities to which it gave rise, rejected an argument that sentencing judges should structure their remarks to make the shortest sentence first. It was not incumbent on such a judge, indeed it was ordinarily wrong, to consider early release possibilities when calculating his sentence or framing the manner or order in which they are [sic] expressed to be imposed (para 49). There was a statutory anomaly, perpetrated (however accidentally) by the Executive and contrary to the discernible policy of Parliament (para 33), and the varying, not to say erratic, effect of the existence of two differing statutory regimes applying to the same defendant is to create real and disturbing anomalies between prisoners who ought in fairness to be treated similarly (para 51). But the judge must be left to express his sentences in the most natural and comprehensible manner possible (para 49). A fourth and fundamental anomaly is that the approach taken in the second slip is quite different in nature and leads to quite different results both to any applying under the 1991 Act, when that was the only relevant piece of legislation, and to any which would have applied under the 2003 Act had that come fully into effect (as must have been envisaged when it was enacted). In short, the transitional provisions bringing the 2003 Act into force in many respects, but keeping the 1991 Act in force in some other respects, are said to have achieved a result which Parliament did not intend by either Act. Under the 1991 Act, all the sentences, of whatever length, would have fallen under section 51(2) to be treated as a single term. The early release provisions, in particular sections 33 and 34A, would then have applied to that single term. The CRD would have been after one half of the term in the case of a short term prisoner sentenced to less than twelve months or two thirds in the case of a long term prisoner sentenced to four years or more (section 33(1) and (2)). The HDC date for short term prisoners would have been on a scale ranging up to 135 days before the CRD. After the CRD, prisoners subject to a term of less than 12 months were to be released unconditionally (sections 33(1)(a) and 33A(1)), while prisoners whose term was for a term of 12 months or more remained on licence until the three quarters date of their nominal term (section 37(1)). Under the 2003 Act, a different approach was adopted, with largely similar, but in certain respects different, consequences. Instead of treating all sentences passed as a single term, the 2003 Act treats them as separate, and then under sections 244 and 264 aggregates the custodial periods of all sentences to arrive at the CRD, with the HDC date arising 135 days before the CRD (section 246(1)(a)). In relation to any sentence of 12 months or over, the custodial period is under section 244(3)(a) one half (in contrast to the position under the 1991 Act, where it was two thirds for long term offenders serving four years or more). Further, under sections 244(1) and 249(1), the licence remains in force for the whole nominal period of any sentences (in contrast to the position under the 1991 Act, which entitles a prisoner serving a sentence or sentences constituting a single term of less than 12 months to be released unconditionally after serving one half of that term and under which the licence in respect of any longer term only lasts until the three quarters date). Against this background, I turn to the statutory instrument which has been the main focus of this appeal. This is the Criminal Justice Act 2003 (Commencement no. 8 and Transitional and Saving Provisions) Order 2005 (S.I. 2005 no. 950) (the 2005 Order). In consequence of the decision not to introduce provisions of the 2003 Act and to continue the application of the 1991 Act relating to sentences of less than 12 months, the 2005 Order: i) did not include (in Schedule 1, listing provisions to come into force on 4 April 2005) section 181 of the 2003 Act, which would have regulated the permissible term of any sentence less than 12 months and required the court when passing such a term to specify a period, referred to as the custodial period, of a length also regulated by the section, at the end of which the offender was to be released on licence for the remainder of the nominal term; ii) did bring into force section 244(1), (2) and (3)(a) and (d), which requires the Secretary of State to release fixed term prisoners on licence after they had served the requisite custodial period, and defines this period in relation to any person serving a term of 12 months or more as one half of his sentence, and in relation to a person serving two or more concurrent or consecutive sentences as the period determined under (so far as material) section 264(2); but did not bring into force section 244(3)(b) and (c), which would have defined the requisite custody period for sentences of less than 12 months (and for intermittent custody orders); iii) also brought into force section 264(1) to (3), (6) and (7), regulating the situation of a person sentenced to two or more consecutive sentences on the same occasion or in circumstances where the prisoner remained in custody at any time during the period beginning with the first and ending with the last occasion on which they were passed. Section 264(2) provides Nothing in this Chapter requires the Secretary of State to release the offender on licence until he has served a period equal in length to the aggregate of the length of the custodial periods in relation to each of the terms of imprisonment. and section 264(6)(a)(ii) defines the custodial period as meaning, in relation to a term of 12 months or more, one half of that term; section 264(3) reads: Where any of the terms of imprisonment is a term of twelve months or more, the offender is, on and after his release under this Chapter, to be on licence (a) until he would, but for his release, have served a term equal in length to the aggregate length of the terms of imprisonment, and (b) subject to such conditions as are required by this Chapter in respect of each of those terms of imprisonment. iv) did not bring into force section 264(4) and (5), providing that [w]here each of the terms of imprisonment is a term of less than twelve months, the offender was on and after release to be on licence until the relevant time, defined as the aggregate of all the custodial periods and the longest of the licence periods in relation to such terms; though it did, as section 264(6)(a)(iii), bring into force a definition of custodial period as meaning, in relation to a term of less than 12 months complying with section 181, . the custodial period as defined by subsection (3)(a) of that section. This definition was, however, otiose or inoperable since section 181 was not brought into force (see point (i) above); v) included among the Transitional and Saving Provisions contained in Schedule 2 was the following provision (para 14), which is critical for present purposes: Saving for prisoners serving sentences of imprisonment of less than 12 months 14. The coming into force of sections 244 to 268 ., and the repeal of sections 33 to 51 of the 1991 Act, is of no effect in relation to any sentence of imprisonment of less than twelve months (whether or not such a sentence is imposed to run concurrently or consecutively with another such sentence). Under Schedule 2, para 14 it is at least clear that, in a case where an offender is subject to one sentence of less than 12 months and no other sentence at all, the full regime of sections 31 to 51 of the 1991 Act continues to apply. Likewise, in a case where an offender is subject to several sentences each of less than 12 months. Their total term may amount to 12 months or more, but they will still be treated as a single term under section 51(2) of the 1991 Act. The problem comes when there is (as in the present case) a series of consecutive sentences, some of less than 12 months and at least one of 12 months or more. Mr Giffin submits that the language is clear: the coming into force of sections 244 to 268 of the 2003 Act (so far, that must mean, as Schedule 1 otherwise brings them into force) and the repeal of sections 33 to 51 of the 1991 Act is [sic] of no effect in relation to any sentence of imprisonment of less than twelve months. So in this situation, he submits and the Court of Appeal accepted, any and every sentence of less than twelve months must be segregated from any other sentence(s) to which it is concurrent or consecutive (whether such other sentences are for less than 12 months or for 12 months or more) and must remain subject to the 1991 Act. On the other hand, in relation to any sentences of 12 months or more, there is nothing in para 14 to prevent the coming into force of sections 244 to 268 or the repeal of sections 33 to 51 having effect, and any such sentences are therefore subject to, in particular, section 244(1) and (3), section 246(1)(a) and section 264(1) to (3), (6) and (7) of the 2003 Act. Two separate regimes have to be applied entirely separately, and there is, contrary to the scheme of both Acts, no mechanism for combining or aggregating sentences, or any aspect of sentences, which are subject to different regimes. Mr Giffin does not deny that this construction leads to the anomalies identified in paras 55 to 60 above. But he says that the wording compels it. Summum jus, summa injuria. Any suggestion that para 14 could be read as maintaining the 1991 Act in force for sentences of 12 months or more as well as sentences of less than 12 months, whenever these happened to be passed concurrently or consecutively with each other, conflicts with the fact that para 14 only applies in relation to any sentence of imprisonment of less than 12 months. It is also inconceivable that the legislator could have intended that the mere passing of, say, a three month sentence to follow a 4 year sentence could take both outside the scheme of the 2003 Act, with all that this would entail (for example, the requirement to serve two thirds of the sentence under section 33(2) of the 1991 Act, rather than half under section 244(3)(a) of the 2003 Act, before the CRD, and the shorter licence period under the 1991 Act). At first sight, the bracketed words in para 14 provide a simple answer to the construction advanced by Mr Giffin and accepted by the Court of Appeal as set out in para 64 above. The bracketed words whether or not such a sentence is imposed to run concurrently or consecutively with another such sentence contemplate only two situations: one where the only sentence passed is a sentence of less than 12 months, the other where such a sentence is passed concurrently or consecutively with one or more other sentences each also of less than 12 months. They therefore suggest that, despite the initial generality of the phrase in relation to any sentence of imprisonment of less than 12 months, the author was not dealing with the situation of a sentence of less than 12 months passed concurrently or consecutively with one or more sentences of 12 months or more. This would be understandable, since it would mean that the provisions of sections 244 to 268 brought into force under Schedule 1 would apply in this situation. They include provisions which expressly contemplate and provide for the situation, in particular section 263(3), providing that where concurrent sentences include one or more sentences of twelve months or more and one or more sentences of less than twelve months, the terms of the licence may be determined by the Secretary of State in accordance with section 250(4)(b) . , and section 264(3), commencing Where any of the terms of imprisonment is a term of 12 months or more . Unfortunately, this simple answer faces the difficulty that, in order to apply section 264(2) and (3) to situations where there are sentences of a length falling either side of 12 months, it must be possible to identify a custodial period in relation to the sentence or sentences of less than 12 months. The provisions of section 181 and 244(3)(b) were intended to identify this under the 2003 Act, but they have never been brought into force, and, without them, the definition in section 264(6)(a)(iii), which was intended under the scheme of the 2003 Act to apply the definition of custodial period contained in section 181 to the earlier subsections of section 264, is inoperable (para 62(iv) above). Further, if situations where there are sentences both of less than 12 months and of 12 months or more are in every respect outside the reach of para 14, that also means that sections 33 to 51 of the 1991 Act were repealed in their entirety in relation to any sentence of less than 12 months passed concurrently and consecutively with sentences of 12 months or more, so that it becomes on the face of it impossible to derive any custodial period from section 33(1)(a) of the 1991 Act. Nevertheless, it is clear that the author of para 14 had in mind two things. First, sections 181, 244(3)(b) and (c) and 264(4) and (5) had not been brought into force and it was therefore important to preserve the regime of the 1991 Act in respect of any individual sentence of less than 12 months. Second, he needed to address cases where there were two or more sentences each of less than 12 months. Section 264(4) and (5) of the 2003 Act were originally intended to address such situations. But they could not be brought into effect or applied to such situations, so long as section 181 was not in effect. Had section 264(4) and (5) come into force without section 181, the approach which they embody would have led to there being no licence period after the CRD at all. This is because section 264(5) requires regard to be had to the aggregate of all the custodial periods and the longest individual licence period under any of the relevant sentences, viewed individually. In the absence of section 181, there would be no such licence period. (Equally, if it had been provided that the sentences of less than 12 months should be viewed individually as if they were subject to the 1991 Act, none of them would give rise to any licence period, because each would attract a right to release unconditionally at its half way point under sections 33(1)(a) of the 1991 Act: see para 60 above.) In these circumstances, the author of para 14 made clear by the bracketed words that, where there were two or more sentences and each was of less than 12 months, sections 33 to 51 of the 1991 Act were to continue to govern the situation. Such sentences might amount in total to more than 12 months, but they would still remain subject to the 1991 Act. In particular, two such sentences totalling more than 12 months could and would (under section 51(2) of the 1991 Act) continue to be treated as a single term of more than 12 months, so that there would under section 37(1) continue to be a licence period (after release at the half way point under section 33(1)(b)) up to the three quarters point of that term. The words in brackets in para 14 of Schedule 2 to the 2005 Order were, on the other hand, clearly drafted so as not to deal with the situation of one or more sentences of 12 months or more being passed concurrently or consecutively with one or more sentences of less than 12 months. (It is common ground that the phrase another such sentence means and can only mean another sentence of less than twelve months.) Sections 263 and 264(2) and (3) had been brought into force by Schedule 1 to the same Order. Their language expressly contemplates and covers the situation of sentences passed of a length either side of 12 months: see para 66 above. Yet, on the Secretary of States and Court of Appeals approach, they cannot apply to such a situation. That cannot have been meant; and this, in my opinion, also provides a key to understanding why the bracketed words in para 14 are limited to cases where the only sentence(s) in the arena had a term of less than 12 months. Leaving aside the difficulty of identifying an applicable definition of custodial period in this situation for the sentences under 12 months, it made sense to bring the provisions of sections 244 to 268 including sections 263(3) and 264(2) and (3) into force, which Schedule 1 did as from 4 April 2005, and it makes sense for these provisions to cover the situation of sentences of a length either side of 12 months. The licence period applicable in that situation would under section 264(3)(a) last until the end of the aggregate length of all the terms of imprisonment imposed. Eligibility for HDC would fall to be determined under section 246, which ties it back to the CRD specified in section 264(2) (see sections 246(1) and (6) and 244(3)(d)). In the compressed wording of para 14, the author was attempting to achieve and reflect this result. However, he must have overlooked the fact that, without section 181, the definition in section 264(6)(a)(iii) of custodial period in relation to any sentence of less than 12 months is inoperable, and that, if he limited the application of para 14 to cases where no sentence of 12 months or more was in question, then section 33(1)(a) would not, on its face, be available to supply the definition and fill the gap in the situation where there were sentences of a length either side of 12 months. However, the continued application of section 33(1)(a) to all cases where the only sentence or sentences in existence are of less than 12 months (giving a custodial period of one half in respect of such sentences) leaves no doubt about the custodial period which the author would and must have intended would apply under sections 263(3) and 264(2) and (3), if, as I consider, he must have intended these to apply to mixed sentences of a length either side of 12 months. (The appropriateness of a custodial period of one half is merely reinforced by the fact that this is also the custodial period in relation to terms of 12 months or more under the 2003 Act: section 264(6)(a)(ii).) Apart from the objection that, under the literal language of para 14, section 33(1)(a) does not apply in relation to the situation of mixed sentences either side of 12 months, I would see no difficulty about deriving a custodial period of one half for the purposes of section 264(2) and (3) from sections 33(1)(a). The definition in section 264(6) is not expressed in exhaustive terms, and, even if it were, the inoperability of section 264(6)(iii), in circumstances in which section 181 has never been brought into force, would justify recourse to the 1991 Act to fill the consequent gap. The author of para 14 may have failed literally to give effect to these intentions; he may well, as the Court of Appeal (in view of other presently irrelevant drafting errors in Schedule 2) suggested in R (Buddington) v Secretary of State for the Home Department [2006] EWCA Civ 280; [2006] 2 Cr App R (S) 109, para. 18, have been suffering from Homeric exhaustion; but each literal construction that has been suggested has wholly implausible and unacceptable consequences. On the other hand, a purposive construction makes it possible, for the purposes of section 264(2), (3) and (6)(a)(iii), to apply the definition of custodial sentence in section 33(1)(a) (which under para 14 applies on any view to all cases of one or more sentences all of less than 12 months) to the situation where there are sentences of a length either side of 12 months. This avoids the anomalies identified earlier in this judgment and makes sense of the transitional provisions. In summary, either the definition of custodial period, when required under section 264(2) and (3) in relation to a term of less than 12 months, can, in circumstances where section 181 has not come into force, be supplied under section 264(6)(a)(iii) simply by reading into that subsection in this limited context a reference to a custodial period of one half of the term (as would have applied under section 33(1) of the 1991 Act). Or para 14 can be understood as if the bracketed passage went on to provide but, where such a sentence is imposed to run concurrently or consecutively with a sentence of 12 months or more, sections 244 to 268 take effect as if section 33(1) continued to apply so as to define the custodial period of the sentence of less than 12 months as one half of such sentence. In my opinion, this is a permissible as well as the correct approach to the understanding of para 14, read in the overall context of the scheme and provisions of the 2003 Act and 2005 Order. In Inco Europe Ltd. v First Choice Distribution [2000] 1 WLR 586, 592C D, Lord Nicholls, giving the only full speech in the House of Lords, noted that it had long been established that the role of the courts in construing legislation is not confined to resolving ambiguities in statutory language but that The court must be able to correct obvious drafting errors. In suitable cases, in discharging its interpretative function the court will add words, or omit words or substitute words. He added (p.592E G) that the latter power was confined to plain cases of drafting mistakes, where the court could be abundantly sure of three matters: (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the draftsman and Parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed. Any alteration in the literal wording must not be too big, or too much at variance with the language used (p.592H). In Attorney Generals Reference (no. 5 of 2002) [2004] UKHL 40, [2005] 1 AC 167, the House, in view of the absurdity that would otherwise result, refused to give its literal interpretation to a statutory provision which, literally read, precluded the defence from asking questions to establish that there had been interception (consequently illegal) on part of a public telecommunications system, but allowed the prosecution to call evidence to the effect that the interceptions had taken place wholly within a police private telecommunications system (and were therefore legal). The linguistic difficulty was decisively outweighed by a purposive interpretation of the statute (para 31, per Lord Steyn). In my opinion, the reasoning and approach taken in both these cases is applicable to the present. It is the more readily applicable in my view, when this case concerns delegated legislation made by executive action as the Court of Appeal noted in Round and Dunn, and subject only to the limited opportunity for any Parliamentary scrutiny involved in the negative resolution procedure described by Lord Hope in R (Stellato) v Secretary of State for the Home Department [2007] UKHL 5; [2007] 2 AC 70, paras 12 13. Some attention was directed in argument and in the courts below to further provisions of Schedule 2, especially paras 19 and 25 dealing with the application of provisions of the 2003 Act in relation to offences committed before 4 April 2005. To my mind these cannot be decisive in either direction. I would only comment that, as at present advised, I would find it difficult to agree with the Secretary of States and Court of Appeals interpretation of their effect as regards sections 263 and 264. The omission from para 19 of any reference to sections 263 and 264 and the reference in para 25 to those sections seem to me more easily understood as indicating an intention to apply the aggregation provisions of those sections from 4 April 2005 in all circumstances (save only where all sentences in question are for less than 12 months and are therefore within para 14). It was understandable to mention section 244 in para 19 (and so to make clear that, where all sentences in question were for offences committed before 4 April 2005, the relevant provisions of the 1991 Act were to apply). But, where offences committed either side of 4 April 2005 are in question, the language of section 264(2) seems to me quite capable of operating, and to have been intended by para 19 to operate, to require the Secretary of State to release the offender on licence after the period specified. Nothing in para 25 suggests that it was to be confined in scope to cases where one of the sentences was an extended sentence. There seems no reason why para 25 should not be relevant generally (for example, to preclude a long term prisoner serving a sentence of 4 years or more for an offence committed before 4 April 2005 in conjunction with another prison sentence for an offence committed after that date from claiming under section 264(6)(a)(ii) the benefit of a custodial period of one half in respect of the former sentence, instead of the period of two thirds which would follow from section 33(2) of the 1991 Act, the application of which is preserved in relation to the former offence by para 19). For the reasons given in paras 49 to 75, I would in any event allow this appeal, allow the application for judicial review and declare that the appellants release dates were correctly calculated by the Secretary of States first notification slip of 24 May 2007. LORD JUDGE In his Judicial Studies Board Lecture, The Drafting of Criminal Legislation: Need it be so Impenetrable?, given on 13th March 2008, Professor John Spencer QC explained that the collection of statistics in preparation for his lecture was not easy, because there has been so much criminal justice legislation over the last 10 years that accurate figures are now hard to give. However, by my reckoning we have had since 1997 no less than 55 Acts of Parliament altering the rules of criminal justice for England and Wales. The problem he said is not the mere number of statutes, but their increasing bulk. Many of them are enormous. Indeed they are. And that is not the end of the difficulties. Ill considered commencement and transitional provisions, which have to negotiate their way around and through legislation which has been enacted but which for one reason or another has not or will not be brought into force, add to the burdens. And there are hidden traps, the most obvious of which is legislation which repeals the earlier repeal of yet earlier legislation. In the course of his judgment in the Administrative Court in this present case, Mitting J underlined the statutory obligation imposed on the sentencing court to explain the effect of the sentence to the offender in ordinary language. He recorded that These proceedings show that, in relation to perfectly ordinary consecutive sentences imposed since the coming into force of much of the Criminal Justice Act 2003, that task is impossibleIt is simply unacceptable in a society governed by the rule of law for it to be well nigh impossible to discern from statutory provisions what a sentence means in practice. That is the effect here. I entirely agree with these observations. The explanation for the problem is simple. For too many years now the administration of criminal justice has been engulfed by a relentless tidal wave of legislation. The tide is always in flow: it has never ebbed. On 23rd May 2007 a perfectly simple case was listed at Stafford Crown Court before His Honour Judge Eades. After making due allowance for the mitigation the judge concluded that Rebecca Noones criminality merited a sentence of 27 months imprisonment. Whether he imposed a sentence of 27 months for one offence of theft, with lesser concurrent sentences for the remaining offences, or a sentence of 22 months for theft, with consecutive sentences of four months and one month totalling a further 5 months imprisonment (as he did), and whatever the order in which he would eventually pass the sentence, his final assessment required the sentence to reflect the totality principle, recently given the accolade of express reference in statute in section 120(3)(b) of the Coroners and Justice Act 2009. Generations of sentencing judges have been brought up to understand that the relevant legislation always reflected the obvious sense that when sentences are imposed on the same occasion, consecutively to other sentences, and in whatever order they are imposed, for the purposes of ascertaining the prisoners release date, the sentence should be treated as a whole. Thus, section 38(4) of the Criminal Justice Act 1961, section 104(2) of the Criminal Justice Act 1967, and section 51(2) of the Criminal Justice Act 1991 describe the overall effect of such sentences as a single term. In the Criminal Justice Act 2003, in relation to consecutive sentences, the phrase single term has been replaced with a reference to the aggregate length of the custodial period, which can only mean what it appears to say, that is, that all the terms of the sentence will be added up together to form a single whole. This, surely, is the opposite side of the same coin as the totality principle to which the sentencing decision itself is subject. Judge Eades, like every sentencing judge, would have proceeded on the basis that both common sense and justice compelled the conclusion that, altogether ignoring for present purposes the further complications which can arise in relation to licence periods, whether he used concurrent or consecutive sentences for the purpose of constructing his 27 months total sentence, and in which ever order the sentences were pronounced, the time actually to be served in custody by the appellant should be the same. Yet the decision to which the prison authorities felt driven after they examined the policy laid down by the Secretary of State about the administration of the Home Detention Curfew Scheme was that their first conclusion about her date of release, as notified to her, was over generous, and that, notwithstanding any lack of merit in or misconduct by her, her eligibility for release on Home Detention Curfew should be deferred by just over 3 months. In other words the appellant would serve 3 months or so longer in custody because the judge had imposed consecutive rather than concurrent sentences. All this was said to be required by the interaction of the Criminal Justice Act 1991, as amended by the Crime and Disorder Act 1998, with the further provisions of the Criminal Justice Act 2003 and the Criminal Justice Act 2003 (Commencement no. 8 and Transitional and Saving Provisions) Order 2005, a provision which has already achieved a disturbing notoriety for inaccuracy (R v Buddington v Secretary of State for the Home Department [2006] 2 Cr App R(S) 109). The statutory framework has been dissected by Mitting J, and the Court of Appeal, and by counsel before this court in long detailed written and oral arguments. Reflecting on the submissions, I have been unable to find even the slightest indication that it was the legislative intention that the totality principle should be disapplied, or that the fact that this appellants sentence was subject to more than one statutory regime, or even that the introduction of the Home Detention Curfew Scheme by the 1998 Act, was or could ever have been intended to produce the adventitious result for which the Secretary of State contended. I have studied the judgments of Lord Phillips and Lord Mance. Their judgments tell the lamentable story of how elementary principles of justice have come, in this case, to be buried in the legislative morass. They have achieved a construction of the relevant legislation which produces both justice and common sense. I should have been inclined to reject the Secretary of States contention on the grounds of absurdity absurd because it contravened elementary principles of justice in the sentencing process but Lord Phillips and Lord Mance have provided more respectable solutions, either or both of which I gratefully adopt. Nevertheless the element of absurdity remains. It is outrageous that so much intellectual effort, as well as public time and resources, have had to be expended in order to discover a route through the legislative morass to what should be, both for the prisoner herself, and for those responsible for her custody, the prison authorities, the simplest and most certain of questions the prisoners release date. |
This appeal concerns a claim by a beneficiary under a will for negligence against solicitors who, he claims, allowed his brother, also a beneficiary and then the administrator of the estate, to acquire and dispose of land which should have been part of the residuary estate. The claim was begun in a personal capacity, but it is now accepted that a claim that the solicitors owed a duty of care to beneficiaries would be difficult to sustain, and the claimant seeks to amend the proceedings to claim in a representative capacity on behalf of the estate. The events of which the claimant complains happened 13 or 14 years ago. The principal questions on this appeal relate to whether this is an appropriate case for a representative (or derivative) claim, which was the focus of the judges decision, and to the interpretation and application of section 35 of the Limitation Act 1980 and the rules of court which were enacted pursuant to it, first in the Rules of the Supreme Court, and now in the Civil Procedure Rules. The limitation issues were the main focus of the decision of the Court of Appeal. Section 35 was enacted following recommendations of the Law Reform Committee in 1977. It had two main objectives. The first was to enable a plaintiff to amend pleadings out of time so as to sue in another capacity, in particular to reverse the effect of such decisions as Ingall v Moran [1944] KB 160, which created a grave injustice where proceedings were instituted under the Law Reform (Miscellaneous Provisions) Act 1934 prior to letters of administration being taken out and the limitation period expired before proceedings were instituted in a representative capacity: the grant did not date back to the date of death, by then it was too late to issue fresh proceedings or to amend. The second objective was to enable parties to be added out of time, in cases where joinder of the new party was necessary if the plaintiffs claim was to succeed, for example where the plaintiff was an equitable assignee and had omitted to join the assignor prior to the expiry of the limitation period. But section 35 has been described as being without doubt one of the most convoluted provisions in the entire law of limitations (McGee, Limitation Periods, 5th ed 2006, para 23.003). That is no doubt why there have been more than 25 decisions of the Court of Appeal on section 35 and the rules of court. The background Mrs. Alice Margot Roberts (Mrs Roberts), of Lower Hellingtown in Devon, made a will on March 6, 1992. In September 1994 a receiver was appointed by the Court of Protection to administer her affairs. She died on July 27, 1995. Her grandson, Mark Roberts, the appellant, is one of the three equal residuary beneficiaries of the estate of Mrs Roberts. The other residuary beneficiaries are his brother, John Roberts, and his aunt, Ms Jill Roberts. The executors named in the will (Mrs Roberts solicitor and an accountant) renounced their right to probate and John Roberts was granted letters of administration with will annexed on February 16, 1996. Mrs Roberts will provided in clause 7 that if John Roberts within a specified time (the earlier of one month from demand by the trustees or twelve months from death) either paid, or provided security or an indemnity to the will trustees for, all of the estate and other duty arising on her death in respect of her estate then (i) a piece of land known as the Coppice would pass to Mark Roberts and (ii) the remainder of the property known as Lower Hellingtown Farm would pass to John Roberts. By clause 8, if the payment was not made or security/indemnity given then the properties would fall into residue. Consequently (because of the value of the farm) if John Roberts complied with the condition in clause 7 the position would be much more favourable to him than if he did not, and the converse was true in relation to Mark Roberts. John Roberts paid some inheritance tax in order to obtain the grant of letters of administration. He does not appear to have paid the remaining inheritance tax due, which may amount to some 60,000 and with interest would substantially exceed 100,000. During the time John Roberts acted as administrator, he instructed two firms of solicitors, Gill & Co and Whitehead Vizard, the first and second defendants. In July 1996 John Roberts, as personal representative, executed an assent to Lower Hellingtown Farm vesting in himself as beneficiary. The first defendants, Gill & Co, acted for him on the grant of letters of administration, and (it seems) on the preparation of the assent. In or about 1997, Lower Hellingtown Farm was sold by John Roberts in two lots for a total of 305,166.19. Some 285,000 of the proceeds of sale were paid to John Roberts and the balance was used to discharge certain estate liabilities. Whitehead Vizard, the second defendants, acted for John Roberts on the sale of Lower Hellingtown Farm. By order dated October 30, 2000, on the application of Mark Roberts, John Roberts was replaced as administrator of the estate by Mr Charles Sainter, a partner in the firm of solicitors then and now acting for Mark Roberts. By a claim form dated November 27, 2002, issued in the Plymouth County Court, Mark Roberts started proceedings against the solicitors for breach of duty of care owed to him as beneficiary of Mrs Robertss estate. The particulars of claim alleged that: (1) the first firm, Gill & Co, were retained by John Roberts to advise him on matters arising from the appointment by the Court of Protection of a receiver for Mrs Roberts and, after her death, to obtain letters of administration and subsequently to assist and advise on the administration of her estate; (2) John Roberts instructed the second firm, Whitehead Vizard, from April 1997 to act on his behalf on the sale of Lower Hellingtown Farm; (3) inheritance tax payable by reason of the death of Mrs Roberts had never been paid and no security or indemnity for the same had been furnished by John Roberts; (4) inheritance tax on Mrs Roberts personal estate was paid at the beginning of February 1996, together with the first of ten annual instalments payable in respect of her real estate, but no further inheritance tax was paid thereafter, and the duty payable in respect of Mrs Roberts life interest under two will trusts had not been satisfied; (5) notwithstanding this, on July 23, 1996 a legal executive employed by Gill & Co prepared and witnessed the transfer of Lower Hellingtown Farm by John Roberts as trustee of the property to himself as beneficiary under the will; (6) in so doing, Gill & Co acted in breach of duty owed to Mark Roberts personally as beneficiary in the estate; (7) Whitehead Vizard were instructed by John Roberts to act on his behalf on the sale of the farm to a third party, which took place in 1997, and negligently and in breach of duty to Mark Roberts, Whitehead Vizard effected the sale of the farm when they knew, or ought to have known, that the inheritance tax had not been paid or secured and hence that John Roberts did not have good title to the farm; (8) by reason of the negligence and want of care of the two firms Mark Roberts suffered loss and damage in that but for their negligence the farm would have fallen into the residuary estate of which he is entitled to a one third share, and the remaining estate is insufficient to meet either the pecuniary legacies or to discharge the inheritance tax outstanding. The foundation of the claim is that the estate had been administered on the false basis that the requirements of clause 7 of the will had been complied with so that clause 7 of the will operated and clause 8 of the will did not have the effect of putting the land referred to in clause 7 of the will into the residuary estate. There is no doubt that this was a claim by Mark Roberts personally for loss suffered by him as a beneficiary. On January 30, 2003 an order was made staying the action to allow the pre action protocol to be followed. On March 12, 2003 the solicitors for the defendants wrote to Mark Roberts solicitors rejecting the claim, because (they said) the law does not recognise a duty of care between a solicitor instructed by a personal representative and a beneficiary. In April 2003, the parties agreed a general extension of time for the filing of a defence to enable Mark Roberts to respond to the letter from the defendants solicitors. A defence has not been filed. Any claim by the personal representative of Mrs Roberts became statute barred at the latest during 2003, six years after the sale of the farm by John Roberts. By an application notice dated August 25, 2006 Mark Roberts applied to amend the proceedings, three years after the expiry of the limitation period, in order to continue them both in his personal capacity and as a derivative action on behalf of the estate. The proposed amendments (1) describe Mark Roberts as suing on his own behalf and as representing the estate of Mrs Roberts; and (2) plead that (a) Gill & Co acted in breach of the duty of care owed not only to Mark Roberts but also to the estate of Mrs Roberts; (b) Whitehead Vizard were instructed, not only to act for John Roberts on the sale of the farm, but also to assist in the administration of Mrs Roberts estate; and (c) as a result of both firms negligence, the estate has suffered loss and damage in that the farm would have fallen into the residuary estate. The proceedings were transferred to the Chancery Division. Mark Roberts has the benefit of a funding certificate issued by the Legal Services Commission in relation to these proceedings. On April 4, 2007 Mr Paul Morgan QC (now Morgan J), sitting as a deputy judge of the Chancery Division, dismissed the application to amend on the ground that there were no special circumstances which would entitle Mark Roberts to bring a derivative action. Had he found special circumstances, he would have concluded that, notwithstanding that the limitation period for the personal claim had expired, the court would have been able to authorise Mark Roberts to bring a new derivative claim in a representative capacity different from his personal capacity. On appeal the Court of Appeal (Pill and Arden LJJ and Patten J, with Arden LJ giving the only judgment on this aspect) held unanimously that, if Mark Roberts application to amend so as to plead a derivative claim were allowed, the administrator had to be joined as a party: [2009] 1 WLR 531. Since the limitation period had expired, joinder of the administrator could only be permitted if the addition were necessary (CPR 19.5(2)(b)) to enable the existing action to be pursued. The addition of the administrator was not necessary for the existing, personal, claim to be properly carried on, and permission to amend to plead the derivative claim only (without joining the administrator) was refused since that amendment would not enable the claimant to proceed to judgment on the derivative claim because the relevant parties had not been and could not be joined. This was a point not taken before the judge. But the Court of Appeal by a majority (Arden LJ, with whom Patten J agreed, Pill LJ dissenting) disagreed with the judge on what had been the main holding at first instance, and held that if the combined effect of the Limitation Act 1980 and the CPR had not been to prevent the amendment, there would have been such special circumstances as to justify a derivative claim. The nature of Mark Roberts new claim It is clear that the two firms of solicitors did not owe duties in the circumstances to Mark Roberts as a beneficiary under the will. It is equally clear that any claim by Mr Sainter as administrator is statute barred. But Mark Roberts wishes now to proceed on behalf of the estate and to take advantage of the fact that (as Lord Nicholls of Birkenhead put it in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378, 391) for the most part [professionals] will owe to the trustees a duty to exercise reasonable skill and care. When that is so, the rights flowing from that duty form part of the trust property. As such they can be enforced by the beneficiaries in a suitable case if the trustees are unable or unwilling to do so. Mark Roberts seeks to bring a derivative action in his own name on behalf of the estate against a third party. The action is a derivative action in which the beneficiary stands in the place of the administrator and sues in right of the estate, and does not enforce duties owed to him rather than to the administrator. It has often been said that a beneficiary can bring a derivative action only in special circumstances: Hayim v Citibank NA [1987] AC 730, to which it will be necessary to revert. The question on this appeal is whether Mark Roberts should be permitted to amend so as to put his claim as a derivative claim. That involves two further questions. The first question is whether the amendment can be made notwithstanding expiry of the limitation period in respect of his personal claim. The second question is whether, even if the expiry of the limitation period is not a bar to the necessary amendments, the claim is bound to fail because there are no special circumstances justifying a derivative action. The Limitation Act 1980 and the rules of court The old rule of practice was that an amendment would not be allowed if it would prejudice the rights of the opposite party as existing at the date of the amendment; and in particular, an amendment should not be allowed so as to allow a plaintiff to set up a cause of action which would otherwise be barred by the Statutes of Limitation: Weldon vs Neal (1887) 19 Q.B.D. 394, at 395, per Lord Esher MR. This principle applied to amendments consisting of joinder (or substitution) of parties: Mabro v Eagle, Star and British Dominions Insurance Co Ltd [1932] 1 KB 485; Davies v Elsby Brothers Ltd [1961] 1 WLR 170; Lucy v W T Henleys Telegraph Works Co Ltd [1970] 1 QB 393; Liff v Peasley [1980] 1 WLR 781. RSC Ord. 20, r 5 was added in 1964, and prior to the changes in the rules following the Limitation Act 1980, provided that the court could give leave to amend a writ or pleading in a number of cases, including an amendment to alter the capacity in which a party sued. Ord 20, r 5(4) provided: An amendment to alter the capacity in which a party sues (whether as plaintiff or as defendant by counterclaim) may be allowed under paragraph (2) if the capacity in which, if the amendment is made, the party will sue is one in which at the date of issue of the writ or the making of the counterclaim, as the case may be, he might have sued. Ord 20, r 5(2) provided that where an application to the court for leave to make such an amendment was made after any relevant period of limitation current at the date of the writ had expired the court might nevertheless grant leave if it thought it just to do so. Ord 20, r 5(5) also allowed the addition or substitution of a new cause of action if it arose out of the same or substantially the same facts as a cause of action in respect of which relief had already been claimed in the action. But the Court of Appeal decided that the fact that in certain cases under Ord 20, r 5 amendments were to be permitted although the statutory period had run did not mean that, in cases falling outside the rule changes, there was any relaxation of the principle in Weldon vs Neal: Braniff v Holland & Hannen and Cubitts (Southern) Ltd. [1969] 1 WLR 1533 and Brickfield Properties Ltd v Newton [1971] 1 WLR 862, not following Chatsworth Investments Ltd. vs Cussins (Contractors) Ltd [1969] 1 WLR 1, at 5, per Lord Denning MR. In 1977 the Law Reform Committee (chaired by Orr LJ and including, among others, Griffiths and Walton JJ, Mr T H Bingham QC and Mr E G Nugee QC, and Professor A G Guest) issued a Final Report on Limitation of Actions: Cmnd 6923. The Committee had been invited in 1971 to consider what changes to the law relating to limitation of actions was desirable. Part V of the Committees report was headed Procedure and dealt with questions arising when it was sought to alter the character or scope of an action after the limitation period had expired. After referring to the power of the court to correct misnomer of parties in the then RSC Order 20, r 5(3), the Committee referred (para 5.17) to what it described as not wholly dissimilar cases where the existing rule might cause injustice, where the plaintiff had made an error of law or procedure, the correction of which would not occasion anyone to be taken by surprise. For example where an equitable assignee of a debt sued the debtor without joining the assignor and the limitation period then expired, he could not amend his pleading so as to join the assignor: Hudson v Fernyhough (1890) 34 SJ 288. The Committee identified (para 5.20) these cases, among others, in which a new party should be capable of being added by way of amendment after the limitation period: (1) where the plaintiff was beneficially entitled in equity, and the person with the legal title was a necessary party to the action, for example, the equitable assignee of a chose in action, who could not sue without joining the legal assignor: Performing Right Society Ltd v London Theatre of Varieties Ltd [1924] AC 1; (2) the cestui que trust, who could not enforce a right of action against a stranger to the trust without joining the trustee: Harmer v Armstrong [1934] Ch 65; (3) where the plaintiff was a shareholder suing to enforce a right vested in the company and the company was a necessary party to the action: Spokes v Grosvenor and West End Railway Terminus Hotel Co Ltd [1897] 2 QB 124, 128; cf Wallersteiner v Moir (No 2) [1975] QB 373. The Committee pointed out (para 5.27) that the common factors in these examples were that (1) the plaintiffs action was not properly constituted unless the new party were joined; and (2) the plaintiff was not seeking any substantive relief against the new party. The Committee recommended (para 5.25) that the Rules Committee should be given power to cover by rule specific cases falling within a formula embodied in primary legislation. It rejected the solution of legislating for the specific cases. It accepted that the necessary formulation would not be easy, and it accepted that it had not been able to devise any entirely satisfactory formula. It summarised its conclusions (paras 46 48), so far as material, in this way: (1) No change was required in the rules which enabled a new cause of action to be added out of time; (2) a plaintiff should be able to amend pleadings out of time so as to sue in another capacity (including that of administrator) and the rule making powers should be extended for that purpose; (3) the rule making powers should be enlarged so as to confer power to enable parties to be added out of time, in specific cases if (a) the plaintiffs action was not properly constituted unless the new party were joined; and (b) the plaintiff was not seeking substantive relief against the new party, or if substantive relief was sought against the new party, joinder of the new party was necessary if the plaintiffs claim against the defendant was to succeed. The result of these recommendations (on which see Millett LJ in Yorkshire Regional Health Authority v Fairclough Building Ltd [1996] 1 WLR 210, 219) was section 35 of the Limitation Act 1980 and the consequent changes to the Rules of the Supreme Court. Limitation Act 1980, section 35 So far as material to this appeal, section 35 provides: 35. New claims in pending actions: rules of court. (1) For the purposes of this Act, any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced (a) in the case of a new claim made in or by way of third party proceedings, on the date on which those proceedings were commenced; and (b) in the case of any other new claim, on the same date as the original action. (2) In this section a new claim means any claim by way of set off or counterclaim, and any claim involving either (a) the addition or substitution of a new cause of action; or (b) the addition or substitution of a new party; (3) Except as provided by section 33 of this Act or by rules of court, neither the High Court nor any county court shall allow a new claim within subsection (1)(b) above, other than an original set off or counterclaim, to be made in the course of any action after the expiry of any time limit under this Act which would affect a new action to enforce that claim. (4) Rules of court may provide for allowing a new claim to which subsection (3) above applies to be made as there mentioned, but only if the conditions specified in subsection (5) below are satisfied, and subject to any further restrictions the rules may impose. (5) The conditions referred to in subsection (4) above are the following (a) in the case of a claim involving a new cause of action, if the new cause of action arises out of the same facts or substantially the same facts as are already in issue on any claim previously made in the original action; and (b) in the case of a claim involving a new party, if the addition or substitution of the new party is necessary for the determination of the original action. (6) The addition or substitution of a new party shall not be regarded for the purposes of subsection (5)(b) above as necessary for the determination of the original action unless either (a) the new party is substituted for a party whose name was given in any claim made in the original action in mistake for the new party's name; or (b) any claim already made in the original action cannot be maintained by or against an existing party unless the new party is joined or substituted as plaintiff or defendant in that action. (7) Subject to subsection (4) above, rules of court may provide for allowing a party to any action to claim relief in a new capacity in respect of a new cause of action notwithstanding that he had no title to make that claim at the date of the commencement of the action. This subsection shall not be taken as prejudicing the power of rules of court to provide for allowing a party to claim relief in a new capacity without adding or substituting a new cause of action. The structure of section 35 is such that only sections 35(1) and 35(3) lay down binding rules, and the remainder of the section provides for rules of court to be made permitting amendments, subject to conditions, by way of new causes of action and new parties. Rules of court Rules of Supreme Court Following the Limitation Act 1980, RSC Ord 15, r 6 was amended in 1981 and immediately prior to the CPR provided, so far as material, as follows: (5) No person shall be added or substituted as a party after the expiry of any relevant period of limitation unless either (a) the relevant period was current at the date when proceedings were commenced and it is necessary for the determination of the action that the new party should be added, or substituted In this paragraph any relevant period of limitation means a time limit under the Limitation Act 1980 (6) the addition or substitution of a new party shall be treated as necessary for the purposes of paragraph (5)(a) if, and only if, the Court is satisfied that (a) the new party is a necessary party to the action in that property is vested in him at law or in equity and the plaintiffs claim in respect of an equitable interest in that property is liable to be defeated unless the new party is joined, or (d) the new party is a company in which the plaintiff is a shareholder and on whose behalf the plaintiff is suing to enforce a right vested in the company RSC Ord 20, r 5 was also amended in 1981, but the only relevant change was to permit amendment to a partys capacity not only to a capacity which the party had at the date of the commencement of the proceedings, but also to a change to a capacity which the party had since acquired. This gave effect to a recommendation of the Law Reform Committee, enacted as section 35(7), to deal with the anomaly that, where probate was granted to a person as executor, leave to amend to make a claim on behalf of the estate could be given because the title related back to the death, but where the plaintiff was subsequently granted letters of administration in such cases, the title related back to the date of the grant, which would have been after the issue of the writ. This had the effect of removing the grave injustice caused by such decisions as Ingall v Moran [1944] KB 160 (CA); Hilton v Sutton Steam Laundry [1946] KB 65 (CA); Burns v Campbell [1952] 1 KB 15; Finnegan v Cementation Co Ltd [1953] 1 QB 688 (CA). Civil Procedure Rules The Civil Procedure Rules were introduced in 2000 to replace the Rules of the Supreme Court. By CPR 17.4, as amended by rule 7 of the Civil Procedure (Amendment) Rules 2001 (SI 2001/256): (2) The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings. (4) The court may allow an amendment to alter the capacity in which a party claims if the new capacity is one which that party had when the proceedings started or has since acquired (Rule 19.5 specifies the circumstances in which the court may allow a new party to be added or substituted after the end of a relevant limitation period.) CPR 19.5, as amended by rule 8 of the Civil Procedure (Amendment) Rules 2001, provides so far as far as material as follows: (1) This rule applies to a change of parties after the end of a period of limitation under (a) the Limitation Act 1980; (b) the Foreign Limitation Periods Act 1984; or (c) any other enactment which allows such a change, or under which such a change is allowed. (2) The court may add or substitute a party only if (a) the relevant limitation period was current when the proceedings were started; and (b) the addition or substitution is necessary. (3) The addition or substitution of a party is necessary only if the court is satisfied that (a) the new party is to be substituted for a party who was named in the claim form in mistake for the new party; (b) the claim cannot properly be carried on by or against the original party unless the new party is added or substituted as claimant or defendant; or (c) the original party has died or had a bankruptcy order made against him and his interest or liability has passed to the new party. (Rule 17.4 deals with other changes after the end of a relevant limitation period). In 2001 the Law Commission, Limitation of Actions (Law Com 270) recommended that the addition of new claims made between parties to existing proceedings after the expiry of the limitation period relevant to the new claim should be permitted where (1) the new claim arises out of the conduct, transaction or events on which a claim in the existing proceedings is based; and (2) the existing proceedings are commenced within the relevant limitation period: para 5.11 and draft Bill, clause 25(2). The Law Commission recommended that there should be no reform in relation to the addition of new claims to existing proceedings where the new claim involved the addition or substitution of new parties: para 5.19 and draft Bill, clause 25(3). The draft Bill contained among the conditions for amendment to add or substitute new parties, that (c) the addition or substitution is necessary for the determination of a civil claim previously made in the proceedings (the existing claim), and (d) the existing claim was not made after the end of any applicable limitation period In November 2009 the Government announced that it would not be introducing legislation to implement the Law Commissions proposals. Effect of the Limitation Act 1980 and the CPR The effect of the provisions, so far as relevant on this appeal, in the Limitation Act 1980 and the CPR can be summarised in this way: (1) A new claim means a claim involving either (a) the addition or substitution of a new cause of action; or (b) the addition or substitution of a new party: section 35(2). (2) Any new claim made in the course of an action is deemed to have been commenced on the same date as the original action: section 35(1). (3) No such new claim may be made after the expiry of any applicable limitation period, except as provided by rules of court: section 35(3). (4) Rules of court may provide for allowing a new claim, but only (a) in the case of a claim involving a new cause of action, if the new cause of action arises out of the same facts or substantially the same facts as are already in issue on any claim previously made in the original action; and (b) in the case of a claim involving a new party, if the addition or substitution of the new party is necessary for the determination of the original action (i.e. any claim made in the original action cannot be maintained by an existing party unless the new party is joined as claimant or defendant): section 35(4), (5), (6). The relevant rules of court are in CPR 17.4 and 19.5. (5) CPR 17.4(2) has the effect that a new claim may be added by amendment but only if the new claim arises out of the same facts or substantially the same facts as the original claim. (6) CPR 19.5(2), (3) have the effect (among others) that a new party may be added only if the limitation period was current when the proceedings were started, and the addition of that party is necessary in the sense that the claim cannot properly be carried on by the original party unless the new party is added. (7) Rules of court may allow a party to claim relief in a new capacity: section 35(7). The relevant rule is CPR 17.4(4), by which the court may allow an amendment to alter the capacity in which a party claims if the new capacity is one which that party had when the proceedings started, or has since acquired. The original claim for the purposes of these proceedings was the personal claim by Mark Roberts. The relevant limitation period for his claim was current when he started his proceedings in 2002. Mr Sainters claim as administrator is statute barred. Mr Sainter could not apply to be joined as a claimant because his joinder is not necessary for the purposes of section 35(6)(b) as put into effect by CPR 19.5(3)(b). That is because his joinder is not necessary for the purposes of the original action, namely Mark Roberts personal claim. But an amendment to treat Mark Roberts claim as a representative claim rather than a personal claim would be an amendment to alter the capacity in which he claims: Haq v Singh [2001] EWCA Civ 957, [2001] 1 WLR 1594, at [19], per Arden LJ. CPR 17.4(4) permits such a change to be made if the new capacity is one which he had when the proceedings started or has since acquired. Mark Roberts has throughout had the capacity of beneficiary. It is not necessary to decide whether the representative capacity is one which he has had in theory at all times, since there is no doubt that the court has power to allow the amendment to alter the capacity in which he sues. The representative claim is a claim involving a new cause of action, since the capacity in which Mark Roberts makes the claim is an essential part of the claim: Oates v Consolidated Capital Services Pty Ltd [2009] NSWCA 183, at [105]. The court has power to allow the amendment because the new representative claim arises out of the same facts or substantially the same facts as the existing claim: CPR 17.4(2). Consequently it is not necessary to burden this discussion with a sterile analysis of the learning on what constitutes a cause of action. It is sufficient to quote what Robert Walker LJ said in Smith v Henniker Major & Co (A firm) [2003] Ch 182 (CA) at [96]. He referred to the classic definitions by Brett J in Cooke v Gill (1873) LR 8 CP 107, 116 as every fact which is material to be proved to entitle the plaintiff to succeed, and by Diplock LJ in Letang v Cooper [1965] 1 QB 232, 242 243 as simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person, and went on: in identifying a new cause of action the bare minimum of essential facts abstracted from the original pleading is to be compared with the minimum as it would be constituted under the amended pleading. But in applying section 35(5)(a) the court is concerned on a much less abstract level with all the evidence likely to be adduced at trial: see Goode v Martin [2002] 1 WLR 1828, 1838, approving Hobhouse LJs observation in Lloyds Bank plc v Rogers The Times, 24 March 1997;Court of Appeal (Civil Division) Transcript No 1904 of 1996: The policy of the section is that, if factual issues are in any event going to be litigated between the parties, the parties should be able to rely upon any cause of action which substantially arises from those facts. Joinder of the administrator The next question is whether Mark Roberts needs to join the administrator as a defendant. If he does need to join the administrator, there would be a new claim for the purposes of the Limitation Act 1980 because a new claim means any claim involving the addition of a new party (section 35(2)(b)). Rules of court may allow such an addition after the limitation period for the original claim has expired, and the condition in CPR 19.5(2)(a) is fulfilled, namely that the relevant limitation period was current when the proceedings were started (i.e. by Mark Roberts in his personal capacity). But if the administrator has to be added at the same time as Mark Roberts changes the capacity in which he sues, Mark Roberts must satisfy the requirements of CPR 19.5(2)(b) and CPR 19.5(3)(b) (giving effect to section 35(5)(b) and 6(b)), namely that the addition of the administrator is necessary in the sense that the claim cannot properly be carried on by the original party unless the new party is added . But if it were necessary to join the administrator in order for the representative action to be carried on, Mark Roberts would not be able to satisfy those requirements because he would not be able to show that the original claim could not properly be carried on by Mark Roberts in his personal capacity against the solicitors unless the administrator were added as a party. That is because there is no possible basis for any suggestion that the administrator would be a necessary or proper party to the personal claim. Consequently, the only way in which the action could proceed would be (a) if the joinder of the administrator were not necessary at all; or (b) if it were not necessary at the time Mark Roberts changes the capacity in which he sues, but could be done at a later stage. The latter point arises because it is suggested on behalf of Mark Roberts that the combined effect of section 35(1)(b), section 35(6)(b) and CPR 19.5(3)(b) is that (a) the change in Mark Roberts capacity is deemed to take effect as at the date of the original proceedings; (b) the joinder can be effected after the change in Mark Roberts capacity, and would then be necessary for the continuance of what would then be regarded as the original claim, namely the claim in a representative capacity. The trustee as a necessary party and the special circumstances rule To avoid repetition, it is convenient to treat together two aspects of the leading authorities. One is the requirement for special circumstances as a condition of beneficiaries being entitled to sue on behalf of the estate. The second is the light they throw on whether the administrator is a necessary party to a claim by a beneficiary to recover property from a third party. The cases go back to the eighteenth century, and many of them were reviewed in Hayim v Citibank NA [1987] AC 730 (PC). The special circumstances which were identified in the earliest authorities as justifying a beneficiarys action were fraud on the part of the trustee, or collusion between the trustee and the third party, or the insolvency of the trustee, but it has always been clear that these are merely examples of special circumstances, and that the underlying question is whether the circumstances are sufficiently special to make it just for the beneficiary to have the remedy: In re Field, decd [1971] 1 WLR 555, 560 561, per Goff J; cf. Barker v Birch (1847) 1 De G & Sm 376, 63 ER 1112; Daniells Chancery Practice, 7th ed 1901, p176. In all of the early cases the trustees were co defendants with the third party debtor. In Bickley v Dorrington (1737) West T Hard 169, 25 ER 877 the bill was brought by creditors, and by one of the residuary legatees of the testator, against his executors, the other residuary legatee, and the former partner of the testator to recover from the former partner money owing to the estate. Lord Hardwicke LC said that the bill was totally improper as against the debtor, and inconsistent with the principles of law and the rules of the court: No action or suit can be brought against a debtor to the estate but by the executor or personal representative of the testator. The whole management of the estate belongs to him. The right of it is vested in him, and cannot be taken from him by creditors or legatees. If he release a demand and is solvent, it is a devastavit in him, and he is personally answerable for the sum released. In cases of collusion or insolvency it may be proper to come here for satisfaction against the debtor; but there must always be some special case (pp 171, 879) Sixty five years later in Alsager v Rowley (1802) 6 Ves Jun 748, 31 ER 1289, Lord Eldon LC said (at 749 750): The established rule of the Court is certainly that in ordinary cases a debtor to the estate cannot be made a party to a bill against the executor: but there must be, as the cases express it, collusion or insolvency. That very principle admits, that, if there is solvency, the executor must pay: if there is collusion, both are liable. Lord Hardwicke there in the judgment [Beckley v Dorrington] does not state any thing as to negligence. That is in the argument by the Counsel; and in Newland vs Champion (1 Ves. sen. 105) delay in the representative is also stated as one of the special cases, as well as collusion: but no notice is taken of the former in the judgment. If the general principle will not allow you to bring a bill against both the executor and a debtor in the given case, the same principle will apply to the case, where you bring a bill against the executor and a creditor improperly paid by the executor: that is, that, if there is no collusion, or special case, if the executor is not insolvent, he stands the middle man, responsible to the residuary legatee for the property, misapplied by paying a man as a creditor, who was not a creditor, as in the other case for the property outstanding in a debtor. The following three cases involve claims by legatees who were concerned that executors were not properly pursuing the testators partners for an account of partnership dealings. In each case the executors were defendants. In Bowsher v Watkins (1830) 1 Russ & Myl 277, 39 ER 107, residuary legatees brought suit against executors and a surviving partner of the testator for an account. In answer to the argument that there were no special circumstances justifying the action by legatees, Sir John Leach MR held that collusion between the executor and the partner was not an essential condition. In Davies v Davies (1837) 2 Keen 534, 48 ER 733, a bill was filed by residuary legatees against the executor and the surviving partner of the testator for an account of partnership transactions. Lord Langdale MR held that, in the absence of a charge of fraud or collusion, there were no special circumstances justifying the legatees claim. In Travis v Milne (1851) 9 Hare 141, 68 ER 449, a similar case, Turner V C held that a suit by parties beneficially interested in the estate of a deceased partner could not be maintained against both his executors and surviving partners, in the absence of special circumstances; but collusion was not the only ground for such a suit; and the suit might be maintained where the relation between the executors and surviving partners was such as to present a substantial impediment to the prosecution by the executors of the rights of the parties interested in the estate as against such partners. Yeatman v Yeatman (1877) 7 ChD 210 was another case involving a partnership. The executors were named defendants. It was an action by a residuary legatee against her mother in laws executors and another member of the family, who it was alleged, had failed to account for partnership monies to the mother in law. A mere refusal by a personal representative to sue for recovery of a debt owed to the estate would not by itself suffice but there must be additional circumstances, such as a case where the trustee refused to sue and the court was satisfied that it would have given liberty to the trustee to bring proceedings even though there was no certainty that the proceedings would be successful, then it would be a proper case to allow a party to sue in his own name (at 216, per Hall V C). In In re Field, decd [1971] 1 WLR 555 Mr Fields widow obtained letters of administration. His former wife (who was not a beneficiary) obtained an order for maintenance to be paid out of the estate, and independent administrators were appointed. The former wife sued her former husbands employers and the administrators in her own name for the recovery of capital sums on insurance policies which she claimed the employers had wrongly paid to the widow. As Goff J said (at 558): She does not and, indeed, cannot ask for payment to herself, but she asks for payment to the administrators who are added as defendants for the purpose of regularising the proceedings and, by her writ and statement of claim, she expressly disclaims any relief as against them. It was held that there were special circumstances entitling the former wife to make the claim, particularly because there were no other beneficiaries and the alleged asset had been paid to the widow on the footing that it was not part of the estate. Consequently justice requires that the plaintiff, who is the only other person interested, should be allowed to have this question properly tried by the court (at 561). See also Bradstock Trustee Services Ltd v Nabarro Nathanson [1995] 1 WLR 1405, 1412 1413, on the relevance of legal aid for beneficiaries. In Hayim v Citibank NA [1987] AC 730 the plaintiffs were the testators sons, who were beneficiaries under his American will. He also executed a Hong Kong will under which the residue of his property outside the United States was to be held on trust for sale on the trusts of the American will. The terms of the trust enabled the trustee of the American will to give directions to the trustee of the Hong Kong will in respect of the retention of a house in Hong Kong in the interests of the elderly residents of the house. The plaintiffs began proceedings in Hong Kong against the first defendant, the trustee of the American will, and the second defendant, the trustee of the Hong Kong will, for an order that the house be sold and for damages to be awarded against the second defendant for breach of the trusts of the Hong Kong will by the delay of the second defendant in selling the house. No relief was sought against the first defendant. It was held that there were no special circumstances entitling the plaintiffs to bring proceedings directly against the second defendant, but that in any event no breach of the trusts of the Hong Kong will had been committed by the second defendant in implementing the lawful instructions of the first defendant. Lord Templeman, giving the advice of the Privy Council, said (at 747): when a trustee commits a breach of trust or is involved in a conflict of interest and duty or in other exceptional circumstances a beneficiary may be allowed to sue a third party in the place of the trustee. But a beneficiary allowed to take proceedings cannot be in a better position than a trustee carrying out his duties in a proper manner. and (at 748) (after citing, among other cases, Travis v Milne; Yeatman v Yeatman; and In re Field, decd) These authorities demonstrate that a beneficiary has no cause of action against a third party save in special circumstances which embrace a failure, excusable or inexcusable, by the trustees in the performance of the duty owed by the trustees to the beneficiary to protect the trust estate or to protect the interests of the beneficiary in the trust estate. The law in Scotland is similar: Wilson and Duncan, Trusts, Trustees and Executors, 2nd ed 1995, para 10 13, who give an example of the possibility of an action by a beneficiary for recovery of a sum paid by trustees to a third party in error, provided that the action is brought against the trustees as well as the third party. The authority cited for this proposition is Armour v Glasgow Royal Infirmary 1909 SC 916, where the Lord Ordinary, Lord Skerrington said (at 920) that in the ordinary case the action could be brought only at the instance of the trustees. But the testamentary trustees had been called as defenders, and concurred with the Infirmary in maintaining that the money was properly paid. Consequently in those circumstances the pursuers have a good and sufficient title to maintain this action to the effect of demanding that the money shall be repaid to the trustees. It is only with the greatest hesitation that I would differ from Lord Hope on the content of Scots law, but in my judgment neither of the cases which he cites lends support to the view that there is a qualification to the rule that the trustee must be joined. In Morrison v Morrisons Executors, 1912 SC 892, 893, Lord Skerrington went on to say after the passage quoted by Lord Hope: A decree in such an action would be res judicata, provided always that the whole trustees and beneficiaries had been called as defenders. In the second case mentioned by Lord Hope, Rae v Meek (1889) 14 App Cas 558, the beneficiaries under a settlement made pursuant to a marriage contract sued a trustee for having lost trust money which had been lent on the security of unfinished houses in a building speculation. The trustee was held liable to restore the trust fund. The beneficiaries also sued the trustees solicitor, who had advised the trustee that there was no objection to the investment. The passage quoted by Lord Hope in Lord Herschells speech (at 569), which deals with the liability of the solicitor, is simply re stating the rule that in the exceptional case of a failure by trustees to act, the beneficiaries might compel them to do so, or even enforce the right themselves. He went on to say that no such question (that is, of a failure by trustees to act) was raised by the averments in relation to the claim in that case by the beneficiaries against the solicitor, who (in any event) was not liable because he had not been retained by the trustees to advise on the sufficiency of the security. But the trustees were parties to the action, and the decision is not authority for any suggestion that the beneficiary can assert the claim without joining the trustee. So also the law in the United States has the same result, although it is put somewhat differently. See Restatement (Second), Trusts, 1959, section 282(2); and Scott and Ascher, Trusts, 5th ed 1995, chapter 28, section 28.1, where it is put in this way: It is the trustee rather than the beneficiary who is entitled to maintain actions against third parties who commit torts with respect to the trust property or fail to pay debts held in trust. If the trustee improperly fails to bring such an action, the beneficiaries can compel the trustee by a suit in equity to do so, and, in order to settle the whole matter in a single suit, they can join the third party as a co defendant. That joinder of the trustees in a beneficiaries derivative action is required is supported by the analogy of shareholders derivative actions, where the wrongdoers are themselves in control of the company, and the aggrieved minority may bring a minority shareholders action. In Nurcombe v Nurcombe [1985] 1 WLR 370 (CA) Browne Wilkinson LJ said (at 378) that a minority shareholders action, where the courts of equity permitted a person interested to bring an action to enforce the companys claim, was analogous to that in which equity permitted a beneficiary under a trust to sue as plaintiff to enforce a legal right vested in trustees, which right the trustees will not themselves enforce, the trustees being joined as defendants. A derivative action is brought in representative form, and the company is joined as a defendant in order for it to be bound by any judgment and to receive the fruits (if any) of the judgment, and because the action has not been authorised by its board or general meeting: Spokes v Grosvenor and West End Railway Terminus Hotel Co Ltd [1897] 2 QB 124, which is the leading authority on the joinder of the company in derivative actions. A L Smith LJ said (at 126): That in the circumstances of this case the company are necessary parties to the suit I do not doubt, for without the company being made a party to the action it could not proceed. Chitty LJ said (at 128 129): To such an action as this the company are necessary defendants. The reason is obvious: the wrong alleged is done to the company, and the company must be party to the suit in order to be bound by the result of the action and to receive the money recovered in the action. If the company were not bound they could bring a fresh action for the same cause if the action failed, and there were subsequently a change in the board of directors and in the voting power. Obviously in such action as this is, no specific relief is asked against the company; and obviously, too, what is recovered cannot be paid to the plaintiff representing the minority, but must go into the coffers of the company. It was argued for the appellants that the company were made a party for the purpose of discovery only, and authorities were cited to shew that when no relief is asked against a party he cannot or ought not to be compelled to make discovery. But this argument and these authorities have no bearing on the present case, where, as already shewn, the action cannot proceed in the absence of the defendant company, and the defendant company are interested in and will be bound by the results. Since Part 11 of the Companies Act 2006 came into force in 2007 shareholders derivative claims have been put on a statutory basis. CPR 19.9 is headed Derivative Claims how started. It does not apply to derivative claims of the type in issue on this appeal, but it illustrates the general principle that in derivative actions the entity on whose behalf the claim is brought is a necessary party to the derivative claim. CPR 19.9 applies in terms only to derivative claims by members of companies, other bodies corporate, and trade unions, and provides in CPR 19.9(3) that: The company, body corporate or trade union for the benefit of which a remedy is sought must be made a defendant to the claim. The expression derivative action in the context of shareholders actions has been used in the United States since the nineteenth century and was first used in that context in England by Lord Denning MR in Wallersteiner v Moir (No 2) [1975] QB 373, 390 et seq. In the United States it is equally established that the corporation is a necessary party in any shareholder derivative action, although (as in a derivative claims by beneficiary) it is sometimes analysed as two claims, one against the company for failure to take action and the other being the claim by the company against the wrongdoer: Nurcombe v Nurcombe [1985] 1 WLR 370, 378; Konamaneni v Rolls Royce Industrial Power (India) Ltd [2002] 1 WLR 1269, at [50]. In 1873, in Davenport v Dows, 85 U.S 626 (1873) Justice Davis, delivering the opinion of the Supreme Court, said, at p 627: These rights the individual shareholder is allowed to assert in behalf of himself and associates, because the directors of the corporation decline to take the proper steps to assert them. Manifestly the proceedings for this purpose should be so conducted that any decree which shall be made on the merits shall conclude the corporation. This can only be done by making the corporation a party defendant. The relief asked is on behalf of the corporation, not the individual shareholder, and if it be granted, the complainant derives only an incidental benefit from it. It would be wrong, in case the shareholder were unsuccessful, to allow the corporation to renew the litigation in another suit involving precisely the same subject matter. To avoid such a result, a court of equity will not take cognizance of a bill brought to settle a question in which the corporation is the essential party in interest unless it is made a party to the litigation. Almost a hundred years later, in Ross v Bernhard, 396 US 531 (1970) at 538, the Supreme Court said: The corporation is a necessary party to the action; without it the case cannot proceed. Although named a defendant, it is the real party in interest, the stockholder being at best the nominal plaintiff. The proceeds of the action belong to the corporation and it is bound by the result of the suit. Another reason for joinder has been said to be that the decree must protect the directors against any further suit by the corporation, and this will not be true unless it be a party to the suit: Philipbar v Derby, 85 F 2d 27 (2d Cir 1936) at 30. Consequently it has been the consistent practice (noted in Annual Practice 1887 8, p 223; Harmer v Armstrong [1934] Ch 65, 93, per Romer LJ) for almost 300 years that, where a beneficiary brings an action in his own name to recover trust property, the trustees should be joined as defendants. Daniells Chancery Practice, 7thed 1901, p176 states: .such an action cannot, however, be maintained without the personal representative being a party. To put it differently, it would be procedurally improper to continue without the addition which is proposed: McGee, Limitation Periods, 5th ed 2006, para 23.025. The purpose of joinder has been said to ensure that they are bound by any judgment and to avoid the risk of multiplicity of actions: Lewin, Trusts, 18th ed 2008, para 43 05. But joinder also has a substantive basis, since the beneficiary has no personal right to sue, and is suing on behalf of the estate, or more accurately, the trustee. The conclusion that in a beneficiarys derivative action the trustee must be a party is not undermined by those cases in which it has been held, or assumed, that an action by an equitable assignee of property (such as a debt, or intellectual property) can proceed, or is properly constituted, without the joinder of the assignor at the outset of proceedings. The starting point is that if an equitable assignee sues a third party, the assignor must be joined as a defendant: E M Bowdens Patents Syndicate Ltd v Herbert Smith & Co. [1904] 2 Ch 86, 91 (Warrington J); William Brandt's Sons & Co. vs Dunlop Rubber Co. Ltd. [1905] AC 454, 462 (Lord Macnaghten); Performing Right Society, Ltd. vs London Theatre of Varieties Ltd [1924] AC 1, 13 14 (Viscount Cave LC), 19 20 (Viscount Finlay), 29 (Lord Sumner); Vandepitte vs Preferred Accident Insurance Corporation of New York [1933] AC 70, 79 (Lord Wright); Harmer v Armstrong [1934] Ch. 65, 82 (Lord Hanworth MR). But it is not an invariable rule: Performing Right Society Ltd v London Theatre of Varieties Ltd [1924] AC 1, 14 (there may be special cases where it will not be enforced per Viscount Cave LC). In that decision it was held that an equitable assignee may obtain interlocutory relief but was not entitled to obtain a final injunction without joining the legal owners. Viscount Cave LC said (at 14): That an equitable owner may commence proceedings alone, and may obtain interim protection in the form of an interlocutory injunction, is not in doubt; but it was always the rule of the Court of Chancery, and is, I think, the rule of the Supreme Court, that, in general, when a plaintiff has only an equitable right in the thing demanded, the person having the legal right to demand it must in due course be made a party to the action Further, under Order XVI., r. 11, no action can now be defeated by reason of the misjoinder or non joinder of any party; but this does not mean that judgment can be obtained in the absence of a necessary party to the action, and the rule is satisfied by allowing parties to be added at any stage of a case. Subject to these observations, I think that the general rule is still operative William Brandt's Sons & Co. v Dunlop Rubber Co. Ltd. [1905] AC 454 was a case in which an assignee was allowed to proceed to judgment without joining the assignor. That was because the whole focus of the litigation was on the question whether instructions given by the banks customer to purchasers of rubber to pay its bank direct amounted to an equitable assignment of debts, so that the bank could sue for their recovery. The bank sued the purchasers directly without joining its customer, the assignor. The fact that the assignor was not a party seems to have been overlooked until the House of Lords held that there had been an equitable assignment. Lord Macnaghten said (at 462): Strictly speaking, [the sellers], or their trustee in bankruptcy, should have been brought before the Court. But no action is now dismissed for want of parties, and the trustee in bankruptcy had really no interest in the matter. At your Lordships bar the Dunlops disclaimed any wish to have him present, and in both Courts below they claimed to retain for their own use any balance that might remain after satisfying Brandts. Lord James said (at 464): The defect in the parties to the suit can be remedied. In more modern times it has been held that, although the practice was to join the assignor, the requirement is a procedural one, the absence of which can be cured. The assignor must be joined before a final judgment can be obtained by the assignee, but the action is validly constituted without joinder, so that if the assignee sues without joining the assignor, the action is in time for the purposes of limitation: Central Insurance Co Ltd v Seacalf Shipping Corpn (The Aiolos) [1983] 2 Lloyds Rep 25, 34, per Oliver LJ; Weddell v JA Pearce & Major [1988] Ch 26, 40, per Scott J; and cf Robinson v Unicos Property Corpn Ltd [1962] 1 WLR 520, 525 526, per Holroyd Pearce and Harman LJJ; Three Rivers District Council v Governor and Company of the Bank of England [1996] QB 292, 309, 313, per Peter Gibson LJ. For criticism see Tolhurst, Equitable Assignment of Legal Rights: A Resolution to a Conundrum (2002) 118 LQR 98, at 111 116. What distinguishes these cases from the present one is that in the case of an equitable assignment the assignee is the true owner and the assignor is a bare trustee. I agree with Lord Walker that there is no real analogy between an equitable assignee and a beneficiary interested in an unadministered estate. I would not rule out the possibility that there may be circumstances in which justice would require that joinder of the administrator be dispensed with. But the mere fact that there were special circumstances justifying an action by the beneficiary, or the fact that non joinder would defeat a limitation defence, would not be sufficient. It follows that the limitation problem cannot be overcome by amendments in separate stages so as to procure the result that the addition of the administrator would be necessary for the determination of the original action for the purposes of section 35(5)(b). The argument for amendments in separate stages is this. First, there would be an amendment to change the capacity in which Mark Roberts sues from his personal capacity to a representative capacity under CPR 17.4(4). Second, this would have the effect that the new claim in the representative capacity is deemed to commence on the same date as the original action: section 35(1)(b); section 35(2)(a). Third, the addition of the administrator would be necessary because the claim in the original action (i.e. the back dated representative claim) cannot be maintained against the solicitors unless the administrator is joined: section 36(5)(b); section 36(6)(b). This procedural device cannot overcome the limitation problem, since it is plain that, other than in the most exceptional circumstances such as existed in William Brandt's Sons & Co. v Dunlop Rubber Co. Ltd., even in the case of an equitable assignment the assignee cannot proceed to judgment without joining the assignor. It would be an abuse of process for the amendments to be made in separate stages. As Arden LJ said (at [36]), it would be contrary to principle for the court to grant permission to amend the claim merely to reflect a change of capacity which would not enable Mark Roberts to proceed to judgment. But, in any event, in a representative action, the administrator must be joined at the outset. The result is that the Court of Appeal was right to conclude that this was not a case where permission to amend to plead the derivative claim should be given. Special circumstances Consequently, the question whether the judge was right to decide that in any event there were no special circumstances justifying the derivative claim (on which the Court of Appeal was divided) does not arise. It can therefore be dealt with shortly. The judge set out the relevant circumstances as follows: (1) When Mr Sainter was appointed as administrator in 2000, he was still in time to bring any claim which the estate was able in law to bring against the solicitors; (2) at the present time, a claim by the estate against the solicitors is statute barred; (3) Mr Sainter was appointed by the court as administrator on the application of Mark Roberts; (4) Mark Roberts did not apply for himself to be appointed as an administrator; (5) Mark Roberts did not procure by way of an assignment or by way of an assent, the vesting of the estates cause of action against the solicitors into himself before the limitation period ran out; (6) if Mark Roberts procured the vesting of the estates cause of action in himself at the present time then he would not be able to assert that cause of action, by reason of limitation; (7) there was no reason to think that Mr Sainter would not have been prepared to vest the estate's cause of action in Mark Roberts; (8) there was no basis for any allegation of any breach of trust against Mr Sainter; (9) there was no conflict of duty or interest involving Mr Sainter; (10) Mr Sainters decision not to sue the solicitors had not been said to be open to any criticism; (11) if John Roberts had remained the administrator then there might at that time have been special circumstances arising out of the allegations being made as to the involvement of John Roberts in the matters complained of; (12) any special circumstances which existed during the time that John Roberts was administrator ceased to exist when Mr Sainter became administrator in October 2000; (13) Mark Roberts was not the sole beneficiary; (14) the Court had no specific evidence as to the attitude of Mrs Roberts sister or the Inland Revenue; (15) the proceedings against the solicitors were far from straightforward, although the judge did not base his decision on any assessment of the precise prospects of success in those proceedings; (16) in the absence of argument on the point, he left out of account the question whether Mr Sainter as administrator might be liable to pay the costs if a derivative action were permitted and proceeded and failed; (17) Mark Roberts had legal services funding to bring the present proceedings and it might very well be the case that he had or would obtain legal services funding to bring a derivative claim; (18) the court had power under CPR 17.4 to give Mark Roberts permission to amend the present proceedings to add a derivative claim (if special circumstances existed) and thereby defeat a limitation defence. The judge took the view that, although the list of special circumstances was not closed and special circumstances had never been exhaustively defined, the circumstances as to legal services funding and limitation were of a different character from anything contemplated in the cases as to special circumstances. The circumstances in (17) and (18) were not special circumstances which would justify the court in permitting Mark Roberts to bring a derivative claim against the defendants. Arden LJ (with whom Patten J agreed) seems to have taken the view that the judge was wrong (among other reasons) because he had not given sufficient weight to the fact that the derivative claim would enable an asset to be realised, which otherwise could not be realised, and because Mark Roberts had legal aid the estate would not have to fund his costs. If the point had arisen for decision, I (in agreement with Pill LJ) would have taken the view that this was a case where the judge had a wide latitude in evaluating what were special circumstances, that he took all the relevant circumstances into account, and that he conducted the enquiry in a way with which an appellate court should not have interfered. I would therefore dismiss the appeal on the ground that the Court of Appeal was right to hold that the amendment to pursue a derivative claim was not permitted by the CPR after the expiry of the limitation period. LORD HOPE I agree with all my colleagues that, for the reasons that Pill LJ in the Court of Appeal and Lord Collins in this court have given, the judge at first instance was fully entitled to hold that the appellant has failed to show that there were special circumstances justifying the derivative claim which he seeks to bring at this late stage. Contrary to the views of the majority in the Court of Appeal, I would hold that it would not have been permissible for that court to interfere with his decision. I would dismiss the appeal on this ground because, like Lord Clarke, I would prefer not to reach a final conclusion on the question whether, if special circumstances had been made out, the court would have had power to give the appellant permission to amend to introduce the derivative claim. I am not convinced that the rule that the administrator must be joined is quite as absolute as Lord Collins indicates in his judgment. He has referred in para 54 to the law of Scotland as explained in Wilson and Duncan, Trusts, Trustees and Executors, 2nd ed (1995), para 10 13. It is stated in that paragraph that if the trustees refuse to sue to recover a debt due to the trust estate, they can be forced to lend their names to the beneficiaries to enable them to raise the action: Blair v Stirling (1894) 1 SLT 599; Browns Trustees v Brown (1888) 15 R 581. There is no doubt that this is the ordinary rule. As Mackenzie Stuart, The Law of Trusts (1932), p 210, explains, if the beneficiaries insist on action being taken, the trustees must lend their name and authority to the beneficiaries in order that they may have a formal title to sue. This explanation supports the view that Lord Collins has expressed in para 62 of his judgment that joinder has a substantive basis, as the beneficiary has no personal right to sue for the recovery of trust property. This is not, as Scots law would see it too, simply a matter of procedure. How Scots law would see the procedural issue is, as Lord Rodger says, not free from difficulty. But there are some indications as to how it deals with the question which is of real interest in this case, which is whether proceedings can be raised without joining the trustees at the outset. In Morrison v Morrisons Executrix 1912 SC 892, 893 the Lord Ordinary, Lord Skerrington, said that it was certainly logical that no one should be allowed to sue an action unless that right sought to be enforced had been duly transferred to him, and that any injustice that this rule of law might operate was obviated by the further rule that the person who has the beneficial interest may compel the person who has the formal title to lend his name on receiving security against expenses. But he went on to indicate that this was not an absolute rule: I am of opinion that where justice absolutely requires it, the action may, in spite of the legal technicalities, be allowed to proceed at the instance of the party who has the beneficial interest. He referred, in support of that proposition, to a passage in Lord Herschells speech in Rae v Meek (1889) 14 App Cas 558, 569, where he said: The alleged duty, if it existed at all, was to the trustees, and not to the beneficiaries. If there has been a breach of it, the trustees and not the beneficiaries are the parties to sue. There may be cases where, if trustees failed to call to account those who were under liability in respect of acts injurious to the trust estate, the beneficiaries might compel them to do so, or even enforce the right themselves. The last six words in this quotation from Lord Herschells speech may seem a rather slender foundation on which to qualify a rule based on a substantial point of principle. But I take them to indicate that it would be unwise to regard this rule as one which will always be enforced. Viscount Cave LCs observation in Performing Right Society Ltd v London Theatre of Varieties [1924] AC 1, 14 that there may be special cases where the rule that the person with the legal right must be joined will not be enforced provides further support for this approach. It is true, as Lord Collins points out, that in Morrison v Morrisons Executrix Lord Skerrington went on to point out that a decree in such an action would not be res judicata unless all the trustees and beneficiaries were called as defenders. Teulon v Seaton (1884) 12 R 971 is an example of such a case where the title of the beneficiary to sue a debtor to a trust was sustained, but the precaution had been taken of calling the trustees as defenders to the action at the outset. But two points should be noted about this qualification. First, it is for the party against whom the action has been brought to take this point, by a plea of all parties not called. It has never been suggested that the court can compel the pursuer to do this as a condition of raising his action. Second, this step can be taken at any time before extract of the final decree: Maclaren, Court of Session Practice (1916) p 478 479; Maxwell, The Practice of the Court of Session (1980), p 281. The procedure which Scots law uses to cure the absence of a personal right in the beneficiary is different from that which is under discussion in this case. But there is much common ground. The beneficiary has no personal right to sue. The requirement that the personal representative must be joined is more than just a matter of procedure. Yet the rule is not an absolute one. It may be departed from if this is necessary to avoid an injustice. An action which is raised on this basis is not to be regarded as bad from the outset, although the personal representative may have to be joined at a later stage. Like Lord Clarke, however, I think that the appellant would find it very hard to justify a departure from the rule in the circumstances of this case. LORD RODGER At the end of the hearing I was inclined to think that it might have been possible for the claimant to make the amendments in separate stages, as outlined by Lord Collins in para 70 of his judgment. But, having studied what he says, I am satisfied that this would really be an artificial device: it would be to permit the claimant to do in two steps something which the statute and CPR do not permit him to do directly in one step. For the rest, I agree with Lord Walker and Lord Collins and would dismiss the appeal for the reasons which they give. I am reluctant to get drawn into a discussion of a tangential point of Scots law which was not argued and is not free from difficulty. Unquestionably, the general rule is that the beneficiary of a trust cannot sue a debtor of the trust: the relevant right of action is vested in the trustees and it is for them to enforce that right by raising an action, if appropriate. Where the trustees decline to take proceedings but the beneficiary insists, he can require them to assign the right of action or to permit him to use their name, provided that he gives them an indemnity for any liability for expenses. Lord Shand stated the position in absolute terms in Raes v Meek (1888) 15 R 1033, 1050 1051: If the trustees do not think fit to raise an action against the debtors for certain debts, having doubts it may be how far they may be certain of success, is it for a beneficiary or beneficiaries to do so in their own name? I think they have no such right. And I do not think this is a matter of mere form; it is, in my view, a matter of substance, because if the law were otherwise, then the debtors of trust estates, including amongst them law agents who may have been employed by the trustees, would be liable to actions at the instance of many different persons of anyone having a beneficial interest in the trust estate requiring them to pay the amount of their debts to the trustees. I think such actions are not competent, and that the only persons who can maintain actions to recover debts due to an executry or trust estate are the administrators of the estate, the trustees or the executors. A beneficiary could not discharge the liability for a claim due to the trustees and I do not see that a judgment in an action at the instance of a beneficiary could be res judicata in a question with the trustees. It appears to me that the law would get into extreme confusion if we were to sanction actions of this kind raised by a beneficiary against one with whom he had no contract. The beneficiary has his rights against the trustees, for the trustees are in direct relation with him because of their having undertaken a trust for his behoof. But if beneficiaries seek to enforce by action a claim of any kind against a debtor to the trust, it appears to me that they must either compel the trustees to raise the question directly in their own names, or get authority to use their names, or get an assignation to the claim, and thereupon sue as assignees. By contrast, Lord Young, in a characteristic, freewheeling judgment, argued, at pp 1058 1059, that, since everyone was in the action already, the beneficiaries should be able to proceed against the law agents. Against the background of Lord Shands careful statement of the position, the passage in Lord Herschells speech on the appeal quoted by Lord Hope at para 5 is, as Lord Hope says, a rather slender foundation on which to qualify a rule based on a substantial point of principle Indeed, one might wonder whether Lord Herschell had in mind anything more than the use of the trustees name or the taking of an assignation, which are the well recognised ways in which beneficiaries can take proceedings, if they wish to do so. Assuming, however, that a beneficiary can take proceedings against a debtor of the trust, the question is: can he do so without joining the trustees as defenders? In Morrison v Morrisons Executrix 1912 SC 892, 893, the Lord Ordinary (Skerrington) did indeed take Lord Herschells comment in Raes as support for the view that, where justice absolutely required it, an action against a debtor to a trust might be allowed to proceed at the instance of a beneficiary. Lord Skerrington also cited Teulon v Seaton (1885) 12 R 971 in which he had acted as counsel for the pursuer, who was the administratrix of the estate of her mother, a residuary legatee under a settlement. The First Division was prepared to allow her action against the trusters widower, who was alleged to have intromitted with the trust estate, to go ahead but only if she found caution for the expenses. She failed to do so and the defenders were assoilzied: (1885) 22 SLR 786. According to the report, 12 R 971, 973, in the Inner House the first defender directed his principal argument to the issue of forum non conveniens. On the other hand, Lord President Inglis appears to have focused on the fact that the pursuer was a married woman with no estate independent of her husband. Which is presumably why counsel ended up by successfully moving that the pursuer should be ordained to find caution for expenses. In Morrison Lord Skerrington recalled, 1912 SC 892, 894, that the pursuers title to sue had not been much considered in the Inner House in Teulon, but he treated the case, as it stands, as authority for the proposition that in exceptional cases, a beneficiary may sue a debtor to the trust. His comments were obiter, however, since he sustained the defenders plea of no title to sue, on the view that there was no reason why the pursuer should not bring his action in the ordinary way in the name of the executor. The First Division, including Lord President Dunedin, counsel for the first defender in Teulon, considered that Lord Skerringtons judgment was quite right and so found the pursuer liable in expenses because the progress of the action so far was quite useless: 1912 SC 892, 895. On condition that the pursuer first paid the expenses, the Division allowed him to amend to put the deceaseds executor in as pursuer on consignation of a sum to cover his liability in expenses. To summarise. In Raes, Teulon and Morrison the relevant trustees or executrix had actually been called as defenders and there were conclusions for payment to be made in their favour. In Raes and Morrison the pursuers were found to have no title to sue. So neither case can be regarded as any real authority on whether such an action could have been brought without joining the trustees or executrix as defenders. There is no sign of the point having been considered in Teulon. Since in these cases the trustees and executors were parties, there was no room for the defenders to rely on a plea of all parties not called. That plea would indeed have been appropriate if they were necessary parties. But the defenders were in any event relying on the more fundamental argument that the pursuers had no title to sue. Assume, however, that, in some situation, a beneficiary under a trust could raise an action in his own name against a debtor to the trust. If the position were that the trustees would have to be joined as defenders before there could be any effective decree, the position would appear to be much the same as in England. LORD WALKER This appeal is concerned with the amendment of pleadings after the expiry of the limitation period. The amendment of pleadings is part of the law of procedure and practice which has traditionally been regarded as the province of the Court of Appeal rather than the House of Lords (or, now, the Supreme Court). Interventions into this area by the highest appellate tribunal have not always received universal approbation (see for instance the trenchant remarks of Sir Henry Brooke in the last chapter of The Civil Procedure Rules Ten Years On ed. Dwyer (2009) pp 453 459). I am in full agreement with the judgment of Lord Collins. His judgment is so comprehensive that I am doubtful whether I can usefully add anything to it, particularly in the circumstances mentioned in the preceding paragraph. I shall add a few observations, but they are not intended to be in conflict with Lord Collins reasoning and conclusions. As the English legal system has developed statutes of limitation and procedural rules of court have both become more elaborate, but for a long time there was very little direct interaction between them. In relation to causes of action founded on tort or simple contract, statutes of limitation referred, as the Limitation Act 1980 still does, to the date on which a cause of action accrued. That was the date from which, in the normal case, the statutory period started to run. When a question arose of amending pleadings or adding a new party after the period had run, that was regarded as one factor (but usually a decisive factor) influencing the exercise of the Courts discretion whether or not to permit the amendment. The Court acted on the principle that it would not be just to deprive the defendant of a vested right of defence, and it often expressed its reasons in a very summary way: see for instance Doyle v Kaufman (1877) 3 QBD 7; Weldon v Neal (1887) 19 QBD 394; Hudson v Fernyhough (1889) 61 LT 722 (in the last case the amendment was allowed, but only on terms that it was not to prejudice the defendants defence). For much of the 20th century the same approach was taken. In the much cited case of Mabro v Eagle, Star and British Dominions Insurance Co Ltd [1932] 1 KB 485, 487 Scrutton LJ said: In my experience the Court has always refused to allow a party or a cause of action to be added where, if it were allowed, the defence of the Statute of Limitations would be defeated. The Court has never treated it as just to deprive a defendant of a legal defence. The same uncompromising rule of practice was applied even in cases (such as Ingall v Moran [1944] KB 160 and Finnegan v Cementation Co Ltd [1953] 1 QB 688) where the result was to shut out a meritorious claim, arising from a fatal accident, on what many would regard as a technicality. Indeed in the latter case Singleton LJ (at p699) described the point as a blot upon the administration of the law. These hard cases turned on the technical but long established distinction between the position of an executor (whose standing relates back to the deceaseds death, and is merely confirmed by probate) and an administrator (whose title depends on, and dates from, the grant of letters of administration). That distinction has ceased to be relevant, for present purposes, because of section 35(7) of the Limitation Act 1980 and CPR r17.4(4) (made pursuant to section 35(7)). Rule 17.4(4) (replacing the former RSC Order 20 r5(4)) provides: The Court may allow an amendment to alter the capacity in which a party claims if the new capacity is one which that party had when the proceedings started or has since acquired. Here it is the last four words (added to Order 20 r5(4) in 1981) that made the important change. Section 35 of the Limitation Act 1980 was enacted to give partial effect to the recommendations of the 21st Report (Final Report on Limitation of Actions) of the Law Reform Committee (Cmnd 6923), published in September 1977. It was the first statutory provision which (by the prohibitory terms of subsection (3), and subject to the important exceptions in subsections (4) to (8)) made it the Courts duty, and not merely a long standing rule of practice, to refuse amendments which subvert an established defence based on the Limitation Act. In cases where the amendment was not prohibited, the Court retained its traditional discretion whether or not to permit an amendment, that discretion being exercisable by reference to what was just (embodied, since 1999, in the overriding objective in CPR 1.1). Although section 35 of the Limitation Act 1980 was the first provision in a limitation statute which referred to rules of court, rules of court (made under section 99 of the Judicature Act 1925) had already started to acknowledge the existence of limitation statutes. As Millett LJ pointed out in Yorkshire Regional Health Authority v Fairclough Building Ltd [1996] 1 WLR 210, 216, RSC Order 20 r.5 (which apart from r.5(4) was in force long before section 35 came into force on 1 May 1981) gave a limited power to amend pleadings even after the expiration of the limitation period. As early as the mid 1960s questions had been raised as to whether Order 20 r5 was intra vires: Rodriguez v RJ Parker (Male) [1967] 1 QB 116 (Nield J); Mitchell v Harris Engineering Co Ltd [1967] 2 QB 703 (Court of Appeal). In the latter case Russell LJ said at p721, after referring to Mabro and some of the other earlier cases: But I take these cases to have been decided on grounds of settled practice, albeit attributable to the parties position vis a vis the Statute of Limitation. So far as I am aware, no judge said that it would be outside the jurisdiction of the Court to allow the amendment in question: and if it were thought to be a question of substantive law, this would surely have been the immediate and short answer to the application to amend. The attacks on the vires of Ord 20, r 5 were therefore rejected. Further insights into the history of these developments can be obtained from the judgments of Hobhouse J in Payabi v Armstel Shipping Corporation (The Jay Bola) [1992] QB 907, 922 928; Staughton LJ in Hancock Shipping Co Ltd v Kawasaki Heavy Industries Ltd [1992] 1 WLR 1025, 1028 1030; and Mance J in Industrie Chimiche Italia Centrale v Alexander G Tsavliris & Sons Maritime Co (The Choko Star) [1996] 1 WLR 774. I shall come back to some wider issues arising on section 35 and the Yorkshire Regional Health Authority case, but first I want to look more closely at the concept of capacity which is the focus of section 35(7) and CPR r17.4(4). In this context capacity is . being used in the sense of legal competence or status to bring or defend a claim. It is a competence that one may have in ones own right or on behalf of another person. In my judgment the same meaning of capacity must apply in CPR r17.4(4). This means that the alteration in capacity which is referred to is an alteration from a representative capacity, or personal capacity, to another representative capacity, or (in the case of a representative claim) to a personal capacity. That is how it was put by Arden LJ in Haq v Singh [2001] 1 WLR 1594, paras 18 19, and I agree that that is the right meaning in the context. The best example of a representative capacity is that of an executor or administrator of a deceased person, both offices being included in the compendious expression personal representative. When a personal representative takes proceedings as such, he is making a claim in a representative capacity, and his claim form must state what that capacity is (CPR r16.2 (3)). In the usual case where the deceaseds estate has not been fully administered, the personal representative conducts the proceedings for the benefit of all those interested, whether as creditors or as beneficiaries, in the assets of the estate. No residuary beneficiary has an equitable interest in the assets, only the right to have them properly administered. It is worth emphasising this elementary point because much of the argument addressed to the Court on behalf of the appellant was based on a supposed analogy between the relationship between a properly constituted personal representative and a residuary beneficiary, on the one hand, and an assignor and an equitable assignee, on the other hand. In my opinion that supposed analogy is misleading. As Holroyd Pearce LJ said in Robinson v Unicos Property Corporation Ltd [1962] 1 WLR 520, 526, where the plaintiffs wished to amend to plead an assignment: In no sense is the nature of the action altered. The plaintiffs still wish to claim that which they claimed in the beginning. Nor are they suing in a different capacity. Although they now wish to claim by virtue of their right as equitable assignees of the benefits of the principal to the original contract, they still sue in their personal capacity as principals through the same agency on the contract albeit through an assignment of the benefit to them. Where one person acquires property as a bare trustee or nominee for the benefit of one or more other persons who are absolutely entitled beneficially, the analogy with an equitable assignment is obviously closer (see for instance Harmer v Armstrong [1934] Ch 65). Just as there is no real analogy between an equitable assignee and a beneficiary interested in an unadministered residuary estate, so there is in my opinion no real analogy between the assignee of a pending cause of action and a residuary beneficiary or a minority shareholder who seeks (under the general law, and not under special statutory provisions) to bring a derivative action on behalf of a deceased persons estate, or a company. Where, after an action has been commenced, the cause of action is assigned or transmitted by operation of law, the assignment or transmission is not part of the cause of action. It makes it necessary to join the new claimant as a party and it needs to be recorded in the pleadings, but it does not amount to a new cause of action. Not so with a claimant who is not invested with the office of personal representative, but nevertheless seeks to bring a derivative action. As Campbell JA observed, writing for the Court of Appeal of New South Wales in Oates v Consolidated Capital Services Pty Ltd [2009] NSWCA 183, para 105: To summarise, a plaintiff who seeks to bring a derivative action under the general law must allege, in the initiating process, facts that show that he or she falls within a recognised exception to the prima facie rule that the proper plaintiff in an action in respect of a wrong alleged to be done to a corporation is the corporation itself. If the initiating process fails to make those allegations, it is liable to be struck out if the defendant chooses to apply to have it struck out . But there is no requirement under the general law relating to derivative actions for leave to be obtained before a plaintiff commences such an action. So while he need not obtain prior leave from the court, he must plead the special circumstances entitling him to the courts indulgence. Those special circumstances are part of his cause of action. In the ordinary case of a simple assignment or transmission of a cause of action after proceedings have been commenced, no question of limitation arises. That was the point that Millett LJ made forcefully in the Yorkshire Regional Health Authority case at p218 (see also Evans LJ at p221). The contrary argument, rejected by the Court of Appeal, was that RSC Order 15 r6 and Order 20 r5 formed a comprehensive code governing amendments after the expiration of the limitation period. I have no doubt that the Court of Appeal was right in that conclusion, although I am not sure that I agree with (or indeed understand) the refinements of Millett LJs reasoning at p218. Possibly the draftsman of the CPR felt some residual doubt about the position, because CPR 19.5 (3)(c) has added to the post expiry code a new provision which covers some (but not all) cases of transmission of a cause of action (or liability). That particular oddity is not remarked on in the Law Commissions 2001 paper Limitation of Actions (Law Com 270) which briefly discusses the topics of amending pleadings at paras 5.5 to 5.19. In the Yorkshire Regional Health Authority case Millett LJ and Evans LJ referred (at pp219 and 222 respectively) to the impressive and penetrating and scholarly judgment of Mance J in The Choko Star 1996 1 WLR 774, to which I have already referred briefly. The Choko Star seems to be the first case in which it was necessary (because of the wrong turning taken in Toprak Enerji Sanayi AS v Sale Tilney Technology plc [1994] 1 WLR 840) to consider whether the transmission of a pending cause of action had implications under the Limitation Act. Previously it seems to have been assumed that there were no such implications. Mance J analysed the position and spelled out why that assumption was correct. The case was concerned with universal succession after the merger of two companies under Article 2504 of the Italian Civil Code. After setting out RSC Order 15 r 7(2) and observing that it went back to rules in force before 1962, and indeed back to the rules in the First Schedule to the Judicature Act 1875 (38 & 39 Vict c77), Mance J said (at p. 782), The problem addressed by Ord 15, r 7 is different: during the course of the proceedings there has been some change affecting the identity of the correct claimant, which could not have been dealt with (or normally even predicted) when proceedings were originally issued. He then explained why there was no problem under the Limitation Act. In all such situations, of which death is only the most striking, it seems self evident that any existing proceedings, properly constituted within the limitation period, should be allowed to continue for or against the party to whom the relevant right or obligation has been transferred in law; and that this should be permitted whether the transfer occurs before or after the expiry of the limitation period. In the Yorkshire Regional Health Authority case the Court of Appeal approved and followed The Choko Star. Reference was made in argument to the well known definition of cause of action put forward by Diplock LJ in Letang v Cooper [1965] 1 QB 232, 242 243. I am conscious that this is (as Lord Collins says) a sterile topic but I venture to repeat something that I said in a dissenting judgment in Smith v Henniker Major & Co [2003] Ch 182, para 95 (just before the passage quoted by Lord Collins): I have to say that in the context of section 35 of the Limitation Act 1980 I am uneasy about the process of lifting either of these classic definitions out of the legal lexicon, as it were, and reading them into the language of section 35(5)(a). The notion of a factual situation which arises out of the same facts or substantially the same facts as another set of facts is not an easy one to grasp. The other classic definition referred to was that of Brett J in Cooke v Gill (1873) LR 8 CP 107, 116. As I have already noted, the most familiar provisions of the Limitation Act 1980, like their predecessors, set time limits by reference to the date on which the cause of action accrued. Its accrual is an event which occurs at a particular point of time. Moreover the Limitation Act in its amended form makes several references to particular varieties of tort which are commonly referred to as causes of action: conversion in sections 3 and 4, libel and malicious falsehood in section 4A, negligence and nuisance causing personal injury in sections 11 and 4 and negligence causing latent damage in sections 14A and 14B. It might therefore be more helpful, for practical purposes, to say that in the context of the Limitation Act cause of action means the factual basis of a claim for relief. Typically that factual basis falls into one or more familiar categories (such as negligence) and will consist of a sequence of essential facts (such as the facts establishing duty of care, breach of duty and damage) which must be pleaded and proved (if not admitted) in order to establish the cause of action. The cause of action accrues when the last building block of the essential facts is put into place. For reasons already mentioned the building blocks of the cause of action will not include its transmission (for instance on death or bankruptcy) after the proceedings have commenced, but they will (in the unusual case of a derivative action) include special circumstances relevant to the courts willingness to entertain the case. The unusual facts of this case are set out in the judgment of Lord Collins. They raise the issue whether, in a case where there is a properly constituted personal representative of Mrs Alice Margot Roberts, appointed on the application of Mr Mark Roberts himself, there are special circumstances justifying the commencement and conduct of derivative proceedings by Mr Mark Roberts. There is ample authority, comprehensively reviewed in the judgment of Lord Collins, as to the need for special circumstances before the Court will countenance a derivative action. Such actions are now relatively common in cases concerned with mismanaged companies, and in many jurisdictions actions by or on behalf of minority shareholders are now regulated by a statutory code (for overseas examples see Oates v Consolidated Capital Services Pty Ltd [2009] NSWCA 183 and Waddington Ltd v Chan [2009] 2 BCLC 82). Derivative actions by beneficiaries under inter vivos trusts or wills are less common, Hayim v Citibank NA [1987] AC 730 (an appeal to the Privy Council from Hong Kong) and Bradstock Trustee Services Ltd v Nabarro Nathanson [1995] 1 WLR 1405 being modern examples. But in all these cases the unifying factor what has to be special about the circumstances is that the derivative action is needed to avoid injustice: see Goff J in In re Field, decd [1971] 1 WLR 555, 561; Browne Wilkinson LJ in Nurcombe v Nurcombe [1985] 1 WLR 370, 378; Pill LJ in the Court of Appeal in this case, [2009] 1 WLR 531, para 59. For the reasons given by Pill LJ at paras 58 to 60, reinforced by the further reasons given by Lord Collins, special circumstances are not made out in this case. In these circumstances the Court does not have to decide the issues as to amendment of pleadings which I have discussed, in general terms, in the first part of this judgment. But those issues have been fully argued, and I have therefore thought it right to comment on them. On the case as a whole my views are closer to those of Pill LJ than they are to the reasons given by Arden LJ in her longer judgment. I differ from Arden LJ (with whom Patten J agreed) as to special circumstances. I also think that she was too ready to accept the analogy between a true derivative claim and a claim by an equitable assignee, or a sole beneficiary under a bare trust. A derivative claim by a residuary beneficiary interested in an unadministered estate is not, with respect, indistinguishable (as suggested in para 32 of Arden LJs judgment) but faces a more formidable obstacle than a claim by an equitable assignee or a beneficiary under a bare trust. As to para 34, Mr Roberts original claim was a personal claim as a beneficiary. If he were permitted to bring a derivative action, he would be acting in a representative capacity. He would be a beneficiary putting himself forward for the first time as a sort of self appointed personal representative. It may be that CPR r17.4 (4) could be satisfied, but I do not regard the point as free from difficulty. For these reasons, and for the much fuller reasons given by Lord Collins, I would dismiss this appeal. LORD CLARKE I agree with Lord Walker that this appeal should be dismissed on the ground that the appellant has not made out special circumstances such as to make it just for him to be permitted to proceed against the respondents by way of derivative action. I agree with Lord Collins, and with Pill LJ in the Court of Appeal, that, in reaching that conclusion, the judge at first instance, then Mr Paul Morgan QC (now Morgan J), did not err either in principle or otherwise such that it would be permissible for an appellate court to interfere. In this regard, like Lord Walker, I prefer the reasoning of Pill LJ to that of Arden LJ in the Court of Appeal. That conclusion makes it unnecessary to reach a final conclusion on the question whether the court would have power to grant the application for permission to amend to introduce the derivative claim. However, I wish briefly to address that question because it is of potential importance in the future and because I would not go as far as Lord Collins. Lord Collins has set out the relevant provisions of the Limitation Act 1980 (the Act) and the CPR and has discussed the authorities in a masterful way which I could not seek to match. My concern is this. If this were a case in which there were special circumstances such as to make it just that, subject to the issue of limitation, the appellant should in principle be permitted to proceed by way of derivative action against the respondents, I would be concerned if the court had no power to give him permission to amend in circumstances in which it is common ground that the derivative claim, which I will call the new claim, arises out of the same or substantially the same facts as the appellants original claim, which was issued in time. It is thus not in dispute that the appellant satisfies CPR 17.4(2) because he is seeking to add a new claim which arises out of the same facts or substantially the same facts as his existing claim. He is seeking to advance the new claim in a new capacity, namely a representative capacity, which he may or may not have had when the proceedings were started but, if he did not, which he has since acquired within the meaning of CPR 17.4(4). It follows that, on the face of CPR 17.4(2) and (4), the court has power to grant an application for permission to amend to alter the capacity in which he sues. The problem arises under CPR 19.5. The respondents case may be summarised in this way: i) The new claim is a claim involving the addition of a new party within the meaning of section 35(2)(b) and (5)(b) of the Act and CPR 19.5(2)(b). ii) It follows from section 35(5)(b) that the addition of the new party must be necessary for the determination of the original action and from section 35(6)(b) that it is not to be regarded as necessary unless any claim already made in the original action cannot be maintained . against the respondent unless the new party is joined. CPR 19.5(3)(b) reflects section 35(6)(b) except that it provides that the court must be satisfied that the claim cannot properly be carried on against the respondent unless the new party is added as claimant or defendant. iii) The appellant cannot satisfy that test of necessity because he cannot satisfy the court that his own personal claim could not be maintained or carried on against the respondent unless the administrator was added as a defendant. The first question which arises is thus whether the new claim is a claim involving the addition of a new party within the meaning of section 35(2)(b) and (5)(b) of the Act and CPR 19.5(2)(b) because, if it is not, no problem arises. If the administrator (or trustee or company in a shareholders derivative action) must be joined in every case, this question must of course be answered in the affirmative. On the other hand, if there are circumstances in which it is not necessary to join the administrator in every case, the answer to the question will depend upon the facts of the particular case. The critical questions are those addressed by Lord Collins at para 44 above. He says that the only way in which the action could proceed would be (a) if joinder of the administrator was not necessary at all or (b) if it was not necessary at the time the appellant changed the capacity in which he sued but could be effected later. He notes that the appellants case is that the combined effect of section 35(1)(b) and section 35(6)(b) of the Act and CPR 19.5(3)(b) is that (a) the change of capacity is deemed to take effect at the date of the original proceedings and (b) the joinder of the administrator would then be necessary for the continuance of what would then be regarded as the claim made in the original action for the purposes of section 35(5)(b) and 35(6)(b). The critical questions are thus whether joinder of the administrator is always necessary and whether such joinder must take place at the outset or can take place later. I entirely accept that the jurisprudence so fully discussed by Lord Collins at paras 42 to 70 above shows that the approach of the courts has been to require the joinder of a trustee where a beneficiary is making a derivative claim in his own name but for the benefit of the trust as a whole. The same principle applies to a derivative action by a shareholder. However, as I see it, in each case it is a procedural rule. Its purpose was explained by Chitty LJ in Spokes v Grosvenor and West End Railway Terminus Hotel Co Ltd [1897] 2 QB 124 at 128 (quoted in full by Lord Collins at para 57 above) as follows: To such an action as this the company are necessary defendants. The reason is obvious: the wrong alleged is done to the company, and the company must be party to the suit in order to be bound by the result of the action and to receive the money recovered in the action. The principle is now reflected in CPR 19.9(3) in these terms: The company, body corporate or trade union for the benefit of which a remedy is sought must be made a defendant to the claim. In the note to the rule in para 19.9 of Volume 1 of Civil Procedure 2009 the editors say, by reference to para 32 of the judgment of Arden LJ in this case: Although the CPR contains no provision that requires it, where a derivative claim is brought by the beneficiary of an estate, at some stage in the proceedings the personal representative should be joined as a defendant. In para 32 Arden LJ said: It is sufficient that it has to be done at some stage. In putting the principle in that way, she made it clear that it might be appropriate to permit joinder, not at the outset, but at a later stage of the proceedings. Arden LJ so stated after referring to Performing Right Society Ltd v London Theatre of Varieties Ltd [1924] AC 1, 14 per Viscount Cave LC, where he said that the person with the legal right must in due course be made a party to the action and where he referred to the decision in William Brandts Sons & Co v Dunlop Rubber Co [1905] AC 454, 462 that there may be special cases in which the rule will not be enforced. It is of course true that those were cases in which the plaintiff was an equitable assignee suing in his own name. They are among those discussed by Lord Collins at paras 62 to 67 above. However, it is to my mind of note that, at any rate for this purpose, Arden LJ regarded the requirement of joinder in the derivative class of case as the same as that in the equitable assignee class of case. It did not occur to her (or Pill LJ and Patten J, who agreed with her on this part of the case) that, so far as the time for joinder is concerned, there is a different principle in the two classes of case. Although I recognise, as Lord Walker and Lord Collins make clear, that there are differences between the two classes, I do not for my part see why there should be a difference in this particular respect. Moreover, I do not think that there has been any discussion of this point in the authorities as they stand. The essential reason for the joinder of the trustee, administrator, or company as a defendant in the case of a derivative claim is in order that he or it is bound by the result of the action and entitled to receive the money recovered in the action. The purpose of the joinder of the legal owner in the case of a claim by an equitable assignee is also in order that he or it is bound: see eg EM Bowdens Patents Syndicate Ltd v Herbert Smith & Co [1904] 2 Ch 86, 91 per Warrington J. Thus there seems no good reason why a different rule should exist in each case as to when he must be joined. In these circumstances, assuming that joinder is necessary at some stage, I prefer the view of Arden LJ that it does not necessarily have to be at the outset. It is true that, as just stated, CPR 19.9(3) provides that in a derivative claim to which the rule applies, which is essentially that of a shareholder, the company must be made a defendant but there is no similar rule in a claim by a beneficiary under a trust. I entirely accept that one would expect the same principles to apply to all classes of derivative claim and, moreover, that CPR 19.9(3) reflects the general rule, but I would also accept the submission made on behalf of the appellant that CPR 19.9(3) is subject to the overriding objective and that the court must have a discretion to postpone the joinder in a particular case. I would go further. As is clear from the William Brandt case [1905] AC 454, the rule in the equitable assignment case is not absolute. I recognise that not to insist upon joinder is said to be exceptional but I am inclined to think that there are in practice very many cases in the modern era in which equitable assignees proceed to recover a debt assigned to them in equity without joining the assignor. However that may be, I wonder why the rule should be absolute in the derivative action case if it is not absolute in the equitable assignment case. There may be circumstances in a particular case which make it just to dispense with the necessity of joinder. For example, there may be no real point in joining the trustee, administrator or company if appropriate undertakings are given by the claimant to hold any monies recovered for his or its benefit, especially if he or it consents. It has been suggested that one reason for joinder is that, if the derivative action fails, the trustee, administrator or company might bring another action in the future. Where such an action would be time barred, again there would be no such risk. Moreover, there is now a general principle that no action should fail for non joinder of a party: see William Brandt per Lord Macnaghten at p 462. None of these possibilities has been worked out in the cases. In these circumstances I am reluctant to decide this appeal on the basis that there is an absolute rule that the law requires the appellant to join the administrator at all or, alternatively, at the outset. The basis upon which Arden LJ was against the appellant was not that there was an absolute rule that the administrator would have to be joined at the outset because of the nature of the claim. As appears from para 36 of her judgment and para 69 of that of Lord Collins, it was that the administrator would have to be joined before judgment and that it would be contrary to principle for the court to grant permission to amend a change of capacity which would not enable the appellant to proceed to judgment. However, as I see it, that is to conclude that the rule is absolute. For my part, as at present advised, I would hold that the rule is not absolute, that there may be circumstances in which joinder would not be ordered and in any event that joinder does not have to be effected at the outset. Moreover, I do not think that to give the court power to give permission for a claimant to amend his capacity in these circumstances is contrary to principle. CPR 17.4 expressly confers such a power and, although there is a signpost to CPR 19.5, the power in CPR 17.4 is not made subject to it. If the rule is not absolute, or if joinder does not have to be effected at the outset, it seems to me to be at least arguable that the court would have power under CPR 17.4(4) to allow the appellant to change the capacity in which he is suing and that, if he did so, the effect of section 35(1)(b), section 35(6)(b) and CPR 19.5(3)(b) would be that that change of capacity would be deemed to take effect as at the date of the original proceedings and that joinder effected thereafter would be unaffected. The court would thus have power first to permit an amendment to change capacity and to permit joinder thereafter on the basis that joinder would be necessary to allow the proceedings to continue. It is important to note that the above analysis would only give the court power to allow an amendment without joinder at the same time. Whether it would exercise the power would depend upon all the circumstances of the case. It may well be inappropriate, or even (depending upon the circumstances) wrong in principle, to grant an application for permission to amend to change the capacity in which a claimant has been proceeding, but the court would have the power to do so if it appeared just in all the circumstances. I see no reason why the court should not have that power where the new claim arises out of the same or substantially the same circumstances as the existing claim. In this regard it is I think significant that the power is included in a limitation statute. The purpose of such a statute is to protect the defendant against whom a stale claim is made. On the other hand, the staleness of the claim is likely to be of less significance where the new claim arises out of the same or substantially the same facts as the original claim. One of the curiosities of this type of case is that in the ordinary way one would expect it to be the new party who would complain about the addition of a new party. Thus, where a defendant is sought to be added, it is the new defendant whom one might expect to protest. In the instant case, it is most unlikely that, if the administrator were to be joined as a defendant, he would complain. In fact no application has been made by anyone to join the administrator as a defendant. The appellant has not sought to join him and there is no suggestion that he intends to do so. Nor have the respondents sought to join him. If they did, he might well say that he did not object to being joined and might, in any event, not take the point that the claim was time barred. However that may be, I would expect an applicant to explain to the court why the administrator should not be joined at the outset (or perhaps at all) and what was the attitude of other interested parties, including the administrator, other beneficiaries and creditors. They might all consent to the proposal, in which case it might be just to allow the claimant to proceed with a derivative claim without joining the administrator at the outset. Indeed, it might be just even where the administrator did not consent. Such cases would no doubt be exceptional but all would depend on the circumstances. In the instant case the appellant made no attempt to explain the attitude of the administrator or of his aunt Ms Jill Roberts or of the creditors, notably HMRC. So his prospects of persuading a court to exercise its discretion in his favour would be remote. In any event, as I see it, none of the interesting questions I have touched upon needs to be decided in this case because, as I said at the beginning, I agree with Lord Walker that there is no proper basis for interfering with the judges conclusion that special circumstances for bringing a derivative action were not established. |
The Family Law (Scotland) Act 1985 (the 1985 Act) brought about a radical reform of financial provision on divorce in Scotland. This appeal raises questions of statutory interpretation in relation to both the 1985 Act and subordinate legislation made under that Act. The appellant (Mrs McDonald) seeks a pensions sharing order under section 8(1)(baa) of the 1985 Act on her divorce from her husband (Mr McDonald) on the basis that his pension forms part of the matrimonial property which is taken into account in fixing financial provision. It is a central principle in the 1985 Act relating to such financial provision that the net value of the matrimonial property should be shared fairly between the parties to the marriage. This appeal raises the question as to what proportion of a persons pension rights falls within the definition of matrimonial property. In particular, is it necessary that the holder of the pension rights contributed to his or her pension during the marriage in order for any part of his or her interest in the pension to be matrimonial property? The facts can be stated briefly. Mr McDonald worked as a miner for British Coal. He joined the British Coal Staff Superannuation Scheme (the scheme) on 11 December 1978 when he was aged 25 and began contributing to it. He married Mrs McDonald on 22 March 1985. Shortly afterwards, as a result of a leg injury, he was found to be unfit to continue working as a miner. His disability entitled him to retire from employment early on grounds of ill health and to receive a pension income before his normal retiring age. When he decided to exercise that right, he was only 32 years old and had completed only six years and 243 days of pensionable service. He stopped contributing to the scheme on 10 August 1985 and has received a pension since then. As a result, between 11 December 1978 and 10 August 1985 Mr McDonald was a member of and contributor to the scheme; since then he has been a member in receipt of income benefits under the scheme. Mr and Mrs McDonald ceased to cohabit on 25 September 2010. As I explain below, the date of final separation is an important date for ascertaining matrimonial property under the 1985 Act and is one of the dates referred to in that Act as the relevant date. It is in this case the relevant date. Further, as I explain below, section 10(5) of the 1985 Act treats as matrimonial property the proportion of any rights or interests of either person in any benefits under a pension arrangement which is referable to the period [during the marriage but before the relevant date] (emphasis added). Subordinate legislation, which I discuss in paras 20 31 below, has provided for the valuation of a persons rights or interests in a pension arrangement by reference to what is known as the cash equivalent transfer value (CETV). British Coal has provided a figure for the CETV of Mr McDonalds pension rights which had accrued in the scheme on the relevant date. That value is 172,748.38. This figure reflects not only the capitalised value of the pension then in payment but also a spouses pension payable to a surviving spouse on Mr McDonalds death. As discussed below, the subordinate legislation also provides a formula for apportioning the CETV to ascertain what part of it is matrimonial property. The dispute between the parties relates to that formula. The dispute is as to whether in ascertaining the matrimonial property under the 1985 Act the court should apportion the value of Mr McDonalds pension rights (a) by reference only to the period in which he was an active member of the scheme (ie from 11 December 1978 to 10 August 1985) (an active member being a person who is in pensionable service under an occupational pension scheme: Pensions Act 1995, section 124(1)) or (b) by reference to the period in which he was a member of the scheme, both when in pensionable employment and when in receipt of income benefits until the relevant date (ie from 11 December 1978 to 25 September 2010). The parties helpfully agreed in a joint minute that if the CETV is to be apportioned by reference to the period in which Mr McDonald was an active member of the scheme, the value of his interest in the pension benefits which was matrimonial property is 10,002. They also agreed that if the apportionment is by reference to the period of his membership of the scheme, both when in pensionable employment and also when drawing a pension, that value is 138,534. Sheriff Holligan in a judgment dated 12 December 2013 concluded that the first method was the correct one: only the period of active membership was relevant. In reaching that view, he relied on the wording of a formula in the relevant subordinate legislation, the Divorce etc (Pensions) (Scotland) Regulations 2000 (SSI 2000/112) (the 2000 Regulations), which I discuss below. Secondly, he saw that method as being consistent with what he saw as the general principles of the 1985 Act which sought to share wealth accumulated by a spouse over the period of the marriage by treating as matrimonial property only those assets which a spouse acquired during the marriage and before the relevant date. Mrs McDonald appealed to the Inner House of the Court of Session. An Extra Division of the Inner House (Lady Smith, Lord Malcolm and Sheriff Principal Abercrombie) heard the appeal and on 11 August 2015 by majority (Lady Smith dissenting) dismissed the appeal. The majority adopted a purposive approach to the interpretation of the relevant provisions of the 1985 Act and the 2000 Regulations and in substance agreed with the sheriffs reasoning. The majority emphasised the idea that matrimonial property was, as a general rule, confined to assets acquired during the marriage and before the relevant date. They also relied on the formula in the 2000 Regulations. Mrs McDonald appeals to this court. Counsel for Mr McDonald advanced arguments on similar lines to those which the Sheriff and the majority of the Inner House upheld. This appeal raises questions of statutory interpretation both in relation to the 1985 Act and also the 2000 Regulations. I set out below the reasons why I would allow this appeal. The aims of the Family Law (Scotland) Act 1985 The 1985 Act was enacted by the United Kingdom Parliament in response to recommendations of the Scottish Law Commission (the Commission) in its report Family Law: Report on Aliment and Financial Provision (1981) (Scot Law Com No 67). The principal defects of the prior law in relation to financial provision on divorce, which the Commission identified (paras 1.5 and 1.6), were that it identified no objectives or governing principles and that the court had an inadequate range of powers. The Act seeks to remedy those problems. It deals with the first problem by setting out in section 9 the principles which the court would apply in deciding what order for financial provision it would make. Section 8(2) requires the court to make orders which are justified by the section 9 principles and which are reasonable having regard to the resources of the parties. The principle relevant to this appeal is the first which is set out in section 9(1)(a), namely that the net value of the matrimonial property should be shared fairly between the parties to the marriage. Section 10 addresses the concept of matrimonial property. Section 10(1) establishes a presumption that the fair sharing of such property under section 9(1)(a) is equal sharing unless other proportions are justified by special circumstances. Although not directly relevant to this appeal, it is important to observe that the presumption of equal sharing of matrimonial property applies only to the section 9(1)(a) principle; the 1985 Act in the other sub paragraphs of section 9(1) contains other principles which inform the courts decision making and introduce flexibility into the award of financial provision. These principles include (i) that fair account be taken of any economic advantage derived by either party from both financial and non financial contributions by the other and of economic disadvantage suffered in the interests of the family (section 9(1)(b)), (ii) the fair sharing of the economic burden of caring for a child of the marriage after divorce (section 9(1)(c)), (iii) financial provision for up to three years for a person who has been dependent on the financial support of the other person (section 9(1)(d)), and (iv) the need for an award of financial provision for a reasonable period to relieve a person of serious financial hardship as a result of the divorce (section 9(1)(e)). Further flexibility is introduced by the recognition in section 10(1) that there may be special circumstances for departing from the equal sharing of matrimonial property in applying the section 9(1)(a) principle. Those circumstances include but are not confined to the circumstances which are specified in section 10(6). Section 10(2) provides that the net value of matrimonial property is the value at the relevant date after deduction of debts then outstanding. Section 10(3) defines the relevant date as including the date when the parties ceased to cohabit, which is the date applicable in this case (para 3 above). Section 10(4) is an important provision because it establishes a norm that matrimonial property is property acquired by either or both of the parties during the marriage but before the relevant date. Section 10(4) provides: Subject to subsection (5) below, in this section and section 11 of this Act the matrimonial property means all the property belonging to the parties or either of them at the relevant date which was acquired by them or him (otherwise than by way of gift or succession from a third party) before the marriage for use by them as a family home or as furniture or plenishings for such home; or during the marriage but before the relevant date. The requirement in this sub section that the property is acquired during the marriage but before the relevant date has influenced the courts below in their assessment of statutory purpose when adopting a purposive approach to the following sub section, which establishes what part of a persons interest in a pension arrangement falls within matrimonial property. But I observe that the opening words of subsection (4) above carve out subsection (5) from that requirement. Section 10(5), which is the provision in issue in this appeal, provides: The proportion of any rights or interests of either person under a life policy or similar arrangement; and in any benefits under a pension arrangement which either person has or may have (including benefits payable in respect of the death of either person) which is referable to the period to which subsection (4)(b) above refers shall be taken to form part of the matrimonial property Section 27(1) was amended in 2000 to add a definition of a pension arrangement as meaning any occupational pension scheme, a personal pension scheme, a retirement annuity contract and specified annuities and insurance policies. The precursor of section 10(5), as originally framed by the Commission as clause 10(4) of the draft Bill attached to its report, referred to rights or interests under a life policy or occupational pension scheme or similar arrangement but otherwise was to the same effect as the current section 10(5). In its commentary on the draft subsection the Commission explained the recommended provision in these terms: Rights under life policies, pension funds and similar arrangements are often built up over many years. This subsection makes it clear that the proportion referable to the period from the marriage to the final separation is to be regarded as matrimonial property and subject to the same rules as any other item of matrimonial property. (see paragraph 3.73) Paragraph 3.73 of the report stated: Life insurance policies and pension schemes are important ways of saving for the future. In most marriages at least one of the spouses has rights under one or other of them. Where such rights have been acquired wholly during the period from marriage to final separation the value of these rights would constitute matrimonial property. In many cases, however, rights under life policies or pension schemes or similar arrangements will have been built up partly before and partly after the marriage. In such cases we think that only the proportion which is attributable to the period between the marriage and the final separation should be treated as matrimonial property. Paragraph 3.77 spoke of the sharing of savings made during the marriage, including savings made by means of life policies or retirement pension schemes. But it is not clear from those paragraphs whether the Commission sought to confine the scope of such sharing to active saving or included savings created by the passive growth of the relevant fund or the passive accrual of pension rights by survival over time. The answer must be found in the wording of the enacted legislation. The focus in section 10(5) is on the proportion of rights or interests under a pension arrangement referable to the specified period and not on the acquisition of the rights by a party to the marriage during that period. Prima facie the proportion of rights under a pension arrangement referable to a specified period would reflect the enhancement in value of the pension arrangement during that period both by the plan holders investment of further funds in the arrangement and by the passive growth in the value of the already acquired fund. Similarly, where there is no fund, the enhancement in the value of pension rights by survival during the specified period is referable to that period. If Parliament had intended that the proportion of the rights or interests be determined by the ratio of the part of the fund created by contributions to the arrangement during the marriage until the relevant date to the value of the total fund at that date, it could have said so. Section 10(5) could nonetheless achieve a close approximation of such a result in relation to some policies and pension schemes which involve the regular payment of the similar sums year on year. But other arrangements, including personal pension schemes, may involve the payment of differing sums at irregular intervals. Thus, suppose Mr A has a personal pension scheme in which he invested 2,500 each year for ten years before his marriage. On marrying, he encountered other demands on his income and was able to pay into his pension scheme only 1,500 in year four and 1,000 in year eight of his marriage. Mr and Mrs A separated finally at the end of the tenth year of their marriage. In such a case there will have been contributions both before and after the marriage, but a time related ratio would not remotely approximate to the ratio of pre marriage and post marriage contributions. As Lady Smith has recorded in her opinion (para 20), uncertainty about how to value a persons interest in a pension arrangement under section 10(5), and the delay and expense incurred in litigation as a result, including the obtaining of competing actuarial valuations using differing methods, led to the passing of subordinate legislation. The Divorce etc (Pensions) (Scotland) Regulations 1996 (SI 1996/1901), which were made under section 10(8) of the 1985 Act as amended, introduced the CETV, which I mentioned in para 5 above, as the means of valuing the benefits under a pension arrangement. The current regulations are the 2000 Regulations as amended. Before examining the disputed provisions of the 2000 Regulations it is important to note the scope of those regulations. The 2000 Regulations apply to occupational pension schemes and also to personal pension schemes of all kinds. The 2000 Regulations have also been extended to cover certain state scheme rights. Occupational pension schemes may often involve regular contributions from an employee and some, at least in the past, may have provided for such contributions only from the employer. Personal pension schemes include schemes which permit the member to make contributions when he or she chooses giving rise to the result which I have discussed in para 19 above. Regulation 3 of the 2000 Regulations sets out mandatory rules for the calculation and verification of the value of any benefits under a pension arrangement for the purposes of the 1985 Act. Regulation 3 provides different rules for the calculation depending on whether, for example, the party with pension rights is a deferred member or an active member of an occupational pension scheme or a member of a personal pension scheme. There are also different rules if the pension of the party with pension rights is in payment. Beyond observing that regulation 3 provides for different classes of membership of an occupational pension scheme and also for membership of a personal pension scheme, we are not concerned with the details of the methods by which the cash equivalent of the benefits is calculated in that regulation. Mr McDonalds interest in a pension in payment has been valued in accordance with regulation 3(2)(d)(i). Regulation 4 of the 2000 Regulations identifies what proportion of a persons rights and interests in such benefits forms part of the matrimonial property. It provides: The value of the proportion of any rights or interests which a party has or may have in any benefits under a pension arrangement or in relevant state scheme rights as at the relevant date and which forms part of the matrimonial property by virtue of section 10(5) shall be calculated in accordance with the following formula A x B/C where A is the value of these rights or interests in any benefits under the pension arrangement which is calculated, as at the relevant date, in accordance with paragraph (2) of regulation 3 above; and B is the period of C which falls within the period of the marriage of the parties before the relevant date and, if there is no such period, the amount shall be a zero; and C is the period of the membership of that party in the pension arrangement before the relevant date. This formula, as I have said, informed the view of the sheriff and the majority of the Inner House. The words which fall to be interpreted are the words in the definition of factor C above, namely the period of the membership of that party in the pension arrangement. It is striking that factor C in the formula in regulation 4, by which the regulation 3 value is apportioned so as to identify what is matrimonial property, (i) refers to the period of membership of the party in the pension arrangement without further specification and (ii) must apply to membership of both occupational pension schemes and personal pension schemes. Both Sheriff Holligan and the majority of the Extra Division treated membership as confined to active membership of an occupational pension scheme or membership of another scheme while the member was contributing to it. I do not agree for four reasons. First, that interpretation involves adding words to regulation 4 which are not there. The person who drafted the 2000 Regulations was clearly aware of the different categories of membership which were set out in regulation 3. Regulations 3 and 4 must be read together. Regulation 4, in contrast to regulation 3, refers to membership without differentiation between classes of membership. Secondly, it is clear, and is not disputed, that the 2000 Regulations apply not only to occupational pension schemes but also to personal pension schemes. The definition of active membership in section 124(1) of the Pensions Act 1995 (para 6 above) applies only to an occupational pension scheme and makes no sense in relation to personal pension schemes. It also, as Mr Mitchell, who appeared for Mrs McDonald, pointed out, makes no sense in relation to relevant state scheme rights to which regulation 4 also applies. It would, as Mrs Scott argued on behalf of Mr McDonald, be possible to circumvent the problem in relation to personal pension schemes by reading the definition of factor C as if it stated the period of membership of that party in the pension arrangement when contributions are being made by or on behalf of that party. But how does one ascertain at what point before the relevant date a party who has made occasional contributions to a personal pension scheme had chosen to cease to make such contributions? It is to be assumed that Parliament intended the provisions of the Regulations to operate sensibly in relation to the differing pension schemes and state pension rights. Thirdly, I do not think that one can support the reading of the word active or contributing into the phrase in question by referring to the focus in section 10(4) of the 1985 Act on the acquisition by the parties of assets during the marriage but before the relevant date. As I have said (para 14 above), the opening words of section 10(4) carve subsection (5) out of the section 10(4) definition of matrimonial property. Parliament chose to deal with pension rights differently by making discrete provision for them. It is important in that regard to recall that in section 10(4)(a) of the 1985 Act there is included in matrimonial property all property acquired before the marriage for use as a family home or as furniture or plenishings for such a home. Thus even within section 10(4) there is no unqualified principle that property must have been acquired during the marriage and before the relevant date. Indeed, the asset which will often be the most valuable asset within the matrimonial property is excluded from the section 10(4)(b) regime. Further, assets acquired during the marriage by way of gift or inheritance from third parties are excluded from the matrimonial property. It is thus difficult to detect a general principle confining matrimonial property to assets acquired during the marriage to support the purposive interpretation which the majority of the Extra Division has favoured. Fourthly, I am not persuaded by the argument that membership in regulation 4 must mean active membership of an occupational pension scheme (or contributing membership of other schemes) and cannot extend to all types of membership in order to give meaning to the statement in the statutory formula that factor B can be zero. This argument has featured at every stage of this case and was accepted by the sheriff and the majority of the Extra Division. Suggestions have been made as to how factor B (the period of C which falls within the period of the marriage before the relevant date) could be zero when factor C is a positive number. Mr Mitchell suggested that where parties separated on the day of their marriage, there would be no period of marriage before the relevant date; if a spouse had a pre existing pension arrangement factor C would be a positive figure and factor B would be zero. Lady Smith gave the circumstance of a pension arrangement entered into on the date of separation as an example of when B would be zero. But in her example both B and C would be zero; there would be no interest in the benefits of a pension arrangement to value. It is not possible to tell precisely which circumstance was in the mind of the person who drafted regulation 4 when he or she provided for the possibility that factor B could be zero. But that does not matter. If the person drafting the wording of factors B and C intended it to confine membership to active membership that would involve egregious circumlocution. There is no hint of such an intention in the words of the Regulations. If it were necessary to go further, I observe that there is no such hint in the explanatory note to the 2000 Regulations, to which the court can have regard to ascertain the context of the provision and the mischief which it addresses as aids to purposive interpretation: R v Environment Secretary, Ex p Spath Holme Ltd [2001] 2 AC 349, 397 398 per Lord Nicholls of Birkenhead; Comhairle nan Eilean Siar v Scottish Ministers 2013 SC 548, para 47 per Lady Smith, para 62 per Lord Brodie. The explanatory note states: Regulation 4 provides for the apportionment of the value of such benefits. Provision is made apportioning the value of the benefits in accordance with the period of time the party in the pension arrangement has been in both the pension arrangement and in the marriage as a proportion of the period of time that person has been in the pension arrangement. (regulation 4) If regulation 4 were circumlocution for the period of active membership of an occupational pension scheme or, more generally, the period when contributions were being made towards a pension, I would have expected that to be flagged up in the explanatory note. In any event, as I have said (para 19 above), confining the period of the membership to the period when contributions were made and apportioning the value of the rights or interests in the benefits by reference to time, as section 10(5) requires, may often create an apportionment of the rights or interests in benefits in personal pension schemes which bears no relationship to the relative value of the rights acquired before and during the marriage. I am therefore persuaded that period of the membership in regulation 4 of the 2000 Regulations refers to the period of the persons membership of the pension arrangement, whether or not contributions are being made to that arrangement in that period. That does not mean, of course, that the value of an interest in a pension arrangement must be shared equally. As I said in para 13 above, there are safeguards within the 1985 Act which temper its prescriptiveness. Conclusion I would allow the appeal and remit the case to the sheriff at Edinburgh to proceed accordingly. |
In 1999 the Inland Revenue, as it was then known and to which I will refer as the Revenue, published a revised version of a booklet known as IR20 and entitled Residents and non residents Liability to tax in the United Kingdom. The 1999 version of the booklet, which remained operative until 2009 and which I will call the booklet, offered general guidance upon the meaning of the word residence and of the phrase ordinary residence in the context of an individuals liability for UK income tax and capital gains tax. The present appeals require the court mainly to construe the guidance in the booklet. For the main contention of the appellants is that, on its proper construction, the guidance contained a more benevolent interpretation of the circumstances in which an individual becomes non resident and not ordinarily resident in the UK than is reflected in the ordinary law and that the appellants had a legitimate expectation, to which the court should give effect, that the more benevolent interpretation would be applied to the determination of their status for tax purposes. Their subsidiary and alternative contention is, that, even if, when properly construed, the guidance did not contain a more benevolent interpretation than is reflected in the ordinary law, it was the settled practice of the Revenue to adopt such an interpretation of it and that the practice was such as to give rise to a legitimate expectation, to which again the court should give effect, that the interpretation would be applied to the determination of their status. The latter limb of each of the appellants alternative contentions is not in dispute. The Revenue accepts that, if either the proper construction of the booklet or its settled practice was as they contend, a legitimate expectation arose which requires that their status for tax purposes should be determined in accordance with the allegedly more benevolent interpretation of the circumstances in which an individual becomes non resident and not ordinarily resident in the UK. The issues arise within applications for judicial review. Mr Davies and Mr James (the first appellants) issued their application in February 2007. They sought judicial review of determinations by the Revenue dated 28 November 2006 that they had each been resident and ordinarily resident in the UK for the tax year 2001 02. Mr Gaines Cooper (the second appellant) issued his application in April 2007. He sought judicial review of a determination by the Revenue dated 25 January 2007 that he had been resident and ordinarily resident in the UK for the tax years from 1993 94 to 2003 04. In each application the appellants contended that, by reference to the allegedly more benevolent interpretation contained in the guidance or adopted by the Revenue in accordance with its settled practice, the determinations were erroneous. In addition to the issue of their application for judicial review the first appellants filed a notice of appeal to the special commissioners which would now be heard by the Tax Chamber of the First tier Tribunal against the determinations of the Revenue dated 28 November 2006. There was a dispute as to whether their application or their appeal should first be determined. On 10 July 2008 the Court of Appeal, in my view correctly and irrespective of its reasoning, ruled that the application should first be determined and it therefore remitted to the Administrative Court the question whether permission to apply for judicial review should be granted. The appeal of the first appellants to the commissioners has been stayed pending determination of the present proceedings. But the course taken in the case of the second appellant was different. The Revenues determination dated 25 January 2007 accorded with assessments for the years from 1992 93 to 2003 04 which it had raised against him in 2005 and against which he had appealed to the commissioners. In June/July 2006, at a hearing which proceeded for ten days, the commissioners conducted a trial of preliminary issues whether he had been: (a) domiciled in the UK from 1992 93 to 2003 04; (b) resident in the UK from 1993 94 to 2003 04; and (c) ordinarily resident in the UK from 1992 93 to 2003 04. I will explain in para 24 below why he did not dispute that he had been resident in the UK in 1992 93. In the event, by Decision dated 31 October 2006, the commissioners held that he had been domiciled, resident and ordinarily resident in the UK during all those years respectively. Against their conclusion in respect of domicile the second appellant appealed, on point of law, to the High Court; on 13 November 2007 Lewison J dismissed his appeal. The result is that the second appellant, can no longer dispute that he was domiciled in the UK from 1992 93 to 2003 04; but his UK domicile is irrelevant to the present proceedings. Nor can he continue to dispute that, according to the ordinary law, he was resident in the UK from 1993 94 to 2003 04 and ordinarily resident in the UK from 1992 93 to 2003 04. His case is, however, that, by reference to either of the contentions set out above, the ordinary law does not govern determination of the issue surrounding his UK residence and ordinary residence during those years. It is unfortunate that, for whatever reason, the course taken in the case of the first appellants was not taken in the case of the second appellant. Were either of his contentions in the present proceedings to prevail, it would follow that the commissioners invested a large amount of time as well as a conspicuous degree of care in application to the issues of his residence and ordinary residence of principles inapplicable to them. In their Decision they expressly noted that their function was to apply the law rather than the guidance in the booklet. But, whereas issues of fact between the Revenue and the first appellants in relation to their circumstances in 2001 02 remain unresolved, the now conclusive resolution by the commissioners of the issues of fact between the Revenue and the second appellant in relation to his circumstances from 1992 93 to 2003 04 at any rate throws the effect of these proceedings into sharp relief. For, although it remains an open question whether, upon application of the ordinary law, the first appellants were resident and ordinarily resident in the UK during the year relevant to them, we know that, upon application of the ordinary law, the second appellant was resident and ordinarily resident in the UK during the years relevant to him. As the appellants rightly stress, a legitimate expectation that the ordinary law will apply to them is a matter of no legal significance in that it adds nothing to the right of every citizen to due application to him of the ordinary law. A complication, to which I will turn in para 30 and para 31 below, is that, while they all contend for what I have described as a more benevolent interpretation of the circumstances in which a taxpayer becomes non resident and not ordinarily resident in the UK than is reflected in the ordinary law, the benevolent interpretation for which the first appellants contend is not identical to that for which the second appellant contends. I infer that it is the unchallengeable findings of fact made by the commissioners against the second appellant which drive him to contend for a more ambitious interpretation than that for which the first appellants now contend. In the Administrative Court permission to apply for judicial review was refused in both cases by Wilkie J on 10 October 2008 in the case of the first appellants and by Lloyd Jones J on 3 November 2008 in the case of the second appellant. All the appellants appealed against the refusals and, when granting permission to appeal, the Court of Appeal listed the appeals to be heard together. On 10 July 2009 the court allowed their appeals against the refusals and, pursuant to CPR 52.15(4), directed that it should itself, on a later date, hear their applications for judicial review. The hearing took place on 4, 5 and 6 November 2009 and judgments were handed down on 16 February 2010. The court (Ward, Dyson and Moses LJJ) thereby dismissed the applications for judicial review and it is against the dismissals that the present appeals are brought. The appellants The first appellants are successful property developers. By March 2001, then based in Swansea, they each held 50% of the preference shares in Liberty Property Holdings Ltd (Liberty). They were also prominent in the administration of Swansea Rugby Football Club and were respected members of the local community. They decided to extend their property development business to Brussels. Whether their decision was related to a possible disposal of their shares in Liberty appears to be in dispute. At all events, in March 2001, they caused a company, in which each of them had a one third shareholding, to be incorporated in Belgium. Furthermore they began to rent furnished apartments in the same block in Brussels and began to reside in them, at any rate in part, prior to 6 April 2001. They contend that, prior to 6 April 2001, they had begun to work full time for the Belgian company in the field of property development; that, alternatively, during the weeks after 5 April 2001, they had begun to work full time for it; that, from the date whatever it was when their full time work for it began, they have worked for it full time throughout a number of years; and that it has become extremely successful. On the other hand they accept that neither of them sold their homes in Swansea; that their wives, and in the case of Mr. Davies his daughters, remained resident, or partly resident, in Swansea; and that they returned very frequently, albeit not for lengthy periods, to their homes in Swansea in order to be with their families or in connection with Liberty (of which they remained non executive directors) or with rugby in Swansea or with other matters of local importance. In December 2001 Liberty acquired the first appellants shares in itself for a consideration of 4.5m each. Although the capital gain within the consideration remains unidentified, it is clearly important for the first appellants that they should be recognised at law to have been neither resident nor ordinarily resident in the UK in 2001 02. The second appellant is a successful entrepreneur. His domicile of origin was in England (and Wales) and he remains a British citizen. His case before the commissioners was that in 1976, when aged 39, he acquired a domicile of choice in the Seychelles. But, by their Decision, we know that he remained domiciled in England until, at any rate, 2003 04. Between 1976 and 2004 he led an international existence, assiduously charted in their Decision. But, by reference inter alia to two substantial homes successively maintained and to a significant extent occupied by him in Berkshire and in Oxfordshire throughout those years and to the presence in England, following 1977, of the wife whom he was ultimately to marry in 1993 and also, from his birth in 1998 until after 2004, of their son, the commissioners concluded that from 1992 to 2004 the second appellant dwelt permanently in the later home in England and that thus, notwithstanding his residence in the Seychelles throughout those years, he was resident and ordinarily resident in the UK during the years under review. C. Residence as a matter of law The status of being resident in the UK creates liability to UK tax under provisions of the Income Tax (Earning and Pensions) Act 2003 and the Income Tax (Trading and Other Income) Act 2005. But the word itself is not currently defined in statute. In 1936 the Income Tax Codification Committee appointed by the Chancellor of the Exchequer issued a Report (Cmd 5131) in which, in para 59 of Volume I, it concluded that the lack of clarity surrounding the word residence was intolerable and in which, in Volume II, it set out a proposed Bill including, in clause six, a definition of the circumstances in which an individual would be resident in the UK. But the Bill was never enacted. Under active consideration today, however, is the governments proposal to introduce a full statutory definition of tax residence for individuals; and the time for response to its initial consultation paper, issued in June 2011 by HM Treasury and HMRC and entitled Statutory definition of tax residence: a consultation, has recently expired. In the absence to date of any statutory definition of residence taxpayers and their advisers have had to turn to the guidance given by the courts and, importantly, also by the Revenue in relation to its meaning. But the courts have not nor, as we shall see, has the Revenue found it easy to formulate the guidance. For more than 80 years the leading authority has been Levene v Inland Revenue Comrs [1928] AC 217. Until 1919 Mr. Levene was resident and ordinarily resident in the UK. During the next five years he spent about five months (mainly in the summer) each year, staying in hotels in the UK and receiving medical attention or pursuing religious and social activities. He spent the remaining months staying in hotels abroad. The appellate committee declined to disturb the conclusion of the commissioners that Mr Levene had remained resident and ordinarily resident in the UK during those years. Viscount Cave, the Lord Chancellor, adopted, at p 222, the definition of reside given in the Oxford English Dictionary, namely to dwell permanently or for a considerable time, to have ones settled or usual abode, to live in or at a particular place; and, of these three descriptions, the Lord Chancellor chose, no doubt as being the most helpful, that of a settled or usual abode. Since 1928, if not before, it has therefore been clear that an individual who has been resident in the UK ceases in law to be so resident only if he ceases to have a settled or usual abode in the UK. Although, as I will explain in para 19 below, the phrase a distinct break first entered the case law in a subtly different context, the phrase, now much deployed including in the present appeals, is not an inapt description of the degree of change in the pattern of an individuals life in the UK which will be necessary if a cessation of his settled or usual abode in the UK is to take place. To the legal analysis of a taxpayers residence must be added a provision which can be traced back to section 10 of an Act of 1799 (39 Geo III, c 13) which introduced income tax in order to raise an ample Contribution for the Prosecution of the War against Napoleon. Parliament has recently placed the provision, in modified form and in clearer terms than those of its several predecessors, in section 829 of the Income Tax Act 2007; but it is convenient to cite the section in which it was to be found when the booklet was operative and indeed during the years for which assessments have been raised against the appellants. The section was section 334 of the Income and Corporation Taxes Act 1988 and it provided as follows: Commonwealth citizens and others temporarily abroad Every Commonwealth citizen or citizen of the Republic of Ireland (a) shall, if his ordinary residence has been in the United Kingdom, be assessed and charged to income tax notwithstanding that at the time the assessment or charge is made he may have left the United Kingdom, if he has so left the United Kingdom for the purpose only of occasional residence abroad, and (b) Kingdom upon the whole amount of his profits or gains shall be charged as a person actually residing in the United The effect of this provision is or should be now clear. If an individual (restricted under the 1988 Act to Commonwealth and Irish citizens) who has been resident and ordinarily resident in the UK ceases to be resident in the UK, he will nevertheless be deemed to have remained resident in the UK if he has left the UK for the purpose only of occasional residence abroad. So the provision puts a second hurdle in his way in that, in order to escape liability as a resident, he needs to establish not only that he has become non resident but also that his change to non residence was not for the purpose only of occasional residence abroad. That such is the effect of the statutory provision can be discerned in the opinions in Levene itself. For the Lord Chancellor (with whose opinion Lord Atkinson agreed) and Lord Warrington of Clyffe both held that the appellant could not overturn the conclusion that he had remained resident and ordinarily resident in the UK and, at pp 224 and 232, they each made clear that, while they considered that alternatively he may well have fallen foul of the provision (which was then in General Rule 3 in the First Schedule to the Income Tax Act 1918), they did not rest their decision upon it. Viscount Sumner, on the other hand, at p 227, expressly rested his decision upon it. In Reed v Clark [1986] Ch 1, however, Nicholls J made it expressly clear that such was the effect of the statutory provision. Mr Dave Clark, who had been resident and ordinarily resident in the UK, moved to Los Angeles on 3 April 1978 and made his home and place of business there until 2 May 1979, when, not having set foot in the UK in the interim, he returned to reside here. Nicholls J dismissed the Revenues appeal against the ruling of the commissioners that he had not been resident nor ordinarily resident in the UK in 1978 79. He rejected each of the Revenues alternative arguments that (a) on the primary facts found by the commissioners Mr Clark had been so resident and ordinarily resident and (b) for the purposes of the provision (which was then in section 49 of the Income and Corporation Taxes Act 1970) he had left the UK for the purpose only of occasional residence abroad. Nicholls J, at p 15C, accepted the Revenues submission that the provision brought into the tax net those who were not resident in the UK at all in the year of assessment. He held, at p 16H, that occasional residence was the converse of ordinary residence and he cited, at p 17D, the statement of Lord Scarman in R v Barnet London Borough Council, Ex p Nilish Shah [1983] 2 AC 309, 343 that ordinary residence referred to 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 or the time being, whether of short or of long duration. By that route Nicholls J came to contrast occasional residence with residence for a settled purpose. In observing, at p 18A, that his construction might give little scope in practice for the operation of the statute as an independent charging provision, Nicholls J perhaps had in mind that, were the persons residence abroad not to have been for a settled purpose, his settled or usual abode might have remained in the UK with the result that, in the light of the definition adopted in Levene, he would not have ceased to be a UK resident and so would already have fallen at the first hurdle. Nevertheless the concepts of settled purpose and settled abode are clearly different. Nicholls J proceeded to hold, at p 18G, that there had been a distinct break in the pattern of Mr Clarks life in the UK such that his becoming non resident had not been for the purpose only of occasional residence abroad. In referring to a distinct break Nicholls J, as he acknowledged at 14F, was adopting a phrase first used in this context in the decision of the Court of Session in Inland Revenue Comrs v Combe (1932) 17 TC 405. Until 1926 Captain Combe was resident and ordinarily resident in the UK. Then he went to New York to work as a broker for a firm on Wall Street. The objective was that he should become its European representative and, in furtherance of it, he returned to the UK, staying in hotels, for 52 days, 175 days and 181 days during each of the following three years. In upholding the conclusion that he was not liable to tax as a UK resident for those years the court proceeded straight to the statutory provision (which then remained in General Rule 3) and concluded that the captain had not left the UK for the purpose only of occasional residence abroad. It was implicit in its conclusion that he had left the UK in the sense of becoming non resident in it. When, therefore, Lord Sands observed, at p 411, that there was a distinct break in what he described as the captains residence in the UK, it was with a view to explaining his conclusion that the captains residence abroad had been more than occasional. In Reed v Clark Nicholls J applied the phrase in precisely the same context and helpfully added that what was required distinctly to be broken was the pattern of the taxpayers life [1986] Ch 1, 18. It is therefore clear that, whether in order to become non resident in the UK or whether at any rate to avoid being deemed by the statutory provision still to be resident in the UK, the ordinary law requires the UK resident to effect a distinct break in the pattern of his life in the UK. The requirement of a distinct break mandates a multifactorial inquiry. In my view however the controversial references in the judgment of Moses LJ in the decision under appeal to the need in law for severance of social and family ties pitch the requirement, at any rate by implication, at too high a level. The distinct break relates to the pattern of the taxpayers life in the UK and no doubt it encompasses a substantial loosening of social and family ties; but the allowance, to which I will refer, of limited visits to the UK on the part of the taxpayer who has become non resident, clearly foreshadows their continued existence in a loosened form. Severance of such ties is too strong a word in this context. It became clear from decisions like Combe that, if a taxpayer left the UK in order to pursue employment abroad which was full time, it was likely not only that he would cease to be a UK resident but also that he would escape being deemed still to be a UK resident under the statutory provision. For, from the fact that the employment was full time, it was likely to follow that he had made a distinct break in the pattern of his life in the UK. By section 11 of the Finance Act 1956 the position of the full time employee or other worker abroad was strengthened by a provision (now in effect contained in section 830 of the 2007 Act) that, in determining whether he remained resident in the UK, regard should not be had to any place of abode in the UK which he maintained for his use. As I will demonstrate in para 36 below, the Revenue also sought to eliminate any remaining element of doubt about the proper treatment of the full time employee abroad by providing in the booklet that, subject to specified conditions of ostensibly simple application, he would definitely be treated as not resident, nor ordinarily resident, in the UK. In his case, therefore, the Revenue was dispensing with the need for the multifactorial inquiry. In its piecemeal contribution to the law relating to UK residence for tax purposes, Parliament has also made provision in respect of the individual who has been non resident in the UK and challenges a contention that he has become resident here for tax purposes. He is, as Nicholls J pointed out in Reed v Clark above, at p 16G, the converse of the UK resident who contends that he has become non resident in the UK and who, as I have explained, is required by statute also to address the purpose of his change to non residence. Until 1993 Parliaments provision in respect of the former individual, now in effect to be found in sections 831 and 832 of the 2007 Act, was that, subject to one bright line rule, he did not become resident in the UK for income tax purposes if, in the words of subsections (1)(a) and (2) of section 336 of the 1988 Act (entitled Temporary Residents in the United Kingdom), he was in the United Kingdom for some temporary purpose only and not with any view or intent of establishing his residence there. The bright line rule, set out in subsection (1)(b) and, albeit in slightly different terms, in subsection (2), was that he had not actually resided in the United Kingdom at one time or several times for a period equal in the whole to six months in any year of assessment; and both subsections concluded by making clear that, if he had so resided for such a period in any year, he was chargeable to UK income tax for that year. Until 1993, however, the available accommodation rule, abrogated in 1956 in respect of the full time employee abroad, continued to apply to the person who claimed to be only a temporary resident within the meaning of section 336: its effect was that, were living accommodation in the UK to have been available for his use during any year of assessment, any presence on his part within the UK during that year would be taken to have been otherwise than for some temporary purpose only and not with any view or intent of establishing his residence there. The application to him of the available accommodation rule was abrogated, with effect from 1993 94, by the insertion into section 336 of subsection (3). It will now be clear why the second appellant did not dispute that he had been resident in the UK in 1992 93, namely the first of the 12 years of assessment. Before the commissioners he unsuccessfully contended that the relevant inquiry was not whether he had become non resident in the UK in 1976 but whether, having then become non resident, he had again become resident in the UK in any of the years of assessment. In other words he unsuccessfully contended that the parameters of the inquiry were set by section 336, rather than by section 334, of the 1988 Act. But, in that in 1992 93 living accommodation in the UK had been available for his use and in that during that year he had been present in the UK albeit not for a total of six months, he was constrained to concede that, even on his approach, he was in principle liable to tax as a UK resident for that first year. D. Revenue guidance There can be no better introduction to this section than in the words of Moses LJ in his judgment in the decision under appeal: 12. The importance of the extent to which thousands of taxpayers may rely upon guidance, of great significance as to how they will manage their lives, cannot be doubted. It goes to the heart of the relationship between the Revenue and taxpayer. It is trite to recall that it is for the Revenue to determine the best way of facilitating collection of the tax it is under a statutory obligation to collect. But it should not be forgotten that the Revenue itself has long acknowledged that the best way is by encouraging co operation between the Revenue and the public Co operation requires fair dealing by the Revenue, and frank and open dealing by the public. Of course the Revenue may refuse to give guidance and re create a situation in which the taxpayers and their advisers are left to trawl through the authorities to find a case analogous to their own, or, if they are fortunate, a statement of principle applicable to their circumstances. But since 1973, in a field fraught with borderline cases relating to an enormous variety of circumstances, the Revenue has chosen to confer what presumably it regarded as a benefit on taxpayers who wished to know whether they were likely to be treated as resident or not. The primary duty of the Revenue is to collect taxes which are properly payable in accordance with current legislation but it is also responsible for managing the tax system: section 1 of the Taxes Management Act 1970. Inherent in the duty of management is a wide discretion. Although the discretion is bounded by the primary duty (R(Wilkinson) v Inland Revenue Comrs [2005] 1 WLR 1718, para 21 per Lord Hoffmann), it is lawful for the Revenue to make concessions in relation to individual cases or types of case which will, or may, result in the non collection of tax lawfully due provided that they are made with a view to obtaining overall for the national exchequer the highest net practicable return: Inland Revenue Comrs v National Federation of Self employed and Small Businesses Ltd [1982] AC 617, 636 per Lord Diplock. In particular the Revenue is entitled to apply a cost benefit analysis to its duty of management and in particular, against the return thereby likely to be foregone, to weigh the costs which it would be likely to save as a result of a concession which cuts away an area of complexity or likely dispute. The Revenue accepts first that, were it in the booklet to have made the representations about the circumstances necessary for the achievement of non residence for which either the first appellants or the second appellant contend, such would have been within its powers; and second that, for so long as the representations remained operative, an individual would have had, and therefore have been able to enforce, a legitimate expectation that it would appraise his case by reference to them notwithstanding that they failed to reflect the ordinary law. In this connection, however, the Revenue refers to the decision of the Divisional Court of the Queens Bench Division in R v Inland Revenue Comrs Ex p MFK Underwriting Agents Ltd [1990] 1 WLR 1545. It was advantageous to members of syndicates at Lloyds that funds required to be held for them by their underwriters should be so invested as to yield what the Revenue would accept to be capital gain rather than as income. Prior to their investment in American and Canadian index linked bonds underwriters had, by their agents, inquired of the Revenue whether the uplift for indexation to be achieved on sale or redemption of the bonds would be treated as capital gain rather than as income. They unsuccessfully contended that the Revenues responses constituted an affirmative to which it should be held irrespective of whether such treatment of the uplift was correct as a matter of law. Having rejected the Revenues argument that any such affirmative response would have been outside its powers, Bingham LJ proceeded, at p 1569, as follows: I am, however, of the opinion that in assessing the meaning, weight and effect reasonably to be given to statements of the revenue the factual context, including the position of the revenue itself, is all important. Every ordinarily sophisticated taxpayer knows that the revenue is a tax collecting agency, not a tax imposing authority. The taxpayers only legitimate expectation is, prima facie, that he will be taxed according to statute, not concession or a wrong view of the law Such taxpayers would appreciate, if they could not so pithily express, the truth of the aphorism of One should be taxed by law, and not be untaxed by concession: Vestey v Inland Revenue Comrs [1979] Ch 177, 197 per Walton J. No doubt a statement formally published by the Inland Revenue to the world might safely be regarded as binding, subject to its terms, in any case falling clearly within them. But where the approach to the revenue is of a less formal nature a more detailed inquiry is in my view necessary First, it is necessary that the taxpayer should have put all his cards face upwards on the table Secondly, it is necessary that the ruling or statement relied upon should be clear, unambiguous and devoid of relevant qualification. The court held that the Revenues statements about the treatment of the uplift had not been clear enough to give rise to any legitimate expectation. In that the representations in the booklet are formally published by the Revenue to the world rather than being its response to approaches of a less formal nature, a literal reading of Bingham LJs judgment suggests that, although they are binding in relation only to cases falling clearly within them, the requirement that they should be clear, unambiguous and devoid of relevant qualification does not apply to them. But in my view a case would fall clearly within them only if they were clear, unambiguous etc; and in R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2008] UKHL 61, [2009] 1 AC 453, Lord Hoffmann, at para 60, applied the quoted words of Bingham LJ to a formal publication, namely a press announcement, on the part of the Foreign Secretary. It is better to forsake any arid analytical exercise and to proceed on the basis that the representations in the booklet for which the appellants contend must have been clear; that the judgement about their clarity must be made in the light of an appraisal of all relevant statements in the booklet when they are read as a whole; and that, in that the clarity of a representation depends in part upon the identity of the person to whom it is made, the hypothetical representee is the ordinarily sophisticated taxpayer irrespective of whether he is in receipt of professional advice. The alleged representations The first appellants contend that, in the booklet, the Revenue represented that an individual would be accepted as not resident and not ordinarily resident in the UK if he: (a) (paragraph 2.2 of the booklet); or (b) 2.8); or (c) went abroad for a settled purpose and remained abroad for at least a whole tax year (paragraph 2.9) left the UK to take up full time employment abroad left the UK permanently or for at least three years (paragraph provided, in each case, that his visits to the UK during the years following departure totalled less than six months in any tax year and averaged less than 91 days in each such year (the day count proviso). The first appellants accept that, if he is to become non resident in the UK, the law requires an individual to effect a distinct break in the pattern of his life in the UK such as to demonstrate that, when subsequently present in the UK, he is here only as a visitor; and they contend that, by (a), (b) and (c) above, the Revenue reflected in a simplified form the requirement of a distinct break. Their primary contention is that, irrespective of whether they fell within (a) or (b), they fell within (c). They therefore contend that, if (as appears to be the case) they went abroad for a settled purpose for at least one tax year and satisfied the day count proviso, the Revenue is bound to acknowledge their status as having been neither resident nor ordinarily resident in the UK in 2001 02 notwithstanding that, were their cases to be appraised on a wider basis, they might not have effected a distinct break in the pattern of their life in the UK. The second appellant, by contrast, contends that, in the booklet, the Revenue represented that a taxpayer would be accepted as not resident and not ordinarily resident in the UK if he went to live abroad for at least three years and satisfied the day count proviso. His contention is that, in the interests of simplicity, the Revenue thereby cut away its need or entitlement to afford any independent consideration to whether he had effected a distinct break in the pattern of his life in the UK. The proper construction of the booklet The preface to the booklet stated: The notes in this booklet reflect the law and practice at October 1999. They are not binding in law and do not affect rights of appeal about your own tax. You should bear in mind that the booklet offers general guidance on how the rules apply, but whether the guidance is appropriate in a particular case will depend on all the facts of that case. If you have any difficulty in applying the rules in your own case, you should consult an Inland Revenue Tax Office The first paragraph quoted does not advance the Revenues case: no doubt it intended the booklet to reflect the law but it accepts that, were the booklet to have failed to do so, it would be bound by its terms irrespective of the discrepancy. The second paragraph is however of greater significance: it stressed that the guidance was general; that its application to a particular case depended upon its facts; and that, in the event of any difficulties in its application to his case, the individual should consult a Revenue tax office. Neither in 1976 nor at any time thereafter did the second appellant seek advice from a tax office, still less a ruling on residence such as was available until the introduction of self assessment on 6 April 1996. Nor did the first appellants (who were at all material times advised by PricewaterhouseCoopers LLP) seek such advice in advance of their going to Brussels in March 2001. Paragraph 1.1 of the booklet stated: The terms residence and ordinary residence are not defined in the Taxes Acts. The guidelines to their meaning in this Chapter and in Chapters 2 (residence status of those leaving the UK) and 3 (those coming to the UK) are largely based on rulings of the Courts. This booklet sets out the main factors that are taken into account, but we can only make a decision on your residence status on the facts in your particular case. The paragraph therefore told the taxpayer that the booklet set out only the main factors to be taken into account and repeated that the decision in relation to residence could be made only upon an evaluation of the facts of the case. Paragraph 1.4 of the booklet stated: It is possible to be resident (or ordinarily resident) in both the UK and some other country (or countries) at the same time. If you are resident (or ordinarily resident) in another country, this does not mean that you cannot also be resident (or ordinarily resident) in the UK. So here the taxpayer learned that it would be insufficient for him to become resident abroad: if he was to become non resident in the UK, more was needed. Crucial to the appeals is the second chapter of the booklet, entitled Leaving the UK. Paragraph 2.1, headed Short absences, stated: You are resident and ordinarily resident in the UK if you usually live in this country and only go abroad for short periods for example, on holiday or on business trips. The appellants stress the reference to short periods and they reasonably submit that the day count proviso was the other side of the same coin. The Revenue, by contrast, stresses the word usually. I accept its submission that the word conveyed to the reasonably sophisticated taxpayer that the inquiry would encompass consideration of various aspects of his life with a view to the identification of its usual location. Paragraph 2.2, headed Working abroad, stated: If you leave the UK to work full time abroad under a contract of employment, you are treated as not resident and not ordinarily resident if you meet all the following conditions your absence from the UK and your employment abroad both last for a least a whole tax year during your absence any visits you make to the UK total less than 183 days in any tax year, and average less than 91 days a tax year. (The average is taken over the period of absence up to a maximum of four years Any days spent in the UK because of exceptional circumstances beyond your control, for example the illness of yourself or a member of your immediate family, are not normally counted for this purpose.) The second bullet point, which has two parts, represented the day count proviso. Although the first part of it was statutory (now section 830 of the 2007 Act), the second part of it reflected long established Revenue practice: thus, if the individual visited the UK for six months or more in any year of assessment, he was treated as resident here for that year but, if he did not do so and his visits to the UK averaged less than 91 days each year during up to four tax years, he was treated as not resident here for those years. Reluctant though I am to be distracted from consideration of the substantive issues in the appeals, it is convenient here to append a footnote about an alternative ground of appeal on the part of the first appellants, which their leading counsel described as peripheral and which he did not address in oral argument save to decline formally to abandon. The argument is based on their alternative, fall back assertion that it was only after 5 April 2001, namely during the weeks which followed it, that they began the full time work in Belgium which has since proceeded for a number of years and at least throughout the year 2002 03. On that basis the argument is that the Revenue is required to treat the first appellants as not resident and not ordinarily resident in the UK even in the crucial year 2001 02 because they had left the UK prior to the start of that year and because they had left to work full time abroad even though the work did not begin until after the start of that year. But no rational taxpayer could imagine that the route to non residence by his pursuit of full time employment abroad throughout a tax year could be successfully traversed even in relation to a preceding year. It is only the individuals full time employment abroad which yields the distinct break in the pattern of his life in the UK (see para 21 above) and the terms of paragraph 2.2 adequately convey its status as a pre requisite to non residence. Paragraphs 2.7 to 2.9, which lie at the centre of the appeals, were headed Leaving the UK permanently or indefinitely so their content was entirely governed by that rubric, in which the two adverbs provided important colour to the type of leaving which the Revenue was proposing to address. I also agree, however, with the observation of Moses LJ that: It makes no sense to construe leave when qualified by the adverbs permanently or indefinitely as referring to the process of going abroad. They clearly require consideration of the quality of the absence. (para 44) The paragraphs stated: 2.7 2.8 If you go abroad permanently, you will be treated as remaining resident and ordinarily resident if your visits to the UK average 91 days or more a year Any days spent in the UK because of exceptional circumstances beyond your control, for example the illness of yourself or your immediate family, are not normally counted for the purposes of averaging your visits. If you claim that you are no longer resident and ordinarily resident, we may ask you to give some evidence that you have left the UK permanently, or to live outside the UK for three years or more. This evidence might be, for example, that you have taken steps to acquire accommodation abroad to live in as a permanent home, and if you continue to have property in the UK for your use, the reason is consistent with your stated aim of living abroad permanently or for three years or more. If you have left the UK permanently or for at least three years, you will be treated as not resident and not ordinarily resident from the day after the date of your departure providing[viz the day count proviso]. 2.9 If you do not have this evidence, but you have gone abroad for a settled purpose (this would include a fixed object or intention in which you are going to be engaged for an extended period of time), you will be treated as not resident and not ordinarily resident from the day after the date of your departure providing your absence from the UK has covered at least a whole tax year, and your visits to the UK since leaving [satisfy the day count proviso]. If you have not gone abroad for a settled purpose, you will be treated as remaining resident and ordinarily resident in the UK, but your status can be reviewed if your absence actually covers three years from your departure, or evidence becomes available to show that you have left the UK permanently providing [viz the day count proviso]. On any view the three paragraphs were very poorly drafted. But does it follow that, when read in conjunction with the other parts of the booklet to which I have drawn attention, they amounted to a clear representation of the types for which the appellants respectively contend? Regrettable though it would be, a confusing presentation would be likely to have lacked the clarity required by the doctrine of legitimate expectation. There is now a preliminary dispute between the appellants about the nexus between paragraph 2.9 and paragraphs 2.7 and 2.8. For in this court the first appellants for the first time contend that paragraph 2.9 charts a free standing route to non residence; to be specific, that the subject of paragraph 2.7 is leaving the UK permanently, that that of paragraph 2.8 is leaving it permanently or indefinitely and that that of paragraph 2.9 is leaving it for a settled purpose; and that they themselves travelled by the route charted in paragraph 2.9. The second appellant, by contrast, accepts the Revenues contention as did the first appellants in the Court of Appeal that paragraph 2.9 was linked to paragraph 2.8 and charted only a different way in which an individual might establish that he had left the UK indefinitely. In one sense it comes as no surprise that the Revenue should explain that paragraph 2.9 (which first appeared in the 1996 version of the booklet, as paragraph 2.10) was introduced as a result of the decision in 1985 of Nicholls J in Reed v Clark [1986] Ch 1. For, by referring to the need for a settled purpose, the paragraph introduces a phrase adopted by Nicholls J: see para 18 above. But the paragraph is a garbled reference to the decision: for Nicholls J was describing the settled purpose not as a route to becoming non resident but as the means by which the taxpayer who had become non resident escaped being treated otherwise under what is now section 829 of the 2007 Act. Nevertheless, as all parties agree, the exercise required by these appeals is not to compare the booklet with the law but to construe it by reference to its own terms; and, as a matter of construction, the contention of the first appellants that paragraph 2.9 was independent of paragraph 2.8 is in my view patently incorrect. It was grouped with paragraphs 2.7 and 2.8 under the heading Leaving the UK permanently or indefinitely; and, following paragraph 2.8 in which the Revenue offered one example of evidence which might satisfy it that the individual had left either permanently or indefinitely, paragraph 2.9, which, by its opening hypothesis if you do not have this evidence, made an express link with paragraph 2.8, purported to identify another situation in which the Revenue would accept that he had left indefinitely, namely that in which he had gone abroad for a settled purpose (including for a project in which he was to be engaged for an extended period of time) and satisfied the other specified conditions. So the three paragraphs must be read compendiously. They shared one important feature: they all referred to visits on the part of the individual to the UK. If he usually resides in the UK, he will go abroad as a visitor but, if he has left the UK and has adopted a usual residence abroad, he will come to the UK as a visitor: we are not visitors in the country of our usual residence. The reference to visits to the UK therefore underlined the need for a change in the individuals usual residence and therefore, by ready inference, for a distinct break in the pattern of his life in the UK. Another important feature lay in paragraph 2.8. The evidence there suggested was that the individual had taken steps to create a permanent home abroad. He was then warned however that, if he continued to have property in the UK for his use, his reason for doing so must have been consistent with his stated aim of living abroad permanently or for at least three years. The suggestion was therefore that it might be permissible for him to maintain in the UK not a home but property for [his] use but that, if he did so, he would fail to secure non resident status unless his reason for doing so survived the test of consistency with his stated aim. In the course of his submissions leading counsel for the first appellants invited the court to consider a document not placed before the Court of Appeal. It is entitled Notes on NON RESIDENCE, ETC and, when an individual asks the Revenue to supply him with the supplementary pages of a tax return referable to his claim to non residence, it will supply not only the extra pages but also the Notes in order to assist him in completing them. The Notes put before the court were referable to the tax year 2001 02, being the crucial year for the first appellants. By question 2A, first inserted into the Notes supplied for the year 2000 01, the individual was invited to ask himself Have you left the UK? In order to help him answer the question, the Notes said: Even if you make frequent trips abroad in the course of your employment, you will not have left the UK if you usually live in the UK, and your home and settled domestic life remain there. The premise of the question which followed was that prior to the relevant tax year the individual had left in the above sense and, on that basis, he was invited to consider whether he had lived or had intended to live outside the UK for at least three years (reflective of paragraph 2.8 of the booklet) or had worked abroad full time throughout the relevant tax year (reflective of paragraph 2.2, when properly construed) or had been abroad for a settled purpose (reflective of paragraph 2.9). The proposition in the Notes quoted above was a clear (and, as it happens, also a reasonably accurate) definition of leaving the UK for the purposes of attaining non residence; and, inasmuch as the Notes had apparently been furnished in that form to everyone who submitted a claim to the Revenue that he had become non resident for any year after 1999 2000, it would, in the event of any significant doubt about the meaning of the booklet, have been legitimate to construe it in the light also of the quoted proposition. On any view it is inconsistent with the contention of the first appellants, accepted by Lord Mance, that the Revenue was treating as non resident an individual who had done no more than to go abroad for a settled purpose (and to remain there for at least a year and to satisfy the day count proviso) irrespective of whether he had continued usually to live in the UK and to make his home and settled domestic life here. At last comes the moment in which to stand back from the detailed textual analysis of the booklet and to survey the wood instead of the trees. Unlike so it seems its successor, namely HMRC6, the exposition in the booklet of how to achieve non resident status should have been much clearer. My view however, is that, when all the passages in it to which I have referred were considered together, it informed the ordinarily sophisticated taxpayer of matters which indeed were unlikely to come as a surprise to him, namely that: (a) he was required to leave the UK in a more profound sense than that of travel, namely permanently or indefinitely or for full time employment; (b) he was required to do more than to take up residence abroad; (c) he was required to relinquish his usual residence in the UK; (d) any subsequent returns on his part to the UK were required to be no more than visits; and (e) any property retained by him in the UK for his use was required to be used for the purpose only of visits rather than as a place of residence. He will surely have concluded that these general requirements in principle demanded and might well in practice generate a multifactorial evaluation of his circumstances on the part of the Revenue albeit subject to appeal. If invited to summarise what the booklet required, he might reasonably have done so in three words: a distinct break. The evaluative nature of the inquiry described in the booklet was fairly recognised by the first appellants accountant himself when he stated as follows: [W]hat IR20 does (according to the understanding which I have always had as a practitioner) is to set out certain factors which will be taken into account. Some of these factors relate to the quality of the links which the taxpayer has with another country (eg fulltime employment for at least a whole tax year, settled purpose, acquiring accommodation abroad, living outside the UK for three years or more), and some of the factors relate to the extent of the links retained by the taxpayer with the UK (eg the number of days spent here, retaining a property in the UK). It follows from this that HMRC have set out their view of the quality of the links with another country and the extent of the remaining links with the UK which should together be taken into account in determining whether someone has ceased to be UK resident. The quality of the links with the other country are relevant insofar as they help to determine the extent to which the taxpayer has removed himself from the UK. Were I wrong, however, to have concluded that the booklet succeeded in conveying to the taxpayer the information to which I have referred in para 45 above, it would in no way follow that, on this, the main, basis upon which they are advanced, the appeals should succeed. Were I wrong, I would feel driven to conclude only that the treatment in the booklet of the means of becoming non resident was so unclear as to communicate to its readers nothing to which legal effect might be given. Such a conclusion would leave the appeals far short of their necessary foundation, namely of clearly specified criteria by reference to which they legitimately expected their claims to non residence to be determined. The alleged change of practice I summarise the subsidiary and alternative contention of the appellants as follows: that, even if, on a proper construction of the booklet, the Revenue did not thereby make the representations for which they have respectively contended, its settled practice over many years was nevertheless to determine claims to non residence on the footing that, in the booklet, it had made such representations; that its settled practice continued until a date shortly after all the years of assessment (ie until a date in 2004 05); that its practice thereupon changed in that it began to conduct, including in relation to the appellants, a general inquiry into whether the taxpayer had effected a distinct break in the pattern of his life in the UK; and that the Revenue had thus raised in the appellants a legitimate expectation that it would determine their claims in respect of the years of assessment by reference to its earlier settled practice. It is an arresting proposition that, having published and regularly revised a booklet in which it purported to explain how it would determine claims by individuals to have become non resident and of which it encouraged widespread use, the Revenue departed from it as a matter of settled practice. Clear evidence would be necessary in order to make the proposition good. But there is another reason for the need for clear evidence in this connection. For, whereas, in the booklet the Revenue gave unqualified assurances about its treatment of claims to non residence which, if dishonoured, would readily have fallen for enforcement under the doctrine of legitimate expectation, it is more difficult for the appellants to elevate a practice into an assurance to taxpayers from which it would be abusive for the Revenue to resile and to which under the doctrine it should therefore be held. [T]he promise or practicemust constitute a specific undertaking, directed at a particular individual or group, by which the relevant policys continuance is assured: R (Bhatt Murphy) v The Independent Assessor [2008] EWCA Civ 755, per Laws LJ at [43]. The result is that the appellants need evidence that the practice was so unambiguous, so widespread, so well established and so well recognised as to carry within it a commitment to a group of taxpayers including themselves of treatment in accordance with it. The appellants place before the court statements by their tax advisers and others that in their experience the Revenue did not prior to 2004 05 conduct any general inquiry into whether a person who claimed to have become non resident pursuant to paragraphs 2.7 to 2.9 of the booklet had effected a distinct break in the pattern of his life in the UK; and they add that, so far as they know, it was the settled practice of the Revenue not to do so and thus that the general inquiries in that regard which were directed at the appellants from 2004 05 onwards represented an unheralded departure from it. By its witness statements the Revenue disputes the existence of any such alleged practice and, in an argument which found favour in the Court of Appeal, suggests that the appellants witnesses may have mistakenly deduced the existence of the alleged earlier practice from what was on any view a later increase in the level of Revenue scrutiny of claims to have become non resident. In any event, however, the appellants accept that, in order to make good their case, they need evidence beyond the generalised, anecdotal understanding of their witnesses, however highly regarded; and in this regard they primarily rely on a letter, entirely unrelated to the cases before the court, from a Revenue Inspector, Mr Wilks, to an accountant, Mr Sawyer, dated 7 July 1999, which was never published and of which the appellants learnt only following the Revenues disclosure of it in the course of these proceedings. I should add that, in this court albeit not in the Court of Appeal, the appellants have also relied on a document published by the Institute of Chartered Accountants in England and Wales, dated 30 November 1994, in which, no doubt accurately, it recorded the Revenue as confirming that, were a UK resident to retire overseas to a house which he owned but to retain ownership of another house in the UK to which he were to make regular holiday visits of 50 days each year, he would have become non resident and not ordinarily resident in the UK; but in my view the quoted words sufficiently betoken a distinct break. In his letter to Mr Sawyer, Mr Wilks wrote: As promised Im writing to confirm the way we approach the residence status of individuals who leave the UK for purported permanent residence but who cannot produce the sort of evidence mentioned in paragraph 2.9 of IR20. Subject only to the caveat that the following guidance is general and particular cases will always need to be decided on their own specific facts, I can say that provided such an individual lives outside the UK for 3 years or more from the date of departure, and after departure has not visited the UK for as much as 183 complete days in any one tax year or 91 or more days a year on average then we will, after the 3 years has elapsed, accept the claim to have become not resident and not ordinarily resident. Specifically, circumstances such as the spouse and/or children having continued to live in the UK a residence having been maintained here duties having continued to be performed in the UK will not prejudice the claim to non residence. The reference by Mr Wilks to IR20 was to the 1996 version and, in the 1999 version, paragraph 2.9, which he cited, became paragraph 2.8. There is no doubt that Mr Wilks letter accords well with the assertions of the appellants professional witnesses. If and insofar as, by his reference to individuals who leave the UK, Mr Wilks was attempting to refer to individuals who effect a distinct break in the pattern of their lives in the UK, the attempted reference was too elliptical; and the fact that, in another context, he wrote a further letter to Mr Sawyer dated 8 March 2000, in which he referred to a person who continues to be resident in the UK on the basis that he hasnt in reality left the UK, cannot alter the natural construction of the earlier letter. But did it reflect a settled practice to depart from the law and indeed from the then current version of the booklet? Until 1998 some UK residents had been able to take advantage of what was known as the foreign earnings deduction. To the extent that they earned income from employment carried out wholly or partly abroad for at least a year, they had been able to deduct it in full from their income for UK tax purposes. But, by section 63 of the Finance Act 1998, the right to make the deduction was abolished. The abolition precipitated an increase in claims to non residence on the part of mobile workers, ie persons, such as lorry drivers and airline pilots, who made frequent and regular trips abroad in the course of their work but who remained based in the UK. In the present proceedings the Revenue disclosed its statements made in 2000 and 2001 to a variety of professionals about its treatment of such claims. The statements are unhelpful to the appellants case. For example the gist of a tax bulletin, published by the Revenue in April 2001, was that, unless he was working full time abroad for at least a whole tax year and so could satisfy the requirements of paragraph 2.2 of the booklet, it was probable that the mobile worker usually lived in the UK, thus also failed to fall within paragraphs 2.7 to 2.9 and so was resident in the UK. The bulletin explained that individuals usually live in the UK if their home continues to be in the UK and their settled domestic life remains here. Although the bulletin related to mobile workers, tax advisers sought clarity as to how it affected the Revenues treatment of business executives who were seconded to work abroad but who regularly returned to the UK. For example, one of the expert witnesses of the first appellants, Mr Hilton Gee, who was a senior manager at PricewaterhouseCoopers LLP until 2006 but who never handled their case, spoke to a Revenue manager on 8 May 2001 and made the following note: I asked whether the Tax Bulletin article reflects a change of Practice by the Revenue or a change in policing standards. [He] confirmed that the article does not reflect any change in the Revenues practice, but it does reflect their view that whereas in the past they might have taken a claim to non residence at face value, they now feel that they should be asking for more facts. The article was directed at a specific category of individual and [he] can see that, if you try to apply its literal wording to other categories of businessmen, one might get the wrong impression. The Revenue are attempting to describe the difference between a businessman who is based in the UK but travels abroad for most of the time, and a businessman who is based abroad but manages to visit the UK from time to time, and are saying that in a case which may not be clear cut you need to look at all relevant factors. In June 2001 accountants at Arthur Andersen raised analogous questions at a meeting with senior Revenue officers. According to the Revenues note, its officers explained that paragraph 2.2 of the booklet still applied; that mobile workers who worked partly within the UK did not fall within it; but that business executives seconded to work abroad might well do so; and that they could fall within the paragraph without severing every link with the UK. Arthur Andersen acknowledged in the words of the note that: If an individual had full time employment abroad, it was not necessary to look at the wider factors in paragraph 2.7 about personal circumstances such as accommodation, family life etc. Arthur Andersen, at any rate, were under no illusion about the nature of the inquiry into a claim for non residence which was required by the booklet when it did not fall within paragraph 2.2. The Revenues dialogue with the accountants culminated in its letter, dated July 2001, sent to the Institute of Chartered Accountants, the Chartered Association of Certified Accountants, the Chartered Institute of Taxation, the Confederation of British Industry, and the big five firms of accountants. It made clear that most mobile workers failed to become non resident because they did not fall within paragraph 2.2 and because they had not genuinely left the UK in the residence sense. In the light of the wide circulation of the letter, it is hard to imagine that tax practitioners did not realise that the Revenue required that an individual who claimed to have become non resident but who failed to fall within paragraph 2.2 should genuinely have left the UK, being a requirement reflective only of the ordinary law. Had there been a facility for cross examination of the appellants professional witnesses in the proceedings, no doubt their precise understanding of what was or was not required both in law and in practice and their grounds for having it would have been laid bare. In my view the Court of Appeal was right to hold that the appellants failed to establish that, by its inquiries and determinations in respect of them, the Revenue was departing from a settled practice such as to found a legitimate expectation. In about 2001, probably triggered by the mobile workers, scrutiny of claims to non residence became more frequent. But when, previously, claims had been scrutinised, had the Revenue adopted a settled practice of applying criteria different from those identified not only by the ordinary law but also in its own booklet read as a whole? The appellants evidence to this effect was far too thin and equivocal. H. Conclusion I would dismiss the appeals. LORD HOPE I am grateful to both Lord Wilson and Lord Mance for their description of the background to these appeals and for the way in which they have identified the points that are in issue. I have reached the conclusion that, for the reasons that are set out in Lord Wilsons judgment, the appeals should be dismissed. I have nothing to add to what Lord Wilson has said about the appellants secondary and alternative contention. Their case that the Revenue had raised a legitimate expectation that their claim would be determined more favourably than the law and a proper construction of IR 20 would indicate was simply not made out by the evidence. The difference between Lord Wilson and Lord Mance as to the primary issue turns on the meaning that paragraphs 2.7 to 2.9 of IR 20 would convey to the ordinarily sophisticated taxpayer. Is the question whether the taxpayer has become non resident and not ordinarily resident in the United Kingdom to be determined simply by reference to the taxpayers intention when going abroad regarding the overall duration of his absence and counting up the days of any return visits? Or is it to be determined by evaluating the quality or nature of the absence and of any return visits that he has made? There is an obvious attraction in keeping the test as simple as possible, especially as taxpayers are now responsible for self assessment when making their returns. But the underlying principle that the law has established is that it must be shown that there has been a distinct break in the pattern of the taxpayers life in the UK. The inquiry that this principle indicates is essentially one of evaluation. It depends on the facts. It looks to what the taxpayer actually does or does not do to alter his lifes pattern. His intention is, of course, relevant to the inquiry. But it is not determinative. All the circumstances have to be considered to see what light they can throw on the quality of the taxpayers absence from the UK. The question then is whether on its proper construction the booklet sets out tests which are so clear that they eliminate the need for an inquiry into whether there was in fact a distinct break. As Lord Mance points out, the requirement for a distinct break is not clearly expressed in the relevant paragraphs of the booklet. But I cannot agree with him that chapter 2 is to be read as substituting for that test a series of specifically delineated cases which clearly and unambiguously eliminated the need for such an inquiry: see para 100, below. The booklet must be read as a whole, including its introductory paragraphs. As the preface to the booklet made clear, it offered general guidance. Its application to a particular case was to depend on its own facts. So paragraphs 2.7 2.9 do not stand alone. Taken as a whole, the message that the booklet conveyed was that all the circumstances were open to evaluation in order to see whether the rules for non residence were satisfied. I am in full agreement with Lord Wilsons careful analysis. LORD WALKER I agree that these appeals should be dismissed for the reasons given in the judgment of Lord Wilson. The stronger appeal is that of Mr Davies and Mr James, but it is by no means as strong as is claimed by the exaggerated opening of their printed case. The preface to the relevant edition of IR 20 made clear that it gave general guidance only, and that whether the guidance was appropriate in a particular case would depend on all the facts of the case. In the event of difficulty taxpayers were invited to consult an Inland Revenue tax office. The appellants had expert professional advisers, and it was well known to them that a large amount of tax was at stake. The guidance in IR 20 is far from clear, as Lord Wilson explains. Yet there is no suggestion that any attempt was made to seek clarification from an office of the Inland Revenue, still less that any specific guidance or assurance was given on the particular course of action proposed by the appellants. It seems possible that the preferred strategy was to let sleeping dogs lie, despite the obscurity of parts of IR 20. But whether that is right or not, the appeals must be dismissed for the reasons given by Lord Wilson, which are essentially the same as those given by Moses LJ in the Court of Appeal. LORD CLARKE I agree that these appeals should be dismissed for the reasons given by Lord Wilson. I have reached the conclusion that his reasoning is to be preferred to that of Lord Mance for the reasons given by Lord Hope. LORD MANCE Introduction In these appeals, the issue is whether Her Majestys Revenue and Customs (HMRC) is entitled to treat the appellants as resident and ordinarily resident in the United Kingdom, in the case of Mr Davies and Mr James in the tax year 2001 02 and in the case of Mr Gaines Cooper in respect of the tax years 1993 94 to 2003 04. The issue turns primarily upon the interpretation and effect of Revenue guidance on the liability to tax in the United Kingdom of residents and non residents, known as IR20. IR20 was first issued in 1973, and existed in various versions developed from time to time until April 2009, when IR20 was entirely replaced by materially different guidance called HMRC 6. A secondary issue in each appeal is whether HMRC, in seeking to treat the appellants as ordinarily resident, resiled illegitimately from a practice followed prior to 2005 with respect to the interpretation and application of IR20. HMRC has confirmed in each appeal (HMRC Case para 2) that it accepts that a taxpayer has a legitimate expectation that HMRC will apply the guidance of IR20 to the facts of his particular case and, if satisfied that the facts and evidence fall within one of the circumstances in chapter 2 of IR20 indicating a certain residence treatment, will treat him accordingly. This accepts that the guidance of IR20 gives rise to a legitimate expectation, but the nature of that legitimate expectation depends upon the terms of the guidance. In R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2008] UKHL 61, [2009] AC 453, para 60, cited recently in Paponette v Attorney General of Trinidad and Tobago [2010] UKPC 32, [2011] 3 WLR 219, para 28, Lord Hoffmann said that: a legitimate expectation can be based only upon a promise which is clear, unambiguous and devoid of relevant qualification 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 . As to the need for a representation to be clear, unambiguous and devoid of qualification, the Board in Paponette endorsed Dyson LJs statement in R (Association of British Civilian Internees: Far East Region) v Secretary of State for Defence [2003] EWCA Civ 473, [2003] QB 1397, para 56, that the question is how on a fair reading of the promise it would have been reasonably understood by those to whom it was made ([2011] 3 WLR 219, para 30). The primary issue in each appeal is thus how, on a fair reading, IR20 would have been reasonably understood by those to whom it was directed. It is for the courts to resolve this as a matter of law. If any of the appellants succeeds on either issue, it may also be necessary to consider what precise relief would be appropriate. Mr Eadie QC for HMRC suggested in his oral submissions that a requirement to treat the taxpayer as not resident and ordinarily resident should not follow axiomatically. However, the unequivocal nature of the above confirmation makes it difficult to see how this could be so if and in so far as any of the appellants succeeds on the primary issue. More specifically the issues are whether, upon the true interpretation of IR20 or under Revenue practice prior to 2005, taxpayers seeking to show that they are neither resident nor ordinarily resident in the United Kingdom are required to show that they have made a distinct break from or severed family and social ties in the United Kingdom. HMRC maintains and the Court of Appeal (paras 50, 53 55) has held that this is not required where a taxpayer can show that he or she is in full time employment abroad, but is required in all other circumstances. This is said to reflect the test which would, having regard to past case law, apply in strict law. The present judicial review proceedings are brought on the basis that, whatever the legal position might otherwise be, HMRC must as a matter of public law honour the terms of IR20. This, as I have explained in para 70, follows from the HMRCs assurance, that if satisfied that the facts and evidence fall within chapter 2 of IR20, it will treat the relevant taxpayer accordingly. While accepting this assurance, I confess to some residual unease about a concession so apparently general and independent of any consideration of particular circumstances, including any knowledge and advice possessed by or available to the particular taxpayer. Nevertheless, that is the agreed basis upon which this appeal falls to be considered as a matter of public law. Statutory background Although this case concerns the effect of IR20 and/or Revenue practice, I refer at points to the limited statutory provisions relating to residence to be found in the Income and Corporation Taxes Act 1988 (ICTA 1988), which it will therefore be helpful to set out: 335 Residence of persons working abroad (1) Where (a) a person works full time in one or more of the following, that is to say, a trade, profession, vocation, office or employment; and (b) no part of the trade, profession or vocation is carried on in the United Kingdom and all the duties of the office or employment are performed outside the United Kingdom; the question whether he is resident in the United Kingdom shall be decided without regard to any place of abode maintained in the United Kingdom for his use. (2) Where an office or employment is in substance one of which the duties fall in the year of assessment to be performed outside the United Kingdom there shall be treated for the purposes of this section as so performed any duties performed in the United Kingdom the performance of which is merely incidental to the performance of the other duties outside the United Kingdom. 336 Temporary residents in the United Kingdom (1) A person shall not be charged to income tax under Schedule D as a person residing in the United Kingdom, in respect of profits or gains received in respect of possessions or securities out of the United Kingdom, if (a) he is in the United Kingdom for some temporary purpose only and not with any view or intent of establishing his residence there, and (b) he has not actually resided in the United Kingdom at one time or several times for a period equal in the whole to six months in any year of assessment, but if any such person resides in the United Kingdom for such a period he shall be so chargeable for that year. (2) For the purposes of Cases I, II and III of Schedule E, a person who is in the United Kingdom for some temporary purpose only and not with the intention of establishing his residence there shall not be treated as resident in the United Kingdom if he has not in the aggregate spent at least six months in the United Kingdom in the year of assessment, but shall be treated as resident there if he has. (3) The question whether (a) a person falls within subsection (1)(a) above, or (b) for the purposes of subsection (2) above a person is in the United Kingdom for some temporary purpose only and not with the intention of establishing his residence there, shall be decided without regard to any living accommodation available in the United Kingdom for his use. Section 336(3) was only introduced for and with effect from the tax year 1993 94 by section 208 of the Finance Act 1993. IR20 has, as stated, developed over the years. The version which matters in the case of Mr Davies and Mr James was issued in December 1999. Mr Gaines Coopers case may require consideration also of earlier versions issued in October 1992, November 1993 and October 1996. However, Mr Gaines Coopers case is that he left the United Kingdom permanently long ago and has lived abroad for many years, and the changes in provisions governing his situation are relatively limited. The 1992 version read as follows: Leaving the UK permanently 2.5 If you go abroad permanently but have accommodation in the UK available for your use, you will be treated as resident for any tax year during which you visit the UK (see Chapter 4 for details of when accommodation is regarded as available). The length of the visit does not matter. If you come to the UK in most tax years, you remain ordinarily resident. 2.6 If you go abroad permanently and do not have available accommodation in the UK, you will be treated as remaining resident and ordinarily resident if your visits to the UK average 91 days or more a year. 2.7 If you claim that you are no longer resident and ordinarily resident you will normally be asked to give some evidence that you have left the UK permanently for example, that you have sold your UK home (or you have left it empty and on the market for sale) and set up a permanent home abroad. If you can provide this, you may be treated as provisionally not resident and not ordinarily resident from the day after the date of your departure. Normally this provisional ruling is confirmed after you have lived abroad for a whole tax year, as long as your visits to the UK since leaving have averaged less than 91 days a tax year. 2.8 If you do not have this evidence, a decision is postponed for up to three years. The decision will be based on what has actually happened since you left the UK. Until then you are provisionally treated as remaining resident in the UK. You continue to receive tax allowances and reliefs (see paragraph 8.1). Your tax bill may be adjusted when the final decision has been made. In the event, the guidance regarding accommodation in paragraphs 2.5 and 2.6 was superseded as a matter of law by the introduction (for and from the tax year 1993 94) of section 336(3) of ICTA 1988 (para 72 above), providing that whether a person is in the United Kingdom with the intention of establishing his residence there should be decided without regard to any living accommodation available in the United Kingdom for his use. This change was reflected in the 1993 version of IR20 which read: Leaving the UK permanently 2.6 If you go abroad permanently, you will be treated as remaining resident and ordinarily resident if your visits to the UK average 91 days or more a year. For tax years before 1993 94, if you went abroad permanently but had accommodation in the UK available for your use, you were treated as resident for any tax year during which you visited the UK (see Chapter 4 for details of when accommodation was regarded as available). The length of the visit did not matter. If you came to the UK in most tax years, you remained ordinarily resident. 2.7 If you claim that you are no longer resident and ordinarily resident, you will normally be asked to give some evidence that you have left the UK permanently for example, that you have taken steps to acquire accommodation abroad to live in as a permanent home, and if you continue to own property in the UK, the reason is consistent with your stated aim of permanent residence abroad. If you can provide this, you may be treated as provisionally not resident and not ordinarily resident from the day after the date of your departure. Normally this provisional ruling is confirmed after you have lived abroad for a whole tax year, as long as your visits to the UK since leaving have averaged less than 91 days a tax year. 2.8 If you do not have this evidence, a decision is postponed for up to three years. The decision will be based on what has actually happened since you left the UK. Until then you are provisionally treated as remaining resident in the UK. You continue to receive tax allowances and reliefs (see paragraph 8.1). Your tax bill may be adjusted when the final decision has been made. The Revenue in its submissions before the Supreme Court suggested that section 336(3) has no bearing on the present appellants situations, being relevant to persons who have established residence and ordinary residence abroad and come back here temporarily, rather than to the question whether persons have established ordinary residence abroad (an analysis encapsulated in the title to a contribution to issue 435 of CCH Taxes The Weekly Tax News after the Special Commissioners decision in relation to Mr Gaines Copper: Tis better to have left and returned than never to have left at all: p 37). Whatever the accuracy of the Revenues submission on this point in strict law, it is clear, from the change in treatment of the significance of available accommodation in the 1993 and subsequent versions of IR20, that for the purposes of IR20 the Revenue treated the thinking behind section 336 as directly relevant to the question whether a taxpayer had established residence and ordinary residence abroad. The 1996 version of IR20 was amended by the addition in the light of the decision, some ten years before, of Nicholls J in Reed v Clark [1986] Ch 1 of a new paragraph 2.10, which became paragraph 2.9 of the 1999 version and is of particular relevance to the cases of Mr Davies and Mr James. The 1999 version read: 1 Residence and ordinary residence Residence in both the UK and another country 1.4 It is possible to be resident (or ordinarily resident) in both the UK and some other country (or countries) at the same time. If you are resident (or ordinarily resident) in another country, this does not mean that you cannot also be resident (or ordinarily resident) in the UK. Where, however, you are resident both in the UK and a country with which the UK has a double taxation agreement, there may be special provisions in the agreement for treating you as a resident of only one of the countries for the purposes of the agreement (paragraph 9.2). 2 Leaving the UK . Short absences 2.1 You are resident and ordinarily resident in the UK if you usually live in this country and only go abroad for short periods for example, on holiday or on business trips. Working abroad 2.2 If you leave the UK to work full time abroad under a contract of employment you are treated as not resident and not ordinarily resident if you meet all the following conditions your absence from the UK and your employment abroad both last for at least a whole tax year during your absence any visits you make to the UK total less than 183 days in any tax year, and average less than 91 days a tax year. (The average is taken over the period of absence up to a maximum of four years see paragraph 2.10. Any days spent in the UK because of exceptional circumstances beyond your control for example the illness of yourself or a member of your immediate family, are not normally counted for this purpose.) 2.3 If you meet all the conditions in paragraph 2.2, you are treated as not resident and not ordinarily resident in the UK from the day after you leave the UK to the day before you return to the UK at the end of your employment abroad. You are treated as coming to the UK permanently on the day you return from your employment abroad and as resident and ordinarily resident from that date. If there is a break in full time employment, or some other change in your circumstances during the period you are overseas, we would have to review the position to decide whether you still meet the conditions in paragraph 2.2. If at the end of one employment you returned temporarily to the UK, planning to go abroad again after a very short stay in this country, we may review your residence status in the light of all the circumstances of your employment abroad and your return to the UK. If you do not meet all the conditions in paragraph 2.2, you remain resident and ordinarily resident unless paragraphs 2.8 2.9 apply to you. Special rules apply to employees of the European Community (see paragraph 2.14). 2.4 The treatment in paragraph 2.3 will also apply if you leave the UK to work fulltime in a trade, profession or vocation and you meet conditions similar to those in paragraph 2.2. Meaning of full time 2.5 There is no precise definition of when employment overseas is full time, and a decision in a particular case will depend on all the facts. Where your employment involves a standard pattern of hours, we will regard it as full time if the hours you work each week clearly compare with those in a typical UK working week. If your job has no formal structure or no fixed number of working days, we will look at the nature of the job, local conditions and practices in the particular occupation to decide if the job is full time. If you have several part time jobs overseas at the same time, we may be able to treat this as full time employment. That might be so if, for example, you have several appointments with the same employer or group of companies, and perhaps also where you have simultaneous employment and self employment overseas. But if you have a main employment abroad and some unconnected occupation in the UK at the same time, we will consider whether the extent of the UK activities was consistent with the overseas employment being full time. Accompanying spouse 2.6 If you are the husband or wife of someone who leaves the UK within the terms of paragraph 2.2 or 2.4 and you accompany or later join your spouse abroad, you may also by concession (extra statutory concession A78) be treated as not resident and not ordinarily resident from the day after your departure to the day before your return, even if you are not yourself in full time employment abroad. This applies where you are abroad for a complete tax year, and during your absence any visits you make to the UK total less than 183 days in the tax year average less than 91 days a tax year. (The average is taken over the period of absence up to a maximum of four years see paragraph 2.10. Any days spent in the UK because of exceptional circumstances beyond your control, for example the illness of yourself or a member of your immediate family, are not normally counted for this purpose.) Where the tax years of your departure or return are spilt in this way, your tax liabilities which are affected by residence status are calculated on the basis of the period you are treated as resident in the UK. Leaving the UK permanently or indefinitely 2.7 If you go abroad permanently, you will be treated as remaining resident and ordinarily resident if your visits to the UK average 91 days or more a year see paragraph 2.10. Any days spent in the UK because of exceptional circumstances beyond your control, for example the illness of yourself or your immediate family, are not normally counted for the purposes of averaging your visits. 2.8 If you claim that you are no longer resident and ordinarily resident, we may ask you to give some evidence that you have left the UK permanently, or to live outside the UK for three years or more. This evidence might be, for example, that you have taken steps to acquire accommodation abroad to live in as a permanent home, and if you continue to have property in the UK for your use, the reason is consistent with your stated aim of living abroad permanently or for three years or more. If you have left the UK permanently or for at least three years, you will be treated as not resident and not ordinarily resident from the day after the date of your departure providing your absence from the UK has covered at least a whole tax year, and your visits to the UK since leaving have totalled less than 183 days in any tax year, and have averaged less than 91 days a tax year. (The average is taken over the period of absence up to a maximum of four years see paragraph 2.10. Any days spent in the UK because of exceptional circumstances beyond your control, for example the illness of yourself or a member of your immediate family, are not normally counted for this purpose.) 2.9 If you do not have this evidence, but you have gone abroad for a settled purpose (this would include a fixed object or intention in which you are going to be engaged for an extended period of time), you will be treated as not resident and not ordinarily resident from the day after the date of your departure providing your absence from the UK has covered at least a whole tax year; and your visits to the UK since leaving have totalled less than 183 days in any tax year and have averaged less than 91 days a tax year. If you have not gone abroad for a settled purpose, you will be treated as remaining resident and ordinarily resident in the UK, but your status can be reviewed if your absence actually covers three years from your departure, or evidence becomes available to show that you have left the UK permanently providing in either case your visits to the UK since leaving have totalled less than 183 days in any tax year and have averaged less than 91 days a tax year. Calculating annual average visits 2.10 If it is necessary to calculate your annual average visits to the UK, the method is as follows: Total visits to the UK in days x 365 Total period since leaving (in days) = annual average visits . After the third review the year of departure is dropped from the calculation. At each subsequent review the oldest year is dropped, so that there is a rolling period of four years being reviewed. However, if during your absence the pattern of your visits varied substantially year by year, it might be appropriate to look at the absence as being made up of separate periods for the purpose of calculating average visits. This might be necessary if, for example, a shift in the pattern of your visits suggested a change of circumstances, which altered how we viewed your residence status. Contacting the Inland Revenue 2.11 You should let us know when you leave the UK (other than for short trips as in paragraph 2.1). You will normally be asked to complete form P85,which will help to determine your residence status. Paragraphs 2.1 to 2.6 repeated similar provisions in previous editions, all including a 183 day limit. Such a limit appears for the first time in the 1996 edition in paragraphs dealing with Leaving the UK permanently . Again, it is clear that, even if the scope of section 336 of ICTA 1988 may in strict law be regarded as confined to persons who have already established residence and ordinary residence abroad, the Revenue was inspired to take a more generalised view of the relevance of a 183 day limit in IR20, treating it as part of the test whether someone has established residence and ordinary residence abroad. Davies and James Mr Davies and Mr James are British citizens, who were born in the United Kingdom and lived and worked in Wales until 2001, when they took decisions, with the benefit of undisclosed professional tax advice, aimed at bringing about a cessation of ordinary residence here. In pursuit of those decisions, in March 2001, they moved from the United Kingdom to apartments in Brussels, and incorporated and became directors of a Belgian company, Beaufort House SA, in which each held one third of the shares. They also entered into employment contracts for full time work with that company for three years from 1 April 2001. They say that, in planning for and making this move, they and their tax advisers, PriceWaterhouseCoopers, relied upon the guidance in IR20 in believing that it would mean that they would cease to be ordinarily resident in the United Kingdom. The importance of this is that, in the tax year 2001 02, as they probably already envisaged, they realised chargeable gains in respect of which they became liable to capital gains tax unless they were not resident and ordinarily resident in the United Kingdom in that tax year. In May 2002 they submitted to HMRC forms P85 (Leaving the United Kingdom) declaring that their intention had been to live outside the United Kingdom for a full tax year after their departure (though not permanently), that they would be working full time under a contract for their employment abroad for three years and that they expected to be in the United Kingdom for less than 90 days a year. HMRC maintains and the Court of Appeal has held that Mr Davies and Mr James are unable to take advantage of paragraph 2.2 of IR20, because their employment by Beaufort House SA did not in fact commence from 5 April 2001, but only later, since on 5 April 2001 they were in fact on holiday in Italy. That is accepted factually, but Mr Goldberg QC does not abandon his clients submission that it is sufficient under paragraph 2.2 that their employment should last for at least a whole tax year including a later tax year, such as 2002 03. Rightly, however, he did not elaborate on the submission, which is without merit. It is plainly implicit that the whole tax year to which paragraph 2.2 refers is that in relation to which absence of ordinary residence in the United Kingdom is asserted. Mr Goldberg QC for Mr Davies and Mr James has thus to fall back on paragraph 2.8 or 2.9. In relation to these paragraphs, Mr Daviess and Mr Jamess case is that they went abroad either to live outside the United Kingdom for three years or more within paragraph 2.8 or, at least, for a settled purpose within paragraph 2.9, and that they were in fact absent from the United Kingdom for the whole tax year 2001 02, indeed for three tax years, from such departure, and that their visits to the United Kingdom totalled less than 183 days in any such tax year and averaged less than 91 days a tax year. HMRC asserts in response that Mr Davies and Mr James failed to establish the necessary distinct break with family and social ties in the United Kingdom. In particular, they continued to each to have a substantial house here, in which their spouses lived when not visiting them in Belgium and where they lived when in the United Kingdom; and they retained employment and business links in the United Kingdom, as well as other links such as with Swansea Football Club and the Area Health Authority. The Court of Appeal held that the issue whether such a break was necessary under IR20 should be determined in the present judicial review proceedings prior to any proceedings before the Special Commissioners ([2008] EWCA Civ 933, paras 18 19 and 24). Gaines Cooper Mr Gaines Coopers case involves very different and more complex facts, which have already been established in proceedings before the Special Commissioners, who, in a full and very clearly reasoned decision, concluded that Mr Gaines Cooper was in law resident and ordinarily resident during the relevant tax years in the United Kingdom. In doing so they said that in this appeal we must apply the law rather than the provisions of IR20: para 99. A brief summary will suffice, since it is of the essence of the present appeal that most of the facts so established are irrelevant under IR20 and/or under Revenue practice. Mr Gaines Cooper is also a British citizen, who was born and educated and for many years lived here. But by 1974 he had formed the view that the tax regime in the United Kingdom was unfavourable to businessmen and entrepreneurs, and on that basis he began to establish overseas interests. He did so first in Canada and then in the Seychelles, where he purchased a house (Bois Noir) in late 1975 and was granted a residency permit in February 1976 and with which he has had close links ever since, and later elsewhere worldwide. In February 1980, HMRC wrote to him asking for details of his travel to the United Kingdom between 1976 and 1979. The figures provided for days spent, which there is no reason to doubt, were 49, 45 and 56, not counting days of arrival and departure. HMRC raised no further queries thereafter and did not suggest that he might be taxable as resident or ordinarily resident in the United Kingdom until 2000, when the inquiries began which led eventually to these proceedings. After marrying Mrs Dilona Lantang in 1979, Mr Gaines Cooper also purchased a house in California, where they lived for a time, but the marriage was dissolved in 1986. In 1993 he married a Seychellois citizen, Miss Jane Laye Sion, whom he had met in the Seychelles, but who had moved with her family to the United Kingdom, and their son James was born in 1998. Through off shore companies, Mr Gaines Cooper has retained property in the United Kingdom which was, apart from occasional periods of letting, available for his use. Since early 1989 that has consisted of Old Place, near Henley, where his wife, Mrs Jane Gaines Cooper lives during term time, as does Mr Gaines Cooper when here. By reason of the availability of such property, Mr Gaines Cooper accepts that, in the tax years immediately prior to 1993 94 and under the language then of IR20, the availability of such property meant that he was, even though he might satisfy all other conditions of IR20, to be treated as ordinarily resident in the United Kingdom. In school holidays, Mrs Gaines Cooper and James also join Mr Gaines Cooper abroad in the Seychelles or wherever he may be. In October 1987 Mr Gaines Cooper acquired an Italian company, Orthofix, administered from Cyprus and from about 1988 serviced by a company of which he was director based in Henley. He developed it by 2003 into a worldwide company with subsidiaries registered in twenty four countries. From 1992 to 1995 he was employed half time to perform duties in the United Kingdom for Orthofix. After about 1987 he also became involved in manufacturing Laryngeal masks, first through a Seychelles company and then from 1988 by mass production in Indiana, USA. So far as he had earnings here, he paid tax on them here. During the relevant tax years, Mr Gaines Cooper spent about 150 days each year on airplanes, travelling between his interests in different countries, and spending each year in total about three or four months in the United Kingdom, three or four months in Jersey, six to eight weeks in the United States, two weeks in Cyprus and two weeks in Italy. He also made visits to the Seychelles, which involved in the years 1991 92 to 1995 96 weeks in total rather than months according to the Special Commissioners (para 108). It is now common ground that the total days spent by Mr Gaines Cooper in the United Kingdom, calculated by ignoring days of arrival and departure (in accordance with IR20) were, in the tax years 1992 93 to 2002 03, as follows (the square bracketed figures being those arrived at by the Commissioners who concluded that when examining the position in strict law they should add back days of arrival and departure, including single day trips to the United Kingdom): 1992 93: 107 (including 60 for a heart bypass) [147]; 1993 94: 78 [121]; 1994 95: 110 [158]; 1995 96: 66 [110]; 1996 97: 109 [146]; 1997 98: 92 (including 8 for Jamess birth) [141]; 1998 99: 110 (including 8 for Jamess birth) [151]; 1999 2000: 81 [127]; 2000 01: 50 [94]; 2001 02: 0 [27]; and 2002 03: 68 [105]. The Commissioners concluded, looking at the position overall, that England remained the centre of gravity of [Mr Gaines Coopers] life and interests, because he lived in Henley more than anywhere else and because of his many other ties to Berkshire and Oxfordshire. On the basis of figures calculated according to IR20 (and all the more so if one excludes as exceptional circumstances the time spent here for a heart bypass and Jamess birth), Mr Gaines Cooper satisfied in the relevant tax years the conditions both that his visits should in no tax year total 183 days and that they should have averaged over any four year period less than 91 days a year. Mr Gaines Cooper clearly intended to maintain that position permanently or for three years or more, and has maintained it over a period of many years. The essential question is whether that is sufficient to attract the benefit of paragraph 2.7, read with paragraph 2.8, or paragraph 2.9 of IR20. The status and interpretation of IR20 Giving the leading judgment in the Court of Appeal Moses LJ, with whose reasoning Dyson LJ agreed, addressed the question of the status and interpretation of IR20 (1999 version) in relation to questions of residence for the purpose of taxation as follows (para 4): It is notorious that the principles to be applied [on such questions] are to be found, not in the few statutory provisions (sections 334 336 ICTA 1988, now sections 829 832 ITA 2007), which do not purport to be a statutory code but in case law, mainly from the late 19th and early 20th Century. As the Codification Committee recognised, only study of that jurisprudence would enable intelligent prediction of the outcome of an assertion as to residence or non residence. All the more important, then, that guidance should be given on which taxpayers could rely. The Income Tax Codification Committee, chaired by Lord Macmillan and reporting in 1936 (Cmd 5131), put the matter strongly, saying: We are, however, of opinion that the present state of affairs, under which an enquirer can only be told that the question whether he is resident or not is a question of fact for the Commissioners, but that by the study of the effect of a large body of case law he may be able to make an intelligent forecast of their decision, is intolerable and should not be allowed to continue. (paragraph 59) The Codification Committees prescription to resolve this situation was a draft set of statutory rules, which was not however enacted. Nearly 20 years later in 1955, the Royal Commission on The Taxation of Profits and Income (Cmd 9474) set out what it believed to be the practice which the Revenue followed and claimed to derive from the few statutory rules existing and from decided cases. This included a principle that: A man who has been regularly resident in the United Kingdom and has then gone abroad may or may not be treated as a visitor if he comes back again at any time. That depends primarily on the question whether the circumstances in which he went abroad indicate a clear break with the United Kingdom as his place of ordinary residence. (paragraph 290) The Commission, quoting the 1936 reports words set out above, agreed that the state of affairs was unsatisfactory. It suggested as the remedy a printed leaflet which sets out at any rate the main lines of the Revenue Departments established practice, and went on to say that: . fixed rules would simplify the work of administration even if they worked unreasonably in some instances. But it is one of the arguments against the existing system that it does lead to the devotion of a great deal of time and skill to considering and adjudicating upon individual cases, whereas the establishment of certain fixed rules would make this unnecessary without giving any individual a serious cause of complaint. Indeed we think that the visitor or potential visitor would normally prefer certainty to the assurance that there will be the fullest consideration of his personal circumstances. (paragraph 292) By 1961 separate visitors and permanent residence leaflets were in existence, and steps were begun to bring into existence the single guidance which became the first edition of IR20 in 1973. The Preface to IR20 has since 1992 started with the statement that: The notes in this booklet reflect the law and practice at the time of writing. They are not binding in law and do not affect rights of appeal about your own tax. You should bear in mind that the booklet offers general guidance on how the rules apply, but whether the guidance is appropriate in a particular case will depend on all the facts of that case. Until 1996 it went on: From 1996, it read: You should therefore always consult an Inland Revenue Tax Office on how the rules apply in your own case . If you have any difficulty in applying the rules in your own case, you should consult an Inland Revenue Tax Office . This change followed from the introduction in April 1996 of self assessment, representing a major shift in the responsibilities of taxpayers, who from then on had to determine for themselves in the first instance whether or not they were ordinarily resident for tax purposes. However, it is not, I understand, suggested that the change is critical to the outcome of the present appeals in any year. Paragraph 1.1 of IR20 notes that the terms residence and ordinary residence are not defined in the Taxes Acts, but states that: The guidelines to their meaning in this Chapter and in Chapters 2 . and 3 . are largely based on rulings of the courts. This booklet sets out the main factors that are taken into account, but we can only make a decision on your residence status on the facts in your particular case As Moses LJ underlined in paras 17 to 25 of his judgment, HMRC has given, both by the language of paragraphs 2.2 to 2.9 and expressly in the present proceedings (para 70 above), a binding and lawful assurance that it will treat a taxpayer, whose case falls within the circumstances described, as not resident and not ordinarily resident. The significance of the words quoted above from the Preface and paragraph 1.1 is to show that the guidance is meant to reflect the law and practice, and to set out the main factors and that, although it is not binding in law and does not affect a taxpayers right of appeal, it was and is intended to obviate any need for a taxpayer to look further. As HMRC itself put the matter, in writing to PriceWaterhouseCoopers about Mr Daviess and Mr Jamess positions on 14 March 2005: it is generally accepted that some of the practices outlined in IR20 are relaxations from the strict position. Not all these relaxations are covered in Extra Statutory Concessions (ESCs). Parliamentary Draftsmen did not draw up the IR20 notes, as they are simply general guidance. Therefore it is not appropriate to seek to construe this general guidance as if it were statute law. On the other hand we do consider ourselves bound to follow the practices outlined in IR20. Therefore if your clients circumstances place them within IR20 2.2, or 2.7 etc we will accept the non resident (NR) claim. This conclusion would apply even if a strict interpretation of the law suggested otherwise. Moses LJ correctly identified each of paragraphs 2.2 to 2.9 in the 1999 version as requiring at the outset not merely a departure from the United Kingdom, but satisfaction of a further qualification (in addition to the later provisos relating to the duration of absence from and of visits to the United Kingdom). In the case of paragraph 2.2, the further qualification was that he must have left to work full time; no more, and in particular no severance of any family and social ties within the United Kingdom, was required (para 43). But, in the case of paragraphs 2.7 to 2.9, he held that severance of ties had to be demonstrated, because (para 44) The adverbs permanently or indefinitely make, as a matter of construction, all the difference. The extent to which a taxpayer retains social and family ties within the United Kingdom must have a significant and often dispositive impact on the question whether a taxpayer has left permanently or indefinitely (for at least three years). It makes no sense to construe leave when qualified by the adverbs permanently or indefinitely as referring to the process of going abroad. They clearly require consideration of the quality of the absence and contrast with 2.1 . Moses LJ considered that this interpretation was supported both by the contrast with paragraph 2.1 (short absences) and by the reference in paragraph 2.8 to the need, if you continue to have property in the UK for your use, for evidence that the reason is consistent with your stated aim of living abroad permanently or for three years or more. To my mind, however, the references in paragraphs 2.7 and 2.8 to going abroad permanently or to live outside the UK for three years or more and to a stated aim of living abroad permanently or indefinitely are directed most obviously to the taxpayers intention regarding the overall duration of his or her absence, rather than to the quality of absence or the nature of any return visits or continuing British connections. Further, it is clear that the words Leaving the UK permanently or indefinitely cannot and do not precisely or accurately reflect all the paragraphs above which they appear. Thus, the only requirements under the first part of paragraph 2.9 are (i) going abroad (ii) for a settled purpose, which is expressly defined to include a fixed object or intention in which you are going to be engaged for an extended period of time. That paragraph, reflecting Reed v Clark [1986] Ch 1, is again focused on the taxpayers intention when going abroad; and a settled purpose to engage in an overseas activity for an extended period of time may clearly exist without any intention to stay overseas either permanently or indefinitely. As in Reed v Clark, therefore, a taxpayer may have a settled purpose simply to remain outside the United Kingdom for one tax year. When paragraph 2.9 starts with the phrase If you do not have this evidence, this cannot mean that paragraph 2.9 only applies as a sort of long stop, when a taxpayer is asserting that his intention was to go abroad permanently or indefinitely, but when he cannot prove this but can prove some more limited settled purpose. To that extent, I disagree with Moses LJs description of paragraph 2.9 as designed to assist taxpayers who lack evidence (para 50), a description which may have been based on a partial concession below (para 51) which cannot however be sustained. In my opinion, paragraph 2.9 is designed to assist taxpayers who never intended to leave permanently or indefinitely, but can show a settled purpose of lesser duration. The second part of paragraph 2.9 deals likewise with situations where there was neither an intention to go abroad permanently or indefinitely nor, additionally, any settled purpose. It covers two possibilities: one that the taxpayer can subsequently say and show that he has now acquired an intention to leave the United Kingdom permanently (or, one would presume though this is not expressed, for three years or more); the other that his actual absence covers three years from departure. This second possibility looks on its face at the period for which he is abroad, again without focusing on the quality of absence. Paragraph 2.1 in my view also lends no real support to HMRCs case. It focuses on persons who usually live in this country and only go abroad for short periods for example, on holiday or on business trips. Not only does this leave open what is meant under IR20 by usually living here, but the reference to only going abroad for short periods cannot be regarded as matching either Mr Gaines Coopers or Mr Daviess and Mr Jamess lifestyles during the relevant periods, and is consistent with an analysis whereby persons spending less than 91 days here within the terms of paragraphs 2.2 onwards are not treated as ordinarily resident. What is also worth note is the use throughout chapter 2 of words such as go abroad, leave and departure interchangeably in relation to short and long term absence. It is impossible to derive from any of them any message as to the quality of the absence required for cessation of United Kingdom residency. Reference was made to a short check sheet (Notes on Non residence) issued by HMRC to persons making tax returns, which included from the tax year 2000 01 a question 2A, asking Have you left the UK? with a note: Even if you make frequent trips abroad in the course of your employment, you will not have left the UK if you usually live in the UK, and your home and settled domestic life remain here, If NO, you are resident in the UK . This was introduced after a number of long distance lorry drivers based in, but driving overseas for substantial periods from, the United Kingdom made claims to be not ordinarily resident here. One would have thought that such claims were self evidently not admissible, on the basis that part of such drivers work must have taken place in the United Kingdom, eg when they collected and returned vehicles or tractors. Question 2A recognises this by its reference to making frequent trips abroad in the course of your employment. It does not address persons who worked basically abroad, although sometimes coming here on business. In any event, it does not form part of IR20, and it has not been relied upon by HMRC as qualifying whatever IR20 may mean. It follows from what I have already said that I do not find in the express terms of paragraph 2 of IR20, or in particular in the words permanently or indefinitely, direct support for any requirement for a distinct break. Looking at the matter more broadly, it would seem to me remarkable that, if any such requirement were intended, it was not clearly expressed. The guidance is intended to be useful as well as reliable. A requirement for a distinct break from family and social ties in the United Kingdom would certainly be a main factor (see paragraph 1.1). It and its uncertainty would also be matters of obvious concern to many taxpayers. How (for example) does one demonstrate a distinct break from family ties, in a world where spouses or partners may live and work in different countries, but meet regularly in one or the other? This is highlighted by a point made by Moses LJ after he had referred to section 334 of ICTA 1988 and to case law including Levene v Inland Revenue Comrs [1928] AC 217, The Comrs of Inland Revenue v Combe (1932) 17 TC 405, Revenue and Customs Comrs v Grace [2009] STC 2707 and Reed v Clark. He said (para 53): While IR20 is designed to guide and simplify, I cannot accept that it provides a warrant for ignoring so obvious a factor [as the need for a distinct break] for determining whether a taxpayer hitherto resident and ordinarily resident in the UK has ceased to be so and has left permanently or indefinitely. Yet HMRC now suggests that the existence of so obvious a factor was left to inference from what appear, at best, very opaque clues. Moses LJ regarded the statutory and case law position as confirming his view that a distinct break was required. He said (para 52): I am confirmed in that view by the objective of IR20 stated in the opening words of the preface, that it is designed to reflect the law. It would, therefore, be surprising if IR20 had the effect of contradicting established jurisprudence. In my opinion, it is wrong to start with the premise that IR20 was designed to reflect the law as a court would interpret it apart from IR20 and Revenue practice; and also wrong to assume a knowledge of the case law as background to the construction of IR20. The purpose of IR20 was to reflect the law and practice. It was addressed to individual taxpayers, and, even if they might often have professional advisers, those advisers would be very likely to be, as Mr Daviess and Mr Jamess were, accountants rather than lawyers, and correspondingly interested in HMRCs understanding and practice rather than prepared to attempt exhaustive analysis of legal authority. These points are underlined, rather than undermined, by Miss Simler QCs submission that there is nothing in IR20 to suggest that there is likely to be any divergence from the law. To the extent that that is so, it confirms that, even if he were interested in the legal position apart from Revenue understanding and practice, a taxpayer or professional adviser need look no further than IR20. It follows that the terms of IR20 should be read as independent of any conclusion to which a strict interpretation of the law might lead: see HMRCs letter dated 14 March 2005 (para 87 above). A degree of simplification brought about by fixed rules, in place of a difficult judgment as to whether the circumstances indicated a clear break with the United Kingdom as his place of ordinary residence, is indeed precisely what the Royal Commission on The Taxation of Profits and Income encouraged in 1955 (para 84 above). The aim and function of IR20 in this respect is demonstrated by consideration of the further conditions of chapter 2. In addition to the requirements already discussed, a taxpayer seeking to take advantage of paragraphs 2.7 to 2.9 must satisfy two conditions relating to duration of absence from and visits to the United Kingdom. As I have already stated (para 75 above), the first (absence totalling less than 183 days in a tax year) was clearly inspired by the provisions of section 336(1)(b), delimiting what counts as temporary residence in the United Kingdom. The second (an average of less than 91 days a tax year in the United Kingdom) has no statutory basis. It is a condition introduced by HMRC to enable a taxpayer to know where he stands in HMRCs eyes. It is there, on its face, as a measure of the degree of separation from the United Kingdom which HMRC will in practice accept as sufficient to avoid ordinary residence here. The further references in paragraph 2.8 to the exclusion from this 91 day average period of days spent here due to exceptional circumstances such as the illness of yourself or a member of your immediate family do not fit with an expectation of a distinct break of social or family ties with the United Kingdom. The reference in all versions of IR20 from November 1993 on to a person being able to have property available for use in the United Kingdom during his visits here also militates against a requirement of a distinct break. IR20 should in this connection be read on its own terms, independently of the statutory or common law background to that reference. There is here, however, a minor paradox, since the October 1992 version contains a contrary reference, reflecting the law as it was prior to the Finance Act 1993 which introduced section 336(3) into ICTA 1988 for the tax year 1993 94 (para 74 above). Mr Gaines Cooper had property available for his use in the United Kingdom at all material times. In relation to the tax year 1993 94 he cannot simply rely on IR20, he must rely upon it as (notionally) supplemented by section 336(3). However, HMRC did not in its submissions identify this as a specific problem for Mr Gaines Cooper in relation to the tax year 1993 94, and I will put it on one side for the moment. Moses LJ found support in paragraph 1.4 for his view that a value judgment was necessary as to whether there had been a direct break (para 53). That the guidance in paragraph 1.4 is correct is clear. But it says, to my mind, nothing about whether such a value judgment is necessary under paragraphs 2.7 to 2.9. In particular, it is obvious that, if a person falls automatically to be treated as ordinarily resident here if he or she spends 91 days or more here, he or she may well be ordinarily resident in one or two other countries in the same tax year, whether on the basis of an equivalent 91 day rule there or for more general reasons. It does not follow that compliance with the express requirement and conditions of paragraphs 2.7 to 2.9 may not be sufficient to ensure that a person is not ordinarily resident here. Ward LJ appears to have concluded (paras 118 119) that the appellants each had an unarguably strong case for claiming to be ordinarily resident abroad under IR20. But he went on to say that the principle of case law recognised in Viscount Cave LCs dictum in Levene v Inland Revenue Comrs [1928] AC 218, 233, that a man may reside in more than one place, entitled HMRC to look for a clear or clean break with this country. That is once again to make the error of applying the case law, rather than the terms of IR20. In so far as paragraph 1.4 reflects a similar principle, it must be read not as watering down the categorical guidance as to situations of non residence given in chapter 2, but consistently with that guidance in the way which I have indicated in the previous paragraph. It is submitted on behalf of HMRC that all that the specific 91 day rule does is identify a limit which HMRC applies to persons who would or might otherwise be able to show that they are not ordinarily resident (ie by having made a distinct break with United Kingdom ties). It is an upper limit above which HMRC will not accept absence of ordinary residence, but keeping below that limit does not indicate or point to an absence of ordinary residence. The word providing used in paragraphs 2.8 and 2.9 of the 1999 version is particularly relied upon. The language used in IR20 is however variable. In previous versions of paragraph 2.8 (see the versions of paragraph 2.7 quoted in paras 73 and 74 above) and in paragraph 2.7, words such as as long as and if were and are used, and the limit is clearly expressed as a condition of entitlement in paragraphs 2.2 and 2.6 dealing with persons with full time employment outside the United Kingdom and their accompanying spouses. It is of course HMRCs case that a distinction is to be drawn between paragraphs 2.2 to 2.6 and later paragraphs, but to my mind the distinction rests on weak foundations in so far as it is based on such terminological differences. The natural meaning to a potential taxpayer of all relevant paragraphs of the guidance is, as I see it, that, as long as he confines his presence within the United Kingdom to less than 183 days in any one tax year and less than 91 days average per tax year, and satisfies the other requirements relating to intention and/or years spent abroad, he will qualify as not ordinarily resident. In my opinion, the natural meaning of chapter 2 in all its versions since at least 1993 is that, rather than imply the case law test of a distinct break, they introduced (and for public law purposes substitute) a series of specifically delineated cases, into which, if a taxpayer falls, he or she will be treated without more as not resident or ordinarily resident in the United Kingdom. I repeat that the suggestion that the distinct break test is implicit in the language of paragraphs 2.5 to 2.9 (though not in that of paragraph 2.2) appears to me remarkable in the light of the obvious importance of such a factor if it were envisaged. Paragraphs 2.5 to 2.9 of IR20 are essentially futile, indeed positively misleading, if they are read as incorporating or reiterating the difficult case law test of a distinct break, and moreover imposing a further specific restriction (a 91 day average limit) to the taxpayers disadvantage. I appreciate that, in all the appellants cases, the view may be taken that it is desirable and appropriate that HMRC should be able to tax as ordinarily resident persons with the life style and connections with the United Kingdom of these appellants. That is a moral or fiscal judgment, which may well reflect the strict law (and evidently does so in the case of Mr Gaines Cooper). But it does not follow that it is the conclusion to be drawn from the guidance in IR20 which HMRC issued, in the interests of good governance, clarity and transparency for the benefit of individuals, to explain the combination of the law and practice by reference to which such individuals could direct their affairs. I would therefore allow these appeals, so far as they concern the correct interpretation of IR20. It seems to me to follow from the assurance given by HMRC in these proceedings (para 70 above) that there should be a declaration that HMRC should treat the appellants in respect of the relevant tax years (save perhaps 1992 93, on which I would be prepared to hear any further specific submissions) in accordance with that interpretation of IR20. I did not find in Mr Eadies submissions any good reason to the contrary. Since writing this judgment, I have had the benefit of reading Lord Wilsons judgment. My own view, as will be apparent from what I have already written, is that to treat IR20 as pregnant with the detailed implications listed in para 45 (or, in summary, as informing an ordinarily sophisticated taxpayer of a need for a multifactorial evaluation of his or her circumstances and for a distinct break) runs contrary not only to the wording and sense of the document itself but also to its genesis and purpose: paras 83 87 above; so also, to treat IR20 as so unclear as to communicate nothing to which legal effect can be given on the means by which non resident status might be acquired. Practice It is in these circumstances unnecessary to go into the secondary issue regarding HMRCs practice prior to 2005, when the issues relating to the appellants first crystallised. Whether the appellants can show a clear and unequivocal practice is in issue, as are potentially how far it would be necessary to establish any general or particular knowledge of or reliance on such a practice and how far they could hold HMRC to such a practice as a matter of legitimate expectation. These are all matters into which I prefer not to go. Conclusion I would allow these appeals, on the primary issue of interpretation of IR20 and make the declaration to which I have referred in para 101. |
This appeal concerns the compatibility with EU law of regulations 21 and 24 of the Immigration (European Economic Area) Regulations 2006 (SI 2006/1003) (EEA Regulations 2006) and the legality at common law of the appellants administrative detention from 3 April until 6 June 2012 and of bail restrictions thereafter until 2 January 2013. The regulations were designed to give effect to the Citizens Directive 2004/58/EC of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the member states (hereinafter the Directive). The appellant appeals, with permission granted by the Supreme Court, against an order of the Court of Appeal (Moore Bick, Briggs and Christopher Clarke LJJ) of 10 December 2013 [2014] 1 WLR 3313. In a judgment given by Moore Bick LJ, with whom the other members of the court agreed, the Court of Appeal dismissed the appellants appeal against the amended order of Eder J made in the Administrative Court on 24 June 2013. In a judgment handed down on 15 March 2013; [2013] EWHC 567 (Admin), Eder J refused part of the appellants claim for judicial review challenging his administrative detention by the respondent (SSHD). The SSHD sought to justify the appellants detention under regulations 19 and 24 of the EEA Regulations 2006 (as amended), which provide, so far as material, as follows: 19. Exclusion and removal from the United Kingdom (3) Subject to paragraphs (4) and (5), an EEA national who has entered the United Kingdom or the family member of such a national who has entered the United Kingdom may be removed if (a) to reside under these Regulations; or that person does not have or ceases to have a right (b) the Secretary of State has decided that the persons removal is justified on grounds of public policy, public security or public health in accordance with regulation 21. 24. Person subject to removal (1) If there are reasonable grounds for suspecting that a person is someone who may be removed from the United Kingdom under regulation 19(3)(b), that person may be detained under the authority of an immigration officer pending a decision whether or not to remove the person under that regulation, . (3) Where a decision is taken to remove a person under regulation 19(3)(b), the person is to be treated as if he were a person to whom section 3(5)(a) of the 1971 Act (liability to deportation) applied and section 5 of that Act (procedure for deportation) and Schedule 3 to that Act (supplementary provision as to deportation) are to apply accordingly. Regulation 21, which is designed to give effect to articles 27 and 28 of the Directive, is referred to in paras 34 and 35 below. Issues in this appeal In the agreed statement of facts and issues the parties agreed that the appeal raises the following issues. (1) Does the detention power under regulation 24(1) of the EEA Regulations 2006 discriminate without lawful justification against EEA nationals and their family members? (2) Is the power in regulation 24(1) to detain before the making of a decision to deport disproportionate? (3) In particular, does the absence of a time limit render such detention unlawful under EU law? (4) Does regulation 24(1) unlawfully restrict the rights of EEA nationals and their family members by contrast to those enjoyed before the coming into force of the Citizens Directive which the EEA Regulations 2006 purport to implement? (5) Do regulations 21 and 24 of the EEA Regulations 2006 fail accurately to transpose the safeguards of articles 27 and/or 28 of the Citizens Directive? (6) Were the appellants administrative detention from 3 April until 6 June 2012 and the bail restrictions imposed upon him until 2 January 2013 unlawful by reason of the matters raised in questions (1) to (5) above? The facts The facts are not in dispute and can largely be taken from the agreed statement of facts and issues. The appellant is an Algerian national born on 21 August 1968 who arrived in the United Kingdom in March 1996, gaining entry using a false French identity card. On 4 March 1996 he applied for asylum, which was refused. He appealed. On 25 February 1997 he married a French national who was a worker in the UK and on 5 February 1998 he was granted a five year residence permit as the family member of an EEA national. The permit was renewed until 14 April 2004. The appellant and his wife had two children who were born on 30 June 1997 and 23 October 1998 respectively. He withdrew his asylum appeal on 9 February 1999. In or about 2001, the appellants wife became depressed with psychotic symptoms and became involuntarily unemployed. The appellant, who worked as a barber, began abusing alcohol, heroin and crack cocaine. The two children were taken into care. The couple became estranged before the birth of their third child in July 2004. The appellants wife returned to France with the youngest child in late 2005. The two older children were transferred to care in France by an order of the Family Court dated 31 January 2006. The appellant acquired a right of permanent residence in the UK under EU law. Article 16(2) of the Directive establishes a right of permanent residence for family members legally residing with an EEA national in a host member state for a continuous period of five years. That entitlement was transposed in regulation 15(1)(b) of the EEA Regulations 2006. The appellant had fulfilled that condition by 5 February 2003. By the end of January 2012, the appellant had been subject to 28 criminal convictions for 48 offences. His longest custodial sentence was imposed in 2008 when he was sentenced to 23 months imprisonment for three offences of theft, possession of controlled drugs and affray and possession of a bladed article. His other custodial sentences have been imposed for acquisitive offences (theft and handling stolen goods) and offences of personal drug possession, namely possession of a class A drug (crack cocaine) and possession of a Class B drug (cannabis resin). He also received non custodial sentences for motor vehicle offences, failure to surrender to bail, failure to comply with community punishments, being drunk and disorderly and further acquisitive and drug possession offences. A full list of the appellants convictions until and including the index offence (which gave rise to the period of detention under challenge) was agreed between the parties as an addendum to the agreed facts and issues. The list is attached to this judgment. It can be seen that the appellant was guilty of a series of offences. The First tier Tribunal, Immigration and Asylum Chamber (the FtT IAC) subsequently described his offending in this way: 16. We have studied the record of the appellants offences with care. Whatever the future may hold, no one can gainsay the appellants past propensity to re offend. However, the appellants convictions are, almost without exception, for petty opportunistic thefts or possession of drugs. None discloses any violence, nor is it suggested that the appellant has ever dealt in drugs. When sentencing the appellant to 8 months imprisonment on 20 November 2006, the Recorder described the appellant as a pest, a nuisance. He went on to note that the offences were petty thefts and that the appellant to his credit had not sought to use violence or hide anything. The Recorders characterisation of the appellant as a pest was endorsed in the AITs November 2008 determination. 17. We have looked with particular care at the apparently most serious convictions on 15 December 2008, when the offences included affray and possession of a blade in a public place. The appellant was sentenced to 23 months imprisonment, the longest term by a considerable margin. As to the affray, the appellant states that he was drunk at the time of the incident and got into an argument. The sharp object was a razor blade that he carried with him because at the time he was self harming. We note that the psychiatric reports of Professor Kantona to which we return below contain some confirmation of the appellants self harming claim. There remains no evidence that the appellant has ever used violence in the course of his offences, or that he was carrying the blade with any intention of using it on a third party. 18. We do not consider that the offences for which the appellant was convicted on 15 December 2008 or any other of the offences set out in the record are of a gravity such as to alter the overall character of the appellants record of offences as a petty criminal committing mainly theft offences to fund his drug use. On 8 January 2007 the SSHD made the decision to deport the appellant in the light of his convictions to date. He appealed against that decision. On 23 July 2007, the Asylum and Immigration Tribunal (AIT) found that the appellant had established a right of permanent residence in the UK under EU law and allowed the appellants appeal on EU law grounds but applied the incorrect legal test. The matter was remitted and on 3 November 2008 the AIT again found that the appellant had acquired a right of permanent residence in the United Kingdom and again allowed his appeal. It held that the serious grounds of public policy or public security threshold for expulsion of permanent residents in article 28(2) of the Directive and regulation 21(3) of the EEA Regulations 2006 was not met. The SSHD was granted permission by the AIT to appeal to the Court of Appeal but withdrew her appeal by a consent order sealed on 11 April 2012. As the addendum shows, the appellant continued to offend after the AIT allowed his appeal on 3 November 2008. On 25 January 2012, the appellant was convicted of theft for which he was sentenced to a further term of 20 weeks imprisonment, with a release date of 3 April 2012. This conviction gave rise to further deportation proceedings against the appellant and to the administrative detention under challenge in this appeal. While the appellant was serving his custodial sentence, on 27 March 2012 the SSHD issued internally a notice purporting to authorise the appellants detention under Schedule 3 of the Immigration Act 1971. The detention authority stated (it is agreed erroneously) that the SSHD had decided to make a deportation order against the appellant under section 5(1) of the Immigration Act 1971. On 3 April 2012, the appellant completed his criminal custodial term but (as stated above) was administratively detained. On the same date, he was served with three documents from the UK Border Agency. The first document, dated 29 March 2012, was a letter which invited the appellant to make representations as to why he should not be deported and stated that he had 20 working days to respond. The second, dated 3 April 2012, was a notice of Decision to make a Deportation Order under the EEA Regulations 2006. The decision was said to be made on grounds that he would pose a genuine, present and sufficiently serious threat to the interests of public policy if he were allowed to remain in the United Kingdom but gave no other reasons. The third document was a letter dated 29 March 2012 which informed the appellant that he was being detained under Schedule 3 of the Immigration Act 1971 pending his removal. The reasons for detention letter made no reference to the Directive or the EEA Regulations 2006. On 12 April 2012 the appellants solicitors sent a pre action protocol letter stating that the decision to deport was procedurally unfair since it had been made before the appellant had time to make representations and was in breach of the mandatory safeguards contained in regulation 21(6) of the EEA Regulations, which required the SSHD to take specific considerations into account before making a relevant decision. The letter also drew the SSHDs attention to the earlier findings of the AIT that the appellants deportation would be in breach of EU law. A reply on behalf of the SSHD dated 13 April 2012 said that the SSHD considered that the appellant posed a risk of harm to the general public and that his deportation was proportionate and justified. On 20 April 2012, the SSHD provided reasons for deportation which acknowledged that the appellant had acquired a right of permanent residence in the UK and could only be deported on serious grounds of public policy or public security but asserted that this threshold was met. The letter set out an account of the appellants offending and an assessment of the threat posed by him. On 11 May 2012, in her acknowledgment of service in these proceedings the SSHD withdrew her decision to deport the appellant dated 3 April 2012 and stated that she would notify the [appellant] of any decision to deport following consideration of any representations received. The letter further said that the [appellant]s extensive criminal convictions give the SSHD reasonable grounds for believing that he may be someone who may be removed from the United Kingdom under regulation 19(3) so that in her view the appellants detention remained lawful. There have been two relevant periods when the appellant was on bail. The appellant was first granted bail on 31 May 2012 by the FtT IAC subject to a reporting restriction and an electronic curfew and was released from detention on 6 June 2012. It was subsequently conceded by the SSHD in these proceedings that the appellants detention from 3 April 2012 until 6 September 2012 was to be regarded as pursuant to regulation 24(1) of the EEA Regulations 2006, since there had been no valid decision to deport him in that period. As to the second period of bail, on 7 September 2012 the SSHD issued a further decision to deport him under the EEA Regulations 2006. That decision was accompanied by reasons and referred to the factors listed in regulation 21(6) of the EEA Regulations 2006 (quoted below). The SSHD again acknowledged that the appellant had acquired a right of permanent residence in the UK. The appellants appeal against the decision of 7 September 2012 was allowed by the IAT in a determination promulgated on 2 January 2013 on the ground that, as a permanent resident, his deportation would breach EU law since the threshold for the expulsion of a permanent resident was not met. The SSHD did not seek to challenge that decision. These proceedings On 27 April 2012 the appellant issued the claim for judicial review which gives rise to this appeal. On 16 May 2012, the appellant was granted limited permission on the papers to apply for judicial review by James Dingemans QC, sitting as a Deputy High Court Judge. The appellant sought permission to enlarge his grounds and the matter was dealt with at a rolled up hearing before Eder J (the judge) on 6 and 7 March 2013. He recorded two concessions made on behalf of the SSHD. The first was that the decision to deport the appellant dated 3 April 2012 was to be regarded as null and void ab initio at least so far as it constituted a decision or notice to remove or deport. It followed that it was common ground that the appellant was in effect to be regarded as having been detained from 3 April 2012, not pursuant to regulation 24(3) of the EEA Regulations 2006 but rather pursuant to regulation 24(1). The second related to the second period of bail after the second decision to deport, which was on 7 September 2012. The judge said at para 15 of his judgment that, at least until 2 January 2013, the appellant was to be regarded as detained on bail under regulation 24(3). I note in passing that it is not accepted on behalf of the SSHD that the expression detained on bail was used on her behalf. It was also accepted by the appellants then counsel that he could not, and did not, challenge the detention decisions on grounds of Wednesbury unreasonableness or irrationality: see Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223. Nor did the appellants counsel below seek to argue that the Secretary of State had acted contrary to the principle of proportionality. Moreover, it was agreed at the hearing before the judge that questions concerning the lawfulness of any remaining restrictions on the appellants liberty after 2 January 2013 should be adjourned with liberty to apply. For present purposes the issues are accordingly limited to the detention of the appellant for about two months from 3 April to 6 June 2012 and the restraint upon his liberty while on bail for just under seven months until 2 January 2013. As stated above, the application for judicial review failed before the judge and the Court of Appeal dismissed his appeal. One of the ironies of this appeal is that the Court of Appeal dismissed some of the appellants submissions on the basis that they had not been raised at first instance, whereas the appellant, who has the benefit of fresh counsel, now raises a number of issues which were not before the Court of Appeal. However, he does so without objection on behalf of the SSHD. The court will accordingly consider the particular questions raised by the parties and set out in para 4 above. Before doing so, it is appropriate to set out the relevant legal framework. A striking feature of the appellants case is that it does not for the most part focus on his particular circumstances. It is put at the highest level of abstraction. The appellant contends that the impugned legislation is invalid and must be disapplied in each and every case and in all circumstances. The critical provisions are regulation 24(1) and (3) of the EEA Regulations 2006, which must of course be construed in their context. The legal framework The legal framework is not in dispute. There are UK immigration controls relating to (a) entry, (b) restrictions on removal and (c) detention, although this appeal is directly concerned only with detention. At each point there are important differences between the rules which apply to those exercising rights of free movement derived from laws applying to the European Economic Area, which I will call EU law rights, namely EEA nationals and their family members, and those who are not exercising such rights. As to controls on entry, for a non British citizen not exercising EU law rights, the regime which confers leave to enter and remain in the United Kingdom is governed by the Immigration Act 1971. By section 3(1) of that Act, people who are not British citizens and do not fall within defined exceptions are not permitted to enter the UK other than with specific permission, or leave, to do so. Leave to remain may be granted for either indefinite or limited periods and may be subject to conditions, such as (amongst other things) restrictions on employment. These rules are subject to specific exceptions, although the general position is that a form of permission is required to enter and remain in the UK. Those who require leave to enter or remain in the UK are subject to immigration control. The process of the granting of leave to enter or remain to those subject to immigration control involves consideration of whether the presence of the individual in question would be conducive to the public good. Those with previous criminal convictions, or in relation to whom there are other grounds to conclude that their presence will not be conducive to the public good, may be subject to immigration controls preventing their entry. By contrast, those exercising EU law rights are not subject to the above regime. They enjoy extensive additional rights, no doubt as a means of promoting the internal market, including the market for labour, as given effect in UK law. By section 7(1) of the Immigration Act 1988, people with directly effective EU rights to enter or remain in the UK, or who enjoy such rights by virtue of any provision made under section 2(2) of the European Communities Act 1972, do not require leave to enter or remain. Critical to the construction of the EEA Regulations 2006, including of course regulation 24(1), is the true meaning and effect of the Directive, which consolidates and extends the rights granted by pre existing secondary legislation and reflects established CJEU case law. Further, it applies to all of the countries in the EEA. It appears to me that the recitals are of some assistance. Moore Bick LJ drew attention (at para 6) to the following recitals: Whereas (1) Citizenship of the Union confers on every citizen of the Union a primary and individual right to move and reside freely within the territory of the member states . (2) The free movement of persons constitutes one of the fundamental freedoms of the internal market . (5) The right of all Union citizens to move and reside freely within the territory of the member states should, . be also granted to their family members, irrespective of nationality . (20) In accordance with the prohibition of discrimination on grounds of nationality, all Union citizens and their family members residing in a member state on the basis of this Directive should enjoy, in that member state, equal treatment with nationals in areas covered by the Treaty . Article 1 explains that the Directive lays down the conditions governing the exercise of the right of free movement and residence by Union citizens and their family members, the right of permanent residence and the limits placed on the rights set out above, on grounds of public policy, public security or public health. Article 2 defines Union citizen as any person having the nationality of a member state, and defines family member to include a spouse. Article 3 makes clear that the beneficiaries of the Directive are Union citizens who move to or reside in a member state other than that of which they are a national, and to their family members. Accordingly, it does not apply to a wholly internal situation, which arises where an EU national has not moved between member states. The class of persons who are able to exercise EU law rights extends not only to nationals of EEA member states who exercise rights of free movement, but also to certain third country family members who are nationals of non EEA states. The residence rights conferred by EU law on third country family members are nevertheless personal rights. Article 13 of the Directive makes clear that rights of residence of a spouse may survive divorce in certain circumstances. In short, so far as leave to enter and remain are concerned, those exercising EU rights have much greater rights than those not exercising such rights but are subject to immigration control. The same is true so far as restrictions on removal and deportation are concerned. For example, a person subject to immigration control who has leave to remain may be liable to deportation or removal under a number of statutory provisions, namely sections 3(5)(a), 3(5)(b) and 3(6) of the Immigration Act 1971 and section 32 of the UK Borders Act 2007. There are differences between deportation and removal but it is not necessary to discuss those differences here. A person who is not a British citizen (and not exercising EU law rights) is liable to deportation under the Immigration Act 1971 where (a) the SSHD determines that his or her deportation is conducive to the public good: section 3(5)(a); or (b) another person to whose family he belongs is or has been ordered to be deported: section 3(5)(b); or (c) after attaining the age of 17 he has been convicted of an offence punishable by imprisonment and on his conviction the judge recommended deportation: section 3(6). The power to make deportation orders is contained in section 5 of the 1971 Act. In addition to those powers of deportation, the UK Borders Act 2007 introduced automatic deportation for certain foreign criminals. Section 32(5) of that Act provides that the Secretary of State must make a deportation order in respect of a foreign criminal. The regime of automatic deportation is, however, subject to certain exceptions set out in section 33 of the 2007 Act including, inter alia, where removal of the foreign criminal would breach that persons rights under EU Treaties (section 33(4)) and where deportation would breach a persons Convention rights or the UKs obligations under the Refugee Convention (section 33(2)). Detention pending a decision whether or not to deport I turn to detention pending a decision whether or not to deport. In summary, it is a familiar feature of the system of immigration controls that the power of detention can be used in a variety of situations prior to the making of a decision to deport or remove. These include the following: (1) the 1971 Act, Schedule 2, paragraph 16(2), where there are reasonable grounds to suspect a person is someone in respect of whom removal directions may be given, including inter alia under section 10 of the Immigration and Asylum Act 1999; (2) the 1971 Act, Schedule 3, paragraph 2, pending the making of a deportation order following a court recommendation; (3) under the 2007 Act, detention pending a decision as to whether a person is liable to automatic removal; and (4) under regulation 24(1) of the EEA Regulations 2006. It is correctly accepted on behalf of the SSHD that, in contrast to the position described above, those exercising EU rights do not require leave to enter or remain and have the benefit of powerful protections against their expulsion from the UK. The ability of member states to restrict the Treaty rights described above is limited by Chapter VI of the Directive, which is entitled RESTRICTIONS ON THE RIGHT OF ENTRY AND THE RIGHT OF RESIDENCE ON GROUNDS OF PUBLIC POLICY, PUBLIC SECURITY OR PUBLIC HEALTH and comprises articles 27 to 33. For present purposes articles 27 and 28 are of particular significance and provide, so far as relevant, as follows: Article 27 General principles 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 Protection against expulsion 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. It is clear that EEA residents who fall within the scope of the Directive enjoy powerful rights of residence far beyond those afforded by domestic law. As appears above, the Directive applies three different escalating threshold tests for restriction on rights of free movement as follows. In the case of a person such as the appellant with the right of permanent residence, an expulsion decision must be based on serious grounds of public policy or public security: article 28(2). Article 24, which is entitled Equal Treatment, provides so far as relevant: 1. all Union citizens residing on the basis of this Directive in the territory of the host member state shall enjoy equal treatment with the nationals of that member state within the scope of the Treaty. The benefit of this right shall be extended to family members who are not nationals of a member state and who have the right of residence or permanent residence. As already noted the Directive has been implemented into domestic law by the EEA Regulations 2006. The Regulations extend to the EEA rather than just the EU because the Directive applies throughout the EEA. They include the following. Regulation 2 contains definitions, including the definition of EEA decision as meaning a decision under these Regulations that concerns (a) a persons entitlement to be admitted to the United Kingdom (c) a persons removal from the United Kingdom. Regulation 7(1)(a) provides that a spouse or his civil partner shall be treated as a family member. Regulations 11 to 15B provide for rights of admission and residence which implement the relevant provisions of the Directive. As noted in para 3 above, regulation 19(3)(b) provides for the removal of an EEA national or the family member of an EEA national where the Secretary of State has decided that the persons removal is justified on grounds of public policy, public security or public health in accordance with regulation 21. Regulation 21 is designed to give effect to articles 27 and 28 of the Directive. It applies to relevant decisions, meaning an EEA decision taken on the grounds of public policy, public security or public health. It provides that such a decision to remove inter alia (2) may not be taken to serve economic ends, and (3) may not be taken in respect of a person with a permanent right of residence under regulation 15 except on serious grounds of public policy or public security. Regulations 21(5) and (6) provide: (5) Where a relevant decision is taken on grounds of public policy or public security it shall, in addition to complying with the preceding paragraphs of this regulation, be taken in accordance with the following principles the decision must be based exclusively on the the decision must comply with the principle of (a) proportionality; (b) personal conduct of the person concerned; (c) the personal conduct of the person concerned must represent a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society; (d) matters isolated from the particulars of the case or which relate to considerations of general prevention do not justify the decision; (e) in themselves justify the decision. a persons previous criminal convictions do not (6) Before taking a relevant decision on the grounds of public policy or public security in relation to a person who is resident in the United Kingdom the decision maker must take account of considerations such as the age, state of health, family and economic situation of the person, the persons length of residence in the United Kingdom, the persons social and cultural integration into the United Kingdom and the extent of the persons links with his country of origin. In summary, an EEA national who has entered the United Kingdom or the family member of such a national, exercising free movement rights, may be removed if certain limited circumstances apply, and under circumscribed conditions. Broadly, removal may only occur where: (1) There are grounds of public policy, public security or public health: article 27(1) of the Directive and regulation 19(3)(b). In the case of a person with a permanent right to reside under regulation 15, there must be serious grounds of public policy or public security: article 28(2) and regulation 21(3). If the EEA national has resided in the United Kingdom for a continuous period of at least ten years there must be imperative grounds of public security: article 28(3)(a) and regulation 21(4)(a). For an EEA national under 18 there must be imperative grounds of public security and expulsion must be necessary for the best interests of the child, as provided for in the United Nations Convention on the Rights of the Child: article 28(3)(b) and regulation 21(4)(b). (2) But a decision to remove taken on public policy or public security grounds must also be a proportionate response and taken exclusively on the basis of the individuals personal conduct, which must itself represent a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society. It cannot be based on matters isolated from the case, considerations of general prevention or prior convictions (see, generally, article 27(2) and regulation 21(5)(a e)). (3) Decisions on grounds of public policy or public security further require consideration of a set of specific factors, including age, state of health, family and economic situation, length of residence and social and cultural integration in the UK and links to the country of origin: article 28 and regulation 21(6). It is to be noted that, as originally drafted, regulation 24(1) referred to regulation 19(3) without the restriction to paragraph (b) of that provision. The regulation was amended with effect from 16 July 2012 to its present form which refers only to cases in which regulation 19(3)(b) is satisfied. Although that change took place during the period of detention with which the appeal is concerned, it is not suggested that it is material to any of the issues in the appeal. Discussion of issues The agreed issues are set out at para 4 above. Although there is considerable overlap between some of them, it seems to me to be sensible to consider them separately. (1) Does the detention power under regulation 24(1) discriminate without lawful justification against EEA nationals and their family members? Before the Court of Appeal it was argued that this question should be answered in the affirmative on the basis that the power under regulation 24(1) to detain is contrary to article 18 of the TFEU, which provides: Within the scope of application of the Treaties, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited. Reliance is placed upon a statement by CWA Timmermans in Kapteyn Verloren Van Themaat, The Law of the European Union and European Communities, Kluwer Law International, 4th ed (2008), para 6.5.1 at p 158, where he described article 18 as The most fundamental expression of the principle of equality in relation to the functioning of the Common Market. Both the judge and the Court of Appeal rejected this submission. The Court of Appeal put it thus in para 28: Equality of treatment among EU nationals is one of the cornerstones of the European Union but [article 18 TFEU] is not concerned with the way in which member states treat nationals of other countries who reside within their territories, provided that they do not undermine the laws of the Union. Consistently with the purpose of the Treaty, which is to establish the fundamental legal architecture of the Union, article 18 TFEU is concerned only with the way in which citizens of the Union are treated in member states other than those of which they are themselves nationals. The argument therefore falls down at the first hurdle. It was correctly conceded on behalf of the appellant that the Court of Appeal was right to hold that article 18 is concerned only with the way in which citizens of the Union are treated in member states other than those of which they are nationals. This can be seen in the decision of the CJEU in Vatsouras and Koupstantze v Arbeitsgemeinschaft (AGRE) Nrnberg (Joined Cases C 22/08 and C 23/08) [2009] ECR I 4585, where two Greek nationals complained that they were not permitted access to certain social assistance benefits which were granted to illegal immigrants. The CJEU explained that the referring Court was essentially asking whether article 12 EC [now article 18 TFEU] precluded national rules which excluded nationals of member states from receipt of social assistance benefits in cases where those benefits were granted to nationals of non member states. The court rejected the complaint in these terms: 52. [Article 18 TFEU] concerns situations coming within the scope of Community law in which a national of one member state suffers discriminatory treatment in relation to nationals of another member state solely on the basis of his nationality and is not intended to apply to cases of a possible difference in treatment between nationals of member states and nationals of non member countries. 53. The answer to the third question, therefore, must be that [article 18 TFEU] does not preclude national rules which exclude nationals of member states of the European Union from receipt of social assistance benefits which are granted to nationals of non member countries. As observed in argument on behalf of the SSHD, in Vatsouras, Advocate General Ruiz Jarabo Colomer formulated the same point at a higher level of abstraction: 66. In relation to the third question, Community law does not provide rules for resolving issues of difference in treatment between Community citizens and citizens of non member countries who are subject to the law of the host member state. [article 18 TFEU] seeks to eliminate discrimination between Community citizens and nationals of the host member state but does not offer guidelines for eliminating the discrimination complained of by the referring court. In so far as it was suggested that Vatsouras can be confined to its own facts and to consideration of articles 12 and 39 EC and article 24 of the Directive, and did not purport to set out general principles of equality under article 18 TFEU, it is my opinion, in agreement with the judge and the Court of Appeal, that Vatsouras was indeed setting out general principles. Further, in Martinez Sala v Freistaat Bayern (Case C 85/96) [1998] ECR I 2691, para 62, the CJEU said: Article 8(2) of the Treaty [now article 20(2) TFEU] attaches to the status of citizen of the Union the rights and duties laid down by the Treaty, including the right, laid down in article 6 of the Treaty [now article 18 TFEU], not to suffer discrimination on grounds of nationality within the scope of application ratione materiae of the Treaty. Finally, in Edward and Lane on European Union Law (2013), para 8.02, Professor Sir David Edward QC, former UK judge at the European Court of Justice, writing extra judicially, observed: Discrimination against third country nationals is not prohibited. It is presumed, and indeed expected, that they will be treated differently. Such discrimination is simply a function of the limited scope of the EU legal order. It is not legitimate to draw a comparison between those exercising EU rights and other third country nationals for the purposes of EU discrimination law. Thus, in R (Bhavyesh) v Secretary of State for the Home Department [2012] EWHC 2789 (Admin) Blake J held at para 27 that members of such a class are the beneficiaries of a special legal regime, in a different position from either aliens or generally, or British citizens who fall altogether outside the scope of EU law. They are thus incapable of being a comparator class, or a group who are analogously situated with the claimants. It is submitted on behalf of the SSHD that this analysis is fatal to the appellants discrimination case. I agree. It follows to my mind that the other points made on behalf of the appellant under this head do not assist his case. They all fall foul of the principle in Vatsouras that those concerned are subject to a different legal order. It may be noted that the European Court of Human Rights has approached the problem in a similar way. In Moustaquim v Belgium (1991) 13 EHRR 802 the claimant was a Moroccan national who had resided in Belgium for most of his life. On committing criminal offences the Belgian government decided to deport him to Morocco. He claimed that he was the victim of discrimination on grounds of nationality (contrary to article 14 taken together with article 8 ECHR) because two categories of persons could not be deported in the same circumstances: those with Belgian nationality and those who were citizens of another member state of the European Community. The ECtHR rejected this challenge. Paragraph 49 included the following: the court would reiterate that article 14 safeguards individuals placed in similar situations from any discriminatory differences of treatment in the enjoyment of the rights and freedoms recognised in the Convention. In the instant case the applicant cannot be compared to Belgian juvenile delinquents. The latter have a right of abode in their own country and cannot be expelled from it As for the preferential treatment given to nationals of the other member states of the Communities, there is objective and reasonable justification for it as Belgium belongs, together with those states, to a special legal order. See also, to the same effect, Ponomaryov v Bulgaria (2011) 59 EHRR 20, where the applicants complained they were required to pay school fees as a result of their Kazakh nationality and immigration status. At para 54 the ECtHR said: [A state] may also, in certain circumstances, justifiably differentiate between different categories of aliens residing in its territory. For instance, the preferential treatment of nationals of member states of the European Union some of whom were exempted from school fees when Bulgaria acceded to the Union may be said to be based on an objective and reasonable justification because the Union forms a special legal order, which has, moreover, established its own citizenship. Here too the ECtHR regarded such differences as objectively justified by the existence of a special legal order rather than treating such a comparator as impermissible. It was submitted on behalf of the SSHD that it is artificial to isolate regulation 24(1) and complain as to the lack of precisely analogous powers under the non EEA regime. That submission was accepted by both the judge and the Court of Appeal. The judge held at para 52 that whilst there was no power to detain pending a decision to remove/deport this does not necessarily mean that there is any relevant disadvantage to EEA nationals or their family members. He noted that EEA nationals and their families benefit from extended rights which non EEA nationals do not benefit from and that there is a lower threshold test for deportation conducive to the public good which applies to non EEA nationals. He said at paras 53 and 54: 53. As to the former a non British citizen is liable to deportation if the SSHD deems his deportation to be conducive to the public good. In my judgment this is indeed a lower threshold test than that which exists with regard to the power of the SSHD to remove pursuant to regulation 19(3)(b). In particular, the latter is limited to the grounds of public policy, public security or public health in accordance with Regulation 21. Again, [the appellants] comparison exercise ignores this additional important aspect and for that reason as well is, in my judgment, fundamentally flawed. 54. Given these differences I do not consider that there is any proper basis for comparing the different circumstances which exist to deport/remove under each applicable regime. As to this part of the appellants argument, Moore Bick LJ said at the end of para 28 that article 18 TFEU is not concerned with the way in which member states treat nationals of other countries who reside in their territories. He added at para 29: 29. However, the difficulties do not end there. In seeking to compare the position of EEA nationals with that of nationals of other countries [the appellant] sought to focus exclusively on the Secretary of States power of detention, but that is to view the matter too narrowly. As the judge pointed out, the provision for detention in each case forms part of a wider regime dealing with removal. Unlike nationals of other countries, nationals of the EEA are entitled to reside in this country and enjoy the protection from removal afforded by the Treaty and the Directive. They are subject to a different legal regime which cannot be directly compared to that which applies to other foreign nationals, who can be deported if the Secretary of State deems their removal to be conducive to the public good: see section 3(5)(a) of the 1971 Act. For both these reasons I agree with the judge that [the appellants] argument is fundamentally flawed and that there is no substance in this ground of appeal. I agree with the reasoning of both the judge and Moore Bick LJ. In this court Mr Saini QC for the appellant has put his case rather differently. He argues that two forms of discrimination arise which require justification, and to which the Vatsouras principle has no application. The first is discrimination between EU nationals or their spouses and third country nationals, on grounds of their status as beneficiaries of the Directive, contrary to article 21(1) of the EU Charter of Fundamental Rights. The second is discrimination on grounds of nationality, contrary to article 18 TFEU, between British nationals and EU nationals, both of whom have third country spouses. The first argument in my view adds nothing to the discussion under TFEU article 18. Article 21 of the Charter cannot be relied on to extend the rights otherwise provided under European law. As the CJEU said in NS v Secretary of State (Case C 411/10) at para 119: the Charter reaffirms the rights, freedoms, and principles recognised in the Union and makes those rights more visible, but does not create new rights or principles. Furthermore, as has been seen above, article 24(1) contains a specific application of the principle of non discrimination on grounds of nationality contained in article 18 TFEU. It makes clear that the relevant comparators for the purposes of the Directive are the nationals of the host member state but does not include and is not concerned with discrimination as regards third country nationals who fall entirely outside the scope of EU law. The second argument appears to be new. The following comparison is relied on: i) A French woman exercising Treaty rights in the UK is married to an Algerian man. Her husband is sentenced to less than 12 months imprisonment for a criminal offence. Her husband is liable to be detained under regulation 24(1). ii) A British woman resident in the UK is married to an Algerian man. Her husband is sentenced to less than 12 months imprisonment for a criminal offence. Her husband is not liable to be detained before a decision to deport. At first sight this comparison does not appear to assist an argument that the appellant has been discriminated against in the enjoyment of his EEA law rights. In each limb of the comparator the situation of the third country national is the same. The argument is that the spouse of the third country national has been the subject of discrimination. But here the appellants wife has not brought a claim and is not before the court. As stated in para 5 above, she returned to France in late 2005 with her third child and the two older children joined her in 2006. So the couple have been separated for ten years. There is nothing to suggest that she has suffered any discrimination because of the appellants detention. However, Mr Saini submits that, contrary to the requirement to treat an EU national equally to a British national, the French wife exercising Treaty rights has been adversely affected. Her husband was liable to be detained, whereas the British wifes husband was not. When considering whether regulation 24(1) is discriminatory, it is legitimate to consider the EU spouse, regardless of whether she has brought a claim herself. This is because any adverse effects on third country spouses interfere with the EU nationals own free movement rights. Mr Saini supports his argument by reference to the decision of the CJEU in R v Immigration Appeal Tribunal, Ex p Secretary of State for the Home Department (Case C 370/90) [1992] 3 All ER 798. Mr Singh was the Indian husband of a British woman. They had married in the UK in 1982, and lived in Germany from 1983 1985 where they were employed. They returned to the UK to open a business in 1985. A decree nisi of divorce was pronounced in 1987. Mr Singh remained in the UK without leave from 1988. A deportation order was made against Mr Singh, which he appealed, asserting a Community law right to reside in the UK. The decree absolute was pronounced in 1989. The court held that the fact that the marriage was dissolved by the decree absolute was irrelevant to the issue raised by the question before the court which concerned the basis of his right of residence in the period before the decree (para 12). Mr Saini relies in particular on the following passage of the judgment, at para 19: A national of a member state might be deterred from leaving his country of origin in order to pursue an activity as an employed or self employed person as envisaged by the Treaty in the territory of another member state if, on returning to the member state of which he is a national in order to pursue an activity there as an employed or self employed person, the conditions of his entry and residence were not at least equivalent to those which he would enjoy under the Treaty or secondary law in the territory of another member state. The court rejected the submission that her rights turned on domestic law. The case was concerned with free movement under Community law. As the court said, at para 23: These rights cannot be fully effective if such a person may be deterred from exercising them by obstacles raised in his or her country of origin to the entry and residence of his or her spouse. Thus, submits Mr Saini, Mr Singh was able to rely on the fact that the free movement rights of his EEA spouse might be affected hypothetically by restrictions placed on his own movements, and to continue to do so even after any connection had ceased. It is unfortunate that this authority, described by Mr Saini as seminal, was not referred to in the courts below or even in his own 50 page case for this appeal. It seems to have emerged for the first time in a note accompanying a set of supplementary authorities submitted shortly before the hearing. For this reason, no doubt, it was not addressed in the respondents case, or in any detail in oral argument. Had it been necessary to reach a conclusion on the scope and implications of that decision, the court might have required further submissions including submissions on the possibility of a reference. However, I am satisfied that the decision has no direct bearing on this case. In the first place, the court made clear that its reasoning was addressed to Mr Singhs position before the divorce was finalised. It seems doubtful that it was intended to apply to a case where, as here, any practical link between the spouses came to an end eight years before the relevant actions of the Secretary of State. Any effect on the rights of Mr Nouazlis spouse would surely be truly hypothetical because she was unlikely ever to exercise her rights and thus unlikely ever to be deterred from exercising them. It is important in any event to bear in mind that we are concerned not with the removal of the appellant, but merely with his temporary detention or subjection to bail conditions for a few months, first pending a decision by the Secretary of State, and then pending his successful appeal. Whether in other circumstances any relevant discrimination might arise as a result of mere detention pending a decision to remove will also be a fact sensitive matter. It cannot be a reason for holding, as Mr Saini would submit, that regulation 24(1) is invalid in each and every case. At most, such a claim could justify the disapplication of the offending measure in a particular case. On the facts of the present case I can see no conceivable basis for holding that any actual or hypothetical rights of the appellants former spouse have been affected by the appellants detention for a few months in 2012, still less by the imposition of bail conditions. In the light of these conclusions it is not necessary to consider whether regulation 24(1) can be objectively justified. I would answer the question raised by issue (1) in para 4 above, by holding that regulation 24(1) does not discriminate without lawful justification against EEA nationals and their family members. Is the power in regulation 24(1) before making a decision to deport (2) disproportionate? So far as I am aware it is not in dispute that regulation 24(1) must be applied proportionately. In these circumstances, so long as it is so applied, I do not see how it can be said that the regulation is itself disproportionate. It is not said in this appeal that it was applied disproportionately on the facts. This question must therefore be answered in the negative, subject to the answer to question (3). In particular, does the absence of a time limit render such detention (3) unlawful under EU law? It is submitted on behalf of the appellant that this question should be answered in the affirmative. In particular it is submitted that it is inconsistent with the general EU law provisions of legal certainty and proportionality to permit executive detention of those exercising free movement rights when such incarceration is subject neither to specified time limits nor to initial or further mandatory judicial oversight. It is submitted that the ECtHR has found mandatory detention time limits to be a necessary component of the quality of law for the purposes of justifying deprivation of liberty under article 5(1)(f) ECHR, which provides: 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 to (f) 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. The SSHD relies upon the well known principles originally propounded by Woolf J in R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704. In R (I) v Secretary of State for the Home Department [2002] EWCA Civ 888, Dyson LJ noted at para 46 that the principles were approved by Lord Browne Wilkinson in the House of Lords in Tan Te Lam v Superintendent of Tai A Chau Detention Centre [1997] AC 97, 111A D. Dyson LJ identified the following four principles as emerging from Hardial Singh: (i) The Secretary of State must intend to deport the person and can only use the power to detain for that purpose; (ii) The deportee may only be detained for a period that is reasonable in all the circumstances; (iii) If, before the expiry of the reasonable period, it becomes apparent that the Secretary of State will not be able to effect deportation within that reasonable period, he should not seek to exercise the power of detention; (iv) The Secretary of State should act with the reasonable diligence and expedition to effect removal. In R (WL (Congo)) v Secretary of State for the Home Department [2012] 1 AC 245, para 171, those principles were was endorsed by Lord Hope of Craighead, for the majority. Those principles have been applied by the courts on many occasions. I would accept the submission made on behalf of the SSHD that they were intended to impose limitations on the powers of immigration detention: R (Francis) v Secretary of State for the Home Department [2015] 1 WLR 567, para 45. The principles have been applied to the following: mandatory detention pending deportation: Francis; detention pending administrative removal: R (FM) v Secretary of State for the Home Department [2011] EWCA Civ 807, para 25; detention pending examination of immigration status: R (Saadi) v Secretary of State for the Home Department [2002] 1 WLR 3131, para 26; and detention pending a decision on whether one of the exceptions to automatic deportation applies: R (Rashid Hussein) v Secretary of State for the Home Department [2009] EWHC 2492 (Admin), para 44 and R (Saleh (Sudan)) v Secretary of State for the Home Department [2013] EWCA Civ 1378, para 16. It is clear that the approach taken in Hardial Singh requires both the SSHD and the courts to take a fact sensitive approach to the length of detention. Thus in Fardous v Secretary of State for the Home Department [2015] EWCA Civ 931, paras 37 41, Lord Thomas CJ deprecated the use of tariffs or yardsticks. He said between paras 37 and 41: 37. The Secretary of State acting through his officials has to determine whether the period of detention is reasonable when deciding whether or not to continue the detention, subject to the right of any detainee to apply for bail. It is a judgment which has to be made on the evidence and in the circumstances as appear to the officials in each case. 38. There is no period of time which is considered long or short. There is no fixed period where particular factors may require special reasons to make continued detention reasonable. 39. McFarlane LJ said in R (JS) Sudan) v Secretary of State for the Home Department [2013] EWCA Civ 1378 at 50 51 that fixing a temporal yardstick might cause the courts to accept periods of detention that could not be justified on the facts of a particular cases. In R (NAB) v Secretary of State for the Home Department [2010] EWHC 3137 (Admin) Irwin J made clear at paras 77 80 that a tariff would be repugnant and wrong 41. Each deprivation of liberty pending deportation requires proper scrutiny of all the facts by the Secretary of State in accordance with the Hardial Singh principles. Those principles are the sole guidelines. The courts have recognised that there are sound policy reasons for a flexible and fact sensitive approach. I find nothing in the judgments of the ECtHR which undermines the Hardial Singh approach to the duration of detention. In this regard our attention was drawn to R (Kambadzi) v Secretary of State for the Home Department [2011] 1 WLR 1299, para 94, where Lord Kerr observed that Hardial Singh principles are more favourable to detainees than Strasbourg requires. We were also referred to the leading case of Chahal v United Kingdom (1996) 23 EHRR 413, where the Grand Chamber considered a lengthy period of detention prior to deportation. The court said at para 113: any deprivation of liberty under article 5 para (1)(f) will be justified only for as long as deportation proceedings are in progress. If such proceedings are not prosecuted with reasonable diligence, the detention will cease to be permissible under article 5 para (1)(f). As counsel observed on behalf of the SSHD, that is evidently a fact sensitive question, just as it is in English law. The court in Chahal held that article 5(1)(f) was satisfied on the facts. It did not suggest that the lack of a specified time limit rendered the detention unlawful. The Grand Chamber revisited Chahal in Saadi v United Kingdom (2008) 47 EHRR 17 and made an explicit link between the notion of arbitrariness and the duration of detention (para 74): To avoid being branded as arbitrary the length of the detention should not exceed that reasonably required for the purpose pursued. In R (Kambadzi) v Secretary of State for the Home Department [2011] 1 WLR 1299, para 76, Baroness Hale described this as an endorsement of Hardial Singh principles, and noted that the ECtHR had not yet imposed a requirement for regular reviews. There is no suggestion in the Strasbourg judgment that a firm time limit is required. I would accept the submission that the principles set out in Chahal and Saadi contain a specific application of the relevant rules in the context of the legality of detention. Nothing in the broad dicta in the CJEU cases referred to on behalf of the appellant demonstrates a narrower approach in EU law. Hardial Singh was considered by the ECtHR in Tabassum v United Kingdom (Application No 2134/10) decision on admissibility, 24 January 2012), where the applicant complained of unlawful detention pending deportation. The ECtHR expressly considered the formulation of the Hardial Singh principles in R (WL (Congo)) and concluded at para 23 that the applicants period of detention did not exceed what was reasonable in all the circumstances of the case and was not arbitrary. None of the cases cited on behalf of the appellant in his case to support his contention that mandatory time limits are a necessary component of the quality of law. They all turn on very different facts. See, for example Ismoilov v Russia (2008) 49 EHRR 42 and Muminov v Russia (2008) 52 EHRR 23. In Ismoilov the ECtHR criticised the Russian system under review and concluded at para 140 that: in the absence of clear legal provisions establishing the procedure for ordering and extending detention with a view to extradition and setting up time limits for such detention, the deprivation of liberty to which the applicants were subjected was not circumscribed by adequate safeguards against arbitrariness. There is nothing to suggest time limits are a general requirement of article 5(1)(f). This is not to say that the absence of time limits is not a relevant factor in deciding in a particular case. This is shown in a number of cases to which we were referred. See, for example six cases against Turkey, namely Abdolkhani and Karimnia v Turkey (Application No 30471/08) (unreported) given 22 September 2009, para 135, applied in ZNS v Turkey (Application No 21896/08) (unreported) given 19 January 2010, para 56; Tehrani v Turkey (Application Nos 32940/08, 41626/08 and 43616/08) (unreported) given 13 April 2010, para 70; Charahili v Turkey (Application No 46605/07) (unreported) given 13 April 2010, para 66; Alipour and Hosseinzadgan v Turkey (Application Nos 6909/08, 12792/08 and 28960/08) (unreported) given 13 July 2010, para 57; and Dbouba v Turkey (Application No 15916/09) (unreported) given 13 July 2010, para 50. In those cases the ECtHR treated the absence of a time limit as a relevant factor in reaching the same conclusion as in Ismoilov quoted in para 71 above, in almost identical terms. In Abdolkhani, at para 135, the ECtHR said, in the context of detention pending deportation concluded: In sum, in the absence of clear legal provisions establishing the procedure for ordering and extending detention with a view to deportation and setting time limits for such detention, the deprivation of liberty to which the applicants were subjected was not circumscribed by adequate safeguards against arbitrariness. See also Mathloom v Greece (Application No 48883/07) (unreported) given 24 April 2012 and Massoud v Malta (Application No 24340/08) (unreported) given 27 July 2010 to much the same effect. Again, the absence of a time limit was treated as a relevant factor but no more. In each case the ECtHR focused on the importance of having a procedure capable of avoiding the risk of arbitrary detention. In my judgment in the instant case there is in place a clear statutory framework which involves appropriate judicial scrutiny and the consideration of the guidelines referred to above. In short, each case depends upon its particular facts. I would endorse the approach identified by Lord Thomas CJ and quoted in para 66 above: Each deprivation of liberty pending deportation requires proper scrutiny of all the facts by the SSHD in accordance with the Hardial Singh principles. Those principles are the sole guidelines. Nor can I accept the five reasons given on behalf of the appellant as to why the Hardial Singh approach is unlawful. They are these. First, it is said that this approach fails to address the fundamental legality test of reasonable foreseeability. For my part, I would reject the argument based on reasonable foreseeability. As explained above, the principles in Chahal are an application of the legality principle in the context of the legality of detention. Secondly, it is said that Hardial Singh is not satisfied because detention under regulation 24(1) does not comply with the requirement that detention must be for the purpose of facilitating the deportation. As I see it, facilitating the deportation is precisely the purpose of regulation 24(1) detention, even if no final decision has been made. Thirdly, it is said that the principles in Hardial Singh only apply ex post facto. In my view that is wrong. What is required is proper scrutiny of all the facts: see paras 64 and 70 above. The court is able to ensure that Hardial Singh is adhered to, but the primary responsibility to comply lies with the SSHD. The courts provide supervision of the application of these criteria and in practice, challenges are brought to secure release, not just damages after the event. Fourthly, it is said that a lack of legal certainty may amount to a restriction on free movement. The authority cited for this proposition is a tax case, namely Safir v Skattemyndigheten i Dalarnas Ln (Case C 118/96) [1999] QB 451, which was not concerned with detention. I would accept the submission made on behalf of the SSHD that it gives no reason to suppose that EU law requires more in this particular context than the ECHR. Fifthly, the appellant argues that it is no answer to lack of legal certainty that the national courts interpret the measures compatibly with EU law. That is not the case for the SSHD, which is that the Hardial Singh limitations form part of what has been accepted by European courts as meeting the requirements imposed by law. For all these reasons I would reject the case for the appellant and in answer to the question posed by issue (3), would hold that the absence of a time limit does not, as a matter of principle, render such detention unlawful under EU law. (4) Does regulation 24(1) unlawfully restrict the rights of EEA nationals and their family by contrast to those enjoyed before the coming into force of the Directive which the EEA Regulations purport to implement? I would answer this question in the negative, essentially for the reasons given in the answer proposed to issue (1). (5) Do regulations 21 and 24 of the EEA Regulations 2006 fail accurately to transpose the safeguards of articles 27 and/or 28 of the Directive? The essential point made on behalf of the appellant is that the Directive has not been properly transposed into the EEA Regulations 2006 because regulation 24 fails to transpose the safeguards contained in articles 27 and 28 of the Directive. It is said that decisions taken under regulation 24(1) are not EEA decisions for the purposes of regulation 2 of the Regulations, which is the definition section. It provides: EEA decision means a decision under these Regulations that concerns (a) (b) (c) a persons removal from the United Kingdom; (d) . The argument is that a decision to detain a person in the position of the appellant, who is detained under regulation 24(1) pending a decision whether or not to remove him, is not a decision which concerns a persons removal within the meaning of sub paragraph (c). In my view there is a short answer to this point. The power to detain under regulation 24 is not free standing, but is purely ancillary to the powers of removal in the circumstances permitted by regulation 21, which properly transposes articles 27 and 28. Where the Secretary of State has reason to believe that there is a case for removal under those provisions, it is clearly appropriate that she should have power to detain while the matter is being considered, and thereafter pending deportation, if otherwise there might be a risk of the subject absconding. The creation of such a power is well within the margin of appreciation given to the national authorities under the Directive, provided it is suitable and proportionate to its purpose and reasonably exercised (see for example R (Lumsdon) v Legal Services Board [2015] 3 WLR 121, para 55). It is not necessary to show that a decision under regulation 24 is itself an EEA decision within the meaning of article 2. It is enough that it is directly linked to regulation 19(3)(b) which in turn is made expressly subject to regulation, and hence to requirements equivalent to those in the Directive. Moreover, I can see no basis for concluding the regulations themselves are disproportionate and it is not said that the impugned decisions were arbitrary or disproportionate on the facts. Both the judge and the Court of Appeal rejected the submission, albeit on somewhat different grounds. The submission advanced on behalf of the SSHD is shortly this. Regulation 24(1) provides: If there are reasonable grounds for suspecting that a person is someone who may be removed from the United Kingdom under regulation 19(3)(b), that person may be detained . Thus, regulation 24(1) makes express reference back to regulation 19(3)(b). Regulation 19(3)(b) permits the removal of an EEA national on grounds that: the Secretary of State has decided that the persons removal is justified on grounds of public policy, public security or public health in accordance with regulation 21. So regulation 19(3)(b) in turn makes express reference back to the requirements of regulation 21 and is in any event itself an EEA decision and a relevant decision. See paras 34 to 35 above. In these circumstances, I would accept the submission made on behalf of the SSHD that regulation 21 implements the requirements of articles 27 and 28 of the Citizens Directive. It appears to me to follow from the above that regulation 24(1) gives an express power to detain a person who may be removed under regulation 19(3)(b), which contains essentially the same criteria as articles 27 and 28 of the Directive. It seems to me therefore that a person who is so detained can fairly be said to be detained pursuant to a decision which concerns a persons removal within the meaning of sub paragraph 2(c) of the EEA Regulation 2006 in the definition of an EEA decision. For these reasons I would answer the question posed by issue 5 in the negative. Regulations 21 and 24 of the EEA Regulations 2006 do not fail accurately to transpose the safeguards of articles 27 and/or 28 of the Directive. (6) Were the appellants administrative detention from 3 April until 6 June 2012 and the bail restrictions imposed upon him until 2 January 2013 unlawful by reason of the matters raised in questions (1) to (5) above? It follows from the above that the answer must be no. The appellants detention was not unlawful for the reasons suggested. The remaining question is whether the court should refer any of the questions discussed above to the CJEU for a preliminary reference. I am not persuaded that the Supreme Court should do. In so far as the questions raise issues of EU law, the principles adopted seem to me to be acte clair. Conclusion For the reasons given above I would dismiss the appeal. Postscript After preparing a draft judgment in the form set out above (as agreed by the other members of the court) we received a detailed note containing submissions on behalf of the appellant relying upon a decision of the Grand Chamber of the CJEU in JN v Staatssecretaris van Veiligheid en Justitie (Case C 601/15 PPU), in which judgment was handed down on 15 February 2016. It was submitted that, where in the implementation of EU law, a member state authorises administrative detention prior to expulsion and seeks to justify it on public order grounds, first, the member state must previously have formed a concluded view as to the threat posed to public order by the individual and must have balanced that against the interference with liberty: Such a provision cannot form the basis for measures ordering detention without the competent national authorities having previously determined, on a case by case basis, whether the threat that the persons concerned represent to national security or public order corresponds at least to the gravity of the interference with the liberty of those persons that such measures entail. (see para 69) Second, administrative detention for the purpose of expulsion (including, in that instance of third country nationals exercising no free movement rights) in the implementation of EU law must be necessary. Reliance was placed on the right to liberty in article 6 of the EU Charter of Fundamental Rights and upon article 52 of the Charter, which provides that limitations may be made only if they are necessary. See paras 49 50 in JN. It is submitted that article 52(3) of the Charter and article 5(1)(f) of the ECHR do not preclude article 6 of the Charter from proposing a necessity test in detention for expulsion for the reasons given in paras 47 and 48. Thus, it is submitted, a legislative measure authorising administrative detention must be necessary in order to attain the legitimate objectives pursued by the legislation in question, since the disadvantages caused by the legislation must not be disproportionate to the aims pursued: see para 54. It is stressed that, in view of the importance of the right to liberty, limitations on the exercise of the right must apply only in so far as they are strictly necessary. See para 56, where reliance is also placed upon para 52 of the judgment in the Digital Rights Ireland Ltd v Minister for Communications, Marine and Natural Resources (Joined cases C 293/12 and C 594/12). Reliance is further placed upon article 8(3) of Directive 2013/33/EU, which lays down standards for the reception of applicants for international protection. It is said that article 8(3)(e) is the analogue, in the asylum context, of article 27 of the Citizens Directive. Indeed, it is submitted that the Citizens Directive is a fortiori to Directive 2013/33/EU. In all the circumstances it is submitted that the EEA Regulations incorrectly transposed the safeguards of article 27 of the Citizens Directive and that the test is one of necessity. In all the circumstances it is said that, on this new ground, the appeal should be allowed and that, in any event, an appropriate question should be referred to the CJEU. It is properly accepted on behalf of the appellant that Directive 2013/33/EU now relied upon is not binding on the United Kingdom. It is not therefore in issue in these proceedings. Where it does apply, it sets out an express legislative code which governs the circumstances in which an applicant for international protection may be detained. Article 8(1) provides that the member states to which it applies shall not hold a person in detention for the sole reason that he or she is an applicant for international protection: see para 15 of the JN judgment. Article 8(2) then provides that when it proves necessary and on the basis of an individual assessment of each case, member states may detain an applicant, if other less coercive alternative measures cannot be applied effectively. Article 8(3) then provides that an applicant for international protection may be detained only on certain exhaustive grounds. By contrast, as is correctly submitted on behalf of the SSHD, the Citizens Directive contains no legislative provisions which refer expressly to detention. Articles 27 and 28 are concerned respectively with restrictions on freedom of movement and residence and removal. The substantive issue in JN was whether the freestanding power contained in article 8(3)(e) was compatible with fundamental rights. A question referred by the Dutch court was whether such a power could be compatible with article 5 of the ECHR if such detention was not imposed with a view to removal. The CJEU held (in para 82) that the provision was valid. There is no similar freestanding power in EU law applicable in the United Kingdom. Moreover, the JN case was not concerned with the central issue in the Nouazli case, namely whether detention may be permitted in circumstances prior to the making of a decision to effect the removal of the family member of an EEA national. By contrast, Directive 2013/33/EU contains a pre decision power to detain in order to decide on an applicants right to enter (article 8(3)(c)) and in order to secure the transfer of a claimant for international protection to the responsible member state (article 8(3)(f)). Those powers were not in issue in Nouazli. I have set out in detail above the basis upon which in my opinion the appeal of the appellant should be dismissed. By contrast, the CJEU in JN was considering a different legislative provision and did not purport to address the issue before the court in this appeal. I would accept the submission made on behalf of the SSHD that the CJEU did not lay down minimum criteria that must be satisfied in all cases within the scope of EU law. It was instead addressing the requirements that must be satisfied before the exercise of a specific statutory power of unusually broad scope. For these reasons I would not accept that this new point affords any supportable basis for allowing the appeal or indeed for making a reference to the CJEU. I would therefore dismiss the appeal for the reasons I gave earlier. Sentence Addendum to the Statement of Facts and Issues List of appellants convictions and sentences until and including the conviction giving rise to the detention under challenge in this appeal Offence Date 06/11/2001 Driving a motor vehicle with excess alcohol 21/08/2002 Failing to provide a specimen for analysis (driving or attempting to drive) 12/01/2004 Theft 22/01/2004 Possession controlled drug class A Drug Crack cocaine 28/06/2004 Theft from person Fine 100 Disqualification from driving 6 months Driving licence endorsed Fine 150 Disqualification from driving 18 months Driving licence endorsed Imprisonment 28 days Possession controlled drug Fine 50 Forfeiture and destruction Class B Cannabis Failing to surrender to bail Fine 100 Failing to surrender to bail Fine 150 Fine 100 Forfeiture Community rehabilitation order 12 months Community punishment order 140 hours concurrent Community punishment order 140 hours Community punishment order Attempt/ obtaining services by deception 140 hours concurrent Failing to surrender to bail Community punishment order 140 hours concurrent 30/12/2004 Obtaining property by deception Theft Date Offence 14/03/2005 Breach of community rehabilitation order 27/04/2005 Detainee fail/ refuse to provide sample of fluid for purpose of ascertaining whether class A drug is in body Handling stolen goods 18/05/2005 Theft from person 04/07/2005 Theft Theft Theft Possession controlled drug Class C cannabis Handling stolen goods (receiving) 24/05/2006 Theft from person 20/11/2006 Theft shoplifting Theft from person 20/05/2008 Possession of a class C drug Sentence Resulting from original conviction of 28/06/2004, order to continue Fine 50 or 1 day (served) Imprisonment 3 months Conditional discharge 18 months Imprisonment 4 months Imprisonment 2 months consecutive Imprisonment 2 months concurrent Fine 150 or 1 day (served) Forfeiture Imprisonment 4 months consecutive Imprisonment 21 weeks Imprisonment 4 months Imprisonment 4 months consecutive Fine 75 Victim surcharge 15 Forfeiture and destruction with intent to supply Possession of a class A drug Fine 75 03/06/2008 Being drunk and disorderly Fine 60 Date Offence 15/12/2008 Theft from person Theft from person Possession cannabis resin Affray Possession knife blade/ sharp pointed article in a public place 01/07/2010 Possession Cannabis resin 28/09/2010 Obstructing powers of search for drugs 22/10/2010 Possession Cannabis resin Failing to surrender to custody at appointed time 08/12/2010 Failing to comply with the requirements of a community order 13/12/2010 Theft from person 14/01/2011 Theft Sentence Imprisonment 4 months consecutive Imprisonment 4 months consecutive Imprisonment 1 week concurrent Forfeiture and destruction Imprisonment 15 months Imprisonment 9 months concurrent Forfeiture and destruction of razor Fine 100 Forfeiture and destruction Community order, unpaid work requirement 80 hours Subsequently varied on 08/12/2010 to curfew requirement 2 months with electronic tagging Fine 100 Victim surcharge 15 Forfeiture and destruction Fine 100 Resulting from original conviction of 30/09/2010, order revoked Imprisonment 5 months Imprisonment 5 months Consecutive 04/07/2011 13/07/2011 05/09/2011 Date Offence 19/01/2011 Possession controlled drugclass A cocaine Possession controlled drugclass B cannabis resin Handling stolen goods Theft from person Possession controlled drug class A crack cocaine Theft shoplifting Possession controlled drugclass A crack cocaine Failure to comply with the requirements of a community order Theft from person Sentence Forfeiture and destruction 1 days detention Forfeiture and destruction 1 days detention Imprisonment 12 weeks Imprisonment 3 months Community order, curfew requirement 3 months, subsequently varied to imprisonment 2 weeks One days detention Imprisonment 2 weeks consecutive Resulting from original conviction of 05/09/2011, order revoked Imprisonment 20 weeks 20/10/2011 14/11/2011 14/11/2011 25/01/2012 LORD CARNWATH: I agree that the appeal should be dismissed for the reasons given by Lord Clarke. I add a few words of my own to underline the need to avoid overcomplicating what is in essence a relatively narrow, albeit important, issue. The appellant has an appalling record of thefts and other crimes (described by the tribunal as mainly petty opportunistic thefts not involving violence) extending over a decade before the events in question. They had resulted in jail terms amounting cumulatively to at least five years. It is not surprising that the Secretary of States patience ran out in early 2012 and that she set in motion steps for his removal from this country. There was an administrative muddle in April 2012 over the powers used to detain him, but that is not an issue in the appeal. Nor is it argued that the detention was in itself unreasonable in the circumstances, assuming there was power to do it. The Secretary of States problem was that by then he had acquired permanent rights of residence here under European law, and thus could only be removed on serious grounds of public policy or public security. He was entitled to have that issue determined by the First tier Tribunal. They decided the point in his favour in on 2 January 2013, and the Secretary of State has properly accepted that decision. We are concerned solely with his detention under regulation 24(1) from 3 April to 6 September 2012 (on bail from 6 June); and thereafter under regulation 24(3) (again on bail) until the tribunals decision. The period of actual detention therefore lasted little over two months. On one view the case could be seen as an example of the system working as it should. However, he now seeks damages for that short period of detention, on the basis that the powers on which the Secretary of State relied did not comply with European law. Mr Saini QC (who did not appear below) has developed his case in elaborate detail. In terms of written submissions it is to be found in a 55 page statement of case, to which were added shortly before the hearing a 12 page note on supplementary authorities, and an 18 page note concerning statutory and factual context. They depart in a number of respects from the case as presented below. For the Secretary of State Mr Ward QC has not objected to these changes, but (perhaps understandably) has felt it necessary to respond in kind, with a 73 page statement of case. The bundles of authorities include 184 items, including cases, legislative material and academic commentary. I am however grateful to Mr Saini, in response to my request on the first day of the hearing, for reducing his submissions to a two page summary of appellants challenge. Although the summary contains a note to the effect that all of the points in the submitted case are maintained, I assume that summary can be taken as indicating the substantial points on which he now relies. The summary identifies four matters of challenge. There is some overlap between them but the essential points can be stated briefly: (1) Equality/discrimination applicable to regulation 24(1) only. The power to detain an EEA national under regulation 24(1) is discriminatory on the grounds of nationality, contrary to TFEU article 18, because there is no equivalent power in relation to a third country national. (2) Proportionality applicable to regulation 24(1) only. The power was introduced for the first time in June 2009. The Secretary of State has failed to show a need for a power which had not been required before. Nor had she shown any reason why consideration of deportation could not have taken place during the criminal custodial term. (3) Legal certainty, proportionality and time limits applicable to regulation 24(3) as well as regulation 24(1). This is principally a challenge to the Hardial Singh principles, which do not require a fixed time limit. (4) Further transposition flaws applicable to both regulation 24(1) and 24(3). Regulation 24 is not in terms made subject to the principles set out in articles 27 and 28 of the Directive, or in regulation 21 which gives effect to them in domestic law. In particular the test of reasonable grounds under regulation 24(1) is well below the threshold required by article 27. On the first point I have nothing to add to what Lord Clarke has said (in agreement with the Court of Appeal). Article 18 is not directed to the comparative treatment of nationals of other countries, who are outside the scope of European law. The alternative formulation based on the case of R v Immigration Appeal Tribunal, Ex p Secretary of State for the Home Department (Case C 370/90) [1992] 3 All ER 798 (raised for the first time in the note on supplementary authorities) is equally unsustainable for the reasons given by Lord Clarke. On the second point, the Secretary of State has a wide margin or appreciation as to the powers required to give effect to the Directive. If their exercise were shown to be disproportionate in a particular case (which is not alleged here), it could to that extent be disapplied. It is not a reason for striking down the regulation. On the third point, the Hardial Singh principles are well established, and approved by high authority; their legality is not open to serious question for the reasons given by Lord Clarke. The last question raises a possible point on the construction of the definition (in regulation 2(1)) of the expression decision that concerns a persons removal from the United Kingdom. If necessary I would read this as extending to a decision such as in the present case which is part of the process leading to removal. But in any event the powers in article 24 are ancillary to the substantive power of removal under regulation 19(3)(b). That refers in terms to the requirements of regulation 21 (reproducing articles 27 and 28). It follows that the Secretary of State cannot properly exercise her powers under article 24, with a view to action under article 19(3)(b), without taking account of the need as part of that process to satisfy regulation 21. That seems to me sufficient to ensure that the action is compliant with the Directive. For these reasons, which are no more than a distillation of those given by Lord Clarke, I would dismiss the appeal. |
If you drive into Dundee from the west along the A90 (T), you will pass on your left a large industrial site. It was formerly occupied by NCR, one of Dundees largest employers, but its factory complex closed some years ago and the site has lain derelict ever since. In 2009 Asda Stores Ltd and MacDonald Estates Group plc, the interveners in the present appeal, applied for planning permission to develop a superstore there. Dundee City Council, the respondents, concluded that a decision to grant planning permission would not be in accordance with the development plan, but was nevertheless justified by other material considerations. Their decision to grant the application is challenged in these proceedings by Tesco Stores Ltd, the appellants, on the basis that the respondents proceeded on a misunderstanding of one of the policies in the development plan: a misunderstanding which, it is argued, vitiated their assessment of whether a departure from the plan was justified. In particular, it is argued that the respondents misunderstood a requirement, in the policies concerned with out of centre retailing, that it must be established that no suitable site is available, in the first instance, within and thereafter on the edge of city, town or district centres. The legislation force at the time of the relevant decision, provides: Section 37(2) of the Town and Country Planning (Scotland) Act 1997, as in In dealing with [an application for planning permission] the authority shall have regard to the provisions of the development plan, so far as material to the application, and to any other material considerations. Section 25 provides: Where, in making any determination under the planning Acts, regard is to be had to the development plan, the determination is, unless material considerations indicate otherwise (a) to be made in accordance with that plan. The development plan The development plan in the present case is an old development plan within the meaning of paragraph 1 of Schedule 1 to the 1997 Act. As such, it is defined by section 24 of the 1997 Act, as that section applied before the coming into force of section 2 of the Planning Etc. (Scotland) Act 2006, as including the approved structure plan and the adopted or approved local plan. The relevant structure plan in the present case is the Dundee and Angus Structure Plan, which became operative in 2002, at a time when the NCR plant remained in operation. As is explained in the introduction to the structure plan, its purpose is to provide a long term vision for the area and to set out the broad land use planning strategy guiding development and change. It includes a number of strategic planning policies. It sets the context for local plans, which translate the strategy into greater detail. Its preparation took account of national planning policy guidelines. The structure plan includes a chapter on town centres and retailing. The introduction explains that the relevant Government guidance is contained in National Planning Policy Guidance 8, Town Centres and Retailing (revised 1998). I note that that document (NPPG 8) was replaced in 2006 by Scottish Planning Policy: Town Centres and Retailing (SPP 8), which was in force at the time of the decision under challenge, and which was itself replaced in 2010 by Scottish Planning Policy (SPP). The relevant sections of all three documents are in generally similar terms. The structure plan continues, at para 5.2: A fundamental principle of NPPG 8 is that of the sequential approach to site selection for new retail developments On this basis, town centres should be the first choice for such developments, followed by edge of centre sites and, only after this, out of centre sites which are currently or potentially accessible by different means of transport. In relation to out of centre developments, that approach is reflected in Town Centres and Retailing Policy 4: Out of Centre Retailing: In keeping with the sequential approach to site selection for new retail developments, proposals for new or expanded out of centre retail developments in excess of 1000 sq m gross will only be acceptable where it can be established that: no suitable site is available, in the first instance, within and thereafter on the edge of city, town or district centres; individually or cumulatively it would not prejudice the vitality and viability of existing city, town or district centres; the proposal would address a deficiency in shopping provision which cannot be met within or on the edge of the above centres; the site is readily accessible by modes of transport other than the car; the proposal is consistent with other Structure Plan policies. The relevant local plan is the Dundee Local Plan, which came into operation in 2005, prior to the closure of the NCR plant. Like the structure plan, it notes that national planning policy guidance emphasises the need to protect and enhance the vitality and viability of town centres. It continues, at para 52.2: As part of this approach planning authorities should adopt a sequential approach to new shopping developments with first preference being town centres, which in Dundees case are the City centre and the District Centres. That approach is reflected in Policy 45: Location of New Retail Developments: The City Centre and District Centres will be the locations of first choice for new or expanded retail developments not already identified in the Local Plan. Proposals for retail developments outwith these locations will only be acceptable where it can be established that: a) no suitable site is available, in the first instance, within and thereafter on the edge of the City Centre or District Centres; and individually or cumulatively it would not prejudice the vitality b) and viability of the City Centre or District Centres; and c) the proposal would address a deficiency in shopping provision which cannot be met within or on the edge of these centres; and d) the site is readily accessible by modes of transport other than the car; and e) It is also relevant to note the guidance given in NPPG 8, as revised in 1998, to which the retailing sections of the structure plan and the local plan referred. Under the heading Sequential Approach, the guidance stated: the proposal is consistent with other Local Plan policies. 12. Planning authorities and developers should adopt a sequential approach to selecting sites for new retail, commercial leisure developments and other key town centre uses First preference should be for town centre sites, where sites or buildings suitable for conversion are available, followed by edge of centre sites, and only then by out of centre sites in locations that are, or can be made easily accessible by a choice of means of transport 13. In support of town centres as the first choice, the Government recognises that the application of the sequential approach requires flexibility and realism from developers and retailers as well as planning authorities. In preparing their proposals developers and retailers should have regard to the format, design, scale of the development, and the amount of car parking in relation to the circumstances of the particular town centre. In addition they should also address the need to identify and assemble sites which can meet not only their requirements, but in a manner sympathetic to the town setting. As part of such an approach, they should consider the scope for accommodating the proposed development in a different built form, and where appropriate adjusting or sub dividing large proposals, in order that their scale might offer a better fit with existing development in the town centre 14. Planning authorities should also be responsive to the needs of retailers and other town centre businesses. In consultation with the private sector, they should assist in identifying sites in the town centre which could be suitable and viable, for example, in terms of size and siting for the proposed use, and are likely to become available in a reasonable time 15. Only if it can be demonstrated that all town centre options have been thoroughly addressed and a view taken on availability, should less central sites in out of centre locations be considered for key town centre uses. Where development proposals in such locations fall outwith the development plan framework, it is for developers to demonstrate that town centre and edge of centre options have been thoroughly assessed. Even where a developer, as part of a sequential approach, demonstrates an out of centre location to be the most appropriate, the impact on the vitality and viability of existing centres still has to be shown to be acceptable The consideration of the application The interveners application was for planning permission to develop a foodstore, caf and petrol filling station, with associated car parking, landscaping and infrastructure, including access roads. The proposals also involved improvements to the junction with the A90 (T), the upgrading of a pedestrian underpass, the provision of footpaths and cycle ways, and improvements to adjacent roadways. A significant proportion of the former NCR site lay outside the application site. It was envisaged that vehicular access to this land could be achieved using one of the proposed access roads. In his report to the respondents, the Director of City Development advised that the application was contrary to certain aspects of the employment and retailing policies of the development plan. In relation to the employment policies, in particular, the proposal was contrary to policies which required the respondents to safeguard the NCR site for business use. The Director considered however that the application site was unlikely to be re developed for business uses in the short term, and that its re development as proposed would improve the development prospects of the remainder of the NCR site. In addition, the infrastructure improvements would provide improved access which would benefit all businesses in an adjacent industrial estate. In relation to the retailing policies, the Director considered the application in the light of the criteria in Retailing Policy 4 of the structure plan. In relation to the first criterion he stated: It must be demonstrated, in the first instance, that no suitable site is available for the development either within the city/district centres or, thereafter on the edge of these centres While noting that the Lochee District Centre lies within the primary catchment area for the proposal, [the retail statement submitted on behalf of the interveners] examines the potential site opportunities in and on the edge of that centre and also at the Hilltown and Perth Road District Centres. The applicants conclude that there are no sites or premises available in or on the edge of existing centres capable of accommodating the development under consideration. Taking account of the applicants argument it is accepted that at present there is no suitable site available to accommodate the proposed development. In relation to the remaining criteria, the Director concluded that the proposed development was likely to have a detrimental effect on the vitality and viability of Lochee District Centre, and was therefore in conflict with the second criterion. The potential impact on Lochee could however be minimised by attaching conditions to any permission granted so as to restrict the size of the store, limit the type of goods for sale and prohibit the provision of concessionary units. The proposal was also considered to be in conflict with the third criterion: there was no deficiency in shopping provision which the proposal would address. The fourth criterion, concerned with accessibility by modes of transport other than the car, was considered to be met. Similar conclusions were reached in relation to the corresponding criteria in Policy 45 of the local plan. In view of the conflict with the employment and retailing policies, the Director considered that the proposal did not fully comply with the provisions of the development plan. He identified however two other material considerations of particular significance. First, the proposed development would bring economic benefits to the city. The closure of the NCR factory had been a major blow to the economy, but the re development of the application site would create more jobs than had been lost when the factory finally closed. The creation of additional employment opportunities within the city was considered to be a strong material consideration. Secondly, the development would also provide a number of planning benefits. There would be improvements to the strategic road network which would assist in the free flow of traffic along the A90 (T). The development would also assist in the re development of the whole of the former NCR site through the provision of enhanced road access and the clearance of buildings from the site. The access improvements would also assist in the development of an economic development area to the west. These benefits were considered to be another strong material consideration. The Director concluded that the proposal was not in accordance with the development plan, particularly with regard to the employment and retailing policies. There were however other material considerations of sufficient weight to justify setting aside those policies and offering support for the development, subject to suitable conditions. He accordingly recommended that consent should be granted, subject to specified conditions. The application was considered by the respondents entire council sitting as the respondents Development Quality Committee. After hearing submissions on behalf of the interveners and also on behalf of the appellants, the respondents decided to follow the Directors recommendation. The reasons which they gave for their decision repeated the Directors conclusions: It is concluded that the proposal does not undermine the core land use and environmental strategies of the development plan. The planning and economic benefits that would accrue from the proposed development would be important to the future development and viability of the city as a regional centre. These benefits are considered to be of a significant weight and sufficient to set aside the relevant provisions of the development plan. The present proceedings The submissions on behalf of the appellants focused primarily upon an alleged error of interpretation of the first criterion in Retailing Policy 4 of the structure plan, and of the equivalent criterion in Policy 45 of the local plan. If there was a dispute about the meaning of a development plan policy which the planning authority was bound to take into account, it was for the court to determine what the words were capable of meaning. If the planning authority attached a meaning to the words which they were not properly capable of bearing, then it made an error of law, and failed properly to understand the policy. In the present case, the Director had interpreted suitable as meaning suitable for the development proposed by the applicant; and the respondents had proceeded on the same basis. That was not however a tenable meaning. Properly interpreted, suitable meant suitable for meeting identified deficiencies in retail provision in the area. Since no such deficiency had been identified, it followed on a proper interpretation of the plan that the first criterion did not require to be considered: it was inappropriate to undertake the sequential approach. The Directors report had however implied that the first criterion was satisfied, and that the proposal was to that extent in conformity with the sequential approach. The respondents had proceeded on that erroneous basis. They had thus failed to identify correctly the extent of the conflict between the proposal and the development plan. In consequence, their assessment of whether other material considerations justified a departure from the plan was inherently flawed. The respondents had compounded their error, it was submitted, by treating the proposed development as definitive when assessing whether a suitable site was available. That approach permitted developers to drive a coach and horses through the sequential approach: they could render the policy nugatory by the simple expedient of putting forward proposals which were so large that they could only be accommodated outside town and district centres. In the present case, there was a site available in Lochee which was suitable for food retailing and which was sequentially preferable to the application site. The Lochee site had been considered as part of the assessment of the proposal, but had been found to be unsuitable because it could not accommodate the scale of development to which the interveners aspired. In response, counsel for the respondents submitted that it was for the planning authority to interpret the relevant policy, exercising its planning judgment. Counsel accepted that, if there was a dispute about the meaning of the words in a policy document, it was for the court to determine as a matter of law what the words were capable of meaning. The planning authority would only make an error of law if it attached a meaning to the words which they were not capable of bearing. In the present case, the relevant policies required all the specified criteria to be satisfied. The respondents had proceeded on the basis that the proposal failed to accord with the second and third criteria. In those circumstances, the respondents had correctly concluded that the proposal was contrary to the policies in question. How the proposal had been assessed against the first criterion was immaterial. So far as concerned the assessment of suitable sites, the interveners retail statement reflected a degree of flexibility. There had been a consideration of all sites of at least 2.5 ha, whereas the application site extended to 6.68 ha. The interveners had also examined sites which could accommodate only food retailing, whereas their application had been for both food and non food retailing. The Lochee site extended to only 1.45 ha, and could accommodate a store of only half the size proposed. It also had inadequate car parking. The Director, and the respondents, had accepted that it was not a suitable site for these reasons. Discussion It has long been established that a planning authority must proceed upon a proper understanding of the development plan: see, for example, Gransden & Co Ltd v Secretary of State for the Environment (1985) 54 P & CR 86, 94 per Woolf J, affd (1986) 54 P & CR 361; Horsham DC v Secretary of State for the Environment (1991) 63 P & CR 219, 225 226 per Nolan LJ. The need for a proper understanding follows, in the first place, from the fact that the planning authority is required by statute to have regard to the provisions of the development plan: it cannot have regard to the provisions of the plan if it fails to understand them. It also follows from the legal status given to the development plan by section 25 of the 1997 Act. The effect of the predecessor of section 25, namely section 18A of the Town and Country (Planning) Scotland Act 1972 (as inserted by section 58 of the Planning and Compensation Act 1991), was considered by the House of Lords in the case of City of Edinburgh Council v Secretary of State for Scotland 1998 SC (HL) 33, [1997] 1 WLR 1447. It is sufficient for present purposes to cite a passage from the speech of Lord Clyde, with which the other members of the House expressed their agreement. At p 44, 1459, his Lordship observed: In the practical application of sec 18A it will obviously be necessary for the decision maker to consider the development plan, identify any provisions in it which are relevant to the question before him and make a proper interpretation of them. His decision will be open to challenge if he fails to have regard to a policy in the development plan which is relevant to the application or fails properly to interpret it. In the present case, the planning authority was required by section 25 to consider whether the proposed development was in accordance with the development plan and, if not, whether material considerations justified departing from the plan. In order to carry out that exercise, the planning authority required to proceed on the basis of what Lord Clyde described as a proper interpretation of the relevant provisions of the plan. We were however referred by counsel to a number of judicial dicta which were said to support the proposition that the meaning of the development plan was a matter to be determined by the planning authority: the court, it was submitted, had no role in determining the meaning of the plan unless the view taken by the planning authority could be characterised as perverse or irrational. That submission, if correct, would deprive sections 25 and 37(2) of the 1997 Act of much of their effect, and would drain the need for a proper interpretation of the plan of much of its meaning and purpose. It would also make little practical sense. The development plan is a carefully drafted and considered statement of policy, published in order to inform the public of the approach which will be followed by planning authorities in decision making unless there is good reason to depart from it. It is intended to guide the behaviour of developers and planning authorities. As in other areas of administrative law, the policies which it sets out are designed to secure consistency and direction in the exercise of discretionary powers, while allowing a measure of flexibility to be retained. Those considerations point away from the view that the meaning of the plan is in principle a matter which each planning authority is entitled to determine from time to time as it pleases, within the limits of rationality. On the contrary, these considerations suggest that in principle, in this area of public administration as in others (as discussed, for example, in R (Raissi) v Secretary of State for the Home Department [2008] QB 836), policy statements should be interpreted objectively in accordance with the language used, read as always in its proper context. That is not to say that such statements should be construed as if they were statutory or contractual provisions. Although a development plan has a legal status and legal effects, it is not analogous in its nature or purpose to a statute or a contract. As has often been observed, development plans are full of broad statements of policy, many of which may be mutually irreconcilable, so that in a particular case one must give way to another. In addition, many of the provisions of development plans are framed in language whose application to a given set of facts requires the exercise of judgment. Such matters fall within the jurisdiction of planning authorities, and their exercise of their judgment can only be challenged on the ground that it is irrational or perverse (Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 WLR 759, 780 per Lord Hoffmann). Nevertheless, planning authorities do not live in the world of Humpty Dumpty: they cannot make the development plan mean whatever they would like it to mean. The principal authority referred to in relation to this matter was the judgment of Brooke LJ in R v Derbyshire County Council, Ex p Woods [1997] JPL 958 at 967. Properly understood, however, what was said there is not inconsistent with the approach which I have described. In the passage in question, Brooke LJ stated: If there is a dispute about the meaning of the words included in a policy document which a planning authority is bound to take into account, it is of course for the court to determine as a matter of law what the words are capable of meaning. If the decision maker attaches a meaning to the words they are not properly capable of bearing, then it will have made an error of law, and it will have failed properly to understand the policy. By way of illustration, Brooke LJ referred to the earlier case of Northavon DC v Secretary of State for the Environment [1993] JPL 761, which concerned a policy applicable to institutions standing in extensive grounds. As was observed, the words spoke for themselves, but their application to particular factual situations would often be a matter of judgment for the planning authority. That exercise of judgment would only be susceptible to review in the event that it was unreasonable. The latter case might be contrasted with the case of R (Heath and Hampstead Society) v Camden LBC [2008] 2 P & CR 233, where a planning authoritys decision that a replacement dwelling was not materially larger than its predecessor, within the meaning of a policy, was vitiated by its failure to understand the policy correctly: read in its context, the phrase materially larger referred to the size of the new building compared with its predecessor, rather than requiring a broader comparison of their relative impact, as the planning authority had supposed. Similarly in City of Edinburgh Council v Scottish Ministers 2001 SC 957 the reporters decision that a licensed restaurant constituted similar licensed premises to a public house, within the meaning of a policy, was vitiated by her misunderstanding of the policy: the context was one in which a distinction was drawn between public houses, wine bars and the like, on the one hand, and restaurants, on the other. A provision in the development plan which requires an assessment of whether a site is suitable for a particular purpose calls for judgment in its application. But the question whether such a provision is concerned with suitability for one purpose or another is not a question of planning judgment: it is a question of textual interpretation, which can only be answered by construing the language used in its context. In the present case, in particular, the question whether the word suitable, in the policies in question, means suitable for the development proposed by the applicant, or suitable for meeting identified deficiencies in retail provision in the area, is not a question which can be answered by the exercise of planning judgment: it is a logically prior question as to the issue to which planning judgment requires to be directed. It is of course true, as counsel for the respondents submitted, that a planning authority might misconstrue part of a policy but nevertheless reach the same conclusion, on the question whether the proposal was in accordance with the policy, as it would have reached if it had construed the policy correctly. That is not however a complete answer to a challenge to the planning authoritys decision. An error in relation to one part of a policy might affect the overall conclusion as to whether a proposal was in accordance with the development plan even if the question whether the proposal was in conformity with the policy would have been answered in the same way. The policy criteria with which the proposal was considered to be incompatible might, for example, be of less weight than the criteria which were mistakenly thought to be fulfilled. Equally, a planning authority might misconstrue part of a policy but nevertheless reach the same conclusion as it would otherwise have reached on the question whether the proposal was in accordance with the development plan. Again, however, that is not a complete answer. Where it is concluded that the proposal is not in accordance with the development plan, it is necessary to understand the nature and extent of the departure from the plan which the grant of consent would involve in order to consider on a proper basis whether such a departure is justified by other material considerations. In the present case, the Lord Ordinary rejected the appellants submissions on the basis that the interpretation of planning policy was always primarily a matter for the planning authority, whose assessment could be challenged only on the basis of unreasonableness: there was, in particular, more than one way in which the sequential approach could reasonably be applied ([2010] CSOH 128, para 23). For the reasons I have explained, that approach does not correctly reflect the role which the court has to play in the determination of the meaning of the development plan. A different approach was adopted by the Second Division: since, it was said, the proposal was in head on conflict with the retail and employment policies of the development plan, and the sequential approach offered no justification for it, a challenge based upon an alleged misapplication of the sequential approach was entirely beside the point (2011 SC 457, [2011] CSIH 9, para 38). For the reasons I have explained, however, even where a proposal is plainly in breach of policy and contrary to the development plan, a failure properly to understand the policy in question may result in a failure to appreciate the full extent or significance of the departure from the development plan which the grant of consent would involve, and may consequently vitiate the planning authoritys determination. Whether there has in fact been a misunderstanding of the policy, and whether any such misunderstanding may have led to a flawed decision, has therefore to be considered. I turn then to the question whether the respondents misconstrued the policies in question in the present case. As I have explained, the appellants primary contention is that the word suitable, in the first criterion of Retailing Policy 4 of the structure plan and the corresponding Policy 45 of the local plan, means suitable for meeting identified deficiencies in retail provision in the area, whereas the respondents proceeded on the basis of the construction placed upon the word by the Director of City Development, namely suitable for the development proposed by the applicant. I accept, subject to a qualification which I shall shortly explain, that the Director and the respondents proceeded on the latter basis. Subject to that qualification, it appears to me that they were correct to do so, for the following reasons. First, that interpretation appears to me to be the natural reading of the policies in question. They have been set out in paras 4 and 5 above. Read short, Retailing Policy 4 of the structure plan states that proposals for new or expanded out of centre retail developments will only be acceptable where it can be established that a number of criteria are satisfied, the first of which is that no suitable site is available in a sequentially preferable location. Policy 45 of the local plan is expressed in slightly different language, but it was not suggested that the differences were of any significance in the present context. The natural reading of each policy is that the word suitable, in the first criterion, refers to the suitability of sites for the proposed development: it is the proposed development which will only be acceptable at an out of centre location if no suitable site is available more centrally. That first reason for accepting the respondents interpretation of the policy does not permit of further elaboration. Secondly, the interpretation favoured by the appellants appears to me to conflate the first and third criteria of the policies in question. The first criterion concerns the availability of a suitable site in a sequentially preferable location. The third criterion is that the proposal would address a deficiency in shopping provision which cannot be met in a sequentially preferable location. If suitable meant suitable for meeting identified deficiencies in retail provision, as the appellants contend, then there would be no distinction between those two criteria, and no purpose in their both being included. Thirdly, since it is apparent from the structure and local plans that the policies in question were intended to implement the guidance given in NPPG 8 in relation to the sequential approach, that guidance forms part of the relevant context to which regard can be had when interpreting the policies. The material parts of the guidance are set out in para 6 above. They provide further support for the respondents interpretation of the policies. Paragraph 13 refers to the need to identify sites which can meet the requirements of developers and retailers, and to the scope for accommodating the proposed development. Paragraph 14 advises planning authorities to assist the private sector in identifying sites which could be suitable for the proposed use. Throughout the relevant section of the guidance, the focus is upon the availability of sites which might accommodate the proposed development and the requirements of the developer, rather than upon addressing an identified deficiency in shopping provision. The latter is of course also relevant to retailing policy, but it is not the issue with which the specific question of the suitability of sites is concerned. I said earlier that it was necessary to qualify the statement that the Director and the respondents proceeded, and were correct to proceed, on the basis that suitable meant suitable for the development proposed by the applicant. As paragraph 13 of NPPG 8 makes clear, the application of the sequential approach requires flexibility and realism from developers and retailers as well as planning authorities. The need for flexibility and realism reflects an inbuilt difficulty about the sequential approach. On the one hand, the policy could be defeated by developers and retailers taking an inflexible approach to their requirements. On the other hand, as Sedley J remarked in R v Teesside Development Corporation, Ex p William Morrison Supermarket plc and Redcar and Cleveland BC [1998] JPL 23, 43, to refuse an out of centre planning consent on the ground that an admittedly smaller site is available within the town centre may be to take an entirely inappropriate business decision on behalf of the developer. The guidance seeks to address this problem. It advises that developers and retailers should have regard to the circumstances of the particular town centre when preparing their proposals, as regards the format, design and scale of the development. As part of such an approach, they are expected to consider the scope for accommodating the proposed development in a different built form, and where appropriate adjusting or sub dividing large proposals, in order that their scale may fit better with existing development in the town centre. The guidance also advises that planning authorities should be responsive to the needs of retailers. Where development proposals in out of centre locations fall outside the development plan framework, developers are expected to demonstrate that town centre and edge of centre options have been thoroughly assessed. That advice is not repeated in the structure plan or the local plan, but the same approach must be implicit: otherwise, the policies would in practice be inoperable. It follows from the foregoing that it would be an over simplification to say that the characteristics of the proposed development, such as its scale, are necessarily definitive for the purposes of the sequential test. That statement has to be qualified to the extent that the applicant is expected to have prepared his proposals in accordance with the recommended approach: he is, for example, expected to have had regard to the circumstances of the particular town centre, to have given consideration to the scope for accommodating the development in a different form, and to have thoroughly assessed sequentially preferable locations on that footing. Provided the applicant has done so, however, the question remains, as Lord Glennie observed in Lidl UK GmbH v Scottish Ministers [2006] CSOH 165, para 14, whether an alternative site is suitable for the proposed development, not whether the proposed development can be altered or reduced so that it can be made to fit an alternative site. In the present case, it is apparent that a flexible approach was adopted. The interveners did not confine their assessment to sites which could accommodate the development in the precise form in which it had been designed, but examined sites which could accommodate a smaller development and a more restricted range of retailing. Even taking that approach, however, they did not regard the Lochee site vacated by the appellants as being suitable for their needs: it was far smaller than they required, and its car parking facilities were inadequate. In accepting that assessment, the respondents exercised their judgment as to how the policy should be applied to the facts: they did not proceed on an erroneous understanding of the policy. Finally, I would observe that an error by the respondents in interpreting their policies would be material only if there was a real possibility that their determination might otherwise have been different. In the particular circumstances of the present case, I am not persuaded that there was any such possibility. The considerations in favour of the proposed development were very powerful. They were also specific to the particular development proposed: on the information before the respondents, there was no prospect of any other development of the application site, or of any development elsewhere which could deliver equivalent planning and economic benefits. Against that background, the argument that a different decision might have been taken if the respondents had been advised that the first criterion in the policies in question did not arise, rather than that criterion had been met, appears to me to be implausible. Conclusion For these reasons, and those given by Lord Hope, with which I am in entire agreement, I would dismiss the appeal. LORD HOPE The question that lies at the heart of this case is whether the respondents acted unlawfully in their interpretation of the sequential approach which both the structure plan and the relevant local plan required them to adopt to new retail developments within their area. According to that approach, proposals for new or expanded out of centre developments of this kind are acceptable only where it can be established, among other things, that no suitable site is available, in the first instance, within and thereafter on the edge of city, town or district centres. Is the test as to whether no suitable site is available in these locations, when looked at sequentially, to be addressed by asking whether there is a site in each of them in turn which is suitable for the proposed development? Or does it direct attention to the question whether the proposed development could be altered or reduced so as to fit into a site which is available there as a location for this kind of development? The sequential approach is described in National Planning Policy Guidance Policy 8, Town Centres and Retailing, para 5.2 as a fundamental principle of NPPG 8. In R v Rochdale Metropolitan Borough Council, Ex p Milne, 31 July 2000, not reported, paras 48 49, Sullivan J said that it was not unusual for development plan polices to pull in different directions and, having regard to what Lord Clyde said about the practical application of the statutory rule in City of Edinburgh v Secretary of State for Scotland 1998 SC (HL) 33 at p 44, that he regarded as untenable the proposition that if there was a breach of any one policy in a development plan a proposed development could not be said to be in accordance with the plan. In para 52 he said that the relative importance of a given policy to the overall objectives of the development plan was essentially a matter for the judgment of the local planning authority and that a legalistic approach to the interpretation of development plan policies was to be avoided. I see no reason to question these propositions, to which Mr Kingston QC for the appellants drew our attention in his reply to Mr Armstrongs submissions for the respondents. But I do not think that they are in point in this case. We are concerned here with a particular provision in the planning documents to which the respondents are required to have regard by the statute. The meaning to be given to the crucial phrase is not a matter that can be left to the judgment of the planning authority. Nor, as the Lord Ordinary put it in his opinion at [2010] CSOH 128, para 23, is the interpretation of the policy which it sets out primarily a matter for the decision maker. As Mr Thomson for the interveners pointed out, the challenge to the respondents decision to follow the Directors recommendation and approve the proposed development is not that it was Wednesbury unreasonable but that it was unlawful. I agree with Lord Reed that the issue is one of law, reading the words used objectively in their proper context. In Lidl UK GmbH v The Scottish Ministers [2006] CSOH 165 the appellants appealed against a decision of the Scottish Ministers to refuse planning permission for a retail unit to be developed on a site outwith Irvine town centre. The relevant provision in the local plan required the sequential approach to be adopted to proposals for new retail development out with the town centre boundaries. Among the criteria that had to be satisfied was the requirement that no suitable sites were available, or could reasonably be made available, in or on the edge of existing town centres. In other words, town centre sites were to be considered first before edge of centre or out of town sites. The reporter held that the existing but soon to be vacated Lidl town centre site was suitable for the proposed development, although it was clear as a matter of fact that this site could not accommodate it. In para 13 Lord Glennie noted that counsel for the Scottish Ministers accepted that a site would be suitable in terms of the policy only if it was suitable for, or could accommodate, the development as proposed by the developer. In para 14 he said that the question was whether the alternative town centre site was suitable for the proposed development, not whether the proposed development could be altered or reduced so that it could fit in to it. Mr Kingston submitted that Lord Glennies approach would rob the sequential approach of all its force, and in the Inner House it was submitted that his decision proceeded on a concession by counsel which ought not to have been made: [2011] CSIH 9, 2011 SC 457, para 31. But I think that Lord Glennies interpretation of the phrase was sound and that counsel was right to accept that it had the meaning which she was prepared to give to it. The wording of the relevant provision in the local plan in that case differed slightly from that with which we are concerned in this case, as it included the phrase or can reasonably be made available. But the question to which it directs attention is the same. It is the proposal for which the developer seeks permission that has to be considered when the question is asked whether no suitable site is available within or on the edge of the town centre. The context in which the word suitable appears supports this interpretation. It is identified by the opening words of the policy, which refer to proposals for new or expanded out of centre retail developments and then set out the only circumstances in which developments outwith the specified locations will be acceptable. The words the proposal which appear in the third and fifth of the list of the criteria which must be satisfied serve to reinforce the point that the whole exercise is directed to what the developer is proposing, not some other proposal which the planning authority might seek to substitute for it which is for something less than that sought by the developer. It is worth noting too that the phrase no suitable site is available appears in Policy 46 of the local plan relating to commercial developments. Here too the context indicates that the issue of suitability is directed to the developers proposals, not some alternative scheme which might be suggested by the planning authority. I do not think that this is in the least surprising, as developments of this kind are generated by the developers assessment of the market that he seeks to serve. If they do not meet the sequential approach criteria, bearing in mind the need for flexibility and realism to which Lord Reed refers in para 28, above, they will be rejected. But these criteria are designed for use in the real world in which developers wish to operate, not some artificial world in which they have no interest doing so. For these reasons which I add merely as a footnote I agree with Lord Reed, for all the reasons he gives, that this appeal should be dismissed. I would affirm the Second Divisions interlocutor. |
From 4 April 2005 until 3 December 2012, English law provided for the imposition of sentences of imprisonment for public protection (IPP). This is another case in which courts have had to address the practical and legal issues resulting from this innovation. To impose a sentence of IPP the court had (inter alia) to be of the opinion that there is a significant risk to members of the public of serious harm occasioned by the commission by [the offender] of further specified offences (Criminal Justice Act 2003, section 225(1)(b)). When imposing it, the court was required to specify a minimum period (the tariff period) after the expiry of which the prisoner was eligible for review by the Parole Board who could direct his release on licence (Powers of Criminal Courts (Sentencing) Act 2000, section 82A). The Parole Board was required not to direct release unless satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined (Crime (Sentences) Act 1997, section 28(6)(b)). The case is before the Supreme Court as an application for permission to appeal, with the appeal to follow if permission be granted. Having heard the submissions, I consider that it raises issues of importance which merit the Courts consideration and would therefore grant permission. On that basis, there are two grounds of appeal before the Supreme Court. The first focuses on the relationship between the criteria for the court to impose a sentence of IPP and for the Parole Board to direct release on licence. The appellant submits that they must, though differently worded, be read as involving the same substantive test. The Parole Board and the Secretary of State submit that the difference in wording represents a difference in substance. The second ground of appeal is that, even if the criteria differ in substance, the Parole Board in fact applied a wrong test when deciding whether to order the appellants release. Although Mr Hugh Southey QC for the appellant accepts that this ground is now largely, if not entirely, academic in view of the appellants release, he submits that the court should address it to clarify the test for release. For reasons which follow, I would dismiss the appeal on both grounds. The factual background During an altercation outside a public house on 19 May 2006 the appellant, then aged 28, punched a man, who fell backwards, struck his head on the ground and died on the next day. The appellant was convicted of manslaughter. The judge, HHJ Findlay Baker, concluded that the appellant was dangerous. He was forceful and physically very strong, had indicated that he regarded it as his right to respond with violence to any tendered or threatened towards him, had uncontrolled heavy drinking and cocaine taking problems, and had shown no commitment to change these. Accordingly, on 31 January 2007 the judge imposed a sentence of IPP, with a tariff of 2 years 108 days, which expired on 19 May 2009. He said that, had it not been appropriate to impose IPP, a sentence of six years imprisonment would have been appropriate. Deducting half of that, and the time spent on remand, gave the tariff. A Parole Board review took place only on 10 May 2010, when the Board concluded that Mr Sturnham had made significant progress, but still presented a low risk of re offending and a medium risk of serious harm. It declined to order release, but recommended transfer to open conditions which took place on 12 August 2010. Mr Sturnham issued proceedings for judicial review, claiming that the Parole Board had applied the wrong test and also claiming damages for the delay in holding the review. These proceedings were the subject of judgments given by Mitting J on 14 March 2011, [2011] EWHC 938 (Admin), and the Court of Appeal on 23 February 2012, [2012] EWCA Civ 452; [2012] 3 WLR 476. The claim for damages was ultimately disposed of in the Supreme Court by decision on 1 May 2013, [2013] UKSC 23; [2013] 2 WLR 1157, restoring Mitting Js award at first instance of 300 damages for six months undue delay. The former claim is now before the court, having been dismissed by both Mitting J and the Court of Appeal. The result of the present appeal no longer has direct significance for Mr Sturnhams detention. He was released on licence pursuant to a Parole Board decision dated 7 September 2011. But it had a live general significance for the Parole Board at the date when the appeal was considered by the Court of Appeal (23 February 2012) and it may have a continuing significance in other cases, including potentially for prisoners serving life sentences. The legislation IPP was a child of the Criminal Justice Act 2003. Section 225(1) to (3) of that Act identified the circumstances in which IPP was appropriate (until 13 July 2008 without, but thereafter subject to, any residual discretion on the sentencers part) by differentiating those in which it required a discretionary life sentence to be imposed. Release after the tariff period was provided for by the insertion into the Crime (Sentences) Act 1997 of a reference to IPP so as to make IPP subject to the same statutory regime of review by and release by direction of the Parole Board as applicable to mandatory and discretionary life sentences. As enacted and in force when Mr Sturnham was sentenced, section 225 read, so far as material: 225 Life sentence or imprisonment for public protection for serious offences (1) This section applies where (a) a person aged 18 or over is convicted of a serious offence committed after the commencement of this section, and (b) the court is of the opinion that there is a significant risk to members of the public of serious harm occasioned by the commission by him of further specified offences. (2) If (a) the offence is one in respect of which the offender would apart from this section be liable to imprisonment for life, and (b) the court considers that the seriousness of the offence, or of the offence and one or more offences associated with it, is such as to justify the imposition of a sentence of imprisonment for life, the court must impose a sentence of imprisonment for life. (3) In a case not falling within subsection (2), the court must impose a sentence of imprisonment for public protection. (4) A sentence of imprisonment for public protection is a sentence of imprisonment for an indeterminate period, subject to the provisions of Chapter 2 of Part 2 of the Crime (Sentences) Act 1997 as to the release of prisoners and duration of licences. (5) An offence the sentence for which is imposed under this section is not to be regarded as an offence the sentence for which is fixed by law. Section 225 falls to be read with section 224 and Schedule 15. Section 224 provided, so far as material: 224 Meaning of specified offence etc (1) An offence is a specified offence for the purposes of this Chapter if it is a specified violent offence or a specified sexual offence. (2) An offence is a serious offence for the purposes of this Chapter if and only if (a) it is a specified offence, and (b) it is, apart from section 225, punishable in the case of a person aged 18 or over by (i) imprisonment for life, or (ii) imprisonment for a determinate period of ten years or more. (3) In this Chapter relevant offence has the meaning given by section 229(4); serious harm means death or serious personal injury, whether physical or psychological; specified violent offence means an offence specified in Part 1 of Schedule 15; specified sexual offence means an offence specified in Part 2 of that Schedule. Schedule 15 contained a very substantial list of over 150 different offences, starting with manslaughter, kidnapping, false imprisonment, threats to kill and malicious wounding. Notably, however, it did not include murder, for the obvious reason that murder would carry a mandatory life sentence. Section 229 explains the concept of risk (or dangerousness) relevant under section 225: 229 The assessment of dangerousness (1) This section applies where (a) a person has been convicted of a specified offence, and (b) it falls to a court to assess under any of sections 225 to 228 whether there is a significant risk to members of the public of serious harm occasioned by the commission by him of further such offences. (2) If at the time when that offence was committed the offender had not been convicted in any part of the United Kingdom of any relevant offence or was aged under 18, the court in making the assessment referred to in subsection (1)(b) (a) must take into account all such information as is available to it about the nature and circumstances of the offence, (b) may take into account any information which is before it about any pattern of behaviour of which the offence forms part, and (c) may take into account any information about the offender which is before it. (4) In this Chapter relevant offence means (a) a specified offence. As to release by the Parole Board on licence, sections 28 and 34 of the Crime (Sentences) Act 1997 read, so far as material: 28 Duty to release certain life prisoners (1A) This section applies to a life prisoner in respect of whom a minimum term order has been made; and any reference in this section to the relevant part of such a prisoners sentence is a reference to the part of the sentence specified in the order. (5) As soon as (a) a life prisoner to whom this section applies has served the relevant part of his sentence, (b) the Parole Board has directed his release under this section, it shall be the duty of the Secretary of State to release him on licence. (6) The Parole Board shall not give a direction under subsection (5) above with respect to a life prisoner to whom this section applies unless (a) the Secretary of State has referred the prisoners case to the Board; and (b) the Board is satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined. (7) A life prisoner to whom this section applies may require the Secretary of State to refer his case to the Parole Board at any time (a) after he has served the relevant part of his sentence; and (b) where there has been a previous reference of his case to the Board, after the end of the period of two years beginning with the disposal of that reference; and (c) where he is also serving a sentence of imprisonment or detention for a term, after he has served one half of that sentence; and in this subsection previous reference means a reference under subsection (6) above or section 32(4) below. (8A) In this section minimum term order means an order under (a) subsection (2) of section 82A of the Powers of Criminal Courts (Sentencing) Act 2000 (determination of minimum term in respect of life sentence that is not fixed by law), or (b) subsection (2) of section 269 of the Criminal Justice Act 2003 (determination of minimum term in respect of mandatory life sentence). 34 Interpretation of Chapter II (1) In this Chapter life prisoner means a person serving one or more life sentences; (2) In this section life sentence means any of the following imposed for an offence, whether committed before or after the commencement of this Chapter, namely (a) a sentence of imprisonment for life; (b) a sentence of detention during Her Majestys pleasure or for life under section 90 or 91 of the Powers of Criminal Courts (Sentencing) Act 2000; and (c) a sentence of custody for life under section 93 or 94 of that Act, (d) a sentence of imprisonment for public protection under section 225 of the Criminal Justice Act 2003 Section 225 accordingly applied whenever the sentencing court was of the opinion that there is a significant risk to members of the public of serious harm occasioned by the commission by [the offender] of further specified offences. It offered two mutually exclusive courses in such a case. Under section 225(2) the court was required to pass a sentence of imprisonment for life if (a) the offence was one in respect of which the offender would apart from section 225 be liable to imprisonment for life, and (b) it considered that the seriousness of the offence, or of the offence and one or more offences associated with it, is such as to justify the imposition of a sentence of imprisonment for life. Alternatively, if either of (a) or (b) was not satisfied, the court was obliged to impose a sentence of IPP. The case law background Prior to the 2003 Act, the criteria for imposition of a discretionary life sentence consisted, broadly, of the commission of a very serious offence and a conclusion that the offender was a serious danger to the public and likely to remain so for an indeterminate period. In R v Hodgson (1967) 52 Cr App R 113, 114 the Court of Appeal put the matter as follows: When the following conditions are satisfied, a sentence of life imprisonment is in our opinion justified: (1) where the offence or offences are in themselves grave enough to require a very long sentence; (2) where it appears from the nature of the offences or from the defendant's history that he is a person of unstable character likely to commit such offences in the future; and (3) where if the offences are committed the consequences to others may be specially injurious, as in the case of sexual offences or crimes of violence. Further guidance was given by Lord Lane CJ in R v Wilkinson (1983) 5 Cr App R (S) 105, 108 109. He said that a discretionary life sentence should be reserved for the most exceptional circumstances, and for the most part for offenders who were incapable of being dealt with under the Mental Health Act 1959, yet who are in a mental state which makes them dangerous to the life or limb of members of the public and in respect of whom It is sometimes impossible to say when that danger will subside. The reference in Hodgson to future offending being likely was read in a mathematical sense of more probable than not by counsel for the appellant and it seems the Divisional Court in R v Parole Board, Ex p Bradley [1991] 1 WLR 134, 143F, 144H, 145F G and (in particular) 146A C. But likely is a word of open meaning, and I regard any attempt to state or apply a test of mathematical probability in this context as inappropriate. The formulation good grounds for believing that the offender may remain a serious danger to the public for a period which cannot be reliably estimated at the date of sentence was, in my view rightly, preferred in the later case of Attorney Generals Reference No 32 of 1996 (R v Whittaker) [1997] 1 Cr App R(S) 261, 264. By the same token, the Court of Appeal was right, in the context of IPP, to regard it as wholly unhelpful to attempt to redefine significant risk in terms of numerical probability, whether as more probable than not or by any other percentage of likelihood: R v Pedley [2009] EWCA Crim 840, [2009] 1 WLR 2517, para 19. Other authority also indicates that the criteria for imposing a discretionary life sentence are in some measure inter related. In R v Chapman [2000] 1 Cr App R 77, 85 Lord Bingham CJ approved Whittaker and said: In most of those cases there was no express departure from the criteria laid down in R v Hodgson, and certainly no doubt has to our knowledge ever been cast on the authority of that decision, which was very recently re affirmed in Attorney General's Reference No 32 of 1996 (R v Whittaker). In Attorney General's Reference No 34 of 1992 (R v Oxford) (1993) 15 Cr App R(S) 167, R v Hodgson was indeed specifically relied on as laying down principles which were described as not in dispute. It is in our judgment plain, as the court has on occasion acknowledged, that there is an interrelationship between the gravity of the offence before the court, the likelihood of further offending, and the gravity of further offending should such occur. The more likely it is that an offender will offend again, and the more grave such offending is likely to be if it does occur, the less emphasis the court may lay on the gravity of the original offence. There is, however, in our judgment no ground for doubting the indispensability of the first condition laid down for imposition of an indeterminate life sentence in R v Hodgson, re affirmed, as we say, in the more recent Attorney General's Reference No 32 of 1996 (R v Whittaker). It moreover seems to this court to be wrong in principle to water down that condition since a sentence of life imprisonment is now the most severe sentence that the court can impose, and it is not in our judgment one which should ever be imposed unless the circumstances are such as to call for a severe sentence based on the offence which the offender has committed. We accordingly find ourselves in sympathy with all the submissions made by Mr Fitzgerald, which are as we conclude soundly based in law. That being the common law position relating to the imposition of a discretionary life sentence, the next question is the effect of section 225(2) and (3). In R v Lang [2005] EWCA Crim 2864; [2006] 1 WLR 2509, para 8 Rose LJ said: It is not clear whether Parliament, when referring in sections 225(2)(b) and 226(2)(b) to the seriousness of an offence or offences being such as to justify imprisonment or detention for life, thereby making such a sentence mandatory, was intending to adopt this court's criteria for the imposition of a discretionary life sentence; see R v Chapman [2000] 1 Cr App R(S) 377, or was seeking to introduce a new, more restrictive, criterion for seriousness relating it solely to the offence rather than, also, to the dangerousness of the offender. On the basis that Parliament is presumed to know the law, we incline to the former view. The point did not however arise for decision. Subsequently in R v Kehoe [2008] EWCA Crim 819; [2009] 1 Cr App R(S) 41, para 17 the Court of Appeal expressed the view that: When, as here, an offender meets the criteria of dangerousness, there is no longer any need to protect the public by passing a sentence of life imprisonment for the public are now properly protected by the imposition of the sentence of imprisonment for public protection. In such cases, therefore, the cases decided before the Criminal Justice Act 2003 came into effect no longer offer guidance on when a life sentence should be imposed. We think that now, when the court finds that the defendant satisfies the criteria for dangerousness, a life sentence should be reserved for those cases where the culpability of the offender is particularly high or the offence itself particularly grave. It is neither possible nor desirable to set out all those circumstances in which a life sentence might be appropriate, but we do not think that this unpremeditated killing of one drunk by another, at a time when her responsibility was diminished, and after she was provoked, can properly be said to be so grave that a life sentence is required or even justified. Accordingly, we quash the life sentence and substitute a sentence of imprisonment for public protection. To the extent that this passage in Kehoe suggests that section 225(2) involves a raising of the threshold for imposition of a discretionary life sentence, it is difficult to see in what that can really have consisted. But it is on any view clear that, in cases of significant risk to the public of serious harm by the commission of further specified offences, section 225(3) introduced a new form of indeterminate sentence, based on actual offending which was either of a kind for which a life sentence was not available or not of such seriousness as to justify the imposition of a life sentence. The amendments made to the Crime (Sentences) Act 1997 had the effect of fitting the new form of sentence of IPP into a pre existing framework established for mandatory or discretionary life sentences. In the light of decisions such as Thynne, Wilson and Gunnell v United Kingdom (1990) 13 EHRR 666 and Stafford v United Kingdom (2002) 35 EHRR 1121 and R (Noorkoiv) v Secretary of State for the Home Department [2002] 1 WLR 3284, the role of considering whether it was no longer necessary for the protection of the public that the prisoner should be confined after the expiry of the tariff period (or minimum term) fell upon the Parole Board under section 28(6)(b) in relation to all these types of sentence. Two clear differences did however exist between sentences of IPP and life sentences: the licence period in respect of an IPP could be brought to an end ten years after release (section 31A of the Crime (Sentences) Act 1997, as inserted by Schedule 18, paragraph 2, to the Criminal Justice Act 2003); and a minimum term of whole life could not be imposed in respect of IPP (Schedule 18, paragraph 4, to the 2003 Act). Since sentences of IPP were fitted into a larger framework, it is relevant to consider how that framework operated. The Criminal Justice Act 1967, section 61(1) provided merely that the Secretary of State may, if recommended to do so by the Parole Board, release on licence a person serving a sentence of imprisonment for life. In R v Secretary of State for the Home Department, Ex p Benson (The Independent, 16 November 1988) and in Ex p Bradley, the Divisional Court considered the nature and level of risk by reference to which the Parole Board should measure whether continuing detention was justified. In Benson Lloyd LJ said that the decision whether to recommend or release on licence depended on whether there was a risk of repetition of the sort of offence for which the life sentence was originally imposed, in other words risk to life or limb, including in that category a non violent rape. In Bradley the court was concerned with the extent of the risk relevant to sentencing and to release on licence. In rejecting Mr Edward Fitzgeralds submission that the two must equate, the court said (p 145F H): the sentencing court recognises that passing a life sentence may well cause the accused to serve longer, and sometimes substantially longer, than his just deserts. It must thus not expose him to that peril unless there is compelling justification for such a course. That compelling justification is the perception of grave future risk amounting to an actual likelihood of dangerousness. But of course the courts perception of that future risk is inevitably imprecise. It is having to project its assessment many years forward and without the benefit of a constant process of monitoring and reporting such as will be enjoyed by the Parole Board. When at the post tariff stage the assessment comes to be made by that board they are thus much better placed to evaluate the true extent of the risk which will be posed by the prisoners release. And they are a more expert body, custom built by Parliament for the purpose. Given those considerations, and given too that their recommendation for release on licence, if accepted by the Secretary of State, will have immediate effect in terms of endangering public safety quite unlike the decision of the trial judge whose sentence would in any event have protected society for an appreciable time it seems to us perfectly appropriate for the Parole Board to apply some lower test of dangerousness, i.e. one less favourable to the prisoner. The court went on to say of the level of risk relevant at the release stage, that it must indeed be substantial , but this can mean no more than that it is not merely perceptible or minimal, that it must be unacceptable in the subjective judgment of the Parole Board and that the Parole Board must have in mind all material considerations, scrutinising ever more anxiously whether the level of risk is unacceptable, the longer the time the offender has spent in prison post tariff (p 146D F, and see R v Parole Board, Ex p Wilson [1992] QB 740, 747E G). In Ex p Wilson Mr Fitzgerald sought initially to renew the submission, rejected in Ex p Bradley, that the test which the Parole Board should apply for continuing detention should be likelihood of re offending. On reflection, he abandoned the challenge and accepted the correctness of Ex p Bradley, and the Court of Appeal commented that in its judgment he was right to do so (p 747A). Section 34(4)(b) of the Criminal Justice Act 1991 introduced a statutory definition of the Parole Boards function in relation to release of a discretionary life prisoner, using language subsequently reproduced in section 28(6)(b) of the Crime (Sentences) Act 1997. The Parole Board was not to give a direction with respect to a discretionary life prisoner unless satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined. The approach established at common law by Ex p Bradley and Ex p Wilson was, in R v Parole Board, Ex p Lodomez (1994) 26 BMLR 162, held applicable under the statutory test introduced by section 28(6)(b). Leggatt LJ in the Divisional Court in Ex p Lodomez recorded his view that it was unhelpful to invent alternative versions of the statutory test (p 184). The first ground In the present case, the Court of Appeal applied to sentences of IPP the approach taken in Ex p Bradley with regard to discretionary life sentences. The appellants first ground of appeal is that IPP is distinguishable in principle from a life sentence and that it was wrong to apply Ex p Bradley to IPP. Alternatively, if that submission be rejected, then it is submitted Ex p Bradley was wrong and should be over ruled. The appeal has been conducted on both sides on the basis that a substantial distinction exists between the test of significant risk to members of the public applicable under section 225(1)(b) and the test no longer necessary for the protection of the public as understood and applied to discretionary life sentences by Ex p Bradley. But I have already indicated my view that Ex p Bradley went too far in equating significant risk with mathematical likelihood and that good grounds would represent a more acceptable elaboration. As to the phrase no longer necessary for the protection of the public, the Divisional Court considered that the level of risk which it involved must remain undefined, but offered two observations. First, it seemed inevitable that the risk must be substantial, which the Divisional Court thought can mean no more than that it is not merely perceptible or minimal (p 146). Second, it must be sufficient to be judged unacceptable in all the circumstances in the subjective judgment of the Parole Board, and, third, in exercising their judgment as to the level of risk acceptable the Parole Board must have in mind all relevant considerations. A possible difficulty about the Divisional Courts first observation is that the equation of substantial risk with any risk that is not merely perceptible or minimal tends to change the focus or starting point in a way which may influence the conclusion. It is preferable to concentrate on the statutory language and not to paraphrase. This applies to the assessment both of significant risk under section 225(1)(b) of the 2003 Act and of whether detention is no longer necessary for the protection of the public under section 28(6)(b) of the 1997 Act. In relation to the first ground of appeal, Mr Southey relies upon the exceptional nature of a life sentence, imposed, the Divisional Court said in Ex p Bradley, only where there was compelling justification [consisting in] the perception of grave future risk amounting to an actual likelihood of dangerousness (p 145). However, as indicated in paragraphs 14 and 21 above, the distinction under section 225 between circumstances calling for a discretionary life sentence and for IPP may depend more upon the seriousness of the offence actually committed than upon any difference in the offenders assessed dangerousness. The threshold criterion of dangerousness for the purposes of applying section 225 (significant risk to members of the public of serious harm occasioned by the commission by him of further specified offences) was the same in each case. Mr Southey argues that discretionary life sentences and IPP are or may also be different in two other respects. One is that it was wrong to speak of an onus on an offender serving IPP to disprove his dangerousness. Although the default position is that detention will continue unless the Board is satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined, the Parole Board is an investigative body which will make up its own mind on all the material before it: see R v Lichniak [2002] UKHL 47, [2003] 1 AC 903, para 16, per Lord Bingham, and In re McClean [2005] UKHL 46; [2005] UKHRR 826, paras 74 78, per Lord Carswell. Mr Southey suggests that the position may be different in relation to an offender serving a life sentence, while at the same time wishing to reserve the argument that it should not be. If there is in this respect a difference (which I doubt), I regard it as immaterial to the issues which the Supreme Court has to decide on this appeal. The other respect turns on reasoning of the Supreme Court in R v Smith (Nicholas) [2011] UKSC 37, [2011] 1 WLR 1795. This is relied upon as establishing that, when considering whether to impose a sentence of IPP, the sentencing court was not making a predictive judgment of risk at the expiry of the tariff period. If that is right, then there was a marked distinction between the criteria governing imposition of a discretionary life sentence (as hitherto understood) and a sentence of IPP. The reasoning in Ex p Bradley relies at least in part upon the predictive assessment in relation to the post tariff period which a sentencing court makes when considering whether to impose a discretionary life sentence, and the distinction between that assessment and the contemporary evaluation of the Parole Board at the post tariff review stage. Counsel for the Parole Board and for the Secretary of State did not in their written cases or oral submissions take issue with the reasoning in R v Smith. But I am far from satisfied that it can be regarded as the last word. There is nothing in the language of section 225(1)(b) to suggest any distinction between the nature of the assessment required for the purposes of considering whether to impose a discretionary life sentence and a sentence of IPP. On the contrary, the same kind of assessment of risk was on the face of it required for both, with the distinction between them for the purposes of the section focusing, according to section 225(2) and (3), on the seriousness of the actual offence committed. Further, in a number of other cases, the predictive approach appears to have been assumed to be correct in relation to the imposition of a sentence of IPP. In R v Johnson [2006] EWCA Crim 2486, [2007] 1 WLR 585, Sir Igor Judge P said (para 10) that It does not automatically follow from the absence of actual harm caused by the offender to date [i.e. to the date of sentencing], that the risk that he will cause serious harm in the future is negligible. More clearly, in R (Walker) v Secretary of State for Justice [2009] UKHL 22, [2010] 1 AC 553, Lord Judge CJ referred repeatedly to the predictive assessment to be made when sentencing as to the risk of dangerousness at the expiry of the tariff period: see paras 102, 103 and 108. Citing Sir Igor Judges words in para 10 in Johnson, Hughes LJ in R v Pedley [2009] EWCA Crim 840, [2009] 1 WLR 2517 also referred to the imposition of a sentence of IPP as depending upon an assessment of future risk: see paras 16, 20 and 21. In R v Smith (Nicholas), the primary issue was whether it was legitimate to pass a sentence of IPP for armed robbery and possession of a firearm on a career criminal who had already been recalled to prison to serve the remainder of a previous life sentence also imposed for armed robbery and having a firearm with intent. The submission was that, because he could not be released from that life sentence unless and until the Parole Board was satisfied that it was no longer necessary for the protection of the public that he should be detained, there could not be said to be any significant risk to members of the public of serious harm occasioned by the commission by him of further specified offences so as to justify IPP. Counsel supported this submission by arguing that the sentencing judges duty was to consider whether he [the offender] will pose a significant risk when he has served his sentence (para 14). Lord Phillips, giving the judgment of the court, addressed the submission on the same basis, and rejected it, saying: 15. If this is the correct construction of section 225(1)(b) it places an unrealistic burden on the sentencing judge. Imagine, as in this case, that the defendants conduct calls for a determinate sentence of 12 years. It is asking a lot of a judge to expect him to form a view as to whether the defendant will pose a significant risk to the public when he has served six years. We do not consider that section 225(1)(b) requires such an exercise. Rather it is implicit that the question posed by section 225(1)(b) must be answered on the premise that the defendant is at large. It is at the moment that he imposes the sentence that the judge must decide whether, on that premise, the defendant poses a significant risk of causing serious harm to members of the public. It is notable that, although Pedley was cited in argument (though not in the judgment), Walker does not appear to have been referred to in Smith at all. Nor does the reasoning in Smith address the relationship between discretionary life sentences and IPP or consider what basis there could be for requiring a different approach to the assessment of risk under the latter, when compared with the former. An important part of the rationale of a discretionary life sentence is, on the authorities, an assessment of future risk; such a sentence may be appropriate because It is sometimes impossible to say when that danger will subside; or the offender may remain a serious danger to the public for a period which cannot be reliably estimated at the date of sentence" (see Wilkinson and Whittaker, cited in paras 16 and 17 above). While the Divisional Court in Ex p Bradley placed too much emphasis in my view on mathematical probability, it was unquestionably right to consider that a sentencing judge deciding whether to impose a discretionary life sentence was required to assess risk on a predictive basis. The natural inference would be that a parallel approach was expected to be applied to the new sentence of IPP, when fitted into the pre existing framework governing discretionary life sentences. There is nothing unrealistic about asking a sentencing judge to assess whether an offender presents a risk for a period which cannot reliably be estimated and may well continue after the tariff period. Logically, it is also difficult to see why it was necessary at all in Smith to address the question whether the sentencing judges assessment was of present risk or predictive. If the fact that the offender was in prison was relevant at all, it would exclude any present as much as any future risk of the offences to which he was evidently prone. The point which required decision was that, when deciding whether to order IPP, any concurrent prison sentence was to be ignored and the offender was to be assumed to be at liberty. More generally, unless the judgment required in the case of IPP is predictive, it must logically follow that, even though the fixed (tariff) period would in the judges view be sufficient to eliminate any further future risk before the tariff expired, the judge would still be required (even after the time when the imposition of IPP became discretionary) to impose a sentence of IPP, although convinced that there was no point in doing so. The concept of a long determinate sentence sufficient to eliminate future risk would be largely superseded. In these circumstances, I have grave reservations about the reasoning in para 15 in Smith even in relation to sentences of IPP. But, since it was not challenged on this appeal and is not in my opinion ultimately decisive, I say no more on this. In support of the appellants case on the first ground, Mr Southey is able to point to a number of statements in the cases. In R (Bayliss) v Parole Board [2008] EWHC 3127 (Admin); [2009] EWCA Civ 1016, Cranston J and the Court of Appeal were content to proceed on the basis accepted by counsel that the test for release from IPP mirrored the test for imposition of a sentence of IPP. In Pedley Hughes LJ held that a sentence of IPP was Convention compatible, because inter alia it was proportionate to the risk of serious harm, particularly since when the tariff sentence attributable to the instant offence has been served, the system provides for release once that significant risk no longer exists (para 22). In Ex p Walker when that case was in the Court of Appeal, [2008] EWCA Civ 30; [2008] 1 WLR 1977, Lord Phillips CJ described the primary object of IPP as being to detain in prison serious offenders who pose a significant risk to members of the public of causing serious harm by further serious offences until they no longer pose such a risk (para 35). None of these statements was however based on any detailed examination of the present issue, and I have come to the conclusion that they are wrong, so far as they suggest that the test which the Parole Board must apply when considering whether to direct release from IPP is precisely the same as that which the sentencing judge had to apply in order to pass a sentence of IPP in the first place. I set out my reasons in the following paragraphs. On the same basis, as well as in the light of what I have said in para 36 above, I also reject the submission that Ex p Bradley was wrongly decided. First, the two tests are, both in their terms and in their default position, substantially different. Imposition depends upon the court being positively satisfied of a significant risk to members of the public of serious harm occasioned by the commission of further specified offences. Release depends upon the Parole Board being satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined. Second, the test for release applied under the 2003 Act to a sentence of IPP was the test for discretionary life sentences encapsulated in statutory form first in section 34(4)(b) of the 1991 Act, and later in section 28(6)(b) of the 1997 Act, and since also applied to mandatory life sentences. Those drafting and enacting the 1991 Act must be taken to have been aware of the decision in Ex p Bradley (decided on 4 April 1990). Those drafting and enacting the 1997 Act must be taken to have been aware of and accepted the line of authority consisting of Ex p Bradley, Ex p Wilson and Ex p Lodomez. Parliament therefore accepted a difference in the tests for imposing and for release from a discretionary life sentence. In introducing a sentence of IPP into the same framework for release as applies to discretionary life sentences, Parliament must on the face of it have intended to apply to sentences of IPP the same test for release as for discretionary life sentences, again even though that differed from the test for imposition. Third, the phrase no longer necessary for the protection of the public in the test for release does not import any reference to the threshold risk justifying the imposition of the sentence. The sentence imposed will itself operate as a complete protection of the public against any real risk during the tariff period. The phrase does no more than raise the question whether continued detention, after the tariff period, is any longer necessary to achieve that protection. Fourth, I see no inconsistency or incongruity in a scheme involving a higher initial threshold of risk for the imposition of a life sentence or a sentence of IPP, but requiring a somewhat lower risk to be established in order for the convicted offender to be eligible for release. This is so even if a sentencing judge deciding whether to impose a sentence of IPP was not engaged in the predictive exercise held in Ex p Bradley to be required when a court considers whether to impose a discretionary life sentence. Those who cross the initial threshold have notice from the case law that they are at peril of being held to protect the public against a more general and lesser level of risk. The threshold consists of the commission of a serious offence coupled with the existence of a significant risk of the commission of further specified offences. A person who has not committed a serious offence cannot be detained, even if he presents a significant risk of the commission of specified offences: that is because the threshold has not been crossed. But where the threshold is crossed, it does not follow that the objective of detention beyond the tariff period is confined to the elimination of any significant risk (whether that means whatever significant risk was identified when the sentence of IPP was imposed or any significant risk which may at the end of the tariff period be thought to exist). The objective may well be the more general protection of the public for as long as necessary. This, on the face of it, is also what the statutory test for release under section 28(6)(b) states. Fifth, the appellants case is that an offender serving a sentence of IPP should not continue to be detained after the tariff period, if he can show that there is no significant risk to members of the public of serious harm occasioned by the commission by him of further specified offences. The appellant does not carry the logic of his case to the point of suggesting that the risk must be of the commission of the same kind of specified offences as those for which he was originally sentenced. But, assuming that the test for release were to be whether there was or was not a risk of further specified offences of whatever kind, even though not of the same kind as those for which he was originally sentenced, still it would appear to follow that an offender who was known to present a risk to his partners life because of her unfaithfulness during his imprisonment could not continue to be detained. This is because murder is not a specified offence, which is because it carries a mandatory life sentence. That in turn reflects the fact that the schedule of specified offences was designed to meet the requirements for imposition of a sentence of IPP. It was not intended to operate as part of the test for release from IPP. What matters when release is being considered is whether the prisoner presents a continuing risk to life or limb, including a non violent rape, from which the public needs protection by way of his continuing detention (see para 23 above). Sixth, it would seem logically also to follow by extension, on the appellants case, that an offender serving a life sentence should not continue to be detained after the tariff period, if he can show that there no longer exists the same severe risk of serious re offending that justified the life sentence in the first place. That would mean that an offender serving a life sentence would be entitled to release despite a risk of re offending that would justify an offender serving IPP continuing to be detained. If this difficulty is sought to be avoided by distinguishing between offenders serving life sentences and those serving sentences of IPP, that brings the argument back to the second point. It is implausible to think that any such distinction was intended. Seventh, I do not accept Mr Southeys submission that the provisions of the European Convention on Human Rights require a different interpretation to be put on the statutory language to that which would otherwise apply. The submission is that the Convention requires that any decision to maintain detention becomes illegitimate if 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: Van Droogenbroeck v Belgium (1982) 4 EHRR 443, para 40, M v Germany (2009) 51 EHRR 976, para 88 and James v United Kingdom (2012) 56 EHRR 399, para 195. In the last case, the European Court accepted in para 198 that there was a sufficient causal connection between the imposition of a sentence of IPP, because the offender was considered to pose a risk to the public, and his deprivation of liberty in the post tariff period, when his release was contingent on [him] demonstrating to the Parole Boards satisfaction that [he] no longer posed such a risk. It was not concerned with the question whether the minimum level of risk at each stage was required to be identical in order to comply with the Convention. In principle, I see no reason why it should be. There was and is no reason why the objectives of the statutory scheme should not involve a high threshold for imposition of a discretionary life sentence or sentence of IPP, but a high level of security against risk for release (in other words, a lower threshold for continuing detention) after the tariff period. The provisions whereby IPP was introduced into law and related to or assimilated with the position regarding discretionary life sentences must be read as a whole. So read, in my view, the natural conclusion is that this is what Parliament intended. I see nothing in the Convention inconsistent with such an approach. I would therefore dismiss this appeal on the first ground. The second ground The second ground arises from a complaint by Mr Sturnham that the Parole Board in determining whether to direct his release took into account a direction by the Secretary of State to the effect that the appropriate test was whether the Board was satisfied that his level of risk was no more than minimal. In R (Girling) v Parole Board [2006] EWCA Civ 1779; [2007] QB 783 the Court of Appeal held that the Secretary of State had no power to give such a direction, and accordingly it was wrong of the Parole Board to act on it. Mitting J was shown a copy of an internal Parole Board document dated July 2010, in which the Parole Board had itself adopted the more than minimal test internally in guidance issued to its members. He recorded that there was no direct challenge to that guidance bearing in mind its date. But he added that, if the Board had followed it, he would not be prepared to say that it was an unlawful test, but that Beyond that it would not be wise for me to go, given that the issue has not been fully ventilated (para 32). He dismissed the actual ground of appeal on the basis that there was nothing to show that the Board had taken that part of the Secretary of States direction into account. The Court of Appeal upheld the judges decision on the latter ground. Before the Supreme Court, Mr Southey barely addressed the complaint that the Parole Board wrongly guided itself by reference to directions which the Secretary of State had no power to give, and has not established any reason for this court to do other than uphold the decisions below on that aspect. The appeal on the second ground should therefore also be dismissed. In so far as Mr Southey invited us to try to define more closely the meaning of section 28(6)(b), I would decline the invitation and repeat that it is preferable to concentrate on the statutory language, rather than to seek to paraphrase it. Conclusion Having granted permission to appeal as stated in paragraph 3, I would therefore dismiss the appellants appeal on both grounds as stated in paragraphs 49 and 52. |
This appeal concerns a repairing covenant implied into a subtenancy of a residential flat by section 11 of the Landlord and Tenant Act 1985. It raises two issues of interpretation relating to that section, and an issue of more general application as to the need for notice before a landlord can be liable under a repairing covenant. The background facts, statutes and procedure The contractual background By a lease (the Headlease) dated 28 April 2006, the freeholder of a small block of flats known as Oakleigh Court, Boston Avenue, Runcorn (the Building) let Flat 10 in the Building (the Flat) for a term of 199 years from 1 January 2006 at a rent of 195 per annum, for a premium of 130,000. The extent of the Flat demised by the Headlease was defined by the plastered coverings and plaster work of the external and internal walls and partitions and ceilings, and the floorboards and surfaces of the floors. Congruently, the demise expressly excluded any of main timbers and joists, and the framework, of the Building, and it also excluded the walls or partitions therein, except the plastered surfaces thereof. The demise of the Flat also included certain rights for all purposes incidental to the occupation and enjoyment of the Flat, and those rights included the right to use the entrance hall lift staircases and landings giving access to the Flat, the right to use an access road and a specific space in a parking area in the curtilage of the Building, and the right to use the communal dust bins. As is normal under a long lease of a flat, the Headlease contained provisions whereby the freeholder covenanted to provide certain services, and provisions whereby the headlessee covenanted to pay a service charge for those services. Those services included keeping in good and substantial repair (i) all entrances passages landings stairs fire escapes Bin Store (if any) and other parts of the Building intended to be enjoyed or used by the owners or occupiers of the Building in common with others, and (ii) other areas in the Building not capable of being let as flats. However, [i]n the case of any item of disrepair, it was stipulated that the freeholder will not be liable for breach of this covenant until the [headlessee] has given written notice thereof to the [freeholder] and the [freeholder] has had a reasonable opportunity to remedy the same. The Headlease is and has at all material times been vested in the appellant, Mr Kumarasamy. By a subtenancy dated 6 April 2009 (the Subtenancy), Mr Kumarasamy granted to the respondent, Mr Edwards, a tenancy of the Flat for a term expiring on 5 October 2009 (although the tenancy was liable to be continued as a periodic tenancy, as it was an assured shorthold tenancy, but nothing hangs on that for present purposes). The Subtenancy included a grant of the right to use, in common with others, any shared rights of access, stairways, communal parts, paths and drives of the Building. The Subtenancy contained a covenant by the subtenant, Mr Edwards, (i) to keep the Flat in good and tenantable condition, repair and decorative order, items which the [Headlessee as] landlord is responsible to maintain excepted, and (ii) to permit Mr Kumarasamy and his agents to enter the Flat after giving 24 hours notice in order (a) to view its state of repair and to execute repairs and other works upon the [Flat] or other properties and (b) to show it to prospective new tenants or purchasers. The statutory background It is rightly common ground that section 11(1) of the 1985 Act, which cannot be contracted out of (see section 12(1)), applies to the Subtenancy. It is in these terms: [T]here is implied [into a lease of a dwelling house granted for a term of less than seven years] a covenant by the lessor (a) to keep in repair the structure and exterior of the dwelling house (including drains, gutters and external pipes); (b) to keep in repair and proper working order the installations in the dwelling house for the supply of water, gas and electricity and for sanitation ; and (c) to keep in repair and proper working order the installations in the dwelling house for space heating and heating water. Subsection (6) of section 11 implies into any tenancy to which subsection (1) applies a covenant by the lessee that the lessor, or any person authorised by him in writing, may at reasonable times of the day and on giving 24 hours notice in writing to the occupier, enter the premises comprised in the lease for the purpose of viewing their condition and state of repair. In Campden Hill Towers Ltd v Gardner [1977] QB 823, the Court of Appeal had to consider the application of the predecessor of section 11(1)(a), namely section 32(1)(a) of the Housing Act 1961, which was in effectively identical terms to section 11(1)(a), to a tenancy of a third floor flat in a large block of flats. Megaw LJ, giving the judgment of the court, said at p 834 that [a]nything which, in the ordinary use of words, would be regarded as a part of the structure, or of the exterior, of the particular dwelling house [sc the third floor flat], regarded as a separate part of the building, would be within the scope of paragraph (a). However, as he went on to explain at pp 834 835, other parts of the outside walls and other parts of the structure of the block are not of the dwelling house, and the paragraph expressly and deliberately uses the limiting words, as defined in the section itself, relating the paragraph to the dwelling house. It has not been suggested on this appeal that this analysis is wrong; and in my view it is clearly right. When Parliament repealed section 32 of the 1961 Act and replaced it with section 11 of the 1985 Act, it did not make any amendments of practical significance. However, section 116(1) and 116(2) of the Housing Act 1988 added some new subsections to section 11 of the 1985 Act, part of whose purpose would appear to have been to modify the effect of some of the reasoning in Campden Hill. In particular, new subsections (1A) and (1B) were added to the following effect: (1A) If a lease to which this section applies is a lease of a dwelling house which forms part only of a building, then, subject to subsection (1B), the covenant implied by subsection (1) shall have effect as if the reference in paragraph (a) of that subsection (a) to the dwelling house included a reference to any part of the building in which the lessor has an estate or interest; and (b) any reference in paragraphs (b) and (c) of that subsection to an installation in the dwelling house included a reference to an installation which, directly or indirectly, serves the dwelling house and which either (i) forms part of any part of a building in which the lessor has an estate or interest; or (ii) is owned by the lessor or under his control. (1B) Nothing in subsection (1A) shall be construed as requiring the lessor to carry out any works or repairs unless the disrepair (or failure to maintain in working order) is such as to affect the lessees enjoyment of the dwelling house or of any common parts which the lessee, as such, is entitled to use. The factual and procedural history The Building has a ground and two upper floors, and it appears that there are four flats on each floor, the Flat being on the second floor. The Building has a main entrance door which leads into a front hallway from which access can be got to the ground floor flats and to the lift and staircase which serve the two upper floors. The flats on the upper floors are accessed from hallways, leading from the lift and staircase. There is a car park in front of the Building, and, between the car park and the front door to the Building, there is a paved area, which is part of what is referred to in the Headlease as the access road, which is the only or principal means of access to the Building. The paved area, which is between three and four metres in length, is covered by paving stones. The paved area is also used by occupiers as a means of access to the communal dustbins which are sited in the car park outside the Building. On 1 July 2010, Mr Edwards was taking rubbish from the Flat to the communal dustbins, when he tripped over an uneven paving stone on the paved area. As a result, he suffered an injury to his right hand (which resulted in the exacerbation of pre existing neuropathic pain for some 18 months) and to his right knee (which involved soft tissue injury lasting some four months). He issued proceedings against Mr Kumarasamy contending that his injury was caused by Mr Kumarasamys failure to keep the paved area in repair, in breach of the covenants implied into the Subtenancy by section 11(1)(a) and 11(1A)(a) of the 1985 Act. The claim was heard by Deputy District Judge Gilman, who accepted Mr Edwardss case both on the facts and on the law, and awarded him 3,750 damages. While he did not challenge the Deputy District Judges conclusions on fact or quantum, Mr Kumarasamy appealed against the conclusion that he was liable to Mr Edwards under the statutory repairing covenant as a matter of law. Her Honour Judge May QC allowed his appeal on two grounds, namely (i) the paved area was not within the ambit of the section 11 covenant, and (ii) even it had been, Mr Kumarasamy could not have been liable as he had had no notice of the disrepair. Mr Edwards was permitted to bring a second appeal, and the Court of Appeal allowed his appeal, disagreeing with Judge May on both grounds, for reasons given by Lewison LJ, with whom Sir Terence Etherton C and Christopher Clarke LJ agreed [2015] Ch 484. Mr Kumarasamy now appeals to this court. The issues raised on this appeal In a case such as this, where the dwelling house in question forms part only of a building, section 11(1A)(a) requires section 11(1)(a) to be read as if it required a landlord to keep in repair the structure and exterior of any part of the building in which [he] has an estate or interest. As Lewison LJ said in para 6 of his judgment, when discussing the argument then advanced by counsel then appearing for Mr Kumarasamy: He argues that the extended covenant only applies to a part of the building in which Mr Kumarasamy has an estate or interest. The word building in section 11(1A)(a) is not defined, and should be given its ordinary dictionary meaning of structure with a roof and walls. The paved area in which Mr Edwards sustained his accident does not fall within this definition. I agree that, viewed on its own, the paved area where Mr Edwards tripped is not itself a building. But that is not the statutory question. The statutory question is whether the paved area is part of the structure or exterior of part of the building in which Mr Kumarasamy has an estate or interest In my judgment Mr Kumarasamys legal easement over the front hall means that the front hall is a part of a building in which he has an estate or interest. In the light of that analysis this appeal raises three questions. The first is whether, to quote again from Lewison LJ, the paved area which leads from the front door to the car park [can] be described as part of the exterior of the front hall within section 11(1A)(a). The second question is whether Mr Kumarasamy had an estate or interest in the front hall within section 11(1A)(a). The third question is whether Mr Kumarasamy could be liable to Mr Edwards for the disrepair in question notwithstanding that he had had no notice of the disrepair in the paved area before Mr Edwardss accident. The respondent, Mr Edwards, can only succeed if all three questions are answered in the affirmative, as the Court of Appeal held that they were. The first and second questions are of some significance in relation to the application of section 11, as they concern, in the first case, the extent of the physical property falling within section 11(1)(a), and, in the second case, the nature of the estate or interest which falls within section 11(1A)(a). The second question is particularly relevant to the liability to a subtenant of a flat of a landlord who has a headlease of that flat. The third question also is of importance to the application of subsections (1)(a) and (1A)(a) of section 11, but it is of much wider significance, as it relates to the extent of the need for notice of a want of repair before a landlord can be liable for disrepair under a repairing covenant, whether under section 11 or otherwise. The first question: is the paved area part of the exterior of the front hall? In my view, it is not possible, as a matter of ordinary language, to describe a path leading from a car park (which serves the building and can be said to be within its curtilage) to the entrance door which opens directly onto the front hall of a building, as part of the exterior of the front hall. It is hard to see how a feature which is not in any normal sense part of a building and lies wholly outside that building, and in particular outside the floors, ceilings, walls and doors which encase the front hall of the building, can fairly be described as part of the exterior of that front hall. The paved area may be said to abut the immediate exterior of the front hall, but it is not part of the exterior of the front hall, as a matter of normal English. Unless the natural meaning of the words of a statutory provision produces a nonsensical result, or a result which is inconsistent with the intention of the legislation concerned, as gathered from admissible material, the words must be given their ordinary meaning. (I should perhaps add that in many cases, particularly when the words are read in their context, they can have more than one ordinary meaning, and it is then for the court to decide which of those meanings is correct.) There is some force in the argument that a purposive approach to the words of section 11(1A)(a) suggests that they should be given a wide, rather than a narrow, effect, as one might have expected that Parliament intended those parts of a building or its curtilage which are not included in an individual residential demise, and which are in any way enjoyed by the tenant in question, would be within the ambit of the landlords statutory repairing covenant. However, given that the section imposes obligations on a contracting party over and above those which have been contractually agreed, one should not be too ready to give an unnaturally wide meaning to any of its expressions. Quite apart from that, the fact that one might have expected words in a statute to cover a particular situation is not enough to justify giving those words an unnatural meaning in order to ensure that they do so. In this case, such a wide reading would be very difficult to reconcile with the wording of section 11(1A)(a), especially in the light of the limitation to the building. Further, the fact that section 11(1)(a) is specifically extended to cover drains, gutters and external pipes tends to support the notion that when it refers to the exterior, the word is to be given a natural, rather than an artificially wide, meaning. This conclusion seems to me to be consistent with the approach of the Court of Appeal in Campden Hill, where, as explained above, the natural meaning was adopted, and an unnatural wide meaning was rejected, when interpreting the words structure and exterior of the dwelling house in what is now section 11(1)(a). As Mr Rainey QC said in his submissions on behalf of Mr Kumarasamy, the decision of the Court of Appeal in this case, although on a different subsection 11, is hard to reconcile with the reasoning in Campden Hill. Instead, the Court of Appeal in this case relied on Brown v Liverpool Corpn [1969] 3 All ER 1345, where the premises consisted of a terraced house to which access was obtained from the street through a gate, down some steps and along a two metre path which led to the front door of the house. The court held that the steps were part of the exterior of the dwelling house for the purpose of section 32(1)(a) of the 1961 Act. Danckwerts LJ said at p 1346 that, as the steps were the means of access to the dwelling house in question, they were plainly part of the building. Salmon LJ at p 1346 agreed, but thought the case was not by any means free from difficulty, or, indeed, from doubt and emphasised that his decision was based on the particular facts of this case and not on any general principle of law. Sachs LJ at p 1347 said that the case had caused [him] no little difficulty, that he had considerable hesitation and that the argument was a very close run thing; while he accepted that the covenant did not apply to those parts of the demise that are not part of the building itself, he considered that the issue was one of degree and fact, and that the judge had been entitled to conclude that the steps were within the covenant. In my view, that decision was wrong. The fact that a piece of property is a necessary means of access to a building cannot be sufficient for it to constitute part of the exterior of that building. Steps separated from the outside of a building by a two metre path cannot, as a matter of ordinary English, be said to be part of the exterior of that building. And the passages I have quoted from the brief judgments of Salmon and Sachs LJJ get close to impliedly acknowledging that simple proposition. I note a degree of understandable scepticism in the subsequent Court of Appeal decision of Hopwood v Cannock Chase District Council [1975] 1 WLR 373, which I consider was rightly decided, about the reasoning and conclusion in Brown. Indeed, it is very difficult to reconcile the approach of the Court of Appeal in Brown with that in Campden Hill (where I note that Brown and Hopwood were both cited in argument). In the light of this conclusion, it is strictly unnecessary to consider the other two issues raised by the appeal. However, as they have been fully argued, and one of them is certainly of some significance (and was in my opinion wrongly resolved by the Court of Appeal) and the other is not without significance, it is right to address them. I shall do so on the assumption (contrary to what I have just concluded) that the paved area is part of the exterior of the front hall of the Building. The second question: was there an estate or interest in the front hall? Under the Headlease, Mr Kumarasamy was granted a right of way over the front hall, and, as a matter of property law, a right of way over land constitutes an interest in that land, although it does not constitute an estate in that land see subsections (1), (2)(a) and (3) of section 1 of the Law of Property Act 1925. It is true that the subsequent grant of the Subtenancy effectively deprived Mr Kumarasamy of any practical benefit from the easement so long as it continued. However, that does not alter the fact that, just as he retained his leasehold interest in the Flat, he retained his leasehold easement over the front hall, even though he had sublet the Flat and the easement to Mr Edwards (and any doubt about this is put to rest by section 1(5) of the 1925 Act). Therefore, there is obvious force in the argument, which Lewison LJ had little hesitation in accepting, that Mr Kumarasamy had an interest in the front hall (and indeed in the paved area), within the meaning of section 11(1A)(a). On behalf of Mr Kumarasamy, it is argued that, at least for the purposes of section 11(1A)(a), he nonetheless did not have an interest in the front hall once he had effectively disposed of that right of way to Mr Edwards under the Subtenancy. There is obvious practical attraction, at least at first sight, in the contention that is unlikely that Parliament can have intended that the headlessee of a single flat, whose interest in the common parts is simply as a means of access to and egress from the flat, should have an implied liability to his subtenant of the flat to repair the common parts. After all, during the currency of the subtenancy, the headlessee will have little reason to go onto the common parts and will enjoy very limited, if any, rights of any practical value over them in his own right, because, when he visits the flat, it will normally be as an invitee of the subtenant. However, on closer analysis, I do not consider that contention can be right. First, there would have to be a powerful reason not to give the word interest, when it appears in a property statute, its normal meaning in law. Secondly, if the word is to be given a limited meaning, it is hard to identify a satisfactory way to cut it down, which is consistent with the general policy of section 11. The only possible way of excluding the common parts of the Building in the present case from the ambit of Mr Kumarasamys statutory liability to Mr Edwards, would be to limit the word interest to an interest in possession. However, quite apart from the fact that this would involve reading words into a statute when it does not appear to be necessary, such an interpretation would scarcely be consistent with the liability of a landlord under subsections 11(1)(a) and 11(1A)(a), which impose repairing obligations for items demised to the tenant, which, ex hypothesi, are not in the possession of the landlord. Thirdly, if the headlessee has no liability to a subtenant for disrepair in the common parts, the subtenant would be without any contractual remedy for damage suffered as a result of such disrepair. It is true that he may have a remedy against the headlessor or freeholder of the building under section 4 of the Defective Premises Act 1972, but that would be of very limited value. (I note that a similar argument based on the Occupiers Liability Act 1957 does not seem to have impressed the House of Lords in Liverpool City Council v Irwin [1977] AC 239 see at pp 254 and 257, per Lord Wilberforce and Lord Cross of Chelsea respectively). On the other hand, if the subtenant has a claim for disrepair against the headlessee, the headlessee can normally expect to pass on the claim to the freeholder. Fourthly, quite apart from his rights against the headlessor, it is not as if the headlessee would be without protection in such a case. When subsection (1A) was introduced by the 1988 Act, subsection (3A) was also introduced, and it was to the following effect: In any case where the lessors repairing covenant has effect as (a) mentioned in subsection (1A); and in order to comply with the covenant the lessor (b) needs to carry out works or repairs otherwise than in, or to an installation in, the dwelling house; and (c) the lessor does not have a sufficient right in the part of the building or the installation concerned to enable him to carry out the required works or repairs, then, in any proceedings relating to a failure to comply with the lessors repairing covenant, so far as it requires the lessor to carry out the works or repairs in question, it shall be a defence for the lessor to prove that he used all reasonable endeavours to obtain, but was unable to obtain, such rights as would be adequate to enable him to carry out the works or repairs. At least equally importantly, for reasons to which I turn in the next section of this judgment, the headlessee would be protected by the fact that he would not be liable for any disrepair in the common parts pursuant to section 11(1A)(a) unless he had prior notice of the disrepair, in which case he could normally expect to be able to pass on such notice to the headlessor. Mr Rainey contends that the reasoning of Jacob LJ, giving the judgment of the Court of Appeal in Niazi Services Ltd v van der Loo [2004] 1 WLR 1254, assists the argument that Mr Kumarasamy retained no interest in the common parts of the Building after he had sublet the Flat. Niazi was another case where a subtenant of a flat sought to invoke section 11 against the headlessee whose headlease included no other property in the building. However, that case was concerned with whether the headlessee was liable under section 11(1A)(b) for a defect in the water supply to the top floor flat in a building, owing to inadequate supply upstairs when water was being drawn downstairs. The actual decision and reasoning are of no assistance in this case, which is of course concerned with section 11(1A)(a). It is true that, in para 21 of his judgment, Jacob LJ referred to section 11(1A)(a) and said that the lessor's extended liability is limited to the obligation to keep in repair the structure and exterior of any part of the building in which he has an estate or interest and that in that case, the headlessee has no estate or interest in any part of the building except the top floor flat. However, he had no reason to consider, and presumably was not considering, whether the headlessee had a right of way over the staircase leading to the top floor flat, or (if there were any) other common parts of the building. If he was directing his mind to that point, he was wrong in what he said. The third question: is notice of disrepair required? The case law Where a landlord or a tenant (or anyone else) covenants to keep premises in repair, the general principle is that the covenant effectively operates as a warranty that the premises will be in repair. That principle has been laid down in a number of cases, which were discussed and applied by the Court of Appeal in British Telecommunications Plc v Sun Life Assurance Society Plc [1996] Ch 69. Accordingly, as soon as any premises subject to such a covenant are out of repair, the covenantor is in breach, irrespective of whether he has had notice of the disrepair, or whether he has had time to remedy the disrepair. However, this general principle is subject to exceptions, which are based on normal principles applicable to the interpretation of contracts. The most obvious exception is where the covenant is qualified by an express term, like the freeholders covenant in the Headlease in this case see the end of para 3 above. A further exception to the general principle, which is relevant in the present case is the rule (which I shall refer to as the rule) that a landlord is not liable under a covenant with his tenant to repair premises which are in the possession of the tenant and not of the landlord, unless and until the landlord has notice of the disrepair. The rule has been slightly differently expressed in different cases, but it is based on the normal principle upon which a term is implied into a contract, namely obviousness or necessity. (Accordingly, in accordance with normal principles governing the implication of terms, it could not be invoked where the parties had expressly agreed that the landlord is to be liable for such disrepair irrespective of whether or not he had had notice of it.) This rule was first formally expressed in Makin v Watkinson (1870) LR 6 Ex 25 (although it was voiced in an interlocutory observation in Moore v Clark (1813) 5 Taunt 90, 96 by Sir James Mansfield CJ and Gibbs J). In Makin, a building had been demised under a lease which contained a covenant by a landlord to keep the main walls and roofs in repair. Channell and Bramwell BB considered that commercial necessity justified implying a term that the obligation to repair only arose once the landlord had had notice of the disrepair. Bramwell B at p 28 said that he was irresistibly driven to hold that the parties cannot have intended that a landlord should keep in repair that of which he has no means of ascertaining the condition. He explained this at p 30 by reference to the general proposition that when a thing is in the knowledge of the plaintiff, but cannot be in the knowledge of the defendant, but the defendant can only guess or speculate about the matter, then notice is necessary. Channell B said much the same at pp 27 28. Sir Richard Collins MR took the same view in Tredway v Machin (1904) 91 LT 310, 311, where he said that the rule is based on the fact that the landlord is not the occupier of the premises, and has no means of knowing what is the condition of the premises unless he is told, , whereas the occupier has the best means of knowing of any want of repair. Brett J pithily explained the rule thus in The London and South Western Railway Co v Flower (1875) LR 1 CPD 77, 85: where there is knowledge in the one party and not in the other, there notice is necessary. In an Irish appeal, Murphy v Hurly [1922] 1 AC 369, the House of Lords had to consider the basis for the rule, which, on the facts, they held did not apply in that case. At p 375, Lord Buckmaster said that the rule had to be considered by reference to the actual facts existing in each case, and it was based upon the consideration whether the circumstances are such that knowledge of what may be required to be done to comply with the covenant cannot reasonably be supposed to be possessed by the one party while it is by the other. At p 385, Lord Atkinson described the presumption upon which the right to notice is stated to depend as being that the tenant being in occupation has a full opportunity of seeing and knowing the condition of the premises he occupies and their need of repair, while the landlord has no such opportunity. Lord Sumner said at p 387 388 that the reason for the rule was (1) that the tenant is in occupation and the landlord is not; (2) that the tenant, therefore, has the means of knowledge peculiarly in his own possession ; and (3) the repairs of dwelling houses are not such as to demand of the landlord incessant vigilance Morgan v Liverpool Corpn [1927] 2 KB 131 was a case like the present, in that it involved a statutorily implied liability on a landlord of a dwelling (in that case a house) to keep the dwelling fit for human habitation and in good repair. Lord Hanworth MR at pp 141 142 said that the fact that the liability originated in statute did not put it on higher authority than a contractually agreed covenant. Atkin LJ at p149 took the same view saying that the statutory obligation was imposed as a contractual term and as such it appears to be only available to the tenant because it is a term of the tenancy. Lawrence LJ agreed. At p 143, Lord Hanworth expressed the rule in these terms: it is the duty of the tenant to inform the landlord, if there is to be a responsibility in respect of a breach of his covenant enforced against the landlord. At p 150, having described the reason for the rule as obvious, Atkin LJ explained that, as [t]he landlord has given the tenant exclusive occupation of the house and therefore, is not in a position to know whether the house is in repair or out of repair, and it would be quite contrary to justice to impose an obligation to repair of this kind upon a landlord in respect of matters of which he has in fact no knowledge. Lawrence LJ said at p 153 that the foundation of the rule is that the tenant in occupation is generally in a far better position to know of any want of repair. At pp 150 151, Atkin LJ referred to the fact that the statute involved gave the landlord a right of access, but said that this was quite insufficient to redress the injustice that would arise from imposing this obligation [sc an obligation to remedy disrepair of which he had no notice] upon the landlord, and Lord Hanworth and Lawrence LJ took the same view. McCarrick v Liverpool Corpn [1947] AC 219 was another case which involved a statutorily implied covenant by a landlord to keep a demised house fit for habitation. The appeal was treated as an appeal against the decision in Morgan, and all five members of the House of Lords agreed with the reasoning of Atkin LJ, both on the applicability of the rule to a statutorily implied covenant and on its applicability even in a case where the landlord had the right to enter and inspect the premises (see at pp 223, 226, 229, 230, and 231 232, per Lord Thankerton, Lord Porter, Lord Simonds, Lord Macmillan and Lord Uthwatt respectively). At p 226, Lord Porter cited with approval Lord Sumners explanation in Murphy for the rule. Lord Uthwatt explained at p 232 that it was unreasonable from the point of view of the tenant, as well as that of the landlord, if performance of the landlords covenant to repair premises in the possession of the tenant was not subject to the landlord having notice of the disrepair, adding that [t]he only part the tenant is on this basis required to play in performance is, that knowing what he wants, he should say so. In OBrien v Robinson [1973] AC 912, the House of Lords confirmed that the rule applied to a covenant to repair implied into a tenancy by section 32(1)(a) of the 1961 Act. The arguments largely reflected those considered in McCarrick, and the outcome was the same, in that it was unanimously decided that the reasoning in Morgan was correct and applied in that case. It was also made clear that the rule applied to defects which the tenant did not know about, and even to those which he could not reasonably be expected to discover see at pp 925, 930, per Lord Morris of Borth y Gest and Lord Diplock respectively. At p 926, Lord Morris (with whom Lord Cross agreed) also considered that, where the rule applies, a landlord will be liable once he has notice of the defect, even if that notice does not emanate from the tenant. However, Lord Diplock, with whom Lord Simon of Glaisdale and Lord Reid (as well as Lord Cross) agreed, preferred to keep that point open. Landlords repairing covenants in tenancies of flats Two preliminary questions arise in relation to the applicability of the rule to lettings of flats. The first question is whether, where the landlord of a flat agrees to repair the structure and exterior, the applicability of the rule to the structure and exterior of the flat itself may in some cases depend on whether or not the demise is limited to the internal surfaces of the walls, ceilings and floors (as it is under the Headlease in the present case). In my view, the rule would apply but only to the extent that the structure is included in the demise. If a part of the structure included within a tenants letting is out of repair, then the tenant is in possession of that part of the structure and the landlord is not. Accordingly, the rule would apply to the landlords obligation to repair that part of the structure. However, if that part of the structure is excluded from the demise, it would not be in the possession of the tenant (indeed it would presumably be in the possession of the landlord) and so the rule would not apply. This may seem a rather technical, or in some cases an almost capricious, distinction, but I believe that it follows from the various dicta which I have quoted from the cases concerning the rule. If the tenant is not in possession (and, a fortiori, if the landlord is in possession) of part of the structure which is out of repair, then there is no reason for excluding the general principle set out in para 29 above. The rule is in any event demonstrably based as much on principle as on practicality, given that, as was confirmed in OBrien, it applies to disrepair to demised property even where the disrepair is not reasonably discoverable by the tenant. Further, the distinction between property let to the tenant and property not so let is one which leaves the law as to the applicability of the rule in a tolerably clear state, and clarity is self evidently a desirable feature of any rule or principle. The second question is rather more difficult in my view. It is whether a landlord, who has covenanted with one tenant to repair the structure but has let part of the structure to another tenant, can thereby automatically escape liability to the first tenant for disrepair of that part until he has had notice of that disrepair. Subject to one point, this question could be characterised as being whether the rule applies to property which is in the possession of neither the landlord nor the tenant ie can the rule apply to property which has not been demised to the tenant? It can be said that the dicta in the cases do not speak with one voice on this question, as some appear to emphasise the unfairness of imposing an absolute liability on a landlord in circumstances where he is not in possession and therefore not in a position to know of any disrepair, whereas other dicta indicate that the rule also depends on the tenant being in possession and therefore in a position to know of the disrepair. Given that one is concerned with an implied term, it may be dangerous to generalise (as the point discussed in paras 49 58 below demonstrates). However, I have concluded that the rule does not normally apply to premises which are not in the possession of the tenant. Most of the dicta describing the reason for the rule rely not only on the landlords lack of ability to know, but also on the tenants advantageous position; and some do so very strongly see eg what was said in the earlier cases cited in para 32 above and the observations of Lord Atkinson and Lord Sumner in Murphy, and Lord Porter and Lord Uthwatt in McCarrick. Further, the dicta which do not refer to the tenants privileged position could well have been taking it for granted, as they were all in cases where the tenant was in possession. Further, as is suggested in some of the cases (in Makin (1870) LR 6 Ex 25, 27 28 per Channell B, in Flower (1875) LR 1 CPD 77, 82, in Murphy at pp 375, 392 per Lord Buckmaster and Lord Parmoor, and in McCarrick [1975] AC 219, 231 per Lord Uthwatt), it seems to me that the rule is an aspect of a wider principle described in these terms by Lord Abinger CB in Vyse v Wakefield (1840) 6 M & W 443, 452 453: The rule to be collected from the cases seems to be this, that where a party stipulates to do a certain thing in a certain specific event which may become known to him, or with which he can make himself acquainted, he is not entitled to any notice, unless he stipulates for it; but when it is to do a thing which lies within the peculiar knowledge of the opposite party, this notice ought to be given. This would therefore suggest that it is not normally open to a landlord who has agreed to repair the structure, to invoke the rule against a tenant of a flat in relation to disrepair of part of the structure which the landlord has let to another tenant, or indeed were not in the possession of the landlord for some other reason. The only argument against this might be that the lettings of flats in a block on the same terms can be treated as a sort of scheme between (i) the landlord and (ii) the tenants as a group. I do not accept that is a valid analysis. Once it is determined that the rule only applies to property in the possession of the tenant, there is no warrant for implying it to any other property unless of course it is justified by the terms of the particular tenancy and the surrounding circumstances. After all, it is normally open to a landlord to add a term expressly incorporating the rule (as was done in the Headlease in this case). In the light of section 12(1) of the 1985 Act, that cannot, I think, be done in relation to the covenant implied by section 11, but it may well be that a landlord could protect himself to some extent by imposing an obligation on the tenant to give notice to him of any disrepair which has come (or, possibly, even reasonably should have come) to the attention of the tenant. Does section 11 always require notice? I turn now to Mr Raineys submission that, in every case where a tenant relies on a covenant implied by section 11, a landlord is entitled to invoke the rule. Thus, even in relation to property which is undoubtedly in the possession of the landlord, he submits that section 11 cannot be relied on by a tenant in relation to any disrepair unless the landlord has had notice of the disrepair. This submission is supported by Dowding and Reynolds in Dilapidations: The Modern Law and Practice 5th ed (2013 14), para 20 37 on two grounds, namely (i) the section 11 repairing covenant is most likely to apply to property which is either within the relevant demise or so close to the relevant demise as to be more easily observed by the tenant than the landlord, and (ii) the speeches in OBrien are more consistent with that analysis. I agree with Lewison LJ that this submission must be rejected. It is clear from Morgan, McCarrick and OBrien that the repairing covenant implied by section 11 is to be interpreted and applied in precisely the same way as a landlords contractual repairing covenant. As I have sought to explain, the rule in relation to such covenants is that, until he has notice of disrepair, a landlord should not normally be liable for disrepair of property in so far as it is in the possession of the tenant. I can see no basis as a matter of principle for departing from the rule when it comes to covenants implied by section 11, which is what Dowding and Reynolds suggest. And, as a matter of practicality, once one departs from the clear rule, there is a real risk of uncertainty and confusion for instance, it could be difficult to resolve whether, on particular facts, it is more likely that the tenant or the landlord should have noticed the disrepair. It is true that in many cases where section 11 applies, the tenant may be in a better position than the landlord to observe the disrepair, but that is not the basis on which the rule has been justified in the cases eg it applies to disrepair which could not be reasonably discovered. And, quite apart from its uncertainty, given that the rule is justified by the normal principles governing an implied term, such a yardstick would not, I think, satisfy the requirement of necessity or of obviousness. I accept that the speeches of Lord Morris and Lord Diplock in OBrien contain nothing to suggest that there might be cases where a landlord could be liable under his statutorily implied covenant without having been given notice. However, I do not regard that as significant. They were concerned with a case where there could be no doubt but that the item which had fallen into disrepair (a ceiling in a room of the demised premises) was included in the demise to the tenant, and therefore on any view the landlord could claim the benefit of the rule. Should the rule be extended to the present case? The present case is different from the cases which have so far been decided in relation to the rule, because it is concerned with the application of a landlords repairing covenant to property which is not in the possession of either the landlord or the tenant, although it is property over which they each have a right of way as discussed in paras 23 28 above. However, in my judgment, the application of the reasoning upon which the rule is based justifies the conclusion that the landlords (assumed) obligation to repair the paved area is only triggered once he has notice of any disrepair for which the tenant would seek to make him liable. As explained above, the landlord, Mr Kumarasamy, has a lease of a single flat which includes the right to use the front hall and paved area, and he has effectively sublet his right to use and occupy the flat and to use the hall and paved area to the tenant, Mr Edwards. In so far as the landlord had any right over the hall and paved area, he has effectively disposed of that right to the tenant for the term of the Subtenancy just as much as he has disposed of his right to use and occupy the Flat to the tenant for the term of the Subtenancy. During the term of the Subtenancy, it is the tenant who uses the common parts, not the landlord, just as it is the tenant who occupies the flat, not the landlord. It is true that the tenant does not enjoy exclusive possession of the common parts, but he is present on them every time he comes to or leaves the flat. The present issue is concerned with the relationship between a particular landlord and a particular tenant, and the landlord has effectively lost the right to use the common parts and the tenant has acquired the right to use them, for the duration of the Subtenancy. It is true that the landlord has the right to use the common parts as against the freeholder, but that is irrelevant for present purposes, in the same way as the fact that he has the right to occupy the Flat as against the freeholder does not prevent him from invoking the rule against the tenant in relation to any part of the demised premises which he has covenanted to repair. It is also true that the landlord has the right to use the front hall to get access to the Flat in order to inspect and repair it, but that cannot deprive him of the right to invoke the rule, any more than his right to visit the Flat itself for those purposes would deprive him of the right to invoke the rule in relation to his repairing obligations in relation to the Flat. To use the words of Collins MR in Tredway 91 LT 310, 311, as against the landlord, the tenant has the best means of knowing of any want of repair in the common parts, or, to adapt what Lord Atkinson said in Murphy [1922] AC 369, 385, the tenant has a full opportunity of seeing and knowing the condition of the [common parts he uses] and their need of repair, while the landlord has no such opportunity. To adapt Atkin LJs formulation in Morgan [1927] 2 KB 131, 150, the landlord is not in a position to know whether the [common parts are] in repair or out of repair, whereas the tenant is, or, per Lawrence LJ in the same case at p 153, the tenant [using the common parts] is generally in a far better position to know of any want of repair. Mr Rainey also argues that subsection (3A) of section 11 supports Mr Kumarasamys case that the rule shall be extended to a case such as this, as the landlord cannot be required to use reasonable endeavours to have repairs carried out until he knows of the relevant disrepair. I am unconvinced by this argument, as it seems to me to be circular. Nonetheless, there is something in the point that subsection (3A) shows that Parliament was concerned not to impose an unrealistically demanding duty on a landlord. And that provides a little further support for the conclusion that, in a case such as the present, the landlord is not in breach of his statutorily implied repairing obligation until he has notice of the disrepair. The Court of Appeal reached a different conclusion. That was partly because they took the view that the rule only applied to disrepair within the demised premises themselves. But that is because all the cases so far have been concerned with such disrepair. There is no reason why the rule cannot be extended to cover a state of affairs not so far considered judicially, and, as just explained, it seems to me that the reasoning on which the rule is based means that it should be so extended in the present case. The potential harshness on a headlessee of a single flat of imposing a covenant to repair the common parts, which he has effectively transferred to the tenant his right to use, is mitigated by the need for notice of any disrepair before the covenant becomes activated (and see the end of para 27 above). It is also suggested that it is inappropriate to extend the rule to a case where section 11(1A) applies, when Parliament had not included a need for notice when inserting that subsection into section 11, given that it had expressly limited the landlords liability under that subsection by inserting subsections (1B) and (3A) at the same time. I do not consider that to be a good point. There is nothing about the need for notice in section 11 as originally enacted and yet there is no doubt that the rule applied and applies to the covenant in section 11(1)(a); it seems to me that it would be positively surprising if it did not also apply to any subsequent extensions to the ambit of section 11(1)(a), unless of course it was expressly or by necessary implication excluded, which it is not. Further, as stated in para 53 above, the concern with practicality demonstrated by subsection (3A) appears to me to provide a little support for the requirement of notice in a case such as this. Mr Benson QC, who appears for Mr Edwards, also submits that the implication of the rule in the present case would be inconsistent with the decision of the Court of Appeal in British Telecommunications. I do not agree. That case was concerned with disrepair to part of the exterior of a building on the fifth floor. It is true that the tenant in that case may have had rights in respect of that part, but it was not a right to be frequently present on, a right frequently to use physically (if not to occupy), the property out of repair, as in the present case. In any event, the issue was very different, namely whether, in a case where it was (rightly) common ground that the rule did not apply, a landlord would be in breach the moment disrepair occurs, or whether he would be in breach only after the expiry of a reasonable time to remedy the disrepair. The Court of Appeal also relied on the fact that the law implied a right in Mr Kumarasamy, as a headlessee and tenant of the right to use the common parts, to go on to the common parts to repair them, invoking the decision in Newcomen v Coulson (1877) 5 Ch D 133. I do not consider that to be a good point for two reasons. First, a right of way does not necessarily carry with it a right to carry out repairs to the way: such an ancillary right only arises as a matter of implication, and is normally justified because the servient owner has no obligation to repair the way. As it is put in Gale on Easements 19th ed (2012), para 1 90, [t]he ancillary right arises because it is necessary for the enjoyment of the right expressly granted. In the present case, the Headlease, under which Mr Kumarasamy was granted the right to use the common parts, contains an obligation on the freeholder to keep the common parts in repair. Accordingly, I do not consider that it would be appropriate to imply such an ancillary right: it is not necessary for business efficacy, nor is it obvious. (It may well be that such a right could arise in extremis as Etherton J suggested in Metropolitan Properties Co Ltd v Wilson [2002] EWHC 1853; [2003] L & TR 226, paras 49 51, but that cannot possibly do for present purposes). Secondly, even if a term such as that envisaged by the Court of Appeal could be implied, I do not see how it would help the argument that the rule should be displaced in this case. As mentioned above, it is well established that the fact that a landlord has the right to go into the demised premises to inspect and carry out repairs does not mean that the rule is displaced so far as disrepair to the premises is concerned. By the same token, even if the landlord had the right to repair the common parts, I fail to see why that should displace the rule if it would otherwise apply to disrepair of the common parts. Finally, I should say that, where a flat is let under a tenancy to which section 11 applies, by a landlord who owns the building in which the flat is situated, it seems to me likely that, in so far as the statutory covenant extends to repairing the common parts, it would not normally be subject to the rule. That is because such landlord would ordinarily be in possession of the common parts. Indeed, it may be that the rule would not apply in any case where the landlord is headlessee of more of the building than the single flat he has sublet, as he would have exercisable rights over the common parts in his capacity of headlessee of property other than the flat in question. However, those issues have, understandably, not been even touched on in argument, and it would be wrong to express a concluded view on them. Conclusion I would therefore allow this appeal, on the ground that, although he had a sufficient interest in the front hallway and paved area for the purposes of section 11(1A)(a), Mr Kumarasamy was not liable for the disrepair which caused Mr Edwardss injury, as (i) he could only be liable if the paved area was part of the exterior of the front hall and it was not, and (ii) he could only be liable if he had had notice of the disrepair before the accident and he did not. Her Honour Judge May QC reached the correct conclusion on these two points (although, reflecting the way that the case was argued before her by counsel other than those appearing before this court, she slightly mischaracterised the first point). Accordingly, she dismissed Mr Edwardss claim, and I would do so too. LORD CARNWATH: I agree that the appeal should be allowed for the reasons given by Lord Neuberger. My only reservation concerns a part of his judgment which does not relate directly to the issues in the appeal, and on which we have heard no argument. In paras 40 44, he considers the application of the rule to cases where (unlike the present) parts of the external structure have been included in the relevant demise, or in a demise by the same lessor to another tenant. While I understand the logic of his observations (even if somewhat technical, as he says), I am not convinced that it is safe to lay down a general rule for all such cases. As he rightly says (para 30) the question ultimately depends on ordinary principles for the implication of terms, such as obviousness or necessity. I would prefer not to consider such issues in the abstract without regard to all the circumstances, including the commercial or practical reasons which might have led to the grant in a particular case. I doubt in any event that it is a problem likely to arise often in practice. For the moment I would prefer to reserve my position. |
The claimant, Tiuta International, was a specialist lender of short term business finance, until it went into administration on 5 July 2012. These proceedings were brought by Tiuta in support of a claim against the defendant surveyors for negligently valuing a partially completed residential development over which it proposed to take a charge to secure a loan. The present appeal raises a question of principle concerning the quantum of damages. Since it arises out of an application for summary judgment, it has to be determined on facts some of which are admitted but others of which must be assumed for the purposes of the appeal. They are as follows. On 4 April 2011, Tiuta entered into a loan facility agreement with Mr Richard Wawman in the sum of 2,475,000 for a term of nine months from initial drawdown, in connection with a development in Sunningdale by a company called Drummond House Construction and Developments Ltd, with which Mr Wawman was associated. Advances under the facility were to be secured by a legal charge over the development. The facility agreement was made on the basis of a valuation of the development by De Villiers. They had reported that the development was worth 2,300,000 in its current state and that if completed in accordance with all current consents and to a standard commensurate with its location it would be worth about 4,500,000. The initial advance was drawn down on 8 April 2011 as soon as the charge had been executed. Other advances under the facility followed. On 19 December 2011, shortly before the facility was due to expire, Tiuta entered into a second facility agreement with Mr Wawman in the sum of 3,088,252 for a term of six months in connection with the same development. Of this sum, 2,799,252 was for the refinancing of the indebtedness under the first facility and 289,000 was new money advanced for the completion of the development. A fresh charge was taken over the development to secure sums due under the second facility agreement. On 19 January 2012, Tiuta advanced 2,560,268.45, which was paid into Mr Wawmans existing loan account, thereby discharging the whole of the outstanding indebtedness under the first facility. Between that date and 8 June 2012 further sums were drawn down under the second facility amounting to 281,590 and presumably spent on the development. The advances under the second facility were made on the basis of a further valuation of the development by De Villiers. There were three iterations of the further valuation. On 8 November 2011, De Villiers had valued the development in its current state at 3,250,000 and upon completion at 4,900,000. The current state valuation was subsequently revised on 22 December 2011 to 3,400,000 and on 23 December 2011 to 3,500,000. The second facility agreement expired on 19 July 2012, a few weeks after Tiuta went into administration. None of the indebtedness outstanding under it has been repaid. It is common ground that there can be no liability in damages in respect of the advances made under the first facility. This is because (i) there is no allegation of negligence in the making of the valuation on which the first facility agreement was based; and (ii) even if there had been, the advances made under that facility were discharged out of the advances under the second facility, leaving the lender with no recoverable loss. This last point is based on the decisions of the Court of Appeal in Preferred Mortgages Ltd v Bradford & Bingley Estate Agencies Ltd [2002] EWCA Civ 336 and of this court in Swynson Ltd v Lowick Rose LLP (in liquidation) [2017] 2 WLR 1161. It is not challenged on this appeal. The present claim is concerned only with the liabilities arising out of the valuation which De Villiers made for the purposes of the second facility. It is alleged, and for present purposes must be assumed, that the valuations given for the purposes of the second facility were negligent, and that but for that negligence the advances under the second facility would not have been made. In those circumstances, the valuers contend that the most that they can be liable for by way of damages is the new money advanced under the second facility. They cannot, they say, be liable for that part of the loss which arises from the advance made under the second facility and applied in discharge of the indebtedness under the first. If (as has to be assumed) Tiuta would not have made the advances under the second facility but for the valuers negligence, the advances under the first facility would have remained outstanding and would have remained unpaid. That part of their loss would therefore have been suffered in any event, irrespective of the care, or lack of it, which went into the valuations prepared for the purposes of the second facility. On that ground, the valuers applied for a summary order dismissing that part of the claim which arose out of the refinancing element of the advances under the second facility. In my opinion the result of the facts as I have set them out is perfectly straightforward and turns on ordinary principles of the law of damages. The basic measure of damages is that which is required to restore the claimant as nearly as possible to the position that he would have been in if he had not sustained the wrong. This principle is qualified by a number of others which serve to limit the recoverable losses to those which bear a sufficiently close causal relationship to the wrong, could not have been avoided by reasonable steps in mitigation, were reasonably foreseeable by the wrongdoer and are within the scope of the latters duty. In the present case, we are concerned only with the basic measure. In a case of negligent valuation where but for the negligence the lender would not have lent, this involves what Lord Nicholls in Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No 2) [1997] 1 WLR 1627, 1631 called the basic comparison: It is axiomatic that in assessing loss caused by the defendants negligence the basic measure is the comparison between (a) what the plaintiffs position would have been if the defendant had fulfilled his duty of care and (b) the plaintiffs actual position. Frequently, but not always, the plaintiff would not have entered into the relevant transaction had the defendant fulfilled his duty of care and advised the plaintiff, for instance, of the true value of the property. When this is so, a professional negligence claim calls for a comparison between the plaintiffs position had he not entered into the transaction in question and his position under the transaction. That is the basic comparison. Thus, typically in the case of a negligent valuation of an intended loan security, the basic comparison called for is between (a) the amount of money lent by the plaintiff, which he would still have had in the absence of the loan transaction, plus interest at a proper rate, and (b) the value of the rights acquired, namely the borrowers covenant and the true value of the overvalued property. If the valuers had not been negligent in reporting the value of the property for the purpose of the second facility, the lenders would not have entered into the second facility, but they would still have entered into the first. On that hypothesis, therefore, the lenders would have been better off in two respects. First, they would not have lost the new money lent under the second facility, but would still have lost the original loans made under the first. Secondly, the loans made under the first facility would not have been discharged with the money advanced under the second facility, so that if the valuation prepared for the first facility had been negligent, the irrecoverable loans made under that facility would in principle have been recoverable as damages. There being no allegation of negligence in relation to the first facility, this last point does not arise. Accordingly, the lenders loss is limited to the new money advanced under the second facility. This is what Timothy Fancourt QC, sitting as a Deputy High Court Judge, held. But the Court of Appeal disagreed. By a majority (Moore Bick and King LJJ, McCombe LJ dissenting), they allowed the appeal. The leading judgment was delivered by Moore Bick LJ. He criticised the deputy judges reasoning on the ground that it failed to take into account the fact that the second facility was structured as a refinancing so that the advance was used to pay off the pre existing debt, thereby releasing the valuers from any potential liability in respect of the first valuation. From this, he concluded that the advance under the second facility stands apart from the first and the basic comparison for ascertaining the appellants loss is between the amount of that second loan and the value of the security. He explained this as follows: The appellant entered into the second transaction in reliance on the respondents valuation. If the valuation had not been negligent, the appellant would not have entered into the second transaction, and would have suffered no loss on that transaction as a result. It would have been left with the first loan and the security for it, together with any claim it might have had against the valuer. However, that is of no relevance to the respondent in its capacity as valuer for the purposes of the second loan. The loss which the appellant sustained as a result of entering into the second transaction was the advance of the second loan, less the developers covenant and the true value of the security. If the value of the property was negligently overstated, the respondent will be liable to the extent that the appellant's loss was caused by its over valuation. Moore Bick LJ went on to say that his conclusion would have been the same even if a different valuer had prepared the original valuation on which the first facility was based. This was because the valuer valued the property itself in the expectation that the appellant would advance funds up to its full reported value in reliance on its valuation. There is nothing unfair in holding the respondent liable in accordance with its own valuation for the purposes of the second transaction. I regret that I cannot agree. It does not follow from the fact that the advance under the second facility was applied in discharge of the advances under the first, that the court is obliged to ignore the fact that the lender would have lost the advances under the first facility in any event. Lord Nicholls statement in Nykredit assumes, as he points out in the passage that I have quoted, that but for the negligent valuation, he would still have had the money which it induced him to lend. In the present case, Tiuta would not still have had it, because it had already lent it under the first facility. Moore Bick LJ appears to have thought that this was irrelevant because the effect was to release the valuer from any potential liability in respect of the first facility. I would agree that if the valuers had incurred a liability in respect of the first facility, the lenders loss in relation to the second facility might at least arguably include the loss attributable to the extinction of that liability which resulted from the refinancing of the existing indebtedness. But the premise on which this matter comes before the court is that there was no potential liability in respect of the first facility because that was entered into on the basis of another valuation which is not said to have been negligent. Moore Bick LJs view appears to have been that none of this mattered because the valuer would have contemplated that he might be liable for the full amount of the advances under the second facility, so that it was a windfall for him that part of the advances was used to repay a pre existing debt rather than to fund the development. A similar argument was advanced before us. The difficulty about it is that while the reasonable contemplation of the valuer might be relevant in determining what responsibility he assumed or what loss might be regarded as foreseeable, it cannot be relevant to Lord Nicholls basic comparison. That involves asking by how much the lender would have been better off if he had not lent the money which he was negligently induced to lend. This is a purely factual inquiry. There are, as I have pointed out, legal filters which may result in the valuer being liable for less than the difference. For example, part of it may be too remote or is not within the scope of the relevant duty. But the valuer cannot be liable for more than the difference which his negligence has made, simply because he contemplated that on hypothetical facts different from those which actually obtained, he might have been. There are many cases in which the internal arrangements of a claimant mean that his financial loss is smaller than it might have been. That may be fortunate for the defendant, but it cannot make him liable for more than the claimants actual financial loss. Ms Joanna Smith QC, who appeared for the lenders, was realistic enough to perceive these difficulties, and adopted a rather different approach. She submitted that the court should disregard the fact that the advance under the second facility was applied in discharge of the outstanding indebtedness under the first, because that application of the funds was a collateral benefit to the lender, which they were not obliged to take into account in computing their loss. The argument is that if the discharge of the outstanding indebtedness under the first facility is disregarded, damages can be assessed as if the whole of the loan under the second facility was an additional advance. Since that additional advance would not have been made or lost but for the negligent valuations of November and December 2011 the whole of it is recoverable as damages. I am not persuaded that this was what the Court of Appeal had in mind, but her point is none the worse for that. The real objection to it is more fundamental. This court has recently had to deal with collateral benefits in a context not far removed from the present one. The general rule is that where the claimant has received some benefit attributable to the events which caused his loss, it must be taken into account in assessing damages, unless it is collateral. In Swynson Ltd v Lowick Rose LLP (in liquidation) [2017] 2 WLR 1161, para 11, it was held that as a general rule collateral benefits are those whose receipt arose independently of the circumstances giving rise to the loss. Leaving aside purely benevolent benefits, the paradigm cases are benefits under distinct agreements for which the claimant has given consideration independent of the relevant legal relationship with the defendant, for example insurance receipts or disability benefits under contributory pension schemes. These are not necessarily the only circumstances in which a benefit arising from a breach of duty will be treated as collateral, for there may be analogous cases which do not exactly fit into the traditional categories. But they are a valuable guide to the kind of benefits that may properly be left out of account on this basis. The discharge of the existing indebtedness out of the advance made under the second facility was plainly not a collateral benefit in this sense. In the first place, it did not confer a benefit on the lenders and so no question arises of either taking it into account or leaving it out of account. Lord Nicholls basic comparison requires one to look at the whole of the transaction which was caused by the negligent valuation. In this case, that means that one must have regard to the fact that the refinancing element of the second facility both (i) increased the lenders exposure and ultimate loss under the second facility by 2,560,268.45, and (ii) reduced its loss under the first facility by the same amount. Its net effect on the lenders exposure and ultimate loss was therefore neutral. Only the new money advanced under the second facility made a difference. It is true that the refinancing element might not have been neutral if the discharge of the indebtedness under the first facility had also extinguished a liability of the valuers under the first facility. But on the assumptions that we must make on this appeal there was no such liability. Secondly, even on the footing that there was such a liability, the benefit arising from the discharge of the indebtedness under the first facility was not collateral because it was required by the terms of the second facility. The lenders did not intend to advance the whole of the second facility in addition to the whole of the first, something which would have involved lending a total amount substantially in excess of any of the successive valuations. They never intended to lend more than 289,000 of new money. The concept of collateral benefits is concerned with collateral matters. It cannot be deployed so as to deem the very transaction which gave rise to the loss to be other than it was. This is why the decision of Toulson J in Komercni Banka AS v Stone and Rolls Ltd [2003] 1 Lloyds Rep 383, which was pressed on us as an analogy, was ultimately unhelpful. Toulson J was concerned with a complex series of frauds against a bank under which part of the proceeds of one fraud found its way back to the bank via a third party to serve as pump priming for distinct, further frauds. He declined to reduce the damages by the amount of these circular payments, because they were not an intrinsic part of the relevant venture or transaction but were simply the result of [the fraudsters] independent choice how to use the opportunity created by his fraud (para 171). I doubt whether much is to be gained by analogies with other cases decided on their own peculiar facts, but Komercni Banka does not even offer a relevant analogy. For these reasons, which correspond to those given by the Deputy Judge and by McCombe LJ in his dissenting judgment, I would allow the appeal. The reasons are of course sensitive to the facts, including those facts which are disputed and have been assumed for the purposes of this appeal. In particular, different considerations might arise were it to be alleged that the valuers were negligent in relation to both facilities. The Deputy Judges order was carefully drawn so as to address the point of principle while leaving these matters open. Subject to any submissions that may be made about the exact form of relief, I would restore his order. |
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 of Schedule 13 to, the Police and Justice Act 2006, reads: Section 2 of the 2003 Act, as amended by section 42 of, and paragraph 1(1) 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 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 EUROPEAN ARREST 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 some other person or body properly regarded as a judicial b) 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. 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. The conclusions I reach on these appeals are that: |
The issue in the appeal is the correct approach to determination of the rateable value of an office building (Mexford House), in circumstances where the evidence showed at the relevant time a general demand in the area for comparable office buildings, but no actual tenant willing to pay a positive price for the building itself. I can conveniently take the factual background from Henderson LJs judgment in the Court of Appeal: [2018] 1 WLR 3463, para 2. Mexford House is a substantial three storey block of offices in the North Shore area of Blackpool. It was purpose built in 1971, and was occupied continuously as Government offices from 1972, in part by the Department of Work and Pensions (the DWP) and in part by the Commissioners for Her Majestys Revenue and Customs (HMRC). By the material date, however, the property was vacant. Both HMRC (on 29 February 2008) and the DWP (on 13 March 2008) had given notice of their intention to vacate the property, and it was formally handed back to the lessor on 31 March 2009. It is uncertain when the process of vacating the premises was finally complete, but there is no dispute that the property was empty by 1 April 2010, that being the date on which the 2010 non domestic rating list for the area of Blackpool Borough Council first came into force by virtue of section 41(2) of the Local Government Finance Act 1988 (the 1988 Act). The valuation was made for the purposes of the new rating list, which came into force on 1 April 2010 (the material date). But the rateable value had to be determined by reference to the antecedent valuation date (or AVD) two years earlier, that is 1 April 2008: 1988 Act Schedule 6 paragraph 2(3), Rating Lists (Valuation Date) (England) Order 2008 (SI 2008/216) article 2. The rateable value initially entered by the valuation officer with effect from 1 April 2010 was 490,000. This reflected his view that there were in the area other office buildings of similar age and quality, occupied by public sector tenants at rents of the same order. As became common ground in the course of the appeal, the most closely comparable was Hesketh House in Fleetwood, a building of 8,403 square metres built in 1966. That had been assessed for rating purposes at 59 per square metre, which was taken also as the basis for the valuation officers final valuation before the Upper Tribunal at 370,000 (see below). Basic principles The basis of the valuation is set by paragraph 2 of Schedule 6 to the 1988 Act, which provided: (1) The rateable value of a non domestic hereditament shall be taken to be an amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year [on certain assumptions, including] (a) that the tenancy begins on the day by reference to which the determination is to be made Although the valuation was at the AVD, paragraph 2(5) of Schedule 6 provided that certain matters, listed in paragraph 2(7), were to be taken to be as they are assumed to be on the material date (1 April 2010). Those matters include: the mode or category of occupation of the hereditament, (a) matters affecting the physical state or physical enjoyment of the hereditament, (b) (d) matters affecting the physical state of the locality in which the hereditament is situated or which, though not affecting the physical state of the locality, are none the less physically manifest there, and (e) locality of the hereditament. the use or occupation of other premises situated in the The underlying principle is not in doubt. The valuation must be based on an estimate of the rent at which the hereditament might reasonably be expected to let from year to year . In short, the valuer must imagine a hypothetical negotiation between a willing landlord and a willing tenant and arrive at the rent which best represents the resulting compromise: You must assume a landlord willing to let, and a tenant willing to take by the year; and having done so, you must get in the best way you can at the rent which, under an agreement brought about by the compromise of the conflicting interests of the man who wants to receive as much as he can and the man who wants to pay as little as he can, would be arrived at under such circumstances. (Smith v The Churchwardens and Overseers of the Poor of the Parish of Birmingham (1888) 22 QBD 211, 219 per Wills J) In similar terms in Robinson Bros (Brewers) Ltd v Houghton and Chester le Street Assessment Committee [1937] KB 445, 470, Scott LJ said: The rent to be ascertained is the figure at which the hypothetical landlord and tenant would, in the opinion of the valuer or the tribunal, come to terms as a result of bargaining for that hereditament, in the light of competition or its absence in both demand and supply, as a result of the higgling of the market. I call this the true rent because it corresponds to real value. More contentious is how to apply those principles in a case where there is no evidence of actual demand for the particular property, by which to conduct this hypothetical exercise. I shall return to the authorities in more detail, having outlined the course of the proceedings below. The proceedings below The Upper Tribunal The hearing The Valuation Tribunal for England having reduced the rateable value to 1, the valuation officer appealed to the Upper Tribunal, before which the matter was dealt with by way of a full re hearing on fact and law. Both sides were then represented by the same counsel as have since appeared before the Court of Appeal and this court: Ms Hui Ling McCarthy QC (as she has since become) for the valuation officer, and Mr Richard Glover QC for Telereal. Expert evidence was presented to the tribunal in the form of written statements by Mr Hewitt himself, and Mr Baldwin for Telereal. On the first day of the hearing (28 April 2016), Mr Hewitt gave evidence and was cross examined. The tribunal summarised his evidence (UT paras 19 30). In his view, the building was not obsolete either in a functional or in a locational sense for reasons he explained. That Telereal had shared that opinion, he said, was shown by the fact that in 2002 they had taken a reversionary lease to run from September 2014 to March 2018, and that on the September 2007 rent review their own surveyor had put the rent at 341,000. However, in the course of his cross examination, as the tribunal recorded, he accepted that as at the AVD he could not identify in the real world any person who would put in a bid for a tenancy of Mexford House on the statutory terms; that there was no demand for such accommodation from the private sector; and that all public sector demands as at the AVD were being met by the occupation of other premises which the public sector already enjoyed. He accepted the opinion expressed by Mr Baldwin [Telereals surveyor] in paragraph 11.1 of Mr Baldwins first report, namely that vacant and to let at the AVD there would be no demand for Mexford House. (UT para 24) On the other hand, he pointed to the fact that there did exist at the AVD demand for other (occupied) properties which were comparable to Mexford House. He maintained his view that a substantial rateable value was appropriate, for reasons he explained: Leaving aside any detailed comparisons (some favourable some unfavourable) between Mexford House on the one hand and Hesketh House and the other comparables on the other hand, [Mr Hewitt] expressed the view that there was a quantity of broadly comparable office accommodation which was in beneficial occupation and for which substantial rents were paid at the AVD. He said that the fact that as at the AVD there was in the real world no demand for Mexford House (because all the demand had been absorbed in the other comparable properties) was not because of any intrinsic lack of merit (or obsolescence) in Mexford House as compared with these other properties but because Mexford House could be considered as unlucky not to have occupants in beneficial occupation when comparable office premises did have occupants in beneficial occupation. (UT para 29) On this basis, his final assessment of the rateable value of Mexford House was 370,000. Following the completion of Mr Hewitts evidence, counsel for both parties informed the tribunal of their view that, in the light of his evidence, the issue between them could be decided as a matter of law upon an agreed basis of fact (UT para 31). No other evidence was heard; in particular, Mr Baldwin was not called or cross examined. Following legal argument the hearing concluded, but the tribunal directed that the agreed position should be reduced to writing. Accordingly, on 3 May 2016 the parties lodged an agreed statement (the Joint Position Paper or JPP) in the following terms: 1. The parties are content that the issue can be decided as a point of law. 2. The respondent [Telereal] contends that the correct approach requires the valuer to consider whether, had the subject hereditament been on the market at the AVD (1 April 2008), anybody would have been prepared to occupy the property and pay a positive price. 3. The parties agree that had the subject hereditament been on the market at the AVD (1 April 2008), nobody in the real world would have been prepared to occupy the property and pay a positive price. Thus, if the correct approach under the rating hypothesis is as formulated in para 2 above, the appeal should be dismissed and the decision of the [VTE] confirmed. 4. The [Valuation Officer] accepts that there was nobody in the real world who would be prepared to pay or bid a positive price for Mexford House at 1 April 2008. 5. If, however, the correct approach is, as the [Valuation Officer] contends, that (notwithstanding the absence of anybody who would be prepared to pay or bid a positive price for Mexford House at 1 April 2008), the rating hypothesis: requires the existence of a hypothetical tenant to (a) be assumed and; (b) requires the rateable value to be assessed by reference to the general demand as evidenced by the occupation of other office properties with similar characteristics, then the parties agree that the appeal should be allowed and the [rateable value] determined at 370,000. 6. The respondent accepts the proposition at 5(a) but does not accept the proposition at 5(b). 7. 370k is confirmed. 8. value] of 1 is confirmed. If the respondent is right, the respondents [rateable If the [Valuation Officer] is right, [his rateable value] of Footnotes to paragraphs 2 and 3 noted that the factors in paragraph 2(7) of Schedule 6 were to be taken as they were at 1 April 2010. As the Court of Appeal observed (paras 25 26), the tribunal seems to have gone out of its way to make sure that the basis of the agreement was not in doubt. It commented on the state of the evidence at that point: We have received Mr Hewitts evidence which has been cross examined before us. We have received Mr Baldwins written evidence but he did not give any oral evidence and hence was not offered for cross examination. We pointed out that if we proceeded as invited we could not properly resolve any dispute of fact in so far as such was revealed in the evidence before us. The parties were both content with this position and considered that, in the light of the factual agreements contained in the Joint Position Paper, there was no need for any such resolution of disputed matters save for the point of law which they had identified. (para 33) It also mentioned the kind of factual matters on which (absent agreement) it would have expected to be addressed: including what steps were taken when and by whom to let Mexford House upon what terms; and whether Mexford House could have been let at a much lower rent, for example if the DWP or HMRC might have chosen to consolidate there on the hypothetical statutory terms at such a very much lower rent. It was told that these points did not need to be investigated, since the valuation officer did not seek to argue that in the real world Mexford House could at the AVD have been let at a positive price (UT paras 34 35). On the other side it was confirmed by Mr Glover for Trillium that it was unnecessary to explore differences between the comparables and Mexford House since it was accepted that if, as a matter of principle, the rateable value of Mexford House was to be assessed by reference to the general demand as evidenced by the occupation of other office properties with similar characteristics, then the respondent accepted that 59 per square metre was correct. (para 36) The tribunals reasoning I would pay tribute to the tribunals judgment, which is a painstaking review of the relevant principles, and their application to the present case on the limited basis permitted by the JPP. For present purposes it is unnecessary to set it out in full. The tribunal had conducted a detailed review of a number of authorities, to which I will need to return in more detail later in this judgment. It started its discussion by stating two propositions derived from that review (paras 96 97): It must be assumed that a hypothetical landlord and a hypothetical tenant will agree terms for such a letting. It is not permissible to conclude that no bidder can be found to take the tenancy. It is well established that the basic question to ask is: is the occupation (ie the occupation under the hypothetical tenancy) such as to be of value? A valuation for rating purposes is based upon the concept of the value of the occupation. As indicated by cross references to earlier paragraphs, the latter proposition was derived from various authorities, starting with London County Council v Church Wardens and Overseers of the Poor of the Parish of Erith in the County of Kent [1893] AC 562 (the Erith case); the former more specifically from Hoare (Valuation Officer) v National Trust [1998] RA 391, 422 per Sir Richard Scott VC. The core of the tribunals reasoning comes in the following paragraphs: 102. Having regard to the Joint Position Paper we are not concerned with any detailed comparisons between Mexford House on the one hand and Hesketh House and other comparables on the other hand. We proceed on the basis that as at the AVD there existed several broadly comparable office premises which were beneficially occupied and for which substantial rents were being paid. There is no reason to conclude that the public sector occupants of those comparable premises, if not already accommodated in those premises, would have been unable to enjoy beneficial occupation of Mexford House and find such occupation of substantial value. 103. It is necessary to consider the hypothetical negotiations for the tenancy on the statutory terms between the hypothetical landlord and the hypothetical tenant in circumstances where the hereditament was not intrinsically valueless and where comparable premises were being beneficially occupied at substantial rents. In such circumstances we do not consider a hypothetical landlord and hypothetical tenant, each acting prudently and making the best use it could of its bargaining position, would agree upon a rent of 1. 104. We consider the flaw in the respondents argument to be as follows. The respondent correctly accepts that it is not open to it to say that no hypothetical tenant would be prepared to take any tenancy at all. The respondent accepts that there has to be a tenancy granted on the statutory terms between the hypothetical landlord and the hypothetical tenant after negotiations. However, the respondent then (incorrectly in our view) attributes to the hypothetical tenant a characteristic which is not justified, namely the characteristic of not wanting the tenancy at all. The respondent seeks to justify this by saying that in the open market as a matter of fact no one would have been prepared to pay any positive price for Mexford House. We consider that it is only permissible to attribute this characteristic to the hypothetical tenant where the hereditament is intrinsically valueless (struck with sterility) or where the responsibilities are such that no beneficial occupation is possible in a commercial sense. It is impermissible to attribute this characteristic to the hypothetical tenant when the premises are capable of beneficial occupation and where comparable premises are beneficially occupied at substantial rents. 105. Mexford House was capable of beneficial occupation as at the AVD. It was in fact still occupied (anyhow partially) at that date. The property has its drawbacks having regard to its age of construction and parking provision and location but is deemed to be in repair in accordance with the statutory provisions. It is necessary to ask the question identified in [the Erith case] namely whether the occupation (ie occupation under the hypothetical tenancy) be such as to be of value? We conclude that the only answer that can be given to that question is: yes, the occupation is such as to be of value. 106. Once that answer is reached we conclude it is impossible to find that the yearly tenancy on the statutory terms would be granted in return for a nominal rent. Instead we conclude that the tenancy would be granted at a rent which was more than a nominal rent and which was a rent which represented the value of the occupation. This rent would be negotiated between the hypothetical tenant and the hypothetical landlord by reference to the general demand for such properties as evidenced by the occupation of other office properties with similar characteristics. Having regard to the Joint Position Paper it is not appropriate for us (or indeed open to us) to examine how such negotiations would go and whether the hypothetical tenant might be able to agree a rent at less than 370,000. The tribunal accordingly fixed the rateable value at the agreed figure of 370,000. Permission to appeal was granted by the tribunal itself on 3 August 2016 in the following terms: The appeal raises an issue of principle which is likely to recur in connection with substantial vacant buildings with significant rateable values. Where the evidence shows that there is no demand to occupy a hereditament which is capable of occupation, does the rating hypothesis require the valuer to assume demand that does not in reality exist? The Court of Appeal Telereal appealed to the Court of Appeal, which allowed the appeal and restored the VTEs assessment. Giving the sole judgment, Henderson LJ reviewed the authorities. He cited in particular (at paras 34 35) the judgment of Hoffmann LJ in Inland Revenue Comrs v Gray [1994] STC 360, for the proposition that [a]lthough the yearly letting is hypothetical, the open market in which it is assumed to take place is real, adding the comment: It can be seen, therefore, that the hypothetical purchaser, or in the present context the hypothetical lessee, embodies whatever was actually the demand for that property at the relevant time, and that the valuation is a retrospective exercise in probabilities, wholly derived from the real world. He referred also (para 36) to Hoare v National Trust [1998] RA 391 in which the Court of Appeal, overturning the decision of the Lands Tribunal, had ascribed only a nominal rateable value to two historic houses (Petworth House and Castle Drogo) owned by the National Trust. The court had emphasised the need to depart from reality no further than the statutory hypothesis requires: that is the principle of reality in the words of Peter Gibson LJ. He added: Peter Gibson LJ did not need to consider the more extreme position where, as in the present case, there was no potential bidder for the hypothetical lease; but the logic of the reality principle would appear to dictate that, in such circumstances, no hypothetical lease at a positive rent could have been concluded. In the light of the principles established by the authorities, he saw no real doubt about the answer in the present case: On the agreed factual basis that nobody in the real world would have been prepared to occupy Mexford House at the AVD and to pay a positive price for doing so, it is in my judgment impossible to say that there was any actual demand in the market for such occupation. In the absence of any actual demand, there is no principle of law which requires such demand to be assumed. The only relevant assumption inherent in the rating hypothesis is that an agreement will be reached between the notional lessor and the notional lessee, but this requirement is satisfied by assuming a letting at a nominal rent. It would be contrary to the reality principle, and to the repeated emphasis in the authorities on the need to examine the actual balance between supply and demand in the real market, if the requirement to assume a concluded letting were elevated into a requirement to assume such a letting at a substantial rent which nobody in the real world would ever have been willing to pay. The existence of any such supposed principle of law would also be impossible to reconcile with the cases which show that, in an appropriate factual context, application of the rating hypothesis to premises which are capable of beneficial occupation can nevertheless yield a rateable value of nil or a nominal amount. (para 41) He acknowledged the existence of broadly comparable office properties occupied by public sector tenants at rents comparable to that for which Mr Hewitt contended. However, there was no surplus public sector demand which would have enabled Mexford House to be re let; in other words the relevant market was saturated (para 42). Ms McCarthys arguments glossed over the critical point the saturation of the relevant market and the absence of any potential tenants in the real world for Mexford House. He added: In a saturated market, there is still a proper basis for a substantial rateable value while the existing tenant remains in occupation and pays a substantial rent for the hereditament; but that situation changes once the property becomes vacant, because there is no longer a potential tenant available to take it on the statutory terms required by the rating hypothesis. (para 43) He identified four respects in which the Upper Tribunal had erred (paras 46 50): First, the Upper Tribunal were wrongly influenced by passages in the speech of Lord Herschell LC in [the Erith case] which were directed to the logically prior question of whether the premises were in rateable occupation at all, which is not in issue in the present case, rather than by the guidance given by Lord Herschell LC about the rating hypothesis itself at p 588 Secondly, although the Upper Tribunal quoted at length from the judgment of Hoffmann LJ in Inland Revenue Comrs v Gray, their actual reasoning appears to be inconsistent with the concept of the actual open market described by Hoffmann LJ Thirdly, at para 102, the Upper Tribunal considered that the public sector occupiers of the comparable premises, if not already accommodated in them, would have been able to enjoy beneficial occupation of Mexford House, and to find such occupation of substantial value. That may have been so, but the actual position was that the other public sector tenants were already accommodated elsewhere, and they would not have been available as potential tenants for Mexford House on the actual market which existed at the relevant time. Furthermore, the effect of paragraphs 2(5) and (7) of Schedule 6 to the 1988 Act is that the valuer must assume that all the comparable properties were occupied and used on the material date by their existing tenants. Fourthly, the Upper Tribunal appear to have taken the view that a nominal rateable value is only permissible in law where the hereditament is either intrinsically valueless (struck with sterility) or where the tenants responsibilities are so onerous that no beneficial occupation of the property is possible in a commercial sense. I can find no warrant for treating these categories as exhaustive, or as precluding the same conclusion in a case where the evidence drawn from the market is that there was no tenant who would pay a positive rent for the relevant hereditament. The issues in the appeal The main issue in the appeal, as in the Upper Tribunal and the Court of Appeal, is narrowly constrained by the terms of the JPP. It is common ground that at the AVD nobody in the real world would have been prepared to occupy the property and pay a positive price, but that the rating hypothesis requires the existence of a hypothetical tenant to be assumed. The question is whether, against that agreed legal and factual background, the same hypothesis requires the rateable value to be assessed by reference to the general demand as evidenced by the occupation of other office properties with similar characteristics. If the answer is yes, it is agreed that the correct rateable value was 370,000; if no, 1. The submissions of the parties in this court largely repeat their submissions below, and are sufficiently indicated by the two judgments reviewed above. However, it is convenient at this point to deal with one possible difference between their respective interpretations of the JPP. In his written submissions, Mr Glover commented on the apparently conflicting views of the two valuers on the issue of obsolescence. As he explained, the view of his witness, Mr Baldwin, was that given the size, age and location of Mexford House and the clear evidence that the market had moved away from offices of that size, age and location, the hereditament had reached the end of its economic life and was economically obsolete. In support he took us to parts of Mr Baldwins written evidence (paragraphs 11.4 11.5) where he had spoken of the public sector being in the process of downsizing their estate in the Fylde, with the result that second hand office complexes dating from the 1960s and 1970s that became empty between 2000 and 2014 were either Demolished ; completely refurbished or redeveloped or remained empty pending lease expiry. He put Mexford House in the last category. Mr Glover noted the apparently contrasting view of Mr Hewitt that Mexford House was still physically capable of use as offices and had a general specification not too dissimilar from occupied buildings, and that it was neither functionally nor locationally obsolete. Mr Glover suggested that these uses of the term obsolete were not mutually contradictory: The qualifying adjective is critical. It was not a necessary part of the ratepayers case to show that Mr Hewitts propositions were wrong; so he was not cross examined on them. Similarly, after the agreement of the JPP, counsel for the valuation officer did not feel the need to challenge Mr. Baldwin on his proposition. (written submissions para 17) This submission, in my view, runs up against a difficulty inherent in the JPP itself. The bare agreement that nobody in the real world would have been prepared to pay a positive price to occupy the building tells one nothing about the reasons for that position. Mr Glovers summary highlights what in my view was a significant difference between the explanations given by the two valuers. Had Mr Baldwin been called as a witness, his alternative valuation of 1 would have been explored. The tribunal would no doubt have wished to examine the hypothetical possibilities mentioned in its judgment. There would also have been room for cross examination on the comparison with the valuation proposed by Telereals surveyor on the rent review. As it was, those differences were necessarily left unresolved. The tribunal recorded the valuation officers view that the property was not obsolescent in either sense, and that the lack of demand was due simply to all public sector demands being met by other properties; or as he put it later because all the demand had been absorbed in the other comparable properties not because of any intrinsic lack of merit (or obsolescence) . That was the limited context of his agreement with Mr Baldwins paragraph 11.1. (see paras 10 11 above, citing UT paras 24 and 29). His acceptance of the proposition in that paragraph cannot be read as extending to the matters set out in the following paragraphs of Mr Baldwins evidence. Apart from mentioning his report, the tribunal made no further reference to Mr Baldwins evidence, on this or any other issue. That was entirely understandable in view of the terms of the JPP. As far as concerned the submissions as recorded by the tribunal, the same limited view of Mr Hewitts concession was repeated and relied on in Ms McCarthys submissions (UT para 71). On the other side, there was no indication in Mr Glovers submissions (UT paras 82ff) that the issue of obsolescence, or Mr Baldwins views on it, formed any part of his case on behalf of Telereal following the JPP. Similarly, as has been seen (para 21 above), the Court of Appeals judgment proceeded on the basis that the lack of a tenant was due, not to obsolescence in any sense, but saturation of the relevant market. In this court, in my view, we must take the JPP as it stands. We cannot look beyond it to evidence which was not referred to by the tribunal, nor attempt to resolve issues which were by agreement left unresolved. However, that does not mean that the JPP has to be looked at in a vacuum. In so far as there are differences as to its interpretation we are entitled to look at the context in which it was arrived at, and the state of the evidence as recorded by the tribunal at that time. That includes, but does not go beyond, the agreement arrived at in the course of Mr Hewitts cross examination. The authorities General principles The tribunal took it as established by the authorities, first that It must be assumed that a hypothetical landlord and a hypothetical tenant will agree terms for such a letting. It is not permissible to conclude that no bidder can be found to take the tenancy. (para 96) and secondly that the basic question to ask is: is the occupation (ie the occupation under the hypothetical tenancy) such as to be of value? A valuation for rating purposes is based upon the concept of the value of the occupation. (para 97) As indicated by their cross references, the first proposition was derived from Hoare v National Trust [1998] RA 391, 422 per Sir Richard Scott VC (see UT para 62); the second from a number of authorities, including the Erith case, but perhaps most clearly stated in Poplar Metropolitan Borough Assessment Committee v Roberts (Poplar) [1922] 2 AC 93 HL (UT paras 48). I will need to look in more detail at the National Trust case, which was relied on by the Court of Appeal, and also by Mr Glover in submissions. It is convenient to refer first to the Poplar case, which provides an authoritative and, I believe, uncontentious statement of the general approach. The Poplar case concerned the rating of a tied house (including living accommodation) which was subject to statutory rent control, with the effect that the maximum recoverable rent was less than the value entered in the valuation list. The ratepayer appealed on the basis that the figure should be reduced to the maximum rent so recoverable. The House of Lords dismissed the appeal. It is sufficient for present purposes to refer to Lord Parmoors discussion of some of the fundamental principles which permeate the whole system of our rating law (pp 118ff). As he explained actual rents agreed between tenant and landlord are not the test of value for rating purposes, this being one aspect of the fundamental principle of equality: It has long been recognized, as a matter of principle in rating law, that to make actual rentals the basis of rateable value would contravene the fundamental principle of equality, both between the rate contributions from individual ratepayers, and between the totals of rate contributions levied in different contributory rating areas. In effect the result would be to make the amount on which the occupier of property is liable to pay rates dependent in many cases on the contractual relationship between a particular landlord and tenant, whereas it is dependent in all cases on a statutory direction applicable on the same principle to all hereditaments, and intended to insure equality of treatment as between the occupiers of rateable property and the rating authority. (p 119) As he acknowledged, it could be notoriously difficult in some instances to ascertain the correct figure, but the duty of the assessment committee was in all cases, to ascertain for this purpose as accurately as may be, the value of the beneficial or profitable occupation of the particular property, and then to make the statutory deductions. For that purpose account should be taken of all that can reasonably influence the judgment of an intending occupier (p 120). The underlying principle of equality (or the common yardstick, in Ms McCarthys words) was stated in similar terms more recently by Lord Pearce: Rating seeks a standard by which every hereditament in this country can be measured in relation to every other hereditament. It is not seeking to establish the true value of any particular hereditament, but rather its value in comparison with the respective values of the rest. Out of various possible standards of comparison it has chosen the annual letting value So one must assume a hypothetical letting (which in many cases would never in fact occur) in order to do the best one can to form some estimate of what value should be attributed to a hereditament on the universal standard, namely a letting from year to year (Dawkins (VO) v Ash Brothers and Heaton Ltd [1969] 2 AC 366, 381 388) It is right also to note the necessary qualification to that principle stated by Scrutton LJ in a familiar passage in the Ladies Hosiery case [1932] 2 KB 679. Having referred to the vital principle that the valuation should be fair and equal as between different classes of hereditaments, and as between different hereditaments in the same class, he added: but in my view there is a third important qualification, that the assessing authority should not sacrifice correctness to ensure uniformity, but, if possible, obtain uniformity by correcting inaccuracies rather than by making an inaccurate assessment in order to secure uniform error. (Ladies Hosiery and Underwear Ltd v West Middlesex Assessment Committee [1932] 2 KB 679, 688) The Erith case For the application of these principles to a case where there was no general market for the use in question, the tribunal relied on the Erith case [1893] AC 562, from which it extracted the proposition that in such a case the true test is whether the occupation is of value, contrasting the case where the land was struck with sterility in any and everybodys hands (para 43). The Court of Appeal thought that in this respect the tribunal had been wrongly influenced by passages directed to the logically prior question whether the premises were in rateable occupation at all (see para 23 above). In my view that criticism is misplaced. To understand why, it is necessary therefore to look in a little more detail at the case and its factual context. The Erith case concerned pumping stations and other installations occupied by the LCC, as part of the metropolitan sewerage system. The appeal proceeded by case stated on the basis that the net rateable value was fixed at 10,000 subject to resolution of the question of law identified in the case. It was agreed that, as used by the LCC they were incapable of yielding a profit; that if they had been in private ownership, the LCC would have been prepared to pay a rent sufficient to support the rateable value as fixed; but if disconnected from that system and in the hands of a tenant applied to any other use the rateable value should be 2,143 (p 565). The principal questions before the House were, first, whether they were rateable at all, and secondly, if so, whether for the purpose of assessing rateable value the LCC was to be considered as a possible hypothetical tenant. Both questions were answered in the affirmative. In the leading speech Lord Herschell LC dealt first with the authorities on the issue of rateability, concluding that the relevant law was in a most unsatisfactory condition. However the decision of the House in Jersey v Mersey Docks (1865) 11 HLC 443, mark[ing] an epoch in the law of rating, had exploded the basis of some of the early authorities, by determining that the circumstance that land is held by a public body for public purposes does not affect its rateability; land is rateable whenever its occupation is of value (pp 584 585). Having dealt with the issue of rateability, he turned then to consider that of assessment: upon what principle the assessment ought to be made, and what considerations are proper to be taken into account, questions which in his mind were involved in much greater difficulty (p 586). Having referred to the statutory definition of rateable value, designed for uniformity in the assessment of rateable property in the metropolis (p 587) he said: It has never been doubted that the rent which is actually being paid by the occupier does not necessarily indicate what is the rent which a tenant might reasonably be expected to pay, or that an owner who is in occupation, and who may not be willing to let on any terms, is none the less rateable. The tenant described by the statute has always been spoken of by the court as the hypothetical tenant. Whether the premises are in the occupation of the owner or not, the question to be answered is: Supposing they were vacant and to let, what rent might reasonably be expected to be obtained for them? (p 588) It was in this context that (at pp 590 592) he discussed the use in some of the earlier authorities of the expression struck with sterility. For example, in R v School Board for London (1886) 17 QBD 738, 942 (concerning rateability of a school), Bowen LJ had said: If land is by law struck with sterility when in any and everybodys hands, so that no profit can be derived from the occupation of it, it cannot be rated to the relief of the poor. But if the school house is not used by this school board for any profitable purpose, it by no means follows that the site of it must be sterile in every other persons hands. Lord Herschell commented: Now, if land is struck with sterility in any and everybodys hands, whether by law or by its inherent condition, so that its occupation is, and would be, of no value to any one, I should quite agree that it cannot be rated to the relief of the poor. But I must demur to the view that the question whether profit (by which I understand is meant pecuniary profit) can be derived from the occupation by the occupier is a criterion which determines whether the premises are rateable, and at what amount they should be assessed; and I do not think that a building in the hands of a school board is incapable of being beneficially occupied by them, and is not so occupied because they are prohibited from deriving pecuniary profit from its use. He cited with approval the words of Fry LJ, in the same case (at 17 QBD, p 770): The term sterility has been introduced into the cases because, as a general rule, a profit is produced; but it does not by any means follow that because there is no profit there is no value and commented: I think the learned judge here points to the true test; whether the occupation be such as to be of value and I have already said that the possibility of making a pecuniary profit is not in my opinion the test whether the occupation is of value. (p 591) It is clear in my view from a review of the speech as a whole that Lord Herschell was seeking to clarify the principles not only of rateability but also of assessment. The rateable value in his case was directly dependent on whether the LCC could be considered as a hypothetical tenant, since it was only on that basis that it would be appropriate to take account of the use of the pumping stations as part of the metropolitan sewerage system, rather than as a detached installation in private hands. As has been seen, they were the respective bases of the agreed alternative valuations. Accordingly, with respect, Henderson LJ was wrong to criticise the tribunals reliance on passages from this speech as directed solely to the issue of rateability. That may be true of its first reference (UT para 39) to his statement that land is rateable whenever its occupation is of value. However the tribunal went on to cite passages specifically directed to the issue of assessment, including the contrast with land struck with sterility and Lord Herschells adoption of Fry LJs true test, that is whether the occupation is of value. Indeed, in this as in other early authorities, the considerations relevant to rateability and valuation may often overlap (see eg Mersey Docks and Harbour Board v Birkenhead Union Assessment Committee [1901] AC 175, 184 185 per Lord Davey). The Court of Appeal authorities I turn first to Hoare v National Trust [1998] RA 391, on which both parties relied. As already noted this case concerned the assessment of rateable value of two historic houses (Petworth House and Castle Drogo) owned by the National Trust. I can conveniently adopt the present tribunals summary of the issue (UT para 62): The National Trust had produced figures to show that no profits could be made from the properties. They argued therefore that no hypothetical tenant would be prepared to offer any rent for them and that their rateable value was therefore nil. The Lands Tribunal broadly accepted that no profit could be made from the properties, but held that an overbid would be made by the National Trust, who could be treated as a hypothetical tenant, to reflect the great historical and cultural values of the houses notwithstanding that there was no money to be made out of being a tenant of them. The Tribunal calculated the amount of the rent by taking 3% of the gross receipts at each property. The Court of Appeal disagreed holding that a hypothetical tenant (whether regarded as the National Trust itself, or, as Sir Richard Scott V C thought preferable, a hypothetical person standing in as a hypothetical National Trust) would not have been prepared to make any overbid. As the tribunal noted at para 62, the court had recognised that the statutory formula demands that the hypothetical negotiations for the yearly tenancy should be successful. It cited the words to that effect of the Vice Chancellor (p 422): If only one potential bidder has been identified, a conclusion that the bidder would not be willing to take the yearly tenancy is not one that is permissible. The statutory formula insists that the tenancy is taken up. noting that the other judgments (of Schiemann and Peter Gibson LJJ) were to similar effect. As to the substance of the decision the tribunal cited the leading judgment of Schiemann LJ, but it might also have referred to the concurring judgment of the Vice Chancellor where the critical point is to my mind expressed most clearly: The question for the Tribunal was not, in my judgment, what annual rent the National Trust would have been willing to pay for the two properties, but what rent a hypothetical organisation whose purposes were the preservation of historic houses and whose resources were adequate for taking on these properties would have been prepared to pay. The answer to this question would have to take into account in respect of each property the net annual receipts that could be obtained from a reasonable exploitation of the propertys potential and the annual expenditure that would have to be undertaken in the maintenance, repair and general preservation of the property. It is, in my opinion, important to notice that the statutory formula, unlike its predecessor in section 19 of the General Rate Act 1967, places the burden of repair and maintenance on the hypothetical tenant. Each of the properties with which we are concerned appears to require an annual expenditure on repair and maintenance which would leave the hypothetical tenant heavily out of pocket. The facts as found by the Tribunal, regarding the annual receipts that might be obtained from each property and the annual expenditure currently being spent on the maintenance and repair of each property, make it quite unreal, in my judgment, to suppose that the hypothetical tenant would be prepared to pay any rent at all. The hypothetical tenant, the hypothetical National Trust, would be accepting the obligation to meet a considerable annual deficit. Why should any hypothetical tenant be willing to add to that deficit by paying a positive rent? Why would not the hypothetical landlord be willing to grant the yearly tenancy at a nil rent in order to escape the annual deficit resulting from the cost of keeping the property in repair? (pp 23 24) The tribunal saw that case as exemplifying the proposition that a nil value may be appropriate where occupation of the hereditament may be beneficial in the physical sense but where the responsibilities of a tenancy are so great as to result in the occupation being burdensome rather than beneficial in the commercial sense. (UT para 99) I agree. Henderson LJ thought this decision supported the opposite conclusion to that reached by the tribunal. He referred (para 37) to Schiemann LJs observation that the hypothetical landlord would be faced with a situation where there are no other bidders for the tenancy, pointing as he said to a nominal hypothetical rent. Henderson LJ thought that the same conclusion would seem to follow, a fortiori, if there were no potential bidder for the tenancy in the real world. However, that ignores the different context of Schiemann LJs observation. The lack of alternative bidders in that case was the consequence of the inherently burdensome nature of the property. Unlike the present case, there were no other comparable properties let at substantial rents. For similar reasons I do not consider that any assistance is to be gained from an earlier Court of Appeal authority to which Henderson LJ referred (para 38): Tomlinson v Plymouth Argyle Football Co Ltd (1960) 175 EG 1023. That concerned the respondents football ground, for which the Football Club was the sole potential tenant. Henderson LJ cited Pearce LJs warning against assuming hypothetical tenants for the hereditament if there is in respect of that particular hereditament no reasonable possibility of such tenants existing. However, that again was in the context that the absence of an alternative tenant was due, not to a surplus of similar properties in the market, but to the particular quality of the property and the heavy cost of maintenance (see p 703). Finally I should refer to the passage in Hoffmann LJs judgment in Inland Revenue Comrs v Gray [1994] STC 360, on which Henderson LJ placed some reliance. That concerned a different statutory regime, relating to the valuation of an estate for the purposes of capital transfer tax under the Finance Act 1975. Section 38 of that Act required the value at any time of any property to be taken as the price which the property might reasonably be expected to fetch if sold in the open market at that time. The courts reliance on this authority was perhaps more understandable if, as Henderson LJ recorded (para 33), the parties were in agreement that the open market to be assumed under that section was materially identical to the open market posited by the rating hypothesis. However, in my view the comparison was potentially misleading. I note that in Hoare v National Trust, Peter Gibson LJ mentioned this case as raising a similar requirement of a hypothetical transaction (p 18). That may be true, but it is only part of the story. There are at least two important differences. First, section 38 was expressly concerned with an imaginary sale in the open market; the 1988 Act calls simply for an estimate of the rent reasonably (to be) expected, without any reference in terms to a market (although such language can be found in some of the cases: eg the higgling of the market para 7 above). More importantly, the 1984 Act was concerned with the valuation of a single asset for capital transfer tax. There is no necessary comparison with any other properties or assets. By contrast, as has been seen, the purpose of rating assessment is much wider. It is to achieve a fair standard for comparable properties across the country as a whole. It is unnecessary to decide whether every part of Hoffmann LJs analysis was accurate in the statutory context to which it was directed. In the present context, however, in so far as it suggests that the identification of the hypothetical tenant is limited by whatever was the actual demand for that property at the relevant time, it is my view inconsistent with the statutory test, and the authorities to which I have referred. Lands Tribunal cases Of more direct relevance, as the tribunal rightly held, were two decisions of highly experienced surveyor members of the Lands Tribunal, which were not mentioned by the Court of Appeal. They were Lambeth London Borough v English Property Corpn Ltd and Shepherd (Valuation Officer) [1980] RA 279 LT (Mr J H Emlyn Jones FRICS) (see UT paras 55 57); and Shiel (Valuation Officer) v Borg Warner Ltd [1985] RA 36 LT (C R Mallett FRICS) (UT paras 58 60). They addressed directly the distinction depending on whether the lack of a tenant was attributable to an inherent characteristic of the property, or to a surplus in the market of comparable properties for which there was a general demand. The Lambeth case concerned the annual value for rating of a warehouse (Bridge House) which had been purpose built in 1933 with seven storeys but was unoccupied at the relevant date. The ratepayers argued that at the relevant date the warehouse had outlived its use and was unsuitable for warehousing purposes; that a tenant could have been found at the relevant date who would make use of the ground floor and some limited use of the first floor, but that the upper parts would have been surplus to requirements. The rating authority argued that the building could be let in the open market as a multi storey warehouse. The tribunal accepted that the evidence supported the tenants assessment of the potential use of the building, and that there was no demand for multi storey use or other valuable uses of the upper floors. The tribunal made clear that this conclusion did not depend on the fact that the upper parts of the building were unoccupied at the time: I accept the argument put forward by the appellant rating authority that the mere fact that premises are unoccupied does not of itself justify a lesser value than that applicable to similar premises which are occupied. As counsel for the rating authority expressed it, in a parade of shops where one shop remains unoccupied one would expect to find similar values applicable to all shops possessing similar characteristics. I think in principle that must be right, but that presupposes that the hereditaments are broadly identical (p 313) The member went on to explain why the other properties relied on by the authority were not truly comparable. This passage was applied by the Lands Tribunal in the second case, Shiel. The case concerned a large factory which was no longer required by the original occupiers and which was empty because an alternative occupier had yet to be found. The valuation court had reduced the assessment of rateable value to 50,000, but the Valuation Officer had appealed to the Lands Tribunal arguing for a figure of 200,000. The appeal failed. Citing the Lambeth case, the member accepted that the mere fact that premises are unoccupied does not of itself justify a lesser value than that applicable to similar premises which are occupied, and referred again to the example of a parade of shops where one shop remains unoccupied (p 43). However, he accepted the ratepayers case on the evidence that the appeal premises in their existing state had reached the end of their economic life, and that their future use appears to depend upon the creation of a hereditament, or hereditaments, different from the existing. As he put it, in rating terms the premises have ceased to have any value (p 45). I would respectfully endorse the distinction drawn in those decisions between a property which is unoccupied merely because of a surplus between supply and demand in the market, and a property which has reached the end of its economic life. I did not understand Mr Glover to argue otherwise. I may add that this is not an unfamiliar issue in rating practice, nor necessarily an easy one to resolve. Ms McCarthy referred to us to the Valuation Office Agencys document, Rating Manual section 3: valuation principles, issued in May 2017. Section 5, headed No demand obsolescence states that: 5.1 Existing buildings and hereditaments can become obsolete: technology moves on, demand changes, replacement buildings are constructed. Rating is a tax on rental value. Just because a hereditament exists does not mean it has a rental value demand may have gone. Having noted that this issue is to be considered by reference to the AVD subject to the statutory exceptions taken at the material date, it draws attention (para 5.4) to the possible difficulty for valuation officers in judging whether a property is actually obsolete or simply has not (yet) let. It lists a number of relevant considerations, including: was the property occupied at AVD? This is primary evidence of demand are there other similar properties in the locality that are occupied? Does this mean that the subject property has simply been unlucky, rather than there being no demand for the type and locality of the accommodation? A terrace of five shops or offices can be envisaged with four occupied. It may be there is only demand for four. This does not mean that the demand for the fifth, vacant one should be regarded as nil. It is the general demand for the mode and category of occupation in the locality that needs to be considered not the specific. The accuracy in law of that guidance is not of course before us in this case. In so far as it clearly relies on the approach of the Lands Tribunal in the two cases I have mentioned, it does not appear contentious. It does however usefully highlight the issues of fact which may become relevant in drawing the distinction in particular cases, but which, by agreement, the tribunal in the present case was not required to resolve. This important distinction seems with respect to have been overlooked by Henderson LJ when he said: In a saturated market, there is still a proper basis for a substantial rateable value while the existing tenant remains in occupation and pays a substantial rent for the hereditament; but that situation changes once the property becomes vacant, because there is no longer a potential tenant available to take it on the statutory terms required by the rating hypothesis. (para 43) Whether the hereditament is occupied or unoccupied, or an actual tenant has been identified, at the relevant date is not critical. Even in a saturated market the rating hypothesis assumes a willing tenant, and by implication one who is sufficiently interested to enter into negotiations to agree a rent on the statutory basis. As to the level of that rent, there is no reason why, in the absence of other material evidence, it should not be assessed by reference to general demand derived from occupation of other office properties with similar characteristics. Finally, for completeness I should mention Henderson LJs reliance for support of his approach on the requirement in paragraph 2(7)(e) of Schedule 6 to assume that all the comparable properties were occupied and used on the material date by their existing tenants. As I understand it, he saw this as relevant to the extent that: the other public sector tenants were already accommodated elsewhere, and they would not have been available as potential tenants for Mexford House on the actual market which existed at the relevant time. (para 49) Ms McCarthy criticises this use of paragraph 2(7)(e) as broadening its scope in a way which is incompatible with its purpose in the statutory scheme. As she submits, it is not dealing with the issue of demand in the hypothetical market, but is an aspect of the rebus sic stantibus principle, which requires physical condition and use to be taken as at the material day, both in respect of the hereditament itself and the locality: the actual conditions affecting the hereditament at the time when the valuation is made (see the cases reviewed by Lord Hodge in S J & J Monk (a firm) v Newbigin [2017] 1 WLR 851, paras 12ff). I did not understand Mr Glover seriously to quarrel with that submission. However, as he rightly said, this point was not essential to the Court of Appeals reasoning. For these reasons I would allow the appeal and restore the decision of the Upper Tribunal. LORD BRIGGS: (dissenting) (with whom Lady Black agrees) I would have dismissed the appeal. This is not because I differ from Lord Carnwath upon any aspect of the applicable legal principles. It is only because I have come to a different conclusion about the meaning and consequences of the highly artificial agreement about the facts made between the parties before the Upper Tribunal (UT), as set out in the JPP. This was that, although there was sufficient general demand for comparable properties in the locality to justify a substantial rateable value for them (para 5), there was nonetheless nobody in the real world who would be prepared to pay or bid a positive price for Mexford House as at the AVD (paras 3 and 4). The UT was in no doubt about the artificiality of that agreement about the facts. As they said (at paras 34(b) and 103 104), in the real world the existence of comparable properties at substantial rents would ordinarily have compelled an examination of the question whether one or more of the tenants in those properties would have been prepared to re locate to the subject property at a lower, but still more than nominal, rent. The JPP also required the UT to make a rather unreal choice between two supposedly conflicting principles of law, namely (i) that the valuer is only required to consider whether, had the subject hereditament been on the market at the AVD, anybody would have been prepared to pay a positive price, with a nil rateable value if not, or (ii) that, even if nobody would be prepared to pay a positive price, the rateable value is nonetheless to be assessed by reference to the general demand as evidenced by the occupation of other properties with similar characteristics (para 5(b)). It was, mercifully, common ground that, as a matter of law, the rating hypothesis required the existence of a hypothetical tenant to be assumed (paras 5(a) and 6). It is an unreal choice because, in the real world, the existence of evidence of general demand for comparable properties in the relevant locality will almost invariably lead to the conclusion that there will be someone prepared to pay at least some more than nominal rent for the subject property, even if actually (rather than merely hypothetically) vacant as at the AVD. I would summarise the legal principles applicable to the present unusual problem as follows. I do so briefly because I do not believe that they are in dispute, although I will expand upon them in due course: a. In following the express statutory requirement to identify the rent at which it is estimated the hereditament might reasonably be expected to let from year to year as at the AVD, the valuer is required to make a real world assessment of the demand in the market for a letting of the subject premises, departing from the real world only when the rating hypothesis compels the valuer to do so: Hoare v National Trust; Tomlinson v Plymouth Argyle. b. The rating hypothesis does require a hypothetical tenant to be assumed, willing to negotiate for a yearly tenancy, but this does not require it to be assumed that the tenant will pay more than a nominal rent. The concept of the hypothetical tenant prepared to pay only a nominal rent is the safety valve by which the necessary hypothesis that there is such a tenant is reconciled with a real world in which there may be, in fact, no demand for a letting of the property at all: Hoare v National Trust. c. The requirement to abide by the principle of equality does entail the same principles being applied to each property in the rating list, but not uniformity of outcome, where the evidence (or, I would interpolate, agreement about the facts) demonstrates otherwise: the Poplar and Ladies Hosiery cases. The ordinary approach of the valuer is to look at reliable evidence of rentals agreed for comparable properties (if there are any), and then to adjust them (or discount their evidential weight) by reference to relevant differences between the comparable and the subject properties. Those differences may typically be locational, or physical, and the passage of time between the date when a rental was agreed for a comparable and the AVD may require further adjustment or discount, where for example there has been a general movement in the market between the two dates. Thus the fact that a particular rent is still being paid for the comparable property as at the AVD may be of limited value if, for example, it was negotiated some time previously but is being paid (as it usually is) under a lease for a term of years, from which it would be impossible for the tenant to escape without payment of a prohibitive surrender premium. In valuers language, the comparable is simply over rented. It does not necessarily mean that there is demand even for the comparable property as at the AVD at the then passing rent, or at any particular rent, or even in some extreme cases at more than a nominal rent. If there has been a fall in the market since the rent for the comparable property was freely agreed, (ie otherwise than at an upward only rent review in a lease without a tenants break clause) then the fact that the agreed rent is still being paid tells you little about the continuing market for the comparable property as at the AVD. All these factors are then input into the assessment of the demand (if any) for a yearly letting of the subject property as at the AVD. They are not in any way part of some separate analysis of general demand which may in some way trump an evidence based or agreed conclusion that there is in fact no real world demand at all for the subject property at more than a nominal rent. In the overwhelming majority of cases a conclusion that there is demand for comparable properties which may be described as general will be sufficient evidence to prove to a reasonable valuer that there is some demand for the subject property at a more than nominal rent, if only because there will usually be a level of discounted rent which will be likely to tempt the tenant of an occupied comparable property to re locate, if free to do so without paying a prohibitive surrender premium. That is why the mere fact that the subject property is vacant at the AVD (eg in a row of identical properties all the rest of which are occupied) does not mean that the vacant property has only a nominal rental value. Demand for a letting of a particular property is not normally a binary, yes or no, question. The real question is, demand at what rent? In the present case the parties solemnly agreed that, even though there was general demand for comparable properties at a substantial rent, nonetheless (however improbably) there was no real world demand at all for a letting of the subject property as at the AVD, at anything more than a nominal rent. That is in my view what the phrase nobody in the real world who would be prepared to pay or bid a positive price actually means. This is also how the UT understood the JPP, as is apparent from the way in which, at the respondents invitation, the UT defined the appealable issue of law. They said: Where the evidence shows that there is no demand to occupy a hereditament which is capable of occupation, does the rating hypothesis require the valuer to assume demand that does not in reality exist (my italics). The appellant tried long and hard in this court to submit that this was not what the JPP meant. It was submitted that all it meant was that the parties were unable to identify an actual tenant who would be prepared to take a tenancy on the AVD itself. But the UT was best placed to construe it, since it was agreed in the middle of a contested hearing in which they had read all the relevant evidence, and heard part of it cross examined. A reading of that evidence confirms the UTs interpretation, although a transcript of the cross examination of Mr Hewitt was sadly lacking. As both the UT and Lord Carnwath explain, it followed a cross examination of Mr Hewitt in which he had, flatly contrary to his written evidence, agreed with paragraph 11.1 of Mr Baldwins expert report, which stated: The findings described in previous sections of this statement lead to the unequivocal conclusion that as vacant and to let at the AVD, there would be no demand for Mexford House (my italics). This paragraph followed a detailed examination of the market, the relevant comparables (including Hesketh House) and the reasons why, notwithstanding its locational and physical similarity, a tenant would not be found in the real world for Mexford House at more than a nominal rent. A primary reason for Mr Baldwins conclusion appears to have been that there had been a significant recent contraction in the requirement for office space in the locality on the part of the only (governmental) tenants likely to find it suitable for their needs, and that this requirement was fully accommodated in other premises. He regarded Mexford House as being economically obsolete. The agreement recorded in the JPP was not merely that there was no evidence to prove real world demand for a letting of Mexford House, but that the evidence positively showed that there was none. This flowed naturally from the fact that paragraph 11.1 of Mr Baldwins report (with which Mr Hewitt had agreed in cross examination) was itself based on detailed evidence. I do not mean that the JPP thereby amounted to an agreement about the reasons why there was no demand, but it was an agreement made in the context of evidence, rather than in an evidential vacuum. I therefore respectfully disagree with Lord Carnwaths premise (in para 8) that this is a type of case where there is merely no positive evidence of demand for the particular property. In such a case, evidence about demand for comparable properties (usually in the form of recently negotiated agreements) will be compelling, and usually conclusive. The UTs answer to the problem that it had been agreed that the evidence proved that there was no real world demand for a letting of Mexford House at more than a nominal rent was to conclude that the rating hypothesis required them to conclude otherwise, by a departure from the real world and the substitution of an assumed demand for the subject property, derived purely from an assessment of demand for the comparable properties. This appears from paras 100 to 106 of their carefully reasoned Decision. In their view the statutory requirement to assume a hypothetical tenant meant that, provided only that the premises were capable of beneficial occupation, taking into account the burdens of upkeep, it had to be assumed that the tenant would be prepared to pay more than a nominal rent, regardless of real world evidence or, as in this case, agreement to the contrary. I can find nothing in the authorities which supports this legal analysis. In short, it assumes a requirement to depart from the real world which is not justified by the statutory scheme. All that the scheme requires is an assumption that somebody would agree to take a yearly tenancy, but not necessarily at more than a nominal rent. In a case where the valuer is not hamstrung by an improbable agreement between the parties about the complete absence of demand (at more than a nominal rent) the real world will easily provide an evidential basis for a conclusion that the hypothetical tenant would pay something of substance, for all the reasons which I have set out above. Both the UT and Lord Carnwath rely upon a number of authorities in which a distinction is made between properties which lack intrinsic value, where a nil valuation may be justified, and those which have some intrinsic value to somebody, which therefore command some more than nominal hypothetical rent. I broadly agree with Lord Carnwaths analysis of them, including where it departs from that of the Court of Appeal. But in none of those cases was there a departure from a real world assessment of rental value, nor does the reasoning in any of them justify doing so in the present case. In the Erith case, the outcome turned on a real world conclusion that, if it needed to rent the pumping station from a private owner, a hypothetical LCC would be prepared to pay a substantial rent because it would be able to connect the pumping station with its sewage system, even though, viewed on its own, the pumping station could not be operated at a profit. The phrase struck with sterility was not being approved as a label for an exclusive class of case within which, alone, a nil rental value could be assessed. Rather, this important case is supportive of the requirement to assess demand, as far as possible, on a real world basis, rather than to depart from it. Lord Herschells conclusion that the use of the subject premises would be of value (even if not on its own profitable) was a stepping stone to a conclusion that, in the real world, there was demand for the pumping station at a more than a nominal rent. It was not a licence to depart from the real world assessment of demand required by the statute, in a case where it is proved or (as here) agreed that there was no demand at more than a nominal rent. I agree with Lord Carnwath that Hoare v National Trust was not a case in which there were comparable properties let at a substantial rent. In the absence of comparables the Court of Appeal therefore had to conduct a real world assessment of the economics of being a tenant of each of the stately homes in question, which proved that the hypothetical tenant would only pay a nominal rent. It contains a trenchant statement of the need not to depart from the real world further than the rating hypothesis compels (per Schiemann LJ at p 381). The Court of Appeal overruled the Lands Tribunal precisely because it departed from the real world, under the mis apprehension that the law required it to assume some kind of overbid, contrary to the facts. The case is a good example of the operation of the nominal rent as the safety valve which accommodates the statutory requirement to assume a willing tenant with the absence of any real world demand for the premises at more than a nominal rent. It is powerful authority against, rather than for, the proposition that where the evidence (or, as here, an agreement about the evidence) demonstrates that there is no such demand, the law requires the valuer to depart from the real world so as to create one which does not in reality exist. It is in my view no answer to say of the Hoare case that there were no comparables, or that the absence of demand was proved by reference to the economics of running the two buildings. That is true, and those economics were the real world reasons why there was nobody who would bid more than a nominal rent for either property. In this case that conclusion is an agreed fact, and the reasons for it do not therefore matter. I would make the same observation about Tomlinson v Plymouth Argyle Football Co Ltd. Pearce LJs warning against assuming hypothetical tenants where there is no real possibility of such tenants existing may have been based upon real world facts about the football ground, but it is a perfectly general and in my view correct statement of the law. In this case the absence of any such possibility (ie tenants prepared to pay more than a nominal rent) is an agreed fact, and the law does not compel the valuer to go behind it, into the non real world, merely because there is some general demand for other comparable properties. Again, I agree with Lord Carnwath that Inland Revenue Comrs v Gray is about a different kind of statutory valuation, but rating valuation is surely no less about an open market than the valuation of an estate for tax purposes. In my view the concession recorded by Henderson LJ in the Court of Appeal that the two valuation processes are substantially the same was rightly made. At p 372, speaking generally, Hoffmann LJ said: The valuation is thus a retrospective exercise in probabilities, wholly derived from the real world (my italics). Nor do I accept as a sufficient distinguishing characteristic the fact that rating valuation seeks to value numerous properties as at the same date, whereas estate valuation is a one off. It would be no less unusual (and potentially unsatisfactory) for identical houses in a terrace to receive hugely different values for IHT purposes when their owners died at roughly the same time, than apparently comparable properties in a rating list. But the statutory criterion in both cases is uniformity of the principles applied, not uniformity of outcome. Where as here the parties actually agree that, in fact, there is such a disparity in demand, the law does not require recourse to some non real world principle to trump or remove it. Turning to the Lands Tribunal cases, both Lambeth London Borough v English Property Corpn Ltd and Shepherd (Valuation Officer) and Shiel (Valuation Officer) v Borg Warner Ltd exemplify the plainly correct proposition that the mere fact that the subject property is unoccupied as at the AVD does not of itself mean that there is no real world demand for it. Both make use of the familiar example of the parade of shops, with one empty and the others in use. The conclusion that there is nonetheless some demand for the empty shop is a reasonable conclusion of fact which would be reached by most valuers, even in a saturated market where there are, say, five comparable properties, demand for only four, and the subject property is the only one which is vacant. But nothing in those cases suggests that where the facts show or (as here) it is agreed, for whatever reason, that there is in truth no demand at all for the empty shop, the law requires some notional general demand for comparable properties to be substituted. The agreement in the JPP was not merely that no hypothetical tenant could actually be identified as at the AVD, but that there was no demand at all for Mexford House. Nor does the passage in the Rating Manual, relied upon by Ms McCarthy and quoted by Lord Carnwath at para 56, take the matter any further. Read as a whole, all it advises is that general demand will usually be probative of specific demand for the subject property, and that the valuer should not become too focussed upon the subject property being vacant. It does not say that where the evidence (including that of general demand) shows, or it is agreed, that there is nonetheless no demand at all for the subject property, the general demand must be substituted for that evidence or agreement. I am however cautious about the reliability of the advice that occupation of the subject property as at the AVD is primary evidence of demand. It may well be prima facie evidence, but the continuing occupation may be attributable to a reason other than demand, such as the existence of a lease for a term of years from which the tenant has no economical means of escape. I am, like Lord Carnwath, puzzled by the view of the Court of Appeal about the effect of a property becoming vacant in a saturated market. As noted above, the fact that there is a tenant in a property paying a substantial rent may not be reliable evidence for open market demand for it, and certainly not at the then current rent, if the market has become saturated only after that rent was agreed, and the tenant has no economic means of escape from the tenancy. But I can envisage a situation where demand for a group of comparable properties has collapsed, and where the departure of one of a very small number of potential tenants from one of them, due to its reduced requirement for space of that type in the locality, renders the subject property economically obsolete. Even then that would only exceptionally mean that there was no demand for it at anything above a nominal rent, but that is what was agreed as a fact in the present case. The following familiar example illustrates the point. A shopping centre may have a row of shops whose economic viability is entirely dependant upon the presence of a nearby anchor tenant, such as a major supermarket or department store. The anchor tenant leaves, and there is no prospect of another anchor tenant being found. The row of shops will immediately become economically obsolete (ie no longer viable to a hypothetical incoming tenant at more than a nominal rent), but they will not all immediately fall vacant. For as long as leasehold terms continue, their tenants may be locked in, and only able to leave at the end of their terms. The row of shops will be subject to a lingering economic death. In such a case the evidence that rent is still being paid for some of them will not justify the inference that there is demand for those which have fallen vacant. In conclusion the question of law for which the UT gave permission to appeal in this case is: Where the evidence shows that there is no demand to occupy a hereditament which is capable of occupation, does the rating hypothesis require the valuer to assume demand that does not in reality exist. I would answer it in the negative. It will be a very rare case indeed where the evidence really does show that there is no demand at all for the subject property where there are comparables in the locality let at substantial rents. But if that is what the evidence shows, or that is what the parties have agreed, then the rating hypothesis does not require a departure from that real world conclusion, merely because the subject property is in theory capable of beneficial occupation. |
The respondents, Birmingham City Council, are a local housing authority within the meaning of Part VII of the Housing Act 1996. This is the Part of the Act which sets out the duties that local housing authorities owe to a person who is homeless or threatened with homelessness. Among its provisions is section 193, which identifies the duty that the authority owes where it is satisfied that an applicant is homeless, eligible for assistance and has a priority need and is not satisfied that he became homeless intentionally. In that situation the duty that the authority owes is to secure that accommodation is available for the applicant: section 193(2). The section also defines circumstances in which the authority will cease to be subject to that duty. Various circumstances will bring this about. The one that is relevant to these appeals is where the applicant, having been informed of the possible consequences of refusal, refuses an offer of accommodation which the authority are satisfied is suitable for him and the authority notify him that they regard themselves as having discharged their duty under the section: section 193(5). The applicant has the right to request a review of any decision of a local housing authority as to what duty, if any, is owed to him under section 193: section 202(1)(b). The procedure for review requires that the reviewing officer must be someone who was not involved in the decision and who is senior to the officer who made it. If the applicant is dissatisfied with the decision on the review he may appeal to the county court. But he may only do so on a point of law arising from the decision: section 204(1). The jurisdiction which the county court exercises under that provision is one of judicial review. There is no general right of appeal against the decision of the reviewing officer. The county court judge may not make fresh findings of fact. He must accept the conclusions on credibility that have been reached by the reviewing officer. The question which these appeals raise is whether a decision that the local housing authority take under section 193(5) of the 1996 Act that they have discharged their duty to the applicant is a determination of his civil rights within the meaning of article 6(1) of the European Convention on Human Rights and, if so, whether the quality of review that the statute provides for is sufficient to meet the requirements of that article. Underlying these questions, however, there is a wider and more fundamental issue which has prompted the Secretary of State for Communities and Local Government to intervene. His interest arises because he has policy responsibility for the 1996 Act. But he is concerned at the effect, if these appeals are successful, that this result will have on the conduct of local government homelessness decision making across England and Wales and upon the way proceedings have to be conducted in the county court if these decisions are taken to appeal. He suggests that the outcome could affect indirectly the way decisions are made in other areas of local and central government activity such as community care and education. Lord Hoffmann drew attention to this problem in Runa Begum v Tower Hamlets London Borough Council [2003] UKHL 5, [2003] 2 AC 430, paras 42 44. As he pointed out, it is one thing for the rule of law to require that certain decisions, such as findings of breaches of the criminal law or adjudications of private rights, be entrusted to the judicial branch of government. But there are other areas where utilitarian considerations have their place. It is not in the public interest that an excessive proportion of the funds available for schemes for the regulation of social welfare should be consumed in administration and legal disputes. He referred to a passage in the joint dissenting opinion in Feldbrugge v The Netherlands (1986) 8 EHRR 425, 443, para 15 which, as he said, seems highly material in this context. It contains the following sentence: The judicialisation of dispute procedures, as guaranteed by article 6(1), is eminently appropriate in the realm of relations between individuals but not necessarily so in the administrative sphere, where organisational, social and economic considerations may legitimately warrant dispute procedures of a less judicial and formal kind. I would venture to suggest that those words are as true today as when they were written over twenty years ago. In that case the minority were unable to persuade the majority to restrict the application of article 6, in the civil sphere, to rights and obligations in private law. It has now been extended to public law rights, such as social security or other cash under publicly funded schemes. No clearly defined stopping point to this process of expansion has yet been identified by the Strasbourg court. But concerns about over judicialisation of dispute procedures in the administration of social and welfare benefits have not gone away. I believe that this case provides us with an opportunity to introduce a greater degree of certainty into this area of public law. The facts The Court of Appeal heard argument in two cases, those of Ms Fazia Ali and Ms Khadra Ibrahim. There was a third case, that of Ms Emma Tomlinson. The respondents refused her application that she was homeless on the basis that she was intentionally homeless. This was because she had been evicted from her home on account of rent arrears. Their decision was confirmed by the reviewing officer, who held that she had not acted in good faith in relation to her finances and the way she had given up her tenancy. Her appeal to the county court was dismissed on the grounds that an appeal lay on a point of law only and that the finding of the reviewing officer was not irrational or perverse. But her case had become academic by the time it reached the Court of Appeal as the respondents, having accepted that the homelessness duty was owed to her, had provided her with accommodation. So the Court of Appeal declined to hear her appeal: [2008] EWCA Civ 1228, para 17. It did however hear the appeals in the cases of Ms Ali and Ms Ibrahim. The way the Court of Appeal dealt with their appeals was strongly influenced by the approach which the House of Lords took to issues arising under Part VII of the 1996 Act in Runa Begum v Tower Hamlets London Borough Council [2003] 2 AC 430. In that case the question decided by the reviewing officer, and on appeal to the county court on conventional judicial review grounds, was whether the accommodation offered to Runa Begum, which she had refused, was suitable. The House heard argument as to whether the decision of the reviewing officer under section 202 was a determination of Runa Begums civil rights within the meaning of article 6(1) of the Convention. But it declined to express a concluded view one way or the other on this issue. As Lord Bingham of Cornhill explained in para 6, it preferred to assume, without deciding, that her domestic law right was also a civil right and to consider, on that assumption, whether the statutory provision of an appeal to the county court on a point of law satisfied the requirements of that article. Having done so, it concluded that the context did not require a full fact finding jurisdiction and that the county courts appellate jurisdiction was sufficient to satisfy its requirements. The Court of Appeal too proceeded on the assumption that article 6(1) was engaged in these cases: para 21. The issue that they raised was not, as in Runa Begum, whether the accommodation was suitable. For reasons that I shall explain, they raised simple questions of primary fact which were decided against the appellants by the reviewing officer. It was submitted that, as these questions did not depend on specialist knowledge or expertise, the appellants cases were not within the scope of the decision in Runa Begum. The Court of Appeal rejected this argument. Thomas LJ said that no proper distinction could be drawn between these appeals and the appeal in that case. The appellants seek to persuade this court that, where simple questions of fact are in issue, the court must exercise a full fact finding jurisdiction if the requirements of article 6(1) are to be satisfied. They submit that the decisions of the review officers should be remitted to the county court for consideration on their merits or that it be declared that section 204(1) of the 1996 Act is incompatible with the appellants rights under that article. The question that arose in the cases of Ms Ali and Ms Ibrahim was indeed, a very simple one, and it was a question of fact. It was whether they received a letter from the respondents of the kind that section 193(5) requires, informing them of the possible consequences if they were to refuse their offer of accommodation under that section. The respondents case is that the letters were sent as required by the statute. The appellants maintain that they never received them. The circumstances in which this issue arose in each case are as follows. (a) Ms Ali Ms Ali is single and has two children. She applied for assistance under Part VII of the 1996 Act in October 2006. By letter dated 7 November 2006 the respondents notified her that they were satisfied that she was eligible for assistance and that they would be securing accommodation for her occupation. They also told her that their housing policy was that homeless applicants received only one offer of suitable accommodation. On 8 November 2006 she received an offer of accommodation which she refused because she was unhappy with the location. The respondents told her that in their opinion the accommodation was suitable but, following a review of their decision which was determined in Ms Alis favour, they agreed to make her another offer. On 14 March 2007 a housing officer informed her by telephone that a further offer was being made, that a viewing had been arranged and that a letter would follow. She was not, during this conversation, given the full address of the property. The respondents case is that on 14 March 2007 they sent a letter to Ms Ali headed Final offer of accommodation offering her accommodation at 16 Bromford Lane, Erdington, Birmingham which, as discussed, was to be available for viewing by her on 16 March. The letter satisfied the requirements of the statute, as it contained a statement that if she refused the offer without good cause the respondents would consider that they had discharged their duty to her under Part VII. In the county court it was agreed that the letter had been sent and that the offer which it contained had been communicated orally beforehand. But Ms Ali denied receiving it. She said that she had to telephone the housing office to obtain the address and that the viewing appointment was re arranged. Having viewed the property on 19 March 2007 she refused the offer as she was not happy with the condition of the communal area. By letter dated 21 March 2007 the respondents notified her that they were satisfied that the accommodation at 16 Bromford Lane was suitable for her needs and that of her family. They told her that they considered that their duty to her under Part VII had been discharged by her refusal. By letter dated 29 March 2007 Ms Alis solicitors requested a review under section 202. In another letter of the same date they said that she had never received an offer of accommodation at 16 Bromford Lane in writing. On 3 April 2007, while her case was still pending before the review panel, the respondents made another offer of accommodation to Ms Ali. This offer, which was made under Part VI of the 1996 Act, was of accommodation in a flat at Teviot Tower, Mosborough Crescent, Birmingham. Although it was stated in this letter that Ms Ali had provisionally accepted the property she did not in the event accept this offer. About a month later on 1 May 2007 Arlene Daniel, a homelessness review officer employed by the respondents, conducted a telephone interview with Ms Ali in order to establish her reasons for refusing the offer of accommodation at 16 Bromford Lane. By letter dated 2 May 2007 she informed Ms Ali that she had decided to uphold the respondents decision that they had discharged their duty to her under section 193. Arlene Daniels reasons for this decision were set out in her letter of 2 May 2007. She said that she was aware that the offer of accommodation letter was sent and that she had no reason to believe that Ms Ali did not receive it, as it was sent to her current address to which a number of other letters had been sent and received by her. There then followed this passage: In the light of the above I contacted you on the 1 May 2007 to establish the reasons why you had decided not to accept this offer of accommodation as it was apparent from the reasons given in the letter from your representatives, dated 29 March 2007, that you (sic) alleging that you had not received the offer letter was not the reason you had refused the offer of accommodation. I put this to you and you advised that you had in fact received the offer letter and refused the offer of accommodation for a number of reasons, firstly that there was no lift. Also the entrance was dirty and smelly. Your son was born premature and suffers with lots of infections. Therefore, had you accepted this offer your sons (sic) health would have been at risk. Ms Ali does not deny saying that she had received the offer. Her explanation is that she initially thought that she was being asked about the offer of a flat at Teviot Tower. She then realised that she was being asked about the offer of accommodation at 16 Bromford Lane. She gave her reasons for refusing that offer, but failed to mention her earlier confusion as to which offer was being referred to. Ms Ali then appealed to Birmingham County Court, but on 29 August 2007 HHJ MacDuff dismissed her appeal. He held that the decision as to whether the letter had been received was properly and fairly to be made by the reviewing officer, and he declined to hear evidence on the point. He added that he understood Ms Alis counsel to concede that if he were to hold, as he did, that it was a decision for the reviewing officer rather than for the court hearing live evidence, it could not be regarded as perverse or otherwise capable of being set aside. (b) Ms Ibrahim Ms Ibrahims household consists of herself and six children. She applied to the respondents for assistance under Part VII of the 1996 Act in May 2005. By letter dated 29 May 2005 the respondents notified her that they were satisfied that she was eligible for assistance and that they would be securing accommodation for her occupation under Part VII of the 1996 Act. They also told her that their housing policy was that all homelessness applicants accepted under that Part received one offer of suitable accommodation. On 16 August 2005 they made an offer of accommodation which she refused. She sought a review of this decision which was determined in her favour. On 12 October 2005 they agreed to make her a further offer. On 26 October 2005 they offered her accommodation at 11 Dawberry Road, Birmingham which she also refused. The dispute between the parties relates to the way in which this further offer was made. The respondents say that their housing officer, Lisa Hopkins, sent two letters both dated 26 October 2005 and both offering accommodation at 11 Dawberry Road to Ms Ibrahim in a single envelope. As HHJ McKenna was later to observe when the case came before him in Birmingham County Court on 4 October 2006, somewhat unusually and confusingly these letters were in different terms. One was a Part VI offer letter. It was the type of letter which is sent to people awaiting accommodation who are on the respondents housing register. It made no reference to the respondents homelessness duty under Part VII of the 1996 Act. The other was a Part VII letter. It referred to the respondents duty under that Part of the Act to secure accommodation for her, stating that to discharge their duty the respondents only had to provide one suitable offer of accommodation. It also warned her that if she decided to refuse the offer without good reason to do so the respondents would consider that they had discharged their duty under Part VII and that no further offers of accommodation would be made. Ms Ibrahims case is that she received the first letter but not the second. She refused the offer of accommodation at 11 Dawberry Road without viewing it because she did not want accommodation in that area and because it was too small for her family. By letter dated 3 November 2005 the respondents notified Ms Ibrahim that they considered that they had discharged their duty to secure accommodation for her and her family under Part VII and that no further offers of accommodation would be made. By letter dated 14 November 2005 Ms Ibrahims representative requested a review of that decision. By letter dated 7 December 2005 the respondents reviewing officer, David Colston, informed Ms Ibrahim that he had decided to uphold the decision of discharge of duty. He was persuaded by Ms Ibrahims representative to take a second look at the case, but by letter dated 16 December 2005 he informed her that he had decided not to change his mind. Ms Ibrahim then appealed to Birmingham County Court, where her appeal was disposed of by means of a consent order to the effect that the decision of 7 December 2005 be quashed and the case referred back to the review panel for a further decision to be made. A further review was then carried out by Martin Dewell, another of the respondents review officers. By letter dated 19 May 2006 he notified Ms Ibrahim that he was minded to uphold the respondents decision letter of 3 November 2005. Martin Dewells reasons for this decision were set out in his letter of 19 May 2006. He said that among the matters that he had been asked to consider were various respects in which it was submitted that the accommodation was unsuitable. There was also a point that had not been raised before, that the offer letter did not comply with section 193(5) of the 1996 Act. After dealing with the question whether the accommodation was suitable, the letter went on to say this: I consider that we have adequately dealt with the point you raise about the validity of the offer letter. In her statement dated 21 February 2006 the housing officer Lisa Hopkins clearly states that the two offer letters were sent to you in the same envelope. One was originally addressed to you at your previous temporary address of 110 Fernley Road, Sparkhill, Birmingham. This letter was sent to this address by mistake as it was the last address showing on the computer system following your move to 61 Adria Road, Sparkhill, Birmingham. This mistake was realised and both copies of the offer letter were then sent to you in the same envelope. Your argument that the offer letter does not comply with section 193(5) is therefore not substantiated. The information contained in the offer letter sent to 110 Fernley Road and then sent to 61 Adria Road is fully compliant with section 193(5). It is therefore entirely reasonable to conclude that you were fully acquainted with your options following either acceptance or refusal of the offer. Ms Ibrahim then appealed again to Birmingham County Court under section 204 of the 1996 Act. She raised, as a factual issue, her contention that she did not receive the Part VII offer letter. But by the time her case came before HHJ McKenna it had been conceded that this was a matter for the reviewing officer to decide. No point was taken that to approach that issue in this way was incompatible with article 6(1) of the Convention. The judge said that the issue for his determination was whether or not it was reasonable for Ms Ibrahim to have accepted the offered accommodation, and that in his judgment it was reasonable for her to have accepted it. He rejected arguments about the content of the offer letter, holding that it was made crystal clear to her that she had the one offer only and what the consequences of refusal would be. The issues The issues that arise in this case can be summarised in this way. First, does on appeal under section 204 of the 1996 Act involve the determination of a civil right for the purposes of article 6(1) either generally or in cases such as the present ones where the issue is simply one of fact? Second, if so, does article 6(1) require that the court hearing such an appeal must have a full fact finding jurisdiction so that it can determine for itself a dispute of fact either generally or in a case such as these? Third, if so, can section 204 of the 1996 Act be read compatibly with article 6(1) so as to entitle the county court to exercise that jurisdiction? If not, it is agreed that a declaration of incompatibility will have to be made. In order to set the scene for an examination of these issues I must say a bit more about the statutory background. This is important, as the questions that arose for decision in this case must be seen in that context. They were, as I have said, pure questions of fact. But they were, in each case, only one of a number of questions that had to be addressed in order to decide whether the respondents duty under section 193 had come to an end. Their resolution was a stepping stone to a consideration of the much broader question as to whether the accommodation that had been declined was suitable. This called for the exercise of expertise and judgment on a variety of factual issues. The scheme of the statute is that a decision on all these questions is entrusted, in the event of a review, to the reviewing officer and is subject to appeal on a point of law only. The statutory provisions Section 193 of the 1996, as amended by the Homelessness Act 2002 and so far as relevant, provides as follows: (1) This section applies where the local housing authority are satisfied that an applicant is homeless, eligible for assistance and has a priority need, and are not satisfied that he became homeless intentionally. (2) Unless the authority refer the application to another local housing authority (see section 198), they shall secure that accommodation is available for occupation by the applicant. (3) The authority are subject to the duty under this section until it ceases by virtue of any of the following provisions of this section. (5) The local housing authority shall cease to be subject to the duty under this section if the applicant, having been informed by the authority of the possible consequence of refusal and of his right to request a review of the suitability of the accommodation, refuses an offer of accommodation which the authority are satisfied is suitable for him and the authority notify him that they regard themselves as having discharged their duty under this section. (6) The local housing authority shall cease to be subject to the duty under this section if the applicant (a) ceases to be eligible for assistance, (b) becomes homeless intentionally from the accommodation made available for his occupation, (c) accepts an offer of accommodation under Part V1 (allocation of housing), or (cc) accepts an offer of an assured tenancy (other than an assured shorthold tenancy) from a private landlord, (d) otherwise voluntarily ceases to occupy as his only or principal home the accommodation made available for his occupation. Section 202(1) as amended by the 2002 Act and the Housing and Regeneration Act 2008 deals with the right to request a review of a decision of the local housing authority. It provides a useful guide to the nature and range of decisions that a local housing authority may have to take in the performance of their duties under Part VII of the Act. It provides: An applicant has the right to request a review of (a) any decision of local housing authority as to his eligibility for assistance, (b) any decision of a local housing authority as to what duty (if any) is owed to him under sections 190 to 193 and 195 and 196 (duties to person found to be homeless or threatened with homelessness), (c) any decision of a local housing authority to notify another authority under section 198(1) (referral of cases), (d) any decision under section 198(5) whether the conditions are met for the referral of his case, (e) any decision under section 200(3) or (4) (decision as to duty owed to applicant whose case is considered for referral or referred), (f) any decision of a local housing authority as to the suitability of accommodation offered to him in discharge of their duty under any of the provisions mentioned in paragraph (b) or (e) or as to the suitability of accommodation offered to him as mentioned in section 193(7), or (g) any decision of a local housing authority as to the suitability of accommodation offered to him by way of a private accommodation offer (within the meaning of section 193). Section 203(1) provides that the Secretary of State may make provision by regulations as to the procedure to be followed in connection with a review under section 202. Section 203(2)(a) provides that provision may be made by regulations requiring the decision on review to be made by a person of appropriate seniority who was not involved in the original decision. The Allocation of Housing and Homelessness (Review Procedures) Regulations 1999 (SI 1999/71) provide that the officer shall be someone who was not involved in the original decision and who is senior to the officer who made the original decision. The reviewer is required to consider any representations that may be made to him. If he considers that there is a deficiency or irregularity in the original decision, or in the manner in which it was made, but is minded nevertheless to make a decision which is against the interests of the applicant on one or more issue, he must notify the applicant that he is so minded and the reasons why he is of that view so that the applicant or someone on his behalf may make representations about them. Section 204(1) provides that, if an applicant is dissatisfied with the decision on review, he may appeal to the county court on any point of law arising from the decision or, as the case may be, the original decision. No provision is made for an appeal against the facts found by the reviewing officer. The scheme which Part VII lays down can be seen, therefore, to have these characteristics. It provides a right to assistance if the relevant conditions are satisfied. But this is not a pecuniary right, nor is the benefit that is to be provided defined by the application of specific rules laid down by the statute. Even where the full homelessness duty arises under section 193, the content of the statutory duty lacks precise definition. There is no private law analogy. The duty is expressed in broad terms to secure that accommodation is available which leave much to the discretionary administrative judgment of the authority. As Professor Ian Loveland, Does Homelessness Decision making Engage Article 6(1) of the European Convention on Human Rights? [2003] EHRLR 176, 184 observes, no tightly defined rules are laid down. The legislative requirement is couched only in terms of broad principle. Is this a civil right? The appellants submit that the right to accommodation under section 193 of the 1996 Act is a civil right within the meaning of article 6(1) of the Convention. Mr Goudie QC summarised his argument in this way. The effect of the statutory scheme was to confer on the appellants an entitlement to accommodation. This was a right, the correlative of which was a duty on the local housing authority which subsisted until it ceased to be subject to the duty in one or other of the ways provided for by the statute. The right to accommodation was an individual economic right which flowed from specific rules laid down in a statute, according to the Strasbourg courts reasoning in Salesi v Italy (1993) 26 EHRR 187 and Mennitto v Italy (2000) 34 EHRR 1122. From this it followed that the reviewing officers decision, which brought that right to an end, was a determination of the appellants civil rights within the meaning of the article. Mr Goudie acknowledged that a right to accommodation was a right to a benefit in kind rather than a right to a financial payment or a subsidy. But he said this did not in itself disqualify it from being a civil right. A series of Russian cases beginning with Teteriny v Russia, application no 11931/03, 1 July 2005, and ending with Nagovitsyn v Russia, application no 6859/02, 24 January 2008, indicated the contrary. It was held in those cases, which arose out of failures to comply with judgments by which the applicants were to be provided with accommodation of a certain size in a specified location, that there had been a violation of article 6(1). It was also held that the effect of the judgments, under which the applicants were entitled to a social tenancy agreement, was that their claim was sufficiently established to constitute a possession falling within the ambit of article 1 of Protocol No 1: see, eg, Teteriny, paras 48 50. In Stec v United Kingdom (2005) 41 EHRR SE 295, para 48 the Grand Chamber said that it was in the interests of the coherence of the Convention as a whole that the autonomous concept of possessions in article 1 of Protocol No 1 should be interpreted in a way which is consistent with the concept of pecuniary rights under article 6(1) and that it was important to adopt an interpretation which avoids inequalities of treatment based on distinctions which, at the present day, appear illogical or unsustainable. Mr Arden QC for the respondents was content to follow the approach of the House of Lords in Runa Begum v Tower Hamlets London Borough Council [2003] 2 AC 430 and to assume that the appellants entitlement to accommodation under section 193 was a civil right within the meaning of article 6(1). As he put it, the respondents approached this issue with equanimity. Their concern was to deal fairly with the cases that were before them. But he said that, if this was a civil right, it was very much at the edge of cases that were engaged by that concept. Miss Lieven QC for the Secretary of State, on the other hand, addressed this point head on. She submitted that the proper conclusion in this case was that there was no civil right within the meaning of that article. Strasbourg case law had limited civil rights to those which were related to individual economic rights which were enforceable through the courts. Any right under section 193 was subject to a large number of decisions that were left to the judgment of the local housing authority. There was also a judgmental decision as to how any such right was to be delivered, as the duty under section 193 was merely to secure that accommodation was available. The inclusion of benefits in kind such as these in the determination of rights protected by article 6(1) was a step further than the Strasbourg court had gone, and this Court should decline to take it. As already noted, the House preferred not to decide this question in Runa Begum. It chose instead to concentrate on the question whether the statutory provision of an appeal to the county court on a point of law only satisfied the requirements of article 6(1). No doubt it was content to do this because it was satisfied that the absence of a full fact finding jurisdiction in the county court did not mean that, in the context of the statutory scheme that Part VII lays down, it did not have the jurisdiction that it needed to satisfy the requirements of that article. But the reason that Lord Hoffmann gave for preferring not to decide whether rights under section 193 should be classified as civil rights is instructive. In para 70 he said that this was for one reason only. This, as he explained in the previous paragraph, was his concern should it be decided in Strasbourg that the administration of social welfare benefits falling within the Salesi principle required a more intrusive form of judicial review, that no obstacle should be placed in the way of the UK Government arguing that, in a case such as that, the principle did not apply at all. Almost seven years have now passed since the judgment in Runa Begum was delivered. The contingency which Lord Hoffmann had in mind has not yet arisen. The jurisprudence of the Strasbourg court has not developed in the way he thought it perhaps might. The balance of advantage now points in a different direction. The time has come for the Court to address this question and take a decision upon it. The present state of uncertainty as to whether the administration of social welfare benefits, such as those which are available to those who are homeless or threatened with homelessness, is unhealthy. It encourages litigation on issues that would not require to be addressed at all if their right to accommodation under section 193 did not give rise to a civil right within the meaning of article 6. The delay and expense that uncertainty on this issue gives rise to involves a waste of resources which would be much better deployed elsewhere in the public interest. It may be helpful, as Miss Lieven suggested, to approach the question in stages: to look at the position in Strasbourg before Runa Begum; to look at Runa Begum itself; and then to look at how the law has developed since the decision in that case. (a) before Runa Begum As Lord Walker of Gestingthorpe said in Runa Begum, para 112, the cases on this topic start with Feldbrugge v The Netherlands (1986) 8 EHRR 425 and lead on to Salesi v Italy (1993) 26 EHRR 187 and Mennitto v Italy (2000) 34 EHRR 1122. In these cases the Strasbourg court extended the concept of civil rights to social security benefits for employees and their dependants that were analogous to benefits under insurance schemes in private law, and then to entitlements to welfare payments which lacked the analogy to private insurance as they were non contributory and not related to employment. In Feldbrugge the issue was whether the applicants entitlement to a statutory sickness allowance, which was a contributory scheme but for which she had not registered due to illness, was a civil right within the meaning of article 6: see also Deumeland v Germany (1986) 8 EHRR 448, a case about a widows supplementary pension arising from her husbands death in an industrial accident in which judgment was delivered on the same day. In para 37 of Feldbrugge the court said that the applicant was claiming a right flowing from specific rules laid down by the legislation in force and that the right in question was a personal, economic and individual right, a factor which brought it close to the civil sphere. Taking account of the affinity of the statutory scheme with insurance under the ordinary law, it held that the features of private law predominated and that they conferred on her entitlement the character of a civil right within the meaning of the article: para 40. This was a significant development because, as a powerful dissenting opinion in that case pointed out, the phrase civil rights and obligations was originally intended to mean those rights and obligations that were adjudicated upon by the civil courts: see also Runa Begum, paras 28 and 64, per Lord Hoffmann. The scope of article 6 was then extended to statutory schemes financed entirely out of public funds. In Salesi v Italy (1993) 26 EHRR 187 the principle was applied to welfare payments which, as they were not contributory, could not be said to be analogous to a scheme of insurance. In para 19 the court said that the development in the law that was initiated by the judgments in Feldbrugge and Deumeland and the principle of equality of treatment warranted taking the view that the general rule now was that article 6(1) applied in the field of social insurance. The considerations that pointed in favour of the applicability of the article were said in that paragraph to be that: Mrs Salesi was not affected in her relations with the administrative authorities as such, acting in the exercise of discretionary powers; she suffered an interference with her means of subsistence and was claiming an individual, economic right flowing from specific rules laid down in a statute giving effect to the Constitution. That decision was followed in Mennitto v Italy (2000) 34 EHRR 1122. But there was an important qualification. In para 23 of its decision in that case the court said that the outcome of the proceedings must be directly decisive for the right in question. As in Salesi, the entitlement was to an amount of benefit that was not in the discretion of the public authority. I do not find support in these cases for Mr Goudies submission that the right to accommodation under Part VII of the 1996 Act is a civil right because, as he put it, it is an individual economic right which flows from specific rules laid down in a statute. The entitlement in section 193(2) is simply to accommodation. There is a considerable area of administrative discretion as to how that accommodation is to be provided by the authority in any given case. (b) Runa Begum Although the House preferred not to take a decision on this issue in Runa Begum, there are some pointers to the decision that it would have taken had it felt obliged to do so. In para 6 Lord Bingham said that to hold that the right enjoyed by Runa Begum was a civil right for the purposes of article 6 would be to go further than the Strasbourg court had yet gone. I respectfully agree with this assessment. It would seem to follow, applying the principle which he was later to enunciate in R (Ullah) v Special Adjudicator [2004] UKHL 26, [2004] 2 AC 323, para 20 that, as the duty of national courts is to keep pace with the Strasbourg jurisprudence as it evolves over time, Runa Begums right to accommodation under Part VII was not a civil right within the autonomous meaning of that expression. To reach that conclusion would not have been to dilute or weaken the effect of existing Strasbourg case law. It would, on the contrary, be to transgress Lord Binghams warning that it was not for the national courts to interpret the Convention in a way that provides for rights more generous than those that have hitherto been found by Strasbourg. In para 67 Lord Hoffmann said that the whole scheme of Part VII was shot through with discretions in which either the councils duty was dependent upon it being satisfied of some state of affairs or could be discharged in various ways of its own choosing. He contrasted that situation with Mennitto where, once the applicant had satisfied the conditions for entitlement to the allowance, all that remained was an arithmetical calculation of its amount. In para 69 he too said that to apply the Salesi doctrine to the provision of benefits in kind, involving the amount of discretion that is inevitably needed in such cases, would be to go further than the Strasbourg court has so far gone. In para 91 Lord Millett listed among features which took the case beyond the existing case law the authoritys discretion as to how it will discharge its duties and the fact that ultimately this called for an exercise of judgment. Runa Begum could not be said to be claiming an individual, economic right flowing from specific rules laid down in a statute: para 92. This is directly contrary to the view Mr Goudie invited the Court to take of the appellants position in this case. Miss Lieven said that these observations were a powerful steer towards the conclusion that to extend the concept of a civil right to a claim under Part VII of the 1996 Act would be to go beyond the tests that had been so far laid down by the Strasbourg court. I agree, but this leaves open the question whether anything that has come from Strasbourg since the date of that decision points to the contrary conclusion. (c) since Runa Begum One of the issues raised in R (A) v Croydon London Borough Council [2009] UKSC 8: [2009] 1 WLR 2557 was whether a decision that a local authority makes as to whether or not to provide accommodation for a child in need under section 20(1) of the Children Act 1989 was a determination of a civil right within the meaning of article 6(1). The question was fully and carefully argued, and with that advantage I ventured to suggest that it could be asserted with reasonable confidence that the local authoritys duty, which is to provide accommodation for any child in need within their area who appears to them to require accommodation as a result of the factors mentioned in that subsection, did not give rise to a civil right: para 65. I reached that conclusion after an examination of various decisions by the Strasbourg court since Runa Begum and Lady Hale said in para 44 that she would be most reluctant to accept that article 6 requires the judicialisation of such claims. We have now been shown a decision which did not appear on the list that was provided to the court in Croydon: the courts admissibility decision in Associazione Nazionale Reduci dalla Prigionia dallInternamento e dalla Guerra di Liberazione v Germany (2007) 46 EHRR SE143. The first case that needs to be mentioned is Tsfayo v United Kingdom (2006) 48 EHRR 457. The applicant had failed to renew her application for housing and council tax benefit. After taking advice she submitted a prospective claim and a backdated claim for both types of benefit. The council accepted the prospective claim but rejected the backdated one on the ground that the applicant had failed to show good cause why she had not claimed this benefit earlier. The councils housing benefit and council tax benefit review board rejected her appeal against this decision. Her complaint was that the board was not an independent and impartial tribunal, contrary to article 6(1). The court held that disputes about entitlement to social security and welfare benefits generally fell within the scope of article 6(1) and that the article applied to the applicants claim for housing benefit: para 40. The question whether the claim concerned the determination of the applicants civil rights was not disputed. This was not surprising, as the case fell within the mainstream of cases such as Salesi v Italy (1993) 26 EHRR 187 and Mennitto v Italy (2000) 34 EHRR 1122 where the issue was one as to the entitlement to an amount of benefit that was not in the discretion of the public authority. The case offers important guidance as to what is needed to satisfy the requirements of article 6(1). But it takes us no further on the question whether a statutory duty to provide benefits in kind as part of a scheme of social welfare falls within the scope of that article. There are however, as I said in the Croydon case, para 62, a number of straws in the wind since Runa Begum that suggest that a distinction can indeed be made between the class of social security and welfare benefits that are of the kind exemplified by Salesi v Italy whose substance the domestic law defines precisely and those benefits which are, in their essence, dependent upon the exercise of judgment by the relevant authority. The phrase civil rights is, of course, an autonomous concept: eg Woonbron Volkshuisvestingsgroep v The Netherlands (2002) 35 EHRR CD161. In that case it was held that decisions about state subsidies to housing associations do not raise issues about civil rights. But the phrase does convey the idea of what, in Stec v United Kingdom (2005) 41 EHRR SE295, para 50, the Grand Chamber referred to as an assertable right. The courts references in Loiseau v France application no 46809/99, 18 November 2003 (unreported), para 7, to a private right which can be said, at least on arguable grounds, to be recognised under domestic law and to an individual right of which the applicant may consider himself the holder are consistent with this approach. So too are the references in Mennitto v Italy (2000) 34 EHRR 1122, para 23, to a right which can be said, at least on arguable grounds, to be recognised under domestic law, where the court added: The dispute must be genuine and serious; it may relate not only to the actual existence of a right but also to its scope and the manner of its exercise. The outcome of the proceedings must be directly decisive for the right in question. In para 64 in the Croydon case I said that the series of cases about the enforceability of judgments made by the courts about social housing in Russia to which Mr Goudie referred in this case, of which the latest is Nagovitsyn v Russia application no 6859/02, 24 January 2008 (not reported), offer no assistance as the question whether a duty to provide social housing gives rise to a civil right before it results in a court order was not argued. I remain of that opinion. No consideration was given in any of these cases to that question, as the only point in issue was whether a final, binding judicial decision for the provision of accommodation of a specified kind should be allowed to remain inoperative: Teteriny v Russia, application no 11931/03, 1 July 2005, para 40. As Lady Hale said in Croydon, para 40, it is easy to slip into the assumption that once a right has been crystallised in a court judgment against a public authority it must amount to a civil right. References to the line of authority exemplified by cases such as Salesi v Italy (1993) 26 EHRR 187 and Mennitto v Italy (2000) 34 EHRR 1122 are conspicuous by their absence. The case of Associazione Nazionale Reduci dalla Prigionia dallInternamento e dalla Guerra di Liberazione v Germany (2007) 46 EHRR SE143 is of interest because it appears to be the only decision after Stec v United Kingdom (2005) 41 EHRR SE 295 in which the court has considered the application of article 1 of Protocol No 1. The applicants complaint was that they had claims for compensation for forced labour under German civil law prior to the coming into force in August 2000 of a law, referred to as the Foundation Law, which excluded claims going beyond the benefits provided by the Foundation Law, as a result of which their claims were lost. The question was whether the facts of the case attracted the protection of article 14 in conjunction with article 1 of Protocol No 1. The court found that the applicants could not claim to have a legitimate expectation of compensation for their detention and forced labour and that the facts at issue did not fall within the ambit of Protocol No 1: para 75. The court went on to say that this finding was not contradicted by its judgment in Stec, in which it was held that non contributory social benefits funded by general taxation fell within the scope of article 1 of Protocol No 1 and that, although that provision does not grant the right to receive a social security payment of any kind, if a state does decide to establish a benefits scheme, it must do so in a manner compatible with article 14. This was because the payments of compensation were made outside the framework of social security legislation and could not be likened to the payments in Stec: para 77. It also held that the case was distinguishable from Wo v Poland (2006) 45 EHRR 667 where the applicant was held to enjoy, at least on arguable grounds, a right to compensation which fell within the ambit of article 6. But I do not detect in the courts reasoning any indication that it would hold that the right to accommodation that is in issue in this case was a civil right for the purposes of article 6(1). If anything, the comment that article 1 of Protocol No 1 does not grant the right to receive a social security payment of any kind is an indication to the contrary. In Crompton v United Kingdom, application no 42509/05, 27 October 2009, the applicant who had joined the Territorial Army as a pay and accounts clerk was made redundant. He claimed redress in respect of his redundancy from his Commanding Officer. There then followed a prolonged series of proceedings which took eleven years to reach their conclusion before he achieved a settlement of his claim. He contended that this was a breach of his right to a hearing within a reasonable time under article 6(1). The Government accepted that his civil rights were determined in the civil proceedings and that article 6 was applicable: para 53. Like Tsfayo v United Kingdom (2006) 48 EHRR 457, the case is of interest as to what is needed to satisfy the requirements of article 6(1). But it takes us no further on the question whether a statutory duty to provide benefits in kind as part of a scheme of social welfare falls within the scope of that article. The other members of the court in the Croydon case preferred to leave open the question whether a local authoritys duty under section 20(1) of the Children Act 1989 gave rise to a civil right for the purposes of article 6(1). In para 45 Lady Hale said that, if it was a civil right at all, she would be inclined to hold that it rested at the periphery of such rights. The issue having been left open in that case, the way is clear for us, if we wish, to reach a concluded view on the matter. That being the present state of the authorities, I would be prepared now to hold that cases where the award of services or benefits in kind is not an individual right of which the applicant can consider himself the holder, but is dependent upon a series of evaluative judgments by the provider as to whether the statutory criteria are satisfied and how the need for it ought to be met, do not engage article 6(1). In my opinion they do not give rise to civil rights within the autonomous meaning that is given to that expression for the purposes of that article. The appellants right to accommodation under section 193 of the 1996 Act falls into that category. I would hold that article 6 was not engaged by the decisions that were taken in the appellants cases by the reviewing officer. The article 6 review The question whether the scheme of decision making that is set out in Part VII is compliant with article 6(1) was fully argued and, although I would hold that this is not necessary for the disposal of the appeals, I would like to make some brief observations about it. Mr Goudie invited the court to hold that the decisions that were made in these cases were directly analogous to those that were considered in Tsfayo v United Kingdom (2006) 48 EHRR 457. In that case the Housing Benefit Review Board was deciding a simple question of fact, namely whether there was a good cause for the applicants delay in making a claim for housing and council tax benefit. He said that this was a gateway question of fact, a positive answer to which would determine her entitlement to the benefit. So too in this case, he said, there were two gateway questions of fact: was the applicant informed of the consequences of a refusal, and did she refuse the accommodation. Only when those questions were answered against her would the question arise as to the accommodations suitability. As the court said in Tsfayo, para 46, the issues in cases such as Runa Begum required a measure of professional knowledge or experience and the exercise of administrative discretion pursuant to wider policy aims. That was not so here, as no specialist knowledge was required to determine the issue whether or not the letters were received by the appellants. He sought to draw support for these submissions from Crompton v United Kingdom, application no 42509/05, 27 October 2009, para 71 where the court said: The Court has previously held that in order to determine whether the article 6 compliant second tier tribunal had full jurisdiction, or provided sufficiency of review to remedy a lack of independence at first instance, it was necessary to have regard to such factors as the subject matter of the decision appealed against, the manner in which that decision was arrived at and the content of the dispute, including the desired and actual grounds of appeal. Reference was made to Bryan v United Kingdom (1995) 21 EHRR 342, paras 44 47 and Tsfayo v United Kingdom, para 43 in which those factors were said to be among those to which it was necessary to have regard: see also the concurring opinion of Mr Bratza as he then was, in Bryan at p 354 where he set out a similar list of considerations. Commenting on Tsfayo in para 73, the court said that the determination of the issue in that case did not require any specialist expertise. Nor could the factual findings there be said to be merely incidental to the reaching of broader judgments of policy or expediency which it was for the democratically accountable authority to take. That, said Mr Goudie, was the situation in the case of these appeals. The questions that they raised were not incidental to a judgment as to whether or not accommodation was suitable, such as whether there was a lift. The subject matter of the decision was simply whether or not the letters had been received. I agree that the questions that had to be decided in these cases can be distinguished from the question that had to be decided in Runa Begum. As the Strasbourg court acknowledged in Crompton, the question in that case could not be said to be purely and simply one of fact as the question whether the accommodation was suitable was one for the expert assessment of the housing officer. But the subject matter of the decision appealed against here is exactly the same. The question whether or not the letters were received was just one among a number of questions that had to be addressed to determine whether the respondents duty under section 193 had been discharged. They are dealt with together in section 193(5) in a way that shows that they are all interlinked. The scheme of the Act is that they are to be dealt with together both at the initial stage and, in the event of a review, by the reviewing officer. To separate out questions as to whether the formalities laid down by the subsection were complied with from those as to whether the accommodation was suitable would complicate a scheme which, in the interests of speed and economy, was designed to be simple to administer. Several of the further cases referred to in section 193(6) in which the authority ceases to be subject to the duty also raise issues that require the exercise of judgment. That is inherent in the entire structure of Part VII of the 1996 Act. The way the reviewing officers approached their task in these cases shows very clearly how the scheme works in practice. For ease of administration the review is entrusted to a single officer who is equipped to deal with issues as to the suitability of the accommodation that has been declined. An answer to the question whether or not the letters were received was incidental to a more searching and judgmental inquiry into the accommodations suitability. It was, as Lord Bingham put it in Runa Begum, para 9(2), a staging post on the way to the much broader judgment that had to be made. These cases are quite different from Tsfayo, where no broad questions requiring professional knowledge or experience had to be addressed once the question whether there was good cause had been answered. In these circumstances I would hold that the ratio of the decision in Runa Begum should be applied and that the absence of a full fact finding jurisdiction in the court to which an appeal lies under section 204 does not deprive it of what it needs to satisfy the requirements of article 6(1). I am fortified in this view by the absence of any indication by the Strasbourg court that it disagrees with the decision in Runa Begum. On the contrary, I interpret its reference to this decision in Tsfayo, paras 45 46 as endorsing its approach. An important factor is the way in which the House addressed the relationship between the article 6(1) concept of civil rights on the one hand and the article 6(1) requirement of an independent and impartial tribunal on the others. As Lord Bingham put it in para 5, the narrower the interpretation given to civil rights, the greater the need to insist on a review by a tribunal exercising full powers. Conversely, the more elastic the interpretation given to that concept, the more elastic must be the approach to the independent and impartial review if the emasculation by over judicialisation of administrative welfare schemes is to be avoided. Mr Bratzas concurring opinion in Bryan v United Kingdom (1995) 21 EHRR 342, 354, where he said that the requirement that a court or tribunal should have full jurisdiction cannot be applied mechanically, provides valuable support for this approach. Support for it is to be found also in Crompton, paras 71 72 and in the concept of sufficiency of review which is now well established in the jurisprudence of the Strasbourg court. A consequence of this approach has been to drive the courts to applying a test which is imprecise and uncertain. Is the case near or close to the borderline? Is it at the periphery, as Lady Hale said in Croydon, para 45? In Runa Begum, para 59, Lord Hoffmann expressed his agreement with Laws LJs observation in R (Beeson's Personal Representatives) v Dorset County Council [2002] EWCA Civ 1812 that there is some danger of undermining legal certainty by excessive debates over how many angels can stand on the head of the article 6 pin. That is why I prefer to dispose of these appeals by holding that the appellants cases are outside the scope of article 6 altogether. The third issue, whether section 204 of the 1996 Act can be read compatibly with article 6(1) so as to entitle the county court to exercise a full fact finding jurisdiction, is superseded. I would dismiss these appeals. LORD COLLINS I agree with Lord Hope that the appeals should be dismissed on the basis that a decision of the local housing authority under section 193(5) of the 1996 Act that it has discharged its duty to the applicant is not a determination of the applicants civil rights for the purposes of Article 6(1) of the Convention. Although I agree with much of Lord Hopes reasoning, I would place less emphasis on the evaluative nature of the exercise under section 193, and greater emphasis on the nature of the applicants rights under Part VII of the 1996 Act, and in particular on the absence of what the Strasbourg Court has characterised as an important, and perhaps necessary, feature, namely an individual economic right in the applicant. The crucial developments in Strasbourg relevant to the present case are the decisions in Ringeisen v Austria (No 1) (1971) 1 EHRR 455; Knig v Federal Republic of Germany (1978) 2 EHRR 170; Feldbrugge v Netherlands (1986) 8 EHRR 425; Deumeland v Germany (1986) 8 EHRR 448; and Salesi v Italy (1993) 26 EHRR 187. It is not necessary to elaborate on them here, because they have been the subject of characteristically helpful discussion by Lord Hoffmann in R (Alconbury Developments Ltd) v Secretary of State for the Environment [2001] UKHL 23, [2003] 2 AC 295, at [78] [84] and in Runa Begum v Tower Hamlets London Borough Council [2003] UKHL 5, [2003] 2 AC 430, at [28] [33]; and see also Lord Millett in the latter decision at [82] [90]. For present purposes it is only necessary to say that in Ringeisen and Knig the Court applied Article 6(1) to disputes with public authorities concerning licences to, respectively, sell land and to practise as a doctor. Article 6(1) was extended to social insurance claims against the State in Feldbrugge and Deumeland, and then to welfare assistance in Salesi. The Strasbourg Court has said that it is not necessary to give what it has called an abstract definition of the concept of civil rights and obligations: Benthem v Netherlands (1985) 8 EHRR 1 at [35]; Feldbrugge v Netherlands (1986) 8 EHRR 425 at [27]; and Deumeland v Germany (1986) 8 EHRR 448 at [61]. It is understandable that the Court has been reluctant to provide abstract definitions. What is not so comprehensible is its apparent reluctance to enunciate principles which will enable a line to be drawn between those rights in public law which are to be regarded as civil rights and those which are not to be so regarded. The mere fact that evaluative judgments are required will not take the case out of Article 6(1). For example, in Schuler Zgraggen v Switzerland (1993) 16 EHRR 405 the applicants invalidity pension depended on a finding that she was at least 66.66% incapacitated. It was held that, despite the public law features of the case, the applicant suffered an interference with her means of subsistence, and that she was claiming an individual, economic right flowing from specific rules in legislation: at [46]. The reference in that decision to an individual, economic right flowing from specific rules in legislation reflects a thread running through the case law in this area. It is plain from the jurisprudence of the Court that an important factor in the application of Article 6(1) in disputes with public authorities in areas which in national law would normally be regarded as public law is the assertion by the applicant of what has been variously described as an economic right or an individual, economic right or a purely economic right. The citation of passages from three decisions, among many others, will illustrate the point. In Feldbrugge v Netherlands (1986) 8 EHRR 425 the Court said (at [37]) 37. To begin with, Mrs. Feldbrugge was not affected in her relations with the public authorities as such, acting in the exercise of discretionary powers, but in her personal capacity as a private individual. She suffered an interference with her means of subsistence and was claiming a right flowing from specific rules laid down by the legislation in force. For the individual asserting it, such a right is often of crucial importance; this is especially so in the case of health insurance benefits when the employee who is unable to work by reason of illness enjoys no other source of income. In short, the right in question was a personal, economic and individual right, a factor that brought it close to the civil sphere. So also in Deumeland v Germany (1986) 8 EHRR 448 the Court said (at [71]) [T]he widow of Mr. Deumeland Senior was not affected in her relations with the public authorities as such, acting in the exercise of discretionary powers, but in her personal capacity as a private individual. She was claiming a right flowing from specific rules laid down by the legislation in force. The right in question was a personal, economic and individual right, a factor that brought it close to the civil sphere. and which involved a contributory invalidity scheme, the Court said (at [46]) In Schuler Zgraggen v Switzerland (1993) 16 EHRR 405, referred to above, today the general rule is that Article 6(1) does apply in the field of social insurance, including even welfare assistance . State intervention is not sufficient to establish that Article 6(1) is inapplicable; other considerations argue in favour of the applicability of Article 6(1) in the instant case. The most important of these lies in the fact that despite the public law features pointed out by the Government, the applicant was not only affected in her relations with the administrative authorities as such but also suffered an interference with her means of subsistence; she was claiming an individual, economic right flowing from specific rules laid down in a federal statute In a long series of cases the Court has held that Article 6(1) applied to claims by civil servants against the State which were pecuniary and which asserted a purely or essentially economic right: e.g. Abenavoli v Italy Application No 25587/94 (unreported) 2 September 1997; Couez v France Application No 24271/94 (unreported) 24 August 1998; Kirsten v Germany Application No 19124/02 (unreported) 15 February 2007. So also in Mennitto v Italy (2000) 34 EHRR 1122 the Court emphasised that the applicants right to an allowance as the father of a disabled child was an economic right. In Wo v Poland (2006) 45 EHRR 667 the Court held, applying Salesi v Italy and Mennitto v Italy, that Article 6(1) applied to claims by Polish victims of Nazi persecution against a fund set up by a Polish German agreement. The applicant had suffered an interference with his means of subsistence and was claiming an individual, economic right flowing from specific rules laid down in the Foundations Statute and its by laws: at [76]. There is an emphasis in many of the Strasbourg cases on the pecuniary nature of the applicants rights. But there is no reason to suppose that that is anything more than a factor in the evaluation. Consequently there is nothing in principle to prevent rights in relation to housing, whether pecuniary or not, from being civil rights for the purposes of Article 6(1). Thus in Tsfayo v United Kingdom (2006) 48 EHRR 457 it was conceded (see at [36]) that Article 6(1) applied to a dispute concerning entitlement to housing benefit, a means tested benefit payable towards housing costs in rented accommodation. The cases relied on by the appellants for the proposition that benefits in kind, as opposed to pecuniary benefits, are protected as civil rights under Article 6, are both cases not only where the applicants were entitled to the housing, but where the entitlement had been reflected in a court judgment. In Teteriny v Russia Application No 11931/03 (unreported) 30 June 2005 the applicants (husband and wife) were retired judges. Under Russian law judges were entitled to priority treatment in the allocation of flats. A court ordered the town council to provide the husband with a flat, but the order was not complied with. The complaint was that the failure to comply with the judgment violated the applicants rights under Article 6(1), and also their right under Article 1 of the First Protocol not to be deprived of their possessions. The Russian Government made no submissions on the merits of the claim, and the Court found, without any discussion of whether the application concerned civil rights, that there had been a violation of Article 6(1) on the ground that it applied to the enforcement of judicial decisions. Although Article 1 of the First Protocol did not apply to a right to live in a property not owned by the applicant because it was not a possession, the claim to a flat was sufficiently established by the Russian courts judgment to constitute a possession. Sypchenko v Russia Application No 38368/04 (unreported) 1 March 2007 and Nagovitsyn v Russia Application No 6859/02 (unreported) 24 January 2008 are similar cases involving, respectively, judgments awarding housing to a person suffering from infectious tuberculosis, and to a person exposed to radiation as a result of the Chernobyl explosion. None of these cases decides whether a civil right is engaged before a duty to provide housing provision crystallises in a court order. But it does not follow from that the fact that Article 6(1) may apply in some circumstances to disputes relating to housing benefits that it applies to all such disputes. The following aspects of the homelessness legislation in Part VII of the 1996 Act (on which see the valuable article by Loveland, Does Homelessness Decision Making Engage Article 6(1) of the European Convention on Human Rights? [2003] EHRLR 176) are important. The duties of the local authority arise only if a person is homeless. A person is homeless if he has no accommodation available for his occupation. He may be in accommodation but nevertheless homeless if the accommodation is not such that it would be reasonable for the person to occupy (section 175(1), (3)). Accommodation is regarded as available for a persons occupation only if it is available for occupation by them together with (a) any other person who normally resides with him as a member of his family; or (b) any other person who might reasonably be expected to reside with him: section 176, as amended. It is not reasonable for a person to continue to occupy accommodation if it is probable that this will lead to domestic violence, or other violence, against him: section 177. Certain homeless persons are treated as having a priority need for accommodation, including, persons who are vulnerable as a result (inter alia) of old age or mental illness: section 189(1)(c). Certain homeless persons are treated as becoming homeless intentionally, where they deliberately do or fail to do anything in consequence of which they cease to occupy accommodation which is available for their occupation and which it would have been reasonable for them to continue to occupy: section 191(1). Where a person is intentionally homeless but has a priority need, the local authority has a duty to secure that accommodation is available for his occupation for such period as they consider will give him a reasonable opportunity of securing accommodation for his occupation, and provide him with advice and assistance in securing accommodation: section 190(2). But if he is not in priority need, the duty is limited to advice and assistance: section 190(3). Where a person is homeless, but not in priority need and not intentionally homeless, the local authority is under a duty to provide advice and assistance (section 192(1)) and may secure that accommodation is available for occupation by the applicant (section 192 (3)). Section 193 sets out the duties to persons in priority need, in particular the duty to secure that accommodation is available for occupation by the applicant (section 193(2)). The consequence is that the local authority has to investigate whether applicants are homeless, whether they are in priority need, and whether they are intentionally homeless. It is only in relation to applicants with priority need that the local authority comes under the full duty to secure accommodation. By section 193(5) the local authority ceases to be subject to the duty if the applicant refuses an offer of accommodation which the authority is satisfied is suitable. As Lord Hope points out (at [27]) the content of the statutory duty lacks precision. There is no right to any particular accommodation. The duty is to secure that accommodation is available. In my judgment, these factors together with the essentially public nature of the duty mean that the duty does not give rise to an individual economic right, and a dispute concerning the question whether the applicant has been properly notified of the consequences of refusal of accommodation is not within Article 6(1). LORD KERR I agree with Lord Hope and Lord Collins that this appeal should be dismissed. One can recognise, however, the initial attraction of the argument that the right involved here was a civil right within the autonomous meaning of article 6. To be provided with accommodation in the circumstances in which the appellants find themselves may be argued to constitute a statutory entitlement; the right to accommodation is conferred by section 193 (2) of the 1996 Act and therefore has a statutory base; it endures until determined by the occurrence of one of the events provided for in the succeeding provisions of section 193; and it can be argued to fulfil what have been recognised as the necessary criteria for an article 6 right. In particular, the right can be said to be an economic right; it is individual or personal to the applicant; it is the product of or flows from the application of rules; those rules are specific and they are laid down in statute. But I have been persuaded by the respondents argument that the case law points unmistakably in the opposite direction and I think that now is the time to recognise its effect. I have not found it easy to reach a principled basis for the distinction between social security payments and social welfare provision for both require the expenditure of public resources; both provide a valuable resource to the recipient; and both are activated by a need on the part of the beneficiary. But, the lack of similarity to (or, rather, the distinction that can be made with) a private insurance scheme; and the dependence on discretionary judgments not only to establish entitlement but also to discharge the states obligation and the way in which the obligation can be met all combine to make this a different type of case from the Salesi (Salesi v Italy (1993) 26 EHRR 187) or Mennitto (Mennitto v Italy (2000) 34 EHRR 1122) models. This is not an assertable right as that term was used in Stec v UK (2005) 41 EHRR SE 295. On the question of whether judicial review provides a sufficient review by an independent and impartial tribunal, I confess to some feelings of unease about the way in which this issue has been tackled in the past. At a fundamental level, the purpose of the article 6 review might be said to be to nullify or offset the effect of the established lack of the appearance of partiality. In Crompton v UK 27 October 2009, application 42509/05, at para 71, the purpose was described in this way: The Court has previously held that in order to determine whether the Article 6 compliant second tier tribunal had full jurisdiction, or provided sufficiency of review to remedy a lack of independence at first instance, it was necessary to have regard to such factors as the subject matter of the decision appealed against, the manner in which that decision was arrived at and the content of the dispute, including the desired and actual grounds of appeal (see [Bryan v the United Kingdom (1995) 21 EHRR 342, paras 44 to 47 and Tsfayo v Untied Kingdom (2006) 48 EHRR 457, para 43] [My emphasis.] The underlying purpose is identified in this passage as to remedy a lack of independence at first instance. In Tsfayo v United Kingdom (2006) 48 EHRR 457 this was also given as the purpose of the article 6 review see para 43, sufficiency of review to remedy a lack of independence at first instance. The means by which the examination takes place i.e. having regard to such factors as the subject matter of the decision appealed against; the manner in which that decision was arrived at; and the content of the dispute must be distinguished from the purpose of the exercise. Where the decision involves an evaluative judgment one can quite see that a judicial review challenge would be appropriate but where a conclusion on a simple factual issue is at stake, judicial review does not commend itself as an obviously suitable means by which to rid the original decision of its appearance of bias. In particular, judicial review might be said to be a singularly inapt means of examining issues of credibility which lie at the heart of the present appeals. Judicial review is suitable to deal with issues such as the rationality of the judgment reached; whether relevant factors have been taken into account; whether sufficient opportunity has been given to the affected party to make representations etc. All of these take place on if not an agreed factual matrix at least one in which the areas of factual controversy are confined. It is quite different when one comes to decide a sharply conflicting factual issue. But, the decision in Runa Begum v Tower Hamlets LBC [2003] 2 AC 430 continues to occupy this particular field. The observations of Lord Bingham (in paragraph 10) and of Lord Hoffmann in paragraphs 59 et seq effectively conclude the arguments on the second issue arising on the appeal. There is also much force in Ms Lieven QCs argument that Part VII decisions invariably partake of factual inquiry and discretionary judgment. The nature of the scheme as a whole, therefore, dictates the answer. I agree with Lord Collins that the Russian cases do not assist in reaching a conclusion on the second issue. There is much to be said for Lord Browns suggestion (made during argument) that even where one litigates a claim that does not itself involve an article 6 civil right, one may nevertheless assert that such a right arises where the judgment obtained on the claim which does not fall within article 6 remains unsatisfied. But, it is quite clear that the European Court of Human Rights did not in the Russian cases address the question whether cases such as Salesi and Mennitto should be extended. It is impossible to conclude that the Strasbourg court intended to radically expand the category of article 6 rights by these judgments. |
In November 1999 Mr Alexander Gibson was appointed as managing director of Grays Timber Products Ltd (Timber Products), a wholly owned subsidiary of Grays Group Ltd (Group). He also became a director of Group. He entered into a written service agreement with Timber Products and was also party to a subscription and shareholders agreement (the subscription agreement) under which he paid 50,000 to take up ordinary shares (amounting to about 6% of the issued ordinary capital) in Group. In November 2003 all the issued ordinary shares in Group were acquired by an outside purchaser, Jewson Ltd (Jewson) for 6m, about 5.4m of which was paid in cash. Under the terms of the subscription agreement (to which Group and shareholders owning over four fifths of its ordinary shares were parties) Mr Gibson became entitled to a disproportionately large part of the consideration paid by Jewson just over 1.4m, whereas a rateable part would have been just under 0.4m. The issue for the Court is whether the difference between these two sums is (as HM Revenue & Customs HMRC contend) taxable as employment income of Mr Gibson, subject to income tax and national insurance contribution (NIC), or is (as Mr Gibson contends) taxable as a chargeable gain subject to capital gains tax. The claim for income tax and NIC is primarily against Timber Products as Mr Gibsons employer at the time, but if it succeeds the burden will fall on Mr Gibson and others who have covenanted with Jewson to bear those liabilities. That issue depends primarily on the correct construction and application of Chapter 3D of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) as inserted by the Finance Act 2003, Schedule 22. Chapter 3D consists of only three sections which are, by comparison with other chapters in Part 7 of ITEPA 2003 (as amended), relatively simple and straightforward. They are as follows: CHAPTER 3D Securities Disposed of for More Than Market Value 446X Application of this Chapter This Chapter applies if (a) (b) employment related securities are disposed of by an associated person so that no associated person is any longer beneficially entitled to them, and the disposal is for a consideration which exceeds the market value of the employment related securities at the time of the disposal. 446Y Amount treated as income (1) Where this Chapter applies the amount determined under subsection (3) counts as employment income of the employee for the relevant tax year. (2) The relevant tax year is the tax year in which the disposal occurs. (3) The amount is CD MV DA. where CD is the amount of the consideration given on the disposal, MV is the market value of the employment related securities at the time of the disposal, and DA is the amount of any expenses incurred in connection with the disposal. 446Z Definitions (1) In this Chapter market value has the meaning indicated in section 421(1). (2) For the purposes of this Chapter sections 421(2) and 421A apply for determining the amount of the consideration given for anything. In this Chapter the employee, and employment related securities, have the meaning indicated in section 421B(8). In this Chapter associated person has the meaning indicated in section 421C. (3) (4) It is common ground that Mr Gibsons shares were employment related securities. He was an associated person and no issue arises as to any other associated person. The main area of controversy is market value, which is defined by reference to the Taxation of Chargeable Gains Act 1992. However Chapter 3D forms part of a complex code with fairly deep and tangled legislative roots. Many of the submissions made on behalf of Timber Products (which has been the appellant at every stage in these proceedings) relied on the need for the expression market value to be given a uniform meaning throughout the different chapters comprised in Part 7 of ITEPA 2003. It is therefore appropriate to attempt at least an outline sketch of Chapter 3Ds larger context, without going far into complexities which are not directly relevant. Part 7 of ITEPA 2003 is headed Employment income: income and exemptions relating to securities. Its provisions reflect three different, and to some extent conflicting, legislative purposes. First there is Parliaments recognition that it is good 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 (those in force in 2003 are covered in Chapters 6 to 9 inclusive of Part 7). Second, if arrangements of this sort are to act as 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: I think that the conferring of a right of this kind as an incident of service is a profit or perquisite which is taxable as such in the year of receipt, so long as the right itself can fairly be given a monetary value, and it is no more relevant for this purpose whether the option is exercised or not in that year, than it would be if the advantage received were in the form of some tangible form of commercial property. That was a case about share options, which are now dealt with separately in Chapter 5, but it illustrates the general approach that applied in the days when the taxation of employee benefits was very much simpler than it is now. 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. 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. There is a further layer of complication in provisions which regulate the inevitable overlaps between different chapters. It is regrettable that ITEPA 2003, which came into force on 6 April 2003 and was intended to rewrite income tax law (as affecting employment and pensions) in plain English, was almost at once overtaken by massive amendments which are in anything but plain English. This case is, it seems, the first case concerned with any of the provisions of Part 7. Timber Products appeal from a revised determination dated 3 November 2005 was dismissed by a single Special Commissioner (Mr Demack) by a written decision released on 21 March 2007. Timber Products appeal to an Extra Division of the Inner House of the Court of Session (Lord Kingarth and Lord Mackay of Drumadoon, Lord Osborne dissenting) was dismissed on 13 February 2009. The reasoning of the majority of the Inner House was rather different from that of the Special Commissioner, and counsel for Timber Products has sought to deploy further arguments in this Court. The subscription agreement and the sale agreement The facts relevant to this appeal are set out in some detail in the decisions of the Special Commissioner and the Inner House (especially the judgment of Lord Osborne). Those decisions are readily accessible, being reported together at [2009] STC 889. I need not therefore add a lot of detail to the brief summary at the beginning of this judgment. But I must give a fuller account of the subscription agreement entered into in 1999 and the sale agreement dated 29 November 2003, especially as they affected Mr Gibsons shares in Group. The subscription agreement was not dated but was signed at different dates between 2 December and 18 December 1999. The parties to it were (1) Group (2) Mr Gibson and (3) Mr J R Nicholson (who owned about 60% of the ordinary shares) and other shareholders who (together with Mr Nicholson) owned about 84% of the ordinary shares. Recital (B) provided: Mr Gibson wishes to subscribe up to 14,465 ordinary shares of 1 each in the share capital of [Group] and [Group] has agreed to issue such shares to him on the terms and conditions set out below. Clause 3 provided for what was to happen to the shares if Mr Gibsons employment ended while he still owned them. If he was dismissed for a serious breach of contract, he was to sell them back to Group for 50,000. If he resigned voluntarily (with no element of constructive dismissal) he was to sell back to Group all his shares for a consideration representing 74% of their net asset value (the net asset value of the whole company being taken to be not less than 1.3m) together with 25% of the amount by which the net asset value (of the whole company) exceeded the target net asset value (defined as 1.3m with an indexed escalation of 0.08m for each complete year, but subject to a possible adjustment for newly paid up preference shares). If Mr Gibsons service terminated in other circumstances (including death or incapacity) clause 3.2.3 provided for all but one of his shares to be sold back under a similar formula, but with Mr Gibson receiving 50% of the growth in net assets. None of these provisions was put into effect, since Mr Gibson was still in service when Jewson took over Group. But the evident intention that Mr Gibson should participate disproportionately in growth in net assets occurring during his period of service was also reflected in clause 4.2.1, which did take effect on Jewsons takeover of Group more than two years into Mr Gibsons service. Clause 4.2.1 was as follows: In the event of a Shares Disposal taking place on or after the second anniversary of the Completion Date, Mr Gibson shall sell and the Shareholders shall procure that [Group] or that the purchaser in terms of the Shares Disposal shall purchase Mr Gibsons Shares at a price equal to the aggregate of the sums calculated in accordance with (i) and (ii) below. Item (i) was, in the event, 50,000. Item (ii) was one third of D (E+F), that is (D) the consideration (6m) less the total of (E) the target net asset value of the company at the date of the disposal (approximately 1.46m) and (F) item (i) (0.05m). The total consideration was therefore about 1.5m. HMRCs revised notice of determination proceeded on the basis that this sum exceeded the statutory market value of the shares by 1,059,737, and that the latter sum attracted income tax and NIC. Initially HMRC relied on Chapter 4 of Part 7 of ITEPA 2003, and only later on Chapter 3D, which led to an adjustment as mentioned in paras 1 and 50 of the Special Commissioners decision. Clause 4.2.2 contained similar provisions applying on a sale of Groups business. Clause 5 provided for Mr Gibson to obtain an additional payment in consideration of his shares if a buy back took place under clause 3.2.3 and there was a takeover of Group or its business within eighteen months of the buy back. These provisions were extremely complicated and did not take effect. It is sufficient to say that they reflected the same approach as in clause 4.2.1 and 4.2.2. The underlying purpose of clauses 3.2.2, 3.2.3, 4.2.1, 4.2.2 and 5.2 is set out in clause 6.1: The Shareholders acknowledge and accept that Mr Gibson is to become an executive director of [Timber Products] and shareholder of [Group] on the agreement that, if by reason of his efforts as such an executive director, Net Asset Value plus the Notional Goodwill exceeds the Target Net Asset Value on a return of his investment by share buy back or the Consideration exceeds the Target Net Asset Value on a return of his investment on a sale, he will in certain circumstances and in accordance with clauses 3 and 4 be entitled to an agreed extra payment in addition to the return of his initial investment and, on such a sale, disproportionately greater than the amounts received by other shareholders or (sic) his percentage of the equity share capital of [Group]. Further provisions in clause 6 ensured that these rights were not to be prejudiced by any distribution or reduction of Groups assets. By Clause 7.1 Mr Gibson warranted not to dispose of or encumber any of his shares otherwise than in accordance with the subscription agreement or the articles of Group. Clause 7.3 provided that in the event of a breach of that warranty his service contract and directorships could be terminated. It also provided that this should be the sole rights or remedies of the Shareholders and [Group] arising from such breach. Clause 9 provided that the agreement, and rights and obligations under it, should not be assignable. By clause 11.1 the agreement was to be governed by the law of Scotland. Clause 11.2 provided: The provisions of this Agreement shall prevail over the Articles (and any other Articles of Association of [Group] subsequently amending or replacing the same) such that if there is any conflict between the two the provisions of this Agreement shall prevail and rule to the exclusion of any such conflicting provisions of the Articles or such other Articles of Association. The subscription agreement provided for Group to adopt new articles of association in a form scheduled to the agreement, and they were duly adopted on 9 December 1999. These provided for the redemption of all the companys A preference shares not later than 31 March 2000. They also referred expressly to the 14,465 ordinary shares to be issued to Mr Gibson (freeing them from pre emption rights on their issue). They did not however confer any other special rights on these shares. Under para 5(a) and (b) of the articles ordinary shares participated pari passu in income and return of capital. During 2000 Mr Gibson acquired a further 258 ordinary shares under the pre emption provisions in the articles. These seem to have been accepted as constituting part of Mr Gibsons shares for the purposes of the subscription agreement, despite their apparent exclusion under the definition in clause 1. The sale agreement was made on 29 November 2003 between (1) Mr Nicholson, Mr Gibson and five other holders of Group ordinary shares and (2) Jewson. Clause 3.2.1 provided for the cash consideration of 5,403,219 to be paid to the vendors solicitors as their agents who are hereby authorised to receive the same whose receipt shall be a complete discharge to the Purchaser who shall not be obliged to enquire as to the distribution thereof. By clause 3.2.2 Elbora Ltd, one of the holders of ordinary shares, was to receive 500,000 loan notes issued by Jewson. Clause 3.2.3 provided for a retention of 96,781. The agreement contained numerous warranties, covenants and indemnities. In particular clause 4A provided for the retention in respect of potential NIC liability, and clause 9 and schedule 9 made further provision for potential PAYE income tax and NIC in respect of Mr Gibson. By clause 3.4 and schedule 1 Mr Gibson was to receive 1,451,172 for his shares. The other shareholders received sums proportionate (as between themselves) to their respective holdings (except that Elbora Ltd received less because of the loan notes). In a disclosure letter dated 29 November 2003 the vendors gave information about the subscription agreement (among other matters). The letter stated, However, this agreement is to be terminated at completion. Market Value As already noted, Part 7 of ITEPA 2003 incorporates the statutory definition of market value for capital gains tax purposes. That definition is in sections 272 and 273 of the Taxation of Chargeable Gains Act 1992 which are (so far as relevant) as follows: 272 Valuation: general (1) In this Act market value in relation to any assets means the price which those assets might reasonably be expected to fetch on a sale in the open market. (2) In estimating the market value of any assets no reduction shall be made in the estimate on account of the estimate being made on the assumption that the whole of the assets is to be placed on the market at one and the same time. 273 Unquoted shares and securities (1) The provisions of subsection (3) below shall have effect in any case where, in relation to an asset to which this section applies, there falls to be determined by virtue of section 272(1) the price which the asset might reasonably be expected to fetch on a sale in the open market. (2) The assets to which this section applies are shares and securities which are not quoted on a recognised stock exchange at the time as at which their market value for the purposes of tax on chargeable gains falls to be determined. (3) For the purposes of a determination falling within subsection (1) above, it shall be assumed that, in the open market which is postulated for the purposes of that determination, there is available to any prospective purchaser of the asset in question all the information which a prudent prospective purchaser of the asset might reasonably require if he were proposing to purchase it from a willing vendor by private treaty and at arms length. The definition in section 272 can be traced back to section 44 of the Finance Act 1965 and from there to the estate duty valuation provisions in section 7(5) of the Finance Act 1894. Both sides referred to many of the leading cases on the estate duty definition, including Attorney General v Jameson [1905] 2 IR 218, Salvesens Trustees v Inland Revenue Comrs 1930 SLT 387, Inland Revenue Comrs v Crossman [1937] AC 26 (in which the House of Lords was divided by three to two) and Lynall v Inland Revenue Comrs [1972] AC 680 (in which Crossman was challenged but unanimously upheld on the wider issue, but the taxpayer succeeded on the narrower issue as to access to information, so leading to the rule now embodied in section 273 of the 1992 Act). Reference was also made to Inland Revenue Comrs v Gray [1994] STC 360, which was concerned with the same definition as used for the purposes of capital transfer tax (now inheritance tax). All these cases, apart from Gray, were concerned with the valuation of shares in private companies where the articles contained restrictions on transfer and rights of pre emption. There is not, as it seems to me, much difference in the general conclusions which the parties seek to draw from these authorities. It is not therefore necessary to multiply citations. It is sufficient to repeat two passages which were quoted with approval in Lynall (by Lord Reid at p 693 and Lord Pearson at p 704 respectively). The first is from the judgment of Holmes LJ in Jameson at p 239: The Attorney General and the defendants agree in saying that in this case there cannot be an actual sale in open market. Therefore, argues the former, we must assume that there is no restriction of any kind on the disposition of the shares and estimate that [sic] would be given therefor by a purchaser, who upon registration would have complete control over them. My objection to this mode of ascertaining the value is that the property bought in the imaginary sale would be a different property from that which Henry Jameson held at the time of his death. The defendants, on the other hand, contend that the only sale possible is a sale at which the highest price would be 100 per share, and that this ought to be the estimated value. My objection is that this estimate is not based on a sale in open market as required by the Act. Being unable to accept either solution, I go back to my own, which is in strict accordance with the language of the section. I assume that there is such a sale of the shares as is contemplated by article 11, the effect of which would be to place the purchaser in the same position as that occupied by Henry Jameson. An expert would have no difficulty in estimating their value on this basis. It would be less than the Crown claims, and more than the defendants offer; but I believe that it would be arrived at in accordance not only with the language of the Act, but with the methods usually employed in valuing property. The second is from the judgment of Lord Fleming in Salvesen at p 391: The Act of Parliament requires, however, that the assumed sale, which is to guide the Commissioners in estimating the value, is to take place in the open market. Under these circumstances I think that there is no escape from the conclusion that any restrictions which prevent the shares being sold in an open market must be disregarded so far as the assumed sale under section 7(5) of the Act of 1894 is concerned. But, on the other hand, the terms of that subsection do not require or authorise the Commissioners to disregard such restrictions in considering the nature and value of the subject which the hypothetical buyer acquires at the assumed sale. Though he is deemed to buy in an open and unrestricted market, he buys a share which, after it is transferred to him, is subject to all the conditions in the articles of association, including the restrictions on the right of transfer, and this circumstance may affect the price which he would be willing to offer. The importance of identifying precisely the property to be valued was emphasised in Crossman (especially by Viscount Hailsham LC at pp 39 40 and Lord Blanesburgh at pp 49 50) and this emphasis is reflected in many of the later cases. It is the first major point of controversy in this appeal: are Mr Gibsons ordinary shares to be valued simply as ordinary shares whose rights are set out in the articles, or are his special rights under clause 4 of the subscription agreement to be taken into account as if they were set out in the articles? (This difference has been described in argument as the difference between intrinsic and extrinsic rights, and that terminology will serve, at least as shorthand.) The second major point of controversy is: if Mr Gibsons special rights are treated as intrinsic in the shares to be valued, what effect (if any) do they have on the valuation exercise? Are they to be treated as enuring for the benefit of the hypothetical purchaser, or are they to be disregarded as being, even though intrinsic, exclusively personal to Mr Gibson, and worthless to anyone else? Intrinsic and extrinsic rights The first of these controversies has two strands. One is concerned with shareholder rights as a matter of company law. The other is concerned with the language used in different chapters of Part 7 which, it is argued (especially because of the statutes emphasis on market value having the same meaning throughout Part 7) demonstrates that Parliament must have intended to extend the field of relevant material beyond what would conventionally be regarded as intrinsic shareholder rights. This is a difficult and intricate argument and it is probably best to start off with company law (though even that area is not, in this case, without its difficulties) In Crossman (at pp 40, 51 and 66) the Lord Chancellor and Lord Blanesburgh (in the majority) and Lord Russell of Killowen (dissenting) all referred to Farwell Js classic definition (in Borlands Trustee v Steel Bros & Co Ltd [1901] 1 Ch 279, 288) of a share as consisting partly of mutual obligations entered into by all the shareholders (at the same time Lord Blanesburgh emphasised at p 51 that it is still one indivisible piece of property). The shareholders mutual obligations are normally set out transparently in the articles of association, and Groups new articles (even though adopted in accordance with the subscription agreement) said nothing about special rights attaching to Mr Gibsons shares on their disposal. Mr Sherry (for Timber Products) argued that the rights attaching to shares might be found in arrangements made outside a companys articles. They could be found, he submitted, in a shareholders agreement or in the terms on which shares were issued. He relied on the observations of Lord Hoffmann in ONeill v Phillips [1999] 1 WLR 1092, 1098: First, a company is an association of persons for an economic purpose, usually entered into with legal advice and some degree of formality. The terms of the association are contained in the articles of association and sometimes in collateral agreements between the shareholders. Lord Hoffmann also stated at p 1101: But there may be later promises, by words or conduct, which it would be unfair to allow a member to ignore. Nor is it necessary that such promises should be independently enforceable as a matter of contract. A promise may be binding as a matter of justice and equity although for one reason or another (for example, because in favour of a third party) it would not be enforceable in law. Mr Sherry also relied on the decision of the Court of Appeal in Harman v BML Group Ltd [1994] 2 BCLC 674. In that case Dillon LJ, in a single extempore judgment with which Leggatt and Henry LJJ agreed, made the general observation (at p 678) that a shareholders agreement signed by all the shareholders attaching rights to shares must have the same effect as if the rights had been set out as class rights in the articles. But it seems reasonably clear from the report (at p 675) that in that case the division of the share capital into A and B shares, and some of the rights attached to those respective shares, were set out in the articles. In my opinion these passages give Mr Sherry only limited assistance. In ONeill v Phillips Lord Hoffmann was addressing the equitable nature of the courts jurisdiction under section 459 of the Companies Act 1985 to counteract unfair treatment of minority shareholders. He was not addressing the subject of contractual share rights capable of enuring for the benefit of third parties. The context of Harman v BML Group Ltd was the courts discretionary jurisdiction under section 371 of the Companies Act 1985 to order the holding of a general meeting. Moreover in the present case not all the shareholders were parties to the subscription agreement. Mr Sherry also placed reliance on clause 11.2 of the subscription agreement, which states that its provisions shall prevail over the articles (and any further articles amending or replacing the current articles). However there is House of Lords authority that a provision in a shareholders agreement excluding or restricting the companys statutory power to amend its articles is a nullity: Russell v Northern Bank Development Corpn Ltd [1992] 1 WLR 588, mentioned by Nigel Doran in (2007) 888 Tax Journal 10. That case concerned an agreement to which the company in question had also been made a party. The House of Lords held that it could take effect only as a personal contract. Lord Jauncey of Tullichettle (with whom the rest of the Appellate Committee agreed), at p 593, quoted Lord Davey in Welton v Saffery [1897] AC 299, 331: Of course, individual shareholders may deal with their own interests by contract in such way as they may think fit. But such contracts, whether made by all or some only of the shareholders, would create personal obligations, or an exceptio personalis against themselves only, and would not become a regulation of the company, or be binding on the transferees of the parties to it, or upon new or non assenting shareholders. Unfortunately Russell v Northern Bank Development Corpn Ltd was not cited or referred to in the course of argument. It is a decision which has attracted a good deal of discussion as to its extent: see for instance [1992] CLJ 437 (Sealey), [1994] CLJ 343 (Ferran), (1993) 109 LQR 210 (Shapira), 553 (Davenport). If it were likely to be decisive of this appeal, it would not be satisfactory for the Court to decide the case without inviting further written submissions as to its significance. Leaving that strand of Mr Sherrys argument on one side for the present, I come to the other strand, which relies on the use of the expression market value in chapters of Part 7 other than Chapter 3D, that is Chapter 2 (restricted securities), Chapter 3 (convertible securities), Chapter 3A (securities with artificially depressed market value) and Chapter 3B (securities with artificially enhanced market value). All these chapters describe the relevant restriction, conversion right or value shifting mechanism in the most general terms, which would include extrinsic arrangements: see sections 423(1)(a), 436, 446A(2) and 446K(2). But they also proceed on the footing that that restriction, conversion right or value shifting mechanism affects the market value of the securities in question: see sections 428(2), 431(1), 441(6) and (7), 442(5), 446C(2), 446D(1), 446E(3) 446F(4), 446G(1) and (2), 446H(3), 446I(3) and 446L(6). In all these contexts the restriction, conversion right or value shifting mechanism cannot, it seems to me, be dismissed as something collateral or personal to the particular employee and irrelevant to the valuation. This point was not referred to in the judgments in the Court of Session. Mr Sherry told the Court that it was raised below but as he did not appear in the Court of Session he could not give a detailed account of what happened. Nevertheless it is a point of law which needs to be considered. It is a very puzzling feature of the legislation, and the confusion is increased by the official answers to frequently asked questions published by HMRCs predecessor in 2003 (and made available to taxpayers and their advisers until 2005). Question 1(k) and its answer were: Q: Market value is now based on the CGT definition. Does this mean that personal restrictions on the share no longer have to be taken into account in arriving at its value? A: no. Even where there is, for example, a restriction on sale the shares must be valued as if that restriction would still apply to their hypothetical purchaser. It is the asset (as it is) that is being valued, not some other unrestricted asset. Question 1(m) and its answer were: Q: The Inland Revenue has confirmed that market value will take into account personal rights and restrictions and not just those rights and restrictions attaching to the shares. Can you confirm that this interpretation of market value will be applied consistently throughout Schedule 22 [to the Finance Act 2003] and that you will not adopt a different interpretation for each Chapter of Part 7? A: Market value will be determined on a consistent basis throughout Chapters 1 to 5 of Part 7. Mr Johnston QC (appearing for HMRC in this Court, as he did in the Court of Session) was unable to explain or defend these answers. He said that they were not clear, but to my mind they are perfectly clear and, on HMRCs case, clearly wrong. In the respondents printed case Mr Johnston sought to meet the difficulty by submitting that throughout Part 7 market value has the same meaning, but that the particular asset being valued is not the same under each chapter. He did not accept that there is any inconsistency in treating extrinsic rights as relevant to valuation under Chapters 2, 3, 3A and 3B but as irrelevant to valuation under Chapter 3D. (Chapter 3C is an exceptional case because the fact that shares are not fully paid up must be an intrinsic matter: see sections 446Q(3), 446R(2) and 446T(2).) One possible reason for the difficulties in applying Part 7 consistently is the very wide definition of securities in section 420(1). It includes not only shares and debentures but also (in paras (c), (d), (f) and (g)) a wide variety of contractual choses in action under financial instruments. Some chapters of Part 7 also refer to interests in securities (defined in section 420(8)). The distinction between intrinsic and extrinsic rights is much less obvious when some of these extended meanings of securities are in play. That may help to explain why Part 7 is so difficult, but it does not solve the difficulties. The principle that tax is to be charged only by clear words may be less potent than it was, but it is still relevant to the construction of taxing statutes. I am left in real doubt as to whether Parliament has, in Part 7 of ITEPA 2003, enacted a scheme which draws a coherent and consistent distinction between intrinsic and extrinsic rights attaching to shares and other financial instruments. For that reason I think it unnecessary to invite further submissions on Russell v Northern Bank Development Corpn Ltd. But that is not the end of the matter, since some rights, even if properly described as intrinsic to the property to be valued, are nevertheless worthless to the hypothetical purchaser posited by the statutory definition of market value. So I go on to the second point of controversy, that is whether Mr Gibsons rights under the subscription agreement, even if assumed to be, or treated as, intrinsic, produce the result that Timber Products contends for. It is implicit in that contention that on their acquisition by Jewson each of Mr Gibsons shares had a market value about three times greater than each of the shares owned by the other shareholders. Standing in the shareholders shoes That would be a very surprising result. Jewson agreed to buy Group for 6m less a retention, and all the ordinary shares which it acquired were of equal value to it. It was not concerned with the division of the sale price between the vendors (clause 3.2.1 of the sale agreement) except so far as it might involve adverse tax consequences to Groups subsidiary, Timber Products (clause 4A, clause 9 and schedule 9 of the sale agreement). The same would have been true of any other open market purchaser. Mr Gibsons special rights were peculiar to his position as a director of Group and managing director of Timber Products, as was clearly acknowledged in clause 6.1 of the subscription agreement. His rights were not assignable (clause 9 of the subscription agreement). These rights would have been personal to Mr Gibson even if they had been set out expressly in the new articles adopted by Group when the subscription agreement was entered into. A right can be personal even though it is intrinsic in the sense previously discussed, since class rights can be enjoyed by a class with only one member. Such rights were quite common in the articles of family estate companies formed during the 1930s with a view to saving estate duty. There is an illustration in Dymonds Death Duties, 10th edition (1946) p.61 of a man who owned all the A shares of an estate company, the B shares being held by other members of his family. The A shares were entitled, during his lifetime, to dividends of up to 150% in priority to the B shares; on the deceaseds death they became 6% non participating preference shares. This device was blocked by section 46 of the Finance Act 1940, but until then it avoided estate duty because the A shares had little value on the deceaseds death. The Estate Duty Office accepted that the special rights that he had during his lifetime could not be attributed to the hypothetical open market vendor, and could not benefit the hypothetical open market purchaser, on the notional sale on the deceaseds death posited by section 7(5) of the Finance Act 1894. Mr Sherry argued that Mr Gibsons special rights must be taken into account and treated as enuring for the benefit of the hypothetical vendor. In the Court of Session Lord Osborne accepted that submission (para 46) but I respectfully consider that he went on to undermine his own conclusion when he referred (para 47) to clause 6.1 of the subscription agreement. That clause made it plain that Mr Gibson was to get a special price for his shares, not because the shares themselves had a special value, but in recognition of his personal services as managing director. Lord Kingarth (paras 67 and 68) recognised the significance of clause 6.1 and considered that Mr Gibsons rights were personal rights that did not attach to the shares. Lord Mackay of Drumadoon (paras 87 89) took the same, or a very similar, view. I am in substantial agreement with the majority of the Court of Session, except that I would reach the same conclusion even if the rights did in some sense attach to Mr Gibsons shares: whether attached or unattached, they were of no value to the hypothetical purchaser, and he would pay the hypothetical vendor nothing extra on account of them. Mr Sherrys argument on this point relied on the homely metaphor which judges have often used, of asking what the hypothetical purchaser would pay to stand in the shoes of the hypothetical vendor. The first use of this expression seems to have been by Lord Ashbourne C and Fitzgibbon LJ in Jameson at pp 227 and 230. The point of the metaphor, I think, is to emphasise that the valuer is concerned with the position of the hypothetical purchaser immediately after the notional sale, rather than worrying about how that sale could take place (perhaps in contravention of the companys articles, which was the real point of dispute in Jameson). There is nothing in the speeches to suggest that the hypothetical purchaser was to be presumed to be a male member of the Jameson family in order to facilitate a transfer under article 18 of the articles of John Jameson & Son Ltd. Mr Sherry also relied on the decision of the Court of Appeal in Alexander v Inland Revenue Comrs (1991) 64 TC 59. That was a case about valuation of a flat for the purposes of capital transfer tax on the death of Mrs Alexander. She had bought a flat in the Barbican under the right to buy provisions of the Housing Act 1980 at the discounted price of 35,400, representing a discount of 24,600. She died within a year. The flat was (both before and after her death) subject to a charge to repay all or part of the discount if the flat was assigned within five years of its acquisition. This liability would not be triggered by an assent in favour of a beneficiary under the deceaseds will or intestacy. Her executor contended for a valuation of 35,400, deducting the full discount. The Inland Revenues valuer contended for a reduced deduction of about 13,000, reflecting his assessment of the likelihood of an actual sale during the remainder of the five year period. There was a procedural issue as to whether the matter should be determined by the Lands Tribunal or the Special Commissioners. The Court of Appeal remitted the case to the Lands Tribunal but gave a clear direction as to the valuation principle to be applied. Its decision would have given some support to the appellant if it had directed that the notional sale of Mrs Alexanders flat must for valuation purposes be treated as having triggered an immediate liability for the full 24,600 under the Housing Act charge. But that was not the direction. It was that the notional sale should not be treated as triggering the repayment liability, but that the hypothetical purchaser would be in the position of having to pay off the charge if he made an assignment during the remainder of the five year period (see Ralph Gibson LJ at pp 70 72 and Nicholls LJ at pp 75 76). The implications of the hypothesis of a sale are not to be taken too far. Ralph Gibson LJ, at p 73, referred to what Lord Guest had said in In re Sutherland, decd [1963] AC 235, 262: The purpose of section 7(5) . is to value the property. It does not as Lord Evershed said require you to assume that the sale . has occurred. It simply prescribes, as the criterion for value, price in the open market as between a willing seller and a willing buyer, which is a familiar basis for valuation. Similarly, in this case, the valuation does not have to take account of the actual sale of Mr Gibsons shares at a special price enhanced for reasons related to Mr Gibsons special position as managing director. Mr Sherry asked permission to raise an entirely new argument, set out in para 12 of his printed case, to the effect that the subscription agreement constituted an employment related security in its own right. This argument would have represented a wholly novel approach to the case and would have occupied some time in oral argument. The Court would not have had the benefit of the views of the Court of Session on it. The Court decided that it would not be right to entertain this argument, which seems to fall far short of the test (for admission of an entirely new point on a final appeal) laid down in Brady v Brady [1989] AC 755. For these reasons I would dismiss the appeal. I express the hope that Parliament may find time to review the complex and obscure provisions of Part 7 of ITEPA 2003. LORD HOPE I accept with gratitude Lord Walkers summary of the facts of this case and of the statutory provisions which have given rise to this appeal. As he has said, it is common ground that Mr Gibsons shares were employment related securities within the meaning indicated by section 421B(8) of ITEPA 2003 as inserted by section 140 of and Schedule 22 to the Finance Act 2003, that he was an associated person within the meaning indicated in section 421C and that no other associated person was beneficially entitled to those shares after they had been acquired by Jewson. The question is whether his disposal of those shares was for a consideration that exceeded their market value at the time of the disposal, with the result that Chapter 3D of Part 7 of ITEPA 2003 applies to the transaction. The argument in the Inner House of the Court of Session concentrated on the question whether the market value of the shares falls to be assessed by reference to the price that Mr Gibson was entitled to receive for his shares or by reference to the price that Jewson had to pay to acquire them. This, as Lord Walker has explained in paras 25 and 26, is the first point of controversy in this appeal. The second point of controversy, which was not discussed by the judges of the Extra Division in their opinions, was whether the way the concept of market value is dealt with elsewhere in Part 7 of ITEPA 2003 indicates that Mr Gibsons right on a disposal of the shares to a disproportionately large part of the price paid by Jewson must be taken into account in assessing their market value. Mr Sherry for Mr Gibson sought permission to raise a third argument. This was that, if the subscription agreement created rights which were not part and parcel of the shares issued to Mr Gibson, it should be treated as an employment related security in its own right and that giving effect to its provisions did not give rise to a payment in excess of its market value for the purposes of Chapter 3D. Mr Sherry said that in the Extra Division Lord Mackay of Drumadoon had in substance adopted this approach: 2009 SLT 307, para 90. It is true that Lord Mackay said there that payment of the enhanced amount to Mr Gibson was the equivalent of the settlement of a debt due under the subscription agreement. But the consequences of that approach were not explored below, and they are not at all easy to determine. The argument that Mr Sherry sought to develop on this point is not one that can properly be raised for the first time in this court. There was a division of opinion in the Inner House on the first question. Lord Osborne said that the formula which was described in clause 4.2.1 of the subscription agreement should be seen as conferring rights on Mr Gibsons shares as regards the payment to be received on their disposal, and that the effect of the sale agreement was that the purchaser specifically agreed with each and every vendor that the payments specified in column (3) of schedule 1 would be made to the appropriate vendor: paras 46 49. I agree with these propositions as far as they go. But I think, with respect, that this approach fails to address the crucial question under section 272 of the Taxation of Chargeable Gains Act 1992 which defines the expression market value. In estimating the market value attention must be focussed on the asset that requires to be valued. In this case it is the rights attached to the shares acquired by the purchaser, no more and no less. I agree with the majority that what has to be considered, to determine their market value for the purposes of the statute, is what the hypothetical purchaser would pay to acquire those rights at the relevant date: Lord Kingarth at para 59 and Lord Mackay of Drumadoon at para 87. Mr Gibsons right to an enhanced payment had a value to him, but that right was not the subject of the transaction as it did not transmit to the purchaser. What the purchaser acquired and paid for was the rights attached to the shares themselves and nothing else. Mr Gibsons rights under the subscription agreement between him and the other shareholders who were parties to it were given effect when the transaction was entered into, but for the purposes of section 446X of ITEPA 2003 they must be disregarded. Mr Sherry submitted that the rights which Mr Gibson had under the subscription agreement were close enough to being class rights and that, even if that was not so, they attached to the shares for the time being as the terms on which they were issued to him. The fact that the subscription agreement had been approved by a special resolution that was passed at an extraordinary meeting was also significant. The holders of 83.8 per cent of the issued share capital, who were the parties to the subscription agreement, were in a position to secure the passing of that resolution, and it was inevitable that the purchaser would pay Mr Gibson a share of the price which satisfied his entitlement under that agreement. The practical result of these arrangements was that no purchaser would be able to acquire the share capital of the company without seeing that the subscription agreement was satisfied or brought to an end. Attractively put though his argument was, it seemed to me to miss the point. No doubt Mr Gibson was assured that he would be entitled upon a sale of the companys share capital to the enhanced price that the subscription agreement provided for. But that was, in essence, because of the agreement entered into between him and the other 83.8 per cent shareholders. It was for this reason that the terms agreed with the purchaser extended to how the price was to be divided up between the shareholders. They were designed to give effect to the rights enjoyed by Mr Gibson. But those rights, which were extinguished by the payment which Mr Gibson received, were not part of the assets acquired by the purchaser. The authorities on which Mr Sherry relied did not seem to me to meet this fundamental objection to this part of his argument. In Attorney General v Jameson [1905] 2 IR 218, 226 227 the question was what market value should be attached to shares in a private company on the death of the shareholder. The directors had power under the articles of association to refuse to register a transfer and there was a right of pre emption in favour of the other members of the company. The argument was that the shares should be deemed to be sold subject to these conditions and restrictions, but it was rejected. The court held that the shares should be valued at the price that they would fetch in the open market on the terms that the purchaser would stand in the shoes of the deceased in other words, that he would take the shares subject to the restrictions and conditions on transfer in terms of the articles. Mr Sherry said that this reasoning should be extended to the terms on which the shares were issued to Mr Gibson, to reflect their value to the holder of the shares. But the terms on which the shares were issued to Mr Gibson were personal to him. They were not provided for in the articles of association of the company and they were of no interest to a hypothetical purchaser. In Salvesen's Trustees v Inland Revenue Comrs 1930 SLT 387, in which the same point was contended for by the taxpayer, Lord Fleming followed the decision in Attorney General v Jameson. As he said at p 391, if the taxpayer was right, it would mean that there could not be a real sale in the open market at all. The shares should be valued at the price which they would fetch if sold in the open market on the terms that the purchaser would be entitled to be registered as the holder of the shares and should take and hold them subject to the provisions in the articles. Those decisions were approved and applied in Inland Revenue Comrs v Crossman [1937] AC 26 and the same reasoning was adopted in In re Lynall, decd [1972] AC 680. Mr Sherry said that in the light of these decisions and the others mentioned by Lord Walker the hypothetical purchaser must be assumed to have had the benefit of the rights vested in Mr Gibson under the subscription agreement at the time of the transaction, whether or not they were real or personal. But I do not find anything in these cases that supports that approach. It is the terms subject to which the purchaser will take and hold the shares that must be considered. In this case they did not include Mr Gibsons rights under the subscription agreement, as they were extinguished on settlement of the transaction. Their purpose was to enable Mr Gibson to enhance the benefits available to him in recognition of his services as managing director of Timber Products. That purpose was served when he received the enhanced share of the consideration that he was entitled to. All the shares in Group that Jewson acquired were of equal value to them from and after the date of settlement. Mr Sherrys alternative argument was that the provisions which were substituted by the Finance Act 2003 for those that were originally enacted in ITEPA 2003 were to be read as a code and that the expression market value should be applied consistently throughout Part 7. He said that the definitions of restricted securities and restricted interest in securities for the purposes of Chapter 2 in the substituted section 423 indicated that Parliament must have had in mind that restrictions and conditions outside the articles could affect their market value. This was because section 423(1) provides: 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. He drew attention to the width of this definition. Furthermore, the calculation of the amount of the charge under that Chapter that section 428 takes account of what the market value of the employment related securities would be immediately after the chargeable event but for any restrictions: section 428(2). This provision, said Mr Sherry, indicated that it was to be assumed for the purposes of this calculation that restrictions outside the articles as well as those contained within them could affect market value. He submitted that this approach should be carried forward consistently into Chapters 3, 3A, 3B, 3C and 3D. For example, section 436, which defines convertible securities for the purposes of Chapter 3, refers to a contract, agreement, arrangement or condition which makes provision for the conversion of the securities, which must be taken to be something found in the governing instrument and outside the articles. As in Chapter 2, this approach was carried through into the charging provisions under this Chapter: sections 437, 440. He sought to draw support for this reading of the substituted provisions from the answers to the frequently asked questions that Lord Walker has quoted in para 34. The Finance Act 2003 received the Royal Assent on 10 July 2003 and they were published on or about that date. The key points were that personal restrictions were to be taken into account and that market value would be determined on a consistent basis throughout Chapters 1 to 5 of Part 7. He submitted that post enactment official statements of that kind could be taken into account as persuasive authority as to the meaning of these provisions: Bennion, Statutory Interpretation, 4th ed (2002), section 232; R v Montila [2004] UKHL 50, [2004] 1 WLR 3141, para 40; Chief Constable of Cumbria v Wright [2006] EWHC 3574 (Admin), [2007] 1 WLR 1407, para 17. But, as Lloyd Jones J said in Chief Constable of Cumbria v Wright, para 17, it is for the courts to interpret legislation, not the executive. Mr Johnston QC for the respondents said that the answers on which Mr Sherry sought to rely, which he accepted could not be reconciled with his argument, were not accurate. The point which mattered in this case was that, while the definition of market value was to be applied consistently, the property to be valued under each Chapter varied. The answers had been withdrawn towards the end of 2005 and replaced by a manual dealing with the taxation of employment related securities from which the points made in the answers were absent. He invited the court not to attach a great deal of weight to them. I agree. I do not think that the points that they make are sufficiently precisely framed to amount to an official statement on the particular issue that arises in this case to carry the persuasive authority that the statement in Bennion contemplates. The provisions that are set out in the various Chapters that appear in Part 7 of ITEPA 2003 are complex, and it is not easy to draw conclusions as to how the charging provisions in each Chapter are to be applied if the overall aim is to achieve consistency. I am in any event not persuaded that it would be right to approach these provisions on the basis that the overriding consideration is that each Chapter should be applied consistently with all the others. As the commentator on the Finance Act 2003 in Current Law Statutes observed, if there is any theme in the Act it is one of anti avoidance and the closing down of perceived tax loopholes. This suggests that the correct approach is to take each Chapter according to its own terms without trying to draw conclusions from the way the common definition of market value is applied elsewhere in Part 7. I would adopt that approach. It is worth noting too that the interval between the enactment of ITEPA 2003, which received the Royal Assent on 6 March 2003, and the enactment of the Finance Act 2003 was very short. ITEPA 2003 was a product of the Tax Law Rewrite Project, which was set up specifically to rewrite most direct legislation in user friendly language. It is regrettable that the substituted provisions in the Finance Act 2003 depart from that approach. That, however, was probably inevitable if the Revenue was to achieve the aim of combating tax mitigation planning which is plain from these provisions. As for Chapter 3D, which is the only Chapter with which we need to concern ourselves in this case, it is as Lord Walker said in para 2 relatively simple and straightforward. I see no escape from the conclusion that the enhanced payment that Mr Gibson received was caught by it and that it is taxable accordingly. For these reasons, and those given by Lord Walker with which I am in full agreement, I would dismiss this appeal and affirm the Extra Divisions interlocutor. LORD RODGER, LORD BROWN AND LORD KERR We are in complete agreement with the judgments of Lord Hope and Lord Walker and, for the reasons that they give, we too would dismiss the appeal. |
This is an appeal from an interlocutor of the Second Division of the Court of Session (Lord Justice Clerk Gill, Lord Osborne and Lord Nimmo Smith) of 15 March 2012 allowing an appeal under section 88(1) of the Agricultural Holdings (Scotland) Act 2003 from a decision of the Scottish Land Court: [2012] CSIH 26, 2012 SLT 633. Section 88(3) of the 2003 Act provides that the decision of the Court of Session in any appeal made to it under section 88(1) is final. But, as the Lord Justice Clerk explained in para 1 of his opinion, the issues in the appeal to that court included the question whether section 72 of the 2003 Act was compatible with the European Convention on Human Rights. Section 29(1) of the Scotland Act 1998 provides that an Act of the Scottish Parliament is not law in so far as any provision of the Act is outside the legislative competence of the Parliament. Section 29(2)(d) provides that a provision is outside competence if it is incompatible with any of the Convention rights. The question whether a provision of an Act of the Scottish Parliament is within the competence of the Parliament is a devolution issue: Schedule 6, para 1(a). Paragraph 13 of Schedule 6 provides for an appeal to this court, with leave, against the determination by the Court of Session of the question whether a provision of an Act of the Scottish Parliament was within the Parliaments legislative competence. The Second Division gave leave to appeal on 29 March 2012. The Lord Advocate appeared as an intervener in the proceedings in the Court of Session on behalf of the Scottish Government. The interlocutor of 15 March 2012 included a finding that the appellants Convention rights had been violated by section 72 of the 2003 Act. The court ordered intimation to the Advocate General for Scotland, and the appeal was continued to a later date on the question of remedy. The Advocate General has not thought it necessary to intervene in these proceedings. The facts Alastair Salvesen, who was the appellant in the Court of Session, owns Peaston Farm, near Ormiston, East Lothian. He purchased the farm in 1998. At that time it was subject to a tenancy held by a limited partnership. The limited partnership had been constituted by a contract of partnership dated 22 August and 2 September 1991. The general partners were John and Andrew Riddell. The limited partner was the nominee of the previous owner of the farm. When Mr Salvesen purchased the farm and became the landlord the limited partners rights were assigned to his nominee. The lease to the limited partnership was dated 17 March, 9 April, 22 April and 27 April 1992. It was to endure until 28 November 2008 and would continue thereafter from year to year by tacit relocation until the limited partnership was dissolved or an effective notice to quit was served under the Agricultural Holdings (Scotland) Act 1991. These provisions were mirrored by the terms of the contract of partnership. The limited partnership was to run until 28 November 2008 and from year to year thereafter, unless notice of dissolution was given in terms of the partnership agreement. On 3 February 2003 the limited partner gave notice to the general partners that the limited partnership would be dissolved on 28 November 2008: for the significance of serving the notice of dissolution on that date, see para 19, below. On 12 December 2008 the general partners gave notice to the landlord under section 72(6) of the 2003 Act that they intended to become the joint tenants of the farm in their own right. Mr Salvesen then applied to the Land Court under section 72(7) for an order under section 72(8) that section 72(6) did not apply. He averred that his intention when he bought Peaston Farm was, when the tenancy came to an end, to amalgamate it with the adjacent farm of Whitburgh and part of the nearby farm of Windymains and Keeper Glen, both of which he had in hand, and farm them as one unit. He had expected that he would obtain vacant possession of Peaston Farm on 28 November 2008, when the lease to the limited partnership was due to end. On 29 July 2010 the Land Court refused his application on the ground that his averments failed to satisfy the requirements of section 72(9)(a)(i) of the 2003 Act. It did not have to determine the devolution issue, as it had not been raised there. The issues in the appeal to the Court of Session included an issue as to the construction of section 72 of the 2003 Act. They also included the devolution issue which is now before this court. The underlying dispute between the parties to the lease was settled during the summer of 2012. Mr Salvesen has chosen not to play any further part in these proceedings, and he seeks no further order of substance from this court or the courts below. But the question whether section 72 is incompatible with the landlords Convention right is a matter of general public importance. It affects many other cases, several of which are already the subject of proceedings before the Land Court. So the appeal to this court against the interlocutor of 15 March 2012 is being maintained by the Lord Advocate. Mr Wolffe QC and Mr Burnet were appointed as advocates to the court, and the court is grateful to them for their helpful submissions both orally and in writing. The 2003 Act For much of the post war period, since the enactment of the Agricultural Holdings (Scotland) Act 1948 which was later consolidated in the Agricultural Holdings (Scotland) Act 1991, agricultural tenants enjoyed indefinite security of tenure under the statute. In most cases, a notice to quit served by the landlord would, if the tenant served a counter notice, be effective only if the Land Court consented, and the Land Court could consent only in defined circumstances. Relatives of the tenant could succeed to the tenancy. But the practice had grown up of granting new agricultural tenancies to limited partnerships constituted under the Limited Partnerships Act 1907 in which the landlord or his nominee was the limited partner and the tenants of the farm were the general partners. Dissolution of a limited partnership by one of the partners giving notice to the others determines the partnership at the date when the notice takes effect. The remaining partners cannot carry on the business of the firm, as it has been dissolved: J Bennett Miller, The Law of Partnership in Scotland (2nd ed), p 460. So when the partnership was dissolved there ceased to be anyone who could claim to be the tenant under the tenancy: see Inland Revenue v Grahams Trustees 1971 SC (HL) 1, 20, per Lord Reid; Gill, The Law of Agricultural Holdings in Scotland (3rdth ed), para 1.13. As the legislation gave tenants what in practice amounted to indefinite security of tenure, landlords were reluctant to let agricultural land on any other basis. The practice of letting to limited partnerships became widespread. In MacFarlane v Falfield Investments Ltd 1998 SC 14 it was submitted that the use of limited partnerships was against the public interest. Greater importance, it was said, should be given to the protection of security of tenure for agricultural tenants over artificial transactions of that kind. The court did not accept that argument. Lord President Rodger said at p 34 that it was not for the court to second guess those who were charged with policy on that matter and to strike down schemes simply on the basis of its uninstructed view of what might be contrary to the public interest in good husbandry. But it had come to be recognised more generally that there was a need for a new statutory pattern for the letting of agricultural land. A system was needed which could offer security of tenure to the tenant, and to the landlord the prospect of recovering vacant possession at the end of a fixed term agreed by the parties before the tenancy began. In May 2000 the Scottish Executive published a white paper entitled Agricultural Holdings Proposals for Legislation (SE/2000/51) which proposed that a new limited duration tenancy should be created and that, with the creation of limited duration tenancies, it should no longer be possible to create new limited partnership tenancies. The 2003 Act was enacted against that background. Section 1(4) of the 2003 Act provides that where, in respect of a tenancy of an agricultural holding, a lease is entered into before the coming into force of that subsection and the 1991 Act applies in relation to the tenancy, the tenancy under the lease is referred to in the Act as a 1991 Act tenancy. That expression also includes a tenancy under a lease which was entered into on or after the coming into force of the subsection, provided the lease was entered into in writing prior to the commencement of the tenancy and it expressly states that the 1991 Act is to apply to it: section 1(2), read with section 1(4). Part 6 of the 2003 Act is entitled Rights of certain persons where tenant is a partnership. They include provision in section 74 for the application by the Scottish Ministers of the right to buy provisions in Part 2 of the Act to partnerships who are tenants. The issues which arise in this case relate, however, to the provisions of section 72, which is headed Rights of certain persons where tenant is a limited partnership. To put those provisions into their context reference must also be made to sections 70 and 73 of the 2003 Act, which are also included in Part 6. Section 70 applies to tenancies where the tenant is a partnership. The partnership to which it refers need not be a limited partnership. It applies to a 1991 Act tenancy if the lease constituting the tenancy is entered into on or after the coming into force of that section where the tenant is a partnership: section 70(1). It is designed to deal with cases where any partner is the landlord or an associate of the landlord, or a partnership of a company in which the landlord has an interest of the kind referred to in section 70(7), and there is any other partner: section 70(2). In such cases, a purported termination of the tenancy as a consequence of, among other things, the dissolution of the partnership in accordance with the partnership agreement attracts the provisions of sections 70(5) and (6), which state: (5) Where this subsection applies, notwithstanding the purported termination of the tenancy (a) the tenancy continues to have effect; and any partner not mentioned in subsection (2)(a) [the landlord or (b) the partnership or company in which he has an interest] becomes the tenant (or a joint tenant) under the tenancy in the partners own right, if the partner gives notice to the landlord in accordance with subsection (6). (6) Notice is given in accordance with this subsection if (a) it is in writing; (b) it is given within 28 days of the purported termination of the tenancy; and (c) it states that the partner intends to become the tenant (or a joint tenant) under the tenancy in the partners own right. The effect of these provisions is that, if the landlord seeks to bring the tenancy to an end and the non landlord partner gives notice in accordance with section 70(6), the tenancy will continue in existence but with the non landlord partner as tenant in his own right. Section 72 is designed to deal with cases where the tenant is a limited partnership, and any limited partner is the landlord or an associate of the landlord or is a partnership or a company in which the landlord has an interest of the kind referred to in section 70(7). In such cases any general partner may exercise or enforce the right to buy provisions in Part 2 of the Act unless the conditions in section 72(5) are met. But the section also provides that a purported termination of the tenancy as a consequence of, among other things, the dissolution of the partnership by notice served on or after 16 September 2002 by a limited partner of the kind referred to above attracts the provisions of sections 72(3) to (10). These are the provisions to which the issue of incompatibility with the landlords Convention right is directed. Section 72(3) provides that, in the event of such a termination, subsection (6) applies subject to subsection (4). Subsections (4) to (10) are in these terms: the conditions mentioned in subsection (5) are met; or the Land Court makes an order under subsection (8). (4) Subsection (6) does not apply if (a) (b) (5) For the purposes of subsections (2) and (4)(a), the conditions are (a) that in (i) a (or the) notice of dissolution of the partnership has been (or was) served before 4th February 2003 by a limited partner mentioned in subsection (1)(b); and the partnership has been dissolved (ii) accordance with the notice; and (b) that the land comprised in the lease (i) has been transferred or let; (ii) under missives concluded before 7th March 2003, is to be transferred; or (iii) under a lease entered into before that date, is to be let, to any person. (6) Where this subsection applies, notwithstanding the purported termination of the tenancy (a) the tenancy continues to have effect; and (b) any general partner becomes the tenant (or a joint tenant) under the tenancy in the partners own right, if the general partner gives notice to the landlord within 28 days of the purported termination of the tenancy or within 28 days of the coming into force of this section (whichever is the later) stating that the partner intends to become the tenant (or a joint tenant) under the tenancy in the partners own right. (7) Where (a) a tenancy continues to have effect by virtue of subsection (6); and notice mentioned in paragraph (a) of subsection (b) the (i) (3) was served before the relevant date; or (ii) subsection occurred before that date, thing mentioned in paragraph (b) or (c) of that the landlord may, within the relevant period, apply to the Land Court for an order under subsection (8). (8) An order under this subsection (a) is an order that subsection (6) does not apply; and (b) has effect as if that subsection never applied. (9) The Land Court is to make such an order if (but only if) it is satisfied that (a) the notice mentioned in paragraph (a) of subsection (i) (3) was served otherwise than for the purposes of depriving any general partner of any right deriving from this section; or thing mentioned in paragraph (b) or (c) of that (ii) subsection occurred otherwise than for that purpose; and (b) it is reasonable to make the order. (10) Where (a) a tenancy continues to have effect by virtue of subsection (6); and (b) the (i) (3) was served on or after the relevant date; or (ii) subsection occurred on or after that date, thing mentioned in paragraph (b) or (c) of that notice mentioned in paragraph (a) of subsection section 73 applies. Section 72(11) provides that, for the purposes of subsections (7) and (10), the relevant date is such date as the Scottish Ministers may by order specify and that, for the purposes of subsection (7), the relevant period is the period from the relevant date to such date as they may so specify. Section 72(12) provides that in that section the expressions limited partnership, limited partner and general partner are to be construed in accordance with the Limited Partnerships Act 1907. The relevant date is 1 July 2003. The relevant period ended on 29 July 2003 or on the date 28 days after the general partner gave notice under section 72(6), whichever was the later: Agricultural Holdings (Relevant Date and Relevant Period) (Scotland) Order 2003 (SSI 2003/294). Section 73 is headed Termination of tenancy continued under section 72. Where it applies, the provisions of section 21 of the 1991 Act about notice to quit and notice of intention to quit do not apply: section 73(1). Section 73(3) provides that the tenancy may be brought to an end by the landlord if the landlord gives notice to the tenant under that subsection. Section 73(4) provides that, subject to subsection (7) (which provides for the making by the Land Court, on an application by the landlord under subsection (6), of an order that, instead of the periods of time mentioned in subsections (4) and (5), such shorter periods as the Land Court may specify are to apply), a notice under subsection (3) must: (a) be in writing and state that the tenant shall quit the land on the expiry of the stipulated endurance of the lease constituting the tenancy (or, where the lease has continued in force by tacit relocation, on the expiry of a period of continuation); and (b) be given not less than one year nor more than two years before the expiry of the stipulated endurance of the lease (or expiry of the period of continuation), provided that not less than 90 days have elapsed from the date on which the intimation mentioned in subsection (5) is given. Section 73(5) provides that, subject to subsection (7), a notice under subsection (3) is of no effect unless the landlord has given written intimation of the landlords intention to terminate the tenancy to the tenant not less than two years nor more than three years before the expiry of the stipulated endurance of the lease (or expiry of the period of continuation). The history of the legislation The background to the introduction of the Agricultural Holdings (Scotland) Bill to the Parliament on 16 September 2002 and the history of its passage through its various stages to its passing on 12 March 2003 and the Royal Assent on 22 April 2003 were described very fully and helpfully by the Lord Justice Clerk in paras 7 to 33 of his opinion. Much of it has no direct bearing on the devolution issue which is before this court, so I do not think it necessary to go over these matters in detail. The following points are however worth noting. The use of limited partnerships with a fixed duration was devised by the market to deal with the greatly reduced value of the landlords interest that was the result of the security of tenure that had been conferred on the agricultural tenant as part of the post war reorganisation of British agriculture. Although this was not objectionable in principle, the flexibility that the system gave to the landlord as to the duration of the tenancy was not attractive to tenants. This was not only because of the reduction in their security of tenure. There was also an upward pressure on open market rents due to the competition for limited partnership lets. An attempt was made in 1983 to proscribe such lets by way of a proposed amendment to the Agricultural Holdings (Amendment) (Scotland) Bill, but it was unsuccessful. It was to this issue that the Scottish Government directed attention when its white paper Agricultural Holdings Proposals for Legislation was published in May 2000. But in the last sentence of para 2.9 of the white paper it was stated that existing leases where the tenant was a limited partnership would not be affected by its proposals. That remained the position when the Bill was introduced on 16 September 2002. An indication that existing tenancies where the tenant was a limited partnership might after all be affected was given by the Minister for the Environment and Rural Development, Ross Finnie MSP, in a letter to the convener of the Parliaments Rural Development Committee of 19 November 2002. He said that he had not yet closed his mind to the option of providing a right to buy for existing general partners in 1991 Act tenancies where the tenant was a limited partnership, adding that while the consultation on the draft Bill had not revealed much support for this, a number of tenants had separately urged him to extend the right to buy in this way. On 3 February 2003 a marshalled list of amendments for stage 2 was published by the Parliament. It included a proposed new section 58A that was to apply to existing limited partnerships. It would enable the general partner, in the event of the service by the limited partner of a notice of dissolution of the partnership during the period from 4 February 2003 to a date to be specified later by the Scottish Ministers, to apply to the Land Court for an order that the tenancy was to continue with the general partner as tenant in his own right. This was, albeit in substantially different terms, the precursor of what is now section 72 of the 2003 Act. The limited partner in this case served his notice of dissolution on 3 February 2003. So it was not affected by the proposed amendment, which was agreed to by the committee. A further list of marshalled amendments for stage 3 was published on or about 10 March 2003. Among them was an amendment to section 58A which moved the start date of the period on or after which a notice of dissolution would trigger its application back to 16 September 2002. It also provided that the landlord could apply to the Land Court for an order that the provision that the general partner was to continue as tenant in his own right was not to apply, but that the Land Court could make such an order only if it was satisfied that the dissolution notice had been served otherwise than for the purposes of depriving any general partner of any right derived from the section and that it was reasonable to make the order. As the Lord Justice Clerk observed in para 28 of his opinion, this greatly weakened the position of the landlord in comparison with the position he would have been in under section 58A in its original form. Under the previous amendment the general partner could become tenant only if he applied to the Land Court and established specific grounds for his application. The March 2003 amendment was also retrospective. It caught notices of dissolution that had been served in the period since 16 September 2002 when the Bill was introduced. They included the notice of dissolution that was served in this case. This marshalled list of amendments also included an amendment which inserted a further section into the Bill, to follow section 58A. This was the precursor of what is now section 73 of the 2003 Act. It was to apply where the tenancy continued to have effect by virtue of what are now sections 72(6) and 72(10). It allowed the landlord to terminate the tenancy at the end of its contractual period by giving intimation of his intention to do so and then serving a notice to quit. It is this section, and the conditions for its application in section 72(10)(b)(i) and (ii), that gives rise to the devolution issue in this case. The issues in the appeal (a) prematurity The appeal to the Court of Session related solely to an issue about the construction of section 72(9) of the 2003 Act. The Land Court held that, despite Mr Salvesens explanation for it, the main purpose of the limited partners notice had been to avoid the risk that a provision in the proposed new Act would prevent him from terminating the tenancy on 28 November 2008. The question for the Court of Session was whether the Land Court had construed section 72(9)(a) too narrowly, having regard to the purpose of that provision. The Second Division held that the test that should have been applied by the Land Court was whether the notice was served with an underlying purpose that was not simply to prevent the general partner from acquiring rights under the legislation. The words not simply were to be read into section 72(9)(a)(i) to give content to the subsection. A purpose other than that to which it referred would exist where the landlord served the notice in implementation of a pre existing plan, for the fulfilment of which dissolution of the partnership in accordance with the partnership agreement was a necessary step. The Land Court had therefore erred in dismissing the application, and the landlord was entitled to a proof of his averments as to the reason why the notice was served: paras 65 67. The Second Division recognised, however, that the landlord might fail to prove his case under section 72(9)(a)(i) or, having proved it, might fail to satisfy the Land Court on the reasonableness test set out in section 72(9)(b). In either of these events the Convention arguments that had been submitted to it on the landlords behalf would become decisive. The Lord Justice Clerk said that the Convention based questions remained live and that, as a decision on those questions could make further procedure in the Land Court unnecessary and they were of such general importance, they were better considered now rather than later: para 69. So he proceeded, on behalf of the court, to give his opinion on these issues. Mr Mure QC for the Lord Advocate submitted that the Second Divisions finding that the landlords rights were violated by section 72 was premature and unnecessary, as the effect of its decision on the construction issue was that the question whether Mr Salvesen was entitled to an order under section 72(8) was still pending before the Land Court. I would reject that argument for the reasons given by the Lord Justice Clerk in para 69. Events have, of course, moved on since he delivered his opinion. The parties have settled their differences and there is no longer any need for the case to be remitted to the Land Court. The Convention issues remain, however. They are of general public importance, and the sooner any uncertainty as to how they should be answered is resolved the better. The best course in these circumstances is for them to be resolved in this appeal. (b) the Convention issues As the Second Divisions interlocutor of 15 March 2012 makes clear, the argument that section 72 is incompatible with the landlords Convention rights relies on article 1 of the First Protocol to the European Convention on Human Rights, read together with article 14 of the Convention. There are three questions that need to be addressed under this heading: (i) is section 72 incompatible with that Convention right? (ii) if not, can it be construed in such a way as to make it Convention compliant? (iii) if it cannot be so construed, what is the appropriate remedy? The Second Division's opinion on these questions The Second Division proceeded initially on the basis that section 72 was enacted as an anti avoidance measure. But it held on that basis that it was inappropriate because of its excessive effect and its arbitrary scope: paras 80 85. The Lord Justice Clerk said that it was excessive because, if the landlord should fail to obtain an order of the Land Court under section 72(9), the general partner is given a 1991 Act tenancy of the holding, with all the adverse consequences to the landlord that this involves, and the landlord is also exposed to the tenants contingent right to buy. It was unreasonably discriminatory against the landlord on whose land a 1991 Act tenancy is imposed because of his failure to obtain an order under section 72(9), as a landlord who serves notice of dissolution on or after 1 July 2003 (see para 15, above) has the opportunity under section 72(10)(b)(i) to bring the tenancy of the former general partner to an end by an incontestable notice to quit under section 73. It was arbitrary because its prejudicial consequences affect all notices of dissolution served in the period from 16 September 2002 to 30 June 2003, no matter how long the period of notice is. It was also arbitrary because it continues to apply for what appears to be a random period of one month and eight days from the coming into force of section 72 on 22 May 2003 to the coming into force on 1 July 2003 of section 73: Agricultural Holdings (Scotland) Act 2003 (Commencement No 1) Order 2003 (SSI 2003/248); Agricultural Holdings (Scotland) Act 2003 (Commencement No 2) Order 2003 (SSI 2003/305). Asking himself whether any alternative justification of section 72 could be found, the Lord Justice Clerk examined the justification that had been offered for this provision to the Parliament. He referred in paras 87 92 to passages in the speeches of the deputy minister in the debates at stages 2 and 3 of the Bill which indicated that the provisions of section 72 were essentially punitive. Its inclusion at stage 3 was a retaliatory act based on the ministerial view that dissolutions effected in anticipation of the legislation were immoral. In para 95 he said that he could see no reason why the service of notices of dissolution during the period before the amendment of March 2003 was published was deserving of any form of penalty. This was lawful under the existing law, and would have been unaffected by the proposals for law reform that were current at the time. For these reasons the Lord Justice Clerk said that he was unable to find any convincing justification for the differential treatment of landlords in sections 72 and 73, or that section 72 pursued an aim that was reasonably related to the overall aims of the legislation: para 97. He was also unable to see how section 72(9) could be read in such a way as to avoid the harsh consequences to landlords that were prescribed by that section for notices served before 1 July 2003 in comparison with the consequences for notices served after that date. As section 72 could only be read in a way that was incompatible with the Convention right it was, to some extent, outwith legislative competence: para 103. Two questions then arose, namely (i) the means of severance of the offending parts of the legislation, if severance was possible; and (ii) the orders, if any, that the court should make to deal with the consequences under section 102 of the Scotland Act 1998. The Second Division was not fully addressed on these issues and, as it was of the opinion that the case could be appropriate for the making of an order under that section, it ordered intimation of the proceedings to the Advocate General as required by section 102(4)(b). It appointed 29 March 2012 for a hearing on the question of remedy and the possible application of section 102: paras 105 106. That hearing did not take place, however, as on 29 March 2012 the Second Division granted leave under para 13 of Schedule 6 to the 1998 Act for an appeal to this court against the Court of Sessions determination of the devolution issue. Article 1 of the First Protocol Article 1 of the First Protocol (A1P1) is about the protection of property. It is in these terms: Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties. Article 14 of the Convention prohibits discrimination in the enjoyment of the right to the protection of property under A1P1. It provides: The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. The Lord Advocate contended in the Court of Session that A1P1 was not engaged: see 2012 SLT 633, para 71. But that was no longer his position in this court. He accepts that the article is engaged, due to the potential control of use that may result in the event that the landlords application under section 72(9) fails and there is no order in his favour under section 72(8). I think that his acceptance that A1P1 is engaged was unavoidable. The consistent jurisprudence of the Strasbourg court shows that a restriction on a landlords right to terminate a tenants lease constitutes control of the use of property within the meaning of the second paragraph of the article: Barreto v Portugal (Application No 18072/91) (unreported) 21 November 1995, para 35; Spadea v Italy (1995) 21 EHRR 482, para 28; Gauci v Malta (2009) 52 EHRR 818, para 52. The question which then arises is as to the proportionality of the interference. The tests to be applied are now firmly established. The second paragraph of A1P1 must be construed in the light of the principle laid down in the first sentence of the article: James v United Kingdom (1986) 8 EHRR 123, para 37. An interference must achieve a fair balance between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights: Sporrong v Sweden (1982) 5 EHRR 35, para 69. The search for this balance is reflected in the structure of the article as a whole and therefore also in the second paragraph: Mellacher v Austria (1989) 12 EHRR 391, para 48. There must be a reasonable relationship of proportionality between the means employed and the aim pursued: James v United Kingdom, para 50; Mellacher v Austria, para 48. In Lindheim and others v Norway, (applications nos 13221/08 and 2139/10) (unreported), given 12 June 2012, para 119, the court began its assessment by setting out the principles about achieving a fair balance that were restated by the Grand Chamber in Hutten Czapska v Poland (2006) 45 EHRR 52, paras 167 168: 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. 168. In assessing compliance with article 1 of Protocol No 1, the court must make an overall examination of the various interests in issue, bearing in mind that the Convention is intended to safeguard rights that are practical and effective. It must look behind appearances and investigate the realities of the situation complained of. In cases concerning the operation of wide ranging housing legislation, that assessment may involve not only the conditions for reducing the rent received by individual landlords and the extent of the States interference with freedom of contract and contractual relations in the lease market but also the existence of procedural and other safeguards ensuring that the operation of the system and its impact on a landlords property rights are neither arbitrary nor unforeseeable. Uncertainty be it legislative, administrative or arising from practices applied by the authorities is a factor to be taken into account in assessing the States conduct. Indeed, where an issue in the general interest is at stake, it is incumbent on the public authorities to act in good time, in an appropriate and consistent manner. The provisions of section 72, and the legislative steps that led to its enactment, must be examined against this background. There is no doubt that, as regards the question whether it is pursuing a legitimate aim in the general interest, the Parliament has a broad area of discretion in the exercise of its judgment as to social and economic policy: Hutten Czapska v Poland, paras 164 166; Gauci v Malta, para 54. Provided that the legislature remains within the bounds of its margin of appreciation, it is not for the court to say whether the legislation represents the best solution for dealing with the problem or whether the legislative discretion should have been exercised in another way: James v United Kingdom, para 51; Mellacher v Austria, para 53. But there must be a fair balance if the requirement of proportionality is to be satisfied. The balance that must be struck is between the demands of the general interest of the community and the requirements of the protection of the fundamental rights of the individual. The question is whether the general interest demands in this case were sufficiently strong to justify the extent of the prejudice that the legislation gives rise to: Lindheim and others v Norway, para 129. Some of the remarks by the deputy minister to which the Lord Justice Clerk referred in paras 87 92 of his opinion might be taken to indicate that the intention was to punish landlords who served notices between 16 September 2002 and 4 February 2003 for conduct that the deputy minister described in col 16317 during the debate at stage 3 on 12 March 2003 as immoral. But in Wilson v First County Trust Ltd (No 2) [2003] UKHL 40, [2004] 1 AC 816, para 66, Lord Nicholls of Birkenhead issued an important warning. He said that one must be careful not to treat a ministerial or other statement as indicative of the objective intention of Parliament. It should not be supposed that members necessarily agreed with the ministers reasoning or his conclusions. A reader of what the deputy minister said during that debate might be forgiven for thinking that it displayed a marked bias against landlords. If there was, this was a regrettable attitude for a minister to adopt in a system where both the legislature and the executive are required to act compatibly with the Convention rights. As a minority group landlords, however unpopular, are as much entitled to the protection of the Convention rights as anyone else: see RB (Algeria) v Secretary of State for the Home Department [2009] UKHL 10, [2010] 2 AC 110, para 210, where attention was drawn to the use throughout the Convention of the word everyone. In the present context this means that the rights and freedoms that it guarantees are not just for tenants, although their interests are important. They are for landlords too. But this is a case about the legislative competence of the Parliament, not about acts of the Scottish Government. The question whether section 72 is incompatible with the Convention right must be judged primarily by what the section provides, not by what was said by the deputy minister. That is not to say that what he said in support of the amendment which he introduced at stage 3 is irrelevant. It is important information as to the purpose for which the legislation was being proposed. He drew attention to the large number of dissolution notices that had been served due to the desire of landlords to avoid being adversely affected by any of the amendments that were under discussion, including the possible introduction of a right to buy. Mr Mure said that the mass service of these notices was a deliberate step of avoidance at a stage when the Bill, which had been designed to implement key social and economic policies, was still being debated. It was to deal with this situation that the amendment that was brought forward at stage 3 was introduced. A measure designed to deal with this situation can, in my opinion, be said to have had a legitimate aim. As the court said in Bck v Finland (2004) 40 EHRR 1184, para 68, it must be open to the legislature to take measures affecting the further execution of previously concluded contracts in order to attain the aim of the policy that was being adopted. Legislation which is retroactive is not necessarily incompatible with A1P1: MA v Finland (2003) 37 EHRR CD 210, 217. As the court pointed out in that case, retrospective legislation is not as such prohibited by that provision. The question is whether the retrospective application of section 72 imposed an unreasonable burden on landlords who had served notices before 1 July 2003, and thereby failed to strike a fair balance between their interests on the one hand and preserving the integrity of the legislation on the other. The provision in section 72 which lies at the heart of the argument is subsection (10). Its function is to enable a landlord, in cases where the tenancy continues to have effect by virtue of section 72(6) notwithstanding the purported termination of the tenancy in the circumstances referred to in section 72(3), to obtain the benefit of section 73. It confers a significant benefit as a counterpart to the benefit that the general partner obtains under section 72(6), as it provides that the tenancy may be brought to an end by the landlord by the service of a notice to quit at a time of his own choosing. Where it applies the general partner does not enjoy security of tenure under the tenancy in his own right for an indefinite period. But subsection (10)(b)(i) and (ii) adds a further qualification that must be satisfied if section 73 is to apply. The notice of dissolution or thing mentioned in section 72(3) must have been served or occurred on or after the relevant date which, as specified by order by the Scottish Ministers, is 1 July 2003. The effect of this qualification is to deny the benefit of section 73 to all cases where the tenancy was purportedly terminated between 16 September 2002 and 30 June 2003 but which continue to have effect by virtue of section 72(6). Landlords who served dissolution notices on 3 February 2003 are therefore denied that benefit. They are in a worse position than those who served notices on or after 1 July 2003. So too are landlords who served them at any time after the date when the Bill was introduced, despite the fact that existing leases where the tenant was a limited partnership were not at that stage affected by its proposals and those who served notices before 4 February 2003 were not affected when the new section 58A was introduced on that date at stage 2. The provision is therefore discriminatory in a respect that affects the landlords right to the enjoyment of their property. It is hard not to see this provision as having been designed to penalise landlords in this group retrospectively. The benefit of section 73 is also denied to landlords of continuing tenancies who served dissolution notices during the period of one month and eight days between the coming into force of section 72 and the coming into force of section 73. The penalisation of this group appears to be entirely arbitrary. Mr Mure said that section 72 had to be seen in the context of the situation as it was at stage 3 when the amendment was introduced. The aim was to address what he referred to as the mass service of dissolution notices urgently and to prevent any further steps by way of avoidance. Where there was an urgent need to address that situation it could not be excessive to place all of those who had been serving notices during the passage of the bill into the same category. He did not agree with the description of the effect of section 72(10)(b)(i) and (ii) by the Inner House as punitive. He said that there had been a policy choice to make which was within the margin of discretion that ought to be accorded to the Parliament. It was a legitimate choice which was made in the public interest. It was a question of balance, and the Second Division had erred by placing undue weight on the difference between sections 72 and 73. I am not persuaded that the difference in treatment between landlords of continuing tenancies who served notices after 30 June 2003, for whom the benefit of section 73 was regarded as an appropriate counterweight to the benefit that was conferred on the general partner by section 72(6), and landlords of continuing tenancies who are denied that benefit because they cannot satisfy the tests in section 72(10)(b)(i) or (ii) was justified. The difference in treatment has no logical justification. It is unfair and disproportionate. It is no answer to this criticism to say that there was an urgent need to meet the problem that had been identified. The legislation was intended to have an effect which was permanent and irrevocable. I agree with the Lord Justice Clerks conclusion that section 72 does not pursue an aim that is reasonably related to the aim of the legislation as a whole. On this reading of it, Mr Salvesens rights under A1P1 would have been violated if it had been applied to him. I do not think that any separate issue arises under article 14. All that needs to be said is that the declaration that it contains, which is that the enjoyment of the rights and freedoms set forth in the Convention are to be secured without discrimination on any ground, informs the approach that is to be taken to the question whether there is an incompatibility with A1P1. But it is not just because section 72 is discriminatory that it is incompatible with the landlords rights under that article. The substance of the incompatibility lies within A1P1 itself, in view of the punitive effects of section 72(10)(a) read together with section 72(10)(b)(i) and (ii). Can section 72 be read and given effect compatibly? Section 101(2) of the Scotland Act 1998 provides that a provision of an Act of the Scottish Parliament is to be read as narrowly as is required for it to be within competence, if such a reading is possible, and to be given effect accordingly. But as we are concerned in this case with an issue about compatibility with a Convention right, the proper starting point is to construe the legislation as required by section 3(1) of the Human Rights Act 1998: DS v HM Advocate [2007] UKPC 36, 2007 SC (PC) 1, para 24. The obligation to construe a provision in an Act of the Scottish Parliament so far as it is possible to do so is a strong one, and the court must prefer compatibility to incompatibility. But any section 3 interpretation must, as Lord Rodger of Earlsferry said in Ghaidan v Godin Mendoza [2004] UKHL 30, [2004] 2 AC 557, para 121, go with the grain of the legislation; see also Lord Nicholls of Birkenhead, para 33. It is not for the court to go against the underlying thrust of what it provides for, as to do this would be to trespass on the province of the legislature. As the Lord Justice Clerk pointed out in para 102, the problem that any attempt to construe section 72 compatibly with the landlords A1P1 right has to face is the harshness of the consequence that is prescribed for landlords of tenancies which continue to have effect by virtue of section 72(6) who served notices or in relation to whom the specified things occurred before 1 July 2003, in comparison with the consequences for those whose notices were served or in relation to whom the specified things occurred on or after that date. This is the effect of section 72(10)(a) read together with section 72(10)(b)(i) and (ii), which is expressed in clear and unequivocal language. The underlying message is plain. Only those whose dissolution notices were served or in relation to whom the specified things occurred on or after 1 July 2003 can take advantage of section 73. I do not think that this provision is capable of being read and given effect in any other way. Section 72(9), which sets out the tests that the Land Court must apply when it is considering whether to make an order under subsection (8) that subsection (6) does not apply, is also expressed in clear and unequivocal language. Its purpose, of course, is to ensure that landlords whose only purpose in serving the dissolution notice was to avoid the consequences of legislation that might turn out to be to their disadvantage would be caught by the provision in favour of general partners in subsection (6). The words but only which appear in parenthesis in subsection (9) serve to emphasise the strictness of the test that is to be applied in order to achieve that result. The Second Division held that the words not simply should be read in to the subsection to give content to it. To this extent the test may be more precisely targeted. But it is a test that by no means every landlord will be able to satisfy. It provides no protection for those who cannot do so against the incompatibility with their A1P1 Convention right. For these reasons I agree with the Lord Justice Clerk that section 72 can be read only in a way that is incompatible with the A1P1 Convention right. The question which must then be addressed is whether it is possible to identify and sever the provision within section 72 which is incompatible with the Convention right. That would allow the remainder of the section to remain in force, and so limit the effects of the decision that the section is not within the legislative competence of the Parliament. The Second Division made a finding that Mr Salvesens rights under A1P1 were violated by section 72, but it was not fully addressed on this issue. Having heard fuller argument on the point, this court is in a position to examine it more closely. It has not been suggested that the incompatibility extends to the rights conferred by section 72(2), or to cases of the kind referred to in subsection (5) or to cases where the Land Court has made an order under subsection (8) that subsection (6) does not apply: see also sections 72(3) and (4). There is no reason to think that those provisions are outside legislative competence. Mr Wolffe pointed out that the relationship between section 72 and section 73 should not be overlooked either. Section 73 applies in the circumstances described in section 72(10), and there are no doubt now many leases governed by section 73 in existence. So it would be desirable, if this is possible, to leave section 73 standing. A declaration that section 72 as a whole is outside the legislative competence of the Parliament would deprive section 73 of its effect too. As Mr Wolffe put it, if section 72(10) is not law, that proposition will take section 73 with it. But it is not possible to solve every problem at this stage. It is plain that the whole section needs to be looked at again, as does its relationship with section 73. This is not just a matter of redrafting in order to ensure that all its provisions are compatible with the Convention rights. There are important issues of policy too which the court must leave to the democratic process. But the finding of incompatibility ought not to extend any further than is necessary to deal with the facts of this case, and it is important that accrued rights which are not affected by the incompatibility should not be interfered with. As the incompatibility arises from the fact that sections 72(10)(a) and 72(10)(b) are so worded as to exclude landlords of continuing tenancies from the benefit of section 73 if their notices were served or the specified thing occurred before the relevant date, I would limit the decision about the lack of legislative competence to that subsection only. I would recall that part of the interlocutor of 15 March 2012 in which the Second Division found that Mr Salvesens rights under A1P1 were violated by section 72, and substitute a finding that Mr Salvesens rights under A1P1 were violated by section 72(10). This then raises questions as to the appropriate remedy. Remedy Section 102(1) of the Scotland Act 1998 provides that the section applies where any court or tribunal decides that an Act of the Scottish Parliament or any provision of such an Act is not within the legislative competence of the Parliament. Section 102(2) is in these terms: removing or limiting any retrospective effect of the decision, The court or tribunal may make an order (a) or (b) any conditions to allow the defect to be corrected. suspending the effect of the decision for any period and on These two sub paragraphs can work hand in hand, but the powers need not be exercised together. In Martin v Most 2010 SC (UKSC) 40, para 43 I said that, had I been in favour of allowing the appeals in that case, I would have made an order under section 102(2)(a) removing the retrospective effect of the decision and an order under section 102(2)(b) suspending its effect for two months to enable the defect in the legislation to be corrected. But each case must be dealt with on its own facts, and in this case the question whether it would be right for the court to remove the retrospective effect of the decision is much more difficult. Section 102(3) provides some guidance as to how the powers under section 102 are to be exercised. It says that the court must have regard to the extent to which persons who are not parties to the proceedings would otherwise be adversely affected. In Martin, where the issue was about the sheriffs sentencing powers, that was unlikely to be a difficult exercise. But in this case a long period has elapsed since the legislation came into operation, and there are competing rights and interests which will need to be considered. Tenants who have benefited from the legislation may be adversely affected if the decision is to operate retrospectively. Landlords against whom steps have been taken in reliance on the legislation may be adversely affected if the decision cannot operate retrospectively. An order which only had prospective effect might well be incompatible with their Convention rights. The court would be in breach of section 6 of the Human Rights Act 1998 if it were to make such an order. On the other hand there will be other landlords of tenancies which continued to have effect by virtue of section 72(6) but who now have the benefit of section 73 because they have been able to satisfy the conditions in section 72(10)(b)(i) or (ii) as their notices were served or the specified things occurred on or after 1 July 2003. Mr Mure drew attention to the prospect that, in the absence of an order removing or limiting the retrospective effect of the decision, tenants who had invested in their agricultural holdings during the past ten years on the basis that they had security of tenure under a 1991 Act tenancy would find that their tenancy was null and void. Other parties might have acquiesced in the operation of the legislation and reached commercial settlements on the basis of mutual agreement. Settled transactions of that kind ought not to be disturbed. On the other hand some landlords who might wish to resume possession of their lands if section 72 were not law would be prevented from doing so if the decision did not have retrospective effect. Mr Wolffe referred to various other examples of cases which might be affected by an order removing or limiting the retrospective effect of the decision. Most of these problems will have been addressed by limiting the extent of the incompatibility to section 72(10), but cases directly affected by that provision will need to be provided for. In Marckx v Belgium (1979) 2 EHRR 330, para 58, the Strasbourg court declared that the principle of legal certainty was necessarily inherent in the law of the Convention as in Community law, and it dispensed the Belgian state from re opening legal acts or situations that antedated the delivery of its judgment. It followed the same approach in Walden v Liechtenstein (application no 33916/96) (unreported) 16 March 2000. The court said that it had also been accepted that, in view of the principle of legal certainty, a constitutional court may set a time limit for the legislator to enact new legislation with the effect that an unconstitutional provision remains applicable for a transitional period. As was noted in Cadder v HM Advocate [2010] UKSC 43, 2011 SC (UKSC) 13, para 58, section 102 of the Scotland Act gives effect to that principle. This suggests that closed cases of whatever kind should be allowed to stand. But if the principle were to be applied generally, it would exclude claims by landlords whose position had been prejudiced by the operation of section 72(10)(b). As already mentioned, that would be incompatible with their Convention rights. I would therefore decline to make an order under section 102(2)(a) removing or limiting the retrospective effect of the finding that section 72(10) is outside the legislative competence of the Scottish Parliament. Any adverse effect on rights arising from tenancies to which section 73 has been applied because the conditions set out in section 72(10) were satisfied will need to be provided for. But I would leave that matter to the Scottish Parliament. Decisions as to how the incompatibility is to be corrected, for the past as well as for the future, must be left to the Parliament guided by the Scottish Ministers. Both sides of the industry will need to be consulted, after the necessary research has been carried out and proposals for dealing with the situation that respects the parties Convention rights have been formulated. That process will take time, and the court should do what it can to enable it to be conducted in as fair and constructive a manner as possible. So I would suspend the effect of the decision that section 72(10) is not law for a period that will be sufficient to enable the defect to be corrected. Mr Mure suggested that a period of twelve months or such shorter period as might be necessary for this purpose would be appropriate, and I would be content to adopt that suggestion. It is, however, possible that more time will be needed. So I would also give permission to the Lord Advocate to return to the court for any further orders under section 102(2)(b) that may be required in the meantime. The court best placed to deal with that matter would be the Court of Session. Conclusion competence of the Parliament for 12 months or such shorter period as may be required for the defect to be corrected and for that correction to take effect. I would give permission to the Lord Advocate to apply to the Court of Session for any further orders under section 102(2)(b) that may be needed in the meantime to enable the Scottish Ministers to achieve the correction before the suspension comes to an end. I would allow the appeal. I would, as indicated in para 47, above, recall the Second Divisions interlocutor finding that Mr Salvesens rights under article 1 of the First Protocol to the European Convention on Human Rights were violated by section 72 of the 2003 Act and substitute for it a finding that Mr Salvesens rights under article 1 of the First Protocol were violated by section 72(10) of the 2003 Act and that this provision is outside the legislative competence of the Scottish Parliament. I would make an order under section 102(2)(b) of the 1998 Act suspending the effect of the finding that section 72(10) is outside the legislative |
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: 2 Interpretation (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 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; (a) 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. 7 Exception for genuine occupational requirement 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; it is proportionate to apply that requirement in the (b) 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; it is proportionate to apply that requirement in the (b) 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. 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)? If not, did the whole arbitration agreement fail or was only the discriminatory provision void? iii) ii) 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, the application of the requirement is a proportionate (b) 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". included this: At para 42 the judge quoted extensively from the same summary which 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. LORD MANCE 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. |
The appellant (Mr Youssef), an Egyptian national, has been living in this country since 1994. He challenges a decision made by the respondent Secretary of State on 14 September 2005, in his capacity as a member of the committee of the United Nations Security Council, known as the Resolution 1267 Committee or Sanctions Committee. The committee is responsible for maintaining a list of persons and entities subject to the asset freeze imposed on persons associated with Al Qaida under Chapter VII of the United Nations Charter. The committee acts by consensus: all members must agree to a nomination for inclusion on the list, or to de listing. The United Nations sanctions regime, and the constitution of the committee, are described in more detail in the judgment under appeal of Laws LJ in the Court of Appeal, as is the drastic effect of listing on the individuals concerned: [2013] EWCA Civ 1302; [2014] QB 728, paras 3 12. The decision under challenge removed the hold which the United Kingdom had previously placed on the appellants designation by the committee. It had the consequence that thereafter he became subject to the asset freeze imposed by virtue of the Charter and of implementing European and national legislation. The appellants first contention is that, although the Secretary of State made his own decision on untainted evidence, he was aware that information on which other members were proceeding was or might have been obtained by torture; and that accordingly he was under an obligation, enforceable in domestic law, not to lend his aid to a committee decision which might be so tainted. The appellants case, with others, came before this court in earlier judicial review proceedings in Ahmed v HM Treasury [2010] UKSC 2; [2010] 2 AC 534 (to which I will return below). They related to an implementing order in this country made under section 1 of the United Nations Act 1946. The court held that the order was outside the powers conferred by the Act. However, that decision left in place Council Regulation (EC) No 881/2002, which implemented the asset freeze under European law, and had direct effect in the United Kingdom under the European Communities Act 1972. Although this court declined to suspend its order to enable new regulations to be made under that Act ([2010] UKSC 5; [2010] 2 AC at p 689), such provisions, including the related licensing provisions and criminal sanctions, were made soon afterwards, in effect reproducing the controls previously imposed under the 1946 Act (Al Qaida and Taliban (Asset Freezing) Regulations 2010 (SI 2010/1197), since superseded by 2011 Regulations (SI 2011/2742) to similar effect). In evidence in the Ahmed proceedings it was disclosed that, following a review of the information then available, the government had decided that the appellant no longer met the criteria for designation. From June 2009 until late 2012 the Secretary of State actively supported his removal from the Sanctions Committees Consolidated List, and attempted to persuade other members to agree, but without success. The appellant complains of the Secretary of States failure at that stage to extend his grounds for seeking delisting to include the tainted nature of the evidence apparently relied on by other members. Findings of the United Nations Ombudsperson Meanwhile (by Resolution 1904 of 2009) the Security Council had established the new office of Ombudsperson, inter alia, to assist the committee in considering and responding to requests for delisting. The appointment of the first Ombudsperson (Judge Kimberly Prost) and her understanding of this new role were described by Laws LJ in the Court of Appeal (para 8). In April 2013 the appellant applied to the Ombudsperson requesting delisting. Her report to the committee, submitted in February 2014, recommended that he be retained on the list. On 30 July 2014 she wrote to the appellant informing him of her recommendation and the reasons for it. Her letter indicated that she had excluded from her analysis material tainted by torture (p 4). It reviewed a number of public statements attributed to the appellant between 2011 and 2013. It is sufficient to refer, as an example, to the most recent: a sermon given in May 2013, in which he offered extensive praise of Usama bin Laden, labelled certain Al Qaida linked groups as the fruits of this Martyr [Bin Laden] and his good devout brethren, and asserted that America will crumble thanks to those Mujahids and by virtue of this Martyr. The Ombudsperson commented that such repeated statements clearly glorify Usama Bin Laden and the Al Qaida organisation for its various activities in different locations, and could be categorised as an exhortation to others to join in the continued expansion of the organisation in its aims, which includes the destruction of America (p 9). On 10 September 2014 the Secretary of State informed the appellant that he agreed with the Ombudspersons recommendation and would no longer support delisting. On 30 October 2014 the committees narrative summary of reasons for listing was updated to take account of the Ombudspersons findings. The revised summary includes the following: [The appellant] is a known figure within extremist circles. He uses an Internet site, and other media, to support terrorist acts or activities undertaken by Al Qaida as well as to maintain contact with a number of supporters around the world. He offers praise for Al Qaida as an organisation and, directly or by inference, encourages individuals to join and support that organisation and its activities on a global basis. As of early 2014, [the appellant] provided Al Qaida and Al Nusrah Front for the People of the Levant (QE.A.137.14) with guidance and justification for their operations and tactics. The court has no evidence from the appellant to counter the allegations on which the 1267 committee now relies. In his only witness statement in these proceedings, dating from 3 December 2010, he simply rejected (without further explanation) the notion that he is in any way involved in terrorism, or linked in any way to Al Qaida or the Taliban. The court was told that he intends to challenge the Secretary of States recent decision not to support delisting, but not on what grounds. It has been agreed between the parties that further action will await the decision of the court in this appeal, at which point the Secretary of State will reconsider his decision so far as necessary in the light of this courts findings and of any representations made by the appellant. Immigration The appellants immigration status is not in issue in these proceedings. He claimed asylum on arrival in 1994, but that claim was rejected under article 1F(c) of the Refugee Convention (serious reasons for considering that he has been guilty of acts contrary to the purposes and principles of the United Nations). Since October 1999 he has remained under a series of grants of discretionary leave to remain. An appeal against refusal of asylum under article 1F(c) is currently pending before the Upper Tribunal. Consideration of his application for indefinite leave to remain has been deferred by the Home Office pending a final decision on his asylum application. European proceedings Decisions of the European Court of Justice in Kadi v Council of the European Union (Joined Cases C 402/05P and C 415/05P), [2009] AC 1225 (Kadi I), and of the General Court in Kadi v Commission of the European Communities (Council of the European Union intervening) (Case T 85/09) [2010] ECR II 5177 (Kadi II) established that inclusion of an individual within a list under EC Regulation 881/2002 (regulation 881) was subject to judicial review in Europe, inter alia on grounds relating to the accuracy and reliability of the evidence relied on (Kadi II paras 141 143). Regulation 881 was amended by Council Regulation (EU) No 1286/2009 to create a mechanism for review by the Commission (articles 7(a) and 7(c)). In July 2010 the appellant applied to the General Court of the European Union for removal from the list in regulation 881. In a decision given on 21 March 2014 (Case T 306/10) the court held that the Commission had failed to review his inclusion under the required procedures, but it dismissed his claim that his retention on the list was irrational. On 17 December 2014 the European Commission sent to the appellant an updated statement of reasons for listing under regulation 881 in the same terms as the 1267 committees summary. The appellant responded on 26 January 2015 denying those allegations. He has lodged an application for legal aid with the EU General Court to enable him to challenge the decision to continue his listing under the regulation. The present proceedings and the issues in the appeal The present claim for judicial review was issued in December 2010. It challenged the legality both of the Secretary of States decision in 2005 to lift his hold on designation, and also of his refusal, in a letter of 14 October 2010, to extend his request for delisting to include the ground that the committees decision had been based on torture tainted evidence. The claim was dismissed by the Divisional Court in July 2012, and by the Court of Appeal in October 2013. Permission to appeal to this court was granted on 9 July 2014. The appeal raises issues about the tests to be applied in judging the legality of the relevant decision, and about their consequences under domestic law. It also raises issues about the remedies if any to which the appellant should be entitled, if otherwise successful, having regard in particular to the developments since the Court of Appeal decision. Mr Otty QC summarised his submissions on behalf of the appellant under four main heads: i) Torture tainted material The exceptional status accorded to the prohibition against torture, under international and domestic law, required the Secretary of State not merely himself to make no use of torture tainted evidence, but to forego participation in a decision which might be affected by such evidence. ii) Absence of power The intended and inevitable effect of the committees decision was a serious interference with the appellants right to peaceful enjoyment of his property. That could only be achieved by a clear statutory provision or common law rule, neither of which existed. iii) Standard of proof The test of reasonable grounds to suspect that the appellant met the criteria for designation as having been associated with Al Qaida through his participating in the financing, planning, facilitating, preparing or perpetrating of acts or activity in conjunction with, under the name of or on behalf of Al Qaida adopted by the Secretary of State was too low, as shown by the reasoning of this court in Ahmed. iv) Standard of review Given the gravity of the context, the courts below were wrong to limit the standard of review to that of Wednesbury unreasonableness or irrationality. Following the more recent guidance of this court in Kennedy v Information Comr (Secretary of State for Justice intervening) [2014] UKSC 20, [2015] AC 455 and Pham v Secretary of State for the Home Department (Open Society Justice Initiative intervening) [2015] UKSC 19, [2015] 1 WLR 1591, the appellant was entitled to a full merits review, or at least one involving a proportionality analysis. It will be convenient to take them in this order, expanding the account of law and facts so far as necessary under each head. Torture tainted material Background The factual background to this issue, so far as not already explained, is uncontentious. On 29 March 2005 a designating state (now known to have been Egypt) requested the committee to add 20 individuals, including the appellant, to the UN sanctions list. The information submitted in support relied on his conviction in Egypt in absentia for membership of a terrorist group. This information, as the Secretary of State knew, included evidence that had been or may have been obtained by torture. However, the Secretary of States decision on 14 September 2005 to agree to his designation was not based on this information but on a separate Security Service assessment. This referred to his previous links with a terrorist group known as Egyptian Islamic Jihad (EIJ), his arrest in 1998 in connection with a planned bomb attack on the US embassy in Tirana, and his views which remained extreme. The assessment was that he had had strong historical links to EIJ in the mid to late 1990s and that the potential remains for him to re engage with EIJ. Under the guidelines in effect in 2005 the committee was not required to make a statement of the reasons for its decision. However, under later guidelines (first introduced in June 2008 by SCR 1822), it was required to publish on its website a narrative summary of reasons for listing. Such a summary in respect of the appellant was published in September 2010. This referred to him being wanted in Egypt in connection with terrorist crimes committed in that country. The appellant asserts (without specific contradiction by the Secretary of State) that these allegations were the result of torture of his co accused. As already noted, by this time, the Secretary of State had formed the view on other grounds that the listing was no longer justified. The Security Service assessment on which this was based (May 2009), included the following: We assess that were [the appellant] to be removed from the Consolidated List he would be unlikely to re engage with EIJ. Although [the appellant] continues to maintain his extremist views, he appears very reluctant to be directly involved in terrorist activities. Legal principles and the courts below For the legal principles governing the use of evidence obtained by torture we need look no further than the opinions given in the House of Lords in A v Secretary of State for the Home Department (No 2) [2005] UKHL 71; [2006] 2 AC 221, notably that of Lord Bingham which contains an extensive review of the international materials (paras 30ff). Having quoted from the United Nations Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, he noted as common ground that the international prohibition of the use of torture enjoys the enhanced status of a jus cogens or peremptory norm of general international law. He quoted at length from the authoritative exposition by the International Criminal Tribunal for the Former Yugoslavia in Prosecutor v Furundzija (1998) 38 ILM 317 (10 December 1998), including this statement of the obligations of states, both individually and collectively: 151. Furthermore, the prohibition of torture imposes upon states obligations erga omnes, that is, obligations owed towards all the other members of the international community, each of which then has a correlative right. In addition, the violation of such an obligation simultaneously constitutes a breach of the correlative right of all members of the international community and gives rise to a claim for compliance accruing to each and every member, which then has the right to insist on fulfilment of the obligation or in any case to call for the breach to be discontinued. Lord Bingham interpreted these extracts as indicating the requirement on states both to eschew the practice of torture and to cooperate to bring to an end through lawful means any serious breach of an obligation under a peremptory norm of general international law. The same principles required states save perhaps in limited and exceptional circumstances to reject the fruits of torture (para 34). Similarly article 15 of the Torture Convention prohibited the use of any statement which is established to have been made as a result of torture (para 35), a principle recognised also in the European Convention on Human Rights and in the common law (para 52). The Court of Appeal held that the Secretary of State was responsible for the lawfulness of his own reasons, but not in effect for policing the reasoning of other member states. Laws LJ (paras 54 55) accepted that the court cannot ignore an established rule of international law, far less one which has the force of ius cogens erga omnes, and declined therefore to base his decision on the proposition that the Governments conduct of foreign relations enjoys something close to an immunity from judicial review. He continued: The true answer to Mr Ottys argument on ground 2 rests in my judgment on the facts of the case. In R (Al Rawi) v Secretary of State for Foreign and Commonwealth Affairs [2008] QB 289 I said, at para 102: [T]he status of ius cogens erga omnes empowers but does not oblige a state to intervene with another sovereign state to insist on respect for the prohibition of torture (para 151 of Prosecutor v Furundzija) . But Mr Ottys submission entails an obligation on the Secretary of State so to intervene. Given that the Foreign Secretarys own reasons for lifting the hold were not tainted by torture evidence, there is nothing in Mr Ottys case save an insistence that the United Kingdom should, in effect, have stymied the designation because other states were not so pure. The law did not require him to do so. Submissions In this court Mr Otty challenges both the reasoning of the decision in Al Rawi on which Laws LJ relied, and its applicability to this case. The Court of Appeal in Al Rawi had been wrong to interpret the passage cited from Furundzija as support for an entitlement rather than an obligation to act. In any event, unlike Al Rawi in which the Secretary of State had had no control over the treatment of inmates in Guantanamo Bay, in this case he had the power to determine whether or not designation would proceed. Further, the courts below erred in holding that the Secretary of State could disassociate himself from the reasoning of the committee of which he was a member. Although the committees reasons were not published (nor required to be published) until some years later, the narrative summary must be treated as representing the views of the committee as a body, and so attributable also to its members individually. For the Secretary of State, Mr Swift QC accepted that the decision is reviewable, but subject to defined limits. As he put it in his printed case: It is common ground that the decision taken by the Foreign Secretary as a member of the 1267 committee as to whether or not the appellant met the designation criteria is justiciable as a matter of domestic law, applying standard public law principles. It is equally clear, however, that neither similar decisions taken by other members of the committee, nor decisions of the committee itself, are justiciable as a matter of UK domestic law. In his submission, the Secretary of State in removing the hold on designation was agreeing to the fact of designation and no more. Provided his own reasons were valid, the law did not make him responsible for the decisions of others. He had no means of knowing what evidence might be relied on by them, nor any duty to make inquiries. At the time, under the current UN guidance there was no expectation that the committee would form a single collective view or adopt collective reasons. Discussion In choosing between these competing submissions, it is important to define the scope of the courts powers. Mr Swifts concession that the decision of the Secretary of State is subject to judicial review begs a potentially important question as to the legal basis of the concession and its proper limits. Judicial review does not operate in the abstract. The standard public law principles to which Mr Swift refers cannot be divorced from the legal context, statutory or common law, in which the particular executive action is taken or decision made. The legal context in which the 2005 decision was made was that of a body operating under international law, not subject to the domestic courts. If the Secretary of State alone is to be subject to review, there must be some legal principle by which under domestic law his vote can be distinguished from those of other members. The point can be illustrated by reference to the committees narrative summary of reasons published in 2010. I agree with Mr Swift that there is no valid basis for attributing that statement retrospectively to the decision made in 2005, at a time when there was no requirement for a collective statement of any kind. But I would reach the same view looking at the matter in 2010. Although I see force in Mr Ottys submission that the Secretary of State, as a voting member of the committee, cannot divorce himself from its collective statement, this would lead me to the opposite conclusion from that drawn by him. It does not mean that the Secretary of States vote, infected by the committees reasons, acquires a separate status for the purpose of domestic law. They remain the reasons of the international body, challengeable if at all only under international law (or by virtue of their specific adoption under the European regulation). The object of the present challenge therefore has to be the logically prior decision of the Secretary of State in 2005 to remove his hold on the proposal for designation. The source of his powers under domestic law lay not in any statute but in the exercise of prerogative powers for the conduct of foreign relations. That did not make it immune from judicial review, but it is an area in which the courts proceed with caution, as is apparent from the authorities reviewed by the Court of Appeal in R (Abbasi) v Secretary of State for Foreign and Commonwealth Affairs [2002] EWCA Civ 1598; [2003] UKHRR 76 (cited with approval in this court in R (Sandiford) v Secretary of State for Foreign and Commonwealth Affairs [2014] UKSC 44; [2014] 1 WLR 2697, paras 49ff). In Abbasi the issue was whether the Secretary of State could be required by the court to intervene with the American government on behalf of a British prisoner held in Guantanamo Bay. Following Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374 (GCHQ), it was accepted as settled law that the issue of justiciability depends, not on general principle, but on subject matter and suitability in the particular case (para 85). The court cited R v Secretary of State for Foreign and Commonwealth Affairs, Ex p Everett [1989] QB 811, relating to the issue of a passport, in which Taylor LJ summarised the effect of GCHQ: The majority of their Lordships indicated that whether judicial review of the exercise of prerogative power is open depends upon the subject matter and in particular upon whether it is justiciable. At the top of the scale of executive functions under the prerogative are matters of high policy, of which examples were given by their Lordships; making treaties, making war, dissolving Parliament, mobilising the Armed Forces. Clearly those matters and no doubt a number of others, are not justiciable. But the grant or refusal of a passport is in a quite different category. It is a matter of administrative decision affecting the rights of individuals and their freedom of travel. It raises issues which are just as justiciable as, for example, the issues arising in immigration cases. (p 820) In Abbasi the court held that the exercise of the Secretary of States powers to protect British citizens abroad was in principle subject to judicial review, although the court could not enter the forbidden areas, including decisions affecting foreign policy; but it declined to intervene on the facts of that case (paras 106 107). The present case falls somewhere between the two ends of the spectrum indicated by Taylor LJ. The conduct of foreign policy through the United Nations, and in particular the Security Council, is clearly not amenable to review in the domestic courts so far as it concerns relations between sovereign states. The distinguishing factor in the present context is that the Security Councils action, through the 1267 committee, is directed at the rights of specific individuals, and in this case of an individual living in the United Kingdom. Furthermore, at the time the decision was taken, the Security Council procedures provided no other means for the individual to challenge their decision. It is no doubt such considerations that led to Mr Swifts concession. I am content (without deciding the point) to proceed on the basis that it is correct. That said, the decision under challenge in the domestic proceedings is that of the Secretary of State not of the committee, and it is by reference to his reasons that it must be judged. There is no legal basis for attributing to him reasons which he did not have. Since his own reasons were untainted, Mr Otty has to show that he was in breach of a distinct duty to inquire into the reasons of the other members, and to withhold his support if they appeared tainted in any way. For the existence of such a duty he relies on the obligation of states to reject the fruits of torture, and places particular weight on the following passages from Furundzija (in addition to those cited above): 148. given the importance that the international community attaches to the protection of individuals from torture, the prohibition against torture is particularly stringent and sweeping. States are obliged not only to prohibit and punish torture, but also to forestall its occurrence . 149. in the case of torture the requirement that states expeditiously institute national implementing measures is an integral part of the international obligation to prohibit this practice. Consequently, states must immediately set in motion all those procedures and measures that may make it possible, within their municipal legal system, to forestall any act of torture or expeditiously put an end to any torture that is occurring. He also relies on Lord Binghams reference in this context (A (No 2), para 34) to the obligations held by the International Court of Justice to arise from its ruling on the illegality of the wall in occupied Palestinian territory: see Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory (Advisory Opinion (unreported) 9 July 2004 (General List No 131) para 159). That placed other states under an obligation not to recognise the illegal situation resulting from the construction of the wall and not to render aid or assistance in maintaining the situation created by such construction. These passages leave no doubt as to the importance of the rules against torture and the use of torture tainted evidence, and the duty of states to take the necessary measures within their municipal legal systems to give full effect to those rules. However, taken at their highest, they do not suggest or imply any duty on states to inquire into the possible reliance on such evidence by other states, whether on their own or as parts of an international organisation such as the 1267 committee. The obligations held to arise out of the International Courts decision on the Palestinian wall are nothing in point. They followed a definitive finding of illegality. There was no suggestion that, absent such a finding, mere suspicion of illegality could give rise to an equivalent obligation on other states. In agreement with the courts below I would reject this ground of appeal. Absence of power Mr Ottys submission under this head starts from the principle, established by authorities dating back at least to Entick v Carrington (1765) 19 State Tr 1029, that interference by the state with individual property rights cannot be justified by the exercise of prerogative powers, unsupported by specific statutory authority. The Secretary of States decision to remove his hold on designation, which led inexorably and designedly to the freezing of the appellants assets, fell within that principle, even if the actual interference was authorised (see R (M) v Hackney London Borough Council [2011] EWCA Civ 4; [2011] 1 WLR 2873, in which a local authority was held liable for procuring the detention of the claimant by the hospital trust, albeit that the latter was acting under statutory powers). The Court of Appeal accepted the relevance of the Entick principle (a constitutional principle of the first importance) but held that the necessary authority was provided by the European regulation. Laws LJ said: I accept that if the Foreign Secretarys release of the hold on the claimants designation rested solely on the Prerogative power, then it would appear to have been done without legal authority. But that is not the position. As a matter of domestic law the Foreign Secretary was obliged to apply the Consolidated List regime to its proper subjects by force of article 2(1), (3) of and Annex I to Regulation 881/2002. There might be an argument on the question whether the general words of the European Communities Act 1972, by virtue of which the Regulation has the force of law in the United Kingdom, are sufficient to authorise the EU legislature to empower or require the Secretary of State to deprive an individual of access to any economic resources (with or without proper proof of what was said against him); but no such argument has been run in this or any case, and it would plainly not be appropriate to canvass it now. (para 26) In this court Mr Swift puts his case rather differently. He declined to support the Court of Appeals reliance on regulation 881 as providing statutory authority for the Secretary of State to approve the designation. That power rested on the exercise of the prerogative, which was however sufficient for its purpose. It was not that decision which resulted in interference with the appellants rights, but rather the decision of the European Commission, giving effect in turn to the decision of the 1267 committee. The fact that the Secretary of States decision was a step along the path to those later decisions was insufficient to engage the Entick principle. In my view, there is a short answer to this ground. The respective submissions, and indeed the reasoning of the Court of Appeal, pay insufficient regard to the legal means by which the listing took effect in this country. It is here that the interference with the appellants rights, like the intrusion on Mr Enticks property, took place. It was directly and specifically authorised by regulation 881, which was given legislative effect in this country by the European Communities Act 1972. No issue has been raised as to the effectiveness of the Act for that purpose. The regulation is subject to challenge, but in the European rather than the domestic courts. In my view the regulation, taken with the 1972 Act, provides ample statutory authority to satisfy the Entick principle. That is not affected by the causative role played by the 1267 committee, nor by the Secretary of State as a member of that committee. That was a lawful exercise of his prerogative powers (unlike the actions of the local authority in the Hackney case, which had no lawful basis). For the purpose of domestic law regulation 881, given effect by a United Kingdom statute, stands on its own feet. Laws LJ was right to place reliance on the regulation. He was wrong with respect to read it as implying statutory authority for the prior decision of the Secretary of State as a member of the 1267 committee, but wrong also to think that statutory authority was required at that stage. As Mr Swift rightly submits, the exercise of the prerogative power for that purpose involved no breach of any common law principle. Standard of proof The arguments It is common ground that the standard applied by the Secretary of State in 2005 when considering whether the appellant was associated with Al Qaida was that of reasonable grounds for suspicion. This appears not from any formal statement but from the evidence of the responsible officer in the Foreign Office who says: When deciding whether to support another member states designation proposal, the Secretary of State considers whether or not there are reasonable grounds for suspecting that the individual concerned meets the criteria for designation; ie whether or not the individual is associated with Al Qaida. Although it is not specifically stated in the submission of 12 September 2005, I understand that this is the standard of proof that the then Secretary of State (Jack Straw MP) would have applied when he considered whether or not to lift his hold on another member states proposal to designate the claimant. I say this because I understand that this was the standard which was applied at the time and which continues to be applied today. (Adrian Scott, third witness statement, para 5) He adds that, had the evidence then available been assessed on the basis of a balance of probabilities, he would have expected the same conclusion. Mr Otty submits that the standard applied by the Secretary of State in making his decision in 2005 was too low, having regard to the serious consequences for the appellants rights. He relies strongly on the reasoning of members of the Supreme Court in Ahmed, where the application of such a test led to the quashing of the order made under the relevant United Kingdom statute. He argues further that the test is not supported by the wording of the relevant Security Council resolution (1617) which refers to participating in or supporting the offending activities, not merely being suspected of doing so. Finally he relies on the doctrine of proportionality under the common law (as discussed in recent cases in the Supreme Court), which he says embraces concepts of necessity and suitability similar in substance to the tests of necessity and expedience prescribed by the statute in issue in Ahmed. The Court of Appeal rejected those submissions. Laws LJ, like Toulson LJ in the Divisional Court ([2012] EWHC 2091 (Admin); [2013] QB 906), took as his starting point the recognition that, in lifting the hold, the Secretary of State was exercising a power derived not from an Act of Parliament but in the exercise of prerogative powers acting on behalf of the Government as a member of an international body. The basis of judicial review must lie, therefore, not in the actual or presumed intention of Parliament in passing empowering legislation; but must found entirely on standards which are the product of the common law [of which] reason and fairness are the cornerstones (para 23). He continued: In this case the application of these standards requires in my judgment that the court be satisfied that the Foreign Secretary reached his decision conformably with the Consolidated List regime. His decision was as a participant in that regime. Reason and fairness having effect, perhaps, as a species of legitimate expectation (but I do not mean to involve that expressions panoply of conceptual footnotes) surely demand that he should act according to the grain of the scheme and not across it. (para 24) Having distinguished Ahmed (for reasons to which I will return) he found support for the Secretary of States approach in the preamble to resolution 1617, which emphasised the preventive purpose of the regime. That aim, he said, is more effectively promoted by the adoption of a reasonable suspicion test (para 32). He noted also that paragraph 7 of the same resolution urges the implementation of recommendations of the Financial Action Task Force (FATF) relating to money laundering and terrorist financing. The interpretative notes to Special Recommendation III (para 2) referred to the objective of freezing terrorist related assets based on reasonable grounds, or a reasonable basis, to suspect or believe that the assets could be used to finance terrorist activity. A similar test was later adopted by the Ombudsperson in her report to the Security Council in January 2011 (quoted at para 8 of his judgment), in which she proposed the test whether there is sufficient information to provide a reasonable and credible basis for the listing. Mr Swift in substance adopts the reasoning of the Court of Appeal. He adds that the test proposed by the Ombudsperson in 2011 has not in the ensuing four years been questioned by the 1267 committee. In 2013 it was reaffirmed by her, following exchanges with Ben Emmerson QC who as UN Special Rapporteur had proposed a more stringent balance of probability test. Furthermore in 2012 the Security Council by resolution 2083 (para 44), when urging member states to take note of best practices for effective implementation of targeted financial sanctions, referred to the need to apply an evidentiary standard of proof of reasonable grounds or reasonable basis. In view of the reliance understandably placed by Mr Otty on the reasoning of this court in Ahmed it is necessary to refer to the judgments in a little more detail. As Mr Otty explains, the court had to consider the legality of two regimes introduced by Orders in Council under the United Nations Act 1946: the first designed to give effect to the resolution 1267 which is in issue in this case (referred to as AQO 2006); the other, the Terrorism (United Nations Measures) Order 2006 (or TO 2006) relating to a different Security Council resolution (1373). That was directed at persons who commit or attempt to commit terrorist acts, but left their selection to member states. Both Orders were enacted under section 1(1) of the 1946 Act, which permitted the making by order of such provision as appears necessary or expedient for enabling [Security Council] resolutions to be effectively applied. Both Orders were quashed by this court. Although only the first was applicable to the appellant, Mr Otty finds more assistance in the reasoning of this court in respect of the second. He relies in particular on the definition of the issue by Lord Phillips (para 131): The wording of the TO tracks the wording of the Resolution, save that those who can be made subject to the Order are not only those described in the Resolution but those whom the Treasury have reasonable grounds for suspecting fall or may fall within that description. The issue is whether it can properly be said to be necessary or expedient to apply this test of reasonable suspicion in order to ensure that the measures in the Resolution are effectively applied to those described in the Resolution. Lord Phillips answered that question in the negative. He said that by applying a test of reasonable suspicion the Order goes beyond what is necessary or expedient to comply with the relevant requirements of Resolution 1373 and thus beyond the scope of section 1 of the 1946 Act. (para 143) Although those passages were not dealing directly with resolution 1617, Mr Otty finds parallels in the reasoning in respect of the AQO made to give effect to that resolution, particularly that of Lord Phillips (paras 139 143). He had looked at the parallel series of resolutions adopted by the Security Council under article 41 (including resolution 1617) for guidance on the intended scope of resolution 1373, but had found nothing to indicate that the Security Council has decided that freezing orders should be imposed on a basis of mere suspicion (para 139). Mr Otty submits that Lord Phillips reasoning was sufficiently reflected in other judgments to give it majority support. I am doubtful whether that is so. The clearest support comes from Lord Mance who relied strongly on the differences of language between the resolution and the Order: The relevant wording of Security Council Resolution 1373 paragraph 1(c)(d) is directed at the prevention and suppression and the criminalisation and prosecution of actual terrorist acts; This wording does not suggest that the Security Council had in mind reasonable suspicion as a sufficient basis for an indefinite freeze (para 225). In my opinion, there is an objective limit to the extent to which section 1(1) permits the executive by Order in Council to enact any measure that appears to it expedient to enable the effective application of the core prohibition mandated by Resolution 1373. A measure cannot be regarded as effectively applying that core prohibition, if it substitutes another, essentially different prohibition freezing the assets of a different and much wider group of persons on an indefinite basis (para 230). However, in the leading judgment Lord Hope (with whom Lord Walker and Lady Hale agreed) saw the issue as turning more on principles of domestic law as applied to section 1 of the 1946 Act: SCR 1373 (2001) is not phrased in terms of reasonable suspicion. It refers instead to persons who commit, or attempt to commit, terrorist acts. The Preamble refers to acts of terrorism. The standard of proof is not addressed. The question how persons falling within the ambit of the decision are to be identified is left to the member states. Transposition of the direction into domestic law under section 1 of the 1946 Act raises questions of judgment as to what is necessary on the one hand and what is expedient on the other. It was not necessary to introduce the reasonable suspicion test in order to reproduce what the SCR requires. It may well have been expedient to do so, to ease the process of identifying those who should be restricted in their access to funds or economic resources. But widening the scope of the Order in this way was not just a drafting exercise. It was bound to have a very real impact on the people that were exposed to the restrictions as a result of it. Is it acceptable that the exercise of judgment in matters of this kind should be left exclusively, without any form of Parliamentary scrutiny, to the executive? (para 58 emphasis added) He held that, by introducing the reasonable suspicion test as a means of giving effect to SCR 1373, the Treasury had exceeded its powers under section 1(1): This is a clear example of an attempt to adversely affect the basic rights of the citizen without the clear authority of Parliament. As Lord Hoffmann said in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, 131, fundamental rights cannot be overridden by general or ambiguous words (para 61). Similarly, Lord Rodger noted that resolution 1373 itself provided no express guidance as to the test, but simply prescribed the result to be achieved: it does not indicate how states are to identify the people in question (para 168). He observed, however, that the reasonable suspicion test meant that sooner or later, someone will be designated who has not actually been committing or facilitating terrorist acts. He agreed with Lord Hope that the making of an Order, which, in effect, amounts to permanent legislation conferring powers to affect, directly, very basic domestic law rights of citizens and others lawfully present in the United Kingdom went well beyond the general power conferred by section 1(1) of the 1946 Act (para 174). Lord Brown (dissenting in part) also referred to what he called the Simms principle or principle of legality, concluding: Where, as here, those to be designated under the proposed measure will suffer very considerable restrictions under the regime, I would hold that it can only properly be introduced by executive Order in Council if the measure is in all important respects clearly and categorically mandated by the UN resolution which it is purporting to implement. If the implementing measure is to go beyond this, then, consistently with the Simms principle, it can only properly be introduced by primary legislation. (para 196) Laws LJ dealt with Mr Ottys arguments under Ahmed relatively briefly. He said that, on a reading of the whole case, the reach of the courts concern was no wider than the question whether the reasonable suspicion test in the regulation was authorised by section 1 of the 1946 Act. He noted Lord Hopes comment that: The standard of proof is not addressed. The question how persons falling within the ambit of the decision are to be identified is left to the member states. and Lord Rodgers comment to similar effect (both quoted above). He continued: It is in my judgment clear that if the imposition of sanctions is in principle authorised by [regulation 881], the general law does not impose a further requirement to the effect that the sanction may only bite if the material facts are proved on the balance of probability. By force of article 2(1), (3) of and Annex I to [regulation 881] the procedures of the material Security Council resolutions the Consolidated List regime are effectively incorporated into the [regulation]. There is no doubt but that the imposition of sanctions is in principle authorised by [regulation]. The question then is whether the Foreign Secretary has lawfully deployed the Prerogative power to invoke that authority by lifting the hold on the claimants designation. That in turn depends on the correct resolution of the issue I stated earlier: did the Foreign Secretary reach his decision conformably with the Consolidated List regime? (paras 27 28) As already noted, he answered that question in favour of the Secretary of State. Discussion I have found this issue more troubling than (seemingly) did the courts below, particularly having regard to the strength of views expressed by this court in Ahmed. From the victims point of view it may seem strange that a process which, as applied under domestic legislation, was found to involve an unacceptable interference with his property rights, should be capable of automatic and immediate reinstatement by the indirect route of a European regulation. Indeed, it is unclear from the substantive judgments in Ahmed to what extent the court was made aware of the limited practical effects of its decision. (Some reference was made by Lord Hope to that regulation in his dissenting judgment following a later hearing on the issue of suspension: Ahmed v HM Treasury (No 2) [2010] UKSC 5; [2010] 2 AC 634, 692, 693, at paras 12, 15.) However, as I have said, the majority judgments turned principally on the interpretation of a 1946 statute designed to give effect to United Nations resolutions but expressed in relatively general terms. Particular care was needed in applying it to a novel form of UN measure, directly targeted at the rights of individuals, as under the present resolution. The same considerations do not apply to an EU regulation designed specifically to give effect to the current UN regime, and itself subject to judicial review in the European courts. I note also that Lord Phillips was influenced by his inability to find anything in UN practice to support a reasonable suspicion test. (It seems that the FATF guidelines were referred to in argument, under the name UN International Task Force guidelines: see for example per Lord Hope para 59.) We have the advantage of the more recent evidence, on which Mr Swift is now able to rely as to the current practice of the UN committee, supported by the Ombudsperson. Although this later evidence was not available at the time of the decisions under review, there is no indication that it represented a material change of practice or loosening of the tests previously applied by the committee. Had this been available to the court in Ahmed, it might well have influenced some aspects of the reasoning, even if it is unlikely materially to have affected the majoritys view of the interpretation of the 1946 Act. In substance therefore I agree with reasoning of the Court of Appeal, supported by the more recent evidence relied on by Mr Swift. The position of a decision maker trying to assess risk in advance is very different from that of a decision maker trying to determine whether someone has actually done something wrong. Risk cannot simply be assessed on a balance of probabilities. It involves a question of degree. The Court of Appeal were right to attach weight to the notes to the FATF Special Recommendation which referred to the preventative purpose of designation, and the requirement to freeze terrorist related funds based on reasonable grounds, or a reasonable basis, to suspect or believe that they could be used to finance terrorist activity. This is similar in substance to the language used by the Ombudsperson in her Fifth Report dated 31 January 2013, where she rejected a test based on probability, and proposed the standard whether there is sufficient information to provide a reasonable and credible basis for the listing. She saw this as one which recognised a lower threshold appropriate to preventative measures, while setting a sufficient level of protection for the rights of individuals. As a member of the 1267 committee, the Secretary of State was not only entitled, but would be expected, to apply the same approach as the committee as a whole. On this ground also the appeal must fail. Standard of review The issues In the Divisional Court, under the heading rationality, Toulson LJ considered Mr Ottys submission that there was insufficient evidence to support the Secretary of States finding in 2005 of a subsisting association between the appellant and any Al Qaida organisation, and nothing to show any difference from the position in 2009 when he reached the opposite conclusion. Toulson LJ concluded that the Secretary of State was entitled to rely on the assessment by the Security Service that the appellant continued to hold extremist views and presented a continuing risk of participation in the activities of the EIJ. It was well established that the courts should pay very high respect to ministerial security assessments on competence and constitutional grounds. The fact that four years later the Security Service came to a different assessment did not mean that the view taken in 2005 was irrational (paras 82 84). rationality review was inappropriate: In the Court of Appeal Laws LJ rejected Mr Ottys submission that a there is no question of precedent fact. Nor is there any issue of proportionality: not only because we are outside the territory of the European Convention but also because the Foreign Secretary was not required to exercise a discretionary judgment where there might have been alternative outcomes fertile ground for a proportionality approach. Here, however, once satisfied that the claimant met the criteria for designation, the Foreign Secretarys duty was to include him in the Consolidated List. (para 42) Mr Otty challenges this reasoning on three grounds: the claim did include a challenge brought pursuant to the European i) Convention which required an assessment of proportionality; ii) in the context of the present case concerning interference with fundamental rights, common law review is not restricted to a Wednesbury rationality test; iii) the court was wrong to hold that the case involved no discretionary judgment by the Secretary of State, and therefore no basis for assessing its proportionality. The second submission relies on cases decided in this court since the decision of the Court of Appeal (Kennedy v Information Comr [2015] AC 455, Pham v Secretary of State for the Home Department [2015] 1 WLR 1591, which are said to confirm that a simple Wednesbury test was inappropriate: see Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223). Mr Swift for the Secretary of State accepts that the court is likely to take the approach signalled in Kennedy and Pham as its starting point, and that the facts of the case make it one in which the review to be conducted will be towards the intense end of the scale, conducted in accordance with common law principles, incorporating notions of proportionality. He does not, as I understand him, adopt Laws LJs suggestion that such an approach is inappropriate because the Secretary of State was not exercising a discretionary judgment where there might have been alternative outcomes. He emphasises, however, that application of the doctrine of proportionality does not mean that there has been a shift to merits review (citing, inter alia, R (Daly) v Secretary of State for the Home Department, [2001] UKHL 26; [2001] 2 AC 532 paras 27 28, per Lord Steyn). He submits that the review conducted by the Divisional Court, albeit under the heading rationality, was entirely consistent with the new approach indicated by Kennedy and Pham. Toulson LJ [2013] QB 906 recognised the gravity of the consequence of the designation for the claimant and conducted a review of commensurate intensity. Discussion In Keyu v Secretary of State for Foreign and Commonwealth Affairs [2015] UKSC 69; [2015] 3 WLR 1665 (decided since the hearing in this appeal) this court had occasion to consider arguments, in the light of Kennedy and Pham, that this court should authorise a general move from the traditional judicial review tests to one of proportionality. Lord Neuberger (with the agreement of Lord Hughes) thought that the implications could be wide ranging and profound in constitutional terms, and for that reason would require consideration by an enlarged court. There was no dissent from that view in the other judgments. This is a subject which continues to attract intense academic debate (see, for example, the illuminating collection of essays in The Scope and Intensity of Substantive Review: Traversing Taggarts Rainbow ed Wilberg and Elliott, 2015). It is to be hoped that an opportunity can be found in the near future for an authoritative review in this court of the judicial and academic learning on the issue, including relevant comparative material from other common law jurisdictions. Such a review might aim for rather more structured guidance for the lower courts than such imprecise concepts as anxious scrutiny and sliding scales. Even in advance of such a comprehensive review of the tests to be applied to administrative decisions generally, there is a measure of support for the use of proportionality as a test in relation to interference with fundamental rights (Keyu paras 280 282 per Lord Kerr, para 304 per Lady Hale). Lord Kerr referred to the judgment of Lord Reed in Pham (paras 113, 118 119) where he found support in the authorities for the proposition that: where Parliament authorises significant interferences with important legal rights, the courts may interpret the legislation as requiring that any such interference should be no greater than is objectively established to be necessary to achieve the legitimate aim of the interference: in substance, a requirement of proportionality. (para 119) See also my own judgment in the same case (para 60), and those of Lord Mance (paras 95 98) and Lord Sumption (paras 105 109), discussing the merits of a more flexible approach in judging executive interference with important individual rights, in that case the right to British citizenship. On the other hand, in many cases, perhaps most, application of a proportionality test is unlikely to lead to a different result from traditional grounds of judicial review. This is particularly true of cases involving issues of national security. In Bank Mellat v HM Treasury (No 2) [2013] UKSC 39; [2014] AC 700 (which concerned another security council regime, relating to nuclear weapons), there was not only majority and minority agreement as to the steps involved in an assessment of proportionality (demanded in that case by the relevant statute), but also, within that context, general recognition that on issues of national security a large margin of judgment was accorded to the executive (paras 20 21 per Lord Sumption, para 98 per Lord Reed). The difference turned on contrasting views as to the allegedly discriminatory nature of the restrictions in that case. Similar considerations apply in the present case. Mr Otty asks us to go further and to hold that the Divisional Court should have conducted a full merits review of the Secretary of States decision. He finds support in the judgments of the Court of Appeal in Ahmed in which such a submission appeared to find favour with Sir Anthony Clarke MR and Wilson LJ ([2008] EWCA Civ 1187; [2010] 2 AC 534 at pp 578, 587). I agree with the Court of Appeal (para 38) that those observations were made in the context of an Order made under a domestic statute, and were overtaken by the decision of this court that the Order was ultra vires. In my view, they can have no application in the present context, which concerns the Secretary of States functions as a member of a UN committee. Even accepting that his decision is judicially reviewable, it is to the member states, as members of the committee, that the Security Council has entrusted the task of determining whether the criteria for listing are fulfilled. It would be quite inconsistent with that regime for a national court to substitute its own assessment of those matters. On the basis that a proportionality review is appropriate, two issues arise: first, whether the application of such a test to the decisions under challenge would have made any difference; secondly, if so, whether or not, having regard in particular to the subsequent changes in the basis of the appellants designation, the court should refuse any remedy in respect of the earlier decisions. As to the first, I agree with Mr Otty that, in the light of subsequent authority, Toulson LJ was wrong to lay emphasis on a test based on irrationality. However, apart from the general criticism, he has failed to highlight any particular aspect of the reasoning which is open to challenge even applying a proportionality test. Apart from a general denial of involvement in terrorism, the appellant has not addressed the specific incidents referred to in the 2005 security assessment. Nor in my view has he provided any grounds for questioning the Secretary of States assessment of future risk, given the wide margin allowed to him on such an issue. In any event, whatever grounds there may be for criticism of Toulson LJs reasoning, they have in my view been entirely overtaken by subsequent events. Even if we were to find a legal flaw in the 2005 decision, that would not of itself entitle the appellant to a remedy. Mr Otty has been unable to show how an order quashing the 2005 decision, or a declaration of illegality, would have any substantive effect on his present position. Even in 2010 quashing the Secretary of States decision would not have detracted from the continuing effect of the committees listing, or its application in the United Kingdom through regulation 881. So far as it concerns the Secretary of States own position, he had already decided by 2009 to support the application for de listing. His subsequent change of mind in 2014 followed the Ombudspersons report. There is no reason to link it to any flaws that might have been shown in his reasoning in 2005. More generally, the court should in my view be very slow to grant a substantive remedy in the circumstances now facing the court. Judicial review is a discretionary remedy. The court is not required to ignore the appellants own conduct, or the extent to which he is the author of his own misfortunes. I appreciate that the material disclosed by the Ombudspersons report became available after the Court of Appeals judgment, and indeed after the grant of permission to appeal to this court. It is not formally in issue before us. Further the appeal raised important issues of law which needed a decision. I can understand therefore why it was decided to defer for the moment detailed consideration of any challenge to the latest decision. However, the fact remains that there is before the court unchallenged evidence showing that the appellant is at least a strong vocal supporter of Al Qaida and its objectives. That stands uneasily with his simple denial in 2010 of any involvement in terrorism. If those allegations were misplaced, I would have expected him to want to say so publicly at the first opportunity. I raised my concern with Mr Otty at the opening of the appeal, but I heard no convincing answer. Even if the appellant were otherwise entitled to some relief, I would be very hesitant about granting it so long as these allegations stand unrefuted. Conclusion For the reasons I have given, I would dismiss this appeal. |
Indirect taxes have always posed particular problems of enforcement, which account for the wide powers of investigation and seizure conferred by statute on the Commissioners charged with their collection. The exercise of these powers has given rise to dispute ever since Johnsons Dictionary offered its famous definition of excise in 1755 (a hateful tax, levied by wretches), and its author was threatened by the Commissioners with a libel action. The powers of the Commissioners of Customs and Excise were originally contained in a large number of enactments dealing with different aspects of an exceedingly complex legal scheme. The first modern consolidation was the Customs and Excise Act 1952 (the 1952 Act). The system is currently administered by Her Majestys Commissioners of Revenue and Customs under the Customs and Excise Management Act 1979 (the 1979 Act), which re enacts much of the 1952 Act, with substantial amendments. Some significant amendments have been made to the Act by the Finance Act 2013, but these were not in force at the relevant times, and we therefore refer throughout this judgment to the Act as it stood before they were made. These two appeals are about the circumstances and the manner in which customs officers are empowered to detain goods on which duty has not been paid, or may not have been paid. The Eastenders appeal In the Eastenders appeal, customs officers entered Eastenders warehouses and inspected consignments of alcoholic goods found there. They were acting under section 118C(2) of the 1979 Act, which authorises customs officers to enter and inspect business premises which they have reasonable cause to believe are being used in connection with the supply, importation or exportation of goods chargeable with excise duty and to inspect any goods found there. Section 118C(2) was repealed by the Finance (No 3) Act 2010 and replaced by other provisions, but we refer to the Act as it stood at the material time. Under section 118B, the officers may also require the production of documents. Eastenders employees were unable to provide documentary evidence, such as purchase invoices, demonstrating that duty had been paid on the goods. Inspection of such documents as were produced indicated that duty might not have been paid. The officers decided to detain the goods pending the outcome of further enquiries into the question whether the appropriate duties had been paid: in particular, enquiries into the supply chains relating to the goods. The goods remained on Eastenders premises pending the outcome of those enquiries but were subject to a direction given under section 139(5) of the 1979 Act, in terms of which the Commissioners can direct the manner in which any thing detained under the customs and excise Acts must be dealt with pending the determination as to its forfeiture or disposal. In subsequent correspondence, the Commissioners stated that the goods had been detained under section 139, subsection (1) of which empowers the Commissioners or their officers to seize or detain any thing liable to forfeiture under the customs and excise Acts. By virtue of section 49, things liable to forfeiture include any dutiable goods imported without payment of duty. Following their enquiries, the Commissioners seized most of the detained goods and returned the remainder. All of the seized goods were subsequently condemned as forfeited, and no issue arises about those. The present appeal relates to the goods which were detained but were subsequently returned, the officers enquiries having proved inconclusive. Eastenders applied, as the owners of the goods in question, for judicial review of the decision to detain them. The judge, Sales J, found that the officers had reasonable grounds to suspect that duty had not been paid on the goods that were detained. It was also found that the detention of the goods had not exceeded a reasonable period of time. Those findings were not challenged on appeal. In these circumstances, Sales J held that the Commissioners had acted lawfully in detaining the goods, on the basis that they had the power to detain goods for a reasonable time, pending enquiries as to whether duty had been paid, where they had reasonable grounds to suspect that the goods might be liable to forfeiture. Sales J considered that that power was conferred by section 139(1) of the 1979 Act. No other possible source of the power had been suggested. The application for judicial review was therefore dismissed: [2010] EWHC 2797 (Admin); [2011] 1 WLR 488. The Court of Appeal by a majority (Elias and Davis LJJ, Mummery LJ dissenting) reversed that decision. They held that section 139(1) applied only where goods were actually liable to forfeiture, and it had not been established that the goods in question were so liable. A declaration was accordingly granted that the goods not liable to forfeiture were unlawfully detained: [2012] EWCA Civ 15; [2012] 1 WLR 2067. There was again no contention that the power to detain goods on suspicion might be derived from any source other than section 139(1). It was subsequently decided that Eastenders could not be awarded costs, by reason of section 144(2) of the 1979 Act, which provides, in substance, that where a court holds that a seizure or detention was unlawful, no award of damages or costs may be made against the Commissioners if the court is satisfied that they acted on reasonable grounds: [2012] EWCA Civ 689; [2012] 1 WLR 2912. The Commissioners appeal to this court against the first decision. Eastenders were refused permission to appeal against the second decision. The point in relation to costs has however been argued in the First Stop appeal, as we shall explain, and whatever we decide about it must necessarily apply in both appeals. The First Stop appeal In the First Stop appeal, customs officers entered a warehouse and retail premises used by First Stop. They were acting under section 112(1) of the 1979 Act, which authorises customs officers to enter the premises of revenue traders as defined in section 1 of the Act (in substance, persons who deal in goods liable to excise duty) and to search for and examine any goods or materials connected with that trade. Under section 112A, inserted by the Finance (No 3) Act 2010, that power includes the power to examine documents. At the retail premises, the officers seized a small quantity of spirits on the ground that the duty paid stamps on them were defective. They also detained a much larger quantity of alcoholic drinks, whose provenance was unclear, while enquiries were made into the question whether duty had been paid. One of the directors of First Stop was informed by an officer that the goods were being detained pending further enquiries into their duty status. Written notices were provided stating that the goods had been detained pending evidence of duty status (CEMA 1979, section 139). Most of the detained goods were subsequently seized. The remainder were returned to First Stop. Condemnation proceedings in respect of the seized goods remained pending at the time of the hearing of these appeals. First Stop were granted permission to apply for judicial review of the detention of those goods which were still detained, pending the outcome of enquiries, about four months after their initial detention. By the time the application was heard, all of those goods had been seized. The application came before Singh J after the decision of the Court of Appeal in Eastenders. The judge gave a total of three judgments on different issues which arose from the application. In the first, he held that the detention of the goods had been unlawful, since the reason given for the detention was the need for investigation, and it followed in his view from the decision of the Court of Appeal in Eastenders that goods could not lawfully be detained under section 139(1) of the 1979 Act for that purpose. That was so even if the goods might subsequently be found to be liable to forfeiture: in his view, goods could not lawfully be detained under section 139(1) for the purpose of ascertaining whether the power to detain them had been conferred by that provision: [2012] EWHC 1106 (Admin). In a second judgment, Singh J held that section 144(2) did not protect the Commissioners against an award of costs, on the basis that the reason given for detaining the goods, being unlawful, could not amount to reasonable grounds within the meaning of that provision: [2012] EWHC 2191 (Admin). In his third judgment, Singh J was concerned with the seizure notices. The question was whether a statement in the notices that no evidence of UK duty payment has been provided was a sufficient statement of the grounds for seizing the goods as liable to forfeiture. The judge held that it was: [2012] EWHC 2975 (Admin). All three judgments were appealed to the Court of Appeal. They allowed the Commissioners appeal against the first two judgments. Beatson LJ, in a judgment with which Lewison and Jackson LJJ agreed, accepted that the judges view that the power to detain under section 139(1) must not only exist, but must be exercised for the purpose intended by Parliament, gained powerful support from general principles of public law, but concluded that it was inconsistent with the judgments of the majority of the court in the first judgment in the Eastenders case. The court also considered that it followed from the first judgment in the Eastenders case that there was no duty to give reasons for the detention of goods under section 139(1). In their view, the effect of the Eastenders decision was that if the goods were in fact liable to forfeiture, detention for a reasonable time was lawful under section 139(1) irrespective of any reason that might have been given. The appeal against Singh Js second judgment, relating to section 144(2), was allowed on the ground that the judges decision was inconsistent with the decision of the Court of Appeal in its second judgment in the Eastenders case: [2013] EWCA Civ 183. First Stop appeal to this court against both decisions. The Court of Appeal upheld Singh Js third judgment, and no appeal on the adequacy of the notice of seizure is before us. It follows that in this case, as in Eastenders, we are directly concerned only with the power of detention. The statutory scheme We have referred to the provisions of the 1979 Act that were central to the judgments below, namely sections 139(1) and 144(2). Before considering the effect of these provisions, it is necessary to say something more about them, and about the broader statutory scheme of which they are part. The 1979 Act confers extensive powers on the Commissioners. These include the express power to examine goods and documents relating to goods, or to require information about them. This power is conferred by many provisions of the 1979 Act, the relevant provision depending on the location of the goods and sometimes their type. In particular, section 112(1) confers on customs officers a power to enter the premises of revenue traders, such as First Stop, and to inspect the premises and search for, examine and take account of any goods or materials belonging to or in any way connected with that trade. By virtue of section 112A, the power conferred by section 112 includes power to inspect any business documents that are on the premises. Section 118C(2) applies where an officer has reasonable cause to believe that any premises are used in connection with the supply, importation or exportation of dutiable goods and that such goods are on the premises. It confers on the officer the power, exercised in the Eastenders case, to enter and inspect the premises and inspect any goods found on them. A number of the powers conferred by the 1979 Act are expressly exercisable when the relevant officer has reasonable grounds for believing or suspecting something. Section 118C(2) is an example. There are many others. Thus under section 84, which is concerned with unlawful signals to smugglers, an officer may board a ship, aircraft or vehicle or enter a place from which he has reasonable grounds for suspecting that a signal is being or is about to be sent; under section 113, officers are empowered to break open premises where they have reasonable grounds to suspect that secret pipes or other conveyances are being used for goods subject to excise duty; under section 138, a person may be detained if there are reasonable grounds to suspect that he has committed [an] offence under the customs and excise Acts; under section 161, an officer may enter and search any place where there are reasonable grounds to suspect that property liable to forfeiture is being kept or concealed; and under sections 163 and 164 there are corresponding powers to stop and search vehicles, vessels or persons suspected of being involved in breaches of the customs and excise legislation. The 1979 Act contains many sections providing for the forfeiture of property, including property whose importation is prohibited, property in respect of which duty has been evaded, or property (such as vehicles or vessels) which have been used for the purpose of infringements of various kinds. For present purposes, the relevant power of forfeiture is conferred by section 49, which can be treated as the paradigm case. It provides, among other things, that goods chargeable upon their importation with customs or excise duty which are imported without payment of that duty shall, subject to specified exceptions, be liable to forfeiture. Section 139 of the 1979 Act contains provisions relating to the detention and seizure of goods. Section 139(1) provides: Any thing liable to forfeiture under the customs and excise Acts may be seized or detained by any officer or constable or any member of Her Majestys armed forces or coastguard. It can be seen that section 139(1) confers two distinct powers on the Commissioners, a power of seizure and a power of detention. Neither power is expressly said to be exercisable on the basis of reasonable grounds for suspicion or belief. In this respect they differ from some of the other powers to which we have referred. The effect of seizure is apparent from other provisions of the 1979 Act. It is the first stage of a statutory process leading to forfeiture. The process is governed by Schedule 3, to which effect is given by section 139(6). Paragraph 1 of Schedule 3 requires the Commissioners to give notice of the seizure of any thing as liable to forfeiture, and of the grounds for it, except in cases governed by paragraph 2. The exceptional cases are broadly speaking those in which the seizure was carried out in the presence of the relevant interested party. Under paragraph 3, the owner of the goods has one month from the date of the notice (or the date of seizure in a case within paragraph 2) in which to serve a notice claiming that anything seized as liable to forfeiture is not so liable. If no notice is served within that period, then the seized goods are deemed to have been duly condemned as forfeited (paragraph 5). If, on the other hand, a notice is served, the Commissioners must take proceedings for condemnation in the High Court or a magistrates court, and if the court finds that the thing was at the time of seizure liable to forfeiture the court shall condemn it as forfeited (paragraph 6). If the court holds that the goods were not liable to forfeiture, paragraph 17 provides for the Commissioners to tender to the owner a sum representing their value. The owner may then accept the tender, in which case he shall not be entitled to maintain any action on account of the seizure, detention, sale or destruction of the thing. Or he may reject it, in which case the assumption is that such a right of action will remain available. There are no corresponding provisions relating to the power to detain goods. Indeed, until the Act was amended in 2013, it contained no provisions at all dealing with the procedure for detaining property or its consequences. There can, however, be little doubt about what detention involved, even before the amendment. Detention is a temporary assertion of control over the goods, which does not necessarily involve any seizure with a view to ultimate forfeiture. What is the purpose of detaining goods without seizing them? The obvious answer is to enable the goods to be examined, or secured pending investigations which might lead to their seizure later. This was the view of the Court of Common Pleas in Jacobsohn v Blake and Compton (1844) 6 Man. & G 919; 13 LJ CP 89, a case to which we shall return, and of the majority of the Court of Appeal in Gora v Customs and Excise Commissioners [2003] EWCA Civ 525; [2004] QB 93. In his judgment in the Eastenders case, at para 30, Sales J said this: It does not require much imagination to see that there may be many cases in which there is uncertainty when HMRC officers inspect goods whether duty has been paid on them or not, and to see that in such cases the effective and fair implementation of the relevant tax and its associated enforcement regime will require that goods are held for a period while investigations are carried out in an effort to remove that uncertainty. In general (and without seeking to level criticism against the claimants in the present cases), Parliament cannot have intended that an owner of goods should be able, just by obfuscating and creating uncertainty at the point of inspection in relation to his supply chain and whether duty has or has not been paid, to avoid the full rigour of the machinery for the enforcement of payment of taxes, including by forfeiture of goods on which duty has not been paid. We agree. We have already pointed out that neither the power of seizure nor the power of detention conferred by section 139(1) is expressly said to be exercisable on the basis of reasonable grounds for suspicion or belief. However, the reasonableness of the exercise of those powers does come into it by virtue of section 144, which provides: 144.(1) Where, in any proceedings for the condemnation of any thing seized as liable to forfeiture under the customs and excise Acts, judgment is given for the claimant, the court may, if it sees fit, certify that there were reasonable grounds for the seizure. (2) Where any proceedings, whether civil or criminal, are brought against the Commissioners, a law officer of the Crown or any person authorised by or under the Customs and Excise Acts 1979 to seize or detain any thing liable to forfeiture under the customs and excise Acts on account of the seizure or detention of any thing, and judgment is given for the plaintiff or prosecutor, then if either (a) a certificate relating to the seizure has been granted under subsection(1) above; or (b) the court is satisfied that there were reasonable grounds for seizing or detaining that thing under the customs and excise Acts, the plaintiff or prosecutor shall not be entitled to recover any damages or costs and the defendant shall not be liable to any punishment. Where an officer detains property under section 139(1) because he reasonably considers that it is liable to forfeiture, section 144(2) assumes that that he may be liable if he turns out to be wrong about that, but protects him against an order for financial relief. Liable to forfeiture The first question on these appeals concerns the condition for the exercise of the power of seizure or detention under section 139(1), that the property should be liable to forfeiture. Does this mean that it must actually be liable to forfeiture? Or is it enough that the relevant officer believed or suspected that it was liable to forfeiture? Or that he wished to investigate whether it was or not? We consider that the answer to this is straightforward. The right to seize or detain property under section 139(1) is dependent on that property actually being liable to forfeiture under one of the various forfeiture provisions of the Act. This turns on the objectively ascertained facts, and not on the beliefs or suspicions of the Commissioners or their officers, however reasonable. Our reasons are as follows: (1) Throughout the 1979 Act, the draftsman has said in terms when statutory powers may be exercised on the basis of suspicion or belief rather than objective fact. A particularly striking example is section 138, which is the power corresponding to section 139 relating to the detention of persons who are liable to be detained under the Customs and Excise Acts. The power of detention is exercisable if there are reasonable grounds to suspect that the person has committed an offence. The omission of any such language from section 139 must have been deliberate. (2) The expression liable to forfeiture is used in no less than thirty sections of the 1979 Act. It would be wearisome to go through them all to make exactly the same point, which is that they are almost all sections providing that property is liable to forfeiture in defined circumstances, or in some cases providing that it is not to be liable to forfeiture in defined circumstances when it otherwise would be. In these sections, the words can only refer to actual liability to forfeiture. In all of the other sections in which the expression is used, with the possible exception of sections 139(1) and 144(2), it is equally clear that the reference is to an actual liability to forfeiture. (3) In section 139(1) it is a precondition for both seizure and detention that the goods should be liable to forfeiture. There is no difference in the way that the precondition applies to the two measures. In relation to seizure, the expression must mean actually liable to forfeiture, since seizure puts in train the procedural provisions of Schedule 3, which is wholly concerned with the condemnation of property as forfeit. On the face of it, therefore, the expression must mean the same when applied to detention. The same point can be made about the use of the expression in relation to both seizure and detention in section 144(2). (4) More generally, if liable to forfeiture does not mean actually liable to forfeiture, it is difficult to discern what it can sensibly be thought to mean. The Commissioners submission is that it refers to goods of a kind legally capable of being forfeited. This would mean that all dutiable goods were liable to forfeiture. While that is a linguistically possible meaning of the words, it is hardly the natural one. Its adoption would have the effect of conferring on customs officers a power to detain any goods which were in law dutiable, subject to no restrictions whatever other than those arising from the general principles of public law. So far as the 1979 Act is concerned, it would not even be necessary for the Commissioners to show that there were reasonable grounds for suspicion or belief. (5) Section 144(2), as we have pointed out, assumes that where property has been detained which turns out not to be actually liable to forfeiture, the Commissioners or their officers may be held liable in an action in tort. It confers an immunity in that event from an award of damages and costs if they acted reasonably. If the Commissioners or their officers were entitled to detain goods under section 139(1) on reasonable suspicion, the situation envisaged in this provision could not arise. The action would fail on liability and no immunity from damages and costs would be required. Some difficulties This interpretation of section 139(1), although in our opinion correct, would nevertheless have troubling implications if the Commissioners and their officers had no other power to detain goods. The resultant difficulties include the following: (1) As we have explained, and as Sales J recognised in the passage which we have cited, it is obviously essential to the effective implementation of the laws governing customs and excise that customs officers should be able to detain goods so as to enable them to be examined and secured pending investigations which might lead to their subsequent seizure. Sales J at first instance and Mummery LJ in the Court of Appeal inferred from that practical necessity (i) that Parliament must have intended that customs officers should have the power to detain goods where they reasonably suspect that the goods may be liable to forfeiture and require to make further inquiries, and (ii) that Parliament must therefore have intended section 139(1) to be construed as conferring such a power. The second proposition must be rejected; but the argument in support of the first proposition remains a powerful one. (2) On the hypothesis that the only power of detention is that conferred by section 139(1), and if that provision is interpreted as we consider it must be, it follows that the detention of goods is unlawful whenever the goods are not in fact liable to forfeiture. If that is so, then the detention of goods on the basis of suspicion is unlawful in all cases where the suspicion turns out to be unfounded. In the nature of things, that will be the position in a proportion of cases, even where reasonable grounds for suspicion exist. The customs officers may then be liable in damages for their interference with rights of property unless they can bring themselves within the scope of section 144(2). Even where section 144(2) applies, it only protects the officers against financial relief. (3) A further difficulty with an approach based upon an acceptance that customs officers will behave unlawfully, but will be protected from liability by section 144(2), concerns its compatibility with EU law and the Human Rights Act 1998. Under EU law, the detention of goods by customs officers may require to be justifiable as an interference with the free movement of goods: something which would scarcely be possible if the interference was unauthorised by law, or if that law failed to comply with the EU principle of legal certainty. (4) In relation to the Human Rights Act, the detention of goods by customs officers is an interference with the peaceful enjoyment of possessions within the meaning of article 1 of Protocol No 1 to the European Convention for the Protection of Human Rights and Fundamental Freedoms: see for example Islamic Republic of Iran Shipping Lines v Turkey (2007) 47 EHRR 573. As such, it must be in accordance with law, and must therefore be authorised by domestic law. Furthermore, the domestic law must meet the requirement of legal certainty. If customs officers are not authorised to detain goods which are not actually liable to forfeiture, or to detain goods for the purpose of investigation into whether they are liable to forfeiture, it follows that their doing so is unlawful by virtue of the Human Rights Act as well as under the common law. (5) The proposition that the only power of detention possessed by customs officers is that conferred by section 139(1) also raises a further difficulty. As we shall explain, there was no statutory provision in respect of detention, corresponding to section 139(1), until 1952. Can it possibly have been the position, prior to 1952, that the Commissioners and their officers had no power to secure goods, where there were reasonable grounds to suspect that they were liable to forfeiture and investigations had to be carried out, other than by pre empting the outcome of such investigations by seizing the goods and setting condemnation proceedings in train, at the risk of behaving unlawfully and incurring a liability in damages? As we have explained, the contrary was the view of the Court of Common Pleas in Jacobsohn v Blake and Compton. In view of these difficulties, it appears to us to be necessary to consider the legislative background, and some relevant authorities, in greater detail. The background to the 1979 Act Statutory regimes providing for the appointment of customs officers and vesting them with powers have existed for centuries. A thoroughgoing reform of the statute book was carried out in 1825, when almost all the statutes regulating the administration of customs and excise which were then in force, going back to the reign of Richard II, were repealed by the Act 6 Geo IV c 105, and new provisions were enacted in their place by several Acts, including the Acts 6 Geo IV c 107 and c 108. A further consolidation took place in 1833, when the 1825 legislation was repealed and replaced by a number of Acts, including the Acts 3 and 4 Will IV c 52 (An Act for the General Regulation of the Customs) and c 53 (An Act for the Prevention of Smuggling). This legislation, like that of 1825, made provision for the detention of persons: see the Act 3 and 4 Will IV c 53, sections 48 53. It also made provision for the seizure of goods which were liable to forfeiture: see the Act 3 and 4 Will IV c 53, section 32, which is a predecessor of section 139(1) of the 1979 Act. Provision was also made in respect of proceedings brought by the owners of goods which had been seized. In particular, the defendant was protected from liability in damages or costs if there had been probable cause for the seizure: see the Act 3 and 4 Will IV c 53, section 102, which is a predecessor of section 144(2) of the 1979 Act. The only statutory reference to the detention of goods at that time was made in a different context. The Act 3 and 4 Will IV c 52 required importers of goods to deliver a bill of entry of the goods, containing specified information about them. Goods which were not properly described in the bill were forfeited: section 20. Where the duty payable depended on the value of the goods, that also had to be stated. Section 22 provided that if upon examination it shall appear to the officers of the customs that such goods are not valued according to the true value thereof, it shall be lawful for such officers to detain and secure such goods, and to take such goods for the use of the Crown, the importer being paid compensation based upon his own valuation. Section 133 distinguished between goods being seized as forfeited, or detained as under valued. Then as now, the legislation conferred extensive powers upon customs officers, including a plethora of powers of entry, search and examination. The 1833 legislation was in force at the time of the case of Jacobsohn v Blake and Compton (1844) 6 Man & G 919; 13 LJ CP 89, which is one of the few reported decisions in this area of the law, and the only one which contains a detailed consideration of the relevant principles. The case was brought by the owner of a consignment of cutlery against two customs officers. The officers had examined the goods when they were landed in order to determine the duty payable (the precise statutory power under which they did so is not stated in the report: there are a number of possibilities), and had then decided to detain them, because of a suspicion that they contravened a statutory prohibition on the importation of cutlery of foreign manufacture bearing the names of British manufacturers resident in the United Kingdom, and were therefore liable to forfeiture. The officers refused to release the goods until the matter had been considered by the Commissioners. After a period of about five months, the Commissioners agreed to release the goods on payment of the duty, and the goods were duly released. An action for damages was then brought, on the basis that the detention had been unlawful. There was no express statutory basis for the detention of the goods, since they were not detained as under valued. The jury was directed to return a verdict for the defendants, and that direction was upheld by the Court of Common Pleas. Tindal CJ is reported at pp 925 926 of Manning and Grangers report as stating: [T]he defendants merely took possession of the goods, in the execution of their duty as custom house officers, for the purpose of examination. When the goods were examined certain marks were found upon them, which induced the defendants to think they were prohibited; and they said they must detain them; and then, on a subsequent application on the part of the plaintiff for the delivery of the goods, the answer was that they were detained and would be prosecuted as seizures. It appears, therefore, that the defendants originally detained the goods under a real and honest doubt that they were subject to forfeiture: whether that doubt was well grounded, is not now the question. There has been no abuse of authority on their part. The goods remained, during the whole time of the examination, in the same custody in which they were, in the first instance, legally detained. The latter part of that passage is reported slightly differently in the Law Journal report at p 90: There has been no abuse of the process which the defendants had to execute, and things remain in the same position during the whole time the goods were under examination. The implication, in both reports of the judgment, is that the process of examination was not completed until the necessary enquiries had been carried out. His Lordship left open the question whether an action might have been brought if the goods had been detained for an unreasonable time. The other judgments similarly emphasized that the officers had been acting within their authority. Coltman J stated at p 926: The defendants were custom house officers acting under an authority given them by law. It was their duty to examine the goods in question, in order to ascertain to what duty they were liable, or whether or not they were subject to forfeiture. If the goods had been afterwards detained by them for a time more than reasonable for the examination, that might have been an abuse of their authority so as to render them liable in another form of action. But it appears to me there is no ground for saying they did more than detain the goods for a reasonable time, in order that the question as to the liability of the goods to forfeiture might be submitted to the proper authorities. (In relation to the second sentence in that passage, Coltman J is reported in the Law Journal report as saying that the officers were acting under an authority given them by law to examine the goods to see whether they were liable to duty, and that I think they had also a right to examine them, to see whether they were liable to forfeiture or not). Cresswell Js judgment at pp 927 928 was to the same effect: The goods were taken by the plaintiff's agent to the proper place for the examination of them by the defendants in the regular discharge of their duty as custom house officers. Upon their examination, all that the defendants did was, to detain them, till it could be ascertained whether or not they were liable to forfeiture. Here, there was no act of trespass, either actually, or impliedly from any subsequent abuse of authority. In the present appeals, it was argued on behalf of Eastenders and First Stop that the ratio of the Jacobsohn case was confined to the situation where imported goods had been taken to a customs warehouse: the officers were entitled to decline to allow the goods to leave the warehouse until the appropriate duty had been paid. So understood, it was argued, the case had no application to cases such as the present appeals, where goods which were inside the country might be liable to forfeiture. The argument that the plaintiff could not insist upon the delivery of imported goods from a customs warehouse, so long as the duty remained unpaid, was indeed one of the arguments advanced on behalf of the officers at the trial of the case, but it does not appear to have been argued on appeal, and only the judgment of Erskine J at p 927 adverts to the point: The goods were landed and taken possession of by the defendants in the discharge of their duty, for the purpose of their being examined. Upon their being partially examined there appeared to be sufficient ground for the defendants to doubt whether they were authorised to receive the duty upon them. All that the defendants did was merely to decline to receive the duty upon them. The subsequent declaration made by them was not a declaration that what they had done amounted to a seizure, but merely a statement that, the matter being under the consideration of the commissioners, the goods could not be given up to the plaintiff. Erskine Js reference to the goods being partially examined, prior to the making of enquiries of the Commissioners, is consistent with the approach adopted in the other judgments. In any event, in the light of the other judgments, the ratio of the decision cannot be said to have been based on the non payment of duty on imported goods. In a related submission, it was argued on behalf of Eastenders and First Stop that the decision in Jacobsohn was based on a technical aspect of the law of trespass: since the officers had lawful possession of the goods initially for the purpose of examination, their subsequent detention of the goods did not involve any transfer of possession, and therefore could not amount to trespass. This argument also was advanced on behalf of the officers at the trial of the case, but it was not accepted. The court recognised that possession which was initially lawful might be rendered unlawful by an abuse of the authority under which possession had been taken, following the Six Carpenters Case (1610) 8 Co Rep 146. Hence the emphasis laid in the judgments upon the absence of any abuse of authority: as Cresswell J said, there was no trespass, either actually, or impliedly from any subsequent abuse of authority. As is clear from the passages in the judgments which we have cited, the majority of the court accepted that the detention of the goods was lawful because there had been no abuse of authority on the part of the officers; and there had been no such abuse because their authority to examine the goods in order to determine the duty payable, or (by implication) whether the goods were liable to forfeiture, carried with it, by necessary implication, an authority to detain the goods for such time as was reasonably necessary in order to make that determination. Where the determination required the making of enquiries, going beyond an inspection of the goods themselves, it was lawful to detain the goods for such time as was reasonably necessary to make those enquiries. The practical importance, and good sense, of the approach adopted in the Jacobsohn case to the scope of an examination of goods can be illustrated both by the facts of that case and by the facts of the present appeals. In that case, as we have explained, the statutory prohibition was on the importation of cutlery of foreign manufacture bearing the names or marks of British manufacturers resident in the United Kingdom. Some of the cutlery in question was impressed with the words Watson, Barbican, Norton Folgate, and some with the words Daniel Lutter, extra patent silver steel. A visual examination alone could not enable the officers to know where the cutlery had been manufactured, or whether Watson and Lutter were British manufacturers resident in the United Kingdom. In the present appeals, as counsel for Eastenders submitted, the question whether beer or wine is liable to forfeiture as not duty paid will not be resolved by gazing at the goods, for whatever length of time. It will only be resolved by examining the paper trail back to the point of duty payment. As we have explained, the power of detention which was held to exist in Jacobsohn was not expressly conferred by the customs and excise legislation, but arose by necessary implication from the officers statutory power to examine goods for the purpose of determining the duty payable or whether they were liable to forfeiture. It was not conditional upon the goods being liable to forfeiture: as Tindal CJ observed, whether the officers suspicions were well grounded was not the question. It was sufficient, in order for the power of detention to be lawfully exercised, that the officers should have, in the words of Tindal CJ, a real and honest doubt that the goods were liable to forfeiture. The protection from liability in damages or costs which was conferred on customs officers where goods had been mistakenly seized as liable to forfeiture had nothing to do with such detention, and did not feature in the case: since the detention of the cutlery was impliedly authorised by statute, it could not constitute a tort. The approach adopted in the case of Jacobsohn is consistent with the approach to a statutory power of examination which was taken more recently in the case of R v Secretary of State for the Home Department, Ex p Labiche [1991] Imm AR 263, a decision of the Court of Appeal concerned with immigration. The immigration legislation gave immigration officers the power to examine any person entering the United Kingdom, and required that a person examined by an immigration officer should be given notice, granting or refusing leave to enter the United Kingdom, not later than 12 hours after the conclusion of his examination. The appellant had been given a notice refusing leave more than 12 hours after being interviewed by an immigration officer, and argued that the notice was out of time. The Court of Appeal disagreed. Fox LJ, with whom Butler Sloss LJ and Sir Roualeyn Cumming Bruce agreed, said at p 268 that the examination cannot terminate until (a) necessary inquiries by the immigration officer or the Secretary of State have been completed and (b) the immigration officer has received the directions of the Secretary of State. The approach adopted to the concept of examination in this context was the same, mutatis mutandis, as that adopted in Jacobsohn. It is also relevant to note the earlier customs case of Irving v Wilson (1791) 4 Durn & E 485. That action was brought in the Court of Kings Bench for the recovery of money had and received by customs officers. The officers had stopped a cart containing goods which required a permit, without which they were liable to forfeiture. The carrier did not have a permit, but told the officers that the goods formed part of a larger consignment, and that a permit for the entire consignment was with the remainder of the consignment, some miles behind. The officers waited some time, but the remainder of the consignment did not appear. The officers then seized the goods. When the remainder of the consignment eventually arrived, and the permit was produced, those goods also were seized. The officers then refused to restore the goods until a payment had been made by the owner. He succeeded in his action for the recovery of the payment. The significance of the case in the present context arises not from that decision, but from some of the observations made. Ashurst J noted at p 486 that the goods were not liable to seizure, but also stated at pp 486 487 that the defendants acted right in stopping the goods at first; but when the permit came up, there was no pretence to detain them. The implication appears to be that it was lawful to detain the goods while there were reasonable grounds for suspecting that they might be liable to forfeiture. Lord Kenyon CJ similarly distinguished at p 486 between the initial detention and the subsequent seizure, stating that whatever ground of probability there was for stopping the first cart, yet after the matter was cleared up, there was no pretence for making a seizure. Returning to the history of the legislation, following the 1833 consolidation a further consolidation took place in 1845, when generally similar provision was made by the Act 8 and 9 Vict c 86 and the Act 8 and 9 Vict c 87. The next consolidation, in the Customs Consolidation Act 1853, amalgamated in a single Act the provisions formerly contained in separate statutes dealing with the regulation of customs and the prevention of smuggling. It also amalgamated, in section 223, the previously separate provisions in respect of the seizure of goods liable to forfeiture, on the one hand, and the detention of suspected offenders, on the other hand. The consequence was that a reference to detention appeared for the first time in a provision dealing with the seizure of goods. Generally similar provisions were contained in the next consolidation statute, namely the Customs Consolidation Act 1876. Section 202 again dealt in a single provision with the seizure of goods liable to forfeiture and the detention of persons. The provisions dealing with legal proceedings were drafted, as previously, on the basis that claims would be brought by the owners of goods which had been seized as liable to forfeiture; and section 267, protecting officers from liability, applied only where the goods had been seized. The final consolidation prior to the 1979 Act was effected by the Customs and Excise Act 1952. Like the earlier legislation, the 1952 Act conferred on customs officers extensive powers of investigation. The Act reverted to the separate treatment of the detention of persons, in section 274, and the seizure of goods, in section 275. Section 275(1) however retained the reference to detention which had appeared in section 223 of the 1853 Act and section 202 of the 1876 Act, and provided in subsection (1) that any thing liable to forfeiture under the customs or excise Acts may be seized or detained by any officer or constable or any member of Her Majestys armed forces or coastguard. That provision is almost identical to section 139(1) of the 1979 Act. The 1952 Act also extended the scope of the protection from liability given to customs officers, by providing in section 280(2) that there should be no civil or criminal liability on account of the seizure or detention of any thing liable to forfeiture if the court were satisfied that there were reasonable grounds for seizing or detaining that thing. That provision is almost identical to section 144(2) of the 1979 Act. The effect of section 275(1) of the 1952 Act was to create an express statutory power to detain goods which were liable to forfeiture. Such a power is clearly distinct from the power to detain as part of the process of examination, and has a different purpose and different legal consequences. It was and is available only where goods are liable to forfeiture, whereas the power of detention discussed in the case of Jacobsohn is available where there are reasonable grounds for suspecting that goods are so liable. The power of detention conferred by section 275(1) of the 1952 Act, and now contained in section 139(1) of the 1979 Act, is an alternative to the seizure of the goods in question, but differs from seizure in that it is temporary in nature and does not trigger the commencement of proceedings for the condemnation of the goods. As Elias LJ suggested in the Eastenders case, there could be circumstances in which goods were considered to be liable to forfeiture but in which the Commissioners might not wish to embark at once upon a procedure leading to the condemnation of the goods, for example where the breach of the law was capable of correction. Detention under section 139(1), unlike detention for the purpose of investigation, would require, and would attract, the protection afforded by section 144(2). The important question for present purposes is whether, when Parliament created the power to detain goods liable to forfeiture, it by implication abolished the power of detention which had previously been held to arise by necessary implication from statutory powers of examination. In our view no such implication follows, for several reasons. (1) Temporally, the powers are distinct: the process of examination precedes the reaching of a conclusion whether goods are liable to forfeiture. In terms of purpose, the powers are equally distinct. The purpose for which the power to detain, as an incident of examination, may be exercised is to enable the officers to retain control over the goods temporarily until they have arrived at a conclusion as to the duty payable or as to whether the goods are liable to forfeiture. The purpose for which goods may be detained after such a conclusion has been reached is plainly different, and would appear to be as Elias LJ suggested. There is therefore no necessary implication that the enactment of a power to detain goods liable to forfeiture entailed the abrogation of the existing power to detain as part of the process of examination. (2) It is difficult to conceive why Parliament should have conferred upon the Commissioners and their officers a wider range of intrusive investigatory powers than any other public body, but should at the same time have chosen to deprive them of a means of preventing goods from being disposed of until they have completed their examination and decided whether the goods should be seized. Why depart from an approach long approved by the courts? Why, moreover, should Parliament have conferred on the Commissioners more extensive powers to detain persons (in section 138 of the 1979 Act) than to detain goods? (3) The 1952 Act was a consolidation Act with amendments. There is nothing in the report of the Committee reporting on the Bill (Report of the Committee on the Draft Customs and Excise Bill (1951), Cmd 8453), or in the notes on clauses prepared by Parliamentary counsel, included as an appendix to the report, to indicate that Parliament intended the 1952 Act to have the effect of restricting the existing powers of detention possessed by customs officers. We turn now to consider the present appeals in the light of these general observations. The Eastenders case In the Eastenders case, there is no dispute that the officers were entitled to inspect the goods in question in accordance with section 118C(2) of the 1979 Act, and to require the production of documents under section 118B. It is also not in dispute that, as Sales J found, the officers had reasonable grounds to suspect that duty had not been paid on the goods. The officers were unable to fulfil the object of the inspection, by determining whether the appropriate duties had been paid, without making further enquiries into the provenance of the goods. They detained the goods while those enquiries were made. It is not in dispute that the period during which the goods were detained did not exceed a reasonable period of time. In the present appeal, counsel for the Commissioners submitted that section 118C(2) of the 1979 Act authorised the detention of the goods until the statutory inspection had been completed, and further submitted, in the light of the Jacobsohn case, that there was, and had always been, a power to detain goods pending determination of whether or not they were liable to forfeiture. It was however their primary contention that the inspection of the goods came to an end when the goods had been visually examined, and that their subsequent detention must therefore be justified under section 139(1). For the reasons we have explained at paras 35 37, we consider that that approach is based upon an unduly narrow understanding of what may be involved in an inspection in such circumstances. As we have explained at para 23, we consider that the majority of the Court of Appeal were correct in their construction of section 139(1). They were therefore correct to hold that, since the goods were not in fact liable to forfeiture, their detention did not fall within the scope of section 139(1). It does not however follow that the officers had no power to detain the goods for the purpose of investigating their duty status. Since the officers were carrying out a lawful inspection of the goods for the purpose of determining whether the appropriate duties had been paid, and had reasonable grounds to suspect that duty had not been paid, they were in our view entitled by virtue of section 118C(2) to detain the goods for a reasonable period in order to complete the enquiries necessary to make their determination. The First Stop Case In the First Stop case, there is no dispute that the officers were entitled to examine the goods in question in accordance with section 112 of the 1979 Act, and to require the production of documents under section 112A. The officers were unable to fulfil the object of the examination, by determining whether the appropriate duties had been paid, without making further enquiries into the provenance of the goods. They detained the goods while those enquiries were made. They appear to have had reasonable grounds for suspicion that duty had not been paid, and the contrary has not been argued. It has not been argued that the period during which the goods were detained exceeded a reasonable period of time. As in the Eastenders appeal, it was submitted on behalf of the Commissioners that the power of examination conferred by section 112 permitted the Commissioners to detain the goods for the purpose of their examination, and that there was a power to detain the goods pending determination of whether or not they were liable to forfeiture. These were again, however, conceived to be distinct powers, on the assumption that the examination of the goods came to an end when they had been visually inspected. It was therefore the Commissioners primary contention that the power to detain the goods after that point must have some other source, section 139(1) being the only candidate. As in the Eastenders appeal, we consider however that the examination was not completed until the necessary enquiries had been made, and that the power of examination impliedly included an ancillary power of detention for a reasonable time while those enquiries were made. Counsel for First Stop submitted that this approach to the case was not open to the Commissioners, since they had expressly referred to section 139(1) as the legal basis of the detention of the goods: see para 8 above. We are unable to accept that submission. The lawfulness of the detention of the goods depends upon whether the Commissioners possessed the power to detain them, not on whether they accurately identified the statutory source of that power. The reasons given to First Stop for the detention of the goods (pending further enquiries into their duty status), although certainly not expansive, were sufficient to enable them to exercise their rights, as indeed they did. As we have explained, section 144(2) of the 1979 Act confers a protection against liability in damages or costs. It applies where any proceedings are brought against the Commissioners, a law officer of the Crown or any person authorised by or under the [1979 Act] to seize or detain any thing liable to forfeiture under the customs and excise Acts on account of the seizure or detention of any thing, and judgment is given for the plaintiff or prosecutor. In the circumstances of the Eastenders and First Stop cases, judgment should not have been given for the claimants: on a proper understanding, the detention of their goods had been lawful, and their applications for judicial review should therefore have been dismissed. Section 144(2) was therefore not applicable. The court should have exercised its ordinary discretion in relation to the costs of the proceedings. It is unnecessary to decide whether, in any event, section 144(2) applies where goods are detained otherwise than under section 139(1). It follows that the points that were raised by First Stop (and which Eastenders also sought to raise) in relation to the compatibility of section 144(2) with Convention rights do not arise. It also follows, however, that the decisions on costs in both cases were made on a mistaken basis. No court has been addressed on the issue of costs in these cases on the basis that the court possessed its ordinary discretion. In the circumstances, it is appropriate that the decisions on costs should be set aside and the matter re considered by this court on the proper basis. Disposition For these reasons, we would allow the Commissioners appeal in the Eastenders case, and dismiss the first of the appeals brought by First Stop. The appeal in relation to costs should be allowed. The decision of the Court of Appeal in relation to costs in the Eastenders case should also be set aside. The parties should be invited to make submissions on the issue of costs in this court and the courts below. |
This appeal raises an important question in relation to the law of damages: in what circumstances can damages for breach of contract be assessed by reference to the sum that the claimant could hypothetically have received in return for releasing the defendant from the obligation which he failed to perform? Damages assessed on this basis, sometimes described as Wrotham Park damages, after the case of Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798, have attracted considerable debate, both judicial and academic. That debate, and the confused state of the authorities, have reflected a lack of clarity as to the theoretical underpinning of such awards, and consequent uncertainty as to when they are available. This is the first occasion on which the issue has come before the highest court for decision, although there was some discussion of Wrotham Park in Attorney General v Blake [2001] 1 AC 268. In engaging with this issue, the court has had the assistance of strongly argued submissions by counsel, supported by extensive citation of case law and academic scholarship. It is necessary to recognise at the outset that the term Wrotham Park damages has been used rather loosely in the authorities, as Lord Walker of Gestingthorpe observed in Pell Frischmann Ltd v Bow Valley Iran Ltd [2009] UKPC 45; [2011] 1 WLR 2370, para 46. He referred in particular to the failure to distinguish clearly between its use, on the one hand, to describe every type of compensatory damages which exceed the actual financial loss to the claimant, and, on the other hand, damages awarded in lieu of specific performance or an injunction under the jurisdiction created by section 2 of the Chancery Amendment Act 1858 (Lord Cairns Act); and, in the latter context, between non proprietary breaches of contract, and those involving the invasion of a property right. This judgment will abjure the use of the term Wrotham Park damages. Although it will be necessary to consider the case of Wrotham Park, it is a source of potential confusion because of the opacity of its reasoning, and it can now be regarded as being of little more than historical interest. Instead, this judgment will use the expression negotiating damages, introduced by Neuberger LJ in Lunn Poly Ltd v Liverpool & Lancashire Properties Ltd [2006] EWCA Civ 430; [2006] 2 EGLR 29, para 22. In Pell Frischmann, Lord Walker listed what he regarded as the most illuminating of the judgments on this subject since Wrotham Park itself. He extracted from them the following general principles, at para 48: (1) Damages (often termed user damage) are readily awarded at common law for the invasion of rights to tangible moveable or immoveable property (by detinue, conversion or trespass) (2) Damages are also available on a similar basis for patent infringement and breaches of other intellectual property rights of a proprietary character (3) Damages under Lord Cairnss Act are intended to provide compensation for the courts decision not to grant equitable relief in the form of an order for specific performance or an injunction in cases where the court has jurisdiction to entertain an application for such relief (4) Damages under this head (termed negotiating damages by Neuberger LJ in Lunn Poly at para 22) represent such a sum of money as might reasonably have been demanded by [the claimant] from [the defendant] as a quid pro quo for [permitting the continuation of the breach of covenant or other invasion of right]: Lunn Poly at para 25. (5) Although damages under Lord Cairnss Act are awarded in lieu of an injunction it is not necessary that an injunction should actually have been claimed in the proceedings, or that there should have been any prospect, on the facts, of it being granted In Pell Frischmann it was unnecessary to consider the wider issues raised by the present appeal. For reasons which will be explained, it will be necessary to qualify principles (4) and (5) to some extent, and to add a number of others. It is convenient to preface the discussion with an explanation of the context in which the question arises in the present case, by summarising the facts of the case and the history of the proceedings. The facts The relevant events can be summarised as follows. In 1999 the first defendant established a business providing support for young people leaving care. In 2002 she agreed to sell a 50% interest to a Mr and Mrs Costelloe. The claimant company, One Step (Support) Ltd (One Step), was incorporated as a vehicle for the transaction. The first defendant and Mrs Costelloe each subscribed for 50% of its issued share capital and were appointed as its directors. They entered into a shareholders agreement which included provision for dealing with a deadlock between the directors by enabling each of them to serve a notice requiring the other director either to buy the shares of the director serving the notice at a specified price, or to sell her own shares to that director at the same price. The first defendant and Mr Costelloe then ran the business, and the second defendant performed a managerial role. The business comprised the provision of rented accommodation and support services to enable vulnerable individuals referred by local authorities, such as children and young people leaving care, and adults with mental health and learning disabilities, to live as independent lives as possible in the community. The services were provided to local authorities in West London and the Thames Valley. The business prospered for some years, but over time the working relationship between the first defendant and Mr Costelloe deteriorated. In April 2006, the first defendant emailed to her personal email account confidential market research information held by the claimant. In May 2006, Mrs Costelloe gave notice of her intention to serve a deadlock notice. In July 2006, the first defendant incorporated another company, Positive Living Ltd. She and the second defendant were its sole shareholders. In August 2006 Mrs Costelloe served a deadlock notice, offering either to sell her shareholding to the first defendant, or to buy the first defendants shareholding, for 3.15m. The first defendant elected to require Mrs Costelloe to buy her shares. In December 2006 a buy out agreement was entered into. The first defendant sold her shares to Community Support Project Ltd (CSPL), a vehicle company incorporated and owned by Mr Costelloe, for 3.15m, and agreed to resign as a director of the claimant. She also agreed with the claimant to be bound for a period of three years by covenants requiring her to keep information concerning its business transactions confidential, and prohibiting her from engaging in a business that was in competition with it or soliciting its clients, without its consent, such consent not to be unreasonably withheld. As part of the same transaction, the second defendant terminated her employment with the claimant and agreed to be bound by similar covenants against competition and solicitation. In August 2007, Positive Living began trading in West London and the Thames Valley in competition with the claimant. By early 2008, the claimants business had experienced a significant downturn. In February 2008, solicitors acting on its behalf wrote to the first defendant, threatening to bring proceedings for an injunction. Following an exchange of correspondence, the matter was not pursued further at that time. In December 2009, the three year period of restraint specified in the covenants expired. In September 2010, after further correspondence had passed between the defendants solicitors and solicitors acting for the claimant, the defendants sold their shares in Positive Living for 12.8m. In July 2012, the claimant issued the present proceedings, alleging that the defendants had acted in breach of the covenants and in breach of an equitable duty of confidence, had induced each other to breach the covenants, and had conspired with each other to injure it by unlawful means. In relation to remedies, in respect of the breach of the non compete and non solicit covenants it sought an account of profits, or alternatively what were described as restitutionary damages, in such sum as it might reasonably have demanded as a quid pro quo for releasing the defendants from those covenants, or, in a further alternative, what were described as compensatory damages for the loss it had suffered by reason of the defendants breach of those covenants. In respect of the breach of confidence, it sought an account of profits, or alternatively damages. For the purposes of the proceedings, the claimant produced reports by forensic accountants quantifying the loss which it had allegedly suffered in consequence of the defendants alleged breach of the covenants, the benefits obtained by the defendants, and the hypothetical release fee. Mr Christopher Hine estimated the loss that the claimant had suffered at between 3.4m and 4.6m, depending on the gross profit margin on sales which was assumed. Put shortly, he estimated the sales which the claimant would have made in the absence of competition from Positive Living during the period when the defendants were in breach of contract, compared those with the sales actually made, and applied a profit margin to the shortfall. He based his estimate of the sales which would have been made in the absence of competition from Positive Living on the trend of sales during the period after the defendants departure from the business and before the breach of contract commenced, on a forecast of profits which had been independently prepared for the claimant in September 2006, and on a market analysis establishing the extent to which Positive Livings sales were achieved at the expense of the claimant. He added a further sum in respect of an additional loss of profits after the restrictive covenants expired, again based on a comparison between projected sales in the absence of competition from Positive Living and actual sales. He added that loss of goodwill was not within his expertise. Mr Andrew Grantham estimated the hypothetical licence fee at between 5.6m and 6.3m. He did so by estimating what a reasonable person in the position of the claimant would have agreed to accept in return for releasing the defendants from the covenants, and what a reasonable person in the position of the defendants would have agreed to pay for that release, and then identifying the area of overlap. The hypothetical negotiation which he envisaged was highly complex and cannot be easily summarised. In simplified terms, the reasonable person in the position of the claimant was envisaged as seeking the payment of an initial release fee and the grant of an option entitling it to acquire the defendants competing business at a discount to its market value, while the reasonable person in the position of the defendants was envisaged as being unwilling to pay more than the discounted value of an accelerated sale of Positive Livings business, plus the amount obtained on the first defendants sale of her shares in the claimant, to the extent that it was invested in activities on the part of Positive Living which were not in competition with the claimant. One notable feature is that the starting point, on the claimants side of the hypothetical negotiation, was an estimate of the claimants cash flows and profits in the absence of competition from Positive Living, the equivalent figures in the presence of such competition, and an assumed profit margin. These estimates were taken from Mr Hines report. Since damages have not yet been assessed, it is appropriate for this court to be circumspect in its comments on the reports. One observation can however be made. Much has been made in the judgments below, and in the submissions on behalf of the claimant, of the difficulty of estimating the loss which it suffered, and the comparative simplicity of estimating the hypothetical release fee. So far as appears from the reports, the proposition that estimating the hypothetical release fee is simpler in this case than estimating the loss suffered does not hold water. The proceedings below The trial judge, Phillips J, ordered that the issues of liability, and the claimants entitlement to the remedies sought, should be tried first. Following trial, he found ([2014] EWHC 2213 (QB)) that the defendants had acted in breach of contract by breaching the non compete covenants (although less extensively than had been assumed in the expert reports) between August 2007 and 20 December 2009, that they had also breached the non solicit covenants between 20 December 2006 and 20 December 2009 by soliciting business from seven local authorities, and that the first defendant had also acted in breach of the contractual confidentiality clause and an equitable duty of confidence by appropriating the market research information in April 2006 and subsequently using it to set up Positive Living. He did not find it necessary to determine the claims in tort. In relation to remedies, the judge did not make any separate order in respect of the first defendants breach of her contractual and equitable duties of confidence. He also declined to order an account of profits in respect of any of the breaches of duty. Implicitly, he appears to have proceeded on the basis that no separate award for the breach of confidence was necessary, since the harm which it caused would be reflected in an award in respect of the breach of the non compete and non solicit covenants. No appeal has been taken against these aspects of his decision. He concluded that this was a prime example of a case in which Wrotham Park damages (as he described them) should be and were available. It would, he said, be difficult for the claimant to identify the financial loss it had suffered by reason of the defendants wrongful competition, not least because there was a degree of secrecy in the establishment of Positive Livings business which had not been fully reversed by the disclosure process. In his judgment it would be just for the claimant to have the option of recovering damages in the amount which might reasonably have been demanded in 2007 for releasing the defendants from their covenants, not least because the covenants provided that the restraint was subject to consent, not to be unreasonably withheld. He accordingly granted a declaration that the claimant was entitled to judgment for damages to be assessed on a Wrotham Park basis (for such amount as would notionally have been agreed between the parties, acting reasonably, as the price for releasing the defendants from their obligations) or alternatively ordinary compensatory damages. The claimant then elected for damages on the so called Wrotham Park basis, and a hearing on quantum was fixed. It has not yet been held. An appeal was dismissed. Christopher Clarke LJ, with whom King LJ agreed ([2017] QB 1), considered that the test was whether an award of damages on the Wrotham Park basis was the just response in the particular case. That was a matter for the judge to decide on a broad brush basis. He was entitled to take into account the difficulties which the claimant would have in establishing damages on the ordinary basis. There would be very real problems in showing what placements the claimant lost because of the appearance of Positive Living on the scene, and in addition any loss of goodwill was inherently difficult to measure. Christopher Clarke LJ observed that the amount taken as the reasonable sum for the relaxation of restrictive covenants might represent more, perhaps far more, than the loss realistically to be regarded as, in the event, suffered by their breach. So a Wrotham Park award could bear no relationship to the practical effect of any competition from Positive Living. Further, the assessment of a reasonable price might involve consideration of several imponderables, such as the likely effect of future competition, which would also arise in any assessment of general damages. Nevertheless, Christopher Clarke LJ did not regard these considerations as justifying a denial of Wrotham Park damages. First, the price that might reasonably be demanded for the relaxation of a covenant might necessarily exceed the loss that would have been suffered by the actual breach, since the price reflected the risk that breach of the covenant might result in a greater risk than had in fact occurred (something which, it might be thought, was a reason for declining to award damages on the Wrotham Park basis, rather than the reverse). Secondly, in deciding on the appropriate price the court must exercise a robust judgment (para 131) which took account of the likely extent and effect of any competition. Further, justice might require the court to take into account facts and events after the date of the hypothetical negotiation, or to take a post breach valuation date. Longmore LJ gave a concurring judgment, in which he confessed to having found the question more difficult. As he put it, judges like to act in accordance with accepted principle and it is not easy to set out the principles by which it is possible to decide that Wrotham Park damages should be awarded (para 143). He treated an award of Wrotham Park damages as being justified where three factors, identified by Peter Gibson LJ in Experience Hendrix LLC v PPX Enterprises Inc [2003] EWCA Civ 323; [2003] 1 All ER (Comm) 830, para 58, were present: (1) there was a deliberate breach by the defendant of its contractual obligations for its own reward; (2) the claimant would have difficulty in establishing financial loss therefrom; and (3) the claimant had a legitimate interest in preventing the defendants profit making activity in breach of contract. On the facts, all three factors were considered to be present. The issues in the present appeal are agreed by the parties to be, first, where a party is in breach of contract, in what if any circumstances is the other party to the contract entitled to seek negotiating damages, ie damages assessed by reference to a hypothetical negotiation between the parties, for such amount as might reasonably have been demanded by the claimant for releasing the defendants from their obligations; and secondly, whether the Court of Appeal was correct to uphold the judges finding that such damages are available in this case. First principles The award of negotiating damages under Lord Cairns Act, and also at common law, has been influenced by the award of user damages at common law for the tortious invasion of rights to tangible property, and the award of damages on a similar basis for infringements of intellectual property rights. Before considering the circumstances in which negotiating damages may be available at common law for breach of contract, it is necessary to consider (i) the award of user damages in tort, and also to remind oneself of some general principles governing (ii) common law damages for breach of contract, and (iii) the jurisdiction to award damages under Lord Cairns Act. (i) User damages in tort In tort, although damages may in some circumstances be awarded for punitive purposes, the general principle is that damages are compensatory. As Lord Blackburn said in Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, 39; (1880) 7R (HL) 1, 7: I do not think there is any difference of opinion as to its being a general rule that, where any injury is to be compensated by damages, in settling the sum of money to be given for reparation of damages you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation. Lord Blackburns principle can readily be applied in situations where some tangible loss has been sustained: for example, where real property has been damaged or taken by a trespasser (as in the Livingstone case itself), or where goods have been converted. Its application is less obvious in situations where there has been an invasion of rights to tangible moveable or immoveable property, but there has been no pecuniary loss or physical damage to the property in question. Nevertheless, where a trespasser has made valuable use of someone elses land, without causing any diminution in its value, the landowner has been held to be entitled to damages measured as what a reasonable person would have paid for the right of user: see, for example, Whitwham v Westminster Brymbo Coal and Coke Co [1896] 2 Ch 538. A similar approach has been adopted in cases of detinue, such as Strand Electric and Engineering Co Ltd v Brisford Entertainments Ltd [1952] 2 QB 246. Damages are also available on a similar basis for patent infringement and breaches of other intellectual property rights. The basis of the award of damages in cases of this kind was considered by Lord Shaw of Dunfermline in Watson, Laidlaw & Co Ltd v Pott, Cassels & Williamson 1914 SC (HL) 18; (1914) 31 RPC 104. The case concerned the sale of machines which infringed the pursuers patent. The issue in dispute was whether the pursuers were entitled to recover damages for sales which had been made by the defenders in a territory where the pursuers could not themselves have traded, and which, moreover, the defenders would have made even if the machines had not incorporated the infringing part. It was held that they were so entitled. Lord Shaw contrasted the principle underlying the assessment of damages in general, whether in contract or in tort, which he described as the principle of restoration as he defined it, with a second principle of price or hire, applicable not only to patent cases but whenever an abstraction or invasion of property has occurred (pp 29 31). As he explained, this distinction was relevant to the case before him, since the restoration principle could not support a claim by a patentee relating to a section of trade in which, it was argued, he can have sustained no damage, because he would never have sold his patented articles within that section (p 30). Lord Shaw described the second principle as follows, in a passage at p 31 subsequently quoted by Brightman J in Wrotham Park: It is at this stage of the case, however, that a second principle comes into play. It is not exactly the principle of restoration, either directly or expressed through compensation, but it is the principle underlying price or hire. It plainly extends and I am inclined to think not infrequently extends to patent cases. But, indeed, it is not confined to them. For wherever an abstraction or invasion of property has occurred, then, unless such abstraction or invasion were to be sanctioned by law, the law ought to yield a recompense under the category or principle, as I say, either of price or of hire. He illustrated this by the example of the liverymans horse, also at p 31: If A, being a liveryman, keeps his horse standing idle in the stable, and B, against his wish or without his knowledge, rides or drives it out, it is no answer to A for B to say: Against what loss do you want to be restored? I restore the horse. There is no loss. The horse is none the worse; it is the better for the exercise. Lord Shaw also endorsed the view expressed by Fletcher Moulton LJ in Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 RPC 157, 165 that, even if it was not the claimants practice to grant licences, it would be right for the court to consider what would have been the price at which although no price was actually quoted could have reasonably been charged for that permission, and estimate the damage in that way. The approach adopted in these cases was described by Nicholls LJ in Stoke on Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406 as the user principle. He summarised it as follows, at p 1416: It is an established principle concerning the assessment of damages that a person who has wrongfully used anothers property without causing the latter any pecuniary loss may still be liable to that other for more than nominal damages. In general, he is liable to pay, as damages, a reasonable sum for the wrongful use he has made of the others property. The law has reached this conclusion by giving to the concept of loss or damage in such a case a wider meaning than merely financial loss calculated by comparing the property owners financial position after the wrongdoing with what it would have been had the wrongdoing never occurred. Furthermore, in such a case it is no answer for the wrongdoer to show that the property owner would probably not have used the property himself had the wrongdoer not done so. In The Mediana [1900] AC 113, 117, Earl of Halsbury LC made the famous observation that a defendant who had deprived the plaintiff of one of the chairs in his room for 12 months could not diminish the damages by showing that the plaintiff did not usually sit upon that chair or that there were plenty of other chairs in the room. In these cases, the courts have treated user damages as providing compensation for loss, albeit not loss of a conventional kind. Where property is damaged, the loss suffered can be measured in terms of the cost of repair or the diminution in value, and damages can be assessed accordingly. Where on the other hand an unlawful use is made of property, and the right to control such use is a valuable asset, the owner suffers a loss of a different kind, which calls for a different method of assessing damages. In such circumstances, the person who makes wrongful use of the property prevents the owner from exercising his right to obtain the economic value of the use in question, and should therefore compensate him for the consequent loss. Put shortly, he takes something for nothing, for which the owner was entitled to require payment. (ii) Common law damages for breach of contract It is necessary next to consider some basic principles of the law relating to damages for breach of contract: principles which it will be necessary to bear in mind at a later stage of this judgment, when considering the case of Attorney General v Blake and its aftermath. Damages in contract serve a different remedial purpose from damages in tort, reflecting the different nature of the obligation breached by the wrongdoer in each case. The law of tort is concerned with civil wrongs, that is to say with breaches of duties imposed by the law, sometimes generally and sometimes on those who are party to particular relationships or have assumed particular responsibilities, which protect the interests of others in respect of such matters as their bodily integrity, their liberty, their property, their privacy and their reputation. Damages in tort are generally intended to place the claimant as nearly as possible in the same position as he would have been in if the tort had not been committed. The law of contract, on the other hand, gives effect to consensual agreements entered into by particular individuals in their own interests. Remedies granted by the courts are designed to give effect to what was voluntarily undertaken by the parties. Damages in contract are therefore intended to place the claimant in the same position as he would have been in if the contract had been performed. In Robinson v Harman (1848) 1 Exch 850, Parke B said: The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed. That statement has been endorsed on many occasions at the highest level, most recently in Bunge SA v Nidera NV (formerly Nidera Handelscompagnie BV) [2015] UKSC 43; [2015] Bus LR 987, para 14, where it was described as the fundamental principle of the common law of damages. It has also been described as the ruling principle (Wertheim v Chicoutimi Pulp Co [1911] AC 301, 307), the fundamental basis for assessing damages (British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd (No 2) [1912] AC 673, 689), and the lodestar (Golden Strait Corpn v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] UKHL 12; [2007] 2 AC 353, para 36). That is not to say that damages in contract will always be different from damages in tort. For example, the damages awarded in cases of medical negligence do not normally depend on whether the claimant was a private patient: the substance of the obligation breached, and the recoverable harm caused, are normally the same whether the cause of action is framed in contract or in tort. Equally, the user principle derived from the property cases discussed earlier is of potential relevance whether the wrongful use of property arises in a contractual or tortious context. The compensatory nature of damages for breach of contract, and the nature of the loss for which they are designed to compensate, were explained by Lord Diplock in Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, 848 849. As his Lordship stated, a contract is the source of primary legal obligations upon each party to it to procure that whatever he has promised will be done is done. Leaving aside the comparatively rare cases in which the court is able to enforce a primary obligation by decreeing specific performance of it, breaches of primary obligations give rise to substituted or secondary obligations on the part of the party in default. Those secondary obligations of the contract breaker arise by implication of law: The contract, however, is just as much the source of secondary obligations as it is of primary obligations . Every failure to perform a primary obligation is a breach of contract. The secondary obligation on the part of the contract breaker to which it gives rise by implication of the common law is to pay monetary compensation to the other party for the loss sustained by him in consequence of the breach . (p 849) Damages for breach of contract are in that sense a substitute for performance. That is why they are generally regarded as an adequate remedy. The courts will not prevent self interested breaches of contract where the interests of the innocent party can be adequately protected by an award of damages. Nor will the courts award damages designed to deprive the contract breaker of any profit he may have made as a consequence of his failure in performance. Their function is confined to enforcing either the primary obligation to perform, or the contract breakers secondary obligation to pay damages as a substitute for performance (subject, according to the decision in Attorney General v Blake, to a discretion to order an account of profits in exceptional circumstances where the other remedies are inadequate). The damages awarded cannot therefore be affected by whether the breach was deliberate or self interested. It follows from the principle in Robinson v Harman that the language of election is not appropriate in a discussion of the quantification of damages for breach of contract. The objective of compensating the claimant for the loss sustained as a result of non performance (an expression used here in a broad sense, so as to encompass delayed performance and defective performance) makes it necessary to quantify the loss which he sustained as accurately as the circumstances permit. What is crucial is first to identify the loss: the difference between the claimants actual situation and the situation in which he would have been if the primary contractual obligation had been performed. Once the loss has been identified, the court then has to quantify it in monetary terms. The quantification of economic loss is often relatively straightforward. There are, however, cases in which its precise measurement is inherently impossible. As Toulson LJ observed in Parabola Investments Ltd v Browallia Cal Ltd (formerly Union Cal Ltd) [2010] EWCA Civ 486; [2011] QB 477, para 22: Some claims for consequential loss are capable of being established with precision (for example, expenses incurred prior to the date of trial). Other forms of consequential loss are not capable of similarly precise calculation because they involve the attempted measurement of things which would or might have happened (or might not have happened) but for the defendants wrongful conduct, as distinct from things which have happened. In such a situation the law does not require a claimant to perform the impossible, nor does it apply the balance of probability test to the measurement of the loss. An example relevant to the present case is the situation where a breach of contract affects the operation of a business. The court will have to select the method of measuring the loss which is the most apt in the circumstances to secure that the claimant is compensated for the loss which it has sustained. It may, for example, estimate the effect of the breach on the value of the business, or the effect on its profits, or the resultant management costs, or the loss of goodwill: see Chitty on Contracts, 32nd ed (2015), paras 26 172 26 174. The assessment of damages in such circumstances often involves what Lord Shaw described in Watson, Laidlaw at pp 29 30 as the exercise of a sound imagination and the practice of the broad axe. Evidential difficulties in establishing the measure of loss are reflected in the degree of certainty with which the law requires damages to be proved. As is stated in Chitty, para 26 015, [w]here it is clear that the claimant has suffered substantial loss, but the evidence does not enable it to be precisely quantified, the court will assess damages as best it can on the available evidence. In so far as the defendant may have destroyed or wrongfully prevented or impeded the claimant from adducing relevant evidence, the court can make presumptions in favour of the claimant. The point is illustrated by the case of Armory v Delamirie (1721) 1 Str 505, where a chimney sweeps boy found a jewel and took it to the defendants shop to find out what it was. The defendant returned only the empty socket, and was held liable to pay damages to the boy. Experts gave evidence about the value of the jewel which the socket could have accommodated, and Pratt CJ directed the jury that, unless the defendant did produce the jewel, and shew it not to be of the finest water, they should presume the strongest against him, and make the value of the best jewels the measure of their damages: which they accordingly did. There are also many breaches of contract where the loss suffered by the claimant is not economic. At one time, this was thought to present a problem for the award of damages, unless it was possible to identify some form of physical detriment, on the view that placing a person in the same situation, so far as money can do it, as if the contract had been performed meant placing him in as good a situation financially. A wider view was however taken by the Court of Appeal in Jarvis v Swan Tours Ltd [1973] QB 233, and was confirmed by the House of Lords in Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344, where the defendants loss was the difference to him, in terms of satisfaction and pleasure, between the swimming pool for which he had contracted and the one which he received, and it was therefore necessary to place a reasonable monetary value on that difference. Lord Mustill stated at pp 360 361: the law must cater for those occasions where the value of the promise to the promisee exceeds the financial enhancement of his position which full performance will secure. This excess is usually incapable of precise valuation in terms of money, exactly because it represents a personal, subjective and non monetary gain. Nevertheless where it exists the law should recognise if the misperformance takes it away [I]n several fields the judges are well accustomed to putting figures to intangibles, and I see no reason why the imprecision of the exercise should be a barrier, if that is what fairness demands. it and compensate the promisee That approach is consistent with the logic of damages for breach of contract: they are a substitute for the end result of performance, not for the economic end result of performance. It is therefore necessary in cases of non economic loss, as in cases of economic loss, to identify the difference in the claimants situation resulting from the non performance of the obligation in question, and then to place a reasonable monetary value on that difference, provided that the loss or damage in question is of a kind for which the law provides monetary compensation. (iii) Damages in equity under Lord Cairns Act Historically, the Court of Chancery could provide remedies in aid of equitable rights, including restitution if the right was violated. It could also provide remedies which were not available at common law, such as an injunction or specific performance, in aid of common law rights. Its jurisdiction was wider than that of the common law courts, for it could give relief where there was no cause of action at common law, for example by granting an injunction to prevent a threatened wrong. However, one form of relief which it could not grant (except, according to some authorities, where it was granted in addition to specific performance) was damages, ie monetary relief for the breach of a common law obligation. If the plaintiff wished to claim damages in addition to equitable relief, it was normally necessary to apply to the common law courts. The damages which could then be claimed were restricted to compensation for loss in respect of which there was a cause of action at common law. That inconvenience was addressed by section 2 of the Chancery Amendment Act 1858, commonly known as Lord Cairns Act. The section provided: In all cases in which the Court of Chancery has jurisdiction to entertain an application for an injunction against a breach of any covenant, contract, or agreement, or against the commission or continuance of any wrongful act, or for the specific performance of any covenant, contract, or agreement, it shall be lawful for the same court, if it shall think fit, to award damages to the party injured, either in addition to or in substitution for such injunction or specific performance, and such damages may be assessed in such manner as the court shall direct. Equivalent provision is now contained in section 50 of the Senior Courts Act 1981. Lord Cairns Act enabled the Court of Chancery to award damages in the circumstances specified in addition to an injunction. That power enabled the Court of Chancery to award damages which could otherwise have been awarded by the common law courts, and has lost its significance since the fusion of the administration of law and equity. The Act also enabled the Court of Chancery to award damages in substitution for an injunction: a statutory power to award damages in circumstances in which they could not be awarded at common law. As Millett LJ explained in Jaggard v Sawyer [1995] 1 WLR 269, 284: Damages at common law are recoverable only in respect of causes of action which are complete at the date of the writ; damages for future or repeated wrongs must be made the subject of fresh proceedings. Damages in substitution for an injunction, however, relate to the future, not the past. They inevitably extend beyond the damages to which the plaintiff may be entitled at law. In Leeds Industrial Co operative Society Ltd v Slack [1924] AC 851 the House of Lords confirmed the jurisdiction of the courts to award damages under the Act in respect of an injury which was threatened but had not yet occurred. No such damages could have been awarded at common law. Damages awarded in substitution for an injunction are, as one might expect, a monetary substitute for an injunction. As Viscount Finlay stated in Leeds Industrial Co operative Society Ltd v Slack [1924] AC 851, p 859, the power to give damages in lieu of an injunction must in all reason import the power to give an equivalent for what is lost by the refusal of the injunction. Where it is likely that the refusal of an injunction will result in the claimants sustaining loss and damage as a consequence of the tort, breach of contract or other wrongful act which the court has declined to prevent, the damages should provide compensation for that loss and damage, as Sir Thomas Bingham MR and Millett LJ explained in Jaggard v Sawyer at pp 276 277 and 286 respectively. The power to award damages in substitution for an injunction is dependent on the courts having jurisdiction to grant an injunction, determined as at the commencement of the proceedings. The provision that damages can be awarded in substitution for such injunction might be thought to imply that the court must also have before it an application for an injunction, which it has decided to withhold. The point does not arise for decision in these proceedings, but I would be inclined for that reason to hesitate before endorsing the first part of Lord Walkers principle (5), set out in para 4 above. Like the jurisdiction to grant an injunction, the jurisdiction to grant damages in lieu is equitable in nature, as Millett LJ explained in Jaggard v Sawyer at p 287: When the plaintiff claims an injunction and the defendant asks the court to award damages instead, the proper approach for the court to adopt cannot be in doubt. Clearly the plaintiff must first establish a case for equitable relief, not only by proving his legal right and an actual or threatened infringement by the defendant, but also by overcoming all equitable defences such as laches, acquiescence or estoppel. It follows that it is necessary to treat with care Lord Wilberforces remark in Johnson v Agnew [1980] AC 367, 400 that he found in Lord Cairns Act no warrant for the court awarding damages differently from common law damages. As Millett LJ explained in Jaggard v Sawyer at pp 290 291, all that Johnson v Agnew decided was that damages, whether at common law or under the Act, are not invariably to be measured by reference to the value of the land ascertained at the date of the breach of contract. Lord Wilberforces words should not be read out of context and taken to imply that damages awarded in substitution for an injunction must necessarily be measured in the same way as damages recoverable at common law. That is hardly to be expected, given that the damages are available on a different basis, in different circumstances, and in respect of different types of wrong (past, on the one hand, and future or continuing, on the other). Negotiating damages It is necessary to turn next to the most important of the Wrotham Park line of cases. These can be divided into two phases: an initial period in which awards based on a hypothetical release fee were made in the exercise of the jurisdiction under Lord Cairns Act in substitution for injunctions to prevent interferences with property rights and breaches of restrictive covenants over land, and a later period in which awards calculated in a similar way were made at common law on a wider and less certain basis. The two phases are divided by the case of Attorney General v Blake, in which the wider availability of such awards was signalled, but the seeds of uncertainty were sown. (i) The first phase The first phase began with the case of Wrotham Park Estate Co Ltd v Parkside Homes Ltd. It concerned land originally forming part of an estate, which had been conveyed by its owners to developers, subject to a restrictive covenant that the land would not be developed except in accordance with plans approved by the estate owners. The land was then developed as housing, the plans being approved by the estate owners on the basis that a central area would remain free of buildings. The undeveloped area was later offered for sale as building land for houses, and acquired by developers at a price which reflected its development value. The plaintiffs, who were the current owners of the estate, were aware of the basis on which the land was being sold, but did not inform either the sellers or the developers that they objected to its development. The developers then began to develop it as housing without seeking the plaintiffs approval. The plaintiffs brought proceedings against the developers for an injunction before any substantial construction took place, but did not apply for interim relief. The houses were built, and purchasers moved in. They were made additional defendants. Brightman J decided that the plaintiffs had a prima facie entitlement to a mandatory injunction requiring the removal of the houses, but that such relief should be refused as a matter of discretion. The question which then arose was what damages ought to be awarded in substitution for such an injunction. Brightman Js starting point was to consider the effect of the breach of covenant on the value of the estate. That measure would however result in nil or purely nominal damages, as the breach caused the plaintiffs no financial damage, nor any other form of loss. That would be a result of questionable fairness on the facts of this case (p 812). In that regard, he emphasised that it was only because the breach of covenant took the form of a housing development that an injunction was being refused: had it been the erection of an advertising hoarding, for example, an injunction would been granted. If, for social and economic reasons, the court did not see fit in the exercise of its discretion to order the demolition of the houses, was it just, he asked, that the plaintiffs should receive no compensation and that the defendants should be left in undisturbed possession of the fruits of their wrongdoing? In addressing that question, Brightman J referred to the trespass and detinue cases discussed earlier, where damages were assessed according to the value of the use which the defendants had unlawfully obtained, and to Lord Shaws statement of the principle of price or hire in Watson, Laidlaw. Citing Lord Sumners observation in the Leeds Industrial Co operative Society case at p 870 that damages awarded under Lord Cairns Act in substitution for an injunction should be designed to be a preferable equivalent for an injunction and therefore an adequate substitute for it, he noted that the defendants could have carried out the development lawfully if they had obtained a relaxation of the covenant. He concluded that a just substitute for an injunction would be such a sum of money as might reasonably have been demanded by the plaintiffs from [the developers] as a quid pro quo for relaxing the covenant (Wrotham Park, p 815). That measure was appropriate notwithstanding that the plaintiffs would not have been willing to bargain for the relaxation of the covenant. There was evidence that landowners whose property stood in the way of a development commonly demanded a half or a third of development value. The judge did not however agree with that approach. He noted that the plaintiffs had made no protest when the land was sold as housing land, and the developers had paid for it on that basis. Observing that damages must be assessed in such a case on a basis which is fair (p 816), he concluded that 5% of the anticipated profits from the development (which were taken to be the same as the actual profits) was the most that is fair. This case is unlikely to have been regarded at the time as having the significance which was later ascribed to it. The reasoning is less elaborate than the subsequent exegesis, and is not altogether clear. In particular, the relevance of the discussion of user damages to the award actually made was not clearly explained. A restrictive covenant over land is enforceable in contract only as between the original parties, but it is enforceable in equity as between their successors in title to the land in question. Its effect is to create an equitable obligation whose benefit and burden run indefinitely with the ownership of each parcel of land, rather like a negative easement. It is for that reason that the benefit of a restrictive covenant is recognised as a new kind of property right created by equity: Megarry & Wade, The Law of Real Property, 8th ed (2012), para 5 026. Wrotham Park resembled the earlier cases in which user damages were awarded, in that the use to which the defendants wrongfully put their property infringed a valuable right held by the plaintiffs to control such use. That justified an award of damages under Lord Cairns Act based on the value of the right infringed, since the refusal of an injunction effectively deprived the plaintiffs of the benefit of their right, and therefore of its value. An appropriate sum could be determined by considering what the plaintiffs could fairly and reasonably have charged for relinquishing the right voluntarily. Thus, as Mance LJ noted in Experience Hendrix at para 45, the right was treated as an asset with a commercial value. Another notable aspect of Brightman Js reasoning is that he took account of other circumstances besides the economic value of the plaintiffs covenant: in particular, the fact that an injunction had been refused only because of the particular form of the defendants infringement (ie a housing development), and the plaintiffs failure to inform the defendants in advance that consent would not be forthcoming. Much ink has been spilled on attempts to reconcile the latter aspect of the judgment with orthodox reasoning in relation to common law damages. Unrealistic suggestions have been made that the judge was taking account of the plaintiffs failure to mitigate their loss, or of contributory negligence. It was also suggested by Millett LJ in Jaggard v Sawyer at p 291 that delay in seeking an injunction diminished the prospects of obtaining one, and therefore also diminished the value of the covenant. If the delay was such that it was no longer possible for the plaintiff to obtain an injunction, then the plaintiffs bargaining position was destroyed. One difficulty with that suggestion is that the assessment of damages in Wrotham Park was concerned with the value of the covenant at the time of the breach, rather than at the time of the trial. As Anthony Mann QC (sitting as a deputy High Court judge) said in Amec Developments Ltd v Jurys Hotel Management (UK) Ltd (2001) 82 P & CR 286, para 31, the non availability of an injunction when the trial takes place is the reason for awarding damages, not a bar on awarding them. A more convincing explanation is that the judge was influenced by considerations of fairness, as his language repeatedly indicated, underlining the fact that the award was made in the exercise of an equitable jurisdiction. A further issue which arises from Wrotham Park concerns the date, and hence the knowledge and other circumstances, by reference to which the hypothetical price is to be assessed. This issue has been discussed in the authorities (such as Lunn Poly and Pell Frischmann), but does not arise for decision in the present appeal, and has not been the subject of argument. In those circumstances, although I am inclined to agree with para 159 of Lord Carnwaths judgment, I prefer not to express a concluded view. All that need be said is that, since the damages are awarded in the exercise of an equitable jurisdiction, and the courts objective is, in Viscount Finlays words, to give an equivalent for what is lost by the refusal of an injunction, it follows that the approach adopted should reflect those characteristics. It also follows that the approach which is appropriate when assessing common law damages is not necessarily the same. Wrotham Park was followed in Bracewell v Appleby [1975] Ch 408, where a house was built that could only be accessed by trespassing on land belonging to the plaintiffs. Proceedings for an injunction were brought after building operations began. Graham J decided to award damages in substitution for an injunction under Lord Cairns Act. He awarded an amount of damages which in so far as it can be estimated is equivalent to a proper and fair price which would be payable for the acquisition of the right of way in question (p 419). The amount awarded took account of the fact that the plaintiffs had delayed before bringing proceedings. The Court of Appeal considered Wrotham Park in Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361. The case was one in which the court had no jurisdiction to award damages under Lord Cairns Act (as Millett LJ explained in Jaggard v Sawyer at p 290), and damages were not sought on that basis. It is necessary to refer to the case in the present context only because of Steyn LJs comment that Wrotham Park was only defensible on the basis of restitutionary principles: the object of the award was to deprive the defendants of an unjustly acquired gain. That analysis was rejected in Jaggard v Sawyer. Sir Thomas Bingham MR, with whose judgment Kennedy LJ agreed, stated at [1995] 1 WLR 269, 281 282: I cannot, however, accept that Brightman Js assessment of damages in the Wrotham Park case was based on other than compensatory principles. The defendants had committed a breach of covenant, the effects of which continued. The judge was not willing to order the defendants to undo the continuing effects of that breach. He had therefore to assess the damages necessary to compensate the plaintiffs for this continuing invasion of their right. He paid attention to the profits earned by the defendants, as it seems to me, not in order to strip the defendants of their unjust gains, but because of the obvious relationship between the profits earned by the defendants and the sum which the defendants would reasonably have been willing to pay to secure release from the covenant. He continued, in a passage of wider significance to the issues in the present case, by citing with approval a passage in the judgment of Sir Robert Megarry V C in Tito v Waddell (No 2) [1977] Ch 106, 335, when he said, in relation to Wrotham Park: If the plaintiff has the right to prevent some act being done without his consent, and the defendant does the act without seeking that consent, the plaintiff has suffered a loss in that C the defendant has taken without paying for it something for which the plaintiff could have required payment, namely, the right to do the act. The court therefore makes the defendant pay what he ought to have paid the plaintiff, for that is what the plaintiff has lost. Millett LJ commented at p 291: It is plain from his judgment in the Wrotham Park case that Brightman Js approach was compensatory, not restitutionary. He sought to measure the damages by reference to what the plaintiff had lost, not by reference to what the defendant had gained. He did not award the plaintiff the profit which the defendant had made by the breach, but the amount which he judged the plaintiff might have obtained as the price of giving its consent. The amount of the profit which the defendant expected to make was a relevant factor in that assessment, but that was all. Jaggard v Sawyer itself concerned trespass and breach of covenant, on similar facts to Bracewell v Appleby. The plaintiff brought proceedings for an injunction to prevent the continuing wrongs. The judge refused to grant an injunction, but awarded damages in lieu under Lord Cairns Act, based on the amount which the defendants might reasonably have paid for a right of way and the release of the covenant. That award was upheld. The case is notable for the analysis of damages under Lord Cairns Act generally, and of the Wrotham Park line of cases in particular, in the judgments of Sir Thomas Bingham MR and Millett LJ, from which extensive citation has already been made. The awards made in Wrotham Park itself, and in the cases in which it was followed during the next quarter century, were made in the exercise of a unique statutory jurisdiction: the award of damages in lieu of an injunction. The purpose of the awards was to provide the claimant with an appropriate monetary substitute for an injunction in the circumstances of the particular case. Every reported case appears to have concerned either a tortious interference with property rights, or the breach of a restrictive covenant over land. Damages were assessed according to the amount which might fairly have been charged for the voluntary relinquishment of the right which the court had declined to enforce, subject to downward adjustment for reasons of fairness. That measure reflected the fact that the refusal of an injunction had the effect of depriving the claimant of an asset which had an economic value. But the cases did not purport to lay down a general rule as to how damages under Lord Cairns Act should be quantified, regardless of the circumstances. It is for the court to judge what method of quantification, in the particular circumstances of the case before it, will give an equivalent for what is lost by the refusal of the injunction. Lord Walkers principle (4), set out in para 4 above, should not therefore be understood as laying down a general rule. (ii) Attorney General v Blake Attorney General v Blake concerned a different issue. The question was whether the notorious traitor George Blake, living in exile in Moscow following his escape from Wormwood Scrubs, could be deprived of the profits earned from a book which he had published about his life and work as a spy. Since, as Lord Nicholls of Birkenhead stated at p 275, the information in the book was no longer confidential, nor was its disclosure damaging to the public interest, the only peg on which to hang such a deprivation was breach of contract: the book was written in breach of a contractual undertaking, given at the beginning of his service with the intelligence services, that he would not divulge official information gained as a result of his employment. The House of Lords, by a majority, granted a declaration that the Crown was entitled to be paid a sum equal to whatever amount was due and owing to Blake from his publisher. Lord Nicholls, with whose speech the rest of the majority agreed, emphasised that such an order was available as a remedy for breach of contract only in exceptional cases, where other remedies were inadequate, and at the discretion of the court. A useful guide was said to be whether the plaintiff had a legitimate interest in depriving the defendant of his profit. It was accepted by the majority of the House of Lords that the Crown had such an interest in relation to the profits made by Blake from the book. The case is relevant in the present context only because Lord Nicholls discussed the Wrotham Park line of cases in the course of his reasoning. Put briefly, the difficulty which he saw in the way of an award of damages was that the Crown had suffered no financial loss as a result of Blakes publication of the book. It was not suggested that it had suffered any other loss or damage. In particular, by the time of publication, the information in the book had ceased to be confidential. In those circumstances, he sought to establish that what were described as damages measured by the benefit gained by the wrongdoer were an available alternative to compensation for financial loss, and that to treat an account of profits as an available remedy for breach of contract was therefore a coherent development of the law. Lord Nicholls first stepping stone towards his conclusion was that the user damages awarded for interferences with rights of property in the cases considered earlier cannot be regarded as conforming to the strictly compensatory measure of damage unless loss is given a strained and artificial meaning, since the injured persons rights were invaded but, in financial terms, he suffered no loss (p 279). However, as explained at para 30 above, a compensatory analysis need not be regarded as strained or artificial. The person who makes wrongful use of property, in breach of another persons valuable right to control its use, prevents that person from exercising his right to obtain the economic value of the use in question, and should therefore compensate him for the consequent loss. The second stepping stone was a consideration of remedies for breach of fiduciary duty, which established the availability in equity of an order for an account of profits. That is in a context where the fiduciary owes his principal a duty of unqualified loyalty, and a consequent duty to account for all profits made from his position. The nature of the remedy reflects the nature of the obligation which has been infringed. The third stepping stone was a consideration of cases under Lord Cairns Act, such as Bracewell v Appleby and Jaggard v Sawyer, and pre 1858 cases which could now be brought under the Act, such as the case of a continuing wrong, such as maintaining overhanging eaves and gutters, as in Battishill v Reed (1856) 18 CB 696. These were said to show that in the same way as damages at common law for violations of a property right may be measured by reference to the benefits wrongfully obtained by a defendant, so under Lord Cairns Act damages may include damages measured by reference to the benefits likely to be obtained in future by the defendant ([2001] 1 AC 268, 281). A gains based analysis of awards under Lord Cairns Act was rejected in Jaggard v Sawyer, as explained at para 58 above. The damages awarded in that case, and in Bracewell v Appleby, were measured according to the amount which the claimant could fairly and reasonably have charged for the voluntary relinquishment of a valuable right of which he had effectively been deprived by the refusal of an injunction. In the absence of any reasons of fairness requiring its modification, the award was based on the economic value of the right: a value which was necessarily equivalent to that of the wrongful use which the claimant had to tolerate, since they were two sides of the same coin. That is consistent with Lord Nicholls approval of the analysis of the measure of damages awarded in this type of case as the price payable for the compulsory acquisition of a right (ibid). The claimant does not literally lose the right in question, but, as Lord Nicholls stated, the courts refusal to grant an injunction means that in practice the defendant is thereby permitted to perpetuate the wrongful state of affairs he has brought about (ibid). In the case of the overhanging eaves and gutters, on the other hand, the best measure of damages in the event of an injunction being refused might be found to be the consequent reduction in the value of the claimants property. It was only because that measure would have produced nil or purely nominal damages that Brightman J adopted a different measure in Wrotham Park (p 812). Under Lord Cairns Act, as under the common law, the situations in which damages are awarded are so various on their facts that the courts cannot adopt a uniform approach. Those three disparate types of award (damages for interferences with property, an account of profits made through a breach of fiduciary duty, and damages in substitution for an injunction), each reflecting the characteristics of the obligation which had been breached or the jurisdiction being exercised, formed the stepping stones to the fourth, namely damages for breach of contract. Lord Nicholls began by stating that such damages are compensatory: that, he said, is axiomatic (p 282). But a party to a contract may have an interest in performance which is not readily measurable in terms of money (ibid). In such cases, a financially assessed measure of damages is inadequate (ibid). The primary response of the law to this type of case was to provide specific relief, such as an injunction, so as to ensure that the contractual obligation was performed. These specific remedies, it was said, go a long way towards providing suitable protection for innocent parties who will suffer loss from breaches of contract which are not adequately remediable by an award of damages (p 282). But they were not always available. Lord Nicholls then cited Wrotham Park as an example of a case in which specific relief had been refused. The judge had been right to apply by analogy the cases concerning interferences with property rights, since it is not easy to see why, as between the parties to a contract, a violation of a partys contractual rights should attract a lesser degree of remedy than a violation of his property rights (p 283). Wrotham Park was said at pp 283 284 to shine as a solitary beacon, showing: . that in contract as well as tort damages are not always narrowly confined to recoupment of financial loss. In a suitable case damages for breach of contract may be measured by the benefit gained by the wrongdoer from the breach. The defendant must make a reasonable payment in respect of the benefit he has gained. This part of Lord Nicholls speech is not altogether easy to interpret. A few observations can however be made. First, the fact that a party to a contract may have an interest in performance which is not readily measurable in terms of money (p 282) has long been recognised by the law of damages. The law normally responds to inherent difficulties of measurement, and to difficulties arising from a paucity of evidence in a particular case, in the ways discussed at paras 37 38 above. Such difficulties do not justify the abandonment of any attempt to measure loss, and the use of the benefit gained by the wrongdoer as an alternative basis for an award of contractual damages, since that alternative is inconsistent with the logic of contractual damages, as explained at paras 31 35 above. It is also necessary to recognise that the assessment of a hypothetical release fee is itself a difficult and uncertain exercise. In cases such as Wrotham Park, Bracewell v Appleby and Jaggard v Sawyer, judges estimated in a rough and ready way the amount which the claimant might fairly and reasonably have demanded as a quid pro quo for the relaxation of the obligation in question. More recently, the practice has developed of instructing forensic accountants to give expert evidence about a hypothetical negotiation between a reasonable person in the position of the claimant and a reasonable person in the position of the defendant. Such imaginary negotiations have become increasingly elaborate, and a host of questions can emerge as to the basis on which they should be hypothesised. This is well illustrated by Mr Granthams report in the present case. The artificiality of the exercise can be a further problem. Since the aim is to arrive at an objective valuation, the fact that the claimant might in reality have been unwilling to release the defendant from the obligation is not necessarily a problem, as Brightman J recognised in Wrotham Park. But the premise of the hypothetical negotiation that a reasonable person in the claimants position would have been willing to release the defendant from the obligation in return for a fee breaks down in a situation where any reasonable person in the claimants position would have been unwilling to grant a release, as was found to be the position in Marathon Asset Management LLP v Seddon [2017] EWHC 300 (Comm); [2017] ICR 791. The result of the exercise may be an appearance of precision, but as Hildyard J commented in CF Partners (UK) LLP v Barclays Bank plc [2014] EWHC 3049 (Ch), para 1199, the exercise is artificial; and, despite the apparent precision of the figures and calculations deployed typically (and necessarily) on each side, it necessarily involves a question of impression it is to some considerable extent a broad brush. Secondly, although it is not clear what Lord Nicholls meant by a lesser degree of remedy (p 283), it is not surprising that damages for breach of contract are generally assessed differently from damages for the invasion of a proprietary right, since the rights and obligations in question are generally of a different character. It is only in circumstances where they are analogous that it would be reasonable to expect some consistency of approach. As has been explained, damages for breach of contract are based on the difference to the claimant between the outcome of performance and non performance. That is not generally the same as the economic value of the right to performance, considered as an asset (which is not to deny that they may be the same, or similar, in some circumstances). This point was made in a different context by Lord Sumption, with whom Lord Neuberger, Lord Mance and Lord Clarke agreed, in Bunge SA v Nidera BV, para 21: Sections 50 and 51 of the Sale of Goods Act [1979], like the corresponding principles of the common law, are concerned with the price of the goods or services which would have been delivered under the contract. They are not concerned with the value of the contract as an article of commerce in itself. Thirdly, as Lord Walker remarked in Pell Frischmann at para 48, it is a little surprising that Lord Nicholls should have described Wrotham Park as a beacon in relation to common law damages for breach of contract. In the first place, the proceedings were not based on a contractual right: there was no contract between the parties. They were concerned with the invasion of a property right, as Lord Walker observed. Furthermore, Wrotham Park was not concerned with common law damages, but with damages awarded in substitution for an injunction. In the circumstances of the case, these were not merely arbitrary matters of legal categorisation, but bore directly on the damages awarded, as has been explained. That is not to say that common law damages for a particular breach of contract are necessarily different from damages for analogous breaches of other types of obligation. As was said earlier, in circumstances where the rights and obligations are analogous, it would be reasonable to expect some consistency of approach. Fourthly, it is plainly true that in contract as well as tort damages are not always narrowly confined to recoupment of financial loss. However, that proposition does not depend on the Wrotham Park line of cases. It is illustrated, in relation to breach of contract, by cases concerned with the award of damages at common law for breaches causing non economic loss, such as Ruxley Electronics and Milner v Carnival plc (trading as Cunard) [2010] EWCA Civ 389; [2010] 3 All ER 701. Fifthly, since the assessment of damages in the property cases was based on the value of the right to control the use of the property as it had been wrongfully used, there is a sense in which it can be said that the damages in those cases may be measured by reference to the benefit gained by the wrongdoer from the breach, provided the benefit is taken to be the objective value of the wrongful use. The same can be said of the Wrotham Park line of cases, subject to the same proviso, and subject also to the role of equitable considerations in the making of awards under Lord Cairns Act. The courts did not, however, adopt a benefits based approach, but conceived of the awards as compensating for loss. For the avoidance of doubt, the award of damages for skimped performance, based on the difference between the value of the goods or services contracted for and those actually provided, is not excluded by the principle in Robinson v Harman, but is an example of its application. That was recognised by Lord Nicholls in Blake at p 286. This is worth mentioning, as it was submitted on behalf of the defendants in the present case, under reference to the Canadian case of Smith v Landstar Properties Inc [2011] BCCA 44, that such awards amounted to Wrotham Park damages. Finally, in relation to Lord Nicholls speech, the connection which he drew between Wrotham Park and an account of profits has had consequences in the later case law which are unlikely to have been intended. One has been a view that damages assessed on the basis of a hypothetical release fee, and an account of profits, are similar remedies (partial and total disgorgement of profits, respectively), at different points along a sliding scale, calibrated according to the degree of disapproval with which the court regards the defendants conduct: see, for example, Experience Hendrix, paras 36 37 and 44. Related to this has been a view, illustrated by the present case, that damages assessed on the basis of a hypothetical release fee, like an account of profits in some circumstances, are available at the election of the claimant, and can be awarded by the court at its discretion whenever they might appear to be a just response. Neither view can be justified on an orthodox analysis of damages for breach of contract. The meaning and effect of Lord Nicholls discussion of damages for breach of contract have been much debated. It is unnecessary to pursue the matter further for the purposes of the present case. Negotiating damages were not sought in Blake and were not before the court. As the Earl of Halsbury LC observed in Quinn v Leatham [1901] AC 495, 506, a case is only an authority for what it actually decides. What Blake decided was that in exceptional circumstances an account of profits can be ordered as a remedy for breach of contract. The soundness of that decision is not an issue in this appeal. (iii) The second phase The citation of Wrotham Park in judgments has been more common in the period since Attorney General v Blake than in the period before it. There have continued to be cases in which damages in lieu of an injunction, for interferences with property rights, have been assessed on the basis of the amount payable for a royalty or licence. There have also been awards of damages for breach of contract, in substitution for an injunction, assessed on the Wrotham Park basis. An example is Pell Frischmann, which concerned the breach of a partys right to participate in a business opportunity under a joint venture agreement. An injunction was never sought, but the availability of damages in lieu of an injunction was nevertheless agreed. The award of damages based on the commercial value of the right infringed treated that right as a commercially valuable asset, of which the claimant had been effectively deprived. There have also been cases in which negotiating damages have been treated as available at common law in cases of breach of contract. An example is the case of Vercoe v Rutland Fund Management Ltd [2010] EWHC 424 (Ch); [2010] Bus LR D 141, which also concerned the breach of a joint venture agreement, where the defendants used the information provided by the claimants about a commercial opportunity without including them in the transaction. There were breaches both of a confidentiality agreement and of an equitable duty of confidentiality. It was agreed that damages should be assessed on the basis of a hypothetical release fee. In effect, the court awarded damages based on the commercial value of the information which the defendants misused, as in a number of earlier cases concerned with breach of confidence. These cases can be understood as proceeding on the footing that the result of the breach of contract was that the claimants lost a valuable opportunity to exercise their right to control the use of the information. The decision of the Court of Appeal in Experience Hendrix LLC v PPX Enterprises Inc is less straightforward, and has given rise to difficulties of interpretation, if for example one compares WWF World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2007] EWCA Civ 286; [2008] 1 WLR 445, Devenish Nutrition Ltd v Sanofi Aventis SA [2008] EWCA Civ 1086; [2009] Ch 390, and the present case. The case concerned an agreement between Jimi Hendrixs estate and PPX, relating to recordings on which Mr Hendrix had played at an early stage of his career, before he was an established artist. The copyright in the recordings was owned by PPX. The agreement limited PPXs right to use its copyright, by requiring it to pay the estate royalties for the licensing of certain recordings, and prohibiting it from licensing others. In the event, PPX granted licences in respect of recordings whose licensing was prohibited. The claimant brought proceedings as the estates assignee for an injunction and damages. At the opening of the trial, counsel for the claimant made it clear (para 14): . that he had no evidence, and he said that he did not imagine that he could ever possibly get any evidence, to show or quantify any financial loss suffered by the [claimant] as a result of PPXs breaches. The judge granted injunctions to restrain further breaches of the agreement, but declined to award damages in respect of the past breaches. The claimant appealed. The Court of Appeal decided that damages should be awarded, assessed by reference to the royalties which might hypothetically have been demanded by the claimant in return for its agreement to the grant of the licences in question. Mance LJ, with whom the other members of the court agreed, described Blake as marking a new start in this area of law (para 16). Wrotham Park was said to illustrate that the law gives effect to the instinctive reaction that, whether or not the [claimant] would have been better off if the wrong had not been committed, the wrongdoer ought not to gain an advantage for free, and should make some reasonable recompense (para 26). PPX had done the very thing which it had contracted not to do (as in any case where there is a breach of a negative obligation). Its breach of contract was deliberate. Further, it can be said that the restriction against use of PPXs property of which PPX was in breach, was imposed to protect the [claimants] property (para 36): presumably a reference to the copyright in Mr Hendrixs later recordings, although the judgments do not state whether the copyright was held by the claimant. Finally, the grant of an injunction showed that the claimant had a legitimate interest in depriving PPX of its profits. As a matter of practical justice, PPX should make (at the least) reasonable payment for its use of the recordings in breach of the agreement. However, the case was not exceptional to the point where the court should order an account of profits. The financial remedy should be confined to an order that PPX pay a reasonable sum for its use of material in breach of the agreement. Peter Gibson LJ added a separate judgment, which has been influential (as in the present case) as a summary of the factors justifying the award made. He said at para 58: In my judgment, because (1) there has been a deliberate breach by PPX of its contractual obligations for its own reward, (2) the claimant would have difficulty in establishing financial loss therefrom, and (3) the claimant has a legitimate interest in preventing PPXs profit making activity carried out in breach of PPXs contractual obligations, the present case is a suitable one . in which damages for breach of contract may be measured by the benefits gained by the wrongdoer from the breach. To avoid injustice I would require PPX to make a reasonable payment in respect of the benefit it has gained. Notwithstanding some of the reasoning, the decision in the case can be supported on an orthodox basis. The agreement gave the claimant a valuable right to control the use made of PPXs copyright. When the copyright was wrongfully used, the claimant was prevented from exercising that right, and consequently suffered a loss equivalent to the amount which could have been obtained by exercising it. That analysis can be reconciled with some of the reasoning in the judgment of Mance LJ, but there are other aspects of the reasoning in the case with which it is more difficult to agree. In particular, in so far as the reasoning might convey the impression that the fact that loss or damage may be difficult to measure renders it unnecessary to identify such loss or damage, or that it is relevant to an award of damages that the breach of contract was deliberate or the party in breach benefited from his conduct, or that it is relevant to an award of damages that the claimant has a legitimate interest in preventing an activity carried out in breach of contract, or that damages for breach of contract and an account of profits are similar remedies at different points along a continuum, that impression would be mistaken. Conclusions The use of an imaginary negotiation can give the impression that negotiation damages are fundamentally incompatible with the compensatory purpose of an award of contractual damages. Damages for breach of contract depend on considering the outcome if the contract had been performed, whereas an award based on a hypothetical release fee depends on considering the outcome if the contract had not been performed but had been replaced by a different contract. That impression of fundamental incompatibility is, however, potentially misleading. There are certain circumstances in which the loss for which compensation is due is the economic value of the right which has been breached, considered as an asset. The imaginary negotiation is merely a tool for arriving at that value. The real question is as to the circumstances in which that value constitutes the measure of the claimants loss. As the foregoing discussion has demonstrated, such circumstances can exist in cases where the breach of contract results in the loss of a valuable asset created or protected by the right which was infringed, as for example in cases concerned with the breach of a restrictive covenant over land, an intellectual property agreement or a confidentiality agreement. Such cases share an important characteristic with the cases in which Lord Shaws second principle and Nicholls LJs user principle were applied. The claimant has in substance been deprived of a valuable asset, and his loss can therefore be measured by determining the economic value of the asset in question. The defendant has taken something for nothing, for which the claimant was entitled to require payment. It might be objected that there is a sense in which any contractual right can be described as an asset, or indeed as property. In the present context, however, what is important is that the contractual right is of such a kind that its breach can result in an identifiable loss equivalent to the economic value of the right, considered as an asset, even in the absence of any pecuniary losses which are measurable in the ordinary way. That is something which is true of some contractual rights, such as a right to control the use of land, intellectual property or confidential information, but by no means of all. For example, the breach of a non compete obligation may cause the claimant to suffer pecuniary loss resulting from the wrongful competition, such as a loss of profits and goodwill, which is measurable by conventional means, but in the absence of such loss, it is difficult to see how there could be any other loss. It is not easy to see how, in circumstances other than those of the kind described in paras 91 93, a hypothetical release fee might be the measure of the claimants loss. It would be going too far, however, to say that it is only in those circumstances that evidence of a hypothetical release fee can be relevant to the assessment of damages. If, for example, in other circumstances, the parties had been negotiating the release of an obligation prior to its breach, the valuations which the parties had placed on the release fee, adjusted if need be to reflect any changes in circumstances, might be relevant to support, or to undermine, a subsequent quantification of the losses claimed to have resulted from the breach. It would be a matter for the judge to decide whether, in the particular circumstances, evidence of a hypothetical release fee was relevant and, if so, what weight to place upon it. However, the hypothetical release fee would not itself be a quantification of the loss caused by a breach of contract, other than in circumstances of the kind described in paras 91 93 above. The foregoing discussion leads to the following conclusions: (1) Damages assessed by reference to the value of the use wrongfully made of property (sometimes termed user damages) are readily awarded at common law for the invasion of rights to tangible moveable or immoveable property (by detinue, conversion or trespass). The rationale of such awards is that the person who makes wrongful use of property, where its use is commercially valuable, prevents the owner from exercising a valuable right to control its use, and should therefore compensate him for the loss of the value of the exercise of that right. He takes something for nothing, for which the owner was entitled to require payment. (2) Damages are also available on a similar basis for patent infringement and breaches of other intellectual property rights. (3) Damages can be awarded under Lord Cairns Act in substitution for specific performance or an injunction, where the court had jurisdiction to entertain an application for such relief at the time when the proceedings were commenced. Such damages are a monetary substitute for what is lost by the withholding of such relief. (4) One possible method of quantifying damages under this head is on the basis of the economic value of the right which the court has declined to enforce, and which it has consequently rendered worthless. Such a valuation can be arrived at by reference to the amount which the claimant might reasonably have demanded as a quid pro quo for the relaxation of the obligation in question. The rationale is that, since the withholding of specific relief has the same practical effect as requiring the claimant to permit the infringement of his rights, his loss can be measured by reference to the economic value of such permission. (5) That is not, however, the only approach to assessing damages under Lord Cairns Act. It is for the court to judge what method of quantification, in the circumstances of the case before it, will give a fair equivalent for what is lost by the refusal of the injunction. (6) Common law damages for breach of contract are intended to compensate the claimant for loss or damage resulting from the non performance of the obligation in question. They are therefore normally based on the difference between the effect of performance and non performance upon the claimants situation. (7) Where damages are sought at common law for breach of contract, it is for the claimant to establish that a loss has been incurred, in the sense that he is in a less favourable situation, either economically or in some other respect, than he would have been in if the contract had been performed. (8) Where the breach of a contractual obligation has caused the claimant to suffer economic loss, that loss should be measured or estimated as accurately and reliably as the nature of the case permits. The law is tolerant of imprecision where the loss is incapable of precise measurement, and there are also a variety of legal principles which can assist the claimant in cases where there is a paucity of evidence. (9) Where the claimants interest in the performance of a contract is purely economic, and he cannot establish that any economic loss has resulted from its breach, the normal inference is that he has not suffered any loss. In that event, he cannot be awarded more than nominal damages. (10) Negotiating damages can be awarded for breach of contract where the loss suffered by the claimant is appropriately measured by reference to the economic value of the right which has been breached, considered as an asset. That may be the position where the breach of contract results in the loss of a valuable asset created or protected by the right which was infringed. The rationale is that the claimant has in substance been deprived of a valuable asset, and his loss can therefore be measured by determining the economic value of the right in question, considered as an asset. The defendant has taken something for nothing, for which the claimant was entitled to require payment. (11) Common law damages for breach of contract cannot be awarded merely for the purpose of depriving the defendant of profits made as a result of the breach, other than in exceptional circumstances, following Attorney General v Blake. (12) Common law damages for breach of contract are not a matter of discretion. They are claimed as of right, and they are awarded or refused on the basis of legal principle. The present case Applying these conclusions to the present case, it is apparent that neither the judge nor the Court of Appeal applied an approach which can now be regarded as correct. The judge was mistaken in considering that the claimant had a right to elect how its damages should be assessed. He was mistaken in supposing that the difficulty of quantifying its financial loss, such as it was, justified the abandonment of any attempt to quantify it, and the award instead of a remedy which could not be regarded as compensatory in any meaningful sense. The Court of Appeal was mistaken in treating the deliberate nature of the breach, or the difficulty of establishing precisely the consequent financial loss, or the claimants interest in preventing the defendants profit making activities, as justifying the award of a monetary remedy which was not compensatory. The idea that damages based on a hypothetical release fee are available whenever that is a just response, that being a matter to be decided by the judge on a broad brush basis, is also mistaken. The basis on which damages are awarded cannot be a matter for the discretion of the primary judge. This is a case brought by a commercial entity whose only interest in the defendants performance of their obligations under the covenants was commercial. Indeed, a restrictive covenant which went beyond what was necessary for the reasonable protection of the claimants commercial interests would have been unenforceable. The substance of the claimants case is that it suffered financial loss as a result of the defendants breach of contract. The effect of the breach of contract was to expose the claimants business to competition which would otherwise have been avoided. The natural result of that competition was a loss of profits and possibly of goodwill. The loss is difficult to quantify, and some elements of it may be inherently incapable of precise measurement. Nevertheless, it is a familiar type of loss, for which damages are frequently awarded. It is possible to quantify it in a conventional manner, as is demonstrated by Mr Hines report. The case is not one where the breach of contract has resulted in the loss of a valuable asset created or protected by the right which was infringed. Considered in isolation, the first defendants breach of the confidentiality covenant might have been considered to be of that character, but in reality the claimants loss is the cumulative result of breaches of a number of obligations, of which the non compete and non solicitation covenants have been treated as the most significant, as explained in para 17 above. The judge has ordered a hearing on quantum. That hearing should now proceed, but it should not be, as he ordered, an assessment of the amount which would notionally have been agreed between the parties, acting reasonably, as the price for releasing the defendants from their obligations. The object of the exercise is that the judge should measure, as accurately as he can on the available evidence, the financial loss which the claimant has actually sustained. How that assessment is best carried out is, in the first instance, a matter for the judge to consider, proceeding in accordance with this judgment. If evidence is led in relation to a hypothetical release fee, it is for the judge to determine its relevance and weight, if any. It is important to understand, however, that such a fee is not itself the measure of the claimants loss in a case of the present kind, for the reasons which have been explained. The other judgments Lord Carnwath discusses differences between my reasoning and that of Lord Sumption. It is unnecessary for me to undertake a comparison. Ultimately, our judgments speak for themselves. Provided it is clear which judgment represents the view of a majority of the court, and therefore contains the ratio of the decision, any differences between them should not cause difficulty. Disposal The appeal should therefore be allowed to the extent of allowing a hearing on quantum of the nature which I have indicated. LORD SUMPTION: Oliver Wendell Holmes once wrote: I look forward to a time when the part played by history in the explanation of dogma will be small, and instead of ingenious research we shall spend our energy on a study of the ends sought to be attained and the reasons for desiring them. As a step towards that ideal it seems to me that every lawyer ought to see an understanding of economics: The Path of Law, (1897) 10 Harvard LR 457, 474, quoted in Edelman, The Meaning of Loss and Enrichment, Philosophical Foundations of the Law of Unjust Enrichment, ed Chambers, Mitchell and Penner (2009) 211, 221. This appeal raises in an acute form the problem posed by the historic categorisation of legal rules. The claimant, One Step (Support) Ltd, bought a business providing support for young people leaving care, which had previously been run by Karen and Andrea Morris Garner. In connection with the acquisition, it shortly afterwards entered into a valid agreement with the Morris Garners by which the latter agreed for a limited period not to engage in specified modes of competition with the business which they had just sold. The Morris Garners did compete with them in ways which contravened the agreement. The present appeal concerns the assessment of damages for those breaches. The ordinary measure of damages for breach of a non compete covenant is the value of the business profits which the claimant would otherwise have made but which it has lost as a result of the defendants unlawful competition, discounted in the case of future profits for accelerated receipt. As with many problems in the law of damages, difficulty arises in identifying the counterfactual by reference to which their loss falls to be measured. How many customers who contracted with the Morris Garners would have contracted with One Step if the Morris Garners had complied with their contract? When and for how long? For what volume of business? On what terms, especially as to price? And how profitable would the additional business have been for One Step? The economic effect of the breaches is inherently incapable of being precisely estimated, and may be incapable of even imprecise measurement. Nonetheless it is practically inconceivable that One Step has not suffered significant losses in this relatively small field of business. The law would be failing in its economic purpose if it confined One Step to the fraction of the business lost which was capable of being demonstrated with the necessary degree of confidence, or if it resorted to guesswork as an alternative to evidence. Because of the inherent uncertainties of the exercise, the claimant is normally awarded the value of the lost chance of doing more business: Sanders v Parry [1967] 1 WLR 753, SBJ Stephenson Ltd v Mandy [2000] FSR 286, CMS Dolphin Ltd v Simonet [2001] 2 BCLC 704, para 141, Merlin Financial Consultants Ltd v Cooper [2014] EWHC 1196 (QB), paras 74 83. But even a chance must be valued by something better than guesswork. Wrotham Park damages Phillips J ([2014] EWHC 2213 (QB)) declared that One Step was entitled to damages to be assessed on a Wrotham Park basis (for such amount as would notionally have been agreed between the parties, acting reasonably, as the price for releasing the defendants from their obligations) or alternatively ordinary compensatory damages. The Court of Appeal ([2017] QB 1) upheld him. In my opinion, the courts below were wrong in a case like this to regard the Wrotham Park basis as an alternative measure of damages, differing from ordinary compensatory damages. But I consider that the notional price of a release may nonetheless be relevant, not as an alternative measure of damages but as an evidential technique for estimating what the claimant can reasonably be supposed to have lost. The characteristic features of an award of damages based on a notional release fee were described by Lord Walker, delivering the advice of the Privy Council in Pell Frischmann Engineering Ltd v Bow Valley Iran Ltd [2011] 1 WLR 2370, para 49: It is a negotiation between a willing buyer (the contract breaker) and a willing seller (the party claiming damages) in which the subject matter of the negotiation is the release of the relevant contractual obligation. Both parties are to be assumed to act reasonably. The fact that one or both parties would in practice have refused to make a deal is therefore to be ignored. It is to be noted that the assumption of a willing buyer and a willing seller, acting reasonably, means that one is not trying to reconstruct what the particular parties would hypothetically have done. Lord Walker, at para 53, expanded on this point in reference to the facts before the Board: A willing seller, acting reasonably, would have recognised that an excessively dog in the manger attitude would be counterproductive. At the same time BE and Bakrie [two of the defendants], as willing buyers acting reasonably, would have accepted that even negative rights must be bought out at a proper price, and that unless they were bought out, the project could not proceed at all. It is implicit in this approach that the hypothetical release fee is normally to be assessed as at the time of the breach, by reference to the facts existing at that time. In the same judgment, Lord Walker (at para 50) adopted the statement of Neuberger LJ on this point in Lunn Poly Ltd v Liverpool and Lancashire Properties Ltd [2006] 2 EGLR 29, para 29: Given that negotiating damages under [Lord Cairns Act] are meant to be compensatory, and are normally to be assessed or valued at the date of breach, principle and consistency indicate that post valuation events are normally irrelevant. However, given the quasi equitable nature of such damages, the judge may, where there are good reasons, direct a departure from the norm, either by selecting a different valuation date or by directing that a specific post valuation date event be taken into account. For this reason, the object of the exercise is to arrive at a money sum such as would hypothetically have been agreed between reasonable parties at the relevant time. It is not (as, unfortunately, the claimants expert appears to have thought in the present case) to arrive at a formula dependent on future events. The more difficult question is in what circumstances damages may be assessed in this basis. On this question, I take broadly the same view as Lord Reed, although for reasons which I would express more simply. The decision of Brightman J in Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798, has unfortunately given its name to the entire range of cases in which a notional release fee has been awarded by way of damages. This is unfortunate, because it has impeded analysis of a very disparate group of cases governed by different principles and not always consistent among themselves. The case law can be conveniently be categorised under three heads: (i) cases in which damages are not limited to pecuniary loss, because the claimant has an interest in the observance of his rights which extends beyond financial reparation; (ii) cases in which the claimant would be entitled to the specific enforcement of his right, and the notional release fee is the price of non enforcement; and (iii) cases in which the claimant has suffered (or may be assumed to have suffered) pecuniary loss, and the notional release fee is treated as evidence of that loss. Clear analysis requires a distinction to be made between these cases. But it does not require principles to be formulated for one category without regard to those which apply to another. The law should develop coherently across different categories. It should not be allowed to fragment into self contained sectors governed by arbitrary rules which have little relationship to the task in hand or to the principles applied in cognate areas. Category (i): Interest extending beyond financial reparation The invasion of property rights is the classic case in this category. The owner of the property is entitled to receive by way of damages a user rent equal to the amount that he would have had to pay for the right to do lawfully what he has in fact done unlawfully. The release fee is notional. It is awardable even if in fact the owner would not have consented in any circumstances. The leading case is Whitwham v Westminster Brymbo Coal and Coke Co [1896] 2 Ch 538. The defendant had tipped spoil onto the plaintiffs land. The plaintiff was held entitled to (i) the resulting diminution in the value of the land, and (ii) the reasonable rent that the defendant would have to pay for the right to do this. In Owners of Steamship Mediana v Owners, Master and Crew of the Lightship comet (The Mediana) [1900] AC 113, the defendants negligently damaged a lightship belonging to a harbour authority. The authority was held to be entitled by way of damages to (i) the cost of repairing the lightship, and (ii) a user rent for the period when she was out of service, although the authority had suffered no pecuniary loss by its unavailability because they were not in the business of renting out lightships and had a spare lightship for just such an event. Lord Halsbury LC asked (p 117): Supposing a person took away a chair out of my room and kept it for 12 months, could anybody say you had a right to diminish the damages by shewing that I did not usually sit in that chair, or that there were plenty of other chairs in the room? In Watson, Laidlaw & Co Ltd v Pott, Cassels & Williamson (1914) 31 RPC 104, 119, Lord Shaw gave it as a general principle that wherever an abstraction or invasion of property has occurred, then, unless such abstraction or invasion were to be sanctioned by law, the law ought to yield a recompense under the category or principle either of price or of hire. The effect of these decisions was summarised by Nicholls LJ in Stoke on Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406, 1416: It is an established principle concerning the assessment of damages that a person who has wrongfully used anothers property without causing the latter any pecuniary loss may still be liable to that other for more than nominal damages. In general, he is liable to pay, as damages, a reasonable sum for the wrongful use he has made of the others property. The law has reached this conclusion by giving to the concept of loss or damage in such a case a wider meaning than merely financial loss calculated by comparing the property owners financial position after the wrongdoing with what it would have been had the wrongdoing never occurred. This is exceptional because in general the law is concerned only with the specific enforcement of obligations or the money equivalent of their due performance. The exceptions in the case of trespass to or appropriation of property are justified by the nature of the right which the wrongdoer has infringed. Property rights confer an exclusive dominion over the asset in question. The law treats that exclusivity as having a pecuniary value independent of any pecuniary detriment that he might have suffered by the breach of duty. The user rent is simply the measure of that value. Although the concept of user rent as a measure of damages originates in the field of wrongful injury to or appropriation of property, in Attorney General v Blake [2001] 1 AC 268, the principle was applied by analogy in order to justify an order for an account of profits in a case of breach of contract with no proprietary element. The facts are well known. In breach of his contract of employment the convicted traitor George Blake had published a book disclosing information acquired in the course of his duties as an intelligence officer. The government had suffered no pecuniary loss, but was held to be entitled to a restitutionary remedy, namely an account of Blakes profits. This was because, as in the property cases, a party to a contract may be recognised by the law as having an interest in its performance extending beyond financial reparation for a breach. In Blake, damages were incapable of putting the government in the same position as it would have been but for the wrong. This was because the nature of the obligation was such that the governments only interest in the performance of an intelligence agents duties of confidentiality was a non pecuniary governmental interest. In a case where it was too late to get an injunction, its rights against Blake would have been inherently worthless if the only remedy had been the recovery of pecuniary loss. After stating the ordinary rule of damages, Lord Nicholls, with whom Lord Goff, Lord Browne Wilkinson and Lord Steyn agreed, expressed the principle in this way at p 282: It is equally well established that an award of damages, assessed by reference to financial loss, is not always adequate as a remedy for a breach of contract. The law recognises that a party to a contract may have an interest in performance which is not readily measurable in terms of money. On breach the innocent party suffers a loss. He fails to obtain the benefit promised by the other party to the contract. To him the loss may be as important as financially measurable loss, or more so. An award of damages, assessed by reference to financial loss, will not recompense him properly. For him a financially assessed measure of damages is inadequate. In reasoning in this way, Lord Nicholls (pp 278 279) drew a direct analogy with the award of user damages for invasion of a property right. It was, he observed (p 283) not easy to see why, as between the parties to a contract, a violation of a partys contractual rights should attract a lesser degree of remedy than a violation of his proprietary rights. The governments legal interest as against Blake was a purely contractual right. It was not a property right. Yet Lord Nicholls was prepared to cross the boundary in pursuit of an analogy which justified a similar treatment. The analogy justified a similar treatment because in both cases the claimant was entitled to recover more than his pecuniary loss when his interest in performance extended beyond pecuniary loss. Category (ii): Damages in lieu of an injunction I turn now to the second category, comprising cases where the relevant obligation was in principle specifically enforceable, and the release fee was the price of non enforcement. Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798, was a case of this kind. The Plaintiff had conveyed part of his land to a developer subject to a restrictive covenant against developing it otherwise than in accordance with a lay out plan to be approved by the vendor or its surveyor. A successor in title to the developer built houses on part of the land without submitting the vendors consent to a lay out plan. No question of user rent arose, for the plaintiff had parted with his interest in the land, subject only to the covenant. It was, moreover, common ground that the value of the Wrotham Park estate had not been diminished by the offending development. An injunction was in principle available, but Brightman J declined to order the demolition of the houses. Instead, he awarded damages in lieu of an injunction under the statutory jurisdiction originating with the Chancery Amendment Act 1858 (now the Senior Courts Act 1981, section 50). His reasoning is summed up in the following passage, at p 815: As I have said, the general rule would be to measure damages by reference to that sum which would place the plaintiffs in the same position as if the covenant had not been broken. Parkside [the first defendant] and the individual purchasers could have avoided breaking the covenant in two ways. One course would have been not to develop the allotment site. The other course would have been for Parkside to have sought from the plaintiffs a relaxation of the covenant. On the facts of this particular case the plaintiffs, rightly conscious of their obligations towards existing residents, would clearly not have granted any relaxation, but for present purposes I must assume that it could have been induced to do so. In my judgment a just substitute for a mandatory injunction would be such a sum of money as might reasonably have been demanded by the plaintiffs from Parkside as a quid pro quo for relaxing the covenant. He went on to assess the damages as a proportion (5%) of the profit that the developer had made. In subsequent cases, the courts have had some difficulty in identifying the principle on which Brightman J arrived at this assessment, but it is clear that he was seeking to determine the value to the claimant of a hypothetical injunction to the claimant. Whether he necessarily chose the best method of doing so does not matter for present purposes. In Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361 the facts were similar but Wrotham Park was distinguished on the ground that no injunction was sought. The correctness of this distinction has more than once been doubted, notably by Millett LJ in Jaggard v Sawyer [1995] 1 WLR 269, 289 290 and by Lord Nicholls in Attorney General v Blake, p 283. Millett LJs analysis (pp 290 291) repays study. As he pointed out, the award of a notional release fee by way of damages was in fact compensation for pecuniary loss. It was not restitutionary, albeit that the amount of the developers gain was a relevant factor in assessing what the notional release fee would have been. He considered that the critical factor was that an injunction was in principle available, whether or not it was actually sought. The measure of the claimants loss was the diminution in the value of property resulting from the defendants breach of the restrictive covenant. The notional price that could have been charged for releasing the covenant was recoverable in lieu of an injunction, because the availability of an injunction increased the value of the claimants land by an amount equal to what he could have exacted in return for releasing it. That sum therefore represented the diminution in the value of the claimants land resulting from the courts discretionary refusal specifically to enforce the covenant. It was the proper measure of compensation. The same measure would have been awarded at common law if an injunction was still available. But if an injunction was not available, for example because the covenant was not specifically enforceable or the claimants delay had made it impossible, the buy out value did not contribute to the value of the land because there was none. In that case, damages could not be awarded on that basis either at common law or in lieu of an injunction. This seems to me to be sound in principle, sounder perhaps than the suggestion made, obiter, by Lord Walker in Pell Frischmann, at para 48, that it is not necessary that there should have been any prospect on the facts, of it being granted. This observation, if taken literally, would expand the concept so far as to lose almost any connection with the courts jurisdiction to grant injunctive relief. Difficulty has been caused by Lord Nicholls observations about Wrotham Park in Attorney General v Blake [2001] 1 AC 268. Lord Nicholls was not directly concerned with damages in lieu of an injunction. But he fortified his reasoning with an analogy between an account of profits and an award of damages in lieu of an injunction. He offered an analysis (p 281) of the basis on which a notional release fee might be awarded as damages, which was similar to that of Millett LJ in Jaggard v Sawyer. Citing that case as an example, he considered that such damages may include damages measured by reference to the benefits likely to be obtained in future by the defendant (p 281). He went on to hold that damages measured on that basis were available for the infringement of contractual as well as property rights. Turning to Wrotham Park, he described it (pp 283 284) as a solitary beacon, showing that in contract as well as tort damages are not always narrowly confined to recoupment of financial loss. In a suitable case damages for breach of contract may be measured by the benefit gained by the wrongdoer from the breach. The defendant must make a reasonable payment in respect of the benefit he has gained. This passage is apt to cause confusion. Two points should, I think, be made about it. The first is that Wrotham Park was for practical purposes a contract case. The restrictive covenant was binding on the defendant because the covenant ran with the land and there was privity of estate. Lord Nicholls was well aware that Brightman J had been awarding damages as the financial equivalent of the injunction to which claimant was in principle entitled, and not as the financial equivalent of performance of the covenant. His point was that the two things, although conceptually different, were for practical purposes the same, because the value to the claimant of an order specifically enforcing the covenant would have been substantially the same as the value of performance. Secondly, when Lord Nicholls referred to damages measured by the benefit gained by the wrongdoer, he cannot have meant to say that the juridical basis of the award in cases like Wrotham Park was restitution of the defendants gain. Restitution of an unjustly retained gain serves to reverse the financial effect of the transaction. It is not the same as damages for breach of it. I do not believe that Lord Nicholls overlooked this basic difference. He was simply pointing out that in some circumstances, including those which obtained in Wrotham Park, damages may be awarded according to a measure which has substantially the same financial effect as a disgorgement or partial disgorgement of profits. This was one reason why he felt able to order an account of profits. As he observed later in his speech (p 284), the label is not always a sufficient description of what is in the bottle. Category (iii): Notional release fee as the measure of pecuniary loss This category comprises cases in which there is no question of injunctive relief and no legally recognised interest of the claimant in performance beyond the recovery of pecuniary loss for a breach. The amount that reasonable people in the position of the parties would agree should be paid for the right to do the acts complained of is treated as evidence of what that pecuniary loss is. This is not because the claimant is entitled to restitution or to some other remedy involving the disgorgement of the defendants gains. It is because it represents the value that reasonable people in the position of the parties would place on the performance of the relevant obligation. There is of course a conceptual difference between the value of performance and the cost of being released from performance, just as there is a conceptual difference between the value of performance and the value of an injunction enforcing performance. But there is commonly no practical difference between them. The notional release fee is in many cases a useful surrogate for the loss of profits arising from the breach, for straightforward economic reasons. The claimants right to performance is an asset. It may not be marketable generally, but as between the parties it has a financial value which is measured by the buy out price that would be agreed between them. The claimants recoverable loss is the additional profit that he would have made if the contract had been performed. If he is hypothetically to assess a reasonable charge for releasing the defendant from the relevant obligation (in this case the non compete obligation) he will do it by estimating what that obligation is worth to him. It is worth the additional profit that he would have made if it were to be performed. It is true that the value of a release may not be same for both parties. But the claimant, acting reasonably, has no reason to demand more than he anticipates he will lose by non performance, and the defendant, acting reasonably, has no reason to share with the claimant any benefit which the latter may expect to derive from some especially profitable use attributable to his own skill or effort. Of course, the parties, lacking perfect foresight, may get this wrong. But that is because what they are valuing is not the actual performance as it turns out to be, but the prospects as seen at the time of the breach. In other words, they are valuing the chance, as the court itself does in cases of this kind. The paradigm case in which damages are assessed on this basis, and the context in which this question was first considered by the courts, is the award of damages for patent infringement. A patentee may exploit his legal monopoly in either or both of two ways, (i) by manufacturing and selling the patented article or (ii) by licensing others to do so. In case (i), the measure of damages is the profits which he has lost by the diversion of sales to the infringer: United Horse Shoe and Nail Co Ltd v John Stewart & Co (1888) 13 App Cas 401. This is the same as the ordinary measure of damages for breach of a non compete agreement. In case (ii), the measure of damages is the royalty which the infringer would have had to pay if he had obtained the licence which would have been available: Penn v Jack (1867) LR 5 Eq 81; English and American Machinery Co v Union Boot and Shoe Machine Co (1896) 13 RPC 64; Pneumatic Tyre Co Ltd v Puncture Proof Pneumatic Tyre Co Ltd (1899) 16 RPC 209; Aktiengesellschaft fur Autogene Aluminium Schweissung v London Aluminium Co Ltd (No 2) (1923) 40 RPC 107. In his classic statement in Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 RPC 157, Fletcher Moulton LJ suggested that even where there is no pattern of granting licences and no going royalty rate, damages could properly be measured by the notional royalty that would have been agreed as between willing patentee and licensee. The reason was that that was evidence of the value to the parties of performance of the defendants obligation. At pp 164 165, he observed: There is one case in which I think the manner of assessing damages in the case of sales of infringing articles has almost become a rule of law, and that is where the patentee grants permission to make the infringing article at a fixed price in other words, where he grants licences at a certain figure. Every one of the infringing articles might then have been rendered a non infringing article by applying for and getting that permission. The court then takes the number of infringing articles, and multiplies that by the sum that would have had to be paid in order to make the manufacture of that article lawful, and that is the measure of the damage that has been done by the infringement. The existence of such a rule shows that the courts consider that every single one of the infringements was a wrong, and that it is fair where the facts of the case allow the court to get at the damages in that way to allow pecuniary damages in respect of every one of them. I am inclined to think that the court might in some cases, where there did not exist a quoted figure for a licence, estimate the damages in a way closely analogous to this. It is the duty of the defendant to respect the monopoly rights of the plaintiff. The reward to a patentee for his invention is that he shall have the exclusive right to use the invention, and if you want to use it your duty is to obtain his permission. I am inclined to think that it would be right for the court to consider what would have been the price which although no price was actually quoted could have reasonably been charged for that permission, and estimate the damage in that way. Indeed, I think that in many cases that would be the safest and best way to arrive at a sound conclusion as to the proper figure. But I am not going to say a word which will tie down future judges and prevent them from exercising their judgment, as best they can in all the circumstances of the case, so as to arrive at that which the plaintiff has lost by reason of the defendant doing certain acts wrongfully instead of either abstaining from doing them, or getting permission to do them rightfully. In General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1975] 1 WLR 819, 825, Lord Wilberforce (with whom Viscount Dilhorne, Lord Diplock and Lord Kilbrandon agreed) restated these principles and made it clear that a notional royalty was relevant evidence of the patentees loss, whether it arose from diverted sales (his category 1) or from lost royalties (his category 2), simply on the ground that it may in practice be difficult to estimate the loss in any other way, at p 826: In some cases it is not possible to prove either (as in 1) that there is a normal rate of profit, or (as in 2) that there is a normal, or established, licence royalty. Yet clearly damages must be assessed. In such cases it is for the plaintiff to adduce evidence which will guide the court. This evidence may consist of the practice, as regards royalty, in the relevant trade or in analogous trades; perhaps of expert opinion expressed in publications or in the witness box; possibly of the profitability of the invention; and of any other factor on which the judge can decide the measure of loss. Since evidence of this kind is in its nature general and also probably hypothetical, it is unlikely to be of relevance, or if relevant of weight, in the face of the more concrete and direct type of evidence referred to under 2. But there is no rule of law which prevents the court, even when it has evidence of licensing practice, from taking these more general considerations into account. The ultimate process is one of judicial estimation of the available indications. The true principle, which covers both cases when there have been licences and those where there have not, remains that stated by Fletcher Moulton LJ in Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 RPC 157, 164 165 He then set out the passage from Fletcher Moulton LJs judgment which I have quoted above. It is right to say that a patent is a species of property, albeit incorporeal. It can be assigned like any other item of property, or the benefit transferred by license. But that is entirely irrelevant to the present issue, because the concept of awarding a notional royalty as damages for infringement does not depend on the characterisation of a patent as a species of property. The infringer has not appropriated or used the patent like the man who trespasses on the claimants land or takes or damages his chattels. The patentee does not have an interest in the observance of his patent exceeding its financial value, in the way that a landowner may. He is not entitled to any more than his actual pecuniary loss. What he has is a personal claim against the infringer for competing with him unlawfully. In cases of diverted sales (Lord Wilberforces category 1) the measure of damages for the infringement is precisely the same as it is in this case, namely the profit lost by the diverted sales. And the value of those diverted sales may be measured by the amount that the patentee could reasonably charge the infringer for not enforcing his monopoly against him. The same principle has been applied in other cases of tortious competition, which involve no invasion of property rights unless property is so broadly defined as to encompass any right whatever. For example, confidential information is not property in the proper sense of the word, for there is no title against the world but only a personal right against the person owing the duty of confidence. However, a notional royalty (or its capitalised value) is commonly awarded as damages for breach of a duty not to misuse confidential information, whether that duty arises from contract or from equitable doctrines: Seager v Copydex Ltd (No 2) [1969] 1 WLR 809, 813; Force India Formula One Team Ltd v 1 Malaysia Racing Team Sdn Bhd [2012] RPC 29, paras 383 387, 424, approved without consideration of this point, [2013] EWCA Civ 780; [2013] RPC 38. This is not because of some principle peculiar to equitable relief. Nor is it because the claims were in reality for restitution. These were expressed to be, and in fact were awards of compensatory damages. Irvine v Talksport Ltd [2003] 1 WLR 1576 was a passing off action. The defendant had published a photograph of the claimant, a racing driver, thereby falsely suggesting that he had endorsed their radio station. The Court of Appeal awarded a notional endorsement fee. In a loose sense, passing off can be described as an appropriation of the claimants property in his goodwill, which is how the judge had characterised it at first instance in that case. The same could probably be said of the breach of confidence cases. But I doubt whether this characterisation contributes anything to the argument. In one sense almost any legal right can be described as a right of property, including the business and goodwill which the Morris Garners may be said to have appropriated by their breach of the non compete covenant. Hence the use of the same technique of assessment in straightforward cases of breach of contract, where no question arose of the invasion of proprietary rights. In Pell Frischmann Engineering Ltd v Bow Valley Iran Ltd [2011] 1 WLR 2370, the Privy Council extended the concept of awarding damages in lieu of an injunction to a case where there was no prospect of an injunction. I have already pointed out that the effect is to sever any real connection between the financial award and the hypothetical alternative of an injunction, because the alternative of an injunction did not exist. But in reality what the Board was doing was awarding damages for breach of contract on the same measure as damages in lieu of an injunction, ie in an amount equal to the notional value of not having to perform. Similarly, in Vercoe v Rutland Fund Management Ltd [2010] EWHC 424 (Ch), a notional release fee was awarded by way of damages for breach of a joint venture agreement. This explains why, in Pell Frischmann (paras 47 48), Lord Walker, delivering the advice of the Board, regarded Experience Hendrix LLC v PPX Enterprises Inc [2003] 1 All ER (Comm) 830 as instructive. In Experience Hendrix, the defendant owned the copyrights in certain master recordings of the singer Jimi Hendrix, but in an agreement to settle earlier litigation it had undertaken not to license them. The claimant, which had succeeded to the rights of Jimi Hendrix, complained that recordings had been licensed in breach of the settlement agreement. The claimant asserted that the breach had damaged the market reputation of its own Jimi Hendrix recordings, but told the trial judge (para 14) that it had no evidence and did not imagine that he could ever possibly get any evidence to show or quantify any financial loss. This was not an admission that there were no losses. It is clear that what the claimant was saying was that there were, but that it was impossible to establish how much it had lost. The Court of Appeal (para 45) awarded damages equal to the amount which would reasonably have been paid for permission to license the recordings. In the absence of any possibility of assessing the difference that the breach had made to the claimants sales, the notional release fee in that case was simply the value which the reasonable people in the position of the parties would have placed on the prospect of performance of the relevant obligation. In refusing to be deterred by the fact that Experience Hendrix was neither a property case nor a case in which damages were being awarded in lieu of an injunction, Mance LJ was doing no more than follow the call of Lord Nicholls in Blake for a more coherent approach to the law of damages, and in particular for an assimilation in appropriate cases of the principles for awarding a notional release fee as damages in property and contract cases. Lord Nicholls analysis has had the valuable effect of freeing the law of damages from artificial categorisations which had turned the principles with which we are presently concerned into an incoherent mass of sub rules for different categories which exhibit no real differences in fact. These authorities, drawn from a diverse range of cases on the law of obligations over a considerable period, suggest that the concept of treating a notional release fee as an evidential tool for assessing a partys true loss in appropriate cases has been found valuable and is certainly not impractical. It is frequently employed. Conclusion As a result of the order which Phillips J made in the second week of the trial, his judgment was confined to liability and to the question whether in principle the claimant was entitled to what he compendiously called Wrotham Park damages. He did not seek to quantify those damages, and although he had substantial expert reports before him he made no finding about them. This makes it necessary to proceed at the same level of abstraction in determining the present appeal. For the reasons which I have given, I would modify the declaration of the judge so as neither to require nor to exclude the use of a notional release fee as evidence of the claimants loss. I put in it that way because the use of a notional release fee is not to be regarded as a rule of law. As Fletcher Moulton LJ explained in the Meters case and Lord Wilberforce in General Tire, the award of a notional release fee is not a measure of damages but an evidential technique for estimating the claimants loss. Its use is appropriate only if there is material on which the notional release fee can be assessed and then only so far as the trial judge finds it helpful, in the light of such other evidence as may be before him. I doubt whether it matters, on the facts of this case, whether the right which One Step asserts is analogous to a right of property. They are not claiming, nor are they entitled to more than their pecuniary loss. But I would tentatively suggest that the analogy is in fact close. The restrictive covenants were given by the Morris Garners to procure the sale of their shares in a business. The value of the business included its goodwill. The effect of their proceeding to compete unlawfully with the business, was to appropriate to themselves part of the goodwill of the business which they had sold. For these reasons, I would allow the appeal to the extent that I have indicated. My reasons are not in all respects the same as Lord Reeds, but our conclusions appear to me to be closely aligned. LORD CARNWATH: I agree that the appeal should be allowed for the reasons given by Lord Reed. In view of the importance of the case in the development of the law of damages, I shall add some comments of my own, in particular with regard to some important issues raised by Lord Sumptions judgment, in view of what appear to my mind to be significant differences between the two approaches. Lord Reeds analysis, as I understand it, follows an entirely orthodox approach. He starts from the distinction identified and explained by Lord Shaw more than a century ago (Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson 1914 SC (HL) 18; (1914) 31 RPC 104): that is, between cases governed by the traditional compensatory principle (restoration of loss), and those covered by his second principle (referred to in later cases as the user principle), applicable to cases involving the abstraction or invasion of property or analogous rights. That in turn is compared by Lord Reed with a third group of cases involving damages in lieu of an injunction under Lord Cairns Act, of which the Wrotham Park case itself is taken as a prime example. It is only in the second and third groups that an award based on a user fee or negotiating damages can be supported. Lord Sumptions approach is more radical. He starts with an open challenge to the historic categorisation of legal rules (para 103), which he regards as problematic and economically unsound. This leads him to propose a new, avowedly simpler, division into three inter related categories, not to be fragment(ed) into self contained sectors governed by arbitrary rules (para 109). As is apparent from the judgment as a whole, this reformulation is in part a response to Lord Nicholls speech in Attorney General v Blake [2001] 1 AC 268, 283, and what Lord Sumption sees as (at para 122) the call for a more coherent approach to the law of damages, and in particular for an assimilation in appropriate cases of the principles for awarding a notional release fee as damages in property and contract cases. He adds that Lord Nicholls analysis has had the valuable effect of freeing the law of damages from artificial categorisations which had turned the principles with which we are presently concerned into an incoherent mass of sub rules for different categories which exhibit no real differences in fact. (at para 122) It is symptomatic of their differences of approach that Lord Reed regards the same passage in Lord Nicholls judgment as not altogether easy to interpret, for reasons he explains but finds unnecessary to pursue further for the purposes of the present case (paras 72 82). Lord Sumptions second category (damages in lieu of an injunction: para 112ff) covers much of the same ground as Lord Reeds discussion of the same topic (paras 41ff), although there are significant differences of emphasis. The other two categories are more innovative. The first category, headed Interest extending beyond financial reparation (para 110ff), is in part based on the user principle group of cases, starting from the classic case of invasion of property rights. That is expanded into a new group not limited to such rights, but defined by the non pecuniary nature of the claimants interest. The scope of the expansion is typified by Blake itself, where the governments only interest in protecting itself against disclosure of information by an agent was a non pecuniary governmental interest (para 111). Conversely, cases of patent infringement, traditionally associated with the user principle, are carved out of the first category, and treated as the paradigm example of Lord Sumptions third category Notional release fee as the measure of pecuniary loss (paras 115ff). Although it is accepted that a patent is a species of property, its status as such is said to be irrelevant to the issue of damages: [t]he infringer has not appropriated or used the patent like the man who trespasses on the claimants land or takes or damages his chattels (para 119). This category is exemplified by Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 RPC 157, as applied by Lord Wilberforce in General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1975] 1 WLR 819, 825). Those cases are treated as supporting the use of a notional release fee as not a measure of damages but an evidential technique for estimating the claimants loss (para 124); a technique which in his view should be available to the judge, if there is material on which the notional release fee can be assessed, so far as the trial judge finds it helpful, in the light of such other evidence as may be before him (para 124). Discussion Lord Sumptions analysis provides some valuable insights, in particular in relation to the special treatment of the governments non pecuniary interest in Blake itself. However, I am unable with respect to accept his reformulation as a helpful guide in the general run of cases. In the first place it conflicts with the previous development of the law, up to and including the description of the user principle by Nicholls LJ in Stoke on Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406, 1416. That is cited by both Lord Reed (para 29) and Lord Sumption (para 110), and as I understand them treated as an authoritative statement of the principle. Nicholls LJ cited, as examples of the principle, the cases of Meters, General Tire, and Watson, Laidlaw noting that they were patent infringement cases (pp 1416 17). Nothing in that judgment or the previous cases justifies treating them as part of a separate category. Nor in my view does anything in Lord Nicholls speech in Attorney General v Blake [2001] 1 AC 268. He made no mention of the Stoke on Trent City Council case (which does not appear to have been mentioned in argument). He did, however, cite Lord Shaws statement of the equivalent principle in Watson, Laidlaw, noting that it was a patent infringement case, and describing the principle as established and not controversial (p 279A D). Secondly, the two cases on which Lord Sumption principally relies Meters and General Tire do not to my mind support the use of a negotiated fee as an evidential technique in other contexts. The observations of Fletcher Moulton LJ in the former case (quoted by Lord Sumption at para 117) were directed specifically to cases of patent infringement. In that context, it was said to be almost a rule of law that where permission is granted to make the infringing article at a fixed price, that price, multiplied by the number of offending articles, is taken as the basis for assessing damages. An equivalent approach was then applied by the Lord Justice to cases where there was no such fixed price, by looking for the price which although no price was actually quoted could have reasonably been charged for that permission It was in the same context that Lord Wilberforce in General Tire (again in a passage quoted by Lord Sumption: para 118) spoke of the broad categories of evidence which may be relevant to the ultimate process of judicial estimation. There is nothing in either passage which supports the use of a negotiated fee, actual or hypothetical, as an evidential technique for assessing loss more generally. I accept that, if one were to turn the clock back 100 years one might question the analogy drawn by Lord Shaw between borrowing a horse and infringement of a patent. As Lord Sumption fairly says, patent infringement, although involving a property right, is not the same as the appropriation or use of anothers land or chattels. However, that has not hitherto been seen as a reason for separation. Nicholls LJ himself, in the Stoke on Trent City Council case (at p 1416H), observed that the principle was not confined to the physical use of anothers property, but had been applied in relation to incorporeal property, in particular patents. He did not see that anomaly, if anomaly it be, as requiring qualification of the principle. Lord Sumption also observes that the principle has been applied to cases which involve no invasion of any property right, as properly understood, for example misuse of confidential information. There again, however, the principle has been justified by analogy with the taking of property. In the first case he cites (Seager v Copydex Ltd (No 2) [1969] 1 WLR 809, 813), the award was in terms justified by Lord Denning MR (with the agreement of his colleagues) by analogy with damages for conversion. Thirdly, Lord Sumption appears to give no clear indication of the circumstances which are expected to come within the third category. As I understand it, the suggested criteria for use of this technique are twofold: whether there is material on which a negotiated release fee can be assessed, and, if so, whether the trial judge finds it helpful in the light of the other evidence before him (para 124). I cannot with respect regard that as providing adequate guidance to parties or to the courts, on an issue which may have a substantial impact on the level of damages, and accordingly on decisions about disclosure and about the evidence to be called. This cannot be left as a matter depending simply on what, at the end of the day, the judge may find helpful. More generally, I am unpersuaded that it is necessary or helpful to redefine, or break down the barriers between, the established categories; nor that to do so offers any improvement in the coherence of the law. The concept of loss suffered, or value diminished, is well understood in the law. So is the concept of a negotiated fee, actual or hypothetical, for use of anothers property or for release from an obligation. But they are different concepts, and the differences should not be blurred. If in a particular context a negotiated fee basis of claim cannot be justified in its own terms, the case is not improved by treating it as an evidential technique for assessing something conceptually different. Statutory compensation A further concern, which needs to be taken into account before redefining the traditional categories, is the possible impact of our reasoning on other related areas of the law, for example compensation for statutory interference with property rights. Arguments based on Wrotham Park have been deployed with mixed results in support of claims for enhanced, negotiated fee compensation in two important contexts: for injurious affection caused by statutory works on land subject to restrictive covenants (Compulsory Purchase Act 1965 section 10); and for discharge or modification of restrictive covenants by the Upper Tribunal (Law of Property Act 1925 section 84). Injurious affection The Compulsory Purchase Act 1965 section 10 (like its predecessor: Land Clauses Act 1845 section 68) has been interpreted as permitting statutory works on land subject to restrictive covenants, subject only to payment of compensation for any diminution in value of the dominant tenement. In a case relating to land on the same Wrotham Park estate (Wrotham Park Settled Estates v Hertsmere Borough Council [1993] 2 EGLR 15 the Hertsmere case) the Court of Appeal rejected an argument that the compensation should include a sum reflecting the price which that the landowner could have exacted for allowing the development or a ransom price (p 16H). In the leading judgment Sir Thomas Bingham MR expressed reservations about the correctness of Brightman Js judgment in the earlier Wrotham Park case (p 18J), but held that it had no application to compensation under section 10. He cited a comment by Professor Gareth Jones (The recovery of benefits gained from a breach of contract (1983) 99 LQR 443, 450; referring to Tito v Waddell (No 2) [1977] Ch 106, 335 336): In Wrotham Park Estate, the defendants had taken something for nothing for which the plaintiffs could have required payment, namely the release of the restrictive covenant; this was not the case in Tito v Waddell (No 2) for the defendants had done nothing which the plaintiffs had the right to prevent Sir Thomas Bingham thought the same reasoning could be applied to the instant case: the authority had done nothing wrong nor taken anything to which it was not entitled, but was simply performing its statutory duty to supply housing (p 18H). He had earlier accepted that this might result in less than perfect compensation, but that was acceptable in the wider communal interests represented by the local authority (pp 17M 18A). This case was considered by the Law Commission in its review of the law of compensation for compulsory purchase of land (Towards a Compulsory Code: (1) Compensation Final report (2003) Law Com No 286 para 9.6ff). It was suggested that it seemed somewhat anomalous to treat the owner of the dominant tenement in such a case as a person from who no land is taken. However, it was decided, in line with the majority of responses (para 9.10), not to recommend a change to the law in this respect. More recently the issue has been revisited by a leading textbook (Michael Barnes QC The Law of Compulsory Purchase and Compensation (2014) para 10.60 61). It is there argued that the Hertsmere case should be reconsidered, following the imprimatur said to have been given by the House of Lords in Attorney General v Blake [2001] 1 AC 268 to a voluntary agreement basis for awards in private law. Comment Under this statutory provision the law must in my view be taken as settled for the time being by the Court of Appeal decision in the Hertsmere case. As far as I am aware, there has been no suggestion, then or since, that a negotiated fee might be brought in by a different route, as an evidential technique for assessing loss under the section. There are, as the Law Commission recognised, arguments for a more generous basis of compensation. However, that is a matter properly left to Parliament taking account of all the interests involved, including the public interest considerations mentioned by the Master of the Rolls in Hertsmere. Restrictive covenants A more confused picture emerges from the history of the Wrotham Park analogy, in claims relating to statutory modification of restrictive covenants. The authorities were reviewed by the Court of Appeal in Winter v Traditional & Contemporary Contracts Ltd [2007] EWCA Civ 1088; [2008] 1 EGLR 80 (in which I gave the judgment of the court). The statutory framework for the power to discharge or modify restrictive covenants is found in section 84 of the Law of Property Act 1925. Under section 84(1)(aa), the Lands Tribunal (now Upper Tribunal) was given power to discharge or modify a restrictive covenant in order to allow some reasonable user of land, where the restriction either (a) did not secure to the person entitled to the benefit any practical benefits of substantial value or advantage; or (b) was contrary to the public interest; and where, in either case, money would be an adequate compensation for any loss or disadvantage suffered. The tribunal was empowered to direct the payment of a sum by way of consideration to make up for any loss or disadvantage suffered by that person in consequence of the discharge or modification. A few months after the judgment in Wrotham Park, such a claim came before the Lands Tribunal in In re SJC Construction Co Ltds Application (1974) 28 P & CR 200. It concerned a development of six flats on land subject to a restrictive covenant in favour of the local borough council. The development had been begun without seeking a modification. The Tribunal (President Sir Douglas Frank QC) refused to modify the covenant under ground (a) (no substantial benefit), but did so under ground (b) (public interest). In relation to compensation, the President mentioned the free negotiation approach adopted in Wrotham Park. This was seen by him as equivalent to the familiar Stokes v Cambridge principle (Stokes v Cambridge Corp (1962) 13 P & CR 77, 91). Stokes v Cambridge is commonly relied on by valuers in assessing the market value of land subject to compulsory acquisition (under the Land Compensation Act 1961 section 5), where adjoining land holds the key to its development. The value is treated typically as reduced by between one third and one half, to reflect the likely cost of securing the necessary interest from the adjoining landowner. This precedent was probably in the mind of the witness mentioned by Brightman J (Wrotham Park, p 815E), who spoke of one a half or a third of the development value being commonly demanded by an adjoining landowner, although Brightman J adopted the much lower percentage of 5% for reasons he explained. In SJC Construction the President favoured the free negotiation approach over an approach limited to loss or disadvantage affecting the dominant land as such (p 206). He did so in part because he saw statutory modification of the covenant as in effect a compulsory expropriation of a right which together with the servient land has a market value (p 206). Assessing the development value at 19,000, he fixed compensation at 9,500, on the basis that the likely outcome of friendly negotiations would have been to split the development value equally (p 207). In the Court of Appeal ((1975) 29 P & CR 322) the Presidents award was upheld, but on what seems a quite different conceptual basis. Lord Denning MR (with whom the other members of the court agreed) noted the purpose of compensation as being to make up for the loss or disadvantage suffered by the person entitled, adding, at p 326: It is however, to be assessed for loss of amenities, loss of view and so forth, which are things which it is hard to assess in terms of money. It is similar to compensation for pain and suffering He approved the Presidents reliance on Wrotham Park, as a method by which he was getting at the loss or disadvantage, that being an intangible matter which is incapable of exact calculation (pp 326 327) This reasoning is not easy to follow, given the Presidents express refusal to limit the award to loss or damage to the dominant land, and the lack of any hint in his judgment of an attempt to assess loss of amenities, loss of view and so forth. Lord Dennings explanation of Wrotham Park is also difficult to reconcile with Brightman Js finding that in that case the plaintiff had suffered no loss. Lip service at least was paid to his approach in the next case in the Court of Appeal (Stockport Metropolitan Borough Council v Alwiyah Developments (1983) 52 P & CR 278), but with a markedly less generous outcome in financial terms. Dillon LJ saw ground (a) as concerned with practical benefits on the land in the nature of amenities and not with the merely financial bargaining position (p 284). However, he accepted that on the tribunals findings there was a loss of amenity to be valued and that a possible method of assessment might have been by reference to some share, probably small, of the development value (p 285). In the Winter case (para 28) those cases were treated as establishing, at least up to Court of Appeal level, that compensation under section 84 was based on the impact of the development on the objectors land, not on the loss of the opportunity to extract a share of the released development value (para 28); that the negotiated share approach was a permissible tool (para 33), but that the percentage must bear a reasonable relationship to the actual loss suffered by the objector; and that the 50% percentage used in SJC established no precedent. SJC was described as undoubtedly a difficult decision, because the Court of Appeal seemed to have re interpreted the tribunals award to fit its own different view of the law, but the Stockport case should have dispelled any idea that objectors in cases of this kind have any expectation of a windfall Stokes percentage of the released development value, or anything like it (para 37). That more modest view seems thereafter to have been reflected in the pattern of awards by the tribunal, as documented for example in Preston and Newson: Restrictive Covenants affecting Freehold Land 10th ed (2013) cap 14. Comment Here again a case can be made for a more generous basis of award, at least in some circumstances. Where as in SJC itself modification is made on public interest grounds, it is easy to see the force of the Presidents analogy with the refusal of an injunction on similar grounds in Wrotham Park itself. It is less easy to see on what principled basis one is to fix the appropriate percentage of development value, within the range offered by those two cases (between 5% to 50%). The current law may fairly be criticised as a somewhat uneasy compromise between two competing concepts. However, as was pointed out by the Court of Appeal in Winter (para 34 5) those conceptual problems seem to have been negotiated by experienced members of the tribunal so, in subsequent cases, as to produce a reasonably consistent practice. Again, in my view, if change is to be made it is for Parliament rather than the courts to determine the appropriate balance. Date of assessment Finally, I would add a comment on an issue mentioned by Lord Reed (para 56), but not treated by him as needing to be resolved in this appeal. Lord Sumption touches on the same issue, noting that the hypothetical release fee is normally to be assessed at the time of the breach (para 108). He cites the statement by Neuberger LJ in Lunn Poly Ltd v Liverpool and Lancashire Properties Ltd [2006] 2 EGLR 29, para 29: Given that negotiating damages under the Act are meant to be compensatory, and are normally to be assessed or valued at the date of breach, principle and consistency indicate that post valuation events are normally irrelevant. However, given the quasi equitable nature of such damages, the judge may, where there are good reasons, direct a departure from the norm, either by selecting a different valuation date or by directing that a specific post valuation date event be taken into account. As Lord Sumption notes, this passage was cited with approval by Lord Walker in Pell Frischmann. However, neither he nor Neuberger LJ found it necessary on the facts of their cases to look at events later than the date of breach, nor to examine the flexibility allowed by the quasi equitable nature of the remedy. Although this is not an issue in the appeal, I note that at least one of the expert reports in this case treats that passage as allowing the negotiated fee to be assessed taking account of the the eventual outcome. Some comment may therefore be appropriate. In Lunn Poly itself the issue arose somewhat obliquely, and on unusual facts relating to the breach of a covenant for quiet enjoyment in the lease of a unit in a shopping centre. The breach in question involved works for the stopping up and replacement of a fire door. An injunction to restrain the breach having been refused, damages in lieu were assessed on the basis of a hypothetical negotiations for sale of the tenants right to prevent the works. An issue then arose as to whether account could be taken of the risk of subsequent forfeiture of the lease for a separate breach of covenant by the tenant shortly before the landlords works. As Neuberger LJ observed it was a very weak point in practice (para 15), in view of the strong likelihood of relief being granted to the tenant. However, the court thought it right to consider the point as a matter of principle, having regard to discussion in recent cases. Neuberger LJ referred in particular to AMEC Development v Jurys Hotel Management (UK) Ltd (2001) 82 P & CR 22. The judge (Anthony Mann QC, sitting as a Deputy High Court judge) noted that Brightman J in Wrotham Park (p 815H) had taken as his starting point for the hypothetical negotiation the profit which the developer with the benefit of foresight would have assumed. As the deputy judge commented, Brightman J seems to have imagined a negotiation before the infringement, but using actual profits as evidence of what the parties would have contemplated before they actually accrued. He took this as showing that the negotiation analysis need not be pursued rigorously to its logical end, and that he was not required to guess at something which events have in fact made certain (para 13). While declining to lay down any firm general guidance, Neuberger LJ did not accept the deputy judges approach as generally applicable. Once the court had decided on a particular date of valuation, consistency, fairness and principle pointed against ignoring factors existing at that date or taking account of factors which occurred afterwards (para 29). He then set out what he regarded as the proper analysis in the passage cited above. As can be seen, he saw the quasi equitable nature of the jurisdiction as permitting a relatively flexible approach, guided only (it seems) by whether the judge sees good reasons to direct a departure from the norm. In my view, the more detailed examination by this court of the subject of negotiating damages allows for more precise and principled guidance. Here again there are useful statutory parallels. The Bwllfa case (Bwllfa and Merthyr Dare Steam Collieries Ltd (1891) v Pontypridd Waterworks Co [1903] AC 426) established that, in assessing compensation for loss caused by limits to mine working imposed under a statutory notice, the arbitrator was entitled to take account of evidence of increase of prices since the date of the notice; he was not required to conjecture on a matter which has become an accomplished fact (p 431 per Lord Macnaghten). That was in a case where, as Lord Robertson observed (p 432) the statutory compensation was not for an assumed sale of the coal at the date of the notice, but for a continuing embargo on working. In the same way, in the present context account must be taken of the nature of the claim. Under the user principle, whether as applied to the taking of a horse or infringement of a patent, the inquiry is as to the price or fee that the defendant would have been expected to pay at the time of the taking or the infringement. Logically the assumed knowledge should be limited to that which was available to the parties at the time. The position is different where the award is by way of compensation for the refusal of an injunction. This is a reflection not simply of the more flexible (quasi equitable) nature of the jurisdiction, but (as Lord Reed explains: para 47) the different bases of the awards: past, on the one hand, and future or continuing, on the other. Where the causes of the claimants loss are not limited to past breaches, but include the judges refusal of an injunction to restrain future breaches, there is no reason in principle to exclude information available to the parties up to the time of the judges decision. |
These appeals are concerned with a little used provision in article 1F(c) of the Geneva Convention on the Status of Refugees (the Refugee Convention). This excludes from refugee status and protection any person with respect to whom there are serious reasons for considering that . he has been guilty of acts contrary to the purposes and principles of the United Nations. For the time being at least, however, the Home Secretary accepts that these appellants cannot be returned to their home countries because they face a real risk of torture or inhuman or degrading treatment or punishment there. It is the grant of refugee status, rather than the right to stay in this country, which is in issue in these proceedings. The issues in the two cases are different. In Al Sirri, the question is whether all activities defined as terrorism by our domestic law are for that reason alone acts contrary to the purposes and principles of the United Nations, or whether such activities must constitute a threat to international peace and security or to the peaceful relations between nations. In DD, the question is whether armed insurrection is contrary to the purposes and principles of the United Nations if directed, not only against the incumbent government, but also against a United Nations mandated force supporting that government, specifically the International Security Assistance Force (ISAF) in Afghanistan. Although the issues are different, many of the relevant materials are the same, as must be the general approach to article 1F(c), and so we deal with them in one judgment to avoid unnecessary repetition. In all article 1F cases, there is also the issue of the standard of proof: what is meant by serious reasons for considering a person to be guilty of the acts in question? (1) The general approach Relevant treaty and legislative provisions Article 1F of the Refugee Convention excludes three types of person from the definition of refugee: 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. It will be apparent that a particular act may fall within more than one of these categories. In particular, terrorism may be both a serious non political crime and an act contrary to the purposes and principles of the United Nations. Member States of the European Union are, moreover, bound to observe the standards laid down in Council Directive 2004/83/EC 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). Its main objective is to ensure common standards in the identification of people genuinely in need of international protection and a minimum level of benefits for them in all Member States (recital 6). Recital 22 deals with article 1F(c): Acts contrary to the purposes and principles of the United Nations are set out in the preamble and articles 1 and 2 of the Charter of the United Nations and are, amongst others, embodied in the United Nations Resolutions relating to measures combating terrorism, which declare that acts, methods and practices of terrorism are contrary to the purposes and principles of the United Nations and that knowingly financing, planning and inciting terrorist acts are also contrary to the purposes and principles of the United Nations. Article 12 of the Qualification Directive both reflects and expands slightly upon article 1F of the Refugee Convention (the changes and additions are italicised): 2. A third country national or a stateless person is excluded from being a refugee where there are serious reasons for considering that: (a) he or she 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 or she has committed a serious non political crime outside the country of refuge prior to his or her admission [to that country] as a refugee; which means the time of issuing a residence permit based on the granting of refugee status; particularly cruel actions, even if committed with an allegedly political objective, may be classified as serious non political crimes; (c) he or she has been guilty of acts contrary to the purposes and principles of the United Nations as set out in the Preamble and articles 1 and 2 of the Charter of the United Nations. 3. Paragraph 2 applies to persons who instigate or otherwise participate in the commission of the crimes or acts mentioned therein. The Qualification Directive is transposed into United Kingdom law by the Refugee or Person in Need of International Protection (Qualification) Regulations 2006 (SI 2006/2525). Regulation 2 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. The Immigration Rules provide, in paragraph 334, that a person will be granted asylum, inter alia, if (ii) he is a refugee, as defined in regulation 2 of The Refugee or Person in Need of International Protection (Qualification) Regulations 2006. However, section 54 of the Immigration, Asylum and Nationality Act 2006 (the 2006 Act), provides: (1) In the construction and application of article 1F(c) of the Refugee Convention the reference to acts contrary to the purposes and principles of the United Nations shall be taken as including, in particular (a) acts of committing, preparing or instigating terrorism (whether or not the acts amount to an actual or inchoate offence), and (b) acts of encouraging or inducing others to commit, prepare or instigate terrorism (whether or not the acts amount to an actual or inchoate offence). (2) In this section the Refugee Convention means the Convention relating to the Status of Refugees done at Geneva on 28 July 1951, and terrorism has the meaning given by section 1 of the Terrorism Act 2000. There is no need to set out the definition of terrorism contained in section 1 of the 2000 Act. The essence is the use or threat of certain dangerous actions designed to influence this or any other government or intimidate the public for the purpose of advancing a political, religious, racial or philosophical cause. But if firearms or explosives are involved, the act or threat need not be designed to influence the government or intimidate the public. Terrorism designed solely to achieve political change within the United Kingdom, with no international repercussions, is clearly covered, as is terrorism committed here with a view to achieving internal political change in another country. The Preamble to the Charter of the United Nations recites the determination of the peoples of the United Nations to save succeeding generations from the scourge of war; to reaffirm faith in fundamental human rights, in the dignity and worth of the human person, in the equal rights of men and women and of nations large and small; to maintain justice and respect for international law; and to promote social progress and better standards of life in larger freedom; and for these ends to live together in peace, unite to maintain international peace and security, ensure that armed force is used only in the common good, and employ international machinery for the economic and social advancement of all peoples. The purposes of the United Nations are set out in article 1 of the Charter. The first purpose is 1. To maintain international peace and security, and to that end: to take effective collective measures for the prevention and removal of threats to the peace, and for the suppression of acts of aggression or other breaches of the peace, and to bring about by peaceful means, and in conformity with the principles of justice and international law, adjustment or settlement of international disputes or situations which might lead to a breach of the peace. The second is to develop friendly relations among nations based on respect for the principle of equal rights and self determination of peoples, and to take other appropriate measures to strengthen universal peace; the third is to achieve international cooperation in solving international problems of an economic, social, cultural, or humanitarian nature, and in promoting and encouraging respect for human rights and for fundamental freedoms for all; and the fourth is to be a centre for harmonising the actions of nations in the attainment of these common ends. Article 2 of the Charter requires the United Nations and its Member States to act in accordance with the seven Principles set out therein. These are: the sovereign equality of all Members; the duties of all Members to fulfil their obligations under the Charter in good faith; to settle their disputes by peaceful means; to refrain from the threat or use of force against the territorial integrity or political independence of any state; to give the United Nations every assistance in taking action in accordance with the Charter and to refrain from assisting any state against which it is taking action; the duty of the United Nations to ensure that non member states act in accordance with these principles so far as may be necessary to maintain international peace and security; and, finally, that Nothing contained in the present Charter shall authorise the United Nations to intervene in matters which are essentially within the domestic jurisdiction of any state . The general approach to article 1F(c) The appellants, with the support of the UNHCR, argue that article 1F must be interpreted narrowly and applied restrictively because of the serious consequences of excluding a person who has a well founded fear of persecution from the protection of the Refugee Convention. This was common ground in R (JS (Sri Lanka)) v Secretary of State for the Home Department [2010] UKSC 15, [2011] 1 AC 184, in the context of article 1F(a), and must apply a fortiori in the context of article 1F(c). Concern was expressed during the drafting of the Convention that the wording was so vague as to be open to misconstruction or abuse. Professor Grahl Madsen comments that It seems that agreement was reached on the understanding that the phrase should be interpreted very restrictively: The Status of Refugees in International Law, 1966, p 283. Secondly, article 1F(c) is applicable to acts which, even if they are not covered by the definitions of crimes against peace, war crimes or crimes against humanity as defined in international instruments within the meaning of article 1F(a), are nevertheless of a comparable egregiousness and character, such as sustained human rights violations and acts which have been clearly identified and accepted by the international community as being contrary to the purposes and principles of the United Nations. The appellants rely on Pushpanathan v Canada, Minister of Citizenship and Immigration (Canadian Council for Refugees intervening) [1998] 1 SCR 982 (Pushpanathan) per Bastarache J at para 65: .In my view, attempting to enumerate a precise or exhaustive list [of acts contrary to the purposes and principles of the United Nations] stands in opposition to the purpose of the section and the intentions of the parties to the Convention. There are, however, several types of acts which clearly fall within the section. The guiding principle is that where there is consensus in international law that particular acts constitute sufficiently serious and sustained violations of fundamental human rights as to amount to persecution, or are explicitly recognised as contrary to the purposes and principles of the United Nations, then article 1F(c) will be applicable. On the other hand, not every act which is condemned by the United Nations is for that reason alone to be deemed contrary to its purposes and principles. In Pushpanathan itself, the majority held that international drug trafficking did not fall within article 1F(c), despite the co ordinated efforts of the international community to suppress it, through United Nations treaties, declarations and institutions. As the UNHCR explains, in its Background Note on the Application of the Exclusion Clauses: Article 1F (September 2003), at para 47: The principles and purposes of the United Nations are reflected in myriad ways, for example by multilateral conventions adopted under the aegis of the UN General Assembly and in Security Council resolutions. Equating any action contrary to such instruments as falling within article 1F(c) would, however, be inconsistent with the object and purpose of this provision. Rather, it appears that article 1F(c) only applies to acts that offend the principles and purposes of the United Nations in a fundamental manner. Article 1F(c) is thus triggered only in extreme circumstances by activity which attacks the very basis of the international communitys co existence under the auspices of the United Nations. The key words in article 1F(c) acts contrary to the purposes and principles of the United Nations should therefore be construed restrictively and its application reserved for situations where an act and the consequences thereof meet a high threshold. This threshold should be 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. Thus, crimes capable of affecting international peace, security and peaceful relations between states would fall within this clause, as would serious and sustained violations of human rights. Thirdly, for exclusion from international refugee protection to be justified, it must be established that there are serious reasons for considering that the person concerned had individual responsibility for acts within the scope of article 1F(c): see the detailed discussion at paras 50 to 75 of the UNHCR Background Note. This requires an individualised consideration of the facts of the case, which will include an assessment of the persons involvement in the act concerned, his mental state and possible grounds for rejecting individual responsibility. As a general proposition, individual responsibility arises where the individual committed an act within the scope of article 1F(c), or participated in its commission in a manner that gives rise to individual responsibility, for example through planning, instigating or ordering the act in question, or by making a significant contribution to the commission of the relevant act, in the knowledge that his act or omission would facilitate the act. In Bundesrepublik Deutschland v B and D (Joined Cases C 57/09 and C 101/09) [2011] Imm AR 190 (B and D) the Grand Chamber of the Court of Justice of the European Union confirmed the requirement of an individualised assessment and held that it was not justifiable to base a decision to exclude solely on a persons membership of a group included in a list of terrorist organisations. This too is consistent with the approach adopted by this Court in R (JS (Sri Lanka)) v Secretary of State for the Home Department [2011] 1 AC 184. In our view, this is the correct approach. 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. However, those general observations are not enough in themselves to resolve the questions raised by the two cases before us, to which we now turn. (2) The case of Al Sirri The facts The appellant is a citizen of Egypt. He arrived in the United Kingdom in April 1994 and claimed asylum then. His claim was eventually turned down on 11 October 2000, on the ground that article 1F(c) of the Refugee Convention applied to him, but he was told that he would be granted exceptional leave to enter the United Kingdom. That never happened, but on 1 April 2004 he was granted discretionary leave to enter which has been extended for periods of six months at a time ever since. Under section 83 of the Nationality, Immigration and Asylum Act 2002, the grant of discretionary leave for an aggregate of more than a year also gave him the right to appeal against the refusal of asylum. This he did in September 2006. On 2 August 2007, the Asylum and Immigration Tribunal (the AIT) (Hodge J, President, Senior Immigration Judge Lane and Immigration Judge Woodhouse) dismissed his appeal. On 18 March 2009, the Court of Appeal (Sedley, Arden and Longmore LJJ) set aside the Tribunals determination and remitted the case to be determined afresh by a differently constituted tribunal: [2009] EWCA Civ 222, [2009] INLR 586. Nevertheless, the appellant has appealed to this Court because he takes issue with some aspects of the leading judgment given by Sedley LJ. The Home Secretary relied upon seven matters to show that there are serious reasons for considering that the appellant has been guilty of acts contrary to the purposes and principles of the United Nations. Four of these are accepted facts: (i) that the appellant had published and written the Foreword to an Arabic language book, Bringing to light some of the most important judgments in Islam; the author, Rifai Ahmed Musa, has been credibly named as having been a member of the Egyptian organisation, al Gamma al Islamiyya; the AIT pointed out that that organisation is proscribed under the Terrorism Act 2000, and also in Canada and the United States and within the European Union by Council Common Position 2005/936/CFSP; (ii) that the appellant was in possession of an unpublished Arabic manuscript, Expectations of the Jihad Movement in Egypt; the author, Ayman Al Zawahiri, is a former leader of the organisation, Egyptian Islamic Jihad; (iii) that the appellant possesses books and videos relating to Osama bin Laden and Al Qaeda; (iv) that the appellant had transferred money to and from foreign countries, allegedly in sums greater than his known income could explain. The AIT relied upon a long and detailed statement from Acting Detective Inspector Dingemans of the Counter Terrorism Command at Scotland Yard, containing what Sedley LJ described as a damaging account and analysis of the material found at Mr Al Sirris premises (para 67). Sedley LJ commented that the preferable course would have been for the AIT to be shown the documentary material supporting the allegations, to hear what both sides had to say about it, to consider any explanations given by the appellant, and to make up their own mind about it. The Court of Appeal was not satisfied that this material, together with the more serious allegation referred to in para 22 below, would inevitably have led the AIT to conclude that the appellant fell within article 1F(c); it follows that they would not have been so satisfied on the basis of the above material alone. Two of the matters relied upon were more serious, but the Court of Appeal ruled that the AIT was required by law to give them no weight, and the Home Secretary has not appealed against that ruling: (i) that the appellant has twice been convicted in his absence by the Supreme Military Court of Egypt: in March 1994, when he was sentenced to death for conspiracy to kill Dr Atef Sidqi, Prime Minister of Egypt; and in January 1999, when he was sentenced to 15 years imprisonment for membership of a terrorist organisation. These convictions cannot be relied upon because they were probably secured by the use of torture. Although the AIT placed little weight upon them, the Court of Appeal correctly ruled that this was a serious error of law, and the only principled way of dealing with them was to afford them no weight at all (para 44); (ii) that a grand jury in the United States District Court for the Southern District of New York had indicted him for allegedly providing material support to a terrorist organisation, al Gamma al Islamiyya, and soliciting the commission of a crime of violence. The AIT had accorded this substantial weight, although none of the evidence on which the indictment was based had been disclosed, and as a result (under extradition law as it then stood) the Home Secretary had declined to authorise an extradition request based upon the indictment to proceed. The Court of Appeal ruled that it should be accorded no evidential weight whatsoever. This leaves the most important matter relied upon: that the appellant had conspired in the murder of General Ahmad Shah Masoud in Afghanistan on 9 September 2001, just two days before the atrocities of 11 September 2001. The background to this is common knowledge, some of which is confirmed by the witness statement of General Masouds brother, Charg dAffaires in London for the Islamic State of Afghanistan. This was then the recognised government of Afghanistan and General Masoud was its Vice President and Defence Minister. But at the time the Taliban were in control of most of the country, apart from the territory in the north east of the country which was under the control of the Northern Alliance. General Masoud was leader of the Northern Alliance. Earlier that year he had travelled to Europe to address the European Parliament on the situation in Afghanistan and it is said that he had warned of an impending Al Qaeda attack upon the United States on a larger scale than the bombing of the US embassies in Kenya and Tanzania in 1998. It is also believed that his assassination may have been ordered by Osama bin Laden to cut off the most obvious source of support for US retaliation against such an attack. Be that as it may, the appellant was indicted at the Old Bailey for conspiracy to murder General Masoud. The case against him was described by the Common Serjeant as follows. The General had been murdered by two Arab suicide bombers posing as a journalist and photographer who had been granted an interview with him. A letter of introduction, purportedly signed by the appellant, from the Islamic Observation Centre (IOC) which was run by the appellant in London, and informing the reader that the two were journalists of Arab News International, a TV subsidiary of the IOC, had played a part in securing this interview. However, the letters actually carried by the assassins at the time of the murder were in fact, as the Common Serjeant put it, careful and elaborate forgeries of the letters that the appellant had created. So did the appellant know that the letters which he created were to be used to secure an interview with the General at which he would be killed? Or were they used by the assassins as a template for the letters which they would forge, the appellant being an innocent fall guy who knew nothing of their intended use? The Common Serjeant concluded that the evidence was as consistent with the innocence of the accused (who had made no secret of his authorship of the templates which could easily be traced to him and had not destroyed any of the relevant documentation in his possession) as it was with his guilt. Accordingly, on 16 May 2002, he dismissed the charge on the ground that the evidence would not be sufficient for a jury properly to convict. The AIT reminded themselves that the standard of proof in criminal proceedings is not the same as that under article 1F(c). They concluded that the evidence seriously points to some knowing involvement of the appellant in the events which led to the death of General Masoud (para 46). Sedley LJ considered whether this conclusion, together with the Dingemans evidence referred to in para 19 above, would have been bound to lead to a finding adverse to the appellant (para 62). He concluded that there was a realistic possibility that a tribunal of fact, confining itself to the admissible evidence and excluding the two items ruled inadmissible by the Court of Appeal, might have rejected the submission that the appellant fell within article 1F(c) (para 64). Hence the case was remitted to be determined afresh on the basis of the admissible evidence. Why then this appeal? The appellant originally took issue with the Court of Appeal on three matters: (1) The Court of Appeal rejected his argument that article 1F was aimed only at state actors people who had in some way abused the powers of a sovereign state. Although this had the support both of academic commentators on the Refugee Convention and of the UNHCR, it had been rejected as an absolute rule by the Supreme Court of Canada in Pushpanathan. The appellant was originally given permission to argue the point in this Court, but has now abandoned it in the light of the later decision of the Court of Justice of the European Union in B and D. In these proceedings, Mr Fordham QC, who appears for the UNHCR, has accepted that it is possible for non state actors to be guilty of acts contrary to the purposes and principles of the United Nations. (2) Sedley LJ saw the force of the appellants submission that terrorism must have an international character or aspect in order to come within article 1F(c) (paras 29 and 32). However, he did not think that this helped the appellant. On the face of it, the assassination was in support of a domestic Afghan quarrel. The international repercussions were referred to but not described by the AIT. But what in his view gave it a dimension which brought it within the purposes and principles of the United Nations was that, if true, it involved the use of a safe haven in one state to destabilise the government of another by the use of violence (para 51). The appellant wishes, therefore: (i) clearly to establish that the act in question must have an international character, because the relevant purposes and principles of the United Nations are limited to matters which significantly affect international peace and security; and (ii) clearly to establish that it is not enough to supply that international character that actions are taken in one state to destabilise the government of another. (3) Sedley LJ rejected the submission that serious reasons for considering the appellant to be guilty of acts falling within article 1F(c) imported the criminal standard of proof (paras 33 to 35). The appellant was originally refused permission to appeal on this ground. But he now wishes to appeal on the different ground that, for there to be such serious reasons, it must be found more likely than not that the appellant is guilty of the relevant acts. This is of particular importance in his case, because of the Common Serjeants finding that the evidence was as consistent with his innocence as with his guilt. An international dimension? The question is whether labelling an act as terrorism or a person as a terrorist is sufficient to bring the act or the person within the scope of article 1F(c). Before the Court of Appeal, Mr Eicke QC, on behalf of the Home Secretary, did not dispute that article 1F(c) was not as wide as the definition of terrorism in section 1 of the Terrorism Act 2000 (see para 29). Further, by common consent the Qualification Directive conditions and qualifies the application of section 1 of the Terrorism Act to article 1F proceedings (see para 28). Before this Court, Mr Eicke has withdrawn any such concession and argues that, because the United Nations has condemned terrorism but not defined it, Member States are free to adopt their own definitions and that, therefore, acts falling within the domestic definition of terrorism will also be acts contrary to the purposes and principles of the United Nations, whether or not they have any international dimension or repercussions for international peace and security. In support of his argument, he cites the numerous General Assembly and Security Council resolutions on the subject of terrorism, sometimes with and sometimes without the adjective international. In 1994, the General Assembly of the United Nations adopted, by resolution 49/60, the annexed Declaration on Measures to Eliminate International Terrorism. By article 1: The States Members of the United Nations solemnly reaffirm their unequivocal condemnation of all acts, methods and practices of terrorism, wherever and by whomever committed, including those which jeopardise the friendly relations among states and peoples and threaten the territorial integrity and security of states. By article 2: Acts, methods and practices of terrorism constitute a grave violation of the purposes and principles of the United Nations, which may pose a threat to international peace and security, jeopardise friendly relations among states, hinder international cooperation and aim at the destruction of human rights, fundamental freedoms and democratic bases of society. And by article 3: Criminal acts intended or calculated to provoke a state of terror in the general public, a group of persons or particular persons for political purposes are in any circumstance unjustifiable, whatever the considerations of a political, philosophical, ideological, racial, ethnic, religious or any other nature that may be invoked to justify them. By article 5(f), states were required to take effective measures before, among other things, granting asylum to ensure that the asylum seeker has not engaged in terrorist activities. In 1996, the General Assembly adopted, by resolution 51/210, the Declaration to Supplement the 1994 Declaration on Measures to Eliminate International Terrorism. By article 3: The States Members of the United Nations reaffirm that States should take appropriate measures in conformity with the relevant provisions of national and international law, including international standards of human rights, before granting refugee status, for the purpose of ensuring that the asylum seeker has not participated in terrorist acts, . and, after granting refugee status, for the purpose of ensuring that that status is not used for the purpose of preparing or organising terrorist acts intended to be committed against other states or their citizens. Declarations are not, of course, binding in international law. Resolution 51/210 referred to the possibility of considering in the future the elaboration of a comprehensive convention on international terrorism and established an ad hoc committee to that end; a draft text has been prepared for discussion but as yet no such Convention has been agreed. In the meantime, a number of specific Conventions requiring states to criminalise certain particular acts of terrorism have been agreed. The Security Council has passed numerous resolutions concerning threats to international peace and security caused by acts of terrorism, including Resolution 1624 of 2005. Paragraph 8 of the Preamble to this reaffirms that acts, methods, and practices of terrorism are contrary to the purposes and principles of the United Nations, as is knowingly financing, planning and inciting terrorist acts. But paragraph 2 also stresses that States must ensure that any measures taken to combat terrorism comply with all their obligations under international law, and should adopt such measures in accordance with international law, in particular international human rights law, refugee law, and humanitarian law. Mr Fitzgerald QC, on behalf of the appellant, argues that an act of terrorism can only be contrary to the purposes and principles of the United Nations if it impacts in some significant way upon international peace and security. In the Guidelines on International Protection: Application of Exclusion Clauses: Article 1F of the 1951 Convention relating to the Status of Refugees, 2003, para 17, the UNHCR takes a view of terrorism which is consistent with the general principles quoted above at para 14: In cases involving a terrorist act, a correct application of article 1F(c) involves an assessment as to the extent to which the act impinges on the international plane in terms of its gravity, international impact, and implications for international peace and security. This position is maintained in the UNHCRs Note on the Impact of Security Council Resolution 1624 (2005) on the Application of Exclusion under Article 1F of the 1951 Convention relating to the Status of Refugees: The focus should . continue to be on the nature and impact of the acts themselves. In many cases, the acts in question will meet the criteria for exclusion as serious non political crimes within the meaning of article 1F(b). In others, such acts may come within the scope of article 1F(a), for example as crimes against humanity, while those crimes whose gravity and international impact is such that they are capable of affecting international peace, security and peaceful relations between states would be covered by article 1F(c) of the 1951 Convention. Thus, the kinds of conduct listed in [preambular paragraph] 8 of Resolution 1624 ie acts, methods and practices of terrorism and knowingly financing, planning and inciting terrorist acts qualify for exclusion under article 1F(c), if distinguished by these larger characteristics. (Emphasis supplied) B and D was decided by the Grand Chamber of the CJEU after the decision of the Court of Appeal in Al Sirri. The principal question referred by the Bundesverwaltungsgericht was whether mere membership of or support for an organisation listed in the Annex to the Council Common Position of 17 June 2002 on the application of specific measures to combat terrorism constituted a serious non political crime within article 12(2)(b) or an act contrary to the purposes and principles of the United Nations within article 12(2)(c) of the Qualification Directive. The Advocate General drew a distinction between terrorist acts in general, which depending upon the circumstances were likely to be categorised as serious non political crimes, and terrorist acts which were contrary to the purposes and principles of the United Nations. As to the latter, in his view, the UNHCR Guidelines and Background Note suggested that it is nevertheless necessary to verify whether they have an international dimension, especially in terms of their seriousness and their impact and implications for international peace and security. Within those limits, it therefore seems permissible to make a distinction between international terrorism and domestic terrorism (para 70, Adv Gen). The Grand Chamber confirmed that terrorist acts, even if committed with a purportedly political objective, fall to be regarded as serious non political crimes (para 81). Coming on to acts contrary to the principles and purposes of the United Nations, the Grand Chamber thought it clear from the Security Council Resolutions that the Security Council takes as its starting point the principle that international terrorist acts are generally speaking, and irrespective of any state participation, contrary to the purposes and principles of the United Nations (para 83). It is for that reason that the appellant has conceded that non state actors can be guilty of such acts. The Grand Chamber continued (para 84): It follows that as is argued in their written observations by all the governments which submitted such observations to the court, and by the European Commission the competent authorities of the Member States can also apply article 12(2)(c) of Directive 2004/83 to a person who, in the course of his membership of an organisation which is on the list forming the Annex to Common Position 2001/931, has been involved in terrorist acts with an international dimension. The B and D case is prayed in aid on each side of the argument. Mr Eicke, for the Secretary of State, correctly points out that the international dimension was not what the case was all about. The principal issue was whether mere membership of and support for a listed organisation was sufficient for either article 12(2)(b) or (c) to apply. The answer to this question was clearly no. The national authorities had first to consider whether the acts committed by the organisation fell within those provisions and secondly whether individual responsibility for carrying out those acts could be attributed to the persons concerned. In that context, little weight could be attached to the references to international terrorism and terrorist acts with an international dimension. Against that, argues Mr Fitzgerald, it is clear that both the Advocate General and the Grand Chamber were drawing a distinction between paragraphs (b) and (c) of article 12(2). There is no mention of an international element in the terrorist acts which could fall within paragraph (b), whereas the international element is referred to whenever reference is made to paragraph (c). Discussion and conclusions Approaching the matter in the light of the general principles discussed earlier, it is clear that the phrase acts contrary to the purposes and principles of the United Nations must have an autonomous meaning. It cannot be the case that individual Member States are free to adopt their own definitions. As Lord Steyn said in R v Secretary of State for the Home Department, Ex p Adan [2000] UKHL 67, [2001] 2 AC 477, In principle, there can be only one true interpretation of a treaty. There is, at least as yet, no specialist international court or other body to adjudicate upon Member States compliance with the Refugee Convention. The guidance given by the UNHCR is not binding, but should be accorded considerable weight, in the light of the obligation of Member States under article 35 of the Convention to facilitate its duty of supervising the application of the provisions of the Convention (see R v Asfaw [2008] AC 1061, per Lord Bingham at para 13, and R v Uxbridge Magistrates Court, Ex p Adimi [2001] QB 667, 678). Within the European Union the Qualification Directive is designed to lay down minimum standards with which Member States must comply. Sedley LJ correctly concluded that the adoption by section 54(2) of the 2006 Act of the meaning of terrorism contained in the 2000 Act has where necessary to be read down in an article 1F[(c)] case so as to keep its meaning within the scope of article 12(2)(c) of the Directive. The United Nations Security Council has declared that acts, methods, and practices of terrorism are contrary to the purposes and principles of the United Nations and this is repeated in recital 22 to the Qualification Directive. But it has done so in a context where there is as yet no internationally agreed definition of terrorism, no comprehensive international Convention binding Member States to take action against it, and where the international declarations adopted by the General Assembly are headed Measures to eliminate international terrorism. Above all, however, the principal purposes of the United Nations are to maintain international peace and security, to remove threats to that peace, and to develop In those circumstances, it is our view that the appropriately cautious and friendly relations among nations. It is also noteworthy that the CJEU, despite recital 22 to the Directive, consistently referred to international terrorism, when discussing article 12(2)(c) in B and D. restrictive approach would be to adopt para 17 of the UNHCR Guidelines: Article 1F(c) is only triggered in extreme circumstances by activity which attacks the very basis of the international communitys coexistence. Such activity must have an international dimension. Crimes capable of affecting international peace, security and peaceful relations between states, as well as serious and sustained violations of human rights would fall under this category. The essence of terrorism is the commission, organisation, incitement or threat of serious acts of violence against persons or property for the purpose of intimidating a population or compelling a government or international organisation to act or not to act in a particular way (see, for example, the definition in article 2 of the draft comprehensive Convention), as Sedley LJ put it in the Court of Appeal, the use for political ends of fear induced by violence (para 31). It is, it seems to us, very likely that inducing terror in the civilian population or putting such extreme pressures upon a government will also have the international repercussions referred to by the UNHCR. In this particular case, the AIT did not consider that any such repercussions were required, but commented that if we are wrong about that we consider the killing itself to be an act of terrorism likely to have significant international repercussions, as indeed it appears to have done (para 47). When the case returns to the Tribunal, the Tribunal will have to consider the totality of the evidence and apply the test set out above. Finally, is it enough to meet that test that a person plots in one country to destabilise conditions in another? This must depend upon the circumstances of the particular case. It clearly would be enough if the government (or those in control) of one state offered a safe haven to terrorists to plot and carry out their terrorist operations against another state. That is what the Taliban were doing by offering Osama bin Laden and Al Qaeda a safe haven in Afghanistan at the time. As the UNHCR says, this would have clear implications for inter state relations. The same may not be true of simply being in one place and doing things which have a result in another. The test is whether the resulting acts have the requisite serious effect upon international peace, security and peaceful relations between states. (3) The case of DD The facts The appellant is a citizen of Afghanistan. He arrived in the United Kingdom on 18 January 2007 and applied for asylum on the same day. The basis of his claim was that he feared persecution because of his association with his brother AD, who was a well known Jamiat e Islami commander in Afghanistan. Following the fall of the Najibullah government in 1992, the appellants brother became responsible for other commanders in the north of Afghanistan and formed a number of strategic alliances, ultimately allying himself with the Taliban. The appellant acted as his deputy and commanded between 50 and 300 men. He was later demoted and reduced to the command of no more than 20 men. Following US military intervention in Afghanistan, the appellant and his brother fled to Pakistan. In 2004, the appellants brother was assassinated in Pakistan by his enemies who held positions in the Karzai government of Afghanistan. The appellant was also a target of the assassination attempt and sustained gunshot injuries. After about a month, he returned to Afghanistan and sought protection from his enemies by joining a military grouping, Hizb e Islami. He commanded 10 15 people and engaged in both offensive and defensive military operations against both the Afghan government and the forces of ISAF. The appellants nephew (the son of his deceased brother) was killed in Peshawar in about September 2006. The appellant was ordered to fight in his home area. He decided that it would be too dangerous for him to do so as he had enemies there who were high ranking members of the Karzai government. He fled once again to Pakistan and arrangements were made through an agent for him to travel from there to the United Kingdom. He claimed asylum saying that he feared that, if he were returned to Afghanistan, he would be killed by his deceased brothers enemies or by Hizb e Islami as a traitor. By letter dated 27 April 2007, the Secretary of State refused the claim on the grounds that the appellants account was not credible. In particular, he did not accept the account that he gave of his role in Hizb e Islami. By letter dated 6 August 2007, the Secretary of State gave supplementary reasons for the refusal. These were that, even if the appellants claimed activities in Afghanistan were substantiated, he was not entitled to asylum in any event. This was because his claim that he had fought against ISAF, if accepted, meant that he had been guilty of acts contrary to the purposes and principles of the United Nations and was therefore excluded from the definition of refugee by reason of article 1F(c) of the Refugee Convention. The appellant appealed to the Asylum and Immigration Tribunal (AIT). IJ Morgan found the appellant to be credible and allowed his appeal under the Refugee Convention and under article 3 of the European Convention on Human Rights (ECHR). He had a well founded fear of persecution by his brothers enemies some of whom were members of the Karzai government. The judge was not persuaded that the appellant had been guilty of acts contrary to the purposes and principles of the United Nations. For reasons that are immaterial to the present appeal, a second stage reconsideration was ordered by SIJ Moulden. The second stage reconsideration was conducted by IJ Simpson who, by a determination promulgated on 28 August 2008, allowed the appellants appeal on both asylum and article 3 of the ECHR grounds. The judge found the appellant to be credible, except that she rejected his assertion that his actions with Hizb e Islami in Afghanistan were defensive. He had a longstanding history of military involvement in Afghanistan, including at a high level, deputy to his Commander brother, and independently a Commander in Hizb e Islami Hekmatayar in Kunar. There were prima facie grounds for considering his actions were both offensive and defensive. As regards article 1F(c), the judge concluded that section 54 of the 2006 Act (see para 7 above), which came into effect on 31 August 2006, appeared to have effected a substantive change in the law and that, as a matter of natural justice, it applied only to acts after it came into force, that is from September 2006. She concluded at para 151: Having regard to the combined lack of specificity of evidence of the appellants conduct with Hizb e Islami and the highly reasonable likelihood, given the chronology, that his involvement with Hizb e Islami was at its end stage after September 2006 and the coming into effect of section 54, I find in sum there are not serious grounds for considering he committed a barred act(s). I find article 1F(c) does not apply. The Court of Appeal The issues before the Court of Appeal concerned (i) the interpretation and applicability of the 2006 Act and (ii) whether and, if so, to what extent on the AITs findings the appellant had been guilty of acts contrary to the purposes and principles of the United Nations within the meaning of article 1F(c) of the Refugee Convention. Pill LJ (with whom Rimer and Black LJJ agreed) allowed the Secretary of States appeal. He held that, on the findings of the AIT, the appellant had not committed any acts of terrorism within the meaning of section 54 of the 2006 Act. The nub of the courts reasoning on the article 1F(c) point is contained in para 64 of Pill LJs judgment: The UN Security Council has mandated forces to conduct operations in Afghanistan. The force is mandated to assist in maintaining security and to protect and support the UNs work in Afghanistan so that its personnel engaged in reconstruction and humanitarian efforts can operate in a secure environment. Direct military action against forces carrying out that mandate is in my opinion action contrary to the purposes and principles of the United Nations and attracts the exemption provided by article 1F(c) of the Convention. As we explain below, we substantially agree with this conclusion. The Court of Appeal nevertheless remitted the case for reconsideration by the Upper Tribunal because the AIT had failed to consider the appellants individual responsibility as required by this Court in JS (Sri Lanka) (and by the CJEU in B and D) and whether he had been guilty of acts contrary to the purposes and principles of the United Nations. The United Nations and Afghanistan Ever since the Soviet withdrawal from Afghanistan in 1989, the United Nations has been trying to bring an end to the fighting that has been taking place in that country. As long ago as 28 August 1998, Security Council Resolution 1193 called for a ceasefire and expressed grave concern about the continuing Afghan conflict and the Taliban forces offensive which was causing a serious and growing threat to regional and international peace and security, as well as extensive human suffering. Similar resolutions followed. For security reasons, all international United Nations personnel were withdrawn from Afghanistan in September 2001. On 5 December 2001, the participants in the United Nations Talks on Afghanistan entered into the Bonn Agreement on Provisional Arrangements in Afghanistan Pending the Re establishment of Permanent Government Institutions. The participants pledged their commitment to do all within their means and influence to ensure that security was provided in Afghanistan. They agreed that an Interim Authority should be established (to be the repository of Afghan sovereignty) and that, pending the establishment and training of new Afghan security and armed forces, they would request the United Nations Security Council to consider authorising the early deployment in Afghanistan of a United Nations mandated force to assist in the maintenance of security in Kabul and its surrounding areas. By Resolution 1383 (6 December 2001), the Security Council endorsed the Bonn Agreement. By Resolution 1386 (20 December 2001), acting under Chapter VII of the United Nations Charter, the Security Council authorised the establishment for 6 months of ISAF to assist the Afghan Interim Authority in the maintenance of security in Kabul and its surrounding areas, so that the Afghan Interim Authority as well as the personnel of the United Nations can operate in a secure environment. The resolution (i) authorised the Member States participating in ISAF to take all necessary measures to fulfil its mandate; called upon ISAF to work in close consultation with the Afghan Interim Authority in the implementation of the force mandate; (ii) called upon all Afghans to cooperate with ISAF; and (iii) called upon the Member States participating in ISAF to provide assistance to help the Afghan Interim Authority in the establishment and training of new Afghan security and armed forces. On 18 March 2002, the Secretary General submitted a long report entitled The situation in Afghanistan and its implications for international peace and security. The report contained a good deal of detail about the situation and expressed the hope that the Security Council would support the wish of the Afghan people for the expansion of the operation of ISAF. At para 95, it said: the next step, to ensure that all United Nations efforts are harnessed to fully support the implementation of the Bonn Agreement, would be to integrate all the existing United Nations elements in Afghanistan into a single mission, the United Nations Assistance Mission in Afghanistan (UNAMA). The missions mandate would be (i) to fulfil the tasks and responsibilities, including those related to human rights, the rule of law and gender issues, entrusted to the United Nations in the Bonn Agreement, which were endorsed by the Security Council in its resolution 1383 (2001); (ii) to promote national reconciliation and rapprochement throughout the country; and (iii) to manage all United Nations humanitarian relief, recovery and reconstruction activities in Afghanistan under the overall authority of the United Nations Special Representative and in coordination with the Interim Authority and successor administrations of Afghanistan. By Resolution 1401 (28 March 2002), the Security Council endorsed the establishment of UNAMA for an initial period of 12 months with the mandate and structure set out in the Secretary Generals report of 18 March 2002. By Resolution 1413 (23 May 2002), the Security Council extended the mandate of ISAF for a further 6 months from 20 June 2002, authorising the Member States participating in ISAF to take all necessary steps to fulfil its mandate. By one of its recitals, the Security Council determined that the situation in Afghanistan still constituted a threat to international peace and security. The mandate was extended for a further year beyond 20 December 2002 by Resolution 1444 (27 November 2002). Once again, the threat to international peace and security posed by the situation in Afghanistan was recorded. The mandate of UNAMA was extended for a further period of 12 months by Resolution 1471 (28 March 2003). On 23 July 2003, the Secretary General reported on the situation in Afghanistan and its implications for international peace and security. At para 67 of his report, he said that the consequences of failing to provide for sufficient security for the Bonn process to succeed may have implications far beyond Afghanistan. On 11 August 2003, NATO assumed command of ISAF. By Resolution 1510 (13 October 2003), the Security Council extended ISAFs mandate for a further 12 months to allow it, as resources permit, to support the Afghan Transitional Authority and its successors in the maintenance of security in areas of Afghanistan outside Kabul and its environs, so that the Afghan Authorities as well as the personnel of the United Nations and other international civilian personnel engaged, in particular in reconstruction and humanitarian efforts, can operate in a secure environment, and to provide security assistance for the performance of other tasks in support of the Bonn Agreement. It called upon ISAF to continue to work in close consultation with the Afghan Transitional Authority and its successors as well as the Special Representative of the Secretary General. By its recitals, the Security Council recognised that the responsibility for providing security and law and order throughout the country resided with the Afghans themselves and welcomed the continuing cooperation of the Afghan Transitional Authority with ISAF. Yet again, the resolution recorded that the situation still constituted a threat to international peace and security. By Resolution 1536 (26 March 2004), the Security Council extended the mandate of UNAMA for a further 12 months. By Resolution 1563 (17 September 2004), the mandate of ISAF was extended for a further 12 months beyond 13 October 2004. In subsequent years, the mandates of UNAMA and ISAF were again extended for periods of 12 months at a time. As will become apparent, the differences between ISAF and UNAMA have assumed some importance in this case. ISAF is an armed force, but it is not a United Nations force. It has never been under direct United Nations command. It was initially under the lead command of single nations (starting with the United Kingdom). Since August 2003 it has been under the command of NATO. On the other hand, UNAMA is an assistance mission under United Nations control. It is not an armed force. But the objectives of ISAF and UNAMA are essentially the same, although the means by which they seek to achieve them differ. In particular, they both aim to promote the Bonn Agreement and to maintain peace and security in Afghanistan, thereby reducing the threat to international peace and security posed by the situation in Afghanistan. Some of the more recent Security Council resolutions explicitly make the link between the two organisations. Thus, recital 7 to Resolution 1776 (19 September 2007) is in these terms: Stressing the central role that the United Nations continues to play in promoting peace and stability in Afghanistan, noting, in the context of a comprehensive approach, the synergies in the objectives of the United Nations Assistance Mission in Afghanistan (UNAMA) and of ISAF, and stressing the need for further sustained cooperation, coordination and mutual support, taking due account of their respective designated responsibilities (underlining added). Similar language appears in the recitals to Resolution 1806 (20 March 2008), Resolution 1833 (22 September 2008), Resolution 1868 (23 March 2009) and subsequent resolutions. The appellants case on article 1F(c) Mr Drabble QC, on behalf of DD, relies upon the general approach to article 1F(c) discussed earlier. In particular, he argues that participation in an armed attack against forces operating under and carrying out a United Nations mandate does not without more engage article 1F(c). Armed insurrection is not, in itself, contrary to the purposes and principles of the United Nations. Internal armed conflict is now covered by international humanitarian law, in the shape of the 1949 Geneva Conventions. United Nations mandated forces are often deployed during or after an armed conflict, where international humanitarian law provides the appropriate legal framework for determining the lawfulness of armed attacks against them. The distinction between ISAF and UNAMA is crucial to the argument. Armed attacks on UNAMA could be characterised as contrary to the purposes and principles of the United Nations. UNAMA is a non combatant peacekeeping force which is protected under the 1994 Convention and the 2005 Protocol on the Safety of United Nations and Associated Personnel, whereas ISAF is not. Article 1(a)(i) of the 1994 Convention defines United Nations Personnel as persons engaged or deployed by the Secretary General of the United Nations as members of the military, police or civilian components of a United Nations operation. Article 1(c) defines a United Nations operation as an operation established by the component organ of the United Nationsand conducted under United Nations authority and control. Article 9 provides that various specified acts against any United Nations or associated personnel (including murder or other attacks) shall be made by each State Party a crime under its national law. But article 2(2) provides that the Convention is not to apply to a United Nations operation authorised by the Security Council as an enforcement action under Chapter VII of the Charter of the United Nations in which any of the personnel are engaged as combatants against organised armed forces and to which the law of international armed conflict applies. Article 2(2) is consistent with the broad principle that the laws of war apply to UN forces engaged in hostilities, and therefore such forces do not have immunity from attack: p 624 of Documents on the Laws of War, ed Roberts and Guelff, 3rd ed (2000). The distinction between combatants and peacekeeping personnel was considered by the Special Court for Sierra Leone in Prosecutor v Issa Hassan Sesay, Morris Kallon & Augustine Gbao (Case No SCSL 04 15T, 2 March 2009). In that case, the Special Court handed down the first convictions for the war crime of attacking personnel involved in a peacekeeping operation, namely members of the United Nations Assistance Mission in Sierra Leone, who were entitled to the protection given to civilians under the international law of armed conflict. Therefore, it is argued, military activities against United Nations mandated forces should only provide a basis for exclusion under article 1F(c) where (i) the act or acts in question constitute a crime in international law; or (ii) the act or acts, which must be of sufficient gravity to have a negative impact on international peace and security, have been specifically identified as contrary to the purposes and principles of the United Nations, either by clear decision of the Security Council acting within its competence, or by way of agreement or consensus among states at large; and (iii) there are serious reasons for considering that the individual concerned was personally responsible for the act or acts in question. Discussion and conclusions The acts relied on by the Secretary of State are acts of violence by the appellant against ISAF, the international force that was mandated by the United Nations for the express purpose of maintaining peace and security in Afghanistan, thereby assisting in the maintaining of international peace and security. Time and again, the resolutions of the Security Council recorded that the role and responsibility of ISAF was to assist in the maintaining of international peace and security. This is one of the most important purposes set out in article 1 of the United Nations Charter (see para 10 above). In these circumstances, it might be thought to be obvious at first sight that such acts are contrary to the purposes and principles of the United Nations. It is noteworthy that Mr Drabble (rightly) accepts that, if the appellant had been guilty of fighting UNAMA, he would in principle have been guilty of acts contrary to the purposes and practices of the United Nations. We say in principle, because it would still be necessary to examine all the facts (as per B and D). So why does it make any difference that the appellant was fighting ISAF rather than attacking UNAMA? That the aims and objectives of ISAF and UNAMA are congruent is amply borne out by the Security Council Resolutions: see para 58 above. The answer given by Mr Drabble and Mr Fordham is that the 1994 Convention and 2005 Protocol would apply to attacks on UNAMA, but not to attacks on ISAF. Peacekeeping forces, unlike combat forces, are entitled to the same protection against attack as that accorded to civilians under international humanitarian law, as long as they are not taking a direct part in hostilities. Under the Statute of the International Criminal Court (articles 8(2)(b)(iii) and 9(e)(iii)), intentionally directed attacks against personnel involved in a peacekeeping mission in accordance with the Charter of the United Nations constitute a war crime: see rule 33 in Customary International Humanitarian Law vol 1:Rules (2005, International Committee of the Red Cross). We accept the points made by Mr Drabble and Mr Fordham about the differences between ISAF and UNAMA which are summarised at paras 60 and 61 above. These differences are not in doubt. But they are not material to the issue of whether the appellant is excluded from the refugee status by article 1F(c). The question which rules of law apply to attacks on ISAF and UNAMA is categorically different from (and irrelevant to) the question whether an attack against either body is contrary to the purposes and principles of the United Nations. This latter question must be determined on an examination of all the relevant facts. These include the terms of the Security Council Resolutions by which ISAF was mandated in the first place, and by which its mandate was renewed from time to time. Mr Drabble submits that it is relevant to the issue in this case that, although the Security Council has mandated many military enforcement operations, it has never sought to characterise opposition, even armed opposition, as contrary to the purposes and principles of the United Nations. In some cases, a United Nations resolution explicitly states that a particular activity is contrary to the purposes and principles of the United Nations. (One example is the condemnation of international terrorism in General Assembly resolution 49/60, referred to in para 27 above.) However, it is not suggested, either by the UNHCR or by the Supreme Court of Canada in Pushpanathan, that this is the only criterion. In our view, the principled test is that put forward by the UNHCR in para 17 of its Guidelines and quoted at para 38 above. In Pushpanathan, the court did not have to consider whether an attack on a United Nations body or a United Nations mandated body constitutes acts contrary to the purposes and principles of the United Nations. We conclude that there is no basis for the view that such an attack can only be regarded as an act contrary to the purposes and principles of the United Nations in circumstances where (i) it is by consensus in international law explicitly recognised as being contrary to these purposes and principles, or (ii) it amounts to a serious and sustained violation of fundamental human rights. This conclusion is consistent with Mr Drabbles acceptance that an attack on UNAMA is in principle capable of satisfying article 1F(c), despite the fact that there appears to be no United Nations resolution (or other formal international decision) which explicitly recognises that an attack against UNAMA would be contrary to the purposes and principles of the United Nations. In short, an attack on ISAF is in principle capable of being an act contrary to the purposes and principles of the United Nations. The fundamental aims and objectives of ISAF accord with the first purpose stated in article 1 of the United Nations Charter. By attacking ISAF, the appellant was seeking to frustrate that purpose. To hold that his acts are in principle capable of being acts contrary to the purposes and principles of the United Nations accords with common sense and is correct in law. This conclusion accords with that of Hogan J in the High Court of Ireland in B v Refugee Appeals Tribunal and others [2011] IEHC 198 at para 56. For these reasons, we agree with the conclusion of the Court of Appeal, quoted in para 47 above. (4) Standard of proof This issue arises in an acute form in Al Sirri but could arise in any proposed exclusion under article 1F. The article requires that there be serious reasons for considering that the individual asylum seeker has committed the crimes referred to in article 1F(a) or (b) or been guilty of the acts referred to in article 1F(c). In Al Sirri, it was argued in the Court of Appeal that this imported the criminal standard of proof beyond reasonable doubt. In rejecting that submission, Sedley LJ said this, at para 33: . it clearly sets a standard above mere suspicion. Beyond this, it is a mistake to try to paraphrase the straightforward language of the Convention: it has to be treated as meaning what it says. In JS (Sri Lanka), at para 39, Lord Brown was inclined to agree with this passage, having also pointed out that . serious reasons for considering obviously imports a higher test for exclusion than would, say, an expression like reasonable grounds for suspecting. Considering approximates rather to believing than to suspecting. In Al Sirri, the Common Serjeant had considered that the evidence admissible in a criminal trial for conspiracy to murder General Masoud was as consistent with innocence as with guilt. Thus he, at least, was not satisfied of Al Sirris guilt even on the balance of probabilities. Mr Fitzgerald QC argues that it is not possible to have serious reasons for considering a person to have committed a crime or be guilty of a particular act unless you can be satisfied that it is more likely than not that he did it. In this he is less ambitious than the UNHCR. Its 2003 Guidelines, at para 35, state that clear and credible evidence is required. It is not necessary for an applicant to have been convicted of a criminal offence, nor does the criminal standard of proof need to be met. However, the 2003 Background Note, at para 107, also states that: . in order to ensure that article 1F is applied in a manner consistent with the overall humanitarian objective of the 1951 Convention, the standard of proof should be high enough to ensure that bona fide refugees are not excluded erroneously. Hence, the balance of probabilities is too low a threshold. He also relies upon the Australian case of W97/164 v Minister for Immigration and Multicultural Affairs [1998] AATA 618, in which Mathews J said this at para 42: The article provides a direction to decision makers in words that are clear of meaning and relatively easy of application. To re state this test in terms of a standard of proof is unnecessary and may in some cases lead to confusion and error. But she went on in para 43 to say this: I find it difficult to accept that the requirement that there be serious reasons for considering that a crime against humanity has been committed should be pitched so low as to fall, in all cases, below the civil standard of proof. The seriousness of the allegation itself and the extreme consequences which can flow from an alternative finding upon it would, in my view, require a decision maker to give substantial content to the requirement that there be serious reasons for considering (emphasis added) that such a crime has been committed. On the other hand, in Arquita v Minister for Immigration and Multi cultural Affairs [2000] FCA 1889, 106 FCR 465, at para 54, Weinberg J disagreed. There must be evidence available upon which it could reasonably and properly be concluded that the applicant has committed the crime alleged. To meet that requirement, the evidence must be capable of being regarded as strong. But evidence could properly be characterised as strong without meeting either the criminal or the civil standard of proof. He did, however, say at para 58 that it would have to go beyond establishing merely that there was a prima facie case. The New Zealand courts have followed the Court of Appeal in Al Sirri in taking the view that the Refugee Convention simply means what it says and that adding glosses by analogy with civil litigation or criminal prosecution simply confuses matters: see Hammond J in Tamil X v Refugee Status Appeals Authority; Attorney General (Minister of Immigration) v Y [2009] NZCA 488, [2009] 2 NZLR 73, paras 77, 79; upheld by the Supreme Court in Attorney General (Minister of Immigration) v Tamil X [2010] NZSC 107, [2011] 1 NZLR 721, para 39. In Canada, the courts have adopted a lower standard of proof than the balance of probabilities: see Ramirez v Minister of Employment and Immigration (1992) 89 DLR (4th) 173, para 5. But in Cardenas v Canada (Minister of Employment and Immigration) [1994] FCJ No 139, it was said that the Board must base its decision to exclude only on clear and convincing evidence, not simply on suspicion and speculation. And the German Bundesverwaltungsgericht has said that as a rule, reasons are good when there is clear, credible evidence that such crimes have been committed (BVerwG 10 C 2.10). We are, it is clear, attempting to discern the autonomous meaning of the words serious reasons for considering. We do so in the light of the UNHCR view, with which we agree, that the exclusion clauses in the Refugee Convention must be restrictively interpreted and cautiously applied. This leads us to draw the following conclusions: (1) Serious reasons is stronger than reasonable grounds. (2) The evidence from which those reasons are derived must be clear and credible or strong. (3) Considering is stronger than suspecting. In our view it is also stronger than believing. It requires the considered judgment of the decision maker. (4) The decision maker need not be satisfied beyond reasonable doubt or to the standard required in criminal law. (5) It is unnecessary to import our domestic standards of proof into the question. The circumstances of refugee claims, and the nature of the evidence available, are so variable. However, if the decision maker is satisfied that it is more likely than not that the applicant has not committed the crimes in question or has not been guilty of acts contrary to the purposes and principles of the United Nations, it is difficult to see how there could be serious reasons for considering that he had done so. The reality is that there are unlikely to be sufficiently serious reasons for considering the applicant to be guilty unless the decision maker can be satisfied on the balance of probabilities that he is. But the task of the decision maker is to apply the words of the Convention (and the Directive) in the particular case. (5) Disposal We would dismiss the appeal in DD. The object of his argument was to establish that his activities could not be contrary to the principles and purposes of the United Nations. In this he has failed. However, the Court of Appeal were correct to hold that there were material errors of law in the AITs findings in that they failed to examine the appellants conduct in the manner prescribed by this court in JS and to consider whether he had been guilty of acts contrary to the purposes and principles of the United Nations. The order remitting the case to the Upper Tribunal for reconsideration should stand. The appeal in Al Sirri is rather different. Technically, the appellant has challenged the decision of the Court of Appeal to remit his case to the tribunal, rather than to find that he was not excluded from the status of refugee. We would dismiss that appeal. But the reality is that he was challenging certain aspects of the guidance given to the tribunal which would hear the remitted case. In that he has succeeded to some extent. Consideration will also have to be given to whether it is more appropriate for the case to be remitted to the First tier or to the Upper Tribunal, given that the evidence will have to be examined afresh. The parties therefore have 14 days from the date of judgment to file their submissions as to the precise form of the order and as to costs. |
Section 3(2) of the Immigration Act 1971 (the 1971 Act) provides that: 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. The central question that arises in these two appeals is whether statements by the Secretary of State of her policy as regards the granting of concessions outside the immigration rules and of their subsequent withdrawal amount to statements as to the practice to be followed within the meaning of section 3(2) of the 1971 Act which she must, therefore, lay before Parliament. The statutory framework The 1971 Act lies at the heart of these appeals. Section 1(4) provides: (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 rights 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(1) provides that a person who is not a British citizen (a) shall not enter the United Kingdom unless given leave to do so in accordance with the provisions of or made under the 1971 Act; (b) may be given leave to enter or remain for a limited or indefinite period; and (c) if given leave to enter or remain, it may be subject to all or any of the specified conditions. Section 3(2) should be set out more fully than at para 1 above: (2) 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 If a statement laid before either House of Parliament under this subsection is disapproved by a resolution of that House passed within the period of forty days beginning with the date of laying.then the Secretary of State shall as soon as may be make such changes or further changes in the rules as appear to him to be required in the circumstances, so that the statement of those changes be laid before Parliament at latest by the end of the period of forty days beginning with the date of the resolution Section 3A(1) states that the Secretary of State may by order make further provision with respect to the giving, refusing or varying of leave to enter; and the following subsections make particular provisions in relation to such orders. Section 3B makes similar provisions in relation to the giving, refusing or varying of leave to remain. Section 3C deals with continuation of leave pending a variation decision, subsection (6) providing that the Secretary of State may make regulations determining when an application is decided for the purposes of this section. Section 4(1) provides: (1) The power under this Act to give or refuse leave to enter the United Kingdom shall be exercised by immigration officers, and the power to give leave to remain in the United Kingdom, or to vary any leave under section 3(3)(a) (whether as regards duration or conditions), shall be exercised by the Secretary of State. Section 33(1) states that immigration rules means the rules for the time being laid down as mentioned in section 3(2) above. Section 33(5) provides: This Act shall not be taken to supersede or impair any power exercisable by Her Majesty in relation to aliens by virtue of Her prerogative. The relevant policies In March 1996, the Secretary of State introduced Deportation Policy 5/96 (DP5/96). It was entitled Deportation in cases where there are children with long residence. It defined more clearly the criteria to be applied by immigration decision makers when considering whether enforcement action should proceed or be initiated against parents who have children who were either born here and are aged 7 or over or where, having come to the United Kingdom at an early age, they have accumulated 7 years or more continuous residence. It stated that, whilst it was important that each individual case must be considered on its merits, certain factors (which were specified) might be of particular relevance in reaching a decision. In June 1998, the Secretary of State issued chapter 18 of the Immigration Directorates Instructions (The Long Residence Concession). It recognised that there was no provision in the immigration rules for a person to be granted indefinite leave to remain solely on the basis of the length of his or her residence. It stated that, where a person had 10 years or more continuous lawful residence or 14 years continuous residence, indefinite leave to remain should normally be given in the absence of any strong countervailing factors. It made no specific reference to the position of children. On 24 February 1999, the Under Secretary for the Home Department announced a revision to DP5/96. The policy modification statement said that, whilst it was important that each case be considered on its merits, there were certain factors which were likely to be of particular relevance when considering whether enforcement action should proceed or be initiated against parents who had children who had lengthy residence in the United Kingdom. The general presumption would be that enforcement action would not normally proceed in cases where a child was born here and had lived continuously to the age of 7 or over, or where, having come to the United Kingdom at an early age, 7 years or more of continuous residence had been accumulated. The statement identified certain factors which would be relevant to reaching a judgment on whether enforcement action should nevertheless proceed in such cases. On 31 March 2003, the Secretary of State laid before Parliament a statement of a number of changes to the immigration rules (HC 538). These included rules 276A to 276D which dealt with the issue of long residence. To a considerable extent, they occupied the same ground as the Long Residence Concession, but added some detail. So far as I am aware, there was no formal withdrawal of the Long Residence Concession, although it had been taken off the website by 8 November 2011. Rule 276B provided that the requirements for indefinite leave to remain on the ground of long residence were that an applicant had had at least 10 years continuous lawful residence or (excluding certain periods) at least 14 years residence and that, having regard to the public interest, there were no reasons why it would be undesirable for him to be given indefinite leave to remain on the ground of long residence, taking into account various specified factors. On 9 December 2008, the Minister for Borders and Immigration announced the immediate withdrawal of DP5/96. In a written Parliamentary ministerial statement, he said: The [seven year child] concession set out the criteria to be applied when considering whether enforcement action should proceed or be initiated against parents of a child who was born here and has lived continuously to the age of seven or over or where, having come to the UK at an early age, they have accumulated seven years or more continuous residence. The original purpose and need for the concession has been overtaken by the Human Rights Act and changes to immigration rules. The fact that a child has spent a significant period of their life in the United Kingdom will continue to be an important relevant factor to be taken into account by case workers when evaluating whether removal of their parents is appropriate. Any decision to remove a family from the UK will continue to be made in accordance with our obligations under the European Convention on Human Rights (ECHR) and the Immigration Rules. The facts Mr Rahman is a citizen of Bangladesh. He entered the United Kingdom with his wife and two children on 17 September 2001 on a visitors visa which expired on 16 February 2002. His application for an extension of his leave was refused on 11 March 2003. Thereafter, he and his family remained in the country unlawfully. On 20 July 2009, he applied for indefinite leave to remain. This application was refused on 12 February 2010 on the grounds that he did not satisfy the test for indefinite leave to remain under rule 276B. The Secretary of State also considered the application on an exceptional basis outside the immigration rules, but was satisfied that there were no compelling or compassionate grounds that would warrant the grant of indefinite leave to stay on that basis. Nor would the refusal of leave to remain involve an interference with the rights of Mr Rahman and his family under article 8 of the European Convention on Human Rights (the Convention). Mr Rahman issued proceedings challenging the refusal of leave to remain. The principal issue was whether the Secretary of State should have afforded him the benefits of policy DP5/96. His grounds of challenge included that he and his family had been resident in the United Kingdom for more than 7 years before the withdrawal of the policy and that it was irrational and unfair for the Secretary of State to withdraw DP5/96 in a way which prevented persons already in the United Kingdom who had built up at least 7 years residence prior to the withdrawal of the policy from benefiting from it. On 12 November 2010, Judge Bidder QC allowed the claim for judicial review on this ground. He held that, having regard to what he described as the clear practice of the Secretary of State to grant indefinite leave to remain when DP5/96 was satisfied, it would be irrational to distinguish between (i) persons who had prior to 9 December 2008 had the necessary period of residence but who, like Mr Rahman, had not prior to that date been the subject of enforcement proceedings, and (ii) those with the necessary residence qualification but who had prior to that date been the subject of such proceedings. The judge also said that it was unfair not to have given a warning that the concession was to end. Not to afford Mr Rahman and his family the benefit of DP5/96 when they had accrued 7 years residence prior to the withdrawal of the policy was so conspicuously unfair as to amount to an abuse of power. The judge quashed the refusal decision and ordered the Secretary of State to reconsider the application under DP5/96. He gave the Secretary of State permission to appeal. Mr Munir is a citizen of Pakistan. He entered the United Kingdom with his wife and daughter on 18 August 2002 on a visitors visa. The visa expired on 17 January 2003. They remained in the United Kingdom unlawfully after that date. A son was born in 2005. On 27 November 2009, they applied for indefinite leave to remain outside the immigration rules and in reliance on article 8 of the Convention. The application was refused by the Secretary of State on 18 June 2010. Mr Munir issued proceedings challenging the refusal decision. His grounds of challenge were essentially the same as those of Mr Rahman. On 17 February 2011, Mr David Holgate QC (sitting as a Deputy Judge of the High Court) refused his application for permission to apply for judicial review. Mr Munir had accepted that, prior to the withdrawal of DP5/96, neither of his children had been resident in the United Kingdom for a continuous period of 7 years. Accordingly, the reasoning of Judge Bidder could not apply to his case. Mr Munir was nevertheless granted permission to appeal by the Court of Appeal. Shortly before the hearing of the appeals, the Secretary of State reconsidered the cases. She informed the Court of Appeal that, taking account of the passage of time since the original decisions were taken, the impact of removal on the particular children involved and article 8 of the Convention, she had decided that removal would not be enforced and that the families would be granted discretionary leave to remain outside the immigration rules for 3 years. Nevertheless, the Secretary of State pursued her appeal in the case of Mr Rahman and resisted the appeal of Mr Munir because of the point of principle raised by the decision of Judge Bidder, namely that DP5/96 continued to apply to families with children who had been in the United Kingdom for 7 years or more when the policy was withdrawn. The Court of Appeal The Court of Appeal (Thomas, Moore Bick and Stanley Burnton LJJ) allowed the Secretary of States appeal and dismissed that of Mr Munir: [2011] EWCA Civ 814. The lead judgment was given by Stanley Burnton LJ. They held that the Secretary of State had acted lawfully in withdrawing DP5/96 and in determining the transitional arrangements that would apply. The Secretary of State was entitled to review her policy (such as that contained in DP5/96) and to change or revoke it whenever she considered it to be in the public interest to do so. They rejected the argument that the decision to withdraw the policy was irrational or unfair and held that the interests of the children were adequately addressed by article 8 of the Convention. There has been no challenge to this part of the Court of Appeals reasoning. It was plainly correct. The appeal to this court arises because before the Court of Appeal, for the first time, it was submitted on behalf of Mr Rahman and Mr Munir that the withdrawal of DP5/96 amounted to a statement of a change in the immigration rules within the meaning of section 3(2) of the 1971 Act and that it was unlawful and of no effect because it had not been laid before Parliament in accordance with the subsection. Stanley Burnton LJ dealt with this argument crisply in these terms: 38. In my judgment, Mr Maliks submission that the withdrawal of DP5/96 amounted to a change in the immigration Rules proves too much. If the withdrawal of DP5/96 was such a change, it necessarily follows that DP5/96 itself should have been laid before Parliament in accordance with section 3(2). It was not. On this basis, DP5/96 was unlawful, and its withdrawal was lawful since it brought to an end the application of an unlawful policy. 39. It is therefore unnecessary to decide whether or not DP5/96 should have been laid before Parliament pursuant to section 3(2) of the 1971 Act. It is sufficient to say that it seems to me to be well arguable that it was indeed a rule laid down by [the Secretary of State] as to the practice to be followed.for regulating the entry into and stay in the United Kingdom of persons required. to have leave to enter. A direction that in defined circumstances a discretion conferred on the Secretary of State is normally to be exercised in a specified way may well be such a rule. Discussion The starting point is to consider the legal status of DP5/96. On its face, it was a statement by the Secretary of State of the criteria to be applied when considering whether enforcement action should proceed or be initiated against parents [where there are children with long residence]. Mr Malik submits that this shows that it was a statement of the practice to be followed in the administration of [the 1971] Act for regulating the.stay in the United Kingdom of persons required by this Act to have leave to enter and, therefore, fell within the scope of section 3(2) of the 1971 Act. In other words, it was no less a statement of practice than a statement described as a rule to that effect would have been. He submits that any statement of a concessionary policy which is more favourable to migrants than a rule which makes provision for the grant of leave to enter or remain is, by definition, a statement of a change in the rules within the meaning of section 3(2). The primary answer given by Mr Swift QC is that everything done by the Secretary of State for the purpose of regulating the entry into and stay in the United Kingdom of persons who require leave to enter or remain is done in exercise of the prerogative power. She is under no legal obligation to lay any rules before Parliament (although she may be subject to political constraints to do so). He therefore submits that (i) the making and laying of immigration rules before Parliament is an exercise by the Secretary of State of the prerogative power and (ii) the publication of a policy which identifies the circumstances in which there may be a relaxation of legislation or the rules which regulate entry into and stay in the United Kingdom is also an exercise of the prerogative power and not a statement within the meaning of section 3(2). Source of the power to lay down immigration rules Although the present appeals concern the withdrawal of a policy published outside the immigration rules, I propose to start by considering Mr Swifts submission that the making and laying of rules before Parliament is an exercise of the prerogative power. There has been some debate as to the scope of the prerogative power in relation to aliens, and in particular as to whether there is a distinction between alien friends and alien enemies in this context: see the discussion in Macdonalds Immigration Law and Practice 8th ed (2010) at para 1.5. For present purposes, it is unnecessary to enter into this debate. The traditional view is that the situation of British subjects differed from that of all aliens. British subjects, including Commonwealth citizens until the passing of the Commonwealth Immigrants Act 1962 (the 1962 Act), had a right of abode in the United Kingdom, whereas aliens did not. Until the passing of the 1962 Act, the prerogative power that existed to control the entry and expulsion of aliens could not be exercised in relation to a Commonwealth citizen who had the right at common law to enter the United Kingdom without let or hindrance when and where he pleased and to remain here as long as he listed: per Lord Diplock in Director of Public Prosecutions v Bhagwan [1972] AC 60, 74B C. As Lord Diplock said, Commonwealth citizens continued to enjoy that right following the enactment of the 1962 Act, save in so far as it was restricted or qualified by the provisions of that Act. A prerogative power to control the entry and stay of Commonwealth citizens did not, by some process of alchemy, come into being after the 1962 Act. The prerogative power to control the entry of aliens into the United Kingdom had no more relevance to Commonwealth citizens after the 1962 Act than it had before. Neither the 1962 Act nor the Immigration Appeals Act 1969 (the 1969 Act) made any reference to the prerogative power. It is not necessary to consider the questions raised at para 1.7 of Macdonald as to the juridical basis for Lord Diplocks observations. All that matters is that, whatever the scope of the prerogative power in relation to aliens, it had no application to Commonwealth citizens before or after the 1962 Act. The 1969 Act conferred on Commonwealth citizens a right of appeal to an adjudicator. Section 8(1)(a)(i) provided that an adjudicator should allow an appeal if he considered that the decision or action against which the appeal was brought was not in accordance with the law or with any immigration rules applicable to the case. Section 24(1) defined immigration rules as rules made by the Secretary of State for the administration of [control on and after entry], being rules which have been published and laid before Parliament. This is the first reference in a statute to immigration rules. The long title of the 1971 Act is that it is an Act to amend and replace the present immigration laws, to make certain related changes in the citizenship law and enable help to be given to those wishing to return abroad, and for purposes connected therewith (emphasis added). Of particular significance is section 33(5): This Act shall not be taken to supersede or impair any power exercisable by Her Majesty in relation to aliens by virtue of Her prerogative. This saving provision gives rise to two inferences. First, Parliament must have considered that the prerogative power to regulate immigration control did not apply to those who owed their allegiance to the Crown, that is British and Commonwealth citizens, and only applied to aliens. Otherwise, Parliament would surely have made some provision as to how, if at all, the prerogative power was to be exercised in relation to Commonwealth citizens. Secondly, Parliament must have intended that, subject to the saving in section 33(5), all powers of immigration control were to be exercised pursuant to the statute. These inferences are supported by the fact that, when promoting the 1971 Act, the Government made it clear that it intended that the use of the prerogative should be limited to controlling the entry of enemy aliens into the United Kingdom. On 3 August 1971, Lord Brockway moved an amendment to the Bill to omit clause 33(5). The debate included the following exchanges Hansard (HL Debates) 3 August 1971, Col 1046 1047: LORD BROCKWAY I desire to move this Amendment largely to obtain information. Subsection (5) of this clause reads: This Act shall not be taken to supersede or impair any power exercisable by Her Majesty in relation to aliens by virtue of Her prerogative. I want to ask what these powers are. The powers which are in the Bill already are so comprehensive and of such detail that I find it difficult to think that any additional powers are necessary. When immigration is to be regulated by the rules under the Bill, why should it be necessary to have extra powers of this kind, powers of which we have no knowledge? Why should these powers be extended by the Royal prerogative? LORD WINDLESHAM I think I can answer the noble Lord quite briefly. The prerogative powers in question have existed for very many years. They include the power in the Crown at times of war to intern, expel or otherwise control enemy aliens at its discretion, which is exercised on the advice of the Home Secretary. The Government do not think it necessary to surrender these powers, which go back many years. We are talking about residuary prerogative powers for the kind of exceptional circumstances which have arisen in this century only on the occasions of the two World wars. LORD BROCKWAY . in view of the assurances given by the noble Lord, I beg leave to withdraw the Amendment. In my view, the power to make immigration rules under the 1971 Act derives from the Act itself and is not an exercise of the prerogative. As its long title indicates, the purpose of the 1971 Act was to replace earlier laws with a single code of legislation on immigration control. Parliament was alive to the existence of the prerogative power in relation to enemy aliens and expressly preserved it by section 33(5). But prima facie, subject to the preservation of that power, the Act was intended to define the power to control immigration and say how it was to be exercised. It is true that there is no provision in the 1971 Act which in terms confers on the Secretary of State the power or imposes on her the duty to make immigration rules. But for the reasons that follow, in my view it is implicit in the language of the Act that she is given such a power and made subject to such a duty under the statute. Section 1(4) states that the rules laid down by the Secretary of State shall include provision for admitting 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. It is implicit in the wording of this subsection that, in the case of the persons described, the Secretary of State is obliged to lay down rules 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. It cannot have been the intention of Parliament to leave it entirely to the discretion of the Secretary of State to decide whether to lay down any rules as to her practice, insisting only that, if she decided to do so, the rules should include provision for admitting the classes of person identified in the subsection. If that had been the intention of Parliament, the 1971 Act would have made it clear that the Secretary of State had a power (but not a duty) to lay down rules of practice, but it did not do so. Section 3(2) requires the Secretary of State to 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 etc. Here too, the statute does not state explicitly that the Secretary of State is obliged to make statements of the rules or changes of the rules. It merely states that she is obliged to lay before Parliament statements of the rules or changes of the rules. But the whole point of section 3(2) is to give Parliament a degree of control over the practice to be followed by the Secretary of State in the administration of the 1971 Act for regulating immigration control. If the Secretary of State were free not to lay down rules as to her practice, the plain purpose of section 3(2) would be frustrated. This cannot have been intended by Parliament. At the House of Lords Committee stage on 21 and 22 July 1971, a further amendment was tabled proposing an affirmative resolution procedure. This was resisted by the Government because of the need for the Secretary of State to have power to change these rules at short notice if any unforeseen gap in the immigration control comes to light (see Hansard 12 October 1971). Section 3(1) of the 1971 Act 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. Sections 3A to 3C give the Secretary of State further relevant powers. Section 3A(1) states that she may by order make further provision with respect to the giving, refusing or varying of leave to enter the United Kingdom and the following subsections say what such an order may provide. There is a similar provision in section 3B(1) in relation to the giving, refusing or varying of leave to remain. Section 3C deals with continuation of leave pending a decision on variation of leave and subsection (6) provides that the Secretary of State may make regulations determining when an application is decided for the purposes of this section. Section 4(1) provides that the power under this Act to give or refuse leave to enter the United Kingdom shall be exercised by immigration officers and the power to give leave to remain in the United Kingdom, or to vary any leave.shall be exercised by the Secretary of State (emphasis added). In addition to the powers conferred on the Secretary of State to which I have referred, Schedule 2 to the Act contains detailed administrative provisions as to control on entry etc. Para 1(3) provides: In the exercise of their functions under this Act immigration officers shall act in accordance with such instructions (not inconsistent with the immigration rules) as may be given them by the Secretary of State, and medical inspectors shall act in accordance with such instructions as may be given them by the Secretary of All of these detailed powers and duties derive from the 1971 Act. In particular, the power to make rules and to grant and vary leave to enter and remain is vested in the Secretary of State by the Act. The exercise of that power is an exercise of statutory power and not the prerogative. The prerogative has never been exercised over Commonwealth citizens. It had been exercised over (at least) enemy aliens and the power to continue to exercise the prerogative power for that limited purpose was expressly preserved by section 33(5) of the 1971 Act. But if (contrary to my view) the prerogative power was exercisable in order to control immigration of Commonwealth citizens before the 1971 Act came into force, then the power was implicitly abrogated or, at least, suspended by the Act: see, for example, AG v de Keysers Royal Hotel Ltd [1920] AC 508, 539 40. Odelola v Secretary of State for the Home Department Mr Swift submits that my conclusion that the 1971 Act is the source of the power and duty to lay down immigration rules cannot be reconciled with the House of Lords decision in Odelola v Secretary of State for the Home Department [2009] 1 WLR 1230. In that case, the applicant applied for leave to remain in the United Kingdom as a postgraduate doctor. The immigration rules which had been laid before Parliament in accordance with section 3(2) of the 1971 Act and which were current at the time of her application stated that a person who had only an overseas medical degree was (subject to other requirements) eligible to apply for an extension of leave as a postgraduate doctor. After the date of her application, the relevant rule was replaced by a rule which required an applicant to have completed a recognised United Kingdom degree. The issue was whether the Secretary of State was entitled to determine the application by reference to the new rule. The House of Lords unanimously decided that she was. In the opinion of Lord Hoffmann, the case turned on the construction of the new rule (para 3). He said that the rules are a statement by the Secretary of State as to how she will exercise powers of control over immigration (para 7). For that reason, the most natural reading of the rules (in the absence of any statement to the contrary) was that they would apply to the decisions she makes until such time as she promulgates new rules. In my view, that is the essential ratio of the decision. It is, however, right to record that one of the submissions of Mr Drabble QC for the applicant in that case was that immigration rules are subordinate legislation within the meaning of section 23 of the Interpretation Act 1978 (the 1978 Act) and that this submission was rejected by Lord Brown and Lord Neuberger. It was Mr Drabbles case that section 16(1) of the 1978 Act provides that, where an Act repeals an enactment, the repeal does not affect any right or privilege acquired (unless the contrary intention appears); section 23 of the 1978 Act applies to subordinate legislation; section 21 provides that subordinate legislation includes any rulesmade or to be made under any Act (emphasis added); and a change in the immigration rules constitutes subordinate legislation repealing earlier such enactment. Lord Brown (with whom Lord Hope and Lord Scott agreed) said at para 34 that the core consideration in the case was the fact that immigration rules are essentially executive, not legislative. Indeed, Lord Hoffmann also said at para 6 that immigration rules are not subordinate legislation, but detailed statements by a minister of the Crown as to how the Crown proposes to exercise its executive power to control immigration. Lord Brown said this at para 35: The immigration rules are statements of administrative policy: an indication of how at any particular time the Secretary of State will exercise her discretion with regard to the grant of leave to enter or remain. Section 33(5) of the 1971 Act provides that This Act shall not be taken to supersede or impair any power exercisable by Her Majesty in relation to aliens by virtue of Her prerogative. The Secretary of States immigration rules, as and when promulgated, indicate how it is proposed to exercise the prerogative power of immigration control. It is not clear what part this view of the nature of immigration rules played in Lord Browns decision. His overall conclusion at para 39 was that, standing back from the detail and addressing a single indivisible question, to be answered largely as a matter of impression, he had no doubt that changes in immigration rules, unless they specify to the contrary, take effect whenever they say they take effect. Ultimately, therefore, like Lord Hoffmann he treated the question as one of construction of the relevant rule. I would accept that the immigration rules are statements by the Secretary of State as to how she will exercise her power to regulate immigration. But that is so whether the power to make the rules is statutory or is an exercise of the prerogative. I have difficulty in seeing how the source of the power sheds light on the question of construction that the House had to resolve. Be that as it may, it is clear from what I have already said that I cannot agree with Lord Brown that the immigration rules indicate how the Secretary of State proposes to exercise the prerogative power of immigration control. Lord Brown referred in para 35 to section 33(5) of the 1971 Act. It may be that he did not appreciate the significance of the reference there to the exercise of the prerogative in relation to aliens (emphasis added). As already stated, there was no prerogative power to control immigration by Commonwealth citizens and, far from supporting the argument that the making of immigration rules was an exercise of prerogative power, section 33(5) is inconsistent with it. Lord Neuberger also rejected Mr Drabbles argument based on the 1978 Act. At para 46, he said that the view that the rules were not made under any enactment was consistent with the statutory history. He said that immigration rules had existed long before the 1971 Act and this tended to support the view that the rules were non statutory in origin. But as I have said the first statutory reference to immigration rules is to be found in the 1969 Act. There is no basis for saying that the immigration rules were non statutory in origin. The position is that until the 1969 Act, there were no immigration rules so called; and the prerogative power was exercised, but only in relation to aliens. Lord Neuberger went on to consider whether the common law presumption against retrospectivity had any application to changes in the rules and concluded that it did not. In my view, the views expressed by their Lordships on whether the rules were subordinate legislation within the meaning of section 23 of the 1978 Act 1978 were not necessary for their decision. The ratio of the case is that, as a matter of construction, in the absence of a statement to the contrary, immigration rules apply when they say they take effect. Concessionary policies I would, therefore, reject Mr Swifts primary submission that, if a concessionary policy such as DP5/96 is a rule as to the practice to be followed in the administration of the 1971 Act for controlling immigration, there is no legal obligation on the Secretary of State to lay it before Parliament. What about the Secretary of States power to make policies about the circumstances in which she will or may relax the rigorous application of the rules? It is important to distinguish between (i) the exercise of a discretion given by an immigration rule and (ii) a policy (such as DP5/96) which identifies the circumstances in which exceptionally leave to enter or remain will or may generally be granted outside the rules. We are concerned with (ii). There is undoubtedly support in the authorities for the view that the power to make immigration decisions outside the immigration rules is exercised pursuant to the prerogative. In R v Secretary of State for the Home Department, Ex p Rajinder Kaur [1987] Imm AR 278, 291, Glidewell LJ said at p 291: immigration was formerly covered by the royal prerogative and it was a matter which lay entirely within the exercise of that prerogative. Much of the prerogative powers vested in the Crown in this field have now been superseded by a statute but there remains and this is what the royal prerogative isa residual power in the Crown, through Her Majestys Secretary of State for Home Affairs, to exercise such residual power as is necessary for the proper control of immigration. In my view, the exercise of discretion in relation to leave to enter outside the rules is an exercise of the remaining part of that prerogative power. But those conjoined cases concerned Commonwealth citizens. For the reasons I have given, the observations by Glidewell LJ were incorrect. Similar comments were made in R v Secretary of State for the Home Department, Ex p Ounejma [1989] Imm AR 75, 82 and Ahmed v Secretary of State for the Home Department [1999] Imm AR 22. These cases also concerned Commonwealth citizens. In my view, it is the 1971 Act itself which is the source of the Secretary of States power to grant leave to enter or remain outside the immigration rules. The Secretary of State is given a wide discretion under sections 3, 3A, 3B and 3C to control the grant and refusal of leave to enter or to remain: see paras 4 to 6 above. The language of these provisions, especially section 3(1)(b) and (c), could not be wider. They provide clearly and without qualification that, where a person is not a British citizen, he may be given leave to enter or limited or indefinite leave to remain in the United Kingdom. They authorise the Secretary of State to grant leave to enter or remain even where leave would not be given under the immigration rules. The question remains whether DP5/96 was a statement of practice within the meaning of section 3(2). If a concessionary policy statement says that the applicable rule will always be relaxed in specified circumstances, it may be difficult to avoid the conclusion that the statement is itself a rule as to the practice to be followed within the meaning of section 3(2) which should be laid before Parliament. But if the statement says that the rule may be relaxed if certain conditions are satisfied, but that whether it will be relaxed depends on all the circumstances of the case, then in my view it does not fall within the scope of section 3(2). Such a statement does no more than say when a rule or statutory provision may be relaxed. I have referred to DP5/96 at para 9 above. It was not a statement of practice within the meaning of section 3(2). It made clear that it was important that each case had to be considered on its merits and that certain specified factors might (not would) be of particular relevance in reaching a decision. It was not a statement as to the circumstances in which overstayers would be allowed to stay. It did not have to be laid before Parliament. Conclusion For the reasons that I have given, I would reject Mr Swifts submission that the issuing of a concessionary policy (or indeed the waiving of a requirement in the rules in an individual case) is an exercise of prerogative power which for that reason does not come within the scope of section 3(2). But, subject to the constraints to which I have referred and any relevant public law principles, the Secretary of State is authorised by the 1971 Act to make policies setting out the principles by which she may, as a matter of discretion, grant concessions in individual cases to those seeking leave to enter or remain in the United Kingdom. The less the flexibility inherent in the concessionary policy, the more likely it is to be a statement as to the practice to be followed within the meaning of section 3(2) and therefore an immigration rule. But DP5/96 was amply flexible and was therefore not an immigration rule and did not have to be laid before Parliament. I would not, therefore, agree with the tentative obiter dicta of Stanley Burnton LJ at para 39 of his judgment, but would nevertheless dismiss both appeals. Since the Secretary of State was not obliged to lay DP5/96 before Parliament, she was not obliged to lay the 24 February 1999 revision or statement of its withdrawal on 9 December 2008 before Parliament either. In these circumstances, it is not necessary to deal with the point on which Stanley Burnton LJ decided this issue at para 38 of his judgment (the proves too much point). |
These appeals are concerned with the procedure followed when a prisoner is kept in solitary confinement, otherwise described as segregation or removal from association. The principal question raised is whether decisions to keep the appellants in segregation for substantial periods were taken lawfully. Before the courts below, the arguments focused on the procedural requirements of article 6.1 of the European Convention on Human Rights (the ECHR). Before this court, the primary focus of the parties printed cases was upon the requirements of procedural fairness at common law. During the course of the hearing, however, a different issue came to the forefront, namely whether the segregation was authorised as required by the applicable legislation. For the reasons I shall explain, I have concluded that it was not. In the light of that conclusion, the question whether the requirements of procedural fairness were met does not affect the outcome of these appeals. Nevertheless, the nature of those requirements in this context is a question of general public importance, which has divided judicial opinion and was fully and carefully argued in these appeals. In the circumstances, it is appropriate that this court should deal with it. It may be helpful to begin, however, by summarising the relevant factual background, considering first the history of events, and then the conditions of segregation. The first appellant: the history of events In 2010 the first appellant, Kamel Bourgass, was a prisoner in HMP Whitemoor, which is a high security prison. He was serving a life sentence for the murder of a police officer, concurrent sentences for the attempted murder of two other officers and the wounding of a third, and a 17 year sentence for being part of a terrorist conspiracy to commit public nuisance by the use of poisons and/or explosives. On 10 March 2010 Bourgass was the victim of an assault by another prisoner named Sahebzadeh. Bourgass was then segregated under rule 45(1) of the Prison Rules 1999 (SI 1999/728) (the Rules), for reasons of good order and discipline. He was charged with an offence against discipline, it being alleged by a prison officer that he had been fighting with Sahebzadeh. He appeared before a governor the following day, when he denied the charge and was remanded. Bourgasss segregation was reviewed after 72 hours, on 13 March 2010, and thereafter at fortnightly intervals, on 23 March and 6 April 2010. The review was carried out by a Segregation Review Board (SRB). On each occasion, authority for continued segregation was given, purportedly in compliance with rule 45(2), by the senior prison officer who chaired the SRB (the officer on two of these occasions being Mr Colley, the challenging prisoners manager), on the ground that the investigation into the incident had not yet been completed. On 20 April 2010 Bourgass was found not guilty of the disciplinary charge. On 22 April 2010 he was removed from segregation. In a memorandum of the same date, he was notified by the head of security at the prison that intelligence suggested that he held extreme views, that he exerted a significant influence over other prisoners, and that we suspect you of being linked to threats to other prisoners. In a letter dated 14 May 2010, the prison informed Bourgasss solicitors that he had been kept in segregation during that period as he was influencing other prisoners in their activities. On 23 April 2010 Sahebzadeh was seriously assaulted. Bourgass was not present. He was however segregated under rule 45(1) on the orders of Mr Colley, the reason given being that it was for the maintenance of good order and discipline pending an investigation into a serious assault. Authority for continued segregation was given on 26 April 2010 by another officer, the same reason being given. The assault was referred to the police for investigation. On 29 April 2010 Bourgasss solicitor, Mr Guedalla, wrote to the governor pointing out that his client had not been present at the time of the assault, and requesting an outline of the evidence relied on to justify his segregation. In a letter dated 30 April 2010, the dynamic security governor, Mr Garvie, stated that although not in the area of this assault we believe your client, along with others was behind this assault and as such his presence on normal location poses a threat to the good order and discipline of the Establishment. On 4 May 2010 authority for Bourgasss continued segregation was given by Mr Colley on the ground that you were involved in a serious assault. At about the same time Bourgass was referred for an assessment for transfer to the Close Supervision Centre (CSC), which houses prisoners considered too dangerous and challenging to be held in ordinary locations. On 12 May 2010 Mr Guedalla wrote again asking for information about the evidence relied on. On 14 May 2010 the prison replied, stating that Bourgass was being held in segregation due to his involvement in the planning of an assault on another prisoner [which] is currently being investigated by the police. Continued segregation was authorised on 18 May 2010 pending an investigation into a serious assault. In a letter of the same date, Mr Guedalla again requested an outline of the evidence relied on. On or before 20 May 2010 the police indicated that they did not regard Bourgass as a suspect in connection with the assault on Sahebzadeh, and that he was no longer the subject of investigation by them. Mr Guedalla then wrote to the governor again, referring to the outcome of the police inquiries and requesting disclosure of the reasons for any further segregation, and of the evidence relied on to support it. The prison replied by letter dated 26 May 2010, stating that the investigation was still ongoing. In a letter to Mr Guedalla dated 28 May 2010, Mr Colley stated that Bourgass is a prisoner we believe to hold extremist views and has an influence over other prisoners, that he was being referred to the CSC, and that he would remain segregated until the result of that referral was known. On 1 June 2010 Bourgasss continued segregation was authorised by Mr Colley, the reason given being that you are an unacceptable risk to other prisoners. Mr Colley authorised continued segregation again on 15 June 2010, the reason given being pending CSC referral and investigation. He authorised continued segregation again on 29 June 2010, giving the reason you are being investigated for a serious assault, and again on 13 July 2010, giving as his reason that you were involved in a very serious assault. Continued segregation was again authorised on 27 July 2010 by another officer, on the ground that a final decision was awaited on the CSC referral. In the meantime, Mr Guedalla had initiated judicial review proceedings, which were listed for a hearing on 4 November 2010. On 17 June 2010 the Secretary of State filed a response which said that Bourgass was not being segregated simply because he may be responsible for the assault, but because, for numerous reasons, he is considered to pose an unacceptable risk on normal location. The additional reasons were based on intelligence that he had been involved, prior to the commencement of his segregation on 10 March 2010, in intimidating other prisoners to change faith, and forcing other prisoners to join in prayer sessions and to refrain from eating certain foods for religious reasons. On 2 August 2010 the Secretary of State filed detailed grounds of defence, which disclosed that the basis upon which Bourgass was suspected of involvement in the assault on Sahebzadeh was principally that, during the morning prior to the assault, he had been seen on CCTV speaking to the perpetrator of the assault. It is difficult to understand why that information, and indeed the CCTV footage itself, had not been provided during the previous three months. The Secretary of State also filed a witness statement of Mr Garvie, who stated that Bourgass had been transferred to Whitemoor in the first place because of his perceived influence over other prisoners at his previous prison and suspicion that he was bullying and intimidating other prisoners there. On his arrival at Whitemoor, he had been placed on the prisons anti bullying regime but, according to Mr Garvie, had failed to engage with it and had continued his attempts to intimidate other prisoners. His initial segregation after the incident on 10 March 2010 had been a reaction to that incident, but it had been decided that he should remain in the segregation unit because it was believed that his attempts to influence other prisoners had caused Sahebzadeh to assault him out of frustration. There had been an escalation in violence within the prison that involved prisoners being pressurised into assaulting other prisoners for faith related reasons. It was believed that Bourgass was involved in this. Following his removal from segregation on 23 April 2010, he had again been segregated because he was known to have met the perpetrator of the assault which took place that day, there was intelligence suggesting that he had been involved in the organisation of that assault as retaliation for the previous assault on himself, and there was intelligence suggesting that he had influence over other prisoners. These factors, combined with his history of violence and intimidation, led to the conclusion that he could no longer be managed on normal location. At the meeting of the SRB on 4 May 2010, it had been decided that he should be referred to the CSC. If the CSC referral were refused, Mr Garvie stated, Bourgass would have to be moved to another establishment. Mr Garvie also disclosed that the prison authorities had decided that there was insufficient evidence to bring a disciplinary charge against Bourgass in relation to the assault on Sahebzadeh. They nevertheless considered, on the basis of his history, as well as their suspicion as to his involvement in the organisation of the assault on Sahebzadeh, that there would be a significant risk to the safety of other prisoners if he were returned to normal location. Continued segregation was authorised on 10 August 2010, the reason given being that you are down as a threat to other prisoners and we are awaiting a referral to CSC. On 24 August 2010 continued segregation was again authorised, the reason given being that your behaviour is deemed to be unsuitable for normal location and have been referred to CSC (sic). It was said that he would remain in segregation until the outcome of the referral. On 7 September 2010 continued segregation was authorised by Mr Colley, who reverted to the reason, pending an investigation into a serious assault. On 15 September 2010 the CSC Management Committee decided not to accept Bourgasss referral to the CSC, in the light of a report by the Central Case Management Group, a body within the prison service but external to Whitemoor. Its report stated that the referral was primarily based on alleged violence towards prisoners, with reference to the assault on Sahebzadeh. The report concluded, however, that the referral did not provide sufficient evidence to justify selection for the CSC. It noted that no internal investigation was being carried out into the assault on Sahebzadeh, and that the police did not consider Bourgass to have been involved. As to the allegations of intimidation, it stated that there is very little that shows he is intimidating others. On 21 September 2010 continued segregation was authorised, the reason given being that you will be transferred to another establishment, as we feel you would be a disruptive influence on normal location at Whitemoor. Mr Guedalla wrote to the Treasury Solicitor on 22 September pointing out that one reason which had sometimes been given for Bourgasss segregation, namely involvement in the assault on Sahebzadeh, had been rejected by the police after investigation, and that another, the need to await the outcome of the referral to the CSC, had been superseded. Bourgass had been held in segregation for a period of over seven months, apart from a 24 hour period on 22/23 April 2010. Mr Guedalla reminded the Treasury Solicitor of concerns that had been expressed by the senior forensic psychologist at Whitemoor about the potential effect of prolonged segregation on Bourgasss mental health. On 5 October 2010 continued segregation was authorised, the reason given being that we are trying to transfer you. On 3 November 2010, the day before the judicial review hearing, Bourgass was transferred to HMP Woodhill. He had been in segregation almost continuously since 10 March 2010. On arrival at Woodhill, he was removed from segregation and placed on normal location. The application for judicial review was heard together with that of the second appellant by Irwin J, who dismissed both applications: [2011] EWHC 286 (Admin). Their appeals to the Court of Appeal were heard together with that of a third appellant named King. All three appeals were dismissed: [2012] EWCA Civ 376; [2012] 1 WLR 3602. The conditions of the first appellants segregation During segregation, Bourgass was locked in his cell for 23 hours a day, and was denied association with other prisoners. He was allowed out of his cell for exercise, which he took alone in a caged area. He was unable to participate in activities which involved association with other prisoners, such as work, education and communal religious services. Prisoners in segregation could however have access to education courses in their cells. He was permitted visits, but not physical contact with visitors, until that restriction was lifted during July 2010. He saw a member of the chaplaincy from time to time. He also saw members of staff of the segregation unit when they opened the door to his cell at mealtimes. He was permitted books and a radio, and also had the opportunity to have a television if he displayed consistently good behaviour and a good attitude. The second appellant: the history of events In 2010 the second appellant, Tanvir Hussain, was a prisoner in HMP Frankland, which is another high security prison. He was serving a life sentence, having been convicted of involvement in a terrorist conspiracy. On 26 April 2010 Hussain was placed in segregation under rule 45 on the orders of the residential governor of the prison, Mr Greener, following an incident in which another prisoner, Aslan, was seriously injured. The reason given was to ensure the safety of others and to maintain good order. Disciplinary proceedings also began on the same date, in which it was alleged that Hussain had assaulted Aslan. He was provided with a report by a prison officer who said that he had seen Hussain assaulting Aslan and had heard him make an incriminating remark. The adjudicator decided to refer the matter to the police, and adjourned the adjudication. On 27 April 2010 Hussains continued segregation was authorised by an officer on the ground that following an alleged recent assault on a fellow prisoner we need to assess your risk and future location. A further continuation was authorised on 5 May 2010 by Mr Greener, the reason given being the risks you pose to others. A further continuation was authorised on 19 May 2010, due to the serious nature of the incident you were involved in on J Wing and the risk you pose to others. Hussains solicitor, Mr Guedalla, wrote to the governor the same day requesting an explanation of why it was necessary for Hussain to be kept in segregation, and for an outline of any evidence relied on. In response, the prison stated that segregation had been continued because of the risk Hussain potentially posed to other prisoners. A further continuation was authorised on 2 June 2010, to maintain good order and discipline after an assault on another prisoner. On 14 June 2010 Mr Greener wrote to Mr Guedalla stating that Hussain remained segregated following his physical attack upon another prisoner. It was said that the savage nature of the attack raised obvious risk concerns relating to other prisoners. Further continuations were authorised on 16 and 30 June and 14 July 2010, the reasons given being respectively pending police investigation and security review, due to ongoing investigation into an assault on another prisoner, and pending ongoing investigation into a serious assault on another prisoner. A further continuation was authorised by Mr Greener on 28 July 2010, on the ground that it is believed you may pose a threat to others, and you may be at risk from other prisoners. The latter possibility had not previously been mentioned. In the meantime, Mr Guedalla had initiated judicial review proceedings, which were listed for a hearing together with the proceedings brought by Bourgass. On 30 July 2010 the Secretary of State submitted detailed grounds of defence together with a witness statement of Mr Greener. It was said, in Mr Greeners witness statement, that Hussain had initially been segregated because of the severity of the assault on Aslan, the fact that it appeared to have taken place as the result of a mundane disagreement over food, and the risk which Hussain therefore posed to other prisoners. Consideration had also been given to the risk of reprisals by Aslan or other prisoners. Intelligence information also linked Hussain with the conditioning of segregated prisoners who were susceptible to manipulation. Three such prisoners had informed segregation unit staff that they had changed their religion from Christianity to Islam, having been converted through their cell windows by another prisoner. Intelligence suggested that Hussain was preaching Islam through his cell window to others in a determined attempt to convert non Muslim prisoners to his own interpretation of Islamic ideals. There was concern that his interpretation of the Quran was in line with his terrorist beliefs, and that the promulgation of his ideals had the potential to cause serious disruption both in the segregation unit and in the general prisoner population. Mr Greener did not consider that the risk posed by Hussain could be managed by means of closer supervision on normal location, transfer to another wing or transfer to another establishment. He therefore remained in the segregation unit while he was monitored with the aim of assessing whether he should be referred to the CSC. In a witness statement filed in reply, Hussain gave a detailed response to the allegation of proselytising. He quoted the sentencing remarks of the judge at his trial, to the effect that there was no evidence that he was a religious fanatic, and that his involvement in the offence appeared to be entirely attributable to his loyalty to his co defendant. In correspondence some months later, concerned with Hussains security classification, the prison authorities stated that it was believed not to be Hussain who had converted the prisoners. On 10 August 2010 the judicial review proceedings were listed for a hearing. The following day, it was recorded that Hussain was being considered for transfer to another establishment. A further continuation of segregation was authorised because of an assault on another prisoner. A further continuation of segregation was authorised by Mr Greener on 25 August 2010, pending transfer to another establishment; and due to risks you pose to others. Further continuations of segregation were authorised on 8 and 22 September 2010, the reasons given being respectively that due to the assault on another prisoner you are to remain segregated until transferred out of the establishment, and because of the risk you pose to others on the wing. On or before 19 October 2010 Hussain was transferred to HMP Wakefield. He had been in solitary confinement since 26 April 2010. Following the police investigation, Hussain was charged with an assault upon Aslan. On 3 February 2011 the Crown Prosecution Service informed Hussains solicitors that the proceedings were being discontinued on the ground that there was insufficient evidence to provide a realistic prospect of conviction. The conditions of the second appellants segregation The conditions in which Hussain was kept in segregation were broadly similar to those that applied to Bourgass. He was only able to make a telephone call once every three days, as there were fewer telephones available than on normal location. As there was no electricity in the cells in the segregation unit, he did not have a television. Hussain also claimed to have been denied exercise on some occasions. The regime which was applied to Bourgass and Hussain is similar to that which applies to prisoners undergoing cellular confinement as a punishment for an offence against discipline. Such a punishment can however only be imposed following disciplinary proceedings conducted in accordance with the Rules. It can, in addition, only be imposed for a maximum of 21 days. That maximum reflects the well known risks which solitary confinement poses to the mental health of those subjected to it for prolonged periods: a matter to which I turn next. The effects of segregation In about 2003 the Secretary of State issued Prison Service Order 1700 (the PSO), a non statutory document concerned with segregation. It acknowledges that the number of self inflicted deaths in segregated settings is disproportionate. It continues at p 29: Research into the mental health of prisoners held in solitary confinement indicates that for most prisoners there is a negative effect on their mental wellbeing and that in some cases the effects can be serious. A study by Grassian & Friedman (1986) stated that, Whilst a term in solitary confinement would be difficult for a well adjusted person, it can be almost unbearable for the poorly adjusted personality types often found in a prison. The study reported that the prisoners became hypersensitive to noises and smells and that many suffered from several types of perceptual distortions (eg hearing voices, hallucinations and paranoia). According to a report published in June 2015 by the Prisons and Probation Ombudsman for England and Wales, 28 prisoners took their own lives while being held in segregation units in England and Wales between January 2007 and March 2014. An interim report submitted to the UN General Assembly in August 2011 by Juan E Mndez, the Special Rapporteur of the Human Rights Council on torture and other cruel, inhuman or degrading treatment or punishment expressed particular concern about prolonged solitary confinement (or segregation, as it was also termed), which he defined as solitary confinement in excess of 15 days. He noted that after that length of time, according to the literature surveyed, some of the harmful psychological effects of isolation can become irreversible (para 26). He also noted that lasting personality changes often prevent individuals from successfully readjusting to life within the broader prison population and severely impair their capacity to reintegrate into society when released from prison (para 65). The previous Special Rapporteur, Manfred Nowak, annexed to an earlier report, submitted in July 2008, the Istanbul Statement on the Use and Effects of Solitary Confinement, adopted on 9 December 2007. It stated, in a passage cited by the Special Rapporteur: It has been convincingly documented on numerous occasions that solitary confinement may cause serious psychological and sometimes physiological ill effects. Research suggests that between one third and as many as 90% of prisoners experience adverse symptoms in solitary confinement. A long list of symptoms ranging from insomnia and confusion to hallucinations and psychosis has been documented. Negative health effects can occur after only a few days in solitary confinement, and the health risks rise with each additional day spent in such conditions. Similar conclusions were reached by the European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment in its 21st General Report of 10 November 2011. It referred to evidence that solitary confinement can have an extremely damaging effect on the mental, somatic and social health of those concerned, which increases the longer the measure lasts and the more indeterminate it is (para 53). It considered the maximum period for which solitary confinement should be imposed as a punishment to be 14 days (para 56(b)). The risks of segregation are recognised by the Secretary of State. On his behalf, it is said that segregation is used as a last resort where other means of addressing risk are considered insufficient. The alternatives include transfer to another wing, to another establishment, to a CSC, or to a Dangerous and Severe Personality Disorder Unit; or closer supervision on normal location, which might include constant CCTV observation, and resort to powers to use physical force so far as necessary; or the use of an incentives and earned privileges scheme. Was the segregation duly authorised? duly authorised. Rule 45 The legal basis for segregation is rule 45 of the Rules. It provides, so far as material: I turn next to the question whether the appellants continued segregation was (1) Where it appears desirable, for the maintenance of good order or discipline or in his own interests, that a prisoner should not associate with other prisoners, either generally or for particular purposes, the governor may arrange for the prisoner's removal from association accordingly. (2) A prisoner shall not be removed under this rule for a period of more than 72 hours without the authority of the Secretary of State and authority given under this paragraph shall be for a period not exceeding 14 days but it may be renewed from time to time for a like period. (3) The governor may arrange at his discretion for a prisoner removed under this rule to resume association with other prisoners at any time . It is clear from rule 45(1) and (3) that removal from association is something which is arranged, and may be ended, by the governor: an expression with a specific meaning, as I shall explain. It is equally clear from rule 45(2) that removal from association is not to last for a period exceeding 72 hours without the authority of the Secretary of State. The appellants complain that their segregation was ordered without that authority. PSO 1700 As explained earlier, in about 2007 the Secretary of State issued a non statutory document concerned with segregation, known as PSO 1700. The PSO provides for the establishment of SRBs, chaired by a competent operational manager. Counsel for the Secretary of State informed the court that an operational manager is an officer performing a senior role within a prison, such as the head of security or the head of the segregation unit. Such officers are accorded the title governor, although not in fact the governor of the prison or the duty governor for the time being (these expressions will be explained later). The PSO adds that a person who is acting up/temporarily promoted to competent operational manager is able to give authority for the continuation of segregation. The PSO states that the initial SRB must be held within 72 hours of a prisoner being placed in segregation, and that subsequent SRBs should be held at least every 14 days. Those intervals correspond to those required by rule 45(2). The initial SRB should comprise at least a chairman and a healthcare representative, and subsequent SRBs may also include other members of prison staff, such as the chaplain, and the prisoner for at least part of the Board. It is said to be desirable that a member of the independent monitoring board for the prison (the IMB), appointed by the Secretary of State under section 6 of the Prisons Act 1952 as amended (the 1952 Act), should also attend. In relation to procedure, the PSO states that, once a decision has been reached by the SRB, it is good practice for the chairman to ask the IMB member to comment on it and to indicate whether he or she is likely to raise an objection to it. The chairman will then make a final decision on the matter. In that regard, the PSO states: The Review Board decides, after considering all of the factors detailed in section 2 [the part of the PSO headed What the Review Board should consider], whether or not to authorise segregation to continue for a certain period of time (up to the maximum of 14 days). The operational manager chairing the Board has the final authority as to whether to authorise continuation of segregation under rule 45 (YOI rule 49) and must sign the relevant part of the form Segregation Review Board Governors Continued Authority for Segregation. It is common ground that the PSO thus purports to confer on a member of the staff of the prison, namely the operational manager chairing the SRB, the power to authorise the continued segregation of a prisoner after the initial 72 hours ordered by the governor. The first question raised by the appellants is whether authority under rule 45(2) can lawfully be given by an operational manager, as envisaged by the PSO, and as occurred in relation to both appellants, given that rule 45(2) requires authority to be given by the Secretary of State. It is argued on behalf of the Secretary of State that rule 45(2) permits governors and other senior prison officers to take such decisions, when authorised to do so by the Secretary of State, and that such authority has been lawfully granted by the PSO. The Secretary of States argument is not that a blanket authorisation has been granted by the Secretary of State ab ante. The argument, rather, is that the decision of the governor or the operational manager is the decision of the Secretary of State, by virtue of the operation of the Carltona principle. Alternatively, it is argued that the words the Secretary of State, in rule 45(2), should as a matter of construction be interpreted as including prison governors and other senior prison officers. The Carltona principle In Carltona Ltd v Comrs of Works [1943] 2 All ER 560, the Court of Appeal rejected a challenge made to a decision taken by a senior civil servant on the ground that the statutory power was conferred on the minister rather than his officials. Lord Greene MR said at p 563: In the administration of government in this country the functions which are given to ministers (and constitutionally properly given to ministers because they are constitutionally responsible) are functions so multifarious that no minister could ever personally attend to them. To take the example of the present case no doubt there have been thousands of requisitions in this country by individual ministries. It cannot be supposed that this regulation meant that, in each case, the minister in person should direct his mind to the matter. The duties imposed upon ministers and the powers given to ministers are normally exercised under the authority of the ministers by responsible officials of the department. Public business could not be carried on if that were not the case. Constitutionally, the decision of such an official is, of course, the decision of the minister. The minister is responsible. It is he who must answer before Parliament for anything that his officials have done under his authority, and, if for an important matter he selected an official of such junior standing that he could not be expected competently to perform the work, the minister would have to answer for that in Parliament. The whole system of departmental organisation and administration is based on the view that ministers, being responsible to Parliament, will see that important duties are committed to experienced officials. If they do not do that, Parliament is the place where complaint must be made against them. The Carltona principle, as it has become known, is not one of agency as understood in private law. Nor is it strictly one of delegation, since a delegate would normally be understood as someone who exercises the powers delegated to him in his own name. Rather, the principle is that a decision made on behalf of a minister by one of his officials is constitutionally the decision of the minister himself. As Jenkins J stated in Lewisham Borough Council v Roberts [1949] 2 KB 608, 629, when rejecting an argument that the principle was one of delegation: I think this contention is based on a misconception of the relationship between a minister and the officials in his department. A minister must perforce, from the necessity of the case, act through his departmental officials, and where as in the Defence Regulations now under consideration functions are expressed to be committed to a minister, those functions must, as a matter of necessary implication, be exercisable by the minister either personally or through his departmental officials; and acts done in exercise of those functions are equally acts of the minister whether they are done by him personally, or through his departmental officials, as in practice, except in matters of the very first importance, they almost invariably would be done. No question of agency or delegation . seems to me to arise at all. An official in a government department is in a different constitutional position from the holder of a statutory office. The official is a servant of the Crown in a department of state established under the prerogative powers of the Crown, for which the political head of the department is constitutionally responsible. The holder of a statutory office, on the other hand, is an independent office holder exercising powers vested in him personally by virtue of his office. He is himself constitutionally responsible for the manner in which he discharges his office. The Carltona principle cannot therefore apply to him when he is acting in that capacity. It is possible that a departmental official may also be assigned specific statutory duties. In that situation, it was accepted in R v Secretary of State for the Home Department, Ex p Oladehinde [1991] 1 AC 254 that the official remained able to exercise the powers of the Secretary of State in accordance with the Carltona principle. It is also possible that the performance of statutory ministerial functions by officials, or by particular officials, may be inconsistent with the intention of Parliament as evinced by the relevant provisions. In such circumstances, the operation of the Carltona principle will be impliedly excluded or limited: Oladehinde at p 303. Furthermore, the authorisation of officials to perform particular ministerial functions must in any event be consistent with common law requirements of rationality and fairness: see, for example, Oladehinde at pp 281 282 per Lord Donaldson of Lymington MR (in the Court of Appeal), and at pp 300 and 303 per Lord Griffiths. The legislative framework In considering rule 45(2), it is necessary to note at the outset that the court was provided with only minimal information about the administrative relationships between prisons (both those staffed by civil servants and those that are contracted out to private operators, to which rule 45(2) also applies), Her Majestys Prison Service, the National Offender Management Service and the Ministry of Justice, and with no information about the governance arrangements or the arrangements in relation to accountability to Parliament. Counsel for the Secretary of State relied upon the decisions in R v Secretary of State for Social Security, Ex p Sherwin (1996) 32 BMLR 1 and Castle v Director of Public Prosecutions [2014] EWHC 587 (Admin); [2014] 1 WLR 4279, implicitly inviting the court to assume that there was no relevant difference between the relationship of the agency officials with which those cases were concerned and the Secretary of State, on the one hand, and the relationship of prison governors and other prison staff and the Secretary of State for Justice, on the other hand. That cannot however be assumed. The decisions in Ex p Sherwin and Castle were based upon evidence concerning the relationship between officials of the Benefits Agency and the Highways Agency, respectively, and the relevant departments of government. No equivalent evidence is before this court. Furthermore, unlike those cases, the relationship between prison governors and other officers, on the one hand, and the Secretary of State on the other hand, is the subject of specific legislation: something which, in itself, points towards a different relationship from that between a departmental official and a minister, since it is not readily reconciled with the idea that prison governors and officers, and the Secretary of State, are constitutionally indistinguishable. Section 3 of the 1952 Act empowers the Secretary of State to appoint such officers and employ such other persons as he may . determine. Under section 4(1), the Secretary of State shall have the general superintendence of prisons and shall make the contracts and do the other acts necessary for the maintenance of prisons and the maintenance of prisoners. Section 4(2) and (3) provide: (2) Officers of the Secretary of State duly authorised in that behalf shall visit all prisons and examine the state of buildings, the conduct of officers, the treatment and conduct of prisoners and all other matters concerning the management of prisons and shall ensure that the provisions of this Act and of any rules made under this Act are duly complied with. (3) The Secretary of State and his officers may exercise all powers and jurisdiction exercisable at common law, by Act of Parliament, or by charter by visiting justices of a prison. Section 7 provides: (1) Every prison shall have a governor, a chaplain and such other officers as may be necessary. (3) A prison which in the opinion of the Secretary of State is large enough to require it may have a deputy governor . The implication is that a prison has only one governor within the meaning of the 1952 Act. Section 8 confers on every prison officer the powers, authority, protection and privileges of a constable. Section 13 provides: Every prisoner shall be deemed to be in the legal custody of the governor of the prison. Other sections confer powers or impose duties specifically upon the governor or prison officers. Examples include sections 16A and 16B, which empower the governor to authorise the testing of prisoners for drugs and alcohol, and empower prison officers to carry out such testing in accordance with the authorisation. Provisions such as these can be contrasted with other provisions conferring powers or imposing duties upon the Secretary of State, generally of wider scope, or of a supervisory nature. There are also provisions which confer separate and overlapping powers on the governor and on the Secretary of State, such as sections 40A to 40E. Apart from a small number of powers for which specific provision is made, such as those I have mentioned, the 1952 Act gives no content to the powers of governors or other prison officers. By section 47(1), however, Parliament has enabled the Secretary of State to make rules conferring a wide range of powers: The Secretary of State may make rules for the regulation and management of prisons, remand centres, young offender institutions or secure training centres and for the classification, treatment, employment, discipline and control of persons required to be detained therein. It was under section 47(1) that the Rules were made. Several features of the Rules are relevant to the present question. First, a number of the Rules expressly confer powers upon the Secretary of State. Numerous powers are also conferred or imposed expressly on governors, a term which is defined by rule 2 as including an officer for the time being in charge of a prison. A governor, within the meaning of the Rules, can therefore include an officer who is acting as duty governor, as well as the governing governor of the prison. Secondly, some rules deal separately with the powers and duties of the Secretary of State, on the one hand, and the governor, on the other. For example, rule 35(3) empowers the governor to allow a prisoner an additional letter or visit, and rule 35(7) separately empowers the Secretary of State to allow additional letters and visits in relation to any prisoner. Rule 45 also falls into this category, as I have explained. Thirdly, numerous rules require the governor or prison officers to act in accordance with directions or guidance given by the Secretary of State. For example, rule 55(4) requires the governor, in imposing a punishment, to take into account any guidelines issued by the Secretary of State. It would scarcely be necessary to impose explicit requirements of this kind if the governor and prison officers were, for these purposes, in the position of departmental officials. It would then go without saying that they were bound to carry out the instructions of their minister. Fourthly, several other rules require the governor to act in a specified manner towards the Secretary of State. For example, rule 22(2) requires the governor to notify the Secretary of State of the death of a prisoner. Rules of this kind would again be unnecessary if the governor were in the position of a departmental official. Legislation is scarcely necessary to require departmental officials to provide their minister with the information he desires. In the light of the foregoing, it is apparent that the arrangements governing the relationship between the Secretary of State and prison governors, established by the 1952 Act and the Rules, bear no resemblance to those governing the relationship between a minister and his departmental officials. Prison governors, whether the governor appointed under the 1952 Act or the wider class of governors referred to in the Rules, are the holders of an independent statutory office. The governor, not the Secretary of State, has custody of the prisoners held in the prison in question. He and his officers, unlike the Secretary of State, have the powers of constables. He and his officers exercise the powers over prisoners which are conferred on them by rules made by the Secretary of State, under the power conferred on him by section 47(1). The Secretary of States officers in turn ensure that those rules are complied with, in accordance with section 4(2). Under the Rules, the powers of governors and of the Secretary of State are distinctly demarcated. Some powers are exercised by governors independently. In relation to others, they are expressly required by law to act in accordance with, or have regard to, directions given by the Secretary of State: a requirement which demonstrates their constitutional separation from the Secretary of State and his departmental officials. The case law There are two decisions of the House of Lords in which the relationship between prison governors and the Secretary of State has been considered. In the first, Leech v Deputy Governor of Parkhurst Prison [1988] AC 533, the question was whether a disciplinary decision by a governor was amenable to judicial review. In the course of considering that question, their Lordships made a number of observations which are pertinent to the present issue. Lord Bridge of Harwich, in a speech with which the other members of the House agreed, stated at p 561: The governor of a prison holds an office created by the Act of 1952 and exercises certain powers under rules 47 to 55 of the Rules of 1964 [the disciplinary provisions then in force] which are conferred upon him and him alone. Lord Bridge went on to address the reasoning in an earlier decision of the Court of Appeal, which had distinguished between prison governors and boards of visitors on the basis that governors were servants or agents of the Secretary of State: A prison governor may in general terms be aptly described as the servant of the Secretary of State, but he is not acting as such when adjudicating upon a charge of a disciplinary offence. He is then exercising the independent power conferred on him by the rules. The Secretary of State has no authority to direct the governor, any more than the board of visitors, as to how to adjudicate on a particular charge or what punishment should be awarded. If a Home Office official sought to stand behind the governor at a disciplinary hearing and tell him what to do, the governor would properly send him packing. (p 563) It follows from Lord Bridges observations that the Secretary of State, having no authority to direct the governor in the exercise of his disciplinary powers, could have no constitutional responsibility for the governors exercise of those powers (as distinct from his own supervisory functions), and that the rationale underpinning the Carltona principle would therefore be absent. Lord Oliver of Aylmerton, whose speech was also concurred in by the other members of the House, reiterated that the office of a governor of a prison is the creation of statute (p 569). He went on to observe: The starting point of the inquiry appears to me to be that the prison governor is not a mere servant or alter ego of the Secretary of State but a statutory officer performing statutory duties. Many of those duties are of a purely administrative nature and involve no adjudicatory function at all. (p 578) Applying Lord Olivers dictum, plainly the Carltona principle can have no application in so far as the governor is performing those duties. Lord Bridge focused particularly on the governors exercise of disciplinary functions, but, as Lord Oliver recognised, the same principle applies to the exercise of administrative functions. As I explained earlier, the important question is whether the function in question is one which is performed by the governor as the holder of an independent statutory office, as distinct from being a function of the Secretary of State which might be performed by any Crown servant authorised by him. It is also necessary to note the decision of the Court of Appeal in R v Deputy Governor of Parkhurst Prison, Ex p Hague [1992] AC 58. The case concerned rule 43 of the Prison Rules 1964 as amended, which was the predecessor of rule 45 of the Rules in issue in the present appeals. Under rule 43(1), as under the later rule 45(1), the initial power to segregate was given to the governor. The case arose from the fact that the governor of one prison had purported to authorise the segregation of a prisoner on his arrival at another prison to which he was being transferred, as required by an instruction issued by the Home Office. The prisoners continued segregation at his new prison, after the initial period of segregation expired, was then automatically authorised by the regional director of prisons on behalf of the Secretary of State, in accordance with the same instruction. Both authorisations were held to be ultra vires. The governor of one prison had no power to order the segregation of a prisoner held in another prison: the decision could only be taken by the governor of the prison where the prisoner was currently held. Nor could the Secretary of State lawfully authorise segregation as a matter of routine, without a genuine exercise of his discretion both as to whether it should be given and, if so, for how long. In a judgment with which Nicholls LJ and Sir Nicolas Browne Wilkinson V C agreed, Taylor LJ addressed an argument that the Secretary of State possessed a residual power to initiate segregation under rule 43. He observed at p 107: Whether or not the Secretary of State retains an overall power to segregate a prisoner, he cannot, in my judgment, exercise it under rule 43 because that rule gives powers specifically to the governor. Rule 43(2) provides for authority to be given to the governor to segregate for more than 24 hours by either a visitor or the Secretary of State. But that authority is merely clothing for the governor. The decision under this rule is still his. I do not accept, therefore, that the Secretary of State can act under rule 43 to initiate segregation. Taylor LJ went on to explain the fact that the Secretary of States authority was required as a safeguard provided to protect the prisoners rights (p 110). These passages are doubly relevant to the present case. First, the implication is that segregation is at all times dependent on the governors being of the view that it appears desirable for the maintenance of good order and discipline, as required by rule 43(1) of the 1964 Rules and rule 45(1) of the current Rules. The governor, for these purposes, means the governing governor or the duty governor, to adopt the expressions used by counsel for the Secretary of State. It does not mean any prison officer meeting the description of a competent operational manager. Secondly, the governors functions under rule 43 are distinct from those of the Secretary of State, and neither can perform the functions properly belonging to the other. In particular, since segregation beyond the initial period requires the authorisation of the Secretary of State, as a safeguard for the prisoner, in addition to the governors being of the view that continued removal from association is desirable, it follows that such authorisation cannot be given by the governor (let alone by a more junior member of his staff). The second decision of the House of Lords is that in Somerville v Scottish Ministers [2007] UKHL 44; [2007] 1 WLR 2734. One of the issues in the case was whether the act of the governor of a Scottish prison, in ordering the segregation of a prisoner, was to be regarded as the act of the Scottish Ministers by virtue of the Carltona principle. Under rule 80(1) of the Prisons and Young Offenders Institutions (Scotland) Rules 1994 (SI 1994/1931), the governor could order that a prisoner should be removed from association with other prisoners. Rule 80(5) provided that a prisoner who had been removed from association by virtue of an order made by the governor should not be subject to such removal for a period in excess of 72 hours from the time of the order except where the Scottish Ministers had granted written authority on the application of the governor. As Lord Rodger of Earlsferry observed at para 135, the terms of these rules would therefore suggest that, while the basis for the initial segregation of 72 hours would be the governors order, the basis for any segregation for a period of longer than that would be constituted by the governor's order plus the written authority granted by the Scottish Ministers. That is consistent with the view expressed by Taylor LJ in Hague. Lord Rodger accepted the Scottish Ministers argument that, when making an order under rule 80(1), the governor was exercising a specific power which the rules conferred on governors and which could not be exercised by the ministers themselves. In that regard he applied the reasoning of Lord Oliver in Leech, on the basis that it was equally applicable to the governors role under rule 80 as to his disciplinary functions. He added, at para 140: Whoever is acting as governor for the purposes of rule 80 at the relevant time is exercising a distinct function, or distinct functions, which cannot be carried out by the Scottish Ministers. Under rule 80 of the Scottish Prison Rules, the Scottish Ministers have their own distinct functions. The division between the role of the governor and the role of the Ministers is indeed essential if the protections for prisoners contained in the rule are to be effective. It follows that the familiar principle in Carltona Ltd v Comrs of Works [1943] 2 All ER 560 has no application to what the governor does under rule 80. The approach adopted in Somerville is consistent with that adopted in Leech, and as I have explained with that of the Court of Appeal in Hague. The implication of the decisions is that the powers that are confided to the governor by rule 45(1) or its Scottish equivalent are conferred on him in his own right, and not in the performance of functions of the Secretary of State. They are therefore not within the ambit of the Carltona principle. Equally, the Secretary of States function under rule 45(2), or its Scottish equivalent, is distinct from the function of the governor, and exists as a safeguard to protect the prisoner. Counsel for the Secretary of State relied upon a number of other cases. The first was the case of R v Governor of Brixton Prison, Ex p Walsh [1985] AC 154, which was cited in Leech but not referred to in the speeches. The issue in that case was whether the Secretary of State, or the governor of a prison holding remand prisoners, was under a duty to produce them at court in accordance with the terms of their remand. Counsel relied upon a passage in Lord Fraser of Tullybeltons narration of the background circumstances, in which he stated at p 165 that the power conferred on the Home Secretary by section 29(1) of the Criminal Justice Act 1961, to direct that a detained person should be taken to a place where his attendance was desirable in the interests of justice, had been delegated to the governors of prisons for certain purposes. The matter was not argued or discussed. The use of the term delegated suggests that it was not the Carltona principle that Lord Fraser had in mind. In the circumstances, I find this case of no assistance. Reliance was also placed on R v Secretary of State for the Home Department, Ex p Hickling [1986] 1 FLR 543. The case concerned the provision, now contained in rule 12(2) of the Rules, enabling the Secretary of State to permit a woman prisoner to have her baby with her in prison, subject to any conditions he thinks fit. The Secretary of State had issued a general instruction laying down criteria for admission to a mother and baby unit, together with the procedures to be followed, and stating that the final decision in a particular case should rest with the governor. The instruction also stated that the governor should arrange for the removal of the baby if he considered that the mothers behaviour was such as to threaten the serious disruption of the unit or the safety of the baby or other babies in the unit. The Court of Appeal held that the instructions laid down the conditions on which the Secretary of State permitted women prisoners to have their babies with them in prison, as contemplated by the relevant rule. Eveleigh LJ stated that it was not a case of the Secretary of State delegating his authority, but of his laying down conditions which must be fulfilled. Since those conditions addressed matters which the governor was best placed to judge, it was right to allow the governor to decide if they were not being complied with. It is apparent, therefore, that this case was not an application of the Carltona principle. The Carltona principle, statutory construction and rule 45 Returning to rule 45 in the light of the foregoing discussion, it is virtually identical to the rule considered in Hague. Paragraph (1) enables the governor to arrange for the prisoners removal from association. Paragraph (2) provides that a prisoner shall not be removed under the rule for a period of more than 72 hours without the authority of the Secretary of State, and that authority given under this paragraph shall be for a period not exceeding 14 days. Authority is therefore given under rule 45(2) by the Secretary of State to the governor, the governor having already formed the view that continued segregation is desirable. That provision cannot sensibly be construed either as enabling the governor to give authority to himself, or as enabling authority to be given to him by a subordinate officer. Rule 45 is also similar to the Scottish rule considered in the case of Somerville. The only distinction between the Scottish rule and rule 45 which might conceivably be material is that the former expressly states that decisions to authorise removal beyond the initial period are made following an application by the governor. Although that is not expressly stated in rule 45(2), it must be implicit that the Secretary of States authority follows upon an initiative taken by the governor, as Taylor LJ considered in Hague. The minor difference in wording between the Scottish and English rules does not therefore warrant a different approach to the division of roles as between the governor and the Secretary of State from that held to exist, in the Scottish context, in Somerville, and in the English context, under the 1964 Rules, in Hague. The apparent rationale of rule 45(2) is clear. The governor can order segregation at his own hand for a maximum of 72 hours, but any longer period requires the authorisation of the Secretary of State in practice, senior officials from outside the prison in order to protect the prisoner against the risk of segregation for an unduly protracted period. Counsel for the Secretary of State argued, however, that rule 45(2) had no such rationale. His argument was based primarily on a detailed analysis of the history of rule 45 and of two other rules, rule 48 and rule 49. As originally made, rule 45(2) prohibited the removal of a prisoner under rule 45(1) for more than three days without the authority of a member of the board of visitors or of the Secretary of State. Rule 45(2) in its present form was substituted by the Prison (Amendment) (No 2) Rules 2005 (SI 2005/3437) (the 2005 amendments). The material change was the removal of the reference to a member of the board of visitors. Rule 48(1) permits the governor to order the temporary confinement of a prisoner in a special cell, but rule 48(2) prohibits the prisoners confinement there for longer than 24 hours without a direction in writing. In its original form, rule 48(2) required the direction to be given by a member of a board of visitors or by an officer of the Secretary of State (not being an officer of a prison). That rule was amended by the 2005 amendments so as to require the direction to be given by an officer of the Secretary of State. Rule 49(1) permits the governor to order that a prisoner be placed under restraint, but rule 49(4) provides that a prisoner must not be kept under restraint for longer than 24 hours without a direction in writing. In its original form, rule 49(4) required the direction to be given by a member of the board of visitors or by an officer of the Secretary of State (not being an officer of a prison). That part of the rule was not amended by the 2005 amendments. It was however amended by the Prison (Amendment) Rules 2008 (SI 2008/597) (the 2008 amendments), so as to require the direction to be given by a member of the independent monitoring board or by an officer of the Secretary of State (not being an officer of a prison). It was amended again by the Prison and Young Offender Institution (Amendment) Rules (SI 2009/3082) (the 2009 amendments), so as to remove the reference to a member of the independent monitoring board. In counsels submission, the original terms of rules 48(2) and 49(4), which referred to an officer of the Secretary of State (not being an officer of a prison), were designed to make it clear that the direction had to be given by an official external to the prison. Their effect was to draw a distinction between the functions of the governor under rules 48(1) and 49(1), and the functions which could not be performed by the governor, under rules 48(2) and 49(4). There had been no similar words in rule 45(2). The implication, it was argued, was that the function under rule 45(2) could be performed by any officer of the Secretary of State, whether within the prison or not, and including the governor in particular. The 2005 amendments, it was submitted, made the position even clearer. The words (not being an officer of a prison) had been removed from rule 48(2) but not from rule 49(4). The implication was that the function under rule 48(2) could now be performed by any officer of the Secretary of State, including an officer of the prison. Rule 48(2) was therefore placed in the same position as rule 45(2). No analogous amendment had been made to rule 45(2), because none was necessary: its terms had never prevented the function under that rule from being performed by an officer of the prison. The latter rule could not have been intended to be construed in the same way as rule 49(4), since it was expressed in different terms. I am not persuaded by this argument. In the first place, it proves too much. As I have explained, the Rules accord a variety of powers to the Secretary of State. Some of those powers are clearly not intended to be exercised by a governor or other prison officer. For example, rule 46(1) empowers the Secretary of State to direct a prisoners removal from association and his placement in a CSC. There is no express provision that the Secretary of States powers cannot be exercised by an officer of the prison. On counsels argument, it follows from the absence of those words that the Secretary of States powers under rule 46 could be exercised by a governor. In view however of the contrast between the power given by rule 45(1) to a governor to order removal from association in the ordinary case, and the power given by rule 46(1) to the Secretary of State in the special case where removal is to result in placement in a CSC, quite possibly in another prison, it is plain that the power under rule 46(1) is not intended to be exercisable by a governor. The presence of the language found in rule 49(4) (which appears to be unique to that provision), or its absence (as in the numerous other rules which address separately the functions of the governor and of the Secretary of State), cannot therefore be the touchstone. The premise of counsels argument, that whenever the Rules intend to restrict the delegation or devolution of the Secretary of States powers to an officer external to the prison they say so expressly, is not made out. Reliance on the differently worded provisions of rules 48 and 49 cannot therefore determine the meaning of rule 45(2). As in the cases of Hague and Somerville, it can in my opinion be inferred that rule 45(2) is intended to provide a safeguard for the prisoner: a safeguard which can only be meaningful if the function created by rule 45(2) is performed by an official from outside the prison. It makes sense that the governor should be able to act at his own hand initially, since decisions to remove a prisoner from association with other prisoners may need to be taken urgently. It also makes sense that the governor should be able, under rule 45(3), to arrange for the prisoners resumption of association with other prisoners at any time, and, in particular, in response to any medical recommendation. Rule 45(2) however ensures that segregation does not continue for a prolonged period without the matter being considered not only by the governor but also by officials independent of the management of the prison. If, as counsel submitted, rule 45(2) was not intended to provide a safeguard, then the requirement to obtain the authority of the Secretary of State, before segregation can lawfully continue for more than 72 hours, would lack any rationale. It follows that it is implicit in rule 45(2) that the decision of the Secretary of State cannot be taken on his behalf by the governor, or by some other officer of the prison in question. The Carltona principle cannot therefore apply to rule 45(2) so as to enable a governor or other prison officer to exercise the powers of the Secretary of State. It equally follows that the alternative argument advanced on behalf of the Secretary of State, that the expression the Secretary of State, in rule 45(2), implicitly includes the governor and other officers of the prison, must also be rejected. Quite apart from the implausibility of the argument in the light of other provisions of the Rules, as I have explained, it would in any event defeat the purpose of rule 45(2). Any purported performance of the Secretary of States function under rule 45(2) by a governor or other prison officer cannot therefore be treated as constituting performance by the Secretary of State. The Secretary of States purported delegation of his function under rule 45(2) to the chairman of the SRB, in terms of the PSO, was therefore unlawful. It follows that the decisions to continue the segregation of the two appellants were taken without lawful authority, and that their segregation beyond the initial 72 hours was therefore unlawful. Procedural fairness That is sufficient to determine these appeals. It is however appropriate also to deal with the questions of procedural fairness which divided opinion in the courts below and also occupied much of the hearing before this court. They concern two issues: first, the prisoners right to make representations and, for that purpose, to be provided with information about the basis on which authorisation for his continued segregation is sought; and secondly, the scope of judicial review of decisions taken under rule 45(2), and its compatibility with the requirements of article 6.1 of the ECHR, if that provision is applicable. It is important to be clear at the outset as to the nature of the decision making in question. Decisions under rule 45(2) do not involve the determination of a charge against the prisoner or the imposition of a punishment, either in form or in substance. As counsel for the Secretary of State emphasised, segregation decisions are not based on a determination of fact as to whether a particular event has occurred, but involve a judgment as to the risk posed to the good order and discipline of the prison, and whether the particular situation could be equally or better addressed by other measures, such as transfer to another wing, closer supervision on normal location or transfer to another establishment. Allegations may be made against a prisoner, but the subject matter of the Secretary of States decision is not whether the prisoner behaved as alleged: these are not disciplinary proceedings. Representations and the provision of information It is common ground that initial segregation generally has to be decided upon in circumstances of urgency. It is not argued that such decisions, which cannot last for more than 72 hours, must be preceded by any form of hearing. It is also common ground that decisions by the Secretary of State to grant authority for continued segregation are in a different position. On behalf of the appellants, it is submitted that fairness requires that the prisoner be provided with sufficient information about the reasons for seeking authority, and the evidence relied on, to enable him to make effective representations. It is accepted that the evidence may be redacted or summarised where necessary to protect essential interests. On behalf of the Secretary of State, it is accepted that fairness requires that prisoners should usually be given a meaningful opportunity to make representations in relation to such decisions, and entails that they should be provided with relevant information for that purpose. It is submitted that the duty to provide information is limited by countervailing considerations, such as those relating to security and the need to protect sources of information. It is therefore submitted that it is sufficient that the prisoner should be provided with the gist of the reasons for seeking authorisation, and the opportunity to make representations. The Secretary of State also submits that, on the facts of the appellants cases, that is what they were given. In relation to these matters, neither party seeks to support the decision of the Court of Appeal, which considered itself bound by its earlier decision in Hague to hold that the common law gave a prisoner no right to be provided with adequate disclosure or reasons to enable him to challenge his continued segregation. The Court of Appeal had previously declined to follow that aspect of its decision in Hague in relation to the segregation of child offenders (see R (SP) v Secretary of State for the Home Department [2004] EWCA Civ 1750), but considered itself bound by it as far as adult offenders were concerned. In Hague, it was conceded, as in the present appeals, that there was no right to be heard before the initial decision to segregate was made, given the urgency with which such decisions normally have to be made. It was however argued that fairness required that the prisoner be given the right to be heard before continued segregation was ordered. That argument was rejected by the Court of Appeal, primarily, it appears, because of the absence from the then rule 43 of any express procedural requirements, whereas such requirements could be found in the rules governing disciplinary proceedings. The Court of Appeal also considered that there were public policy grounds for not giving reasons to the prisoner, since such disclosure could reveal sensitive information and put security, or informants, at risk. The court supported its decision by reference, in particular, to its earlier decision in Payne v Lord Harris of Greenwich [1981] 1 WLR 754. The law relating to procedural fairness has not stood still since then. In R v Secretary of State for the Home Department, Ex p Doody [1994] 1 AC 531 the House of Lords overruled Payne v Lord Harris of Greenwich and, in the speech of Lord Mustill, set out the approach to be followed when considering questions of procedural fairness generally, and more particularly the procedural rights of prisoners in relation to decisions which may affect them adversely. The House also rejected the argument that the existence of express statutory rights to a fair hearing in relation to some kinds of decisions affecting prisoners entailed the absence of any such right in relation to all other such decisions. More recently, in R (Osborn) v Parole Board [2013] UKSC 61; [2014] AC 1115 this court considered the rationale of procedural fairness at common law, and emphasised both the instrumental value of enabling persons to participate in decision making when they may be able to contribute relevant information or to test other information before the decision maker, and the ethical value of allowing persons to participate in decision making which concerns them and is liable to have a significant effect on their rights or interests, where they may have something to say which is relevant to the decision to be taken. The court also referred to research indicating the significance of unfair procedures in prisons, in particular, in affecting prisoners attitudes and their prospects of rehabilitation. Whatever the position may have been in the past, the approach described in Doody and Osborn requires that a prisoner should normally have a reasonable opportunity to make representations before a decision is taken by the Secretary of State under rule 45(2). That follows from the seriousness of the consequences for the prisoner of a decision authorising his segregation for a further 14 days; the fact that authority is sought on the basis of information concerning him, and in particular concerning his conduct or the conduct of others towards him; the fact that he may be able to answer allegations made, or to provide relevant information; and, in those circumstances, from the common laws insistence that administrative power should be exercised in a manner which is fair. A contrary conclusion cannot be drawn from the absence from rule 45 of procedural provisions similar to those contained in the rules governing adjudication proceedings. It would be extraordinary if, where there was sufficient evidence to warrant disciplinary proceedings, the prisoner were entitled to a fair process at the end of which he might be segregated as a punishment for up to 21 days, yet where there was insufficient evidence, he could be segregated for a much longer period, without procedural protection. The Court of Appeals decision to the contrary in Hague cannot be sustained. A prisoners right to make representations is largely valueless unless he knows the substance of the case being advanced in sufficient detail to enable him to respond. He must therefore normally be informed of the substance of the matters on the basis of which the authority of the Secretary of State is sought. That will not normally require the disclosure of the primary evidence on which the governors concerns are based: as I have explained, the Secretary of State is not determining what may or may not have happened, but is taking an operational decision concerning the management of risk. It is however important to understand that what is required is genuine and meaningful disclosure of the reasons why authorisation is sought. The reasons for continued segregation which were provided by the prison staff involved in the present cases gave, at best, only the most general idea of the nature of their concerns, and of why those concerns were held. More could and should have been said and was said, in the witness statements filed in these proceedings without endangering the legitimate interests which the prison authorities were concerned to protect. The imposition of prolonged periods of solitary confinement on the basis of what are, in substance, secret and unchallengeable allegations is, or should be, unacceptable. More specifically, in Bourgasss case, although some of the reasons given to him explained that his segregation was based on the assault on Sahebzadeh, the prison failed to provide any information as to why he was considered to have been involved in an assault which took place in his absence, despite being repeatedly asked to do so. The statement that he was to remain in segregation pending an investigation into a serious assault became particularly egregious when repeated after all investigations had ceased. Stating that segregation was pending CSC referral, or that we are trying to transfer you, provided no explanation related to rule 45. Stating that you are an unacceptable risk to other prisoners, that you are known as a threat to other prisoners, that your behaviour is deemed to be unsuitable for normal location, or that you would be a disruptive influence on normal location, told him nothing about the basis on which he was considered to present such a risk or threat or disruptive influence, or about the behaviour which was deemed unsuitable. Similar criticisms apply in Hussains case. He had been provided with information as to the basis on which he was believed to have assaulted another prisoner. It was not explained why, several months later, his suspected responsibility for that assault was still considered to require his segregation, not as a punishment, but for the maintenance of good order and discipline. It was only in the present proceedings that further allegations against him were disclosed, namely that he was suspected of having attempted to convert other segregated prisoners to Islam. Once that was disclosed, he was able to provide a response. It has to be recognised, however, that authority under rule 45(2) will often be sought on the basis of information which cannot be disclosed in full without placing at significant risk the safety of others or jeopardising prison security. Considerations of that kind were relevant in both of the present cases. There may also be cases where other overriding interests may be placed at risk. In such circumstances, fairness does not require the disclosure of information which could compromise the safety of an informant, the integrity of prison security or other overriding interests. It will be sufficient to inform the prisoner in more or less general terms of the gist of the reasons for seeking the authority of the Secretary of State. Judicial review and article 6.1 On behalf of the appellants, it is submitted that decisions to authorise the continued segregation of a prisoner fall within the scope of article 6.1, with the consequence that the prisoner is entitled to a hearing before an independent and impartial tribunal. On behalf of the Secretary of State, on the other hand, it is submitted that article 6.1 has no application to decisions to keep a prisoner in segregation. The question is relevant to the scope of judicial review, since rule 45(2) requires authorisation to be given by the Secretary of State, who is not, of course, an independent and impartial tribunal. Where article 6.1 applies, and the initial decision maker is not an independent and impartial tribunal, then its decision must be subject to subsequent control by a judicial body that has full jurisdiction and does provide the guarantees of article 6.1 (Tsfayo v United Kingdom (2006) 48 EHRR 457, para 42). The only subsequent control exercised by a judicial body over the decisions of the Secretary of State is by way of judicial review. In its Tsfayo judgment, as in a number of others, the European Court held that judicial review did not meet the requirements of article 6.1 in that case, because the central issue was one of fact, and the High Court did not have jurisdiction to rehear the evidence or substitute its own views as to the applicants credibility (para 48). If some decisions under rule 45(2) are centrally concerned with disputed questions of fact, then there is accordingly a question whether the availability of judicial review is sufficient to secure compliance with article 6.1. There have been a number of cases in which the European Court of Human Rights has considered the application of article 6.1 in relation to court proceedings in which prisoners challenged restrictions on their activities. In this context, as in others, it has asked, first, whether there was a genuine and serious dispute over a right which can be said, at least on arguable grounds, to be recognised under domestic law, and secondly, whether the right in question was a civil one. In relation to the first question, most of the relevant cases have concerned restrictions on activities, such as visits, correspondence and telephone calls, in respect of which prisoners were explicitly recognised as possessing rights under the relevant legal systems. The earliest case appears to be Ganci v Italy (2003) 41 EHRR 272, where the applicants complaint concerned the failure of an Italian court to give a decision on his appeals against executive acts restricting his rights to visits and telephone calls: rights which were recognised under Italian law. The case of Glmez v Turkey (Application No 16330/02) given 20 May 2008, concerned prison disciplinary proceedings, and subsequent proceedings on appeal, which had resulted in a restriction on the applicants right to receive visits: a right recognised in Turkish law. In that case, the Second Section gave an affirmative answer to the first question (whether there was a dispute over a right recognised under domestic law) simply on the basis that the applicant had a right to challenge the disciplinary sanctions before the domestic courts. That reasoning was criticised by a minority of the court. The case of Enea v Italy (2009) 51 EHRR 103 was similar on its facts to Ganci, but was decided by a Grand Chamber. The court held, as in Ganci, that since the Italian court had failed to reach a decision on the applicants appeal against restrictions imposed on rights recognised under Italian law, it followed that the first question should be answered in the affirmative. In relation to the second question, some of the restrictions alleged by the applicant, such as rights restricting contact with his family and those affecting his pecuniary rights, fell within the sphere of personal rights and were therefore civil in character. The first case in which the court considered the imposition of segregation appears to have been Stegarescu v Portugal (Application No 46194/06) given 6 April 2010. Having recorded the Governments submission that the applicants had failed to identify any rights under domestic law which had been restricted, the Second Section noted that article 6.1 had been held in cases such as Ganci and Glmez to be engaged in relation to other restrictive measures imposed on prisoners. It then cited the passage in the Enea judgment dealing with the second question: a passage which proceeded on the basis that the existence of a dispute over a right recognised under domestic law had been established, and addressed the question whether the right was of a civil character. The Second Section noted that the placement of the applicants in segregation led to the restriction of visits, the restriction of exercise, and the impossibility, for one of the applicants, of continuing his studies and sitting exams. It concluded that in the eyes of the court these are restrictions on individual civil rights, and that article 6.1 was applicable. It did not refer to domestic law in support of its conclusion. The same approach has been adopted by the Second Section in more recent cases, such as Nusret Kaya v Turkey (Application Nos 43750/06, 43752/06, 32054/08, 37753/08 and 60915/08) given 22 April 2014, a case concerned with restrictions on prisoners telephone calls. The Second Section adopted a similar approach in Boulois v Luxembourg (Application No 37575/04) given 14 December 2010, a case concerned with release on licence. There was a vigorous dissent by a minority of the court. The decision of the majority in that case was relied on by Elias LJ, along with Stegarescu, in reaching the conclusion, contrary to the majority of the Court of Appeal, that article 6.1 applied in the present cases. The case of Boulois was however referred to the Grand Chamber, which reiterated that for article 6.1 in its civil limb to be applicable, there must be a dispute over a right which can be said, at least on arguable grounds, to be recognised under domestic law: (2012) 55 EHRR 941. The Grand Chamber added (para 91): The court may not create by way of interpretation of article 6(1) a substantive right which has no legal basis in the state concerned. The starting point must be the provisions of the relevant domestic law and their interpretation by the domestic courts. This court would need strong reasons to differ from the conclusions reached by the superior national courts by finding, contrary to their view, that there was arguably a right recognised by domestic law. The Grand Chamber also explained that Enea had concerned a restriction on the existing scope of rights (para 98). It emphasised the significance in that case of the judgment of the Italian Constitutional Court, recognising that domestic rights were involved. It concluded that prison leave was a privilege which might be granted, in relation to which the prison authorities were intended to enjoy a certain discretion. It followed that prisoners had no right to obtain it, even if they met the required criteria (para 99). There was a dissenting opinion by Judge Tulkens, who had presided over the Second Section in Glmez and Stegarescu and had sat in the Section in Boulois, and Judge Yudkivska. They argued that the term right in article 6.1 was an autonomous concept which should not be dependent on the classification adopted in domestic law, and that the reasoning in Stegarescu should be applied. That was clearly a minority view. It is notable that in the case of Stegarescu it was not the imposition of segregation itself which was considered to engage article 6.1, but consequential restrictions on visits, exercise and access to educational facilities. The same is true of the case of Marin Kostov v Bulgaria (Application No 13801/07) given 24 July 2012. That case was concerned with court proceedings in Bulgaria in which the applicant appealed against the imposition of solitary confinement as a punishment for offences against prison discipline. While in solitary confinement, his ordinary rights in relation to such matters as visits, telephone calls and parcels were suspended. The Fourth Section followed the orthodox approach to the scope of article 6.1, noting that the applicants solitary confinement entailed restrictions of a set of prisoners rights explicitly recognised by Bulgarian law. While the case law of the European Court does not speak entirely in unison on this issue, the prevailing and most authoritative view is therefore that the applicability of article 6.1 in this context depends, in the first place, on whether there is a dispute over a right recognised in domestic law. There are certain circumstances in which prolonged segregation may result in an arguable violation of a prisoners rights under English law which may then be the subject of a dispute: where, for example, the prisoner seeks damages for negligence resulting in injury to his mental or physical health, or seeks a remedy for a violation of his Convention rights under the Human Rights Act 1998. In circumstances such as these, where it is necessary to determine a dispute over a right recognised by English law, there is also a remedy before a court possessing jurisdiction to determine all aspects of the case, as required by article 6.1. Whether the authorisation of continued segregation involves the determination of any right recognised by English law is a different question. Counsel for the appellant founded on a line of authority concerned with prisoners access to the courts, to legal advice and to confidential correspondence with their solicitor. In that context, Lord Wilberforce said in Raymond v Honey [1983] 1 AC 1, 10 that a convicted prisoner, in spite of his imprisonment, retains all civil rights which are not taken away expressly or by necessary implication. One right which plainly is not retained, as Lord Bingham of Cornhill noted in R (Daly) v Secretary of State for the Home Department [2001] UKHL 26; [2001] 2 AC 532, para 5, is the right of a person to move freely and choose his associates. The argument that the right to associate (and therefore the right to move freely for that purpose) survives imprisonment, in an attenuated form, was considered in Hague as part of a submission that a prisoner segregated in breach of the Prison Rules had a cause of action for false imprisonment, or alternatively for breach of statutory duty. The submission was rejected. The concept of a residual liberty retained by the prisoner was also rejected. Lord Bridge stated: The concept of the prisoners residual liberty as a species of freedom of movement within the prison enjoyed as a legal right which the prison authorities cannot lawfully restrain seems to me quite illusory. The prisoner is at all times lawfully restrained within closely defined bounds and if he is kept in a segregated cell, at a time when, if the rules had not been misapplied, he would be in the company of other prisoners in the workshop, at the dinner table or elsewhere, this is not the deprivation of his liberty of movement, which is the essence of the tort of false imprisonment, it is the substitution of one form of restraint for another. (p 163) Lord Jauncey also rejected the idea of a residual liberty, and added that, absent a deliberate abuse of power, in which event there would be a cause of action for misfeasance in public office, it followed that the prisoners only judicial recourse for segregation in breach of the Prison Rules was to the public law remedies applicable to administrative action (p 173). The other members of the House agreed. Article 6.1 is not, of course, confined to disputes arising under private law. Equally, not all administrative decisions fall within article 6.1. The availability of a remedy in public law to determine whether a public body has acted lawfully does not, therefore, imply that persons with standing to seek such a remedy are the possessors of a right for the purposes of article 6.1. As Lady Hale explained in R (A) v Croydon London Borough Council (Secretary of State for the Home Department intervening) [2009] UKSC 8; [2009] 1 WLR 2557, para 36 et seq, article 6(1) has been applied to cases where the determination of a public law question is also decisive of the existence of private law rights. It has also been applied to cases concerning rights in public law which are regarded as closely resembling rights in private law, such as rights to state benefits. In Ali v Birmingham City Council (Secretary of State for Communities and Local Government intervening) [2010] UKSC 8; [2010] 2 AC 39, the critical feature of cases in the latter category was identified as being that the benefits in question were the subject of precise definition and could therefore amount to an individual right of which the applicant could consider herself the holder. Those were distinguished from benefits which were, in their essence, dependent on the exercise of judgment by the relevant authority. That is consistent with the approach adopted by the Grand Chamber in Boulois. As was explained in Hague, a prisoner has no private law right to enjoy the company of other prisoners. Some degree of association is, of course, a normal feature of imprisonment; and rule 45 is based on that premise. Nevertheless, a prisoner does not possess any precisely defined entitlement to association as a matter of public law. The amount of time which he is permitted to spend outside his cell, and the degree of association which he is in consequence permitted to have with other prisoners, will depend on an assessment by the prison authorities of a variety of factors, such as the number and characteristics of the prisoners held in the prison, the number of staff on duty, security concerns, disturbances in the prison, and other contingencies such as industrial action by prison officers. The extent of association may therefore vary from one prison to another and from one day to the next. It is thus dependent upon the exercise of judgment by those responsible for the administration of the prison. That conclusion is not inconsistent with that exercise of judgment being subject to review on public law grounds. There is however no analogy with the circumstances in which article 6.1 has been applied to disputes arising in public law. I should add that although I am not persuaded that a decision to authorise continued segregation falls within the ambit of article 6.1, it appears to me that judicial review would in any event meet the requirements of that provision in this context. When the European Court stated in Tsfayo that article 6.1 requires that an administrative decision falling within its scope should be subject to subsequent control by a judicial body that has full jurisdiction and does provide the guarantees of article 6.1, the words full jurisdiction do not necessarily mean jurisdiction to re examine the merits of the case, but jurisdiction to deal with the case as the nature of the decision requires (R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2001] UKHL 23; [2003] 2 AC 295, para 87, per Lord Hoffmann). It is true that judicial review proceedings do not usually involve the determination of questions of fact, and therefore do not usually involve issues of credibility. But, as I have explained, decisions taken by the Secretary of State under rule 45(2) are unlikely to turn on the determination of disputed questions of fact. There may be underlying issues of fact which are contentious, as there were in the present cases, but, if rule 45 is being applied correctly, its application will not normally require the Secretary of State to resolve those issues one way or the other. The critical question is whether the prisoners continued segregation is justified having regard to all the relevant circumstances. Those will include the reasonableness of any apprehension that his continued association with other prisoners might lead to a breakdown in good order and discipline within the prison; the suitability of available alternatives; the potential consequences to the prisoner if authorisation is granted; and the potential consequences to others if it is not. The answer to the question requires the exercise of judgment, having regard to information and advice from a variety of sources, including the governor, health care professionals and the prisoner himself. In proceedings for judicial review, the court has full jurisdiction to review evaluative judgments of that kind, considering their reasonableness in the light of the material before the decision maker, whether the appropriate test has been applied, whether all relevant factors have been taken into account, and whether sufficient opportunity has been given to the prisoner to make representations. This court has explained that the test of unreasonableness has to be applied with sensitivity to the context, including the nature of any interests engaged and the gravity of any adverse effects on those interests: see, for example, Pham v Secretary of State for the Home Department (Open Society Justice Initiative intervening) [2015] UKSC 19; [2015] 1 WLR 1591. The potential consequences of prolonged segregation are so serious that a court will require a cogent justification before it is satisfied that the decision to authorise its continuation is reasonable. It should also be noted that although judicial review does not usually require the resolution of disputes of fact, or cross examination, that is not because they lie beyond the scope of the procedure. Judicial review is a sufficiently flexible form of procedure to enable the court to deal with the situation before it as required: see, for example, R (Wilkinson) v Broadmoor Special Hospital Authority [2001] EWCA Civ 1545; [2002] 1 WLR 419. Conclusion For these reasons I would allow the appeals, and grant a declaration in each case that the appellants segregation beyond the initial period of 72 hours was not authorised by the Secretary of State and was accordingly unlawful. |
This appeal is about the right conferred by the Water Industry Act 1991 (the Act) on a property owner to connect his private drain or sewer to a public sewer for the purpose of discharging his sewage into the public sewer. The principal issue raised is whether it is the property owner or the sewerage undertaker who is entitled to determine the point at which the property owners drain or sewer is to connect to the public sewer. This narrow issue of statutory construction conceals, however, wider and more fundamental issues that are less easily resolved. I propose first to resolve the narrow issue, before commenting on these wider issues. Llanfoist is a village near Abergavenny in Monmouthshire. Its surface water and foul water drainage requirements are met by a public sewerage system that terminates in a waste water treatment works (the Treament Works) about 1/3 mile to the East of the village and below it. This system is about 60 years old. Approximately mid way between the village and the Treatment Works, at manhole SO29125900 (the CSO), the sewage pipe that links the two reduces from a diameter of 225 mm to a diameter of 150 mm and continues for a distance of 282m before it increases, at manhole SO29127901 to a diameter of 300mm for the final stretch to the Treatment Works. The narrow section, described as a pipe bridge determines the capacity of the system, or at least all that part of it that lies upstream of manhole SO29127901. The Respondents, Barratts, are in the process of building a substantial development of 98 houses and a primary school on a greenfield site contiguous to the East side of Llanfoist. They constructed a private sewer to receive the sewage from this development. They claimed a statutory right to connect their private sewer to the public sewer at a point of their own choosing, which was in the close vicinity of their development. This point of connection was not satisfactory to Welsh Water, as it would overload the system upstream of manhole SO29127901. They claimed a statutory right to refuse connection at this point, offering instead connection at manhole SO29127901, an option that would saddle Barratts with the cost of the link from their development to manhole SO29127901. Thus arose the narrow issue of the interpretation of the relevant provisions of the 1991 Act. At first instance, in a judgment delivered on 1 August 2008, Wyn Williams J found in favour of Welsh Water [2008] EWHC 1936 (QB). His decision was reversed by the Court of Appeal on 28 November 2008 [2008] EWCA Civ 1552. Barratts then proceeded to connect the developments sewer to the public sewer at the place of their choice. Welsh Water do not seek, by this appeal, to effect a physical reversal of what has taken place. They accept that what has taken place in this case is now water under the bridge. They are anxious to establish, however, that a sewerage undertaker has a right to refuse to permit connection to be made to one of their sewers when they consider that the proposed point of connection is not suitable. Should they establish this right of refusal a further issue arises as to the effect of a statutory time limit for giving notice of refusal. The Water Industry Act 1991 The law in relation to sewers has its origin in the reign of Henry VIII, but the modern law begins with the Public Health Act 1848. There followed a series of Acts which consolidated and amended the law, of which the 1991 Act is one. The provisions of that Act which are directly relevant to this appeal can be traced back to the Victorian legislation. They provide as follows: 94 General duty to provide sewerage system (1) It shall be the duty of every sewerage undertaker (a) to provide, improve and extend such a system of public sewers (whether inside its area or elsewhere) and so to cleanse and maintain those sewers and any lateral drains which belong to or vest in the undertaker as to ensure that that area is and continues to be effectually drained; and (b) to make provision for the emptying of those sewers and such further provision (whether inside its area or elsewhere) as is necessary from time to time for effectually dealing, by means of sewage disposal works or otherwise, with the contents of those sewers. 106 Right to communicate with public sewers (1) Subject to the provisions of this section (a) the owner or occupier of any premises, or (b) the owner of any private sewer which drains premises, shall be entitled to have his drains or sewer communicate with the public sewer of any sewerage undertaker and thereby to discharge foul water and surface water from those premises or that private sewer. (2) Subject to the provisions of Chapter III of this Part, nothing in subsection (1) above shall entitle any person (a) to discharge directly or indirectly into any public sewer (i) any liquid from a factory, other than domestic sewage or surface or storm water, or any liquid from a manufacturing process; or (ii) any liquid or other matter the discharge of which into public sewers is prohibited by or under any enactment; or (b) where separate public sewers are provided for foul water and for surface water, to discharge directly or indirectly (i) foul water into a sewer provided for surface water; or (ii) except with the approval of the undertaker, surface water into a sewer provided for foul water; or (c) to have his drains or sewer made to communicate directly with a storm water overflow sewer. (3) A person desirous of availing himself of his entitlement under this section shall give notice of his proposals to the sewerage undertaker in question. (4) At any time within twenty one days after a sewerage undertaker receives a notice under subsection (3) above, the undertaker may by notice to the person who gave the notice refuse to permit the communication to be made, if it appears to the undertaker that the mode of construction or condition of the drain or sewer (a) does not satisfy the standards reasonably required by the undertaker; or (b) is such that the making of the communication would be prejudicial to the undertakers sewerage system. (5) For the purpose of examining the mode of construction and condition of a drain or sewer to which a notice under subsection (3) above relates a sewerage undertaker may, if necessary, require it to be laid open for inspection. In this judgment I shall, where appropriate, refer to the developer as shorthand for the owner or occupier of premises who enjoys rights under section 106. Section 106(6) provides that any question as to the reasonableness of an undertakers refusal to permit a communication to be made or of a requirement under subsection (5) may be referred for determination by the Director of the Office of Water Services (OFWAT). Section 107 entitles the sewerage undertaker to give notice within 14 days of receipt of a notice under section 106(3) that the undertaker intends to make the communication himself. In that event the developer has to pay the reasonable cost of the work. The point of connection Submissions Mr Porten QC for Barratts submitted that the provisions of section 106 of the 1991 Act were clear. Subsection (1) gave a property owner the right to connect to a public sewer, subject only to such limitations as were imposed by other provisions of the section itself. That right was a right to connect at whatever point the property owner chose to do so. The only restrictions on that right were those set out in subsection (4). Those restrictions were very limited. They gave the undertaker the right to refuse to permit the connection only on grounds of the inadequacy of the mode of construction or condition of the private drain or sewer that was to be joined to the public sewer. No objection could be made to the point of connection, however inconvenient that might be for the undertaker. Lord Pannick QC for Welsh Water submitted that the Court should not accept this interpretation, for its consequences ran counter to the object of the legislation. That object was the protection of health and of the environment. Parliament cannot have intended that a property owner should be entitled to insist on a specific point of connection however great the harm that this would cause to the environment or to public health and however reasonable it might be to require the property owner to connect elsewhere. The potential harm identified by Lord Pannick was damage to the environment or to health as a result of the escape of foul water from the sewage system. The overload on the system consequent upon the point of connection chosen by Barratts had increased the risk of escape of foul water at the CSO. The CSO was intended to act as an escape point for sewage to a limited extent deemed acceptable in conditions of overload caused by exceptional rainfall in storm conditions. The additional loading on the system as a result of connecting Barratts sewer upstream rather than downstream of the pipe bridge was calculated to lead to escape of foul water beyond the limit that was acceptable. Such escape would result in Welsh Water committing criminal offences of strict liability under section 85 of the Water Resources Act 1991 and would infringe provisions of Directive 91/271/EEC concerning the collection, treatment and discharge of urban waste water (the Directive) and the Urban Waste Water Treatment (England and Wales) Regulations 1994 (SI 1994/2841) (the 1994 Regulations) passed to give effect to the Directive. Lord Pannick treated the facts of the present case as illustrative of the general effect of an interpretation of section 106 of the 1991 Act that permits a developer to select the point of connection between his sewer and a public sewer. That is the only relevance of the facts of this case to the issue of interpretation that is raised and I shall defer a more detailed consideration of those facts to later in this judgment. Lord Pannick further submitted that the escape of waste water consequent upon a property owner connecting to a public sewer at an inappropriate point could include pollution and risk to health, thereby infringing Articles 2, 3 or 8 of The European Convention on Human Rights. The Court was bound, if possible, so to interpret section 106 of the 1991 Act as to avoid these consequences see Marsleasing SA v La Comercial Internacional de Alimentacion SA (Case C 106/89) [1990] ECR 1 4135 and section 3 of the Human Rights Act 1998. Lord Pannick submitted that such interpretation could be achieved by reading the provisions of section 106 in a manner that implicitly incorporated express provisions in earlier legislation that the 1991 Act had replaced. Lord Pannick advanced two alternative ways of interpreting section 106 that produced the result for which he contended. The first involved reading the mode of construction of the drain or sewer in subsection (4) as embracing the point of connection. This interpretation was, he submitted, supported by the legislative history. Section 21 of the Public Health Act 1875 (the 1875 Act) provided: The owner or occupier of any premises within the district of a local authority shall be entitled to cause his drains to empty into the sewers of that authority on condition of his giving such notice as may be required by that authority of his intention so to do, and of complying with the regulations of that authority in respect of the mode in which the communications between such drains and sewers are to be made, and subject to the control of any person who may be appointed by that authority to superintend the making of such communications. The Public Health Act 1936 (the 1936 Act) replaced the provisions of the 1875 Act with provisions that more closely resemble those of the 1991 Act. Section 34 provided: (1) Subject to the provisions of this section, the owner or occupier of any premises, or the owner of any private sewer, within the district of a local authority shall be entitled to have his drains or sewer made to communicate with the public sewers of that authority, and thereby to discharge foul water and surface water from those premises or that private sewer: . (3) A person desirous of availing himself of the foregoing provisions of this section shall give to the local authority notice of his proposals, and at any time within twenty one days after receipt thereof, the authority may by notice to him refuse to permit the communication to be made, if it appears to them that the mode of construction or condition of the drain or sewer is such that the making of the communication would be prejudicial to their sewerage system, and for the purpose of examining the mode of construction and condition of the drain or sewer they may, if necessary, require it to be laid open for inspection: Provided that any question arising under this subsection between a local authority and a person proposing to make a communication as to the reasonableness of any such requirement of the local authority, or of their refusal to permit a communication to be made, may on the application of that person be determined by a court of summary jurisdiction. Lord Pannick submitted that the legislature can have had no intention of restricting the rights of the local authority and that mode of construction in the 1936 Act should be given the same meaning as mode in which the communicationsare to be made in the 1875 Act. The latter phrase was wide enough to embrace the point at which the communication should be made. The same interpretation should be given to mode of construction in section 106 of the 1991 Act. Alternatively, Lord Pannick submitted that section 106(1) did not confer any entitlement on a property owner to connect at any point of his choosing and that it was open to an undertaker to respond to a proposal under section 106(3) by identifying a location at which connection might be made, such a response being subject to dispute resolution under section 106(6). Lord Pannick relied in support of these submissions on observations by Walton J in Beech Properties v GE Wallis & Sons Ltd [1977] EG 735, to which I shall return. The Judgments below Wyn Williams J accepted the first of Lord Pannicks approaches to the construction of section 106, then advanced on behalf of Welsh Water by Mr Maurice Sheridan. In doing so he relied upon the judgment of Walton J in Beech Properties. He added that he considered it would be objectionable to construe the statute in such a way as to preclude an undertaker from refusing a connection that would have potentially deleterious environmental consequences. In the leading judgment of the Court of Appeal, reversing the decision of the trial judge, Carnwath LJ held that section 34 of the 1936 Act, which was essentially reproduced in section 106 of the 1991 Act, provided only narrow grounds on which an undertaker could refuse connection. These related solely to the mode of construction or condition of the connecting drain. This formulation was even narrower than under the 1875 Act, which permitted the authority to regulate the mode of communication. Furthermore, the reason why Welsh Water objected to the point of connection was that connection would overload the public sewer and there was clear authority that an undertaker could not resist connection on this ground. Lawrence Collins LJ agreed with the judgment of Carnwath LJ. Pill LJ also agreed. He held at paragraph 54: I am unable to conclude that the expression mode of construction and condition of the drain or sewer in section 106(4), repeated in section 106(5) of the 1991 Act, has any bearing upon the location of the communication with the public sewer contemplated in section 106(1)(b) and section 106(4). Mode of construction has nothing to do with location. He added in the following paragraph that he would not accept the submission of Mr Porten that the owner or occupier could dictate the precise location of the connection. Circumstances may be such as to allow a modest discretion to the sewerage undertaker where good reason is shown, for example, that the precise location chosen by the applicant is not a feasible or sensible location at which to connect. That was not this case. Welsh Water were seeking to dictate a communication situated about 300 metres from that requested and across land in third party ownership and control. The Statutory scheme The right to connect to a public sewer afforded by section 106 of the 1991 Act and its predecessors has been described as an absolute right. The sewerage undertaker cannot refuse to permit the connection on the ground that the additional discharge into the system will overload it. The burden of dealing with the consequences of this additional discharge falls directly upon the undertaker and the consequent expense is shared by all who pay sewerage charges to the undertaker. Thus in Ainley v Kirkheaton Local Board (1891) 60 LJ (Ch) 734 Stirling J held that the exercise of the right of an owner of property to discharge into a public sewer conferred by section 21 of the 1875 Act could not be prevented by the local authority on the ground that the discharge was creating a nuisance. It was for the local authority to ensure that what was discharged into their sewer was freed from all foul matter before it flowed out into any natural watercourse. described the right under section 21 as an absolute right, adding that: In Brown v Dunstable Corporation [1899] Ch 378 at p. 390 Cozens Hardy J This absolute right is no doubt subject to any regulations in respect of the mode of making connections and subject to the control of any person appointed to superintend the making of the connections; but no regulations can justify an absolute refusal to allow a connection to be made on any terms. In Smeaton v Ilford Corporation [1954] Ch 450 the Corporation was the authority responsible for sewerage in Ilford. They were sued by the plaintiff in nuisance caused by the escape of sewage from a sewer. Upjohn J held that they were not liable. The nuisance was not caused by the Corporation but arose because the Corporation were bound by section 34 of the 1936 Act to permit occupiers or premises to make connections with the sewer and to discharge their sewage into it. Smeaton was cited with approval by the House of Lords in Marcic v Thames Water Utilities Ltd [2003] UKHL 66; [2004] 2 AC 42. Lord Nicholls of Birkenhead remarked at paragraph 34 that Thames Water had no control over the volume of water entering their sewers. A sewerage undertaker was unable to prevent connections being made to the existing system, and the ingress of water through those connections, even if this risked overloading the existing sewers. It follows that the duty imposed on Welsh Water by section 94 of the 1991 Act requires them to deal with any discharge that is made into their sewers pursuant to section 106. It does not follow, however, that where a new development is constructed, Welsh Water are obliged, at their own expense, to construct a sewer to accept the sewage from the development if one does not already exist. Section 98 entitles a developer, among others, to requisition a public sewer, or a lateral drain linking with a public sewer, in order to service the buildings being constructed, but on terms that he meets the costs of so doing. Section 101 provides that the place or places where the public sewer and drain are to be located are to be agreed between the requisitioner and the undertaker or, in default of agreement, to be determined by OFWAT. Sections 102 and 103 of the 1991 Act make provision for a sewerage undertaker to adopt private sewers, lateral drains and disposal works. Section 104 makes provision for a person who is constructing or who proposes to construct a sewer, lateral drain or disposal works to enter into an agreement with a sewerage undertaker under which the undertaker will adopt the works at or after their completion. Section 112 of the 1991 Act provides: Requirement that proposed drain or sewer be constructed so as to form part of general system (1) Where (a) a person proposes to construct a drain or sewer; and (b) a sewerage undertaker considers that the proposed drain or sewer is, or is likely to be, needed to form part of a general sewerage system which that undertaker provides or proposes to provide, the undertaker may require that person to construct the drain or sewer in a manner differing, as regards material or size of pipes, depth, fall, direction or outfall or otherwise, from the manner in which that person proposes, or could otherwise be required by the undertaker, to construct it. (2) If any person on whom requirements are imposed under this section by a sewerage undertaker is aggrieved by the requirements, he may within twenty eight days appeal to [OFWAT]. Any additional cost that this involves has to be paid by the undertaker. Section 113 of the 1991 Act provides: Power to alter drainage system of premises in area (1) Where any premises have a drain or sewer communicating with a public sewer or a cesspool, but that system of drainage, though sufficient for the effectual drainage of the premises (a) is not adapted to the general sewerage system of the area; or (b) is, in the opinion of the sewerage undertaker for the area, otherwise objectionable, the undertaker may, at its own expense, close the existing drain or sewer and fill up the cesspool, if any, and do any work necessary for that purpose. (2) The power conferred on a sewerage undertaker by subsection (1) above shall be exercisable on condition only that the undertaker first provides, in a position equally convenient to the owner of the premises in question, a drain or sewer which (a) is equally effectual for the drainage of the premises; and (b) communicates with the public sewer. The scheme of the legislation, as reflected in the above provisions and as affecting a developer, can be summarised as follows: i) Where connection of a development to a public sewer requires consequential works to accommodate the increased load on the public sewer, the cost of these works falls exclusively upon the undertaker. ii) Where works are done, whether by or on the requisition of the developer, that will be used exclusively by the development, the costs of such works fall exclusively on the developer. In specified circumstances the undertaker is entitled to require the developer to carry out the works in a manner other than that proposed by the developer, or to alter the works carried out by the developer. In either case the undertaker has to bear the costs involved. iv) Costs that are borne by the undertaker are passed on to all who pay sewerage charges. These include those who occupy the houses in the development. iii) The natural meaning of section 106 It is plain from section 106(5) that the drain or sewer referred to in section 106(4) is the private drain or sewer that the developer proposes to connect to the public sewer, and Lord Pannick accepted that this was so. I agree with the Court of Appeal that it is impossible to extend the natural meaning of the mode of construction of the existing drain or sewer so as to include the point at which it is proposed to connect that drain or sewer to the public sewer. Lord Pannick argued that one reason why this extension of mode of construction should be made was that it was unlikely that the mode of construction of the private sewer or drain would be of concern to the undertaker if that phrase were given its natural meaning. As to this, we received no evidence as to why the condition or mode of construction of the private drain or sewer should be of concern to the undertaker, but I note that section 114 gives the undertaker a right to open a private drain or sewer for inspection if, inter alia, there are reasonable grounds for believing that any such drain or private sewer is so defective as to admit subsoil water. I see no justification for approaching section 106(4) on the premise that the condition or mode of construction of the private drain or sewer is unlikely to be of concern to the undertaker. The provisions of section 106(4) of the 1991 Act contrast with the equivalent provisions in relation to sewerage in Scotland set out in section 12 of the Sewerage (Scotland) Act 1968: (3) The owner of any premises who proposes to connect his drains or sewers with the sewers or works of a local authority, or to alter a drain or sewer connected with such sewer or works in such a manner as may interfere with them, shall give to the authority notice of his proposals, and within 28 days of the receipt by them of the notice the authority may refuse permission for the connection or alteration, or grant permission for the connection or alteration, subject to such conditions as they think fit, and any such permission may in particular specify the mode and point of connection and, where there are separate public sewers for foul water and surface water, prohibit the discharge of foul water into the sewer reserved for surface water, and prohibit the discharge of surface water into the sewer reserved for foul water. (4) A local authority shall forthwith intimate to the owner their decision on any proposals made by him under subsection (3) above, and, where permission is refused, or granted subject to conditions, shall inform him of the reasons for their decision and of his right of appeal under subsection (5) below. (5) If a person to whom a decision has been given under subsection (4) above is aggrieved by the decision or any conditions attached thereto, he may appeal to the Secretary of State who may confirm the decision and any such conditions either with or without modification or refuse to confirm it. This merely underlines the fact that mode of construction does not naturally embrace the point of connection. No explanation was offered to us as to why those who drafted the Scottish Act chose different language from that of the 1991 Act. So far as Lord Pannicks alternative approach to construction is concerned, I can see no basis, if the wording of section 106 is given its natural meaning, for inferring that it confers a right on the part of the undertaker to refuse permission to communicate with a public sewer on the ground that the intended point of connection is not satisfactory. Beech Properties v Wallis The issue in this case was whether a vendor of property had satisfied an obligation to provide the purchaser with the right to run foul and surface water from the land sold to a public sewer. The vendor contended that this obligation was satisfied by the right of the purchaser to connect a 12 inch diameter pipe to a 9 inch diameter public sewer at a particular location, pursuant to section 34 of the 1936 Act. Walton J held, essentially because of uncertainty as to this right, that the condition was not satisfied. His judgment contained the following observations at pp. 748 9: However, it does appear to me that, wide as the words of subsection (1) may be, and for the moment ignoring the opening qualification, they do not confer upon an individual the right to connect his sewer to the water authoritys sewer at any point which he may choose. In most cases, of course, the matter will be quite academic. There will be the water authoritys sewer, going along the road; a new house is built in the road; and quite obviously and clearly the owner will expect to have a right to drain into that sewer, and it would be very difficult, assuming that there are no problems under the proviso to subsection (1), to imagine a set of circumstances where the water authority would be entitled to say that he must not connect to that sewer but to some other sewer. Even so, if the new house was built at a crossroads and there were available sewers in both roads, I can see no reason why the owner should be entitled to drain into the sewer of his choice if the water authority required him to drain into the other, which might, for example, well be a relief sewer expressly provided for the district because the other sewer was approaching capacity. Similarly, I see no reason why the owner is entitled to connect at point X rather than an adjacent point Y, if the water authority requires him to connect at Y. This passage sounds eminently sensible, but the judge gave no satisfactory explanation as to how the authoritys option to select the point of connection could be derived from section 34. This decision cannot sustain the weight placed upon it by the trial judge and by Lord Pannick. The requirements of European Law and the Human Rights Convention. Lord Pannick submitted that if the words of section 106 did not naturally bear the meaning for which he contended, they should be so interpreted as to carry that meaning nonetheless in order to avoid infringement of the Directive, the 1994 Regulations and the Human Rights Convention. While he relied upon the facts of the present case as illustrating his thesis, much of the argument focussed on a rather different scenario. Mr Porten argued that Pill LJ had erred in suggesting that an undertaker enjoyed a modest discretion to refuse to connect at the precise location chosen by an applicant where this was not a feasible or sensible location at which to connect. He submitted that a developers proposals under section 106(3) could specify the precise point of connection and that the undertaker had no right to insist on deviation from that point by so much as a metre. Lord Pannick seized on this reductio ad absurdum as demonstrating that the construction for which Barratts contended could not possibly be correct. The scenario postulated is indeed absurd. It is impossible to conceive of any reason why a developer should not be prepared, indeed eager, to co operate with the sewerage undertaker in selecting the point of connection that is most suitable, provided that this is within reasonable proximity of the development. In the present case the evidence placed before us shows that Barratts were prepared to contemplate any one of a number of manholes in the vicinity of their development as the connection point. It is, I believe, significant that, in nearly a century and a half since the 1875 Act was passed, this is the first occasion upon which the English court has been required to resolve a dispute between property owner and sewerage undertaker as to the point of connection of a private sewer or drain to a public sewer. The 1875 Act permitted Local Authorities to make regulations in respect of the mode in which the communications between such drains and sewers are to be made. There is no evidence that any regulations relevant to the issues raised on this appeal were ever made. Nor is there any evidence that suggests that the change to the single ground for refusing a connection made by the 1936 Act led to any practical difficulties. Pill LJ did not identify the source of the modest discretion that he suggested would exist on the part of an undertaker to object to the precise point of connection selected by the developer should this prove not feasible or sensible. I suggest that section 108(1) of the 1991 Act probably provides the answer. This requires the developer, before commencing the work of making the communication, to give reasonable notice to any person directed by the undertaker to superintend the carrying out of the work and to afford such person all reasonable facilities for superintending the carrying out of the work. The sub section is silent as to the powers of the superintendent, but his role can be traced back to section 21 of the 1875 Act, which provided that the making of the communication should be subject to the control of any person who may be appointed by that authority to superintend the making of such communications (my emphasis). It is at least arguable that section 108 of the 1991 Act implicitly confers on the undertakers superintendent power to control the making of the connection and thus to insist that the precise point of communication is one where it is technically feasible and sensible to make the connection. There is a lacuna in the Act in that the powers of the superintendent are not spelt out and no machinery is provided for resolving any dispute between the superintendent and the developer. Once again this may reflect the fact that the possibility of a dispute between the supervisor and the developer is one that exists in theory rather than in practice. I now turn from the unlikely scenario of a dispute as to the precise point of connection to the situation that has led to the dispute in the present case. The real problem The real problem that is demonstrated by the facts of this case arises out of the absolute right conferred by section 106 of the 1991 Act on the owner or occupier of premises to connect those premises to a public sewer without any requirement to give more than 21 days notice. While this might create no problem in the case of an individual dwelling house, it is manifestly unsatisfactory in relation to a development that may, as in the present case, add 25% or more to the load on the public sewer. The public sewer may well not have surplus capacity capable of accommodating the increased load without the risk of flooding unless the undertaker has received sufficient advance notice of the increase and has been able to take the necessary measures to increase its capacity. This problem is accentuated by the fact that the budgets of sewerage undertakers and the charges that they are permitted to make have to be agreed by OFWAT and that this process takes place at five yearly intervals so that forward planning may have to be carried out five years in advance. This is not a problem that arises because, if it be the case, the developer has the right to select the point of connection. It is fortuitous that in this case there was spare capacity in the final short section of Welsh Waters sewer that led to the Treatment Works. In many cases there will be no alternative point of connection that will avoid overload on the public sewer. Welsh Water has presented this appeal as if the problem to be addressed relates to the point of connection whereas in truth the problem relates to the right of a developer, on no more than 21 days notice, to connect to a public sewer that lacks the relevant capacity. The Court of Appeal suggested that the practical answer to this problem lies in the fact that the building of a development requires planning permission under the Town and Country Planning Act 1990. The planning authority can make planning permission conditional upon there being in place adequate sewerage facilities to cater for the requirements of the development without ecological damage. If the developer indicates that he intends to deal with the problem of sewerage by connecting to a public sewer, the planning authority can make planning permission conditional upon the sewerage authority first taking any steps necessary to ensure that the public sewer will be able to cope with the increased load. Such conditions are sometimes referred to as Grampian conditions after the decision of the House of Lords in Grampian Regional Council v Secretary of State for Scotland [1983] 1 WLR 1340. Thus the planning authority has the power, which the sewerage undertaker lacks, of preventing a developer from overloading a sewerage system before the undertaker has taken steps to upgrade the system to cope with the additional load. Mr David Holgate QC, whose expertise in the field of planning led Lord Pannick to delegate to him this area of the case, sought to persuade us that planning law did not provide a satisfactory answer to the problem. He demonstrated that there are some projects that have a major impact on sewerage that are not subject to any planning control. Further, the planning authority may not always take the right decision so far as demands on the sewerage system are concerned. Article 10 of the Town and Country Planning (General Development Procedure) Order 1995 (SI 1995/419) sets out a wide range of bodies that must be consulted by the local planning authority on an application in relation to a development such as Barratts. They include the Health and Safety Executive, highway authorities, the Environment Agency, English Heritage, Natural England, the Countryside Council for Wales and the National Assembly for Wales, but not sewerage undertakers. If conditions of planning permission are to provide the answer to the problem of the connection of private sewers to public sewers which are not adequate to bear the additional load, it would seem essential that there should be input to planning decisions from both the relevant sewerage undertaker and OFWAT. In the present case there was input from each, but in the submission of Welsh Water the County Councils planning department made an erroneous decision. Before looking briefly at what occurred, it is instructive to note that Welsh Water and OFWAT were approaching the situation from different viewpoints. In 1997 an appeal was made to OFWAT, purportedly under section 106 of the 1991 Act, by the Post Office against a refusal by Yorkshire Water to allow a connection to a sewer in Sheffield on the sole ground of lack of capacity in the sewer. OFWAT ruled that this was not a valid ground for refusing connection. Subsequently, on 28 November, OFWAT sent a letter to all sewerage undertakers about this decision. It included the following passages: The key issue, which the Director was required to consider when making his recent determination, is whether the Act allows companies to refuse, or impose conditions upon, a connection of a surface water drain to its public combined sewer on the grounds of limited capacity in the latter. The Director concluded in his determination that the company was not able to refuse a connection solely on the grounds of lack of capacity. The Act refers only to the condition or construction of the private drain or sewer which is to be connected. This cannot, in the Directors view, extend to a consideration of the additional flows to be discharged into the public sewer, except in very specific circumstances. For example, if the additional flows were to be discharged at such high pressure as to potentially cause damage to the receiving sewer. The Director also considers that companies are not able to make connection conditional upon works, by the person requesting the connection, designed to reduce flows and therefore address capacity problems in the companies own systems. The Director also acknowledges that it is not in anybodys interest for new connections to lead to flooding from the public sewers. Although there is no specific provision in the Act to allow conditions to be imposed as to the timing of the connection, there may be circumstances in which it would be desirable to seek a deferment of the connection date to allow the company time to carry out necessary works to prevent flooding. However, if the company has had warning of a development and ought reasonably to have foreseen a likely connection (for example, if it is included in the local structure plan), but fails to act, then a deferment condition is unlikely to be defensible. In this context, the companies duty under Section 94 of the Act to provide, improve and extend the system of public sewers so as to ensure that the area is effectually drained is relevant. Finally, all of the comments above regarding rights of connection assume a situation in which there are no specific planning conditions upon a development specifying the nature of the connection or works to be completed prior to making the connection. There may be cases in which a planning condition would prohibit making a connection to a particular sewer, or place conditions upon that connection. There are mechanisms by which developers may appeal against such planning conditions, in which the Director has no role. Despite this advice, Mr Ian Wyatt, the New Business Manager of Welsh Water, made it clear in a statement in these proceedings that Welsh Water believed that fairness required that a developer such as Barratts should bear any costs caused by the connection of the developments private sewer to a public sewer. Welsh Water had not budgeted for the cost of upgrading their system to cope with the demands that Barratts proposed to make on it by connecting at their chosen point. Upgrading involved replacing the pipe bridge with a pipe of larger diameter at a cost of about 200,000. Welsh Waters attitude throughout has been that Barratts should pay for this to be done or alternatively requisition Welsh Water under section 98 of the 1991 Act to build a parallel sewer to link the development to the public sewer at SO29127901, again at Barratts expense. The facts in this case In 1999 a pre deposit draft of Monmouthshire County Council (MCC)s Unitary Development Plan was sent to Welsh Water for purposes of consultation. This made provision for, inter alia, the Llanfoist development. Welsh Waters response was that they objected to this proposed development because their sewerage system was already overloaded and improvements to it were not included in their relevant development programme. On 18 August 2005 Barratts applied to MCC for planning permission for a development of 120 dwellings. Welsh Water were consulted and, on 14 September 2005, objected to this development for the same reason given in 1999. They added, however, that it might be possible for the developer to fund the accelerated provision of replacement infrastructure or to requisition a new sewer under sections 98 to 101 of the 1991 Act. Barratts revised their planning application, reducing the number of dwellings to 98 but adding a primary school. On 14 May 2007 MCC granted planning permission, subject to a number of conditions, which included: 10. No development shall take place until a scheme of foul drainage, and surface water drainage has been submitted to, and approved, by the Local Planning Authority and the approved scheme shall be completed before the building(s) is/are occupied. Meanwhile, negotiations proceeded between Barratts and Welsh Water under the common assumption that, if the development was to proceed, Barratts would have to fund either upgrading of the public sewer to accommodate the increased load or the construction of a new sewer to link with the public sewer at manhole SO29127901. On 29 May 2007 Barratts served a notice under section 106 of the 1991 Act, on a standard form provided by Welsh Water, of their intention to make a foul water connection to the public sewer on or after June 07 at SO29131302, this being a manhole in close proximity to the development. A parallel application was made in relation to surface water. Welsh Water replied on 26 June 2007 as follows: Thank you for your application to connect the foul and surface water flows from the above proposed development into the public sewerage systems. We are in a position to approve the connections, however, the foul water connection must be made into or downstream of manhole SO29127901, as shown on the attached plan (ref. ConF1). Please note that if you encounter problems with third party landowners you may requisition, under Sections 98 to 101 of the Water Industry Act 1991, one of the following: A new sewer from the boundary of your site to this point of adequacy, or, The necessary improvement works as identified in the hydraulic assessment dated November 2006. It is now accepted that this somewhat confusing letter is to be treated as a refusal of Barratts proposal. Discussions continued between Barratts and Welsh Water on the premise that, in one way or another, Barratts would be funding the cost of dealing with Welsh Waters capacity problem. However, on 11 September 2007 Barratts wrote to Welsh Water, referring to their letter of 26 June, asserting that Welsh Water had no right under section 106 to set the point of connection and asking Welsh Water to approve the connection. Welsh Waters response on 26 September was to contend that Barratts had served a requisition notice under section 98 and that this precluded any right to connect under section 106. On 25 January 2008 OFWAT, who had been kept informed of these developments, wrote to Welsh Water with a copy to Barratts, stating that there was no impediment on a developer pursuing simultaneously rights under sections 98 and 106. This letter concluded with the following statement: In any case, it is apparent that the application under section 106 of the Act by Barratt Homes was made on 29 May 2007, received by Welsh Water on 30 May 2007 and the company did not respond to the application until 26 June 2007. The response on 26 June 2007 was outside the statutory 21 days provided under section 106(4) and the company was not, therefore, entitled to refuse the application as made. That being the case, please confirm by 1 February, that Barratt Homes proposal for connection as notified on 29 May 2007 can proceed. It is for Barratt Homes to confirm with the Planning Authority that it can satisfy the planning condition No 10. This letter was, I suspect, something of a bombshell. If so, it was as nothing compared to the next development. Barratts, with the aid of OFWATs letter and an opinion from Mr Porten, the content of which has never been disclosed, persuaded MCC to treat condition 10 as discharged. The present proceedings followed. Conclusions on the point of connection On its natural construction section 106 of the 1991 Act gives the developer the right to connect his private drain or sewer to a public sewer subject only to (i) the right of the sewerage undertaker to give notice refusing permission to make the communication on the ground of deficiencies in the condition of the private drain or sewer (section 106(4)) and (ii) the right of the sewerage undertaker to give notice that he will make the connection himself (section 107). The section confers no express right on the sewerage undertaker to select the point of connection or to refuse permission to make the communication on the ground that the point of connection proposed by the developer is open to objection. Lord Pannick has argued that, despite its natural meaning, the section must be interpreted as conferring such a right if the operation of the relevant provisions of the 1991 Act are not to be rendered insensible, absurd or ineffective to achieve its evident purpose the phrase used by Lord Bridge of Harwich as justifying the disregard of particular words or phrases in a statute in McMonagle v Westminster City Council [1990] 2 AC 716 at p. 726E. I have not been persuaded by this argument. The lengthy history of the right to communicate with a public sewer does not suggest that the point of connection has ever given difficulty in practice. The facts of this case do not illustrate that section 106 gives rise to a problem with the point of connection. It illustrates the more fundamental problem that can arise as a result of the fact, accepted by Lord Pannick, that no objection can be taken by a sewerage undertaker to connection with a public sewer on the ground of lack of capacity of the sewer. As OFWAT has pointed out, although the 1991 Act affords no such right, there is a case for deferring the right to connect to a public sewer in order to give a sewerage undertaker a reasonable opportunity to make sure that the public sewer will be able to accommodate the increased loading that the connection will bring. The only way of achieving such a deferral would appear to be through the planning process. Some difficult issues of principle arise however: Is it reasonable to expect the sewerage undertaker to upgrade a public sewerage system to accommodate linkage with a proposed development regardless of the expenditure that this will involve? How long is it reasonable to allow a sewerage undertaker to upgrade the public sewerage system? Is it reasonable to allow the sewerage undertaker to delay planned upgrading of a public sewer in the hope or expectation that this will put pressure on the developer himself to fund the upgrading? The facts of this case suggest that a sewerage undertaker may well take a different view from OFWAT as to how these questions should be answered. Be that as it may, it would seem desirable that the sewerage undertaker and OFWAT should at least be consulted as part of the planning process. I would endorse the comment made by Carnwath LJ, at para 48, that more thought may need to be given to the interaction of planning and water regulation systems under the modern law to ensure that the different interests are adequately protected. These comments are an aside from the narrow issue of statutory interpretation raised in relation to the point of connection. For the reasons that I have given I would endorse the judgments of the Court of Appeal in holding that a sewerage undertaker has no right to select the point of connection or to refuse a developer the right to connect with a public sewer because of dissatisfaction with the proposed point of connection. The 21 day limit. Section 106(4) of the 1991 Act provides that the sewerage undertaker has 21 days from receipt of a notice under section 106(3) in which to give notice of refusal to permit the communication to be made. The issue arises of whether this time limit results in an absolute bar on giving such a notice once it has expired. In the light of my conclusion that the right of a sewerage undertaker to refuse permission to connect under section 106 of the 1991 Act arises only where there is reason to question the condition of the private drain or sewer that is to be connected, this issue is of limited importance, and of no significance at all on the facts of this case. A similar issue arises in relation to section 107(1), which gives the sewerage undertaker 14 days in which to give notice that it intends itself to make the communication. In the Court of Appeal both Carnwath LJ and Pill LJ inclined to the view that the 21 day time limit was not mandatory but refrained from deciding the point. I take the opposite view. Notices given under sections 106(4) and 107(1) remove a right to connect which is otherwise vested in the developer. Under the provisions of sections 107 and 109 respectively it is a criminal offence to cause a drain or sewer to communicate with a public sewer after a notice has been given under section 106(4) or section 107(1). In these circumstances it seems to me that the time limits in those two subsections must be strictly applied. For the reasons that I have given I would dismiss this appeal. LADY HALE (Dissenting) It is curious that it should have taken so long for a dispute of this sort to reach the courts. One might have thought that developers and sewerage undertakers were quite frequently at odds with one another about how best to accommodate a new housing development within the sewerage system and how the costs should be borne. But there is no English or Welsh case directly in point. Wyn Williams J reached one conclusion on the meaning of the legislation and the Court of Appeal reached another. Most members of this Court agree with the Court of Appeal, but the legislative history of the matter leads me to disagree. Section 106 of the Water Industry Act 1991 can be traced back to section 21 of the Public Health Act 1875 and before that to section 8 of the Sanitary Act 1866. The 1875 Act consolidated with amendments the patchwork of public health legislation which began with the Public Health Act 1848. The 1848 Act, together with the Local Government Act 1858, provided for the setting up of Local Boards of Health with a variety of powers dealing with sewers and drains, road cleaning, water supply and the like. Under those Acts, the Local Boards had the duty of effectually draining their Districts. There was no right to connect to their sewers without their consent. But the drive was to get new and existing houses to connect. The Board could direct how any new house built within 100 feet of a sewer was to connect to it and could require old houses within the same distance to connect. But Local Boards did not cover the whole country. The Sewage Utilization Act 1865 set up Sewer Authorities in other areas and gave them all the powers of the Local Boards. Section 8 of the Sanitary Act 1866 gave owners or occupiers of premises within the district of a Sewer Authority the conditional right to cause his drains to empty into the Authoritys sewers in almost identical terms to section 21 of the 1875 Act. The Public Health Act 1872 rationalised the administration by dividing the whole of England and Wales (apart from the Metropolis) into urban and rural sanitary districts. The Metropolis was included in 1874 and the whole legislative scheme consolidated in the 1875 Act. Section 21 provided that the owner or occupier of any premises within the district of a local authority shall be entitled to cause his drains to empty into the sewers of that authority, subject to giving the authority such notice as they required of his intention to do so and by complying with the regulations of that authority in respect of the mode in which the communications between such drains and sewers are to be made and subject to superintendence of its making. In Ainley v Kirkheaton Local Board (1891) 60 LJ (Ch) 734, the plaintiff was already connected to the authoritys sewer but they wanted to cut him off because the sewer emptied into an open stream and proceedings had been taken against the authority for fouling the stream. Stirling J held that the owners right to drain into the existing sewers was not affected by the authoritys obligation under section 17 of the Act not to allow its sewers to convey untreated sewage into a natural stream or watercourse. It was for the authority to provide sufficient sewers and to treat the sewage before discharging it into the stream. This case was followed in Brown v Dunstable Corporation [1899] 2 Ch 378, where Cozens Hardy J held that he could not grant an injunction to prevent the authority from allowing new connections to a sewer. Following Ainley in preference to Charles v Finchley Local Board (1883) 23 Ch D 767, at 390, he held that the absolute right is no doubt subject to any regulations in respect of the mode of making connections and subject to the control of any person appointed to superintend the making of the connections; but no regulations can justify an absolute refusal to allow a connection to be made on any terms . It is obvious that under this by law the surveyor can only prescribe the manner of connection. He cannot refuse to allow any connection. In Wilkinson v Llandaff and Dinas Powis Rural District Council [1903] 2 Ch 695, CA, the main issue was whether a roadside surface water drain was a sewer within the meaning of the Act. If it was, the authority had to keep it clean. One of the arguments against its being a sewer was that section 21 would then give everyone the right to connect their own drains into it. Romer LJ bluntly observed, at p 702, that it does not follow that, because this channel is a sewer within the definition of the Act, it can be used by any inhabitants of the district for sewage or faecal matter. Stirling LJ (as he had become) thought, at p 703, that the argument was an exaggeration of the effect of section 21: Section 21 does not provide that every owner or occupier of premises within the district of a local authority shall be entitled as of right to connect every drain which he has with every sewer belonging to the local authority. That is not the meaning of the section. All that is given by that section to the owner and occupier is a right to have the drain connected or made to communicate with the sewers of the local authority, subject to compliance with certain conditions amongst others, that he is to comply with the regulations of the local authority in respect of the mode in which the communication with the sewers is to be made. So that, in my opinion, the local authority may define by regulation the particular sewer with which the communication is to be made. Each party in this case can get something from these three authorities. For the developer, the fact that continuing an existing connection or allowing a new one would cause a nuisance to the public or to a private individual was not by itself a reason to stop up or prohibit the connection. For the undertaker, on the other hand, the mode in which the communication . is to be made could be regulated and this could cover the time and the place where the connection was to be made. The Public Health Act 1875 was consolidated with other enactments and some amendments in the Public Health Act 1936. Section 21 of the 1875 Act became section 34 of the 1936 Act. Once again, the owner or occupier of any premises, or the owner of any private sewer, within the district of a local authority was entitled to have his drains or sewer made to communicate with the public sewers of that authority. This was subject to various restrictions in the section itself, and to the requirement in section 34(3) that a person wanting to avail himself of this right should give notice to the local authority and at any time within 21 days after receipt thereof, the authority may by notice to him refuse to permit the communication to be made, if it appears to them that the mode of construction or condition of the drain or sewer is such that the making of the communication would be prejudicial to their sewerage system . Disputes about the reasonableness of any refusal could be determined by a magistrates court. Lord Pannick has referred us to the Report which led up to the 1936 Act (Cmd 5059 of 1936). There is nothing in that report to suggest that the change in language, from the mode in which the communications between such drains and sewers are to be made to the mode of construction or condition of the drain or sewer, was intended to cut down the existing scope of the local authoritys power to control the place and manner of the connection. Yet one would expect such a significant change to be flagged up in any report proposing consolidation with amendments. It would be very strange if Parliament had intended to make such a change. The public interest in ensuring that connections were made in ways which were not prejudicial to the sewerage system remained the same. There were no other means available of doing so. It could not have been contemplated, for example, that the developer could knock a big hole into an existing sewer and simply stick his own perfectly sound drain through it without making good. It would also be strange if Parliament had legislated for such a change in England and Wales, while leaving the position in Scotland, under section 110 of the Public Health (Scotland) Act 1897, the same as it had been in England and Wales under section 21 of the 1875 Act. And further that Parliament should later re enact and clarify that provision in section 12(1) of the Sewerage (Scotland) Act 1968, which provided that the Scottish local authorities could specify the mode and point of connection. It is inexplicable why provisions which began in the same legislation covering the whole United Kingdom should diverge in this respect. It is much more likely that Parliament intended them to mean the same thing. Then came the well known case of Smeaton v Ilford Corporation [1954] 1 Ch 450. The local authoritys Victorian sewers were over loaded and from time to time sewage erupted from a manhole near the plaintiffs house and overflowed into his premises. Despite section 31 of the 1936 Act, providing that a local authority shall so discharge their functions as not to create a nuisance, the plaintiffs claim in nuisance failed. The local authority were not causing or adopting the nuisance. Upjohn J explained, at pp 464 5: It is not the sewers that constitute the nuisance; it is the fact that they are overloaded. That overloading, however, arises not from any act of the defendant corporation but because, under section 34 of the Public Health Act 1936, subject to compliance with certain regulations, they are bound to permit occupiers of premises to make connections to the sewer and to discharge their sewage therein . Nor, in my judgment, can the defendant corporation be said to continue the nuisance, for they have no power to prevent the ingress of sewage into the sewer. The real problem in such a case, as both Lord Nicholls of Birkenhead and Lord Hoffmann pointed out in Marcic v Thames Water Utilities Ltd [2004] 2 AC 42, is that the every new house built has an absolute right to connect (para 34) and the undertaker has a duty to accept whatever water and sewage the owners of property in their area choose to discharge (para 53). The overflow is not caused by any failure to clean or maintain the existing sewers but by a failure to build new or bigger ones. And there is a long line of authority, dating back to Glossop v Heston and Isleworth Local Board (1879) 12 Ch D 102, that the authoritys duty to provide sufficient sewers effectually to drain the area is to be enforced through the statutory scheme and not by private action. The decisions in Smeaton and Marcic were predicated on the authoritys or undertakers duties to allow connections and to accept sewage, but they did not decide what that duty entailed. The only other relevant observations to which we have been referred are in Beech Properties Ltd v GE Wallis & Sons Ltd [1977] EG 735, where the question was whether a condition in a contract for the sale of land had been performed. Part of this depended upon whether the purchaser would have the right to connect to the public sewer at a particular point. Walton J thought it obvious that the right given by section 34 of the 1936 Act is not an absolute, but a qualified, right (p 747). He continued (pp 748 9): . wide as the words of subsection (1) may be, . , they do not confer upon an individual the right to connect his sewer to the water authoritys sewer at any point which he may choose. In most cases, of course, the matter will be quite academic. There will be the water authoritys sewer, going along the road; a new house is built in the road; and quite obviously and clearly the owner will expect to have a right to drain into that sewer . Even so, if the new house was built at a crossroads and there were available sewers in both roads, I can see no reason why the owner should be entitled to drain into the sewer of his choice if the water authority required him to drain into the other, which might, for example, well be a relief sewer expressly provided for the district because the other sewer was approaching capacity. Similarly, I see no reason why the owner is entitled to connect at point X rather than an adjacent point Y, if the water authority requires him to connect at Y. So we have three propositions for which there is respectable authority going back over many years and which are not inconsistent with one another. The first is that the sewerage authority or undertaker cannot refuse to allow an owner or occupier to connect at all. He must allow some sort of connection even if the system is already overloaded or will thereby become so overloaded that a nuisance will result. The second is that the authority or undertaker is not liable for nuisances which result from such over loading. The remedy lies in the statutory procedures to oblige them to build more sewers. But the third is that all courts which have addressed themselves specifically to the point at issue here, the place and manner in which a particular connection is to be made, have expressed the view that the authority or undertaker can refuse to agree to the developers proposals. There is no material difference between the 1936 and 1991 Acts for this purpose. The 1936 Act provided that disputes between developers and authorities should go to a magistrates court. The 1991 Act provides that a developer who argues that an authoritys refusal is unreasonable can take the dispute to OFWAT, which is a much more appropriate body to resolve such matters. The 1936 Act provided that a local authority could refuse on the ground that the making of the communication would be prejudicial to their sewerage system and section 106(4)(b) provides the same. This is obviously capable of including the deleterious effects of connecting at point A rather than point B. This too may help cast some light on the meaning of the words mode of construction or condition: it is easier to think of ways in which the place and manner of making the connection would be deleterious to the system than of ways in which the physical condition of the developers drain would be so. In the light of the historical development of this difficult legislation, therefore, I would hold that the words mode of construction or condition do cover the way in which it is proposed to connect that private drain or sewer to the public sewer, including the place. Whether the undertakers reasons for refusing to allow the proposed connection are reasonable is another matter, which in my view it is for OFWAT to resolve. If that were the only issue in the case, therefore, I would have allowed this appeal. |
Each of the appellants has been committed for trial at the Crown Court on charges of false accounting. I shall refer to them as the defendants. The charges relate to claims in respect of parliamentary expenses and are alleged to have been committed when each defendant was a serving member of the House of Commons. A fourth defendant, Lord Hanningfield, who is a member of the House of Lords, faces similar charges. Each defendant and Lord Hanningfield is facing a separate trial but each of them has raised an important point of law. Each claims that criminal proceedings cannot be brought against him because they infringe parliamentary privilege. A single preparatory hearing pursuant to section 29 of the Criminal Procedure and Investigations Act 1996 was held to consider this point in relation to all four defendants. On 11 June 2010 Saunders J, sitting in Southwark Crown Court, ruled against the four defendants. All four appealed to the Court of Appeal. On 30 July 2010 that court, Lord Judge CJ, Lord Neuberger MR and Sir Anthony May, President of the Queens Bench Division, dismissed their appeal. On 14 September 2010 the court certified that the appeal had raised a point of law of general public importance, refused permission to appeal to this court and granted a representation order for one leading counsel, one junior counsel and one solicitor to represent the four defendants jointly in the event of an application to this court for permission to appeal and any consequent appeal. The defendants, but not Lord Hanningfield, sought permission to appeal. Lord Hanningfield sought permission to intervene. Permission was granted to him to intervene in writing for the limited purpose of drawing attention to any distinction between expenses schemes and privileges in the two Houses of Parliament. At the opening of the hearing the court granted permission to appeal. On 10 November the court ordered that each of the three appeals be dismissed, for reasons to be delivered in due course. These are my reasons. The charges Each of the defendants has been charged with false accounting contrary to section 17(1)(b) of the Theft Act 1968, which provides in so far as material: False accounting (1) Where a person dishonestly, with a view to gain for himself or another or with intent to cause loss to another, (b) in furnishing information for any purpose produces or makes use of any account, or any such record or document as aforesaid, which to his knowledge is or may be misleading, false or deceptive in a material particular; he shall, on conviction on indictment, be liable to imprisonment for a term not exceeding seven years. (2) For purposes of this section a person who makes or concurs in making in an account or other document an entry which is or may be misleading, false or deceptive in a material particular, or who omits or concurs in omitting a material particular from an account or other document, is to be treated as falsifying the account or document. Mr Morley is charged with making use of monthly expenses claim forms for additional costs allowance which, initially, claimed as mortgage interest sums which were in part repayments of capital and, latterly, made claims for repayment of mortgage interest after the mortgage had been repaid. Mr Chaytor is charged with making use of an expenses claim form for incidental expenses provision in relation to two invoices relating to the supply of IT services when no such services had been supplied. He is further charged with making use of expenses claim forms for additional costs allowance in respect of payments of monthly rent when such payments had never been made. Mr Devine is charged with making use of expenses claim forms for additional costs allowance and personal additional accommodation expenditure in respect of invoices relating to cleaning and maintenance services when no such services had been supplied. He is further charged with submitting expenses claim forms in respect of communications allowance and supporting invoices in respect of the supply of stationery when no such stationery had been supplied. The claim forms which form the subject matter of all charges were submitted to the Fees Office of the House of Commons. Form ACA2 in respect of additional costs allowance contains a declaration, signed by the Member in the following form: I confirm that I incurred these costs wholly, exclusively and necessarily to enable me to stay overnight away from my only or main home for the purpose of performing my duties a Member of Parliament. The issues of fact in each case would seem to be whether the expenses claimed were incurred and not the purpose for which they were incurred. Entitlement to and administration of allowances The entitlement of Members of Parliament to claim certain expenses dates back to 1911, but the system under which the claims with which the present appeals are concerned was introduced in 1971 and the circumstances in which such allowances and expenses may be claimed are determined by Resolutions of the House. On 29 January 2004 the House passed a Standing Order establishing the House of Commons Members Estimate Committee (the Estimate Committee), which is chaired by the Speaker. One of the functions of this Committee is to report to the House from time to time on the provisions of the Resolutions of the House relating to expenditure charged to the Estimate for the House of Commons: Members, as codified and modified by the Committee. In effect the House itself is responsible for the overall scheme of allowances and the Estimate Committee is responsible for the detail. The House of Commons (Administration) Act 1978 created the House of Commons Commission (the Commission) consisting of the Speaker, the Leader of the House, a Member nominated by the Leader of the Opposition and three other Members, not being Ministers, appointed by the House. Under Schedule 1 to this Act the Commission is a body corporate. The primary functions of the Commission are to appoint the staff in the House Departments, to determine their numbers, and to determine their remuneration and other terms and conditions of service (section 2). The various House Departments include the Department of Finance and Administration. This is divided into three main offices. One of these is the Fees Office. Until recently this performed the functions of receiving claim forms for allowances and expenses, which might be submitted in person or by post, considering the claims and making payments in relation to claims that appeared to be properly made. The claim to privilege The defendants contend that the Crown Court has no jurisdiction to try them in respect of these charges on the ground that this would infringe parliamentary privilege. This claim to privilege has two bases. The first is article 9 of the Bill of Rights 1689 (article 9). This provides: That the Freedome of Speech and Debates or Proceedings in Parlyament ought not to be impeached or questioned in any Court or Place out of Parlyament. The defendants further rely on privilege that has its origin before 1689 and which is wider than, and embraces, article 9. This has customarily been described as the exclusive cognisance of Parliament but has also been described in argument as exclusive jurisdiction. I shall use the former description. Who decides the issue? In the 17th and 18th centuries there was a dispute between the courts and the House of Commons, often acrimonious, as to who was the final arbiter of the scope of parliamentary privilege. This dispute was largely resolved in the course of the 19th century. In Stockdale v Hansard (1839) 9 Ad & E 1 at pp 147 148 Lord Denman CJ said of the argument that the House of Commons was a separate Court with exclusive jurisdiction over the extent of its privileges: Where the subject matter falls within their jurisdiction, no doubt we cannot question their judgment; but we are now enquiring whether the subject matter does fall within the jurisdiction of the House of Commons. It is contended that they can bring it within their jurisdiction by declaring it so. To this claim, as arising from their privileges, I have already stated my answer: it is perfectly clear that none of these Courts could give themselves jurisdiction by adjudging that they enjoy it. It is now accepted in Parliament that the courts are not bound by any views expressed by parliamentary committees, by the Speaker or by the House of Commons itself as to the scope of parliamentary privilege. On 4 March 2010 the Clerk of the Parliaments wrote to the solicitor acting for Lord Hanningfield a letter that had received the approval of the Committee for Privileges. This stated: Article 9 limits the application of parliamentary privilege to proceedings in Parliament. The decision as to what constitutes a proceeding in Parliament, and therefore what is or is not admissible as evidence, is ultimately a matter for the court, not the House. This statement was correct. It applies as much to the House of Commons as to the House of Lords, and to an issue as to the scope of the exclusive cognisance of Parliament as it does to an issue as to the application of article 9. Although the extent of parliamentary privilege is ultimately a matter for the court, it is one on which the court will pay careful regard to any views expressed in Parliament by either House or by bodies or individuals in a position to speak on the matter with authority. In Stockdale v Hansard at p 157 Lord Denman CJ commented: The authority to which the Attorney General last appealed is one to which particular attention is due: I mean the report of the committee appointed by the late House of Commons to examine the subject albeit that the comments that he went on to make suggest that in the event the report did not carry the weight that he had suggested that it deserved. Both Saunders J and the Court of Appeal attached weight to views expressed or to be implied within Parliament both as to the scope of parliamentary privilege in general and as to whether such privilege attaches on the facts of these appeals. The decision of Saunders J Saunders J referred at para 19 to concessions made by the prosecution which narrowed the issues. The first was that the scheme for the payment of expenses as prescribed by resolution of the Houses of Parliament was covered by privilege either under article 9 or as part of the exclusive jurisdiction of the House. This meant that the High Court would have no power judicially to review the scheme. The second was that the administration of the scheme by officials in the Fees Office under the supervision of a committee was also covered by parliamentary privilege. Saunders J expressed reservations about this concession, but treated it as correctly made. The third was: While an instinctive reaction might be that, while honest claims are covered by privilege, dishonest ones are not, the prosecution accept that, if the submission of forms by an MP is covered by privilege then dishonest claims are also covered. That is because, in order to prove dishonesty, the prosecution would have to question the document, which is not permitted if it is covered by privilege. Saunders J held that he was satisfied that this concession was properly made. It is not altogether easy to reconcile this with an earlier finding at para 18 that in the context of criminal charges parliamentary privilege should be narrowly construed, but I understand that what he meant was that, because it has the effect of ousting criminal jurisdiction, parliamentary privilege should be narrowly construed. At para 6 Saunders J also recorded an area of ground common to all, or nearly all, counsel. Privilege did not attach to criminal conduct within the House which was not connected to the activities of the House. Such conduct could be described as ordinary criminal conduct. This covered such criminal offences as an assault in the corridors of the House, theft of another Members money, or a sexual offence, none of which related to parliamentary activity or proceedings in Parliament. Addressing the exclusive jurisdiction of Parliament, Saunders J held that the submission of a claim form fell to be distinguished from the subsequent processing of the form. Even if the latter was covered by privilege, the former was not. Privilege covered actions which were part of the collective processes of Parliament. Claiming expenses was not such an action. It was a voluntary individual activity for the benefit of the individual and not of direct benefit to Parliament. So far as article 9 was concerned, Saunders J considered that this essentially protected freedom of speech in Parliament. The protection extended to some actions that were incidental to exercising that freedom of speech, making a claim for expenses could not properly be said to be one of them. Accordingly the privilege claimed was not made out. The decision of the Court of Appeal In the Court of Appeal the Crown withdrew its concession that the administration of the allowances and expenses scheme by officials in the Fees Office under the supervision of a committee was covered by parliamentary privilege. At para 69 the Court of Appeal approached this withdrawal with caution, commenting: The issue in these appeals is not whether the actions of officials in allowing the defendants expenses claims is or may be privileged, but whether in submitting their claims, and making the allegedly false statements contained in them to the officials, the defendants were taking part in proceedings in Parliament, within the ambit of article 9 and privilege, as explained in the relevant authorities. The Court of Appeal attached considerable weight to indications from within Parliament that the defendants claims were not covered by privilege, to which I shall return in due course, but went on to consider arguments advanced on behalf of the defendants. At paras 74 and 75 the court rejected the submission that making a statement to officials in the Fees Office could be equated with making a statement to the House or to a parliamentary committee: A claim for expenses is not submitted to any other member of the House, nor even to the Speaker or Lord Speaker or to his or her office: it is submitted to an official in the Fees Office, and although that official is appointed by and is an agent of the House, he is not officiating in connection with the business carried on within the Chamber or within a committee. He is merely carrying out an administrative task, albeit one mandated by the relevant House, and one subject to the detailed rules approved by that House. The Court of Appeal went on to develop the theme that claiming expenses had nothing to do with the essential, or core, functions of a Member of Parliament. In doing so, however, the court repeatedly considered this question in relation to the presenting of dishonest claims for expenses: In truth, it is impossible to see how subjecting dishonest claims for expenses to criminal investigation would offend against the rationale for parliamentary privilege (para 76). It would therefore be curious if privilege were to apply to the member who defrauded the Fees Office by submitting a false claim for expenses (para 77). the decision to set up, and the terms of the system could not be subject to the courts jurisdiction. Be that as it may, it does not then follow that the dishonest operation of this system by individual members is excluded from it (para 78). on the basis that the implementation of the scheme might constitute a proceeding in Parliament, it does not follow as a matter of logic, convenience or principle, that the dishonest actions by a member when making his claim should be immune from criminal prosecution (para 78). It can confidently be stated that parliamentary privilege or immunity from criminal prosecution has never ever attached to ordinary criminal activities by members of Parliament (para 81). The stark reality is that the defendants are alleged to have taken advantage of the allowances scheme designed to enable them to perform their important public duties as members of Parliament to commit crimes of dishonesty to which parliamentary immunity or privilege does not, has never, and, we believe, never would attach. If the allegations are proved, and we emphasise, if they are proved, then those against whom they are proved will have committed ordinary crimes. Even stretching language to its limits we are unable to envisage how dishonest claims by members of Parliament for their expenses or allowances begin to involve the legislative or core functions of the relevant House, or the proper performance of their important public duties (para 82). Counsel for the defendants submitted that claiming expenses was part of a scheme that was covered by privilege in that the payment of expenses was necessary to enable, or for the purpose of enabling, Parliament to perform its core or essential parliamentary business, to which article 9 related. This was the whole object of the system of allowances. More particularly, counsel submitted that the Court of Appeal had erred in principle in examining this issue on the premise that the claims for expenses were dishonest. Privilege from criminal prosecution would be nugatory if it did not apply to criminal conduct. I consider that there was force in this criticism. The concept of an ordinary crime, the origin of which I shall identify in due course, is only of value in the present context where it describes an act which has no connection with the conduct of parliamentary business, as counsel rightly agreed see para 18 above. Making claims for parliamentary allowances does not fall into this category. Such claims form part of the business of Parliament, giving that phrase a broad meaning. The issue is whether business of this nature amounts to proceedings in Parliament, within the meaning of article 9, or is otherwise privileged from scrutiny in the criminal courts because it falls within the exclusive cognisance or jurisdiction of Parliament. It is not appropriate to approach that question on the premise that the claims are dishonest. Article 9 I propose to start by considering article 9, because the issues in relation to article 9 are relatively narrow and clear cut, compared to those that arise in relation to the exclusive cognisance of Parliament. Jurisprudence Much of the jurisprudence in relation to article 9 relates to what constitutes impeaching or questioning proceedings in Parliament most notably Pepper v Hart [1993] AC 593. The meaning of those words is not in issue in the present case and so I shall not refer to authority dealing with that question. What is at issue is the reach of the phrase proceedings in Parliament. The Bill of Rights 1689 reflected the attitude of Parliament, after the Restoration, to events in the reign of Charles I, and in particular the acceptance by the Court of Kings Bench that parliamentary privilege did not protect against seditious comments in the Chamber R v Eliot, Holles and Valentine (1629) 3 St Tr 293 336. The primary object of the article was unquestionably to protect freedom of speech in the House of Commons. The question is, having regard to that primary object, how far the term proceedings in Parliament extends to actions that advance or are ancillary to proceedings in the Houses. Erskine May, Parliamentary Practice, 23rd ed (2004), summarises the position as follows at pp 110 111: The term proceedings in Parliament has received judicial attention, (not all of it in the United Kingdom) but comprehensive lines of decision have not emerged and indeed it has been concluded that an exhaustive definition could not be achieved. Nevertheless, a broad description is not difficult to arrive at. The primary meaning of proceedings, as a technical parliamentary term, which it had at least as early as the seventeenth century, is some formal action, usually a decision, taken by the House in its collective capacity. This is naturally extended to the forms of business in which the House takes action, and the whole process, the principal part of which is debate, by which it reaches a decision. An individual Member takes part in a proceeding usually by speech, but also by various recognized forms of formal action, such as voting, giving notice of a motion, or presenting a petition or report from a committee, most of such actions being time saving substitutes for speaking. One of the problems when considering the scope of article 9 is that decisions on parliamentary privilege frequently make no mention of the Bill of Rights. That is true of Bradlaugh v Gossett (1884) 12 QBD 271. The plaintiff, Bradlaugh, had been elected to the House of Commons. He required the Speaker to call him to the table to take the oath and the Speaker declined to do so and the House resolved that the Serjeant at Arms should exclude Bradlaugh from the House. Bradlaugh then sought an injunction restraining the Serjeant at Arms from complying with the resolution. The court refused the injunction. Lord Coleridge CJ held, at p 275: What is said or done within the walls of Parliament cannot be inquired into in a court of lawThe jurisdiction of the Houses over their own members, their right to impose discipline within their walls, is absolute and exclusive. Stephen J was less categorical. He held, at p 278: I think that the House of Commons is not subject to the control of Her Majestys Courts in its administration of that part of the statute law which has relation to its own internal proceedings, and that the use of such actual force as may be necessary to carry into effect such a resolution as the one before us is justifiable. These statements do not distinguish between the narrow privilege under article 9 and the broader exclusive cognisance of Parliament. More pertinent are some comments made by Stephen J as to what was not covered by privilege. At p 283 he stated: The only force which comes in question in this case is such force as any private man might employ to prevent a trespass on his own land. I know of no authority for the proposition that an ordinary crime committed in the House of Commons would be withdrawn from the ordinary course of criminal justice. Stephen J pointed out at p 284 that, while Elliot established that nothing said in Parliament by a member as such could be treated as an offence by the ordinary courts, the House of Lords had carefully avoided deciding the question whether the Court of Kings Bench could try a Member for an assault on the Speaker in the House. His was a cogent statement of opinion that parliamentary privilege, including that conferred by article 9, will not preclude a criminal prosecution in respect of the conduct of a Member merely because it has taken place within the House of Commons. While Pepper v Hart was concerned with the circumstances in which reference could be made to proceedings in Parliament, Lord Browne Wilkinson made the following comment on the object of article 9, at p 638: Article 9 is a provision of the highest constitutional importance and should not be narrowly construed. It ensures the ability of democratically elected Members of Parliament to discuss what they will (freedom of debate) and to say what they will (freedom of speech)In my judgment, the plain meaning of article 9, viewed against the historical background in which it was enacted, was to ensure that Members of Parliament were not subjected to any penalty, civil or criminal, for what they said and were able, contrary to the previous assertions of the Stuart monarchy, to discuss what they, as opposed to the monarch, chose to have discussed. Lord Browne Wilkinson made a similar observation when giving the judgment of the Judicial Committee of the Privy Council in Prebble v Television New Zealand Ltd [1995] 1 AC 321 at p 334. These observations are of limited assistance when considering the extent to which article 9 applies to actions that are incidental or in some way connected to proceedings on the floor of either House or in parliamentary committee. The suggestion that article 9 should not be narrowly construed conflicted with an observation of Viscount Radcliffe when giving the advice of the Judicial Committee of the Privy Council in Attorney General of Ceylon v de Livera [1963] AC 103 at p 120. Section 14 of the Bribery Act of Ceylon made it an offence to offer an inducement or reward to a member of the House of Representatives for doing or forbearing to do any act in his capacity as such member. The issue was the scope of those words. Viscount Radcliffe drew an analogy with article 9. He said: What has come under inquiry on several occasions is the extent of the privilege of a member of the House and the complementary question, what is a proceeding in Parliament? This is not the same question as that now before the Board, and there is no doubt that the proper meaning of the words proceedings in Parliament is influenced by the context in which they appear in article 9 of the Bill of Rights (1 Wm & M, Sess 2, c 2); but the answer given to that somewhat more limited question depends upon a very similar consideration, in what circumstances and in what situations is a member of the House exercising his real or essential function as a member? For, given the proper anxiety of the House to confine its own or its members privileges to the minimum infringement of the liberties of others, it is important to see that those privileges do not cover activities that are not squarely within a members true function. Alleged bribery of members in respect of their participation in the proceedings on the floor of one of the Houses of Parliament or in committee has raised the question of whether the connection between the act of bribery outside Parliament and the undoubted proceedings in Parliament to which the bribe relates renders the former subject to article 9 or similar privilege. In Ex p Wason (1869) LR 4 QB 573 the issue was whether a prosecution would lie against three persons, two of whom were members of the House of Lords, for conspiring to deceive the House. The court held that it would not. Cockburn CJ held at p 576: It is clear that statements made by members of either House of Parliament in their places in the House, though they might be untrue to their knowledge, could not be made the foundation of civil or criminal proceedings, however injurious they might be to the interest of a third person. And a conspiracy to make such statements would not make the persons guilty of it amenable to the criminal law. Blackburn and Lush JJ agreed. Lush J ended his short judgment with the following statement: I am clearly of opinion that we ought not to allow it to be doubted for a moment that the motives or intentions of members of either House cannot be inquired into by criminal proceedings with respect to anything they may do or say in the House. It is not clear whether the reasoning of the court was that the act of conspiring was itself subject to privilege or that, as the object of the conspiracy was not an indictable offence, no indictment could lie for the conspiracy itself. Ex p Wason was distinguished by the Supreme Court of Ontario in R v Bunting (1885) 7 OR 524, where it was held that a conspiracy to bring about a change in the Government of Ontario by bribing members of the Legislative Assembly to vote against the Government was an indictable offence at common law committed at the time of the conspiracy itself and within the jurisdiction of the ordinary courts. Ex p Wason has also been cited by the Supreme Court of the United States in the context of considering the ambit of the Speech or Debate clause in article 1, section 6 of the Constitution. This provides that for any speech or debate in either House, Senators or Representatives shall not be questioned in any other place see United States v Johnson (1966) 383 US 169 and United States v Brewster (1972) 408 US 501. Each case involved an allegation of bribery to purchase support in proceedings in the House. In the latter case Burger CJ gave the opinion of the court. At p 518 he commented: The very fact of the supremacy of Parliament as Englands highest tribunal explains the long tradition precluding trial for official misconduct of a member in any other and lesser tribunal. This is not an accurate summary either of parliamentary privilege in this jurisdiction or of the reason for it, but the issue of interpretation facing the Supreme Court mirrors that raised by article 9 and some of the reasoning in Brewster is relevant to consideration of the scope of that article. At p 524 Burger CJ commented: As we noted at the outset, the purpose of the Speech or Debate Clause is to protect the individual legislator, not simply for his own sake, but to preserve the independence and thereby the integrity of the legislative process. But financial abuses by way of bribes, perhaps even more than Executive power, would gravely undermine legislative integrity and defeat the right of the public to honest representation. Depriving the Executive of the power to investigate and prosecute and the Judiciary of the power to punish bribery of Members of Congress is unlikely to enhance legislative independence. Burger CJ went on to hold that prosecution for bribery did not infringe the Speech and Debate clause because there was no need to show that the defendant in fact fulfilled the alleged illegal bargain. It was the acceptance of the bribe that constituted the offence. Brennan J, with whom Douglas J joined, delivered a powerful dissent. He held that one count actually charged that the defendant committed the act for which the bribe was paid, so that the defendants conduct in the House would have to be investigated. Other counts, which merely charged receipt of the bribe, put in question the defendants motive for the legislative acts which followed, even if those acts did not have to be considered by the court. Similar reasoning to that of Brennan J led the Supreme Court of India to hold that Members of Parliament were protected by privilege from prosecution for bribery in respect of voting in parliamentary proceedings: Rao v State (1998) 1 SCJ 529. In 1992 a prosecution was brought against a Member of Parliament, Mr Harry Greenway, for the common law offence of bribery to use his position as a Member of Parliament to further the interests of a company in his constituency. He applied to have the indictment quashed on the ground, inter alia, that the prosecution was precluded by parliamentary privilege. Buckley J dismissed the application [1998] PL 357. He referred with approval to comments of Lord Salmon in debate in the House of Lords (Hansard (HL Debates), 6 December 1976, col 631). Lord Salmon had chaired a Royal Commission on Standards of Conduct in Public Life and the debate was on its Report, Cmnd 6524 (1976). The passages cited by Buckley J were: To my mind equality before the law is one of the pillars of freedom. To say that immunity from criminal proceedings against anyone who tries to bribe a Member of Parliament and any Member of Parliament who accepts the bribe, stems from the Bill of Rights is possibly a serious mistake. Now this [the Bill of Rights] is a charter for freedom of speech in the House. It is not a charter for corruption. To my mind, the Bill of Rights, for which no one has more respect than I have, has no more to do with the topic which we are discussing than the Merchandise Marks Act. The crime of corruption is complete when the bribe is offered or given or solicited and taken. Buckley J made the following comments (pp 361 362,363): It is important to note that which Lord Salmon pointed out, namely, that corruption is complete when the bribe is offered or given, solicited or [sic] taken. If, as is alleged here, a bribe is given and taken by a member of Parliament, to use his position dishonestly, that is to favour the briber as opposed to acting independently and on the merits, the crime is complete. It owes nothing to any speech, debate or proceedings in Parliament. Proof of the element of corruption in the transaction is another and quite separate consideration. Privilege might well prevent any inquiry by a court into Parliamentary debates or proceedings. However, it is not a necessary ingredient of the crime that the bribe worked. A jury will usually be asked to infer corruption from the nature of and circumstances in which the gift was given. I cannot see that article 9 in any way prevents that That a Member of Parliament against whom there is a prima facie case of corruption should be immune from prosecution in the courts of law is to my mind an unacceptable proposition at the present time. I do not believe it to be the law. The Committee of Privileges is not well equipped to conduct an enquiry into such a case, nor is it an appropriate or experienced body to pass sentence. Unless it is to be assumed that it would be prejudiced in his favour, I cannot see that it would be in the Members own interest for the matter to be dealt with by the Committee. The courts and legislature have over the years built up a formidable body of law and codes of practice to achieve fair treatment of suspects and persons ultimately charged and brought to trial. Again, unless it is to be assumed that his peers would lean in his favour, why should a Member be deprived of a jury and an experienced judge to consider his guilt or innocence and, if appropriate, sentence? Why should the public be similarly deprived? These decisions in relation to bribery lend support for a narrow construction of article 9. If Greenway was rightly decided it leads inexorably to the conclusion that submitting claims for expenses falls outside the definition of proceedings in Parliament in article 9. The nexus between bribes intended to influence what is said and proceedings in the House is much closer than the link between submitting a claim for expenses and taking part in such proceedings. Indeed, it is the closeness of the former nexus that raises a question as to whether Greenway was correctly decided. The dissent in Brewster is food for thought. Accusing a Member of Parliament of taking bribes in exchange for statements to be made in the House will necessarily raise an inference that any statements that were subsequently made were corruptly motivated, even if this forms no part of the criminal inquiry. The same point can, however, be made where a Member of Parliament affirms outside the House a statement made in the House. Such an affirmation can found a claim in defamation. This may well involve a challenge to the good faith of the defendant in affirming the statement, which will inferentially challenge his good faith in making the original statement. Lord Bingham dealt with this point when giving the advice of the Judicial Committee of the Privy Council in Buchanan v Jennings (Attorney General of New Zealand intervening) [2005] 1 AC 115, at para 13: It is common ground in this appeal that statements made outside Parliament are not protected by absolute privilege even if they simply repeat what was said therein. That proposition, established by R v Abingdon (1794) 1 Esp 226 and R v Creevey (1813) 1 M & S 273 was more recently applied by the High Court of Ontario in Stopforth v Goyer (1978) 87 DLR (3d) 373 and the Supreme Court of the United States in Hutchinson v Proxmire (1979) 443 US 111, 126 et seq. In such a case there will inevitably be an inquiry at the trial into the honesty of what the defendant had said, and if the defendants extra parliamentary statement is found to have been untrue or dishonest the same conclusion would ordinarily, although not always, apply to the parliamentary statement also. But such an inquiry and such a conclusion are not precluded by article 9, because the plaintiff is founding his claim on the extra parliamentary publication and not the parliamentary publication. Lord Bingham went on to hold that it made no difference that, in that case, the repetition of what had been said in Parliament was merely by reference. At para 17 Lord Bingham tested this conclusion for compliance with the principle underlying the absolute privilege accorded to parliamentary statements, namely the right of Members of Parliament to speak their minds in Parliament without any risk of incurring liability as a result. He concluded that liability for repeating outside Parliament what had been said within did not conflict with this principle. The jurisprudence to which I have referred is sparse and does not bear directly on the facts of these appeals. It supports the proposition, however, that the principal matter to which article 9 is directed is freedom of speech and debate in the Houses of Parliament and in parliamentary committees. This is where the core or essential business of Parliament takes place. In considering whether actions outside the Houses and committees fall within parliamentary proceedings because of their connection to them, it is necessary to consider the nature of that connection and whether, if such actions do not enjoy privilege, this is likely to impact adversely on the core or essential business of Parliament. If this approach is adopted, the submission of claim forms for allowances and expenses does not qualify for the protection of privilege. Scrutiny of claims by the courts will have no adverse impact on the core or essential business of Parliament, it will not inhibit debate or freedom of speech. Indeed it will not inhibit any of the varied activities in which Members of Parliament indulge that bear in one way or another on their parliamentary duties. The only thing that it will inhibit is the making of dishonest claims. Some reliance was placed by the defendants on the terms of section 13 of the Defamation Act 1996, which are as follows: 13. Evidence concerning proceedings in Parliament (1) Where the conduct of a person in or in relation to proceedings in Parliament is in issue in defamation proceedings, he may waive for the purposes of those proceedings, so far as concerns him, the protection of any enactment or rule of law which prevents proceedings in Parliament being impeached or questioned in any court or place out of Parliament. (2) Where a person waives that protection (a) any such enactment or rule of law shall not apply to prevent evidence being given, questions being asked or statements, submissions, comments or findings being made about his conduct, and (b) none of those things shall be regarded as infringing the privilege of either House of Parliament. (3) The waiver by one person of that protection does not affect its operation in relation to another person who has not waived it. (4) Nothing in this section affects any enactment or rule of law so far as it protects a person (including a person who has waived the protection referred to above) from legal liability for words spoken or things done in the course of, or for the purposes of or incidental to, any proceedings in Parliament. (5) Without prejudice to the generality of subsection (4), that subsection applies to (a) the giving of evidence before either House or a committee; (b) the presentation or submission of a document to either House or a committee; (c) the preparation of a document for the purposes of or incidental to the transacting of any such business; (d) the formulation, making or publication of a document, including a report, by or pursuant to an order to either House or a committee; and (e) any communication with the Parliamentary Commissioner for Standards or any person having functions in connection with the registration of members interests. In this subsection a committee means a committee of either House or a joint committee of both Houses of Parliament. Reliance was placed on the reference in subsection (4) to protection from legal liability for words spoken or things done for the purposes of or incidental to, any proceedings in Parliament and in subsection (5)(b) to the presentation or submission of a document to either House or a committee. I do not consider that these provisions advance the defendants case. Section 13 is not capable of extending the ambit of article 9. Subsection (4) cannot found a submission that any words spoken or things done that are incidental to proceedings in Parliament have automatically to be treated as part of those proceedings. The reference to submission of a document to either House or a committee envisages the submission of documents for the purpose of the deliberations of the House or committee in question. No comparison can be drawn between this and the presentation of claims for allowances or expenses to the Fees Office. The views of Parliament I now turn to views expressed in Parliament as to the ambit of article 9. Once again it is not always easy to differentiate between comments that bear on this narrow privilege as opposed to the broader exclusive cognisance of Parliament. The report of the Select Committee on the Official Secrets Acts 1938 1939 (the 1939 Report) included the following: 2. The privilege to which Your Committee were directed by the order of reference to have due regard is that usually referred to as the privilege of freedom of speech. This privilege is declared by the Bill of Rights in the following terms: That the freedom of speech and debates or proceedings in parliament ought not to be impeached or questioned in any court or place out of parliament. 3. The article in the Bill of Rights is not necessarily an exhaustive definition of the cognate privileges. But even assuming that it is, the privilege is not confined to words spoken in debate or to spoken words, but extends to all proceedings in parliament. While the term proceedings in parliament has never been construed by the courts, it covers both the asking of a question and the giving written notice of such question, and includes everything said or done by a member in the exercise of his functions as a member in a committee of either House, as well as everything said or done in either House in the transaction of parliamentary business. 4. The privilege of freedom of speech being confined to words spoken or things done in the course of parliamentary proceedings, words spoken or things done by a member beyond the walls of parliament will generally not be protected. Cases may, however, easily be imagined of communications between one member and another, or between a member and a minister, so closely related to some matter pending in, or expected to be brought before, the House, that though they do not take place in the chamber or a committee room they form part of the business of the House, as, for example, where a member sends to a minister the draft of a question he is thinking of putting down or shows it to another member with a view to obtaining advice as to the propriety of putting it down or as to the manner in which it should be framed. It is noteworthy that the Committee envisaged the need for a close relationship of communications outside the House to business within it in order to attract privilege. The conclusion of the Committee was later agreed by the House CJ (1938 39) 480. The Joint Committee on the Publication of Proceedings in Parliament in its Second Report in 1970 HL 109, HC 261 recommended that proceedings in Parliament should be defined by statute, and offered the following definition at para 27: (1) For the purpose of the defence of absolute privilege in an action or prosecution for defamation the expression proceedings in Parliament shall without prejudice to the generality thereof include a) all things said done or written by a Member or by any officer of either House of Parliament or by any person ordered or authorised to attend before such House, in or in the presence of such House and in the course of a sitting of such House, and for the purpose of the business being or about to be transacted, wherever such sitting may be held and whether or not it be held in the presence of strangers to such House: provided that for the purpose aforesaid the expression House shall be deemed to include any Committee sub Committee or other group or body of members or members and officers of either House of Parliament appointed by or with the authority of such House for the purpose of carrying out any of the functions of or of representing such House; and b) all things said done or written between Members or between Members and officers of either House of Parliament or between Members and Ministers of the Crown for the purpose of enabling any Member or any such officer to carry out his functions as such provided that publication thereof be no wider than is reasonably necessary for that purpose. (2) In this section Member means a Member of either House of Parliament; and officer of either House of Parliament means any person not being a Member whose duties require him from time to time to participate in proceedings in Parliament as herein defined. No effect was given to this recommendation. The Joint Committee on Parliamentary Privilege Report of 1999 HL 43 1; HC214 1 (the 1999 Report) gave detailed consideration to article 9. At para 12 it commented: Freedom of speech is central to Parliaments role. Members must be able to speak and criticise without fear of penalty. This is fundamental to the effective working of Parliament, and is achieved by the primary parliamentary privilege: the absolute protection of proceedings in Parliament guaranteed by article 9 of the Bill of Rights 1689. Members are not exposed to any civil or criminal liabilities in respect of what they say or do in the course of proceedings in Parliament. There is no comprehensive definition of the term proceedings in Parliament, although it has often been recommended there should be. Proceedings are broadly interpreted to mean what is said or done in the formal proceedings of either House or the committees of either House together with conversations, letters and other documentation directly connected with those proceedings. At para 103 the Committee expressed the view that Members correspondence did not form part of parliamentary proceedings: Article 9 protects parliamentary proceedings: activities which are recognisably part of the formal collegiate activities of Parliament. The Committee did not recommend the extension of parliamentary privilege to cover Members correspondence. It commented at para 110: There is another consideration. Article 9 provides an altogether exceptional degree of protection, as discussed above. In principle this exceptional protection should remain confined to the core activities of Parliament, unless a pressing need is shown for an extension. Each House has agreed a set of rules and guidance governing the conduct expected of its members. The Parliamentary Commissioner for Standards is appointed to monitor the operation of the Code of Conduct of Members of the House of Commons and to advise the Committee on Standards and Privileges on the interpretation of the code. In 15 December 2002 the Mail on Sunday published an article alleging that Mr Michael Trend MP had improperly submitted claims in respect of additional costs allowance in respect of a London home which he did not occupy. The Commissioner for Standards submitted a memorandum on the matter which concluded that Mr Trend had claimed additional costs allowance in breach of the rules relating to that allowance. In a post script under the heading The Criminal Law he commented: The decision whether Mr Trend or any other Member who may be shown to have wrongly claimed parliamentary allowances should face a criminal prosecution is one for the police and prosecuting authorities, not for me. As the briefing note on the law on obtaining by deception at Annex C makes clear, there are a number of ingredients to the offence which would have to be proved if a prosecution were to succeed; achieving this would not necessarily be easy. However, the point that needs to be made here is that claiming an allowance is not a proceeding in Parliament and the provisions of parliamentary privilege do not apply. Members of Parliament are no less subject to the criminal law in this respect than anyone else. They must have its provisions in mind at all times like anyone else, and decisions about whether it should be invoked against them must be taken applying the same tests as would be applied to any other citizen. On 8 February 2010 the Speaker made a statement to the House about the application of the sub judice rule in relation to the prosecutions of the three defendants, in the following terms. I wish to make a statement to the House about the application of the sub judice rule. Once criminal proceedings are active by a charge having been made, cases before the courts shall not be referred to in any motion, debate or question. The House will be aware that charges have been made against three Members of the House and that therefore the sub judice rule applies to their cases. The matter is therefore before the courts, and the House and Members would not wish to interfere with the judicial process, risk affecting the fairness of a criminal trial or, furthermore, prevent such a trial taking place. The last sentence does not suggest that the Speaker had any concern that the trials of the defendants might constitute a breach of the privilege enjoyed by Parliament. It is possible that the Speaker had already received orally the advice of the Clerk of the House that was conveyed to him in writing on the following day. This included the following paragraph: In order to make the case that privilege applies to claims it would be necessary to establish that they are indeed transactions of business of the House or one of its Committees. Although I accept that the ACA scheme arises from Resolutions of the House, the proposition that all actions or claims under it are proceedings, seems to me to be unsustainable. The House agrees to many things by Resolution for example to build a new building but that does not mean that all activities in connection with its erection are proceedings. Proceedings must imply, in the words of the Joint Committee on Parliamentary Privilege, formal collegiate activities of Parliament rather than merely the consequences of decisions that either House has taken. It also seems to me to be pertinent to the consideration of claims under the ACA scheme being protected that throughout the Houses involvement in Freedom of Information cases in respect of publication of claims and expenses, the House has never sought an exemption under section 34 of the Act which covers matters deemed to infringe parliamentary privilege. None of these expressions of Parliamentary views lends support to the suggestion that submitting claims for allowances and expenses constitutes proceedings in Parliament for the purposes of article 9. On the contrary they all suggest, either expressly or by implication, that the submission of such claims falls outside the protection of that article. The recovery of allowances and expenses to defray the costs involved in attending Parliament, or travelling on Parliamentary business, has no closer nexus with proceedings in Parliament than incurring those expenses. The question was asked rhetorically of what the position would be if Members had to go before the Estimate Committee, or even the House, to ask for their expenses. It was submitted on behalf of the defendants that in that event their claims would constitute proceedings in Parliament and be protected by privilege, and that the same was true of claims made to the Fees Office as that office was acting on behalf of the House in receiving and considering the claim forms. The answer is that the submission and consideration of allowances and expenses claims is essentially a matter of administration, properly to be performed by officials, and that it would be absurd for this exercise to be performed by a committee or by the House. There are good reasons of policy for giving article 9 a narrow ambit that restricts it to the important purpose for which it was enacted freedom for Parliament to conduct its legislative and deliberative business without interference from the Crown or the Crowns judges. The protection of article 9 is absolute. It is capable of variation by primary legislation, but not capable of waiver, even by Parliamentary resolution. Its effect where it applies is to prevent those injured by civil wrongdoing from obtaining redress and to prevent the prosecution of Members for conduct which is criminal. As to the latter, Parliament has no criminal jurisdiction. It has limited penal powers to treat criminal conduct as contempt. These once included imprisonment for a limited period. As to this Lord Denman CJ commented at p 114 in Stockdale v Hansard: The privilege of committing for contempt is inherent in every deliberative body invested with authority by the Constitution. But, however flagrant the contempt, the House of Commons can only commit till the close of the existing session. Their privilege to commit is not better known than this limitation of it. Though the party should deserve the severest penalties, yet, his offences being committed the day before a prorogation, if the House ordered his imprisonment but for a week, every Court in Westminster Hall and every Judge of all the Courts would be bound to discharge him by habeas corpus. Imprisonment has not been imposed in recent times and the same is true of the theoretical power to fine. Nor is it clear that Parliament is in a position to satisfy all the requirements of article 6 which apply when imposing penal sanctions see Demicoli v Malta (1991) 14 EHRR 47. Thus precedent, the views of Parliament and policy all point in the same direction. Submitting claims for allowances and expenses does not form part of, nor is it incidental to, the core or essential business of Parliament, which consists of collective deliberation and decision making. The submission of claims is an activity which is an incident of the administration of Parliament; it is not part of the proceedings in Parliament. I am satisfied that Saunders J and the Court of Appeal were right to reject the defendants reliance on article 9. Exclusive cognisance This phrase describes areas where the courts have ruled that any issues should be left to be resolved by Parliament rather than determined judicially. Exclusive cognisance refers not simply to Parliament, but to the exclusive right of each House to manage its own affairs without interference from the other or from outside Parliament. The boundaries of exclusive cognisance result from accord between the two Houses and the courts as to what falls within the exclusive province of the former. Unlike the absolute privilege imposed by article 9, exclusive cognisance can be waived or relinquished by Parliament. Thus in 1980 Parliament agreed to a resolution which permitted reference to be made in court to certain Parliamentary papers which, up to then, had been subject to a claim of exclusive cognisance see Erskine May at p 105. The areas subject to exclusive cognisance have very significantly changed, in part as a result of primary legislation. The exclusive cognisance of Parliament was originally based on the premise that the High Court of Parliament had its own peculiar law which was not known to the courts. The 17th edition (1814) of Blackstones Commentaries on the Laws of England observed at pp 158 159: It will be sufficient to observe, that the whole of the law and custom of parliament has its original from this one maxim; that whatever matter arises concerning either house of parliament, ought to be examined, discussed, and adjudged in that house to which it relates and not elsewhere. In Stockdale v Hansard at p 118 Denman CJ said of all internal proceedings of the House of Commons: With respect to them, I freely admit that the Courts have no right to interfere, nor, perhaps, any regular means of obtaining information. I have already cited at paras 29 and 30 passages from the judgments of Lord Coleridge CJ and Stephen J in Bradlaugh v Gossett which are relevant in the present context. It is, of course, always open to Parliament by legislation to provide for the courts to encroach on matters falling within its exclusive cognisance, or even on article 9 privilege, as did the Parliamentary Elections Act 1695, the Parliamentary Oaths Act 1866, the Perjury Act 1911, and the Defamation Act 1996 see Erskine May at p 115. These statutes expressly address matters that were previously subject to privilege under article 9, or the exclusive cognisance of Parliament. Where a statute does not specifically address matters that are subject to privilege, it is in theory necessary as a matter of statutory interpretation to decide a number of overlapping questions. Does the statute apply within the precincts of the Palace of Westminster? If it does, does it apply in areas that were previously within the exclusive cognisance of Parliament? If so, does the statute override the privilege imposed by article 9? In practice there are not many examples of these questions being considered, either within Parliament or by the courts. If Parliament accepts that a statute applies within an area that previously fell within its exclusive cognisance, then Parliament will, in effect, have waived any claim to privilege. The 1939 Report is an example of Parliament considering whether privilege was overridden by statute. In two cases the courts considered the application of the Licensing Acts within the precincts of the Palace of Westminster. In Williamson v Norris [1899] 1 QB 7 Lord Russell of Killowen CJ considered a submission that the Houses of Parliament, in the regulation of their internal arrangements as to the sale of liquor, were entirely outside the control of the law as to licensing. He stated that he was very far from being satisfied that this proposition was correct, but decided the case on another point. In R v Graham Campbell, Ex p Herbert [1935] 1 KB 594 Mr A P Herbert had laid two informations at Bow Street Police Station for summonses against fifteen named Members of Parliament, who were members of the Kitchen Committee of the House of Commons and the manager of the Refreshment Department of the House alleging the unlawful sale of alcohol without a licence contrary to the Licensing (Consolidation) Act 1910. The Chief Metropolitan Magistrate held that the Members of Parliament were not susceptible to the jurisdiction of the court because they were protected by the privileges of the House. On application for orders in the nature of mandamus, Lord Hewart CJ upheld the decision and the reasoning of the magistrate. Only as an afterthought did he express the view that the majority of the provisions of the 1910 Act were inapplicable to the House of Commons. Avory and Swift JJ agreed, albeit that Avory J devoted most of his judgment to the question of whether the Act on its true construction applied to the House of Commons. The Joint Committee on Parliamentary Privilege Report HL paper 43 1, HC 214 1 (1998 99) (the 1999 Report) states at para 15 that since this case Acts of Parliament have been taken not to apply within the precincts of either House in the absence of express provision that they should apply and that the legislation that has been taken not to apply includes the Health and Safety at Work etc Act 1974 and the Data Protection Acts 1984 and 1998 but that in practice Parliament voluntarily abides by some of these statutory provisions. The 1999 Report returns to this topic under the heading Right of each House to administer its internal affairs within its precincts. It comments at para 240 that each House has the right to administer its internal affairs within the parliamentary precincts. It continues at para 241: In one important respect this heading of privilege is unsatisfactory. Internal affairs and equivalent phrases are loose and potentially extremely wide in their scope. On one interpretation they embrace, at one edge of the spectrum, the arrangement of parliamentary business and also, at the other extreme, the provision of basic supplies and services such as stationery and cleaning. This latter extreme would be going too far if it were to mean, for example, that a dispute over the supply of photocopy paper or dismissal of a cleaner could not be decided by a court or industrial tribunal in the ordinary way. Here, as elsewhere the purpose of parliamentary privilege is to ensure that Parliament can discharge its functions as a legislative and deliberative assembly without let or hindrance. This heading of privilege best serves Parliament if not carried to extreme lengths. A little later the Report considers the dividing line between matters that fall within this type of parliamentary privilege and those which fall outside it. This lies at the heart of these appeals and merits quotation in full: 246 Putting aside the activities of individuals, there is a need to distinguish between activities of the House which call for protection under this head of privilege and those which do not. The Palace of Westminster is a large building; it requires considerable maintenance; it provides an extensive range of services for members; it employs and caters for a large number of staff and visitors. These services require staff and supplies and contractors. For the most part, and rightly so, these services are not treated as protected by privilege. It is difficult to see any good reason why claims for breach of contract relating to catering or building services, for example, should be excluded from the jurisdiction of the courts, or why a person who sustains personal injury within the precincts of Parliament should not be able to mount a claim for damages for negligence. This has been formally recognised in the Parliamentary Corporate Bodies Act 1992. Under this Act each House established a corporate officer who can sign contracts on behalf of the House and sue or be sued. 247 The dividing line between privileged and non privileged activities of each House is not easy to define. Perhaps the nearest approach to a definition is that the areas in which the courts ought not to intervene extend beyond proceedings in Parliament, but the privileged areas must be so closely and directly connected with proceedings in Parliament that intervention by the courts would be inconsistent with Parliaments sovereignty as a legislative and deliberative assembly. One example is the Speakers decision on which facilities within the precincts of the House should be available to members who refuse to take the oath or affirmation of allegiance. Another example might be steps taken by the library of either House to keep members informed upon matters of significant political interest. Such steps, if authorised by the presiding officer of the House, would properly be within the scope of the principle and not amenable to orders of the court. 248 It follows that management functions relating to the provision of services in either House are only exceptionally subject to privilege. In particular, the activities of the House of Commons Commission, a statutory body appointed under the House of Commons (Administration) Act 1978, are not generally subject to privilege, nor are the management and administration of the House departments. The boundary is not tidy. Occasionally management in both Houses may deal with matters directly related to proceedings which come within the scope of article 9. For example, the members pension fund of the House of Commons is regulated partly by resolutions of the House. So too are members salaries and the appointment of additional members of the House of Commons Commission under section 1(2)(d) of the House of Commons (Administration) Act. These resolutions and orders are proceedings in Parliament, but their implementation is not. The foundation of the modern system of administration of the House of Commons is the House of Commons (Administration) Act. This established the Commission and gave it corporate status, so that it is capable of suing and being sued. In 1992 each House took full responsibility for managing its own internal administration, which included responsibility for the maintenance of the structure of the Palace of Westminster see Erskine May p 233. In that year, as the 1999 Report explains, the Parliamentary Corporate Bodies Act was passed a necessary practical step to facilitate the bringing of actions in contract and tort arising out of the internal administration of the House. This has rendered easier, and implicitly contemplates, inroads into areas that previously fell within the exclusive cognisance of the House. Statutory inroads have been made by express provisions of the Employment Act 1990, the Trade Union Reform and Employment Rights Act 1993 and the Employment Rights Act 1996 see Erskine May at pp 115 to 116. So far as actions in contract and tort are concerned arising out of the internal administration of the House the courts are unlikely to accept the submission, in the unlikely event that it is advanced, that their jurisdiction is precluded because of the exclusive cognisance of the House. The reasoning of Judge Russell, sitting in the Industrial Court in Bear v State of South Australia (1981) 48 SAIR 604 is likely to be followed. Different considerations apply to claims for judicial review in relation to the conduct by each House of its internal affairs. The courts will respect the right of each House to reach its own decision in relation to the conduct of its affairs. Two examples will illustrate this. In Re McGuinnesss Application [1997] NI 359 the applicant sought to challenge by judicial review the decision of the Speaker that those who had not complied with the requirements of the Parliamentary Oaths Act 1866 would be denied certain of the facilities of the House. Kerr J dismissed his application. He held at p 6 : I am quite satisfied that, whether it qualifies as a proceeding in Parliament or not, the Speakers action lies squarely within the realm of internal arrangements of the House of Commons and is not amenable to judicial review. In R v Parliamentary Commissioner for Standards, Ex p Al Fayed [1998] 1 WLR 669 the Parliamentary Commissioner for Standards had published a report relating to a complaint by the applicant against a Member of Parliament. The applicant sought permission to challenge this by judicial review. The application was refused by Sedley J and renewed before the Court of Appeal. Lord Woolf MR gave a judgment with which the other members of the court agreed dismissing the application. He said, at p 673: The focus of the Parliamentary Commissioner for Standards is on the propriety of the workings and the activities of those engaged within Parliament. He is one of the means by which the select committee set up by the House carries out its functions, which are accepted to be part of the proceedings of the House. This being the role of the Parliamentary Commissioner for Standards, it would be inappropriate for this court to use its supervisory powers to control what the Parliamentary Commissioner for Standards does in relation to an investigation of this sort. The responsibility for supervising the Parliamentary Commissioner for Standards is placed by Parliament, through its standing orders, on the Committee of Standards and Privileges of the House, and it is for that body to perform that role and not the courts. In summary, extensive inroads have been made into areas that previously fell within the exclusive cognisance of Parliament. Following Ex p Herbert there appears to have been a presumption in Parliament that statutes do not apply to activities within the Palace of Westminster unless they expressly provide to the contrary. That presumption is open to question. In 1984 three Law Lords, Lord Diplock, Lord Scarman and Lord Bridge of Harwich, on the Committee for Privileges expressed the view that sections 2 6 of the Mental Health Act 1983 applied to members of the House of Lords, although the Act did not expressly so state. Crime and Parliament I have considered the encroachment by the laws of contract and tort on areas that previously fell within the exclusive cognisance of Parliament and pointed out the distinction that must be drawn between such claims and applications for judicial review. I now come to consider the position where an act is committed which, absent any question of parliamentary privilege, would constitute a crime falling within the jurisdiction of the criminal courts. Parliament has never challenged, in general, the application of criminal law within the precincts of Parliament and has accepted that the mere fact that a crime has been committed within these precincts is no bar to the jurisdiction of the criminal courts. In May 1812 John Bellingham was indicted, tried and convicted of the murder of the Prime Minister, Spencer Percival, at the entrance to the lobby of the House of Commons. Bellingham was not a Member of Parliament, but it would have made no difference had he been. Where a crime is committed within the House of Commons, this may well also constitute a contempt of Parliament. The courts and Parliament have different, overlapping, jurisdictions. The House can take disciplinary proceedings for contempt and a court can try the offender for the crime. Where a prosecution is brought Parliament will suspend any disciplinary proceedings. Conversely, if a Member of Parliament were disciplined by the House, consideration would be given by the Crown Prosecution Service as to whether a prosecution would be in the public interest. In 1988 Mr Ron Brown MP damaged the mace in the course of a heated debate and declined to apologise. The House exercised its penal powers in relation to both the damage to the mace and the lack of respect for the authority of the Chair. The Director of Public Prosecutions subsequently halted an attempt to bring a private prosecution. Erskine May records at pp 162 163 that in cases of breach of privilege which are also offences at law, where the punishment which the Commons has power to inflict would not be adequate to the offence, or where for any other reason the House has thought proceeding at law necessary, either as a substitute for, or in addition to, its own proceedings, the Attorney General has been directed to prosecute the offender. It is of note that in two of the cases cited the Attorney General was directed to prosecute witnesses to parliamentary committees for wilful and corrupt perjury CJ (1860) 258 and CJ (1866) 239. No instance is cited beyond the 19th century and a footnote records that on two occasions in the 1970s the House authorities informally invited the police to consider prosecuting those responsible for gross misbehaviour in the gallery. Thus the House does not assert an exclusive jurisdiction to deal with criminal conduct, even where this relates to or interferes with proceedings in committee or in the House. Where it is considered appropriate the police will be invited to intervene with a view to prosecution in the courts. Furthermore, criminal proceedings are unlikely to be possible without the cooperation of Parliament. Before a prosecution can take place it is necessary to investigate the facts and obtain evidence. The powers of the police in respect of these activities are contained in the Police and Criminal Evidence Act 1984. I am not aware that any court has had to consider the extent to which, if at all, the provisions of this Act apply within the Palace of Westminster. What occurs is that Parliament permits the police to carry out their investigations within the precincts. I shall give some examples of this cooperation which are of particular relevance in the context of these appeals. On 3 April 2008 a meeting took place between the Chairman of the Committee on Standards and Privileges, the Parliamentary Commissioner for Standards and the Commissioner of Police of the Metropolis. Following this an agreed statement was released: All parties agreed that, other than in the limited context of participation in proceedings in Parliament, Members of Parliament are in no different position in respect of alleged criminal behaviour than any other person. The Chairman reiterated the Committees belief in the general principle that criminal proceedings against Members, where these are considered appropriate, should take precedence over the Houses own disciplinary proceedings. The meeting discussed how the respective parties might coordinate their activities to ensure the effective delivery of this principle. Where the Metropolitan Police receive information which suggests a Member of Parliament may have committed a criminal offence, they will take the decision on whether to institute inquiries on their own initiative, on the same basis as they would in any other case, and without regard to whether the same information had formed any part of a complaint to the Parliamentary Commissioner. The Metropolitan Police undertook to inform the Parliamentary Commissioner in the normal course of events if they were considering initiating criminal inquiries into a Member, with a view to establishing whether the alleged conduct was also the subject of a complaint under the Code. The Parliamentary Commissioner confirmed that he had regard, where appropriate, to the possibility of criminal behaviour when investigating complaints he received against Members of Parliament. He would continue the practice in specific cases of liaising with the Metropolitan Police or other relevant force whenever he considered it appropriate to do so, initiating the process at the earliest opportunity. All parties welcomed this. If at any point in his investigation of a complaint, the Parliamentary Commissioner considers that there are sufficient grounds to justify reporting the matter to the police for them to consider a criminal inquiry, he confirmed that he would submit a recommendation to that effect to the Committee on Standards and Privileges who would decide whether such a report should be made. Where this was done, the Chairman confirmed that the Committee would normally expect the Parliamentary Commissioner to suspend his inquiries until the question of possible criminal proceedings had been resolved. The Parliamentary Commissioner and the Committee would follow similar procedures if informed by the police that they are considering initiating criminal inquiries into a matter which was also the subject of a complaint. The Chairman also confirmed that if in the course of the Committees consideration of the outcome of the Commissioners investigation of a complaint it concluded that there were sufficient grounds to justify a report to the police, it would normally expect to advise the House accordingly, and defer reporting substantively on the complaint until the question of possible criminal proceedings had been resolved. On 27 November 2008 the offices of the Conservative front bencher, Mr Damian Green, were searched by the police without a warrant. On 8 December 2008 the Speaker issued a protocol setting out future procedures where the police sought to execute a search warrant in the House, the most material part of which provides as follows: 1. Responsibility for controlling access to the precincts of the House has been vested by the House in me. It is no part of my duties as Speaker to impede the proper administration of justice, but it is of equal concern that the work of the House and of its Members is not necessarily hindered. 2. The precincts of Parliament are not a haven from the law. A criminal offence committed within the precincts is no different from an offence committed outside and is a matter for the courts. It is long established that a Member may be arrested within the precincts. 3. In cases where the police wish to search within Parliament, a warrant must be obtained and any decision relating to the execution of that warrant must be referred to me. In all cases where any Officer or other member of the staff of the House is made aware that a warrant is to be sought the Clerk of the House, Speakers Counsel, the Speakers Secretary and the Serjeant at Arms must be informed. No Officer or other member of the staff of the House may undertake any duty of confidentiality which has the purpose or effect of preventing or impeding communication with these Officers. 4. I will consider any warrant and will take advice on it from senior officials. As well as satisfying myself as to the formal validity of the warrant, I will consider the precision with which it specifies the material being sought, its relevance to the charge brought and the possibility that the material might be found elsewhere. I reserve the right to seek advice of the Attorney General and Solicitor General. 5. I will require a record to be provided of what has been seized, and I may wish to attach conditions to the police handling of any parliamentary material discovered in a search until such time as any issue of privilege has been resolved. On 30 September 2010 Mr Andrew Gibson, a budget officer in the Fees Office, was sentenced to 9 months imprisonment after pleading guilty to three counts of obtaining money transfers by deception. He had drawn up false invoices in the names of three former Members of Parliament. It is reasonable to assume that this prosecution was brought with the assistance of the House authorities. The court was provided with information that on 12 October 2010 the Standards and Privileges Committee agreed that the Parliamentary Commissioner for Standards should report to the Metropolitan Police Service the conduct of Mr Denis MacShane MP in relation to claims for expenses. According to the procedures agreed between the Committee, the Commissioner and the Metropolitan Police an inquiry by the Commissioner into a complaint against Mr MacShane was suspended until the question of possible criminal proceedings was resolved. In the course of the hearing of these appeals the court was informed that, with the consent of the defendants, the Fees Office had provided the prosecution with documentation in relation to the defendants claims for allowances and expenses. Conclusions Parliament by legislation and by administrative changes has to a large extent relinquished any claim to have exclusive cognisance of the administrative business of the two Houses. Decisions in relation to matters of administration are taken by parliamentary committees and it has been common ground before the Court that these decisions are protected by privilege from attack in the courts. The 1999 Report distinguishes, however, between such decisions and their implementation, expressing the view that the latter is not subject to privilege. I consider that view to be correct. Where the House becomes aware of the possibility that criminal offences may have been committed by a Member in relation to the administration of the business of Parliament in circumstances that fall outside the absolute privilege conferred by article 9, the considerations of policy to which I have referred at para 61 above require that the House should be able to refer the matter to the police for consideration of criminal proceedings, or to cooperate with the police in an inquiry into the relevant facts. That is what the House has done in relation to the proceedings brought against the three defendants. The area of activity to which these prosecutions relate is administrative. The payment of allowances and expenses had until recently been entrusted to the Fees Office by the Commission, a body set up for the purposes of administration see paras 9 to 11 above. These administrative tasks are now performed by the Independent Parliamentary Standards Authority, set up under the Parliamentary Standards Act 2009. The House has asserted a disciplinary jurisdiction over claims that have been made for allowances and expenses and, to that end, the Members Estimate Committee set up a review of such claims under Sir Thomas Legg. The House has not, however, asserted exclusive cognisance, or jurisdiction, in respect of such claims. On the contrary, on 20 July 2009 the Committee excluded from the claims referred to Sir Thomas any that were under investigation by the police. Even if the House were not co operating with the prosecuting authorities in these cases, I do not consider that the court would be prevented from exercising jurisdiction on the ground that they relate to matters within the exclusive cognisance of Parliament. If an applicant sought to attack by judicial review the scheme under which allowances and expenses are paid the court would no doubt refuse the application on the ground that this was a matter for the House. Examination of the manner in which the scheme is being implemented is not, however, a matter exclusively for Parliament. It was not suggested that Members have a contractual entitlement to allowances and expenses, but if they were to have such contractual rights, I see no reason why they should not sue for them. If a question were raised as to whether allowances and expenses were taxable, the court would be entitled to examine the circumstances in which they were paid. Equally there is no bar in principle to the Crown Court considering whether the claims made by the defendants were fraudulent. This is not to exclude the possibility that, in the course of a criminal prosecution, issues might arise involving areas of inquiry precluded by parliamentary privilege, although that seems unlikely having regard to the particulars of the charges in the cases before us. For these reasons I am satisfied that neither article 9 nor the exclusive cognisance of the House of Commons poses any bar to the jurisdiction of the Crown Court to try these defendants. That is why I decided that each appeal should be dismissed. LORD RODGER The appellants are three former Members of Parliament who are charged with false accounting, contrary to section 17(1)(b) of the Theft Act 1968 (the Theft Act). The first count on the indictment against Mr Morley, for example, is in these terms: STATEMENT OF OFFENCE False accounting, contrary to section 17(1)(b) of the Theft Act 1968. PARTICULARS OF OFFENCE ELLIOT MORLEY, between 1 April 2004 and 28 February 2006, dishonestly, with a view to gain for himself or with intent to cause loss to another, in furnishing information for the purpose of making allowance claims, produced or made use of documents required for an accounting purpose, namely 19 Form ACA2 claim forms, which to his knowledge were or may have been misleading, false or deceptive in a material particular, in that they stated he was paying 800 per month in mortgage interest, when in fact he was paying a lesser amount. The appellants have not suggested that the indictments do not disclose an offence under English law or that the counts are otherwise defective. The argument which has eventually brought these appeals to this Court arises out of an aspect of the indictments which does not emerge immediately, even from the particulars of the offences: at the relevant time Mr Morley and the other appellants were MPs. The reference to Form ACA2 is, however, a reference to a form which MPs used for submitting claims for allowances to the Fees Office of the House of Commons. When submitting such claims MPs had to sign a declaration to the effect that they had incurred the costs in question wholly, exclusively and necessarily to enable [them] to stay overnight away from [their] only or main home for the purpose of performing [their] duties as a Member of Parliament. The argument for the appellants is that the counts refer to the submission of claims by MPs to an office of the House of Commons and that, in these circumstances, a prosecution is precluded by parliamentary privilege, by reference either to article 9 of the Bill of Rights or to the exclusive jurisdiction of Parliament to regulate its own affairs. As it existed at the relevant time, the system for payment of Members allowances had been created by, and continued to rest solely on, Resolutions of the House of Commons. A request for the necessary funds to pay the allowances was included in the Members Estimate which was laid by the Treasury each year as part of the Governments Main Supply Estimates. The Members Estimate Committee was responsible for oversight of the expenditure on the allowances. The Committee on Members Allowances advised the Members Estimate Committee on this matter. In his role as Accounting Officer, the Clerk of the House of Commons was responsible for compiling the necessary accounts and was accountable to the House for the money spent. The Members Estimate Audit Committee advised the Clerk of the House in this connexion. The various allowances available to Members were set out in the Green Book, on which the Committee on Members Allowances advised the Speaker, the Members Estimate Committee and the Leader of the House. Moreover, if any question arose as to the application of the rules in the Green Book, a Member could refer it to the Committee on Members Allowances, from which there was an appeal to the Members Estimate Committee. The administration of the system of allowances (including payment of the allowances) was handled by an office, usually referred to as the Fees Office, within the Operations Directorate. If the Fees Office refused a Members claim to an allowance, the Member could appeal to the Committee on Members Allowances and from there to the Members Estimate Committee. A further point to notice about the indictments is that the particulars of the offences do not specify where the MPs are alleged to have been when they submitted the claims. For all we know, they could have completed the forms at home, whether in England or in Scotland, and sent them in by post. Equally, they could have completed the forms while in the House of Commons and have submitted them in person to the Fees Office. It does not matter since, on either view, the misleading information would have been furnished to the Fees Office of the House. But, to test the point taken by the appellants, it is best to assume that the allegation is that they completed the forms in the House of Commons and submitted them in person. So all stages of the alleged offence would have taken place within the precincts of the House of Commons. The Theft Act extends to England and Wales. In other words, it forms part of the law of England and Wales. The Houses of Parliament and their dpendances are in England and so the criminal law of England applies to what is done there. The most famous illustration of this elementary point is, perhaps, the murder of the Prime Minister, Mr Spencer Percival, in the lobby of the House of Commons in 1812. John Bellingham was arrested, prosecuted, tried for murder at the Old Bailey, convicted and executed all according to the common law of England. If the assassin had been a fellow MP, then by the law of England he too would have committed murder. The same would have applied if the MP had assassinated the Prime Minister in the chamber of the House of Commons. Less dramatically, if a Member of Parliament were to steal money from a fellow Members wallet in a room in the House of Commons or from the till in the Members Dining Room, he would commit theft under section 1 of the Theft Act. Similarly, if a Member intentionally damaged one of the statues of former Prime Ministers in the lobby of the House of Commons, he would commit criminal damage under section 1 of the Criminal Damage Act 1971. Equally to come to the present cases if a Member of Parliament dishonestly, with a view to gain for himself, submitted a claim form which to his knowledge was false in a material particular, the law of England would apply. The Member would commit an offence under section 17(1) of the Theft Act, even if he completed the form in the House of Commons and submitted it in person to the Fees Office. As already noted, the appellants say, however, that their prosecution in the Crown Court for this offence is precluded by parliamentary privilege, by reference either to article 9 of the Bill of Rights or to the exclusive jurisdiction of Parliament to regulate its own affairs. An invocation of parliamentary privilege is apt to dazzle lawyers and judges outside Parliament. In Wellesley v Duke of Beaufort (1831) 2 Russ & M 639, 660, Lord Brougham LC warned courts of justice against acceding to claims of privilege the instant they hear that once magical word pronounced. A few years later, in Stockdale v Hansard (1839) 9 Ad & E 1, 112, Lord Denman CJ remarked that the privileges are well known, it seems, to the two Houses, and to every Member of them, as long as he continues a Member; but the knowledge is as incommunicable as the privileges to all beyond that pale. Happily, it is unnecessary on this occasion to penetrate too deeply into these mysteries if mysteries they be. The appellants formulation of their argument might seem to suggest that article 9 of the Bill of Rights deals with matters that would not necessarily fall within the exclusive jurisdiction of Parliament to regulate its own affairs. A moments reflection shows, however, that, unless a matter did fall within the exclusive jurisdiction of Parliament with the result that it did not fall within the legitimate jurisdiction of the ordinary courts of the land, whether civil or criminal, or of any other body article 9 could not itself legitimately purport to exclude all consideration of the matter outside Parliament. In other words, article 9 cannot be intended to apply to any matter for which Parliament cannot validly claim the privilege of exclusive cognizance. Indeed, as the distinguished Clerk of the House of Commons, Sir Gilbert Campion (later Lord Campion), pointed out in his Memorandum to the Select Committee on the Official Secrets Acts in 1939, the relevant words in the Preamble to the Bill of Rights make this clear: Whereas the late King James the Second by the Assistance of diverse evill Councellors Judges and Ministers imployed by him did endeavour to subvert and extirpate the Protestant Religion and the Lawes and Liberties of this Kingdome By Prosecutions in the Court of Kings Bench for Matters and Causes cognizable onely in Parlyament and by diverse other Arbitrary and Illegall Courses And thereupon the said Lords Spirituall and Temporall and Commons pursuant to their respective Letters and Elections being now assembled in a full and free Representative of this Nation takeing into their most serious Consideration the best meanes for attaining the Ends aforesaid Doe in the first place (as their Auncestors in like Case have usually done) for the Vindicating and Asserting their auntient Rights and Liberties, Declare (Emphasis added). Sir Gilbert added: The mischief the statute was intended to remedy was therefore the drawing into examination in inferior courts of matters cognizable only in Parliament. See the Committees Report, p 24. Therefore, even though the appellants put their case by reference to both article 9 and the exclusive jurisdiction of the House of Commons, in truth there is really only one basic question: does the matter for which the appellants are being prosecuted in the Crown Court fall within the exclusive jurisdiction or cognizance of Parliament or, more particularly, of the House of Commons? If so, then the appellants must prevail; if not, neither article 9 of the Bill of Rights nor any other doctrine gives them a right to have the prosecution stopped on the ground of parliamentary privilege. The expression, the High Court of Parliament, makes the point that Parliament has a certain power of judicature as do the two Houses in their separate capacities. In exercising this jurisdiction the Houses apply the law and custom of Parliament (lex et consuetudo parliamenti). Cf Kielley v Carson (1843) 4 Moo PC 63, 89, per Parke B. The present case concerns the House of Commons. Since about the time of Floyds Case (1621) the Commons have accepted that they have no power to punish except for a contempt of their House: F W Maitland, The Constitutional History of England (1908), p 245. Obviously, therefore, the House neither has, nor claims to have, any power to try anyone for an offence under English criminal law. If, for example, someone steals money within the precincts of the House of Commons, the House cannot try him for the contravention of the Theft Act: only the ordinary courts can do that. So, when Mr Andrew Gibson, a budget officer in the Fees Office, obtained the transfer of money by submitting false invoices to the Office in the names of three former MPs, he was prosecuted for a contravention of section 15A of the Theft Act and pleaded guilty at Southwark Crown Court, where he was sentenced to nine months imprisonment on 30 September 2010. In such cases the most that the House itself could do would be to treat the conduct as a contempt of the House and, in the exercise of its power of judicature, punish the offender, not for the criminal offence, but for his contempt of the House. Of course, the power to treat conduct as contempt of the House is potentially open to abuse and it was in fact abused in the past, to restrain and punish a wide variety of acts to which MPs happened to take exception. In Wellesley v Duke of Beaufort (1831) 2 Russ & M 639, 658 660, Lord Brougham LC denounced past abuses. A catalogue of examples is attached to the report of the speech of counsel for the plaintiff in Stockdale v Hansard (1839) 9 Ad & E 1, 12 13. It is not suggested that such abuses would readily occur nowadays. On the contrary, todays House of Commons is unlikely to use its power to take proceedings for contempt against a thief or fraudster operating within its precincts if only because the police and the ordinary criminal law and courts are much better adapted to dealing with such cases. In former times, when the House rightly considered that a matter could be better dealt with by the ordinary courts than by the House under its contempt jurisdiction, it either ordered the Attorney General to institute criminal proceedings in the appropriate court or presented an address to the Sovereign, asking for such proceedings to be commenced. See the examples in the Second Report from the Select Committee appointed to consider of the Proceedings had, and to be had, in respect of the several papers signed Francis Burdett, 15 June 1810, in J Hatsell, Precedents of Proceedings in the House of Commons vol 1, 2nd ed (1818), pp 294 295 and 302 303; and in Erskine May, Parliamentary Practice, 23rd ed (2004), p 163 n 1. Today, the House authorities would presumably contact the police and leave the matter in their hands. In Mr Gibsons case, for example, Scotland Yard was called in as a result of information uncovered in the course of Sir Thomas Leggs investigation of MPs expenses. Therefore the mere fact that the House could treat a matter as one of contempt does not mean that the House must do so. On the contrary, if the conduct in question would also constitute an offence under the ordinary criminal law of England, then the individual can be prosecuted in the criminal courts in the usual way. The jurisdiction of the House to deal with the matter as one of contempt overlaps with the jurisdiction of the ordinary courts to deal with it as a criminal offence. In short, the matter does not fall within the exclusive cognizance of Parliament. The examples I have given concerned offenders, hypothetical and actual, who were not Members of Parliament. But, in principle, the same must apply to MPs who commit an ordinary crime, such as theft. Admittedly, it is possible to find passages in the authorities which are so widely stated that they might seem to imply that even an ordinary crime committed by a Member of Parliament within the precincts of the House of Commons would fall within the exclusive cognizance of the House. For example, in his Commentaries on the Laws of England, 17th ed (1814), vol 1, Bk 1, chap 2, pp 158 159, under reference to Cokes Institutes, Blackstone says that the whole of the law and custom of parliament has its original from this one maxim: that whatever matter arises concerning either house of parliament, ought to be examined, discussed, and adjudged in that house to which it relates, and not elsewhere. Similarly, in Stockdale v Hansard (1839) 9 Ad & E 1, 114, referring to the two Houses of Parliament, Lord Denman CJ says that whatever be done within the walls of either assembly must pass without question in any other place. These very generalised statements have, however, to be seen in the context of the actual practice of the House. Despite their wide terms, as pointed out in para 107 above, it was, for example, the practice of the House of Commons to direct the Attorney General to prosecute someone who was alleged to have committed perjury when giving evidence to a committee of the House: James Welsh (1860) CJ 258; Henry Chambers (1866) CJ 239. More particularly, however, for centuries the House of Commons has not claimed the privilege of exclusive cognizance of conduct which constitutes an ordinary crime even when committed by a Member of Parliament within the precincts of the House. In this context the expression ordinary crime occurs in the judgment of Stephen J in Bradlaugh v Gossett (1884) 12 QBD 271, 283, where he said: I know of no authority for the proposition that an ordinary crime committed in the House of Commons would be withdrawn from the ordinary course of criminal justice. Although his use of the expression has been criticised, Stephen J was clearly drawing a distinction between an ordinary crime (such as theft) and a crime (such as sedition) which a Member of Parliament committed by saying something in the exercise of his freedom of speech in the House. What the Member said in the House would fall within the exclusive cognizance of the House and would be protected by article 9 of the Bill of Rights. The House of Commons alone could consider the matter and decide what sanction, if any, should be applied to the MP. So he could not be prosecuted for the crime in the ordinary courts and, if any attempt were made to prosecute him, the House would intervene to stop the prosecution in order to protect the privilege of freedom of speech and debate of the House itself and, simultaneously, the particular Members exercise of that privilege. In expressing the view that a Member of Parliament could be prosecuted for an ordinary crime committed in the House of Commons, Stephen J referred to the case of Sir John Elliot (1629) 3 St Tr 293. In 1629 Sir John Elliot and two others were prosecuted in the Kings Bench for uttering seditious words in the House of Commons and for laying violent hands on the Speaker. The defendants took a plea to the jurisdiction of the court because these offences are supposed to be done in parliament, and ought not to be punished in this court, or in any other, but in parliament. The court overruled the plea and the defendants were convicted. In 1667, after the Civil War and the Restoration, a report of the trial was published and came to the notice of the House of Commons: (1629) Cro Car 181. The House resolved that the judgment had been illegal and against the freedom and privilege of Parliament. A conference was arranged with the House of Lords. Mr John Vaughan (later Sir John Vaughan, the Chief Justice of the Common Pleas) spoke on behalf of the Commons. He argued, at col 317, that the judges had craftily dealt with the allegations of seditious speech and of violence to the Speaker together: So that perhaps whatsoever was criminal in the actions might serve for a justification of their rule, and might make it seem in time to become a precedent, and a ruled case against the Liberty of Speech in Parliament, which they durst not singly and bare faced have done. Mr Vaughan went on to say, at col 318: [I]t is very possible the Plea of those worthy persons, Denzil Hollis, Sir John Elliot, and the rest, was not sufficient to the jurisdiction of the court, if you take in their criminal actions altogether; but, as to the words spoken in parliament, the court could have no jurisdiction while this act of 4 Hen 8 is in force, which extends to all members that then were (or ever should be,) as well as Strode; and was a public general law, though made upon a private and a particular occasion. On a writ of error at the instance of Denzil Hollis (by now, Lord Hollis), the House of Lords held, at cols 333 334, that the original judgment should be reversed. It can be inferred from the Report by the Chief Justice (Sir John Kellynge), at col 332, that the House criticised the original decision on essentially the same basis as had been advanced by Mr Vaughan, viz, that the judges had treated the allegation of seditious words and the allegation of violence to the Speaker together. In the Chief Justices view, the allegations should have been considered separately since, even if an allegation of violent trespass to the person could or should perhaps (forte) be heard and decided in the Kings Bench, nevertheless whatever is said and published in the House of Commons by a serving Member of the House should not be heard or decided anywhere else than in Parliament. Although, as Stephen J noted in Bradlaugh v Gossett (1884) 12 QBD 271, 284, the House of Lords was careful not to express a concluded view on the matter, the indication that the charge relating to the violence to the Speaker could have been tried in the Kings Bench is pretty clear. Indeed, it was under reference to this case that Maitland was able to say, We may take it to be law that an ordinary crime, such as theft committed by a Member in the House, might be punished in the ordinary courts in the ordinary way: Constitutional History of England, p 321. Moreover, the simple fact is that, since 1667, the House has never claimed a privilege of exclusive cognizance in a case where a Member has committed an ordinary crime in the House or its precincts. The Attorney General (Sir Thomas Inskip KC) drew attention to this in his argument in R v Graham Campbell, Ex p Herbert [1935] 1 KB 594, 597 598. He submitted that it showed that there was nothing to bar a prosecution in such a case: Coke was expressing an opinion in support of the view now contended for when he said that the exercise of the power of judicature of the House of Commons was best understood by reading the judgments and records of Parliament at large, . and the book of the clerk of the House of Commons, which is a record . : see Institutes, Part IV, c 1, Of Judicature. Admittedly, a person committing an ordinary felony or misdemeanour, even on the very steps of the Speakers chair, would not be protected by the privilege of the House, but would be amenable to the jurisdiction of the criminal courts. That, however, is merely because the House has never claimed the right to adjudicate on such matters. Adapting the words of Coke, there is no record of such a privilege having been exercised, and it can, therefore, be taken not to exist. That remains the position to this day. I have therefore no doubt that, if the offences with which the appellants are charged are to be regarded as ordinary crimes, then even assuming that they are alleged to have been committed entirely within the precincts of the House the appellants can be prosecuted in the Crown Court. The only question, therefore, is whether there is any aspect of the offences which takes them out of the category of ordinary crime and into the narrower category of conduct in respect of which the House would claim a privilege of exclusive cognizance. In theory, even though the allegations are of false accounting, that could be the position. In Ex p Wason (1869) LR 4 QB 573, for example, an information alleged that three members of the House of Lords had entered into a conspiracy. Conspiracy is, in itself, an ordinary crime. But it was held that a charge of conspiracy to make statements which the members of the House knew to be untrue, in order to frustrate a petition to the House, was not cognizable by the criminal law since it concerned statements to be made, or actually made, in the House. That was considered to take the alleged conspiracy into an area of conduct which would be cognizable only by the House of Lords itself. In the present cases the charges arise out of claims for allowances that the appellants are alleged to have submitted to the Fees Office. As explained at paras 96 97 above, at the time, the system for claiming and paying allowances rested on Resolutions of the House and was supervised by the Members Estimate Committee, with the assistance of the Committee on Members Allowances. It was very much a matter over which the House exercised exclusive control, except in relation to the laying of the relevant estimate. Moreover, a system of allowances can rightly be seen as providing a necessary support to Members in carrying out all their parliamentary activities, including their core activities. It is therefore quite possible that the rules of the system would have fallen within the area for which the House would claim exclusive cognizance. And it may be that the same could have been said of decisions by the Fees Office and, on appeal, by the supervising Committees, as to a particular claim by a Member for payment of an allowance. A challenge to any of these matters in the ordinary courts by a Member or by anyone else might well have called into question decisions taken by Committees of the House, or on their behalf, on a matter which was intended to be under the exclusive control and cognizance of the House and its Committees. Obviously, the offences which the appellants are alleged to have committed could not have been committed if the House of Commons had not established and operated the system for payment of Members allowances. But it is equally true that a hypothetical Member could not steal from the till in the Members Dining Room if the Administration Committee did not consider that the Dining Room should continue to operate and to provide a service to Members. The Dining Room merely provides the setting for the theft, however. Prima facie, therefore, a charge against a Member of theft from the till would not call into question any decision of that Committee or of the House in relation to the Dining Room or other refreshment services. So the alleged conduct would not, in my view, fall within the area for which the House would claim the privilege of exclusive cognizance. A theft of that kind would be an ordinary crime which could be prosecuted in the ordinary courts. Doubtless, the House could also treat it as a contempt of the House, but this would be in the exercise of an overlapping, not an exclusive, jurisdiction. Similarly, in the present case, the appellants alleged conduct could well be regarded as an affront to the system of Members allowances established by the House and, so, as a contempt of the House, which the House could punish in the exercise of its power of judicature. But even though the alleged offences presuppose the existence of the allowances system, nothing in the particulars in the indictments indicates, or even suggests, that the prosecution of the charges would raise any issue as to decisions of the House or of its Committees, or of any officers or employees acting on their behalf, as to the system or its operation. Nor would the prosecution touch on any other core activities of Members of the House which the privilege of exclusive cognizance exists to protect their right, for example, to debate, to speak, to vote, to give notice of a motion, to present a petition, to serve on a committee, and to present a report to the House. In short, there is nothing in the allegations against the appellants which relates in any way to the legislative or deliberative processes of the House of Commons or of its Members, however widely construed. The charges against the appellants are simply charges that they have committed the ordinary crime of false accounting in circumstances where, it so happens, the allegedly misleading information was furnished to the Fees Office of the House of Commons. The allowances system merely provides the setting for the alleged offences, which are ordinary crimes. Therefore they can be prosecuted in the Crown Court. Again, the potential jurisdiction of the House in contempt is an overlapping, not an exclusive, jurisdiction. The very fact that the House authorities co operated with the police in the investigations which led to the charges against the appellants suggests, at least, that the House authorities do not see the allegations as falling into the category in respect of which the House would claim the privilege of exclusive cognizance. The fact that the Speaker has not intervened to assert the privilege points in the same direction. If the privilege of the House to exercise exclusive cognizance in cases of this kind had previously been established, then the appellants might have been able to assert that privilege, even if the House authorities had chosen not to: Wellesley v Duke of Beaufort (1831) 2 Russ & M 639, 655, per Lord Brougham LC. It is unnecessary to express a view on this point, however, since the position in the present cases is different: the appellants are claiming a privilege which the House has not asserted in the past in these circumstances and which it has not asserted on this occasion. The Court is entitled to notice, and to draw an inference from, that clamant silence. I am accordingly satisfied that the prosecution does not infringe article 9 of the Bill of Rights by impeaching or questioning the freedom of speech, the freedom of debates or the freedom of proceedings of the House or of its Members. I am equally satisfied that the prosecution is not precluded on any other basis relating to the Commons privilege of exclusive cognizance. Of course, the Court can judge the situation only as it stands at present. If the trial goes ahead, it may turn out that, contrary to expectations, some issue arises which is said to touch on the core activities of MPs or of the House itself. If that were actually so, the proceedings might be trespassing on an area for which the House would claim exclusive cognizance and to which article 9 would apply. In that event the Speaker or the House authorities might seek to intervene. It would be up to the presiding judge, with the assistance of counsel, to decide what should be done. In the meantime, however, there is nothing on the face of the indictments which would justify this Court in preventing the appellants trial from proceeding. For these reasons, which I understand to coincide in substance with those advanced by Lord Phillips, I favoured dismissing the appeals. LORD HOPE, LADY HALE, LORD BROWN, LORD MANCE, LORD COLLINS, LORD KERR We have read the judgments of Lord Phillips and Lord Rodger. We agree with them and for the reasons they give we too considered that these appeals should be dismissed. LORD CLARKE My reasons for agreeing that these appeals should be dismissed were those given by Lord Phillips and, subject to what follows, by Lord Rodger. I add a few words of my own limited to the second type of privilege relied upon, which is known as exclusive cognisance. It is to my mind plain from Lord Phillips analysis of this principle that it is a privilege which belongs to Parliament and not to individual members. This is I think clear from the fact that, unlike the privilege provided for in article 9 of the Bill of Rights, Parliament can waive or relinquish it. It seems to me to follow logically from that conclusion that it is for Parliament, and not the individual member to rely upon it. In his paras 79 to 83 Lord Phillips has demonstrated that Parliament has never asserted the privilege in cases of the kind at present before the court. He then gives examples based on these and similar cases in recent times at paras 84 to 88. In the light of the practice of Parliament over many years he then concludes in paras 89 to 92 that Parliament has never asserted the privilege in such cases and, subject to the possibility of an Act of Parliament conferring such a privilege, that it is not now open to it to do so. I agree with him that it follows that it is not open to the appellants to do so. Even if it were open to Parliament to rely upon the privilege in cases of this type, since Parliament has the right to waive or relinquish the right to do so, I do not think that an individual member could rely upon the privilege if Parliament has waived or relinquished the right in the particular case. It appears to me that, on the basis of the facts stated by Lord Phillips between paras 84 to 91, Parliament has waived or relinquished any right it might otherwise have had to claim the privilege. Having referred the investigation of allegations such as those made against the appellants to the police with a view to possible prosecution and having co operated with the police, I do not see how Parliament could now assert the exclusive cognisance relied upon. In these circumstances it seems to me that it is not open to the appellants as individual members to do so. I recognise that this conclusion may be inconsistent with the statement made by Lord Brougham LC in Wellesley v Duke of Beaufort (1831) 2 Russ & M 639 at 655, which is referred to by Lord Rodger at para 124 above. Lord Broughams statement, which did not form part of the judgment and was no more than a view expressed in the course of the argument, was in these terms: If a Court of Law or of Equity, upon due deliberation, entertains an opinion that a Member of either House of Parliament has privilege of Parliament, that Court is, in my judgment, bound to give him the benefit of his privilege, and to give it him with all its incidents, even although the House to which he belongs abandons it as a claim of right; for a Court knows nothing judicially of what takes place in Parliament till what is there done becomes an Act of the Legislature. That principle may apply to the article 9 privilege but I do not think that it can apply to the exclusive cognisance privilege. It is inconsistent with Lord Phillips conclusion at para 63 above that exclusive cognisance can be waived or relinquished by Parliament. Based on p 105 of the 23rd edition of Erskine May on Parliamentary Practice, Lord Phillips refers to a 1980 resolution which permitted reference to be made in court to certain Parliamentary papers which had up to then been subject to a claim for exclusive cognisance. It appears to me to follow from those statements that, where Parliament has waived or relinquished the privilege in respect of a particular matter, no individual member can rely upon it. In so far as Lord Brougham expressed a different view, I would not accept it. The reason he gives sounds odd to modern ears. I do not think that it can properly be said today that a court knows nothing judicially of what takes place in Parliament till what is there done becomes an Act of the Legislature. In these circumstances I would not accept that Lord Broughams statement, which was after all only made arguendo, is correct today. |
On 9 November 2016, this Court handed down judgment in the series of cases collectively reported as R (Carmichael) v Secretary of State for Work and Pensions [2016] UKSC 58; [2016] 1 WLR 4550 (Carmichael (SC)). This was a judicial review of the regulations governing the removal of the spare room subsidy, otherwise known as the bedroom tax. Regulation B13 of the Housing Benefit Regulations 2006 (first introduced in 2013) required a percentage reduction in the eligible rent for social sector housing if the number of bedrooms in the property exceeded the number defined by regulation B13(5) and (6) as appropriate for the size of the household living there. This Court held that where there was a transparent medical need for an additional bedroom not catered for in regulation B13(5) and (6) there was unjustified discrimination on the ground of disability and thus a violation of the claimants rights under article 14 read with article 8 of the European Convention on Human Rights. Mrs Carmichael could not share a bedroom with her husband because of her disabilities, but whereas the regulation catered for children who could not share a bedroom for that reason, it did not cater for a couple who could not do so. Mr and Mrs Rutherford cared for their grandson who needed an overnight carer because of his disabilities, but whereas the regulation catered for adults who needed an overnight carer, it did not cater for children who did so. In both cases, the relief granted was a declaration that the claimant had suffered discrimination contrary to article 14 of the Convention: see Carmichael (SC) above and R (Rutherford) v Secretary of State for Work and Pensions [2016] EWCA Civ 29; [2016] HLR 8. On 2 March 2017, the Secretary of State for Work and Pensions laid before Parliament the Housing Benefit and Universal Credit (Size Criteria) (Miscellaneous Amendments) Regulations 2017 (SI 2017/213) which were intended to cater for the two instances in which this Court had held that the previous version of regulation B13(5) and (6) led to violations of a Convention right. They came into effect on 1 April 2017 and were not retrospective. The principal issue in this case is the effect of this Courts decision in Carmichael (SC) upon the decision makers in the housing benefit system the local authorities, responsible for the payment of housing benefit, and the First tier Tribunal (FTT) and the Upper Tribunal (UT) hearing appeals from local authority decisions in claims relating to periods before the regulations were amended. Do they have to carry on applying the regulation in its original form? Or do they have to calculate housing benefit without making the percentage deduction in cases where to do so will breach the Convention rights of the claimants in the way determined in the Carmichael and Rutherford cases? This is an important constitutional question. A secondary issue is whether, if the housing benefit is to be calculated without the percentage deduction in such cases, account should be taken of any discretionary housing payments (DHPs) received by the claimant during the period in question. The history The appellant, RR, lives with his severely disabled partner in a two bedroomed rented social housing property for which he claims housing benefit. The respondent local authority, Sefton Borough Council, applied regulation B13 and decided that, because they were a couple, they were only entitled to one bedroom and so applied the 14% discount required by regulation B13(3)(a) with effect from 1 April 2013. RR appealed to the FTT. On 15 August 2014, the FTT found as a fact that RR and his partner required separate bedrooms because of her disabilities and her need to accommodate medical equipment and supplies. Sefton accepted that, as her primary carer, RR needed to be able to get a nights sleep. The FTT further held that RR had suffered discrimination as between a member of a couple with a disability and a member of a couple without disability which could not be objectively and reasonably justified. To avoid this discrimination, the FTT held, applying the interpretative obligation in section 3(1) of the Human Rights Act 1998 (the HRA), that regulation B13(5)(a) should be read so as to apply either to a couple or to one member of a couple who could not share a bedroom because of the disability of one of them. Meanwhile, in parallel to the judicial review proceedings which culminated in this Courts decision in Carmichael (SC), Mr Carmichael had appealed to the FTT against the local authoritys decision that his housing benefit entitlement should be reduced by 14%. The FTT allowed his appeal on a similar basis to that on which it had allowed the appeal of RR. The Secretary of States appeals against both decisions were stayed until the outcome of Carmichael (SC) was known. Both stays were lifted in January 2017. Mr Carmichaels appeal was determined by the UT in April 2017: Secretary of State for Work and Pensions v Carmichael [2017] UKUT 174 (AAC) (Carmichael (UT)). The UT held that the FTTs reading of regulation B13(5)(a) was impermissible but nevertheless reached the same result by holding that Mr Carmichaels housing benefit was to be calculated without making the 14% deduction because to make it would be a clear breach of his Convention rights, contrary to section 6(1) of the HRA. The Secretary of State appealed the Carmichael (UT) decision to the Court of Appeal and that Court stayed the appeal in RR and some 130 other cases (referred to as the Carmichael/Rutherford lookalike cases) pending the outcome of that appeal. The Court of Appeal gave judgment on 20 March 2018: Secretary of State for Work and Pensions v Carmichael [2018] EWCA Civ 548; [2018] 1 WLR 3429 (Carmichael (CA)). The appeal was allowed. The majority (Sir Brian Leveson PQBD and Flaux LJ) held that the UT did not have power to direct as it did, as this would amount to an impermissible rewording of the regulation: any remedy for the violation of Convention rights was to be found in an action for damages under section 8(2) of the HRA. Leggatt LJ dissented: he would have held that the UT did have power to do what it did. However, he also held that the UT had erred in not taking into account the DHPs that Mr Carmichael had received. So the Court was unanimous in allowing the Secretary of States appeal. Mr Carmichael has not appealed to this Court. Nevertheless, this case is effectively a challenge to that decision. The stay on the Secretary of States appeal to the UT in the case of RR (and another) was lifted on 4 May 2018. RR accepted that the UT was bound by Carmichael (CA) to allow the appeal, which by a decision dated 28 August 2018, it duly did: Secretary of State for Work and Pensions v RR and Sefton Borough Council [2018] UKUT 355 (AAC). The UT also commented that it seemed eminently arguable the problem of double payment, identified by Leggatt LJ, could be overcome by reason of regulation 8(2)(b) of the Discretionary Financial Assistance Regulations 2001 (SI 2001/1167). The UT granted RR a leapfrog certificate under section 14A of the Tribunals, Courts and Enforcement Act 2007, enabling him to appeal directly from the UT to this Court (leapfrogging the Court of Appeal) if given permission to do so. This Court granted permission on 11 February 2019. The evolution of regulation B13 In its original form, introduced by the Housing Benefit (Amendment) Regulations (SI 2012/3040), regulation 5(7), the relevant parts of regulation B13 read as follows: (1) The maximum rent (social sector) is determined in accordance with paragraphs (2) to (4). (2) The relevant authority must determine a limited rent by (a) determining the amount that the claimants eligible rent would be in accordance with regulation 12B(2) (b) where the number of bedrooms in the dwelling exceeds the number of bedrooms to which the claimant is entitled in accordance with paragraph (5), reducing that amount by the appropriate percentage set out in paragraph (3); (3) The appropriate percentage is (a) 14% where the number of bedrooms in the dwelling exceeds by one the number of bedrooms to which the claimant is entitled; and (b) 25% where the number of bedrooms in the dwelling exceeds by two or more the number of bedrooms to which the claimant is entitled. a couple (within the meaning of Part 7 of the (5) The claimant is entitled to one bedroom for each of the following categories of person whom the relevant authority is satisfied occupies the claimants dwelling as their home (and each person shall come within the first category only which is applicable) (a) Act); (b) (c) (d) (e) a person who is not a child; two children of the same sex; two children who are less than ten years old; a child, and one additional bedroom in any case where the claimant or the claimants partner is a person who requires overnight care (or in any case where each of them is). The first amendment (made by SI 2013/665), which came into force on the same day that the regulation came into force, 1 April 2013, repealed the tailpiece to paragraph (5) and incorporated it in a new paragraph (6) as follows: (6) The claimant is entitled to one additional bedroom in any case where (a) the claimant or the claimants partner is (or each of them is) a person who requires overnight care; or (b) the claimant or the claimants partner is (or each of them is) a qualifying parent or carer. A person who requires overnight care was defined in regulation 2(1) in terms which had the effect of not including any child. The inclusion of claimants or their partners who required overnight care in the original and amended regulation was as a result of the decision of the Court of Appeal in Burnip v Birmingham City Council [2012] EWCA Civ 629; [2013] PTSR 117. The next amendment (made by SI 2013/2828 in December 2013) added to the list in paragraph (5): (ba) a child who cannot share a bedroom; This was as a result of the decision of the Court of Appeal in Gorry v Wiltshire County Council, decided at the same time as Burnip and reported with it. The category of adults whose disabilities might count for the purpose of paragraph (6) was also expanded to include people responsible for the rent and their partners. Thus it will be seen that, by the time of Carmichael (SC), the regulation catered for children who could not share a bedroom but not for members of a couple who could not do so. It also catered for adults who needed overnight care but not for children who needed it. It was in those two respects that the regulation was held discriminatory by this Court and the third amendment (made by SI 2017/213) was designed to cure them. As the effect of those amendments is not in issue in this appeal, and their wording is by no means crystal clear, there is no need to prolong this judgment by quoting them. The arguments on the principal issue Mr Richard Drabble QC, who appears for the appellant, does not argue that regulation B13 is ultra vires. Rather, he argues that it is unlawful for the local authority, the FTT and the UT to apply the deduction mandated by regulation B13(2)(b) and (3) in breach of the appellants Convention rights. Under section 6(1) of the HRA, It is unlawful for a public authority to act in a way which is incompatible with a Convention right. A local authority is undoubtedly a public authority for this purpose. Further, by virtue of section 6(3)(a), a public authority includes a court or tribunal. It is therefore unlawful for a local authority, the FTT, the UT, or indeed the Court of Appeal or this Court, to make or uphold an award which is incompatible with the claimants Convention rights. This would not be the case if the decision were mandated by primary legislation. Section 6(2)(a) of the HRA provides that subsection (1) does not apply to an act if as the result of one or more provisions of primary legislation, the authority could not have acted differently. But the regulation is not primary legislation. Nor does primary legislation require that the regulation take the form that it does: it has subsequently been amended with a view to curing the incompatibility found in Carmichael (SC). Thus section 6(2)(b) is also inapplicable. This provides that subsection (1) does not apply to an act if in the case of one or more provisions of, or made under, primary legislation which cannot be read and given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provisions. The regulation is not primary legislation and, although made under primary legislation, the enabling Act does not mandate a regulation which, in some respects, was incompatible with a Convention right. Under section 7(1)(b) of the HRA, A person who claims that a public authority has acted (or proposes to act) in a way which is made unlawful by section 6(1), may rely on the Convention right or rights concerned in any legal proceedings. Hence the appellant did not have to bring separate, free standing proceedings to claim a remedy for a breach of his Convention rights. He could rely on it in the tribunal proceedings. The authority, and the tribunals, should have made an award of housing benefit without the 14% reduction which, in the light of the FTTs findings of fact, was incompatible with the appellants Convention rights. Mr Drabble is able to pray in aid at least two decisions at the level of this Court which support that analysis. Closest to it is Mathieson v Secretary of State for Work and Pensions [2015] UKSC 47; [2015] 1 WLR 3250. The regulations governing entitlement to disability living allowance (DLA) suspended the entitlement of a child under 16 after the first 84 days of free in patient treatment in an NHS hospital. This Court held that, in the circumstances of that case, to suspend entitlement was a violation of the childs Convention rights under article 14 read with article 1 of the First Protocol. The Secretary of State was not obliged by any provision of primary legislation to suspend payment; thus he had acted unlawfully under section 6(1) of the HRA in deciding to do so. The FTT should have allowed the childs appeal against that decision and substituted a decision that he was entitled to continued payment of DLA from the date when it was suspended until the date when it was reinstated. This Court allowed the childs appeal and made the order which the FTT should have made. Significantly, the Court declined to make a declaration that the Secretary of State had violated the childs rights. In a statutory appeal such as this, the FTT, UT and Court of Appeal had no power to make a formal declaration: see sections 12(4) and 14(4) of the Tribunals, Courts and Enforcement Act 2007. Even if the powers of this Court were wider, to make a declaration would add nothing to the substantive order made by the Court. The Court also declined to use the interpretative obligation in section 3(1) of the HRA, to read the regulations relating to suspension so as not to apply to children. Section 3(1) requires that 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. Lord Wilson did not think that possible in that case. But in any event, the 84 day rule would not always or inevitably be in breach of a childs Convention rights: much would depend upon the circumstances of the individual case. The Mathieson approach had previously been applied in a number of other benefit cases. In Francis v Secretary of State for Work and Pensions [2005] EWCA Civ 1303; [2006] 1 WLR 3202, the regulations governing entitlement to a maternity grant were held incompatible with the Convention rights of a woman who had obtained a residence order giving her parental responsibility for her sisters baby son, because they treated the holder of a residence order less favourably that the holder of an adoption order. The remedy was not to construe the regulations in her favour but to make a declaration that she was entitled to the maternity grant. In Burnip v Birmingham City Council [2012] EWCA Civ 629; [2013] PTSR 117, mentioned earlier, the Court of Appeal remitted each case where a violation had been found to the local authority for the decision to be remade in accordance with the Court of Appeals judgment. Each claimant was entitled to such further sum as was necessary to comply with the judgment and article 14. As Leggatt LJ explained in Carmichael (CA), at para 94, Thus, the Court of Appeal treated the Housing Benefit Regulations as having no effect in the three individual cases before them insofar as applying the Regulations in calculating the claimants entitlement to housing benefit violated their Convention rights by treating them as under occupying their accommodation. A further example of the application of the same approach, albeit in a rather different context, is the decision of the House of Lords in In re G (Adoption: Unmarried Couple) [2008] UKHL 38; [2009] AC 173. Article 14 of the Adoption (Northern Ireland) Order 1987 (SI 1987/2203) provided that an adoption order could only be made in favour of more than one person if they were married to one another. The House of Lords held that this discrimination between married and unmarried couples was irrational and in breach of article 14 read with article 8 of the Convention. The remedy was a declaration that this particular couple were entitled to apply to adopt the child. Had the Order been primary legislation, the courts would have been bound to give effect to it: the most they would have done was to make a declaration of incompatibility under section 4 of the HRA. But, at para 116, it was explained that: The courts are free simply to disregard subordinate legislation which cannot be interpreted or given effect in a way which is compatible with the Convention rights. Indeed, in my view, this cannot be a matter of discretion. Section 6(1) requires the court to act compatibly with the Convention rights if it is free to do so. A more recent example of the same approach is JT v First tier Tribunal [2018] EWCA Civ 1735; [2019] 1 WLR 1313. This concerned a rule in the criminal injuries compensation scheme which barred victims who had suffered injury before 1979 from making a claim if at the time of the injury they were living under the same roof as the perpetrator. The Court of Appeal held that this was incompatible with article 14 read with article 1 of the First Protocol and granted a declaration that the claimant was not prevented by the rule from being paid an award of compensation under the scheme. As Leggatt LJ explained, at para 122: Where, as here, a provision of subordinate legislation cannot be given effect in a way which is compatible with a Convention right and there is no primary legislation which prevents removal of the incompatibility, the courts duty under section 6(1) is to treat the provision as having no effect, as to give effect to it would be unlawful. Against that, Sir James Eadie QC, for the Secretary of State, accepts that the regulation was incompatible in the respects identified in Carmichael (SC), and that it could not be interpreted under section 3(1) of the HRA in a way which avoided that incompatibility. No one sought to defend the FTTs rewriting of the regulation so as to add words in. It was the size criteria rather than the 14% deduction which gave rise to the incompatibility. Rectifying that would require rewriting the regulation, which could be done in a variety of ways. It was not for the local authority or the tribunals to redesign the legislative scheme so as to render it compatible with the Convention rights. That would be constitutionally inappropriate, usurping the role of the legislator. It was also outside their statutory powers. He did not accept that Mathieson represented a consistent line of authority that incompatible provisions in subordinate legislation could simply be ignored. It was a case in which a specific finding was made that could be dealt with as an individual case, not a structural problem as in this case. The court declined to go further and did not address the constitutional problems of what it had done. Further, he argues that to allow the tribunals to disapply the regulation would be to cut across the provisions of the HRA relating to damages. Section 8(1) of the HRA provides that 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. Section 8(2) provides that damages may be awarded only by a court which has power to award damages, or to order payment of compensation, in civil proceedings. Making an award of housing benefit without the deduction would be tantamount to making an award of damages or compensation which the tribunals have no power to do. Thus, if there has been a violation of the Convention rights, the correct remedy is a free standing application, under section 7(1)(a) of the HRA, to a court which does have power to award damages. Conclusions on the principal issue Although the majority of the Court of Appeal in Carmichael (CA) accepted the arguments of the Secretary of State, in my view Leggatt LJ was entirely right to accept the arguments of the appellant. There is nothing unconstitutional about a public authority, court or tribunal disapplying a provision of subordinate legislation which would otherwise result in their acting incompatibly with a Convention right, where this is necessary in order to comply with the HRA. Subordinate legislation is subordinate to the requirements of an Act of Parliament. The HRA is an Act of Parliament and its requirements are clear. The HRA draws a clear and careful distinction between primary and subordinate legislation. This is shown, not only by the provisions of section 6(1) and 6(2) which have already been referred to, but also by the provisions of section 3(2). This provides that the interpretative obligation in section 3(1): (a) applies to primary and subordinate legislation whenever enacted; (b) does not affect the validity, continuing operation or enforcement of any incompatible primary legislation; and (c) does not affect the validity, continuing operation or enforcement of any incompatible subordinate legislation if (disregarding any possibility of revocation) primary legislation prevents the removal of the incompatibility. Once again, a clear distinction is drawn between primary and subordinate legislation. The obligation in section 6(1), not to act in a way which is incompatible with a Convention right, is subject to the exception in section 6(2). But this only applies to acts which are required by primary legislation. If it had been intended to disapply the obligation in section 6(1) to acts which are required by subordinate legislation, the HRA would have said so. Again, under section 3(2), primary legislation which cannot be read or given effect compatibly with the Convention rights must still be given effect, as must subordinate legislation if primary legislation prevents removal of the incompatibility. If it had been intended that the section would not affect the validity, continuing operation or enforcement of incurably incompatible subordinate legislation, where there was no primary legislation preventing removal of the incompatibility, the HRA would have said so. Contrary to the Secretary of States argument, Mathieson was not a one off. As shown by the authorities listed in paras 21 to 23 above, the courts have consistently held that, where it is possible to do so, a provision of subordinate legislation which results in a breach of a Convention right must be disregarded. There may be cases where it is not possible to do so, because it is not clear how the statutory scheme can be applied without the offending provision. But that was not the case in Francis, where the maternity grant could be paid to the holder of a residence order who qualified for it in all other respects; nor was it the case in In re G, where the unmarried couple could be allowed to apply to adopt (in reaching my Opinion, I satisfied myself that this would not cause problems elsewhere in the statutory scheme); nor was it the case in Burnip and Gorry, where housing benefit could simply be calculated without making the deduction for under occupation; nor was it the case in Mathieson, where DLA could simply continue to be paid during the whole period of hospitalisation; nor was it the case in JT, where criminal injuries compensation could be paid without regard to the same roof rule; and nor is it the case here, where the situation is on all fours with Burnip and Gorry. There is no legislative choice to be exercised. As Dan Squires QC, for the Equality and Human Rights Commission, put it, where discrimination has been found, a legislator may choose between levelling up and levelling down, but a decision maker can only level up: if claimant A is entitled to housing benefit of X and claimant B is only entitled to housing benefit of X Y, and the difference in treatment is unjustifiably discriminatory, the decision maker must find that claimant B is also entitled to benefit of X. The Secretary of State did suggest that the incompatibility could not be cured in the same way for houses rented in the private sector, because the amount of housing benefit is calculated in a different way under regulation 13D, although the same size criteria are applied. That situation is not before us and we have not heard proper argument upon it, but I would be surprised if an equivalent calculation could not be made, so as to place Carmichael and Rutherford type claimants in the same position as Burnip and Gorry type claimants. As that great judge, Lord Bingham of Cornhill, put it in Attorney Generals Reference (No 2 of 2001) [2003] UKHL 68; [2004] 2 AC 72, 92, I cannot accept that it can ever be proper for a court, whose purpose is to uphold, vindicate and apply the law, to act in a manner which a statute (here, section 6 of the Human Rights Act 1998) declares to be unlawful. The secondary issue The question of whether any DHPs received by the appellant should be deducted from the housing benefit to which he is entitled as a result of this decision can be dealt with shortly, as the parties are agreed as to the position. The initial decision which is under appeal to this Court was made by the local authority on 5 March 2013, applying the size criteria which were to come into force on 1 April 2013. At that stage no question of DHPs could have arisen. The appeal against that decision was heard a year later. The task of the FTT was to decide whether the local authoritys decision was correct. As a Tribunal of Social Security Commissioners, presided over by His Honour Judge Hickinbottom put it in R (IB) 2/04 (unreported) 21 January 2004, at para 25: Taking the simple case of an appeal against a decision on an initial claim, in our view the appeal tribunal has power to consider any issue and make any decision on the claim which the decision maker could have considered and made. The appeal tribunal in effect stands in the shoes of the decision maker for the purpose of making a decision on the claim. In deciding a housing benefit appeal, the FTT is not permitted to take into account any circumstances not obtaining at the time when the decision appealed against was made: Child Support, Pensions and Social Security Act 2000, Schedule 7, paragraph 6(9). The task of the UT was the same. In remaking the decision having set aside the decision of the FTT, it has power to make any decision which the FTT could make if the FTT were remaking the decision: Tribunals, Courts and Enforcement Act 2007, section 12(4). Thus, neither the initial decision maker in the local authority, nor the FTT on appeal, nor the UT on appeal, was concerned with anything other than entitlement to housing benefit. They were not concerned with DHPs and had no power to take them into account. Indeed, the Secretary of State relied upon this fact to bolster the argument that an award of damages under section 8 of the HRA was a more appropriate remedy than applying section 6, because such an award could take DHPs into account. But we are concerned with whether the initial decision was correct and in my view it was not. It is for the local authority to consider whether there are any steps which they can take to recover any DHPs and if there are whether they wish to take them. Final conclusion I would allow this appeal. I would make the same order as the UT made in Carmichael (UT) that (1) the appeal against the local authoritys decision of 5 March 2013 is allowed; and (2) that RRs housing benefit entitlement is to be recalculated without making the under occupancy deduction of 14%. The reason for doing so is the same as that which the UT gave: if the tribunal or the council were to apply this deduction there would be a clear breach of [RRs] Convention rights, contrary to section 6(1) of the Human Rights Act 1998 (R (Carmichael) v Secretary of State for Work and Pensions [2016] UKSC 58; [2016] 1 WLR 4550). |
As Lord Hewart CJ famously declared, in R v Sussex Magistrates, Ex p McCarthy [1924] 1 KB 256, 259, it is not merely of some importance but is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done. That was in the context of an appearance of bias, but the principle is of broader application. With only a few exceptions, our courts sit in public, not only that justice be done but that justice may be seen to be done. But whereas in the olden days civil proceedings were dominated by the spoken word oral evidence and oral argument, followed by an oral judgment, which anyone in the court room could hear, these days civil proceedings generate a great deal of written material statements of case, witness statements, and the documents exhibited to them, documents disclosed by each party, skeleton arguments and written submissions, leading eventually to a written judgment. It is standard practice to collect all the written material which is likely to be relevant in a hearing into a bundle which may range from a single ring binder to many, many volumes of lever arch files. Increasingly, these bundles may be digitised and presented electronically, either instead of or as well as in hard copy. This case is about how much of the written material placed before the court in a civil action should be accessible to people who are not parties to the proceedings and how it should be made accessible to them. It is, in short, about the extent and operation of the principle of open justice. As Toulson LJ said, in R (Guardian News and Media Ltd) v City of Westminster Magistrates Court (Article 19 intervening) [2012] EWCA Civ 420; [2013] QB 618 (Guardian News and Media), at para 1: Open justice. The words express a principle at the heart of our system of justice and vital to the rule of law. The rule of law is a fine concept but fine words butter no parsnips. How is the rule of law itself to be policed? It is an age old question. Quis custodiet ipsos custodes who will guard the guards themselves? In a democracy, where power depends on the consent of the people governed, the answer must lie in the transparency of the legal process. Open justice lets in the light and allows the public to scrutinise the workings of the law, for better or for worse. The history of the case The circumstances in which this important issue comes before the court are unusual, to say the least. Cape Intermediate Holdings Ltd (Cape) is a company that was involved in the manufacture and supply of asbestos. In January and February 2017, it was the defendant in a six week trial in the Queens Bench Division before Picken J. The trial involved two sets of proceedings, known as the PL claims and the CDL claim, but only the PL claims are relevant to this appeal. In essence, these were claims brought against Cape by insurers who had written employers liability policies for employers. The employers had paid damages to former employees who had contracted mesothelioma in the course of their employment. The employers, through their insurers, then claimed a contribution from Cape on the basis that the employees had been exposed at work to asbestos from products manufactured by Cape. It was alleged that Cape had been negligent in the production of asbestos insulation boards; that it knew of the risks of asbestos and had failed to take steps to make those risks clear; indeed, that it obscured, understated and unfairly qualified the information that it had, thus providing false and misleading reassurance to employers and others. Cape denied all this and alleged that the employers were solely responsible to their employees, that it did publish relevant warnings and advice, and that any knowledge which it had of the risks should also have been known to the employers. Voluminous documentation was produced for the trial. Each set of proceedings had its own hard copy core bundle, known as Bundle C, which contained the core documents obtained on disclosure and some documents obtained from public sources. The PL core bundle amounted to over 5,000 pages in around 17 lever arch files. In addition, there was a joint Bundle D, only available on an electronic platform, which contained all the disclosed documents in each set of proceedings. If it was needed to refer to a document in Bundle D which was not in Bundle C, it could immediately be viewed on screen, and would then be included in hard copy in Bundle C. The intention was that Bundle C would contain all the documents referred to for the purpose of the trial, whether in the parties written and oral opening and closing submissions, or in submissions or evidence during the trial. After the trial had ended, but before judgment was delivered, the PL claims were settled by a consent order dated 14 March 2017 and sealed on 17 March 2017. The CDL claim was also settled a month later, before judgment. The Asbestos Victims Support Groups Forum UK (the Forum) is an unincorporated association providing help and support to people who suffer from asbestos related diseases and their families. It is also involved in lobbying and promoting asbestos knowledge and safety. It was not a party to either set of proceedings. On 6 April 2017, after the settlement of the PL claims, it applied without notice, under the Civil Procedure Rules, CPR rule 5.4C, which deals with third party access to the records of the court, with a view to preserving and obtaining copies of all the documents used at or disclosed for the trial, including the trial bundles, as well as the trial transcripts. This was because the Forum believed that the documents would contain valuable information about such things as the knowledge of the asbestos industry of the dangers of asbestos, the research which the industry and industry related bodies had carried out, and the influence which they had had on the Factory Inspectorate and the Health and Safety Executive in setting standards. In the Forums view, the documents might assist both claimants and defendants and also the court in understanding the issues in asbestos related disease claims. No particular case was identified but it was said that they would assist in current cases. That same day, the Master made an ex parte order designed to ensure that all the documents which were still at court stayed at court and that any which had been removed were returned to the court. She later ordered that a hard drive containing an electronic copy of Bundle D be produced and lodged at court. After a three day hearing of the application in October, she gave judgment in December, holding that she had jurisdiction, either under CPR rule 5.4C(2) or at common law, to order that a non party be given access to all the material sought. She ordered that Mr Dring (now acting for and on behalf of the Forum) should be provided with the hard copy trial bundle, including the disclosure documents in Bundle C, all witness statements, expert reports, transcripts and written submissions. She did not order that Bundle D be provided but ordered that it be retained at court. Cape appealed, inter alia, on the grounds that: (1) the Master did not have jurisdiction, either under CPR rule 5.4C or at common law, to make an order of such a broad scope; (2) to the extent that the court did have jurisdiction to grant access, she had applied the wrong test to the exercise of her discretion; and (3) in any event, she should have held that the Forum failed to meet the requisite test. The appeal was transferred to the Court of Appeal because of the importance of the issues raised. In July 2018, that court allowed Capes appeal and set aside the Masters order: [2018] EWCA Civ 1795; [2019] 1 WLR 479. It held that the records of the court for the purpose of the discretion to allow access under CPR rule 5.4C(2) were much more limited than she had held. They would not normally include trial bundles, trial witness statements, trial expert reports, trial skeleton arguments or written submissions; or trial transcripts. Nevertheless, the court had an inherent jurisdiction to permit a non party to obtain (i) witness statements of witnesses, including experts, whose statements or reports stood as evidence in chief at trial and which would have been available for inspection during the trial, under CPR rule 32.13; (ii) documents in relation to which confidentiality had been lost under CPR rule 31.22 and which were read out in open court, or the judge was invited to read in court or outside court, or which it was clear or stated that the judge had read; (iii) skeleton arguments or written submissions read by the court, provided that there is an effective public hearing at which these were deployed; and (iv) any specific documents which it was necessary for a non party to inspect in order to meet the principle of open justice. But there was no inherent jurisdiction to permit non parties to obtain trial bundles or documents referred to in skeleton arguments or written submissions, or in witness statements or experts reports, or in open court, simply on the basis that they had been referred to in the hearing. When exercising its discretion under CPR rule 5.4C(2) or the inherent jurisdiction, the court had to balance the non partys reasons for seeking disclosure against the partys reasons for wanting to preserve confidentiality. The court would be likely to lean in favour of granting access if the principle of open justice is engaged and the applicant has a legitimate interest in inspecting the documents. If the principle of open justice is not engaged, then the court would be unlikely to grant access unless there were strong grounds for thinking it necessary in the interests of justice to do so (paras 127 and 129). Accordingly, the court ordered, in summary: (i) that the court should provide the Forum with copies of all statements of case, including requests for further information and answers, apart from those listed in Appendix 1 to the order, so far as they were on the court file and for a fee, pursuant to the right of access granted by CPR rule 5.4C(1); (ii) that Cape should provide the Forum with copies of the witness statements, expert reports and written submissions listed in Appendix 2 to the order; and (iii) that the application be listed before Picken J (or failing him some other High Court Judge) to decide whether any other document sought by the Forum fell within (ii) or (iv) in para 9 above and if so whether Cape should be ordered to provide copies. Copying would be at the Forums expense. Cape was permitted to retrieve from the court all the documents and bundles which were not on the court file and the hard drive containing a copy of Bundle D. In making this order, the Court of Appeal proceeded on the basis that clean copies of the documents in question were available. Cape now appeals to this court. It argues, first, that the Court of Appeal should have limited itself to order (i) in para 11 above; second, that the Court of Appeal was wrong to equate the courts inherent jurisdiction to allow access to documents with the principle of open justice; the treatment of court documents is largely governed by the Civil Procedure Rules and the scope of any inherent jurisdiction is very limited; insofar as it goes any further than expressly permitted by the Rules, it extends only to ordering provision to a non party of copies of (a) skeleton arguments relied on in court and (b) written submissions made by the parties in the course of a trial (as held by the Court of Appeal in GIO Personal Investment Services Ltd v Liverpool and London Steamship Protection and Indemnity Association Ltd (FAI General Insurance Co Ltd intervening) [1999] 1 WLR 984 (FAI)); and third, that the Court of Appeal was wrong to conclude that the Forum did have a relevant legitimate interest in obtaining access to the documents; the public interest in open justice was different from the public interest in the content of the documents involved. The Forum cross appeals on the ground that the Court of Appeal was wrong to limit the scope of CPR rule 5.4C in the way that it did. Any document filed at court should be treated as part of the courts records for that purpose. The default position should be to grant access to documents placed before a judge and referred to by a party at trial unless there was a good reason not to do so. It should not be limited by what the judge has chosen to read. The Media Lawyers Association has intervened in the appeal to this court. It stresses that the way in which most members of the public are able to scrutinise court proceedings is through media reporting. The media are the eyes and ears of the public. For this, media access to court documents is essential. The need often arises after the proceedings have ended and judgment has been given because that is when it is known that scrutiny is required. The media cannot be present at every hearing. It cites, among many other apposite quotations, the famous words of Jeremy Bentham, cited by Lord Shaw of Dunfermline in the House of Lords in Scott v Scott [1913] AC 417, the leading case on open justice, at p 477, Publicity is the very soul of justice. It is the keenest spur to exertion and the surest of all guards against improbity. It keeps the judge himself while trying under trial. The issues There are three issues in this important case: (1) What is the scope of CPR rule 5.4C(2)? Does it give the court power to order access to all documents which have been filed, lodged or held at court, as the Master ruled? Or is it more limited, as the Court of Appeal ruled? (2) Is access to court documents governed solely by the Civil Procedure Rules, save in exceptional circumstances, as the appellant argues? Or does the court have an inherent power to order access outside the Rules? (3) exercised? If there is such a power, how far does it extend and how should it be Civil Procedure Rules, rule 5.4C Rule 5.4C is headed Supply of documents to a non party from court records. For our purposes, the following provisions are relevant: (1) The general rule is that a person who is not a party to proceedings may obtain from the court records a copy of (a) a statement of case, but not any documents filed with or attached to the statement of case, or intended by the party whose statement it is to be served with it; (b) a judgment or order given or made in public (whether made at a hearing or without a hearing), (2) A non party may, if the court gives permission, obtain from the records of the court a copy of any other document filed by a party, or communication between the court and a party or another person. By rule 2.3(1), statement of case (a) means a claim form, particulars of claim where these are not included in a claim form, defence, Part 20 claim, or reply to defence, and (b) includes any further information in relation to them voluntarily or by court order There are thus certain documents to which a non party has a right of access (subject to the various caveats set out in the rule which need not concern us) and what looks at first sight like a very broad power to allow a non party to obtain copies of any other document filed by a party, or communication between the court and a party or other person. Hence the Forum argues that the test is filing. CPR rule 2.3 provides that filing in relation to a document means delivering it by post or otherwise to the court office. So, it is argued, any document which has been delivered to the court office has been filed and the court may give permission for a non party to obtain a copy. There are two problems with this argument. First, the fact that filing is to be achieved in a particular way does not mean that every document which reaches court in that same way has been filed: the famous fallacy of the undistributed middle. The second is that the copy is to be obtained from the records of the court. The Civil Procedure Rules do not define the records of the court. They do not even provide what the records of the court are to contain. Nor, so far as we are aware, does any other legislation. The Public Records Act 1958 is not much help. It only tells us which records are public records and what is to be done with them. The person responsible for public records must make arrangements to select those which ought to be permanently preserved and for their transfer to the Public Record Office no later than 20 years after their creation (section 3). The Lord Chancellor is the person responsible for many court records, including those of the High Court and Court of Appeal (section 8). Section 10 and Schedule 1 define what is meant by a public record. Paragraph 4 of Schedule 1 includes the records of or held in the Senior Courts (ie the High Court and Court of Appeal) in the list of records of courts and tribunals which are public records. We have been shown a document prepared by Her Majestys Courts and Tribunals Service and the Ministry of Justice, headed Record Retention and Disposition Schedule. This lists how long various categories of files and other records are to be kept. Queens Bench Division files, for example, are to be destroyed after seven years. Trial bundles are to be destroyed if not collected by the parties at the end of the hearing or on a date agreed with the court. This is of no help in telling us what the court files should contain. We have been shown various historical sources which indicate what the records of certain courts may from time to time have contained, but it is clear that practice has varied. Some indication of what the court records may currently contain is given by Practice Direction 5A, para 4.2A of which lists the documents which a party may obtain from the records of the court unless the court orders otherwise. These include a claim form or other statement of case together with any documents filed with or attached to or intended by the claimant to be served with such claim form; an acknowledgement of service together with any documents filed with or attached to or intended by the party acknowledging service to be served with such acknowledgement of service; an application notice, with two exceptions, and any written evidence filed in relation to an application, with the same two exceptions; a judgment or order made in public (whether made at a hearing or without a hearing); and a list of documents. It does not include witness statements for trial, experts reports for trial, transcripts of hearings, or trial bundles. The essence of a record is that it is something which is kept. It is a permanent or long term record of what has happened. The institution or person whose record it is will decide which materials need to be kept for the purposes of that institution or person. Practice may vary over time depending on the needs of the institution. What the court system may have found it necessary or desirable to keep in the olden days may be different from what it now finds it necessary or desirable to keep. Thus one would expect that the court record of any civil case would include, at the very least, the claim form and the judgments or orders which resulted from that claim. One would not expect that it would contain all the evidence which had been put before the court. The court itself would have no need for that, although the parties might. Such expectations are confirmed by the list in Practice Direction 5A. The records of the court must therefore refer to those documents and records which the court itself keeps for its own purposes. It cannot refer to every single document generated in connection with a case and filed, lodged or kept for the time being at court. It cannot depend upon how much of the material lodged at court happens still to be there when the request is made. However, current practice in relation to what is kept in the records of the court cannot determine the scope of the courts power to order access to case materials in particular cases. The purposes for which court records are kept are completely different from the purposes for which non parties may properly be given access to court documents. The principle of open justice is completely distinct from the practical requirements of running a justice system. What is required for each may change over time, but the reasons why records are kept and the reasons why access may be granted are completely different from one another. Other court rules There are other court rules which are relevant to the access to documents which may be granted to non parties. CPR, rule 39.2 lays down the general rule that court hearings are to be in public. Rule 39.9 provides that in any hearing the proceedings will be recorded. Any party or other person may require a transcript (for which there will be a fee). If the hearing was in private, a non party can get a transcript but only if the court so orders. A Practice Direction (Audio Recordings of Proceedings: Access) [2014] 1 WLR 632 states that there is generally no right for either a party or a non party to listen to the recording. If they have obtained a copy of the transcript, they can apply for permission to listen, but this will only be granted in exceptional circumstances, save to official law reporters. Nevertheless, the effect of rule 39.9 (which is wider than its predecessor) is that a non party can (at a fee) obtain a transcript of everything that was said in court. Rule 39.5 requires the claimant to file a trial bundle and Practice Direction 32, para 27.5, deals in detail with how these are to be prepared. Nothing is said about non parties being granted access to them. Rule 32 deals with evidence. If a witness who has made a witness statement is called to give evidence, the witness statement shall stand as his evidence in chief (rule 32.5(2)). A witness statement which stands as evidence in chief is open to inspection unless the court otherwise directs during the course of the trial (rule 32.13(1)). The considerations which might lead the court otherwise to direct are listed as the interests of justice, the public interest, the nature of expert medical evidence, the nature of confidential information, and the need to protect a child or protected person (rule 32.13(3)). Rule 32.13 recognises that the modern practice of treating a witness statement as evidence in chief (which dates back to the Report of the Review Body on Civil Justice (1988, Cm 394)) means that those observing the proceedings in court will not know the content of that evidence unless they can inspect the statement. The rule puts them back into the position they would have been in before that practice was adopted. In FAI, FAI applied to inspect and obtain: copies of documents referred to in witness statements which they had obtained under the predecessor to rule 32.13 (Rules of the Supreme Court, Order 39, rule 2A); any written opening, skeleton argument or submissions, to which reference was made by the judge, together with any documents referred to in them; and any document which the judge was specifically requested to read, which was included in any reading list, or which was read or referred to during trial. The Court of Appeal held that RSC Order 38, rule 2A, the predecessor to CPR, rule 5.4C(2), did not cover documents referred to in witness statements. The purpose of using witness statements was to encourage a cards on the table approach, to accelerate the disclosure of the parties evidence as between themselves; it was not to enable non parties to obtain access to documentation which would otherwise have been unavailable to them whether or not they had attended court. As to the inherent jurisdiction of the court, based on the principle of open justice, the same reasoning applied to documents referred to in court or read by the judge, unless they had been read out in court and thus entered the public domain. Written submissions or skeleton arguments were a different matter. The confidence of the public in the integrity of the judicial process must depend upon having an opportunity to understand the issues. Until recently this had been done in an opening speech, but if the public were deprived of that opportunity by a written opening or submissions which were not read out, it was within the inherent jurisdiction of the court to require that a copy be made available. Nevertheless, the court did observe, having referred to Lord Woolfs report, Access to Justice: Final Report to the Lord Chancellor on the Civil Justice System in England and Wales (July 1996) that It is of great importance that the beneficial saving in time and money which it is hoped to bring about by such new procedures should not erode the principle of open justice (p 997). Lybrand [2000] 1 WLR 2353, para 43, he said this: Indeed, Lord Woolf himself took the same view. In Barings plc v Coopers & As a matter of basic principle the starting point should be that practices adopted by the courts and parties to ensure the efficient resolution of litigation should not be allowed to adversely affect the ability of the public to know what is happening in the course of the proceedings. In this case, the Court of Appeal largely adopted the approach in FAI, while recognising that in certain respects the law had been developed. First, it was now apparent that the court had inherent jurisdiction to allow access to all parties skeleton arguments, not just the opening submissions, provided there was an effective public hearing at which they were deployed (see Law Debenture Trust Corpn (Channel Islands) Ltd v Lexington Insurance Co [2003] EWHC 2297 (Comm); (2003) NLJ 1551), and the same would apply to other advocates documents provided to the court to assist its understanding of the case, such as chronologies, dramatis personae, reading lists and written closing submissions (para 92). Second, although CPR rule 32.13 is limited to access during the trial, there was no reason why access to witness statements taken as evidence in chief should not be allowed under the inherent jurisdiction after the trial (para 95). Third, what applies to witness statements should also apply to experts reports which are treated as their evidence in chief (para 96). This did not extend to documents exhibited to witness statements or experts reports unless it was not possible to understand the statement or report without sight of a particular document (para 100). Finally, developments since FAI also meant that it was within the inherent jurisdiction to allow access to documents read or treated as read in open court (para 107). This should be limited to documents which are read out in open court; documents which the judge is invited to read in open court; documents which the judge is specifically invited to read outside court; and documents which it is clear or stated that the judge has read (para 108). These were all documents which were likely to have been read out in open court had the trial been conducted orally. Furthermore, the rule that parties may only use documents obtained on disclosure for the purpose of the proceedings in which they are disclosed does not apply to documents which have been read to or by the court, or referred to, at a hearing which has been held in public unless the court prohibits or limits their use (CPR rule 31.22). However, the mere fact that a document had been referred to in court did not mean that it would have been read out had the trial been conducted wholly orally or that sight of it is necessary in order to understand or scrutinise the proceedings (para 109). So, as in FAI, the court did not consider that the inherent jurisdiction extended to granting access simply on the basis that it has been referred to in open court (para 109). The decisions of the Court of Appeal in FAI and in this case are not the only cases in which the courts have accepted that they have an inherent jurisdiction to allow access to materials used in the course of court proceedings and that the rationale for doing so is the constitutional principle of open justice. That this is so is made even plainer by some recent cases of high authority. The principle of open justice The Court of Appeal had the unenviable task of trying to reconcile the very different approaches taken by that court in FAI and Guardian News and Media. This court has the great advantage of being able to consider the issues from the vantage point of principle rather than the detailed decisions which have been reached by the courts below. There can be no doubt at all that the court rules are not exhaustive of the circumstances in which non parties may be given access to court documents. They are a minimum and of course it is for a person seeking to persuade the court to allow access outside the rules to show a good case for doing so. However, case after case has recognised that the guiding principle is the need for justice to be done in the open and that courts at all levels have an inherent jurisdiction to allow access in accordance with that principle. Furthermore, the open justice principle is applicable throughout the United Kingdom, even though the court rules may be different. This was plainly recognised in Guardian News and Media. A District Judge had ordered two British citizens to be extradited to the USA. The Guardian newspaper applied to the District Judge to inspect and take copies of affidavits, witness statements, written arguments and correspondence, supplied to the judge for the purpose of the extradition hearings, referred to during the course of the hearings but not read out in open court. The judge held that she had no power to allow this and the Divisional Court agreed. In a comprehensive judgment, Toulson LJ, with whom both Hooper LJ and Lord Neuberger MR agreed, held that she did. The requirements of open justice applied to all tribunals exercising the judicial power of the state. The fact that magistrates courts were created by statute was neither here nor there (para 70). The decisions of the House of Lords in Scott v Scott [1913] AC 417, and of the Court of Appeal in FAI, and R v Howell [2003] EWCA Crim 486 respectively a family, civil and criminal case were illustrations of the jurisdiction of the court to decide what open justice required (para 71). Hence the principles established in Guardian News and Media cannot be confined to criminal cases. They were clearly meant to apply across the board. Nor has anyone suggested why the jurisdiction in criminal cases should be wider than that in civil. More to the point, they have since been approved by this court. So what were those principles? The purpose of open justice is not simply to deter impropriety or sloppiness by the judge hearing the case. It is wider. It is to enable the public to understand and scrutinise the justice system of which the courts are the administrators (para 79). The practice of the courts was not frozen (para 80). In FAI, for example, issues of informing the public about matters of general public interest did not arise (para 81). In earlier cases, it had been recognised, principally by Lord Scarman and Lord Simon of Glaisdale (dissenting) in Home Office v Harman [1983] 1 AC 280, 316, and by Lord Bingham in SmithKline Beecham Biologicals SA v Connaught Laboratories Inc [1999] 4 All ER 498, p 512, that the practice of receiving evidence without its being read in open court has the side effect of making the proceedings less intelligible to the press and the public. Lord Bingham had contemplated that public access to documents referred to in open court might be necessary to avoid too wide a gap between what has in theory, and what has in practice, passed into the public domain. The time had come to acknowledge that public access to documents referred to in open court was necessary (para 83). Requiring them to be read out would be to defeat the purpose of making hearings more efficient. Stating that they should be treated as if read out was merely a formal device for allowing access. It was unnecessary. Toulson LJ was unimpressed by the suggestion that there would be practical problems, given that the Criminal Procedure Rules 2011, in rule 5.8, provided, not only that there was certain (limited) information about a criminal case which the court officer was bound to supply, but also that, if the court so directs, the officer could supply other information about the case orally and allow the applicant to inspect or copy a document containing information about the case (para 84). But it was the common law, not the rule, which created the courts power; the rule simply provided a practical procedure for implementing it. Hence [i]n a case where documents have been placed before a judge and referred to in the course of proceedings the default position should be that access should be permitted on the open justice principle; and where access is sought for a proper journalistic purpose the case for allowing it will be particularly strong. In evaluating the grounds for opposing access, the court would have to carry out a fact specific proportionality exercise. Central to the courts evaluation will be the purpose of the open justice principle, the potential value of the material in advancing that purpose and, conversely, any risk of harm which access to the documents may cause to the legitimate interests of others (para 85). The principles laid down in Guardian News and Media were clearly endorsed by the majority of the Supreme Court in Kennedy v Charity Commission (Secretary of State for Justice intervening) [2014] UKSC 20; [2015] AC 455: see Lord Mance, at para 47, Lord Toulson, with whom Lord Neuberger and Lord Clarke agreed, at paras 110 to 118, Lord Sumption who agreed with both Lord Mance and Lord Toulson, at para 152. Nor did the minority cast doubt upon the decision: see Lord Wilson, para 192; Lord Carnwath, 236. The principles were also endorsed by a unanimous Supreme Court in A v British Broadcasting Corpn (Secretary of State for the Home Department intervening) [2014] UKSC 25; [2015] AC 588, a case emanating from Scotland: see Lord Reed, with whom Lady Hale, Lord Wilson, Lord Hughes and Lord Hodge agreed, at paras 23 27. That case was concerned with the exceptions to the open justice principle, in particular to the naming of a party to the proceedings, and Lord Reed expressly adopted the test laid down in Kennedy, at para 41, which was a direct citation from Guardian News and Media, at para 85: Whether a departure from the principle of open justice was justified in any particular case would depend on the facts of that case. As Lord Toulson JSC observed in Kennedy v Information Comr (Secretary of State for Justice intervening) [2015] AC 455, para 113, the court has to carry out a balancing exercise which will be fact specific. Central to the courts evaluation will be the purpose of the open justice principle, the potential value of the information in question in advancing that purpose and, conversely, any risk of harm which its disclosure may cause to the maintenance of an effective judicial process or to the legitimate interests of others. It follows that there should be no doubt about the principles. The question in any particular case should be about how they are to be applied. Discussion The constitutional principle of open justice applies to all courts and tribunals exercising the judicial power of the state. It follows that, unless inconsistent with statute or the rules of court, all courts and tribunals have an inherent jurisdiction to determine what that principle requires in terms of access to documents or other information placed before the court or tribunal in question. The extent of any access permitted by the courts rules is not determinative (save to the extent that they may contain a valid prohibition). It is not correct to talk in terms of limits to the courts jurisdiction when what is in fact in question is how that jurisdiction should be exercised in the particular case. The principal purposes of the open justice principle are two fold and there may well be others. The first is to enable public scrutiny of the way in which courts decide cases to hold the judges to account for the decisions they make and to enable the public to have confidence that they are doing their job properly. In A v British Broadcasting Corpn, Lord Reed reminded us of the comment of Lord Shaw of Dunfermline, in Scott v Scott [1913] AC 417, 475, that the two Acts of the Scottish Parliament passed in 1693 requiring that both civil and criminal cases be heard with open doors, bore testimony to a determination to secure civil liberties against the judges as well as against the Crown (para 24). But the second goes beyond the policing of individual courts and judges. It is to enable the public to understand how the justice system works and why decisions are taken. For this they have to be in a position to understand the issues and the evidence adduced in support of the parties cases. In the olden days, as has often been said, the general practice was that all the argument and the evidence was placed before the court orally. Documents would be read out. The modern practice is quite different. Much more of the argument and evidence is reduced into writing before the hearing takes place. Often, documents are not read out. It is difficult, if not impossible, in many cases, especially complicated civil cases, to know what is going on unless you have access to the written material. It was held in Guardian News and Media that the default position is that the public should be allowed access, not only to the parties written submissions and arguments, but also to the documents which have been placed before the court and referred to during the hearing. It follows that it should not be limited to those which the judge has been asked to read or has said that he has read. One object of the exercise is to enable the observer to relate what the judge has done or decided to the material which was before him. It is not impossible, though it must be rare, that the judge has forgotten or ignored some important piece of information which was before him. If access is limited to what the judge has actually read, then the less conscientious the judge, the less transparent is his or her decision. However, although the court has the power to allow access, the applicant has no right to be granted it (save to the extent that the rules grant such a right). It is for the person seeking access to explain why he seeks it and how granting him access will advance the open justice principle. In this respect it may well be that the media are better placed than others to demonstrate a good reason for seeking access. But there are others who may be able to show a legitimate interest in doing so. As was said in both Kennedy, at para 113, and A v British Broadcasting Corpn, at para 41, the court has to carry out a fact specific balancing exercise. On the one hand will be the purpose of the open justice principle and the potential value of the information in question in advancing that purpose. On the other hand will be any risk of harm which its disclosure may cause to the maintenance of an effective judicial process or to the legitimate interests of others. There may be very good reasons for denying access. The most obvious ones are national security, the protection of the interests of children or mentally disabled adults, the protection of privacy interests more generally, and the protection of trade secrets and commercial confidentiality. In civil cases, a party may be compelled to disclose documents to the other side which remain confidential unless and until they are deployed for the purpose of the proceedings. But even then there may be good reasons for preserving their confidentiality, for example, in a patent case. Also relevant must be the practicalities and the proportionality of granting the request. It is highly desirable that the application is made during the trial when the material is still readily available, the parties are before the court and the trial judge is in day to day control of the court process. The non party who seeks access will be expected to pay the reasonable costs of granting that access. People who seek access after the proceedings are over may find that it is not practicable to provide the material because the court will probably not have retained it and the parties may not have done so. Even if they have, the burdens placed on the parties in identifying and retrieving the material may be out of all proportion to benefits to the open justice principle, and the burden placed upon the trial judge in deciding what disclosure should be made may have become much harder, or more time consuming, to discharge. On the other hand, increasing digitisation of court materials may eventually make this easier. In short, non parties should not seek access unless they can show a good reason why this will advance the open justice principle, that there are no countervailing principles of the sort outlined earlier, which may be stronger after the proceedings have come to an end, and that granting the request will not be impracticable or disproportionate. It is, however, appropriate to add a comment about trial bundles. Trial bundles are now generally required. They are compilations of copies of what are likely to be the relevant materials the pleadings, the parties submissions, the witness statements and exhibits, and some of the documents disclosed. They are provided for the convenience of the parties and the court. To that end, the court, the advocates and others involved in the case may flag, mark or annotate their copies of the bundle as an aide memoire. But the bundle is not the evidence or the documents in the case. There can be no question of ordering disclosure of a marked up bundle without the consent of the person holding it. A clean copy of the bundle, if still available, may in fact be the most practicable way of affording a non party access to the material in question, but that is for the court hearing the application to decide. Application to this case Cape argues that the Court of Appeal did not have jurisdiction to make the order that it did, not that if it did have jurisdiction the order was wrong in principle. The Forum argues that the court should have made a wider order under CPR rule 5.4C(2). Both are, in our view, incorrect. The Court of Appeal not only had jurisdiction to make the order that it did, but also had jurisdiction to make a wider order if it were right so to do. On the other hand, the basis of making any wider order is the inherent jurisdiction in support of the open justice principle, not the Civil Procedure Rules, CPR rule 5.4C(2). The principles governing the exercise of that jurisdiction are those laid down in Guardian News and Media, as explained by this court in Kennedy, A v British Broadcasting Corpn and this case. In those circumstances, as the Court of Appeal took a narrower view, both of the jurisdiction and the applicable principles, it would be tempting to send the whole matter back to a High Court judge, preferably Picken J, so that he can decide it on the basis of the principles enunciated by this court. However, Cape has chosen to attack the order made by the Court of Appeal, not on its merits, but on a narrow view of the courts jurisdiction. Nor has it set up any counter vailing rights of its own. In those circumstances, there seems no realistic possibility of the judge making a more limited order than did the Court of Appeal. We therefore order that paras 4 and 7 of the Court of Appeal order (corresponding to points (i) and (ii) in para 11 above) stand. But we would replace paragraph 8 (corresponding with point (iii)) with an order that the application be listed before Picken J (or, if that is not possible, another High Court Judge) to determine whether the court should require the appellant to provide a copy of any other document placed before the judge and referred to in the course of the trial to the respondent (at the respondents expense) in accordance with the principles laid down by this court. Postscript We would urge the bodies responsible for framing the court rules in each part of the United Kingdom to give consideration to the questions of principle and practice raised by this case. About the importance and universality of the principles of open justice there can be no argument. But we are conscious that these issues were raised in unusual circumstances, after the end of the trial, but where clean copies of the documents were still available. We have heard no argument on the extent of any continuing obligation of the parties to co operate with the court in furthering the open justice principle once the proceedings are over. This and the other practical questions touched on above are more suitable for resolution through a consultative process in which all interests are represented than through the prism of an individual case. |
Between 2003 and 2008, John Worboys, the driver of a black cab in London, committed a legion of sexual offences on women. The first respondent in these proceedings (who has been referred to throughout as DSD) was among his first victims. She was attacked in 2003. The second respondent (NBV) became Worboys victim in July 2007. Many others were attacked by him between 2003 and 2007 and, sadly, yet more after NBV was assaulted. DSD and NBV brought proceedings against the Commissioner of the Metropolitan Police Service (MPS) for the alleged failure of the police to conduct effective investigations into Worboys crimes. The claims were brought under sections 7 and 8 of the Human Rights Act 1998 (HRA). The combined effect of these provisions (so far as this case is concerned) is to allow a person who claims that a public authority has acted in a way which is incompatible with their rights under the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR) to bring proceedings against the public authority and to be awarded damages. The kernel of DSD and NBVs claims is that the police failures in the investigation of the crimes committed by Worboys constituted a violation of their rights under article 3 of ECHR. This provides that [n]o one shall be subjected to torture or to inhuman or degrading treatment or punishment. They succeeded in that claim before Green J, who delivered judgment on the liability issues on 28 February 2014, (Neutral Citation [2014] EWHC 436 (QB)). In a second judgment handed down on 23 July 2014, (Neutral Citation [2014] EWHC 2493 (QB)), Green J awarded compensation to DSD and NBV against MPS. An appeal by MPS was dismissed by the Court of Appeal (Lord Dyson MR, Laws and Kitchin LJJ) on 30 June 2015, (Neutral Citation [2015] EWCA Civ 646): [2016] QB 161). MPS has appealed to this court. The Secretary of State for the Home Department (SSHD) intervened, making written and oral submissions. A number of other parties intervened. Liberty intervened, as did jointly the organisations Rape Crisis, England and Wales, the End Violence Against Women Coalition, Southall Black Sisters and the Nia Project. They made helpful written submissions and valuable oral submissions. In this appeal MPS accepts that both respondents were subjected to serious sexual assault by Worboys. It further accepts that there were significant errors by the police in each of the investigations into the crimes committed against them. MPS has said that, whatever the outcome of this appeal, MPS will not seek to recoup any of the compensation and consequential costs which have been paid. DSD and NBV have recovered compensation from Worboys and each of them has received an award from the Criminal Injuries Compensation Authority (CICA). The principal issue It is accepted that HRA imposes a general duty to investigate ill treatment amounting to a violation of article 3 of ECHR. The main area of dispute is the nature of that duty. That issue has a number of themes. They can be summarised as follows: Is it a public duty or one owed to individual victims of the breach of Is it a systems or an operational duty? (i) article 3? (ii) (iii) Does the duty to investigate breaches of article 3 in relation to a particular individual arise only when it is alleged that state authorities are complicit in the breach? (iv) If the duty comprehends an obligation to investigate breaches of article 3, even if there is no involvement of state agents, is there a right to claim compensation against the state? (v) Should the fact that a victim can obtain redress against an offender or make a claim under the CICA scheme affect consideration of the availability of a right to compensation under HRA? (vi) In this context, is it relevant that UK courts have, so far, refused to recognise a common law duty of care on the police in relation to the manner in which officers prevent and investigate crime? (vii) Finally, it is suggested that it would require the clearest statement in consistent decisions of the European Court of Human Rights (ECtHR) Grand Chamber to the effect that a positive duty was owed by the state to individuals who suffered treatment contrary to article 3 at the hands of another individual before holding that the investigative duty of the state was animated. If ECtHR jurisprudence is found to be less than clear, the appropriate course was to allow the government to deploy its arguments in Strasbourg R (Ullah) v Special Adjudicator [2004] 2 AC 323. Many of these themes overlap and blend into one another and it is impossible to consider them other than compendiously, not least because that is how they are treated in many of the relevant authorities, both domestic and European. It is necessary at the outset, however, to recognise that examination of the nature of the duty is a multi faceted exercise. The nature of the duty owed under HRA the arguments The appellant argues that the duty of the police to investigate, detect and prosecute crime is of a communal nature; one which is owed to the public at large, not to individual citizens. It is submitted that the general rule is that no private law duty is owed to victims of crime. This is because it has been deemed that it would not be fair, just and reasonable to impose such a duty. The consistent theme of judicial decisions on the liability of the police at common law has been, the appellant suggests, that there are overwhelming public policy reasons that no such liability should be recognised. The Court of Appeal in the present case had emphasised the importance of consistency between the common law and HRA. It would be anomalous, the appellant contends, for there to be different bases of duty owed by the police at common law and under HRA. Many of the public policy considerations which militated against the recognition of such a duty at common law apply with equal force to the duty to investigate that arises under article 3 of HRA. It is accepted that there is a duty to investigate allegations of ill treatment which amount to a violation of article 3 but it is suggested that this duty can be enforced through the disciplinary regime, under the independent oversight of the Independent Police Complaints Commission. The existence of this regime, the appellant says, reflects the public nature of that duty. Insofar as article 3 of ECHR imposes a positive obligation to respond to ill treatment by a member of the public who is not a state agent, that obligation, the appellant submits, is to put in place the legal structures required to ensure that a proper inquiry can be conducted. It does not extend to the operational content of an individual inquiry. The investigative obligation in relation to individual cases arises only where state agents are complicit in the alleged ill treatment. The SSHD submits that the origin of the investigative duty is Assenov v Bulgaria (1998) 28 EHRR 652 where ECtHR stated that an effective official investigation was required where there was an arguable claim of serious ill treatment by the police or other such agents of the state unlawfully and in breach of article 3 para 102. It is therefore argued that the principled foundation for the implication of an investigative duty is to underpin the effectiveness of the express prohibition set out in article 3. That prohibition could only apply, the SSHD argues, to agents of the state, not to private individuals. The respondents riposte to these arguments is that the state has a duty under article 3 to conduct an effective investigation into crimes which involve serious violence to an individual. This is a positive, protective obligation to take measures designed to ensure that individuals within its jurisdiction are not subject to the treatment which article 3 prohibits. The duty is not an abstract one owed to the public at large but can be invoked by an individual who demonstrates that the states failure to fulfil its obligation has led to her or his suffering treatment prohibited by the article. The respondents submit that the appellants argument about the need for consistency between the common law position and the availability of a claim under HRA is, properly analysed, one of justiciability. They point out that the appellant accepts that there is a domestic law duty to investigate effectively serious criminal offences. It is accepted that there were several deficiencies in the investigation of these offences. The decision by Parliament to enact HRA effectively disposes of the issue of justiciability. The incorporation of ECHR into domestic law made available to an individual a remedy for a breach by the state of the article 3 protective obligation. This was entirely in line with the jurisprudence of ECtHR. In any event, the respondents argue, the public policy considerations which have been held to underlie the exemption from liability at common law do not translate to the position under HRA. As Lord Brown of Eaton under Heywood held in Van Colle v Chief Constable of Herts Police; Smith v Chief Constable of Sussex Police [2009] AC 225, para 138, Convention claims have quite different aims from civil actions. On the appellants argument that the duty of the state under article 3 is confined to putting in place legal structures to prohibit such ill treatment as is forbidden by the article, the respondents claim that this is unsustainable, again in light of the decision in Van Colle. That decision was premised on the existence of an operational duty to protect against a real and immediate risk of serious violence. The relevant case law on the nature of the duty In MC v Bulgaria (2005) 40 EHRR 20 the applicant complained that she had been raped by two men when she was 14 years old. The men in question were interviewed but it was concluded that they had not used threats or violence and there was no evidence of resistance on the part of the complainant. The district prosecutor therefore issued a decree terminating the proceedings. The complainants application to ECtHR rested on the twin assertions that Bulgarian law did not provide effective protection against rape and sexual abuse as only cases where the victim had actively resisted were prosecuted, and that the authorities had not properly investigated her allegations. It is important to recognise that the court found that the failure properly to investigate her allegations constituted violation of her rights under articles 3 and 8 of ECHR. As I shall discuss below, the appellant has concentrated on the first of the assertions made by the applicant in MC. The second aspect of her complaint that there was not a proper investigation of her allegations is a distinct and unconnected ground on which the court decided that article 3 had been breached. In para 151 of MC ECtHR observed that, in a number of cases, article 3 of ECHR gives rise to a positive obligation to conduct an official investigation. The court expressly said that such positive obligations cannot be considered in principle to be limited solely to cases of ill treatment by state agents. It concluded that the authorities had failed to explore the surrounding circumstances para 177. On that account, there was a violation of the states positive obligation under article 3 para 187. This was a duty owed to the applicant personally and she was awarded compensation para 194. A significant passage from the courts judgment is to be found in para 153: the court considers that states have a positive obligation inherent in articles 3 and 8 of the Convention to enact criminal law provisions, effectively punishing rape and to apply them in practice through effective investigation and prosecution. (Emphasis supplied) The binary nature of the positive obligation arising under these articles was noted by Green J in para 163 of his judgment: effective systems and operational duties: There were two relevant aspects. First, whether the state of Bulgarian law on rape was so flawed as to amount to a breach of the states positive obligation under articles 3 and 8 (the systemic failings). Secondly, to consider whether the alleged shortcomings in the investigation were, also, so flawed as also to amount to a breach of the states obligations under the same articles (the operational failings). Under the heading general approach the court explained that the duty to create a corpus of law and the duty to apply them in practice through investigation and punishment were separate Lord Hughes has suggested (in para 117 of his judgment) that the statement in para 153 of ECtHRs judgment, that article 3 carries an obligation in some circumstances to investigate third party offending leaves only uncertainties about its source and thus its extent. What is not in the least uncertain, however, is that, if the relevant circumstances are present, there is a duty on the part of state authorities to investigate where non state agents are responsible for the infliction of the harm. That cannot be characterised as other than an operational duty. The debate must focus, therefore, not on the existence of such a duty but on the circumstances in which it is animated. It is suggested (para 119 of Lord Hughes judgment) that Calvelli and Ciglio v Italy (2002) (Application No 32967/96) does not provide authority for the second proposition in para 151 of MC, namely, that positive obligations to investigate cannot be considered in principle to be limited solely to cases of ill treatment by state agents. It should be observed, however, that part of the applicants complaint in that case related to the unexplained delay in the proper investigation of their representations that the doctor who was ultimately charged with manslaughter was responsible for the death of their child see para 43 of the judgment. In other words, an operational failure. At para 54, the court said this: In the instant case, the court notes that the criminal proceedings instituted against the doctor concerned became time barred because of procedural shortcomings that led to delays, particularly during the police inquiry and judicial investigation. The rejection of the applicants case in Calvelli and Ciglio was not because ECtHR considered that the duty to investigate was confined to an obligation to provide a sufficient investigative structure, as Lord Hughes puts it in the final sentence of para 119 of his judgment. To the contrary, the Strasbourg court held that, because of the applicants entitlement to issue proceedings in the civil courts and the fact that they entered into a settlement agreement with the doctors insurers, they had waived their rights to pursue criminal proceedings (para 54). Nothing in the courts judgment supports the suggestion that it was founded on a view that the extent of the ancillary duty under article 2 was to provide a sufficient investigative structure rather than a duty not to be negligent in the way in which the inquiry was conducted. The court made that unequivocally clear in para 56 of its judgment where it said that because the applicants had denied themselves the best means of elucidating the extent of the doctors responsibility for the death of their child, it was unnecessary to examine whether the time bar on bringing proceedings prevented the doctor from being prosecuted. The coming into force of the time bar had, of course, been contributed to by the operational failure of the state authorities to conduct investigations more expeditiously. Lord Hughes has described the statement in para 152 of MC as tentative see para 121 of his judgment. It seems to me clear, however, that the court was there recording that, hitherto, ECtHR had not excluded the prospect that it would be held that actions by non state agents would give rise to positive obligations on the part of the state under articles 2 and 3 of ECHR. MC provided the occasion to proclaim that such a positive obligation existed. In order to be an effective deterrent, laws which prohibit conduct constituting a breach of article 3 must be rigorously enforced and complaints of such conduct must be properly investigated. There is a clear line of Strasbourg authority for the duty to properly investigate reported offences and allegations of ill treatment, which is summarised with approval at para 172 of OKeeffe v Ireland (35810/09): The Court recalls the principles outlined in CAS v Romania (cited above, paras 68 70) to the effect that article 3 requires the authorities to conduct an effective official investigation into alleged ill treatment inflicted by private individuals which investigation should, in principle, be capable of leading to the establishment of the facts of the case and to the identification and punishment of those responsible. That investigation should be conducted independently, promptly and with reasonable expedition. The victim should be able to participate effectively. It has been suggested (Lord Hughes at para 123) that ECtHR in MC made it clear that it regarded the deficiencies in the investigation as the consequence of, and part and parcel with, the flawed approach of the Bulgarian system generally to the issue of lack of consent. At para 179 the court said this: It is highly significant that the reason for that failure [to conduct a proper investigation] was, apparently, the investigators and the prosecutors opinion that since what was alleged to have occurred was a date rape, in the absence of direct proof of rape, such as traces of violence and resistance or calls for help, they could not infer proof of lack of consent and, therefore, of rape from an assessment of all the surrounding circumstances. That approach transpires clearly from the position of the investigator and, in particular, from the Regional Prosecutors decision of May 13, 1997 and the Chief Public Prosecutors decision of June 24, 1997. In my view, the court was not suggesting in this passage that the deficiencies in the investigation were somehow subsumed into the shortcomings of the Bulgarian law. Nor was it suggested that deficiencies in investigation had to be accompanied in all circumstances by systemic defects. In MC, the lack of assiduity in the investigation could be explained because of the inadequacy of that law but it does not follow that deficiencies in investigation, if they are sufficiently egregious, cannot of themselves constitute a violation of article 3. Cases decided after MC make that unambiguously clear. I will discuss those cases presently. Concentrating for the moment on MC, however, Lord Hughes suggests that his thesis, that deficiencies in investigation were part and parcel of the flawed approach of the Bulgarian system generally, was supported by the words of para 168 which he quotes at para 122 of his judgment. In para 168, ECtHR said that it was not concerned with allegations of errors or isolated omissions in the investigation. The court accepted that it could not replace the domestic authorities assessment of the facts of the case nor could it decide on the alleged perpetrators criminal responsibility. These statements must be seen in context. The Strasbourg court is a supra national body. There are obvious limitations on its opportunity to examine deficiencies in investigation. National courts are not so constrained. This case provides the perfect example. Green J heard detailed evidence of the errors that had been made by police in the investigation of Worboys crimes. He was in a position to form a judgment as to the impact of those errors on the respondents cases. And it was open to him to find, as he correctly did, that the errors were so serious that a violation of article 3 was established. I cannot accept a suggestion that, to give rise to a breach of article 3, deficiencies in investigation had to be part and parcel of a flawed approach of the system generally. I accept, however, that simple errors or isolated omissions will not give rise to a violation of article 3 at the supra national and the national levels. That is why, as I point out below, only conspicuous or substantial errors in investigation would qualify. The Strasbourg court disavowed any close examination of the errors in investigation because it was a supra national court. It left that to national courts. But, my reference to ECtHRs disinclination to conduct such a close examination is not intended to suggest that minor errors in investigation will give rise to a breach of the Convention right on the national plane. To the contrary, as I make clear in paras 53 and 72 below, errors in investigation, to give rise to a breach of article 3, must be egregious and significant. As I hope is now clear, not every error in investigation will give rise to a breach of article 3. But the difficulty in defining those errors which qualify should not prompt capitulation to the notion that there has to be some form of structural deficiency before egregious errors in the investigation of the offences, such as occurred in this case, can amount to a breach of article 3. That proposition is strongly supported by consideration of cases decided after MC and I turn now to those cases. The case of Szula v United Kingdom (2007) 44 EHRR SE19 involved a complaint of sexual and physical abuse brought by a minor during the time that he was in a residential approved school. The applicants claim was deemed inadmissible but this was because it was concluded that there was no indication that the authorities showed any lack of diligence or expedition in the investigation of his allegations. Implicit in that finding was that, had there been such an indication, the applicants case would have been admissible. It has been suggested that this case is an example of the court having looked for evidence of a structural defect or culpable disregard or an absence of good faith in the administration of the domestic system (para 26). I do not agree. In that case the court expressly recognised that the criminal law prohibited the physical and sexual abuse alleged by the applicant. True it is that the court, after reviewing steps taken by police and prosecuting authorities, also said (in para 1 of its judgment): While that sequence of events was somewhat unfortunate, the court does not consider that it discloses any culpable disregard, discernible bad faith or lack of will on the part of the police or prosecuting authorities as regards properly holding perpetrators of serious criminal offences accountable pursuant to domestic law. It is unquestionably clear that these observations were made in relation to the discharge by the police and the prosecuting authorities of their operational duties. There is no hint in the judgment that this was in any way related to a structural defect. As I have said, the court had examined the criminal law system and not found it wanting. I cannot accept, therefore, that the quoted passage had anything whatever to do with a systemic or structural failure. It was plainly pertinent and only pertinent to a review of the operational actions and decisions of the police and prosecuting authorities. The fact that the court considered it necessary to conduct such a review, when no systemic defect was present, is important, however. It can only have been necessary if the court considered that a purely operational failing, entirely unrelated to any structural defect, could have given rise to a violation of article 3. In Secic v Croatia (2009) 49 EHRR 18 (31 May 2007), ECtHR considered a complaint of ineffective criminal investigation of a racially motivated physical assault. The court again repeated the statement from MC that article 3 may give rise to a positive obligation to conduct an official investigation para 53. The court stated that the obligation on the state to conduct an official investigation is one of means, not result, referring to the article 2 cases of Menson v United Kingdom (2003) 37 EHRR CD 220 and Yasa v Turkey (1999) 28 EHRR 408. At para 54, however, it observed that the authorities had to take all reasonable steps available to them to secure the evidence concerning the incident and that the authorities must act with promptness and reasonable expedition. Having considered the investigations conducted by the police, ECtHR concluded, at para 59, that the failure of the state authorities to further the case or obtain any tangible evidence with a view to identifying and arresting the attackers over a prolonged period of time indicates that the investigation did not meet the requirements of article 3 of the Convention. It therefore found that article 3 had been breached and that the applicant was entitled to be compensated. Lord Hughes has cited this case as an example where there were plain overtones of structural State deficiencies in relation to the investigation of allegations of racially motivated or discriminatory violence (para 126). The applicants submissions are set out in paras 38 42 of the courts judgment. None of these submissions touched on any structural or systemic deficiency in Croatian law or procedure. To the contrary, the applicant complained that Croatian law provided for many processes and police methods which the police had failed to follow. He also complained that they had failed to apply to a Croatian court for an order compelling a journalist to reveal the name of an interviewee who might have been able to shed light on the attack on him. Such an application could have been made under section 30 of the Media Act. No complaint was made about any inadequacy in that provision. All of the applicants complaints were in relation to the operational failings of the police. The Croatian governments submissions are set out in paras 43 48 of the Strasbourg courts judgment. Apart from claiming that the applicants ill treatment did not reach the threshold required for a breach of article 3 and that the positive obligation under that article arose only where the state had been made aware of acts which it was reasonable to expect them to prevent, all the governments submissions were focused on a defence of the operational decisions and actions of the police. The question of systemic deficiencies was simply not in play in this case. That is obvious also from the courts decision. At para 53 the court said that article 3 may give rise to a positive obligation to conduct an official investigation. This was not, in principle, limited to cases of ill treatment by state agents. And at para 54 the court said this: the court reiterates that the scope of the obligation by the state is one of means, not of result; the authorities must have taken all reasonable steps available to them to secure the evidence concerning the incident. A requirement of promptness and reasonable expedition of the investigation is implicit in this context. The complaint of lack of promptness related solely to police inaction. Nothing about any structural or systemic deficiency was instanced. And the remainder of the courts judgment focused entirely on the operational failings of the police. For my part, therefore, I have not been able to find any overtones of structural state deficiencies in the report of this case. Beganovi v Croatia (Application No 46423/06) 25 June 2009 was a case in which the applicant had been assaulted by three individuals. Although ECtHR acknowledged (in para 69 of its judgment) that no direct responsibility can attach to a member state under ECHR for the acts of private individuals, it stated (in paras 70 and 71): 70. even in the absence of any direct responsibility for the acts of a private individual under article 3 of the Convention, State responsibility may nevertheless be engaged through the obligation imposed by article 1 of the Convention. In this connection the Court reiterates that the obligation on the High Contracting Parties under article 1 of the Convention to secure to everyone within their jurisdiction the rights and freedoms defined in the Convention, taken together with article 3, requires States to take measures designed to ensure that individuals within their jurisdiction are not subjected to torture or inhuman or degrading treatment or punishment, including such ill treatment administered by private individuals (see A v United Kingdom, cited above, para 22). 71. In order that a state may be held responsible it must be shown that the domestic legal system, and in particular the criminal law applicable in the circumstances of the case, fails to provide practical and effective protection of the rights guaranteed by article 3 (see X and Y cited above cited above, para 30, and A v United Kingdom, cited above, opinion of the Commission, para 48). (Emphasis supplied) The court made clear that, as well as examining the impugned regulations and practices, and in particular the domestic authorities compliance with the relevant procedural rules, it would also consider the manner in which the criminal mechanisms were implemented in the instant case para 74. At para 75, ECtHR set out the minimum standards applicable in respect of the duty to investigate. They included that the investigation be independent, impartial and subject to public scrutiny, and that the authorities act with diligence and promptness. It also reiterated that for an investigation to be considered effective, the authorities must take whatever reasonable steps they can to secure the evidence concerning the incident, including, inter alia, a detailed statement concerning the allegations from the alleged victim, eyewitness testimony, forensic evidence and, where appropriate, additional medical reports. The failings in fact identified in this case arose at the post investigative stage and ECtHR confirmed the principle that the requirement for effective criminal law provisions extends to the trial phase of proceedings para 77. The ECtHR decided that the state authorities did not fulfil their positive obligations under article 3. Violation of that article was found. Compensation was awarded to the applicant. The various elements of an effective investigation identified by the court should be noted. It must be independent. It requires to be prompt. Evidence must be secured. Failure to adhere to these standards renders the state liable to the individual affected by that failure. In the case of Vasilyev v Russia (Application No 32704/04) 17 December 2009 the applicant and his friend were seriously assaulted and robbed. Although police officers attended the scene, no investigation into the circumstances of the assault were conducted. The police officers claimed to have considered that the applicant and his friend were intoxicated, so they moved them from the position where they had been found and left them. A number of criminal investigations were subsequently instituted, largely on the initiative of the applicants mother. It was decided to suspend the proceedings because the perpetrators could not be identified. This decision was reversed and restored on a number of occasions. The two police officers who had attended the scene were prosecuted for failing to fulfil their legal duty to protect victims of offences. They were acquitted. The applicant did not lay blame on the state authorities for the attack; nor was it suggested that they knew or ought to have known that the applicant was at risk of physical violence at the hands of third parties. The court explicitly found, however, that this did not absolve the state from obligations under article 3. At para 99, it said that what the article required was that the authorities conduct an effective investigation into the alleged ill treatment even if such treatment has been inflicted by private individuals. It elaborated on this statement at para 100: For the investigation to be regarded as effective, it should in principle be capable of leading to the establishment of the facts of the case and 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, including, inter alia, eyewitness testimony, forensic evidence, and so on. Any deficiency in the investigation which undermines its ability to establish the cause of injuries or the identity of the persons responsible will risk falling foul of this standard, and a requirement of promptness and reasonable expedition is implicit in this context (see, among many authorities, Mikheyev v Russia, no 77617/01, para 107 et seq, 26 January 2006, and Assenov and Others v Bulgaria, judgment of 28 October 1998, Reports 1998 VIII, paras 102 et seq). It was held that there had been a violation of article 3 under its procedural limb in that the investigation into the assault on the applicant was ineffective. He was awarded compensation. A similar approach to that in the cases already discussed is found in later decisions of ECtHR such as Milanovic v Serbia (Application No 44614/07) 14 December 2010, CAS v Romania (2015) 61 EHRR 18 and BV v Croatia (Application No 38435/13) 21 January 2016. The statement of the applicable principles concerning the procedural obligations in CAS v Romania (which reflected the exposition of those in the cases considered in detail above) was expressly endorsed by the Grand Chamber in OKeefe v Ireland (2014) 59 EHRR 15. These propositions have been reiterated by the second section of ECtHR most recently in BV v Belgium (Application No 61030/08) 2 May 2017. At para 56 the court stated that the obligation to carry out an effective investigation cannot be limited to cases of ill treatment by agents of the state. A clear and constant line of authority? In R (Ullah) v Special Adjudicator [2004] 2 AC 323, Lord Bingham of Cornhill, at para 20, quoted with approval the statement of Lord Slynn of Hadley in R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2003] 2 AC 295, para 26, where he said: Your Lordships have been referred to many decisions of the European Court of Human Rights on article 6 of the Convention. Although the Human Rights Act 1998 does not provide that a national court is bound by these decisions it is obliged to take account of them so far as they are relevant. In the absence of some special circumstances it seems to me that the court should follow any clear and constant jurisprudence of the European Court of Human Rights. The respondents argue that the authorities which I have reviewed above constitute clear and constant jurisprudence to the effect that the state has a duty under article 3 to conduct an effective investigation into crimes which involve serious violence to an individual. In order that the protective right under the article be practical and effective, the respondents also assert that failure to conduct such an investigation gives rise to a right to hold the state to account by, among other things, a claim for compensation on the part of a person who was a victim of the article 3 violation and the states failure to discharge its obligations under the article. The appellant counters this argument, claiming that the Strasbourg courts extensive case law (including decisions of the Grand Chamber) refers back to Assenov as the authoritative source of the obligation, derived from article 3, to investigate allegations of ill treatment by state agents. It is suggested that Assenov explicitly limits the investigative duty to cases where the ill treatment has been perpetrated by the police or other such agents of the state unlawfully and in breach of article 3 (para 102). This approach, it is claimed, has been followed by decisions of the Grand Chamber in such cases as Gfgen v Germany (2011) 52 EHRR 1 and El Masri v The Former Yugoslav Republic of Macedonia (2012) 57 EHRR 25. It is to be noted, of course, that Assenov was a case where the claim was based on allegations against state agents, namely, the Bulgarian police. When, therefore, the court expressed the view, which it did in para 102 of its judgment, that, where an individual raises an arguable claim that he has been seriously ill treated by the police or other such agents of the State unlawfully and in breach of article 3, that provision requires by implication that there should be an effective official investigation, it did not address the question whether such a duty arose where the perpetrators of the ill treatment were not state agents. It did not need to do so. The issue simply did not arise in that case. Likewise, in Gfgen the complaint was made concerning the applicants ill treatment by police. So also in El Masri the applicant claimed that he had suffered ill treatment at the hands of state agents and that they had been actively involved in his subsequent rendition by CIA agents. Statements in the judgments in both cases which echo that in Assenov quoted in the preceding paragraph do not sound on the question whether ill treatment by individuals other than state agents can give rise to the duty to investigate under article 3. Those decisions do not impinge upon, much less derogate from, the authority of the cases decided by ECtHR between 2005 and 2017 discussed in paras 16 to 28 above. I consider that those cases amount to clear and constant case law of the Strasbourg court. And I have concluded that they establish that the state is obliged under article 3 to conduct an effective investigation into crimes which involve serious violence to persons, whether that has been carried out by state agents or individual criminals. Further, in order that the protective right should be practical and effective, an individual who has suffered ill treatment contrary to article 3 has a right to claim compensation against the state where there has been a failure by state authorities to conduct a sufficient investigation into the crime. At para 127 of Lord Hughes judgment, he suggests that the proper test for the positive obligation to investigate reports of past violence under article 3 is whether the state has a proper structure of legal provision designed to punish it when it occurs and has administered [it] in good faith and with proper regard for the gravity of the behaviour under consideration. It is not clear whether this formulation excludes any investigation of operational failings on the part of state authorities such as the police. Conceivably, I suppose, a failure to administer the proper structure of criminal legal provisions might entail an examination of the way in which police conducted their inquiries into a particular case. But, importantly, the duty to administer is qualified in Lord Hughes exposition by the stipulation that the administration of the structure of legal provision, if it is to fall foul of the test, must be shown to have been conducted in bad faith or without proper regard for the gravity of the behaviour involved. This places an obvious limitation on the scope of any review of the operational actions and decisions of the police. There is no suggestion in this case, for instance, that the police acted in bad faith. It might possibly be said that there were instances of the police failing to have regard for the gravity of the crimes which the respondents complained of but I am unsure whether this would fulfil Lord Hughes test because the failure to have due regard to the gravity of the crime must take place in the context of the administration of the proper structure of legal provisions. It is true, as Lord Hughes says in para 140, that there were structural errors. But I cannot agree with his statement that the various detailed failings in the conduct of the inquiry were largely attributable to this flawed structural approach. Green J dealt with the operational failures in these two cases in a long passage of his judgment between paras 285 and 313. Some of these were related by him to lack of training but many were not. Significantly, the judge found that if the operational failings had not occurred, the police officers involved in the investigation would have taken steps which would have been capable of identifying and arresting Worboys. It is unnecessary to list all the operational failings. These are set out in admirable and clear detail by the trial judge in his judgment. It is sufficient to refer to a sample of these to explain why I do not accept that these were largely attributable to a flawed structural approach. (i) Reception staff failed to record relevant names, addresses and vehicle registration details. If these had been recorded, it was perfectly feasible to believe, the judge found, that Worboys might have been apprehended earlier or might even have been deterred from further offending; (ii) Failure to interview promptly a witness known as Kevin. He could have identified Worboys and could have given evidence that might have led to his arrest; (iii) Failure to collect CCTV evidence. Worboys had driven his taxi to a police station. The timing of his arrival at and departure from the police station was known. If police officers had checked the CCTV footage, they could have identified the registration number and this would have led them to Worboys; (iv) Between 2003 and 2008 many complaints were made to police which should have been sufficient to trigger the arrest of Worboys. The failure to make the link between these complaints was due not only to a lack of training but also to a failure to adhere to procedures; (v) Failure to conduct searches. None of these failures can be described as a failure in training or in the structures that were in place for the investigation of serious crime at the material time. Many other operational failures, none of which can be ascribed to a flawed structural approach were found by Green J to have occurred. These were considered by him to have contributed in a significant way to his finding that a breach of article 3 had been established. If I have understood Lord Hughes formulation of the relevant test correctly, none of them was relevant to that conclusion. The prospect of every complaint of burglary, car theft or fraud becoming the subject of an action under the Human Rights Act has been raised. I do not believe that this is a serious possibility. All of the cases in this area involve conspicuous and substantial shortcomings in the conduct of the police and prosecutorial investigation. And, as this case illustrates, frequently, operational failures will be accompanied by systemic defects. The recognition that really serious operational failures by police in the investigation of offences can give rise to a breach of article 3 cannot realistically be said to herald an avalanche of claims for every retrospectively detected error in police investigations of minor crime. A systems or an operational duty? The appellant argued that MC v Bulgaria should not be taken as authority for the proposition that how the state carried out its investigative duty at an operational level required to be examined in order to determine whether article 3 had been breached. That case, it was said, involved a systemic problem with Bulgarian law in relation to sexual offences. Under that law, it was not sufficient, in a rape prosecution, to show that a complainant had not consented to sexual intercourse. It was necessary to show that she was incapable of defending herself, or that she had been compelled by force or threats or that she had been brought to a state of defencelessness. The case was therefore primarily concerned with the system of laws in Bulgaria, the appellant claimed, and the court did not find a breach of article 3 because of any particular failing in the investigation in isolation, but because the legal system itself was deficient. The appellant claims that nothing in the judgment says in positive terms that article 3 gives rise to an obligation to investigate in cases where the state is not complicit in ill treatment. I do not accept these arguments. As pointed out in para 18 above, the Strasbourg court in MC clearly specified that the states duty had two aspects. The first was to enact criminal law provisions which would effectively punish rape. The second, distinct but definite obligation was to carry out proper investigation and prosecution so that the laws could be applied effectively. It should be noted that the applicants complaint in that case had two separate aspects, described in para 109 of the judgment as follows: The applicant complained that Bulgarian law and practice did not provide effective protection against rape and sexual abuse as only cases where the victim had resisted actively were prosecuted and that the authorities had not investigated the events of July 31 and August 1, 1995 effectively. (Emphasis supplied) The second aspect of her complaint was elaborated on in para 117 of the judgment where it is recorded that she alleged that the investigation had not been thorough and complete. The crucial issue of the timing of all the movements of the men and the applicant during the night in question had not been investigated. The courts conclusions on the second aspect of the applicants complaint were unmistakable. At paras 176 178 it said: 176. The court recognises that the Bulgarian authorities faced a difficult task, as they were confronted with two conflicting versions of the events and little direct evidence. The court does not underestimate the efforts invested by the investigator and the prosecutors in their work on the case. 177. It notes, nonetheless, that the presence of two irreconcilable versions of the facts obviously called for a context sensitive assessment of the credibility of the statements made and for verification of all the surrounding circumstances. Little was done, however, to test the credibility of the version of the events proposed by P and A [the alleged rapists] and the witnesses called by them. In particular, the witnesses whose statements contradicted each other, such as Ms T and Mr M, were not confronted. No attempt was made to establish with more precision the timing of the events. The applicant and her representative were not given the opportunity to put questions to the witnesses whom she accused of perjury. In their decisions, the prosecutors did not devote any attention to the question whether the story proposed by P and A was credible when some of their statements called for caution, such as the assertion that the applicant, 14 years old at the time, had started caressing A minutes after having had sex for the first time in her life with another man. 178. The court thus considers that the authorities failed to explore the available possibilities for establishing all the surrounding circumstances and did not assess sufficiently the credibility of the conflicting statements made. Plainly, therefore, the court made a separate finding in relation to the inadequacy of the police investigation. This finding was entirely freestanding of its conclusions in relation to the systemic deficiencies in the Bulgarian law in relation to rape. That approach has been consistently followed in the cases examined above. It is incontestably clear, therefore, that the positive obligation to conduct a proper inquiry into behaviour amounting to breach of article 3 may constitute a violation of the states duty under the article. Is state complicity a prerequisite? The answer to the argument that the positive obligation to investigate is animated only where there is state involvement in the acts said to breach article 3 can be simply supplied by reference to the passage from para 151 of MC quoted at para 17 above. The statement that positive obligations are not solely confined to cases of ill treatment by state agents could not be clearer. In fact, of course, statements to like effect appear repeatedly in ECtHR jurisprudence see, for instance, para 70 of Beganovi quoted at para 37 above; Vasilyev where the applicant expressly disavowed any accusation of blame on the state authorities for the attack on him; and para 83 of Milanovic (mentioned at para 43 above) where the court said: In general, actions incompatible with article 3 of the Convention primarily incur the liability of a Contracting State if they were inflicted by persons holding an official position. However, the obligation on the High Contracting Parties under article 1 of the Convention to secure to everyone within their jurisdiction the rights and freedoms defined in the Convention, taken in conjunction with article 3, also requires states to take measures designed to ensure that individuals within their jurisdiction are not subjected to ill treatment administered by other private persons (see A v United Kingdom, judgment of 23 September 1998, para 22, Reports of Judgments and Decisions 1998 VI; Z and Others v United Kingdom [GC], no 29392/95, para 73 75, ECHR 2001 V; E and Others v United Kingdom, no 33218/96, 26 November 2002). Likewise, in CAS v Romania where there was no question of state involvement in the sexual abuse of the first applicant, the court was unambiguous in its finding that this was not a prerequisite to a breach of article 3. At para 69, it said: the absence of any direct state responsibility for acts of violence that meet the condition of severity such as to engage article 3 of the Convention does not absolve the state from all obligations under this provision. In such cases, article 3 requires that the authorities conduct an effective official investigation into the alleged ill treatment even if such treatment has been inflicted by private individuals. I am satisfied, therefore, that ECtHR has consistently held that it is not required that there be state involvement in the acts alleged to amount to breach of article 3. The appellants argument based on that proposition must be rejected. Compensation The themes outlined in para 6 (iv) and (v) above may be taken together. They can be dealt with briefly. Compensation is by no means automatically payable for breaches of the article 3 duty to investigate and prosecute crime. As Lord Bingham pointed out in R (Greenfield) v Secretary of State for the Home Department [2005] 1 WLR 673, para 8, in many cases the Strasbourg court has treated the finding of the violation as, in itself, just satisfaction under article 41 (although that was said in the context of article 6 breaches). It is well settled, however, that the award of compensation for breach of a Convention right serves a purpose which is distinctly different from that of an order for the payment of damages in a civil action. As Lord Brown said in Van Colle at para 138: Convention claims have very different objectives from civil actions. Where civil actions are designed essentially to compensate claimants for their losses, Convention claims are intended rather to uphold minimum human rights standards and to vindicate those rights. That is why time limits are markedly shorter. It is also why section 8(3) of the [HRA] provides that no damages are to be awarded unless necessary for just satisfaction Laws LJ said in para 68 of his judgment in the Court of Appeal, that the inquiry into compliance with the article 3 duty is first and foremost concerned, not with the effect on the claimant, but with the overall nature of the investigative steps to be taken by the State. I agree with that. The award of compensation is geared principally to the upholding of standards concerning the discharge of the states duty to conduct proper investigations into criminal conduct which falls foul of article 3. In paras 72 78 of his judgment, Laws LJ set out the systemic and operational failures of the appellant, quoting extensively from the judgment of Green J as to the first of these. That catalogue of failures was considered to warrant the award of compensation to the respondents, irrespective of the fact that they had received damages from both Worboys and CICA. I cannot find any flaw in the judges decision to award that compensation nor in the Court of Appeals decision to uphold that decision. The relevance of the circumstance that there is no common law duty of care In Van Colle and Smith, two associated cases heard together, the complaint was that police had failed to follow up reports of threats to kill. In Van Colle, the alleged failure had resulted, it was claimed, in the killing of the individual who was the subject of the threats. In Smith, the victim was seriously injured. The first case was brought solely under HRA, alleging violation of article 2. It failed on its facts. In Smith, no HRA claim was made. The appellant relied solely on the common law, alleging negligence by the police. The House of Lords rejected the argument that the common law should now be developed to reflect the Strasbourg jurisprudence about the positive obligation arising under articles 2 and 3 of the Convention (para 136). A similar approach was taken by the majority in this court in Michael v Chief Constable of South Wales Police [2015] AC 1732. As Laws LJ, in the Court of Appeal in this case, pointed out, the essence of the argument on behalf of the appellants in those cases was that the common law rule (that police owe no general duty of care. to identify or apprehend an unknown criminal, nor. a duty of care to individual members of the public who might suffer injury through the criminals activities Hill v Chief Constable of West Yorkshire Police [1989] AC 53) should be moderated so as to accommodate the ECHR para 30. As he observed, the converse is contended for in this appeal. The appellant and the Secretary of State argue that the exemption from liability of the police at common law should be extended to claims advanced under HRA so that the two systems should be in harmony. There are two reasons for rejecting the argument. In the first place, the bases of liability are different, as mentioned at para 44 above. In as much as it was considered that the common law duty should not be adapted to harmonise with the perceived duty arising under ECHR, so should the latter duty remain free from the influence of the pre HRA domestic law. Alternatively, it requires, at least, to be considered on its own merits, without the encumbrance of the corpus of jurisprudence under common law. Secondly and more importantly, no assumption should be made that the policy reasons which underlay the conclusion that an exemption of police from liability at common law apply mutatis mutandi to liability for breach of Convention rights. In Michael much of the debate as to whether police owed a duty to an individual member of the public centred on the question whether there was a sufficient proximity of relationship between the claimant and the police force against whom action was taken. No such considerations arise in the present context. The issue here is simple. Did the state through the police force fail to comply with its protective obligation under article 3? The other principal argument advanced on behalf of the police in Michael was that it would not be fair, just and reasonable to impose liability on them for failings in individual cases. This is a concept with which the common law, with its innate flexibility, can cope but it is not one which can easily be accommodated in Convention jurisprudence. The police either have a protective duty under article 3 or they do not. The presence of the duty cannot depend on ones conception of whether it is fair, just or reasonable for it to exist. Lord Hughes has said (in para 130 of his judgment) that law enforcement and the investigation of crime involve a complex series of judgments and discretionary decisions; that they concern the choice of lines of inquiry, the weighing of evidence and the allocation of finite resources. All of that is unexceptionable. But the claim that to re visit such matters step by step by way of litigation would inhibit the robust operation of police work divert resources from current inquiries [and act as a deterrent] not a spur to law enforcement is unsupported by any evidence. In the first place, none of the cases cited above required a painstaking, minute examination of decisions taken by police. Nothing in the Strasbourg jurisprudence suggests that this would be appropriate, much less that it would be even admissible, as the basis for advancing a claim under article 3. Carrying out police investigations efficiently should not give rise to a diversion of resources. On the contrary, it should lead to more effective investigation of crime, the enhancement of standards and the saving of resources. There is no reason to suppose that the existence of a right under article 3 to call to account egregious errors on the part of the police in the investigation of serious crime would do other than act as an incentive to avoid those errors and to deter, indeed eliminate, the making of such grievous mistakes. The statement made by Lord Hughes (in para 130) about the undesirability of the investigation of terrorist activity and the delicate and difficult decisions it involves being subject to review would be a powerful factor, if it were a possible consequence of following the jurisprudence of ECtHR in this area. But, in my view, it is not. Nothing in that case law supports the notion that a charter has been created for the examination of every judgment or choice of strategy made. As I have said, only obvious and significant shortcomings in the conduct of the police and prosecutorial investigation will give rise to the possibility of a claim. There is no reason to suppose that courts will not be able to forestall challenges to police inquiries based on spurious or speculative claims. Should the question be left to Strasbourg? It was strongly argued, particularly on behalf of the Secretary of State, that the question whether a liability such as that contended for by the respondents arises was one on which ECtHR should be invited to pronounce. The sub text to this argument appeared to be that, where Strasbourg has not yet spoken, national courts should not venture forth. This argument carries echoes of those which found favour in such cases as R (Al Skeini) v Secretary of State for Defence (The Redress Trust intervening) [2007] UKHL 26; [2008] AC 153, and Ambrose v Harris Procurator Fiscal [2011] UKSC 43; [2011] 1 WLR 2435. In Al Skeini Lord Brown suggested that where ECtHR had not spoken, our courts should hold back, explaining that, if it proved that Convention rights have been denied by too narrow a construction, the aggrieved individual can have the decision corrected in Strasbourg. And in R (Smith) v Oxfordshire Assistant Deputy Coroner (Equality and Human Rights Commission intervening) [2010] UKSC 29; [2011] 1 AC 1 Lord Phillips followed a similar line. The difficulty with the argument is that it fails to address the circumstance that the courts of this country, constituted as they are as public authorities, must give effect to (or refuse to give effect to) Convention rights as a matter of domestic law. The HRA introduced to the law of the United Kingdom the European Convention on Human Rights and Fundamental Freedoms by making the Convention part of national law so that the rights became domestic rights. Because the rights are domestic, they must be given effect according to the correct interpretation of the domestic statute. As Lord Hoffmann said In re G (Adoption: Unmarried Couple) [2008] UKHL 38; [2009] AC 173, para 34 [the courts] first duty is to give effect to the domestic statute according to what they consider to be its proper meaning, even if its provisions are in the same language as the international instrument which is interpreted in Strasbourg. The so called mirror principle (whereby pronouncements by national courts on Convention rights should precisely match those of Strasbourg) is often attributed to Lord Binghams statement in Ullah at para 20 where he said The duty of national courts is to keep pace with the Strasbourg jurisprudence as it evolves over time: no more but certainly no less. As explained in para 232 of R (Keyu) v Secretary of State for Foreign and Commonwealth Affairs [2015] UKSC 69; [2016] AC 1355, Lord Bingham was careful to refer to the interpretation of the Convention (as opposed to the interpretation of HRA). Despite this, his opinion in that case has been used in a number of subsequent judgments to support the proposition that the content of domestic rights under HRA should not, as a matter of principle, differ from that pronounced by Strasbourg. Indeed, his judgment has been construed as indicating that, unless ECtHR has given clear guidance on the nature and content of a particular Convention right, the national courts of the United Kingdom should refrain from recognising the substance of a claimed entitlement under ECHR see, for instance, Al Skeini, Smith and Ambrose, referred to in para 74 above. In more recent cases, a departure from the mirror principle can be detected. Thus, in Rabone v Pennine Care NHS Foundation Trust (INQUEST intervening) [2012] UKSC 2; [2012] 2 AC 72 it was held that there was a positive obligation to protect the life of a mentally ill young woman who had been admitted to hospital informally because of serious attempts to take her own life. This decision was reached notwithstanding the fact that there was no authority from ECtHR to that effect. In Surrey County Council v P (Equality and Human Rights Commission intervening) [2014] UKSC 19; [2014] AC 896, para 62 Lord Neuberger said that where there was no Strasbourg authority which dealt precisely with the issues before this court, this court could rely on principles expressed by ECtHR, even if only indirectly relevant, and apply them to the cases which it had to decide. And in Moohan v Lord Advocate (Advocate General for Scotland intervening) [2014] UKSC 67; [2015] AC 901 Lord Wilson suggested that there had been a retreat from the Ullah principle which had led the court to substantially modify it. At para 105 he said: where there is no directly relevant decision of the ECtHR with which it would be possible (even if appropriate) to keep pace, we can and must do more. We must determine for ourselves the existence or otherwise of an alleged Convention This seems to me to be inescapably correct. Reticence by the courts of the UK to decide whether a Convention right has been violated would be an abnegation of our statutory obligation under section 6 of HRA. This section makes it unlawful for a public authority, including a court, to act in a way which is incompatible with a Convention right. As it happens, of course, I consider that the jurisprudence of the Strasbourg court is clear and constant on the issues which this court has to decide. Even if it were not, however, I would firmly reject the suggestion that the decision of this court on whether the respondents enjoy a right under the HRA to claim compensation against the appellant should be influenced, much less inhibited, by any perceived absence of authoritative guidance from ECtHR. Conclusion For these reasons and for those given in the judgment of Lord Neuberger, with which I agree, I would dismiss the appeal. LORD NEUBERGER: (with whom Lady Hale agrees) The claimants, DSD and NBV, succeeded before Green J in establishing that they were entitled to damages from the defendant, the Commissioner of the Police of the Metropolis, as a result of failures by the police properly to investigate serious sexual assaults which had been perpetrated against them. The claims were founded on the propositions that (i) article 3 of the European Convention on Human Rights carries with it an obligation on the state to carry out an effective investigation when it receives a credible allegation that serious harm has been caused to an individual, and (ii) there were serious defects in the police investigation of the assaults on the claimants. The Court of Appeal upheld the decision, and this court takes the same view. However, we disagree on one issue. That issue is whether a person in the claimants position needs to establish that the serious defects in the investigation in question were attributable to failures of a structural nature (also referred to as systems, or systemic, failures), and not to purely operational failures (ie failings on the part of the individual police officers responsible for conducting the specific investigation). We do not need to decide this issue in order to resolve the appeal, but I agree that we should do so. It has been fully and helpfully argued by the parties and the interveners, the competing arguments have been admirably expounded by Lord Kerr and Lord Hughes, and it seems to me to be an important issue which should be decided if possible. The competing arguments have been fully set out in the judgments of Lord Kerr and Lord Hughes. Lord Kerr favours the wider approach, namely that a claimant need only establish serious defects in the investigation into her particular case, irrespective of whether they are systemic or operational failures. Lord Hughes prefers the narrower approach, the effect of which is that a claimant has to establish serious failings of a systemic nature, and that failings of a purely operational nature will not suffice, at least where the perpetrator of the alleged assault was not a state agent. In agreement with Lord Kerr, I am of the view, that serious failures which are purely operational will suffice to establish a claim that an investigation carried out pursuant to an article 3 (or indeed an article 2) duty infringed that duty. So far as the Strasbourg jurisprudence is concerned, I consider that the judgments to which we have been referred support the wider approach. The investigatory duty was identified in Assenov v Bulgaria (1998) 28 EHRR 652, para 102, where the court said that article 3, read with article 1, requires by implication that there should be an effective official investigation into cases where an individual raises an arguable claim that he has been seriously ill treated by the police or other such agents of the state unlawfully and in breach of article 3. I also note that the wider approach appears to have been adopted by the Grand Chamber in the article 2 case of Mustafa Tun and Fecire Tun v Turkey [2015] ECHR 383 see at paras 183 209. I accept of course that those decisions were concerned with cases of ill treatment by state agents, and that the approval of the principle in other decisions of the Grand Chamber (eg Gfgen v Germany (2010) 52 EHRR 1 and El Masri v The Former Yugoslav Republic of Macedonia (2012) 57 EHRR 25) were also concerned with such cases. I also accept that the standard which a court should apply when considering whether the investigatory duty has been satisfied may well be more stringent in cases where the alleged ill treatment was caused by state agents than in cases where it was caused by others. However, I see no basis for holding that the duty is different in kind in the two types of case. While in a number of Strasbourg court decisions, it is stated that the duty extends to cases where the alleged ill treatment was caused by third parties, there is no suggestion that the nature of the duty to investigate is different in kind in the two types of case. Thus, in the recent case of BV v Belgium (Application No 61030/08) 2 May 2017, para 56 the court stated that the obligation to carry out an effective investigation cannot be limited to cases of ill treatment by agents of the state, without suggesting that there was any difference in the basic nature of the duty. It is true that in Beganovi v Croatia [2009] ECHR 992, para 69, the court said that the scope of the States positive obligations might differ between cases where treatment contrary to article 3 of the Convention has been inflicted through the involvement of state agents and cases where violence is inflicted by private individuals. However, even without considering other decisions of the Strasbourg court, that seems to me to be a very small peg on which to hang a contention that the two cases require approaches which differ in nature. In any event, when that observation was repeated in Vasilyev v Russia [2009] ECHR 2078, para 100, the court immediately went on to make the point that the requirements as to an official investigation are similar, and that was a point repeated in a number of subsequent decisions see eg Koky v Slovakia [2012] ECHR 994, para 215, Amadayev v Russia [2014] ECHR 704, para 70, and MC and AC v Romania [2016] ECHR 359, para 111. Indeed, I note that in Beganovi itself, when considering whether the investigatory duty had been complied with in a case where the alleged perpetrator had been a non state agent, the court said in para 74 that it should consider whether or not the impugned regulations and practices, and in particular the domestic authorities compliance with the relevant procedural rules, as well as the manner in which the criminal law mechanisms were implemented in the instant case, were defective to the point of constituting a violation of the respondent states positive obligations under article 3. And the subsequent analysis of the facts in paras 80 86, which led the court to conclude that there had been a violation in that case, focussed very much on the operational failures. That approach appears to be supported by other Strasbourg court decisions involving the investigatory duty in relation to acts of serious ill treatment by non state agents. There is no suggestion in MC v Bulgaria (2005) 40 EHRR 20 that that duty is restricted to having effective systems in place: at para 153, the court referred to the duty of a state to enact criminal law provisions effectively punishing rape and to apply them in practice through effective investigation and prosecution. In para 167, the court seems to me to have been referring to both systemic and operational failures when it mentioned significant flaws in the impugned legislation and practice and its application in the case at hand, combined with the alleged shortcomings in the investigation (and see para 179). The finding of inadmissibility in Szula v United Kingdom (2007) 44 EHRR SE19 appears to me to have been based on the assumption that operational failures would, in principle, suffice to found a claim see para 1. To the same effect, in ei v Croatia (2007) 49 EHRR 18, the court said in para 54 that the police should have taken all reasonable steps available to them to obtain relevant evidence, which, as a matter of ordinary language, naturally refers to operational steps. In para 59 the court concluded that what appear to me to have been operational, rather than structural, failures (summarised in paras 56 58) enabled the article 3 claim to succeed. In Beganovi, para 75, the court made the point that the duty to investigate involved the authorities [having to] take whatever reasonable steps they can to secure the evidence concerning the incident which covers operational matters at least as much as systems. Vasilyev is another case where the court described the duty in terms which are, at least in my view, significantly more consistent with the wider approach, namely that the authorities [should] conduct an effective investigation involving the reasonable steps available to them (paras 99 and 100). In the 2016 case of Chernaya v Ukraine [2016] ECHR 1117, which involved an injury inflicted by a non state agent, the court reiterated in para 25 that [t]he minimum standards of effectiveness laid down by the Courts case law include the requirements that the investigation be independent, impartial and subject to public scrutiny, and that the competent authorities must act with exemplary diligence and promptness again focusing on the operational aspects of the particular investigation. Of course, this Court is not required to follow Strasbourg jurisprudence, even in a case such as this where there is a clear and consistent approach adopted in a significant number of chamber decisions. Dialogue between the United Kingdom Supreme Court (and indeed other courts in the United Kingdom) and the Strasbourg court has proved to be beneficial to the development of human rights law in this jurisdiction and, I hope, in Strasbourg. Accordingly, if it appears to us that the narrower approach is even only probably correct, the fact that the Strasbourg court has consistently taken a different view should not necessarily stand in the way of our coming to a contrary conclusion. In this case, the notion that we can take such a course can fairly be said to be supported by the fact that, although it is inconsistent with the views expressed in a number of decisions of the Strasbourg court, the notion that the narrower approach is correct has not, so far as I can see, been specifically raised in that court. But there must be a good reason for our taking such a course, and in this case, at least in my view, there is not. Indeed, in my view, there are good reasons for favouring the wider approach. First, one starts with the proposition that, given that it is rightly accepted on all sides that the authorities have an investigatory duty, it would be of little value unless it was a duty to investigate effectively. Provided that courts bear clearly in mind the difficulties involved in policing modern societies, the unpredictability of human conduct and the operational choices which must be made in terms of priorities and resources and the need to interpret the duty in a way which does not impose an impossible or disproportionate burden on the authorities (Osman v United Kingdom (1998) 29 EHRR 245, para 116), I find it hard to understand why an investigation which is seriously defective in purely operational terms should, in effect, be held to satisfy the investigatory duty. Secondly, I cannot see any basis in its jurisprudence to suggest that it is likely that the Strasbourg court would think it right to limit the extent of the investigatory duty to systemic, as opposed to operational, failures. It is true that in A v United Kingdom (1998) 27 EHRR 611, having held that article 3, together with article 1, requires States to take measures designed to ensure that individuals within their jurisdiction are not subjected to torture or inhuman or degrading treatment or punishment, the court concluded that then current statutory provisions did not provide adequate protection to the applicant against treatment or punishment contrary to article 3 and that the failure to provide adequate protection constitutes a violation of article 3 (paras 21 and 24). However, that conclusion merely reflected the factual basis and arguments in the case. If the statute did not provide adequate protection, there was a systemic failure, and it was both unnecessary and pointless to consider the operational aspects of the legal system. However, clearly to my mind, it does not follow that, if the statutory provisions had complied with article 3, but the legal processes had been defective, the United Kingdom would have been acquitted of infringing article 3. Indeed, the courts summary of the law in A v United Kingdom, para 22 contains nothing to suggest that the states obligation there being discussed should be limited to systemic matters. Similarly, while the court in Osman, para 116, was concerned to ensure that the investigatory duty was not interpreted or applied unrealistically, there is no indication in that paragraph that it was intending to limit the duty to the provision of a satisfactory framework, irrespective of how ineptly it operated in a particular case. Indeed, such an approach would seem to me to be inconsistent with how the Strasbourg court approaches cases generally, namely by reference to the specific facts of the particular case. Thirdly, there are forensic considerations. In that connection, I would start by rejecting the notion that it could be right for a court to dismiss a claim that an investigation was seriously defective simply because the relevant police procedures as set out in official documents were satisfactory. It would not merely be formalistic, but both unjust and unrealistic, to hold that an investigation, which was seriously systematically defective in practice, nonetheless complied with the article 3 investigatory duty simply on the grounds that, while the systemic defects occurred in practice, they did not reflect the systems as laid down officially. Whether the wider or the narrower approach is correct, the court must surely consider the real, not the hypothetical. Once that is accepted, I consider that the narrower approach could present a court with difficult practical, categorisation, and apportionment issues. Whichever approach applies, a court must inevitably start by considering the failures in the particular case. On the wider approach, the court would simply ask whether those failures were sufficiently serious to represent an infringement of the investigatory duty. On the other hand, on the narrower approach, the court would have to consider which of the failures were operational and which were systemic, and that, as I see it, is where problems would often start. Serious operational failures by individual officers would frequently throw up arguable systemic issues, such as systems of supervision or even of appointment of those officers. And, in order to decide whether the operational failures were systemic in origin, the court might often have to embark on an inquiry whether, for instance, the failures were redolent of what happened in other investigations. That could involve a potentially time consuming and expensive inquiry into other investigations, as well as arguments as to the number and types of investigation, if any, to which the inquiry should be restricted. The question whether the defective investigation was attributable to systemic, rather than purely operational, failures could also involve difficult issues of categorisation and inference. For instance, in many cases it may be hard to decide whether a particular failure is operational or systemic, or whether the operational failures in an investigation or a set of investigations entitle the court to infer a systemic failure. And what happens if, as may very often be the case, there are some operational failures which are purely operational and some which are attributable to structural failures? I do not consider that my view is undermined by the reasoning expressed or conclusions reached in Hill v Chief Constable of West Yorkshire Police [1989] 1 AC 53, Brooks v Comr for the Police for the Metropolis [2005] 1 WLR 1495, Van Colle v Chief Constable of Hertfordshire Police; Smith v Chief Constable of Sussex Police [2009] AC 225 and Michael v Chief Constable of South Wales Police [2015] AC 1732. Those cases establish that, absent special factors, our domestic law adopts the view that, when investigating crime, the police owe no duty of care in tort to individual citizens. That is because courts in this country consider that the imposition of such a duty would, as Lord Hughes puts it, inhibit the robust operation of police work, and divert resources from current inquiries; it would be detrimental, not a spur, to law enforcement. That view is entirely defensible, but, at least in the absence of concrete evidence to the contrary, so is the opposite view that the imposition of such a duty, provided that it is realistically interpreted and applied, would serve to enhance the effectiveness of police operations. It is therefore understandable that human rights law, with its investigatory duty under article 2 and 3, differs from domestic tort law in holding that it is right to impose an investigatory duty on the police. Just as the majority of this Court accepted in Michael, at paras 123 128, that the domestic tortious test for liability should not be widened to achieve consistency with the human rights test, so should the human rights test for liability not be narrowed to achieve consistency with the domestic, tortious test. Finally, I turn to an argument which I have already touched on, namely that the wider interpretation involves placing too great a burden on public authorities, in particular on the police. This concern was recognised in relation to the similar article 2 obligation on the police in Osman v United Kingdom (1998) 29 EHRR 245, para 116, where, as I have mentioned, the Strasbourg court said that the obligation must be interpreted in a way which does not impose an impossible or disproportionate burden on the authorities (and see to the same effect CN v United Kingdom (2012) 56 EHRR 24, para 68). The point was developed in MC v Bulgaria, where at para 168, the Strasbourg court made it clear that, when considering whether an investigation had satisfied article 2, a court should not be concerned with allegations of errors or isolated omissions in the investigation. As the Grand Chamber said in Tun v Turkey, para 176, the nature and degree of scrutiny which satisfy the minimum threshold of the investigations effectiveness depend on the circumstances of the particular case. The court in that case went on to find shortcomings in the investigation, but held that there had been no infringement of article 2, because they were not serious or decisive (paras 189 and 195), and it concluded in para 209 that there were no such shortcomings as might call into question the overall adequacy and promptness of the investigation. And in Beganovi v Croatia, para 78, the Strasbourg court emphasised that it should only conclude that the investigatory duty had been infringed in cases of manifest disproportion between the gravity of the act and the results obtained at domestic level (citing the earlier decisions of Nikolova and Velichkova v Bulgaria, (2009) 48 EHRR 40, para 62, and Atalay v Turkey [2008] ECHR 850, para 40, which are to the like effect). It is because of the concern expressed in Osman, para 116, that it is important to emphasise that only serious defects in any investigation can lead to the conclusion that there has been an infringement of article 2 or article 3. Accordingly, I conclude that a claim based on serious defects in the performance of the investigatory duty under article 3 (and equally under article 2) can succeed even if defects are all of a purely operational, as opposed to a systemic, nature. For these reasons, which are little more than a summary of those given by Lord Kerr, with whose judgment I agree, I would therefore dismiss this appeal. LORD HUGHES: I agree that the appeal of the Metropolitan Police in this case should be dismissed. It seems to me, however, important that the ambit of the positive duties which arise under article 3 ECHR should be subject to examination, if not that an exhaustive definition should be attempted. The context in which this case comes to this court needs to be remarked. It is unusual. The treatment under consideration is the very serious offence of rape of victims who were exploited after putting themselves in apparently trustworthy hands (a black cab driver) and who had then been rendered helpless by stupefaction. There has been no dispute from the beginning that there were notable general failings in the police approach to investigation into the kind of complaint which both claimants made. They affected both the initial complaint by DSD in 2003, at least from the time of the morning after the event, at which stage she first realised that she had been sexually attacked, and the later complaint by NBV in 2007. The findings recorded by the judge in a meticulous judgment were almost entirely to the same effect as, and were grounded upon, the polices own conclusions, following detailed internal reports, about the deficiencies of their approach to the possibility of drug induced rape. The consequences were extremely serious. Because the first incident reported was not approached properly, the attacker remained undetected and became a serial rapist. Although only a small proportion (ten) of his many attacks were reported to the police at the time, it is now known that he raped more than 100 women, employing a similar method. His modus operandi was highly specific. Once anyone put two or more of the reported incidents side by side, the inference that there was a single serial offender was irresistible. Once that was done, early in 2008, the rapist was arrested, and compelling evidence against him found, within eight days. That could and should have been done years earlier. Recognising the substantial justice of the complaints, the police have made it clear that in the event that their appeal should be successful, they do not seek repayment of the compensation ordered by the judge. But the elementary justice of the complainants cases makes it all the more important that the ambit of the duty should be considered. Otherwise indignation at their experiences may lead to an over wide formulation passing unnoticed, with detrimental results for the criminal justice system. The origin of the positive duties Article 3 ECHR says this: No one shall be subjected to torture or to inhuman or degrading treatment or punishment. It is elementary that, as Laws LJ pointed out in the Court of Appeal in the present case, the obligations created by the Convention lie upon the party States and upon no one else. The Convention governs the relationship between the State and the citizen. It creates no duties for individuals. Article 1 is explicit. It is on the states that it imposes the obligation to secure to those within their jurisdiction the rights and freedoms defined in the Convention. It is perfectly clear that the primary case of behaviour which is a breach of article 3 is where torture or inhuman or degrading treatment is meted out by the state against a person within its jurisdiction. Even without the origins of the Convention in the aftermath of the Second World War, the very use of the expressions torture and inhuman or degrading treatment is sufficient demonstration of that; these are typically descriptions of State misbehaviour. And the same is demonstrated by the words subjected to. If the State inflicts such treatment, it has subjected the citizen to it. Anything beyond that is a judicial gloss on the Convention, well established as that gloss may now be. In fact, there have been developed two glosses. Similar glosses have been applied to the primary obligation in article 2, concerning the right to life, and it may be to other rights. The first gloss was explained by the Strasbourg court in Assenov v Bulgaria (1998) 28 EHRR 652, in which there was an allegation of police violence towards a suspect in custody. It builds on the primary obligation of the state not itself to inflict prohibited treatment on the individual. If that primary obligation stood alone, it might well be ineffective because the State organ which inflicts such treatment may deny it or cover it up. It will be effective only if, when there is a reason to think that such ill treatment may have been inflicted by a state organ, there is an ancillary positive obligation to take steps to investigate the allegation and to bring to book those who are found to be responsible. At para 102 the court set out the reason for this obligation: The court considers that where an individual raises an arguable claim that he has been seriously ill treated by the police or other such agents of the State unlawfully and in breach of article 3, that provision, read in conjunction with the States general duty under article 1 of the Convention to secure to everyone within their jurisdiction the rights and freedoms in [the] Convention, requires by implication that there should be an effective official investigation. This obligation, as with that under article 2, should be capable of leading to the identification and punishment of those responsible. If this were not the case, the general legal prohibition of torture and inhuman and degrading treatment and punishment, despite its fundamental importance, would be ineffective in practice and it would be possible in some cases for agents of the State to abuse the rights of those within their control with virtual impunity. (Emphasis supplied) The same rationale was explained (in the context of the ancillary article 2 positive obligation to investigate State responsibility for death in custody) by Lord Bingham in R (Amin) v Secretary of State for the Home Department [2004] 1 AC 653, para 31. The purpose of the duty is, he said: to ensure so far as possible that the full facts are brought to light; that culpable and discreditable conduct is exposed and brought to public notice; that suspicion of deliberate wrongdoing (if unjustified) is allayed; that dangerous practices and procedures are rectified; and that those who have lost their relative may at least have the satisfaction of knowing that lessons learnt from his death may save the lives of others. The reference to culpable and discreditable conduct was plainly to such conduct on the part of State organs. The nature of the obligation was neatly summed up by Jackson J in R (Wright)v Secretary of State for the Home Department [2001] EWHC Admin 520, [2001] UKHRR 1399, in terms repeated by Sedley LJ in R (AM) v Secretary of State for the Home Department [2009] EWCA Civ 219: that an article 2 or article 3 investigation is required in order to maximise future compliance with those articles. The second gloss is different and is the one in question in the present case. It concerns ill treatment not by the state but by an individual or other third party actor. Plainly a citizen may be subjected to inhuman or degrading treatment (or torture) by a fellow citizen. It has become commonplace to speak of this as a breach of article 3, but it is not. An individual cannot be in breach of the Convention. In the ordinary way, if treatment falling within article 3 is applied by A to B, then A may have subjected B to it, but the state has not. The States responsibility is simply not engaged. But it may be if, and only if, the State fails to take steps to afford its protection to B against As misbehaviour. In that event, it is still not a case of the state subjecting the individual to inhuman or degrading treatment, but by judicial gloss the article is read as carrying with it an unspoken but implicit positive obligation upon the State to afford its protection. This second gloss has the potential to extend considerably wider than the first. Whilst the first is concerned to give effect to the primary obligation of the state not itself to subject people to inhuman or degrading treatment, the second reaches into the question of what the state is bound to do in relation to the acts of people for whose behaviour it is not responsible. When one comes to this question, there are considerations which do not apply to the first gloss. Even in the most law abiding of states, that sometimes serious harm will be inflicted by one individual upon another, in the context of all manner of disputes and in pursuit of many different objectives, is a regrettably unavoidable feature of life. No one suggests that the state is bound to guarantee that this will not happen. Indeed, some steps which an authoritarian state might be inclined to take with a view to preventing it (such as preventive detention without conviction or other court order, house arrest, intensive surveillance and the like) might themselves be infringements of other fundamental rights afforded to the citizen. That consideration apart, the systems which states adopt for the protection of those within their boundaries do not have to be the same. It has never been suggested that it is the function of the Convention to monitor every act of enforcement or policing of the varied domestic legal requirements, nor the content of those requirements, so long as they provide sufficiently for the protection of the individual against third party behaviour which meets the high threshold of severity contemplated by article 3. Otherwise, what would be involved would not be a gloss on the primary obligation imposed by article 3, nor would the positive obligation be in any sense ancillary to that primary obligation. Rather, the duty would be of a completely different character to the primary obligation, and would entail wholesale assimilation of, and judicial control of, the legal systems of independent states. The positive obligation constituted by this second gloss relating to the protection of citizens from third party ill treatment requires first that the state have a legal framework for the prohibition of conduct passing the article 3 threshold, and thus afford the protection of its legal system against such behaviour. A v United Kingdom (1998) 27 EHRR 611 was an example of a legal system which failed to provide sufficient protection to children against the infliction of serious harm via corporal punishment, until the former English defence of reasonable chastisement was altered. Such cases concern the structure of a states system. The more difficult question is whether the implied positive obligation recognised by the second gloss extends beyond the structure of the states system to its operation in an individual case. The Strasbourg court confronted this in Osman v United Kingdom (1998) 29 EHRR 245, where the complaint was that the police force had failed sufficiently to heed reports suggesting that an obsessive might be a danger to an individual, who had then been attacked and almost killed (and his father killed). The context was the equivalent gloss on article 2, but the principles are the same as for article 3. The court concluded that the implied positive obligation to protect could apply but in narrow circumstances of a real and immediate risk to the life of an identified individual by a third party, of which risk the State either knew or ought to have known. If such an immediate threat exists, then the States obligation is to do what can reasonably be expected of it which might reasonably have avoided the risk; it is not limited to a duty to avoid gross negligence. As Lord Bingham observed in Van Colle v Chief Constable of Hertfordshire Police; Smith v Chief Constable of Sussex Police [2008] UKHL 50; [2009] AC 225 at para 29, it is quite apparent that every ingredient of this carefully drafted test is of importance. It defines the restricted circumstances in which a duty arises under the Convention to take reasonable operational steps to forestall known specific threats to the safety of an individual from eventuating. The court in Osman made clear the reason why this test is restrictive. It lies in the realities of law enforcement and policing. At para 116 it said this: For the Court, and bearing in mind the difficulties of policing modern societies, the unpredictability of human conduct and the operational choices which must be made in terms of priorities and resources, such an obligation must be interpreted in a way which does not impose an impossible or disproportionate burden on the authorities. Accordingly, not every claimed risk to life can entail for the authorities a Convention requirement to take operational measures to prevent that risk from materialising. Another relevant consideration is the need to ensure that the police exercise their powers to control and prevent crime in a manner which fully respects the due process and other guarantees which legitimately place restraints on the scope of their action to investigate crime and bring offenders to justice, including the guarantees contained in articles 5 and 8 of the Convention. This duty recognised in Osman is a duty to take reasonable steps not to enforce the law or to punish a perpetrator, but to prevent serious violence from occurring to an individual when the threat of it is sufficiently specific. It is an expansion of the second gloss beyond the requirement for structures and systems to render serious violence unlawful, but it is carefully narrow in extent. The House of Lords faithfully applied Osman in Van Colle v Chief Constable of Hertfordshire Police. What has happened since is that the second gloss has been further extended beyond prevention of anticipated violent crime to a duty to investigate reported past violence. The usually identified origin of this further extension is MC v Bulgaria (2005) 40 EHRR 20. There is no doubt that the formulation adopted in that case has been often repeated, usually word for word, in later cases. In that sense there is, no doubt, a consistent line of authority. The difficulty is that much remains unclear, indeed unexplained. Unclear remain the rationale for the extension, the issue whether it can be derived from Osman and/or Assenov or if not why departure from the principles of those cases is justified, and the extent of the duty as extended. MC v Bulgaria concerned a complaint of rape made by a 14 year old against two young men of her acquaintance with whom she had spent an evening and night travelling around in their car. They had been arrested on the day that she made her complaint to the police, a few days after the alleged event. Their case was that she had consented. There were multiple clashes of evidence between the complainant on the one hand and those she accused, plus other witnesses, on the other. But the prosecutors investigation had been closed on the grounds that neither force (physical or psychological) nor threats of the same, nor physical resistance by the complainant, had been established. The point of the case was the courts rejection of that criterion for rape, which was at the time consistently adopted by the Bulgarian authorities, and was asserted by the Government to be the rule: see paras 122 and 166. Thus there was a breach of article 3 (and indeed of article 8) because the Bulgarian structures or system for the criminalisation of rape did not sufficiently protect an individuals sexual autonomy; absence of consent must be the criterion, rather than the use of force. That sufficiently demonstrated a breach of article 3 in the same way as in A v United Kingdom. The court, however, went on to draw attention to deficiencies in the prosecutors investigation of the complaint. At the outset of its judgment it made the following statement of principle, which has subsequently been adopted, often word for word, in later cases. 151. In a number of cases article 3 of the Convention gives rise to a positive obligation to conduct an official investigation. Such positive obligations cannot be considered in principle to be limited solely to cases of ill treatment by state agents. 152. Further, the Court has not excluded the possibilities that the states positive obligation under article 8 to safeguard the individuals physical integrity may extend to questions relating to the effectiveness of a criminal investigation. 153. On that basis the Court considers that states have a positive obligation inherent in articles 3 and 8 of the Convention to enact criminal law provisions effectively punishing rape and to apply them in practice through effective investigation and prosecution. (Emphasis supplied) The emphasised passage in para 153 is expressed as a summary of the three propositions in paras 151 and 152. As to those, authority is cited for each of them. The authority cited for the first sentence of 151 is Assenov (at para 102). For the second sentence of 151 it is Calvelli and Ciglio v Italy. For the third proposition, in 152, it is Osman at para 128. Whilst these paragraphs show that the court asserts that article 3 carries an obligation in some circumstances to investigate third party offending, they leave only uncertainties about its source and thus its extent. As has been seen, Assenov does indeed show that article 3 gives rise to a positive obligation in a number of cases to conduct an official investigation. But those cases are ones where the investigation is into suspected state involvement in ill treatment and is necessary if the primary obligation on the State is not to be ineffective. That rationale does not apply to cases of third party offending and MC v Bulgaria does not say anything about the difference between the two situations. Given the explanation in Assenov of the reasons why an ancillary positive obligation has been devised by judicial gloss, the difference is fundamental. Calvelli and Ciglio was a case of alleged medical negligence in the course of the delivery of a baby who died shortly afterwards. It had been treated by the Italian authorities as a case of possible criminal manslaughter. The doctor had been convicted but his conviction was eventually set aside by the Court of Cassation on the grounds that he had wrongly been convicted in his absence. A re trial was ordered but by then the limitation period had expired. The claimants asserted that there had been no effective system of investigation and trial because owing to delays the limitation period had expired and the doctor had not been convicted. The Court held that there had been no violation of article 2. The obligation discussed was the duty to run a system which provided sufficient remedies: see paras 49 54. That is the A v United Kingdom duty. There had been no breach of it because in the field of medical negligence a civil rather than a criminal process can suffice and here there had been sufficient remedies in (1) a right to damages (which had been pursued and then settled by the claimants without a finding of liability against the doctor, thus waiving an entitlement to pursue the case to such a finding) and (2) disciplinary regulation of doctors. True, there was complaint of delay made, but there was no examination in this case of the question what duty existed to investigate the doctors actions. The nearest that the court got to that question was the observation that remedies must be effective and not exist in theory only. It is not easy to see how this case generated the second sentence of para 151 in MC v Bulgaria, but if it did it is more consistent with an obligation to provide a sufficient investigative structure than with a duty not to be negligent in the detailed inquiry. As to para 152 of MC v Bulgaria, para 128 of Osman (a) is concerned with whether there had been a breach of article 8 and (b) simply re states the finding that the police did not know, nor ought to have known, of a real and immediate threat to the safety of the complainant. Of course it is true that in order to establish whether a sufficiently real and immediate threat to the safety of the complainant exists, it will in some cases be necessary for the police to investigate the complaint. But that does not alter the fact that the carefully limited duty recognised in Osman is concerned not with an obligation to investigate a past event, but with an obligation to prevent a future one. The tentative tone of para 152 is also to be noted. No more is said than that the possibility of the positive obligation extending to a duty to mount an effective investigation is not excluded. No further reasoning is shown for the progression from that to the much more positive statement in para 153. It is not clear why that more positive statement follows from the previous two paragraphs, even if those two had been themselves firmly grounded on the authority cited. The court in MC v Bulgaria was moreover at pains to set some limit to the permissible review of the investigation. At paras 167 168 it said this: 167. In the light of the above, the courts task is to examine whether or not the impugned legislation and practice and its application in the case at hand, combined with the alleged shortcomings in the investigation, had such significant flaws as to amount to a breach of the respondent states positive obligations under articles 3 and 8 of the Convention. 168. The issue before the court is limited to the above. The court is not concerned with allegations of errors or isolated omissions in the investigation; it cannot replace the domestic authorities in the assessment of the facts of the case; nor can it decide on the alleged perpetrators criminal responsibility. The court identified, at para 177, deficiencies in the investigation. It concluded that the conflicting assertions were not sufficiently sensitively assessed, and that inquiries which could have been made into timings, which might have shown which version was correct, were not made. It also criticised the fact that the complainant had not had the opportunity to confront and question the witnesses relied upon by the accused. Lastly, the investigators had not, it was said, sufficiently taken into account the unlikelihood that a 14 year old would make advances to the second man only minutes after losing her virginity to the first. But at para 179, set out by Lord Kerr at para 25 above, the court made it clear that it regarded the deficiencies in the investigation as the consequence of, and part and parcel with, the flawed approach of the Bulgarian system generally to the issue of lack of consent. It was because of the criterion of force/resistance that the investigation did not go into matters which otherwise it should have done. This must be the explanation for the observations about investigation, for otherwise it is very difficult to see that the criticisms made could found a breach of article 3 given the words of paras 167 and 168. Those paragraphs make it clear that the gloss on article 3 is not a vehicle for the second guessing via the Convention of the ordinary domestic process of assessment of conflicting evidence. Of course it is true that the Strasbourg court is a supra national one, but there is no sign that the limit on concern with errors or isolated omissions is restricted to that court as distinct from a national court when the latter is applying the Convention; on the contrary, the limit is expressed to be one which determines when there is a breach of article 3 and this plainly is the same for all courts examining that question. Nor can it be the case that a system which does not involve pre trial confrontation of witnesses, as some Code Napoleon systems do, but other systems, including all the United Kingdom ones, do not, is ipso facto in breach of article 3. What has happened since MC v Bulgaria is that the formulation cited above has been repeated, or in some cases summarised. It is plain that in several of them the summary has been to the effect that whenever there is an allegation of ill treatment passing the article 3 threshold, by whomever committed, there is an obligation on the state to conduct an effective investigation. But in none of these cases has the basis for, and thus the ambit of, any obligation to investigate third party violence ever been addressed. Reference back to MC v Bulgaria, and to its reliance on Assenov, Calvelli and Osman is frequently made, but never examined and the uncertainties mentioned above have not been confronted. In some cases, there is additional reliance on a series of Turkish cases: Ay [2005] ECHR 167, Ali & Aysu Duran [2008] ECHR 289, Mehmet [2008] ECHR 269, Celik [2004] ECHR 548 and Bati [2008] ECHR 246. But all of these were cases of allegations of serious police torture or ill treatment of suspects; the citation of such cases illustrates the manner in which the difference between the first gloss and the second has not received attention. In most cases the injunction that the court is not concerned with errors or isolated omissions is similarly repeated. In some, the court appears to have looked accordingly for evidence of a structural defect, alternatively culpable disregard or an absence of good faith, in the administration of the domestic system: see for example Szula v United Kingdom (2007) 44 EHRR SE19 and BV v Croatia (Application No 38435/13) 21 January 2016. But this is not always the case. The injunction notwithstanding, in some of the cases the criticisms of the investigation have been very particular. In some, there are plain overtones of structural State deficiencies in relation to the investigation of allegations of racially motivated or discriminatory violence: examples include Secic v Croatia (2009) 49 EHRR 18, Beganovi v Croatia [2009] ECHR 992, and Milanovic v Serbia [2010] ECHR 2029, but this was not given as a reason for the decisions. In others, such as Vasilyev v Russia [2009] ECHR 2078, the nub of the allegation was serious misbehaviour by the police, in that case by dumping the injured men in the street in the aftermath of a third party assault. But in some, the court has found itself simply pronouncing on whether the investigation was sufficiently careful. An example appears to be CAS v Romania (2015) 61 EHRR 18, where the complaint was of sexual abuse of a boy in his home by a visitor or neighbour. It is possible that the basis of the decision was a conclusion that, as in some other cases, the state did not take allegations of sexual abuse seriously enough, but that is not said. The court found a breach of article 3 not only in delay, which did not prevent the prosecution of the specific individual identified, but also in what it described as a failure sufficiently to evaluate conflicting testimony, supported by the fact that when that individual accused was acquitted, the police did not look for anyone else. That is very close to, if not indistinguishable from, a view that the outcome of the trial was wrong, and moreover that if it was wrong that could itself amount to a breach of article 3. Beganovi is another case in which (at para 77) the court appears to have held that the positive obligation under article 3 may extend into examination of the conduct of the trial. Such instances, which may be atypical, leave unanswered the question what is meant by the principle that a breach of article 3 is not constituted by a bona fide decision in the course of investigation or law enforcement which is afterwards held to have been an error. Occasionally in the Strasbourg cases, the general statement of principles includes the seminal passage from Osman v United Kingdom (para 116) which is set out at para 112 above. In most of them it does not. But it is surely clear that these considerations relating to the practical business of policing, to the operational choices which have to be made as to priorities and to the allocation of finite resources, must apply with equal if not greater force to the investigation of allegations of past third party violence as they do to reports of threats of future violence. These considerations point firmly to the proper test for the ancillary positive obligation under article 3 to investigate reports of past violence being whether the state has a proper structure of legal and policing provision designed to punish it when it occurs and has administered that structure in good faith and with proper regard for the gravity of the behaviour under consideration. They do not point towards a test of ex post facto assessment of whether the investigation was careless or made mistakes which ought not to have been made, nor to a finding that there has been a breach of the right not to suffer torture, or inhuman or degrading treatment, when the complaint is that an investigation could and should have been done better. The threshold of behaviour This is the more so when one considers the range of behaviour which is treated as triggering the ancillary positive obligation under article 3. It is clear, and regularly emphasised, that treatment must pass a minimum of severity before it falls within article 3. It is also clear, and routinely stated, that what that minimum amounts to is relative and varies according to the circumstances of the case, such as the nature and context of the punishment, the manner and method of its execution, its duration, its physical and mental effects, and in some instances the sex age and state of health of the victim. That statement derives from an early corporal punishment case, Costello Roberts v United Kingdom (1995) 19 EHRR 112, para 30. It was repeated in A v United Kingdom at para 20 and in many subsequent judgments. It is no doubt plain that in the case involving breach of the states primary obligation not to inflict inhuman or degrading treatment on its citizens, almost any physical injury perpetrated upon a citizen by a State official, typically the police, will cross the article 3 threshold. Save where necessary in the course of resisted arrest or the prevention of crime, there is simply no place in policing for causing injury of any kind to a suspect. The practice of the Strasbourg court in relation to third party violence might have built upon the relative nature of the threshold in order to limit the ancillary positive obligation to very serious violence but it has not done so. In Milanovic v Serbia numerous cuts combined with feelings of fear and helplessness were regarded (at para 87) as triggering the ancillary positive obligation. In BV v Croatia (at paras 153 and 121) injuries to the head and contusions to the body were treated likewise. It is plain from the cases that the threshold is regarded as falling, in English terms, somewhere on the scale of actual bodily harm. To that must be added rape and child sexual abuse; whether indecent assault passes the threshold remains unclear but it is perhaps likely that it may. So also one would think must be added false imprisonment (for example by relatives), violent disorder, most terrorist offences and many other crimes. It follows that the great majority of violent and sexual offences will trigger the ancillary positive obligation, and that potentially the investigation of all such offences might lead to an action under section 6 of the Human Rights Act, querying the adequacy of the police treatment of the case. It might also be noted that the application of the judicial glosses to the other rights protected by the Convention has not, as yet, received detailed consideration. But it is difficult to see why, if they are sound, they may not in principle be applied equally to other rights. In Siliadin v France [2005] ECHR 545 the Court held that the second gloss applied to article 4 at least as far as the obligation to put in place legal prohibition of forced labour was concerned, but an obligation in relation to investigation was not in issue. Some third party behaviour in relation to modern slavery might indeed be considerably more serious than actual bodily harm in a fight outside a club. Some of the cases clearly contemplate that third party infringement of article 8 rights may trigger the ancillary positive obligation: see in CAS v Romania at para 72, and Szula v United Kingdom at para 1. The possible application of that ancillary positive obligation to third party interference with the right to enjoyment of ones possessions under Article 1 Protocol 1 has yet, it seems, to be considered. But in principle, the state has a duty to protect this right in its citizens, as it has in relation to all the other rights under the Convention. If so, the prospect may exist of the response to every complaint of burglary, car theft or fraud becoming the subject of an action under the Human Rights Act. English domestic law and its relevance English law recognises a public legal duty owed by the police to enforce the law. The police enjoy a wide measure of discretion as to how to go about it, what inquiries to make, and when and whom to prosecute, but a structural failure to enforce a particular part of the law is amenable to direction by the court via judicial review on the application of any interested party: R v Comr of Police of the Metropolis, Ex p Blackburn [1968] 2 QB 118. Such a public duty is real, not abstract. That is consistent with the implied positive obligation recognised by the Strasbourg court in cases such as A v United Kingdom. English law also recognises the liability of the police to individuals where a tortious duty of care is broken, as it may be where they have directly or indirectly occasioned physical harm: Knightley v Johns [1982] 1 WLR 349 is a simple example. Further, it has a statutory scheme for the independent investigation of complaints about the police, and a different statutory scheme for the compensation of citizens who are injured through the criminal acts of others. What English law does not recognise is a duty of care in tort owed by the police to individual citizens and sounding in damages in relation to the detection of crime and the enforcement of the law. The reasons for this absence of private law duty of care were fully explained by the House of Lords in Hill v Chief Constable of West Yorkshire Police [1989] AC 53, and confirmed by that court in Brooks v Comr for the Police of the Metropolis [2005] 1 WLR 1495, [2005] UKHL 24 and in Van Colle v Chief Constable of Hertfordshire Police [2008] UKHL 50, [2009] AC 225; Smith v Chief Constable of Sussex Police [2008] UKHL 50, [2009] AC 225; and by this court in Michael v Chief Constable of South Wales Police [2015] AC 1732, [2015] UKSC 2. They find convincing expression in the first three cases in the separate speeches of Lords Keith, Steyn, Hope, Phillips, Carswell and Brown and were supported also by Lord Bingham despite his solitary dissent on the extent of the particular duty (of prevention) under consideration in Smith. A convenient summary is perhaps afforded by the judgment of Lord Phillips in Smith at para 97: I do not find it possible to approach Hill and Brooks as cases that turned on their own facts. The fact that Lord Steyn applied the decision in Hill to the facts of Brooks, which were so very different, underlines the fact that Lord Steyn was indeed applying a core principle that had been unchallenged for many years. That principle is, so it seems to me, that in the absence of special circumstances the police owe no common law duty of care to protect individuals against harm caused by criminals. The two relevant justifications advanced for the principle are (i) that a private law duty of care in relation to individuals would be calculated to distort, by encouraging defensive action, the manner in which the police would otherwise deploy their limited resources; (ii) resources would be diverted from the performance of the public duties of the police in order to deal with claims advanced for alleged breaches of private law duties owed to individuals. The point that he [Lord Steyn] was making in Brooks, in support of the core principle in Hill, was that the principle had been enunciated in the interests of the whole community. Replacing it with a legal principle which focuses on the facts of each case would amount, in Lord Steyns words, to a retreat from the core principle. We must be careful not to allow ourselves to be persuaded by the shortcomings of the police in individual cases to undermine that principle. That was the very thing that he was warning against, because of the risks that this would give rise to. As Ward LJ said in Swinney v Chief Constable of Northumbria Police Force [1997] QB 464, 487, the greater public good outweighs any individual hardship. As Lord Hope explained in the same case at para 75: These reasons are powerful, repeated and carefully considered. They are grounded in public policy and have something in common with the considerations explained by the Strasbourg court in Osman v United Kingdom at para 116 (see above at para 112). In the briefest of terms, law enforcement and the investigation of alleged crime involve a complex series of judgments and discretionary decisions. They concern, amongst many other things, the choice of lines of inquiry, the weighing of evidence thus far assembled and the allocation of limited resources as between competing claims. To re visit such matters step by step by way of litigation with a view to private compensation would inhibit the robust operation of police work, and divert resources from current inquiries; it would be detrimental to, not a spur to, law enforcement. It is not carrying out the impugned investigation efficiently which is likely to lead to diversion of resources; on the contrary. It is the re investigation of past investigations in response to litigation which is likely to do so. Moreover, whilst there may exist a mechanism by way of summary judgment for stopping short such a re investigation if the litigation be spurious in the sense of demonstrably bad on the papers, other claims, and particularly those which turn out to be speculative, cannot thus be halted. In short, the public duty would be inhibited by a private duty of such a kind. A contemporary example can be seen in terrorist activity. It is well known that large numbers of possible activists are, to some extent or other, known to the police or security services. The most delicate and difficult decisions have to be made about whom to concentrate upon, whose movements to watch, who to make the subject of potentially intrusive surveillance and so on. It is in no sense in the public interest that, if a terrorist attack should unfortunately occur, litigation should become the forum for a review of the information held about different suspects and of the decisions made as to how they were to be dealt with. Nor is it difficult to see that it is by no means necessarily in the public interest that there should be pressure on the authorities, via the prospect of litigation, to ratchet up the surveillance of additional persons. The long standing controversy over police use of powers of stop and search, for instance in relation to the carrying of knives by youths, affords another example. It may be noted that in his separate opinion on Osman in the commission, Sir Nicholas Bratza recognised the force of these considerations: (1998) 29 EHRR at 298. As he pointed out, the difficulties highlighted by the House of Lords in Hill were well illustrated by the facts of Osman. The allegations there made by the claimant would, he said, involve an investigation not only into issues of fact but into acutely difficult questions of policy and discretion. The relevance of the position at which English law has arrived, after long consideration at the highest level, is not that English law can control the operation of the ECHR. But it is to highlight the delicate balance between the duty of the State to the public generally and its relationship to individuals in particular cases of reported or anticipated crime. That delicate balance is as applicable to the ambit of the implied ancillary positive obligation under articles 2, 3 and maybe others as it is to an action in tort in the domestic courts. When taken together with the uncertainties as to the nature and extent of the implied positive obligation as found by the second gloss on those articles, it points clearly to the undesirability of any assertion of a detailed review of the course of a particular criminal investigation by way of the Convention. It is one thing to say that a state must take seriously its protective obligation, must put in place structures which enforce the law and must not then ignore them. It is quite another to say that by way of the Convention every police investigation should be examined in detail to see whether it should have been done better, and that compensation should be paid out of the limited police resources, at the expense of other necessary expenditure on current cases, if the decision is that it should have been. These important public considerations have nowhere been examined or put into the balance in any of the Strasbourg cases on the second gloss, from MC v Bulgaria onwards. It can properly be said that the distinction between structural and operational defects may at times be difficult to make. It is, however, no more difficult than the distinction which it is suggested must be made, if operational negligence suffices, between errors which amount to breaches of article 3 and those which do not. To say that the errors must be serious and significant in order to amount to a breach of article 3 is surely more to present than to solve the difficulty. Nor is such a restriction clearly to be found anywhere in the line of Strasbourg cases relied upon. If the test is not to be simply a falling below the standard to be expected of the police, and thus the same as negligence, it is not easy to see what it is. The English cases make a clear distinction between the objectives served by a tortious duty to compensate and a Convention based duty to uphold the prohibition on inhuman or degrading treatment: see for example Lord Brown in Van Colle at para 138. In substance, the Convention based duty is not aimed at compensation but at upholding and vindicating minimum human rights standards. It is, substantially, to insist on performance of a public duty. It is now said that this distinction justifies the acceptance of a general duty under article 3 to investigate any report of past behaviour passing the threshold of that article, because such will not impinge on the common law position as firmly established in the cases beginning with Hill. The error in this argument is to seek to have it both ways. One cannot both uphold the distinction and effectively eliminate it by employing a Convention claim to serve substantially the same purpose as an action in tort. That it will do if the wide ambit of the ancillary article 3 duty is accepted, and if compensation routinely follows a finding that a criminal investigation should have been better conducted. True it is that the limitation period differs, but this will not remove the disadvantages to policing which were identified in the English cases. It may be that there is a more relaxed approach to causation in a Convention based claim, but that if anything only increases the prospect of such a claim becoming a substitute for a claim in tort. There is no doubt some difference of approach to the calculation of compensation, but the present case is a good illustration of the marginal, if not imperceptible, nature of the distinction in outcome see the judges scrupulous quantum judgment at paras 33, 130 and 143. If, on the other hand, the positive duty under article 3 is recognised to conform to the public duty, to put in place structures to outlaw the prohibited behaviour and to operate them in good faith, the Convention based claim will afford the possibility of some compensation where the English common law rules do not, but will not result in wholesale substitution of the Convention for a duty in tort. The claimants argument For the claimants Ms Kaufmann QC mounts an elegant argument. It is that the positive obligation to investigate past third party crime for which she contends is simply analogous to the Osman duty to protect from threatened violent crime. Just as the latter arises when there is a real and immediate risk of prescribed behaviour, so she contends the former arises when there is a credible report that the prescribed behaviour has already occurred. Elegant as the argument is, the two situations are not analogous. There is a clear distinction between protection from an immediately anticipated danger and inquiry into a past event. The carefully limited Osman duty arises because there is an immediate risk of death or serious injury to an identified individual, communicated to the State. By contrast, a crime of violence committed by A against B will only occasionally carry a risk of repetition, whether against B or against others; there is generally no immediate danger to an identified person. It is no doubt possible to categorise the duty to investigate reports of third party crime as deriving from the states duty to protect its citizens, in the same way as does its duty to have in place structures which make such behaviour unlawful. So viewed, the duty to investigate each reported crime can be said to be an application of cases such as A v United Kingdom. But the reality is that there is a marked and vital distinction, even if it is sometimes of degree, between structural failure to outlaw the behaviour and operational failings in the investigation of particular reports. The present case The judges findings as to what went wrong are not disputed, and were in any event largely based on the very critical internal police reports, as well as on that of the Independent Police Complaints Commission. What went wrong involved plain structural errors. The Metropolitan Police had a written policy for recognising and dealing with cases of drug induced rape but it was institutionally treated as mere form and there was no proper training in its application. The complaints made by the claimants were simply not accorded the kind of weight which they demanded because of generic failures to treat them with sufficient care and gravity. Moreover there was pressure internally to write off cases of the kind here encountered. The various detailed failings in the conduct of the inquiry were largely attributable to this flawed structural approach. They included those set out by Lord Kerr at para 51. There is, as explained at the outset, no appeal as to quantum. In those circumstances, this is a case which falls within the ancillary positive duty under article 3, as it ought to be interpreted. It is for that reason that I agree that the appeal in the present case ought to be dismissed. LORD MANCE: I have read with benefit the three judgments prepared in this case by Lord Kerr, Lord Neuberger and Lord Hughes. The result is not in doubt, but there is a significant difference between Lord Kerr and Lord Neuberger on the one hand and Lord Hughes on the other regarding the extent to which the Convention rights, as domesticated by the Human Rights Act 1998, should be seen as imposing on the State an operational duty to investigate serious offences the commission of which there is no reason to attribute to state agents. If there is such a duty, then I do not see that it can or should be confined to the victim of the offence in question. Part of its purpose must be not only to punish, but also to deter and to prevent the occurrence of further such offences, and, if a third person suffers foreseeably as a result of a failure properly to investigate, that third person appears to me, potentially at least, to be a victim. There is much force in Lord Hughes analysis and critique in relation to the question whether any such general duty exists. What has happened in the Strasbourg jurisprudence is, unfortunately, not unprecedented. The European Court of Human Rights starts from a solidly rationalised principle, but then extends it to situations to which the rationale does not apply, without overt recognition of the extension, without formulating any fresh rationale and relying on supposed authority which does not actually support the extension. Further, the European Court of Human Rights has not in the present context really focused at any stage on the implications for policing of the general duty which it has suggested. These have been discussed domestically in a number of common law cases, and include the risks of defensive policing and of police priorities being affected by the perceived risk of being sued, as well as the significant financial implications of exposing the police to all those potentially affected by any failure in police investigative work: see eg Michael v Chief Constable of South Wales Police [2015] UKSC 2; [2015] AC 1732, paras 121 122. In these circumstances, while appreciating the pressures under which the European Court of Human Rights operates, and the difficulties of maintaining coherence and discipline in a court consisting in the first instance of multiple chambers, an approach, careful to identify, rationalise and justify any significant development of principle, would save domestic litigants and courts time, effort and expense. The starting point is the positive duty on the State under article 3 not to subject anyone to torture or to inhuman or degrading treatment or punishment. One (solidly rationalised) principle which the Court has derived from that duty, by way of gloss, is an ancillary positive duty to conduct an effective official investigation where an individual raises an arguable case that he has been seriously ill treated by the police or other such agents of the State unlawfully and in breach of article 3: Assenov v Bulgaria (1998) 28 EHRR 652, para 102; the basis for this being that: If this were not the case, the general legal prohibition of torture and inhuman and degrading treatment and punishment, despite its fundamental importance, would be ineffective in practice and it would be possible in some cases for agents of the state to abuse the rights of those within their control with virtual impunity. This is a coherent gloss, derived from the rationale of article 3. It was repeated in Sevtap Veznedaroglou v Turkey (Application No 32357/96), para 32, cited in Jacobs, While and Overys The European Convention on Human Rights (OUP, 2014) where this rationalisation is cited as the basis of any positive investigative duty. The Supreme Court in R (Smith) v Oxfordshire Assistant Deputy Coroner [2010] UKSC 29; [2011] 1 AC 1, expressed a similar understanding of the parallel ancillary investigative duty capable of arising under article 2 (providing that Everyones right to life shall be protected by law): the investigative obligation under article 2 arose only in circumstances where there was ground for suspicion that the state might have breached a substantive obligation under article 2, and the death of a soldier on active service did not of itself raise a presumption of such a breach: see headnote, holding (2). At paras 200 212, I examined both the Strasbourg and the domestic jurisprudence on this point, including the analysis of the point by the House of Lords in the prior authority of R (Middleton) v West Somerset Coroner [2004] 2 AC 182, para 3 per Lord Bingham, and R (Gentle) v Prime Minister [2008] AC 1356, para 6, per Lord Bingham. The investigative duty was in short parasitic. At para 210, I examined the various specific situations in which the European Court of Human Rights had held that there was sufficient State involvement to give rise to a substantive obligation to protect, combined with a parasitic duty to investigate after the event: killings by State agents and deaths of persons in custody or mental health detainees, deaths of conscripts, as well as situations where under the principle in Osman v United Kingdom (1998) 29 EHRR 245, the State was on notice of a specific and immediate threat to someones life and bound accordingly to take protective steps. In para 211, I pointed out the distinction between the procedural investigative obligation arising in such circumstances and the general substantive obligation under article 2 to establish an appropriate regulatory, investigatory and judicial system. To my mind, Lord Hughes analysis fits perfectly with what the House and the Supreme Court then understood to be the law under article 2, and I believe would also have thought the law to be under article 3, since there is no reason to differentiate in this respect between them. The case of MC v Bulgaria (2005) 40 EHRR 20 was not even cited in R (Smith) and there is reason to believe that its potential significance under these articles was not appreciated until much more recently: see paras 149 and 150 below. It is at this point that the European Court of Human Rights extended a solidly rationalised principle to situations to which the rationale did not apply. What it did in MC v Bulgaria (2005) 40 EHRR 20, para 151, was to cite Assenov, para 102, in support of propositions that: In a number of cases article 3 of the Convention gives rise to a positive obligation to conduct an official investigation. Such positive obligations cannot be considered in principle to be limited solely to cases of ill treatment by state agents. The other case cited in support of the second sentence was Calvelli and Ciglio v Italy (Application No 32967/96), where the Court remarked that procedural shortcomings had led to a time bar in relation to any criminal proceedings against the (private) doctor involved, but that the complainants had been able to commence civil proceedings, which, but for the fact that they chose to settle them, would in the special circumstances of the instant case, have satisfied the positive obligations arising under article 2: para 55. This reasoning and decision do not directly address the subject matter of either sentence cited above, and offer negligible support for any departure from the rationale of any investigative obligation stated in Assenov. It is also consistent with a requirement that there should be a sufficient system for redress. On this authority has however been piled a weight of subsequent Strasbourg caselaw, including some recent Grand Chamber authority, to the effect that the investigative duty is not, or not necessarily, confined to cases of suspected misdoing or default by State agents. Lord Kerr and Lord Neuberger have examined this caselaw. While its foundations or rationale may be shaky, I cannot ignore at any rate the clear terms in which the conclusion has now so often been expressed, to the effect that the States positive investigative obligation can arise even where the relevant offence is not arguably attributable to any State agent. There are however some caveats that I would make, based on such explanations as the Court has given as to the working of this extended duty: i) The Court has reiterated that the scope of the States positive obligations might differ between cases where treatment contrary to article 3 of the Convention has been inflicted through the involvement of State agents and cases where violence in inflicted by private individuals: see eg Beganovi v Croatia [2009] ECHR 992, para 62, Vasilyev v Russia [2009] ECHR 2078, para 100 and other cases cited by Lord Neuberger in para 88. This must mean something in practice, even though the Court went on to say that the requirements as to an official investigation are similar. ii) The Court has also repeatedly emphasised that it is not concerned with allegations of errors or isolated omissions in the investigation. A statement to that effect appears in the seminal authority of MC v Bulgaria, para 168, and is repeated in CAS v Romania (2015) 61 EHRR 18, para 69, BV v Croatia (Application No 38435/13) and BV v Belgium (Application No 61030/08), paras 55 61. In place of what was once understood to be a distinction between casual errors of judgments or acts of negligence, consisting of operational as opposed to systematic failures by state servants or agents, there is now a distinction to be drawn between simple errors or isolated omissions in the investigation and more serious failings. In this connection, I agree with Lord Hughes, para 123, that there is no basis for treating this qualification on the scope of the positive investigative duty under article 3 as confined to Strasbourg as a supra national court, and as irrelevant to the English domestic courts interpretation of article 3. I had understood Lord Kerr to suggest the contrary, but he has clarified in paras 27 to 30 that this is not the case. iii) In paras 27 to 30, Lord Kerr expresses a conclusion that the only shortcomings relevant when it comes to the operational duty to conduct an investigation are those which are conspicuous or substantial, or really serious, or egregious or obvious and significant. Lord Hughes considers that this is more to present than to solve the difficulty, and that no such restriction is clearly to be found anywhere in the line of Strasbourg cases relied on: para 136. But a distinction between mere shortcomings and more serious failures is at least consistent with the Courts statements of principle set out in the previous subparagraph, and appears in the reasoning in Mustafa Tun v Turkey (Application No 24104/05), paras 189, 192 and 195. It is also consistent with the Courts more general jurisprudence, to the effect that: ill treatment must attain a minimum level of severity if it is to fall within the scope of article 3. The assessment of this minimum is, in the nature of things, relative; it depends on all the circumstances of the case, such as the nature and context of the treatment, the manner and method of its execution, its duration, its physical or mental effects and, in some instances, the sex, age and state of health of the victim See Kudla v Poland [2000] 35 EHRR 198, para 91; and also A, B and C v Ireland (2011) 53 EHRR 13, paras 164 165. It is evident from the way the Court explains the assessment of the minimum level of severity that it is not going to be easy to predict where it falls in any individual case. iv) The investigative duty currently under consideration should not be confused with, and cannot be treated as part of, an Osman type duty on the state to act in the face of a real and immediate threat imperilling the life or bodily well being of a potential victim. That would involve mining and extending a separate strand of Strasbourg caselaw. In some cases, it would mean there was no investigative duty at all, if no real and immediate threat was apparent to anyone, or anyone other than the original victim, following the original offence. The investigative duty which the Strasbourg case law, in my opinion, now recognises is not tied down by any such restriction. It arises from the fact of the offence. I endorse what Lord Hughes says on this aspect in his paras 137 138. Finally, I do not accept that Lord Binghams well known cautionary remarks in R (Ullah) v Special Investigator [2004] UKHL 26; [2004] 2 AC 323 were confined to the international level (whatever relevance that would mean they had domestically). They were, and have correctly been understood in later authority, such as R (Al Skeini) v Secretary of State for Defence [2007] UKHL 26; [2008] AC 153, as guidance relating to the general approach which domestic courts should take. The general aim of the Human Rights Act was to align domestic law with Strasbourg law. Domestic courts should not normally refuse to follow Strasbourg authority, although circumstances can arise where this is appropriate and a healthy dialogue may then ensue: see eg R v Horncastle [2009] UKSC 14; [2010] 2 AC 373; Manchester City Council v Pinnock [2010] UKSC 45; [2011] 2 AC 104, para 48 and Chester v Secretary of State for Justice [2031] UKSC 63, [2014] 1 AC 271, paras 27 28. Conversely, domestic courts should not, at least by way of interpretation of the Convention rights as they apply domestically, forge ahead, without good reason. That follows, not merely from Ullah, but, as Lord Hoffmann said in In re G (Adoption: Unmarried Couple) [2008] UKHL 38; [2009] 1 AC 173, para 36, from the ordinary respect attaching to the European Court of Human Rights and the general desirability of a uniform interpretation of the Convention in all member states. There are however cases where the English courts can and should, as a matter of domestic law, go with confidence beyond existing Strasbourg authority: see eg Rabone v Pennine Care NHS Foundation Trust [2012] UKSC 2; [2012] 2 AC 72. If the existence or otherwise of a Convention right is unclear, then it may be appropriate for domestic courts to make up their minds whether the Convention rights should or should not be understood to embrace it. Further, where the European Court of Human Rights has left a matter to States margin of appreciation, then domestic courts have to decide what the domestic position is, what degree of involvement or intervention by a domestic court is appropriate, and what degree of institutional respect to attach to any relevant legislative choice in the particular area: see In re G, paras 30 38, per Lord Hoffmann, para 56, per Lord Hope and paras 128 130, per Lord Mance. |
The Architects Registration Board ("ARB") The Solicitors Regulation Authority ("SRA") The Bar Standards Board ("BSB") The Farriers Registration Council The Law Society The Bar Council The Local Government Association Her Majesty's Treasury LORD MANCE: (with whom Lord Neuberger, Lord Clarke, Lord Reed and Lord Toulson agree) 1. The appellants, who I shall call Westminster City Council, are the licensing authority for sex establishments (including sex shops) in Westminster under Schedule 3 to the Local Government (Miscellaneous Provisions) Act 1982. The respondents have at all material times been licensees in respect of some sex shops in Westminster. 2. The agreed statement of facts and issues records that an applicant for the grant or renewal of a sex establishment licence for any year had to pay a fee made up of two parts, one related to the administration of the application and non returnable, the other (considerably larger) for the management of the licensing regime and refundable if the application was refused. By way of example, for the year 2011/12 the total fee was 29,102, of which 2,667 related to the administration of the licence and was non returnable, while 26,435 related to the management of the licensing regime and was refundable if the application was refused. Refundable in this context clearly meant refundable in law. 3. The respondents, during the course of the proceedings before the Supreme Court, appeared to the court to be throwing some doubt on the agreed fact that the second part of the fee was refundable. However, not only was that agreed in the statement of facts and issues, but it was accepted by both courts below: see Keith Js judgment dated 16 May 2012, [2012] PTSR 1676, para 32 and the Court of Appeals judgment dated 24 May 2013, [2013] PTSR 1377, para 32. Further, the practice of refunding the second part of such a fee was recorded as long ago as 1985 in R v Westminster City Council, Ex p Hutton, tried and reported with R v Birmingham City Council, Ex p Quietlynn Ltd (1985) 83 LGR 461, 517. It is one which sex shop operators like the respondents must, on the face of it, have been aware of and have been able to enforce as a matter of public law. I see no basis in these circumstances for proceeding on any other basis. 4. The central issue is whether it was legitimate under domestic and/or European Union law for Westminster City Council to charge the 26,435 in 2011/12, or similarly refundable sums in other years. The respondents contend that it was not, essentially on the basis that these sums were, although refundable in the case of unsuccessful applicants, payable on account of the costs of enforcement of the licensing scheme which were unrelated to the costs of processing applications and should have been borne out of Westminster City Councils general funds and/or were, although payable on application by all applicants, sums which could only benefit successful applicants. I note that this was, of course, why they were refundable. 5. In domestic law, Westminster City Council relies upon paragraph 19 of Schedule 3 to the 1982 Act as authorising such fees. Paragraph 19 provides that: An applicant for the grant, renewal or transfer of a licence under this Schedule shall pay a reasonable fee determined by the appropriate authority. 6. Under this provision, it was established domestically some 30 years ago that a fee could be charged under paragraph 19 to reflect the costs not only of processing of applications but also of inspecting premises after the grant of licences and for what might be called vigilant policing in order to detect and prosecute those who operated sex establishments without licences: R v Westminster City Council, Ex p Hutton (1985) 83 LGR 516, quoted in the Court of Appeals judgment, para 13. 7. The correctness of this case law, as and when decided, is in my view unquestionable. I also have no doubt that it is, as a matter of domestic law, open to a licensing authority under paragraph 19 of Schedule 3 to require an applicant for the grant or renewal of a licence to pay a fee to cover the running and enforcement costs of a licensing scheme, and to make this fee payable either (a) outright, as and when the licence is actually granted pursuant to the application or (b) on a refundable basis, at the time when the application is lodged. The respondents contrary submission reads the wording of paragraph 19 over restrictively. 8. However, the respondents submit that, even if paragraph 19 is so read, the position has changed as a result of the making, under section 2 of the European Communities Act 1972, of the Provision of Services Regulations 2009 (SI 2009/2999) to give effect to Directive 2006/123/EC on services in the internal market. Regulation 18 of the 2009 Regulations provides: (2) Authorisation procedures and formalities provided for by a competent authority under an authorisation scheme must not (a) be dissuasive, or (b) unduly complicate or delay the provision of the service. (3) Authorisation procedures and formalities provided for by a competent authority under an authorisation scheme must be easily accessible. (4) Any charges provided for by a competent authority which applicants may incur under an authorisation scheme must be reasonable and proportionate to the cost of the procedures and formalities under the scheme and must not exceed the cost of those procedures and formalities. Under regulation 4: authorisation scheme means any arrangement which in effect requires the provider or recipient of a service to obtain the authorisation of, or to notify, a competent authority in order to have access to, or to exercise, a service activity Paragraphs (2), (3) and (4) of regulation 18 implement article 13(2) of the Directive. Despite their reformulation, no one suggests that these paragraphs have any wider or different effect than article 13(2). Article 13(2) reads: Authorisation procedures and formalities shall not be dissuasive and shall not unduly complicate or delay the provision of the service. They shall be easily accessible and any charges which the applicants may incur from their application shall be reasonable and proportionate to the cost of the authorisation procedures in question and shall not exceed the cost of the procedures. Article 13(2) is part of section 1, headed Authorisations in Chapter III of the Directive. Article 9, the first article in section 1, reads: Member States shall not make access to a service activity or the exercise thereof subject to an authorisation scheme unless the following conditions are satisfied: (a) the authorisation scheme does not discriminate against the provider in question; (b) the need for an authorisation scheme is justified by an over riding reason relating to the public interest; (c) the objective pursued cannot be attained by means of a less restrictive measure, in particular because an a posteriori inspection would take place too late to be genuinely effective. Article 4(6) contains this definition: authorisation scheme means any procedure under which a provider or recipient is in effect required to take steps in order to obtain from a competent authority a formal decision, or an implied decision, concerning access to a service activity or the exercise thereof Section 2 of Chapter III of the Directive, headed Requirements prohibited or subject to evaluation, specifies in article 14 various prohibited requirements, to compliance with which Member States may not make access to, or the exercise of, a service activity in their territory subject. One is an obligation to provide or participate in a financial guarantee or to take out insurance from a provider in their territory, but it is expressly provided that this shall not exclude a requirement to have insurance or a financial guarantee, or participate in a collective compensation scheme. Section 2 thus suggests that conditions attaching to the actual exercise of a service activity, once any necessary authorisation has been obtained, are a separate matter from the authorisation scheme and authorisation procedures and formalities. Similarly, Chapter IV, headed Free movement of services provides that Member States may not make access to or the exercise of a service activity in their territory subject to compliance with any requirements which do not respect general principles of non discrimination, necessity and proportionality set out in article 16(1) or which involve certain requirements set out in article 16(2). Again, this suggests that the actual regulation of access to or the exercise of a service activity is a distinct matter from any prior authorisation scheme and its procedures, with which section 1 of Chapter III is concerned. The courts below regarded article 13(2) as covering charges made to successful as well as unsuccessful applicants, and as preventing a licensing authority from charging those granted licences as well as unsuccessful applicants with the cost of investigating and prosecuting persons operating sex establishments in Westminster without a licence. On this basis, unsuccessful applicants could only be charged with the costs of dealing with their application (including investigating their suitability), while successful applicants could only be charged with similar costs, and, on any renewal, with the costs of monitoring and enforcing their compliance with their licence in the past. This would, inevitably, leave the licensing authority out of pocket in operating and enforcing the licensing scheme for the benefit of those obtaining licences, since the authority would have no recourse against any applicant for the costs of enforcing the scheme against the operators of unlicensed sex establishments, even though such enforcement was for the benefit of licensed operators. The authority would have to have recourse to any general funds which it might have, ie those raised in the case of Westminster City Council from rate or council tax payers or received from central government. What the remedy would be in the case of other regulatory or professional bodies which might have no general funds and no ability to raise funds in any such way is not clear. The Supreme Court has not only had the benefit of fuller and more refined arguments from the parties. It has also had the benefit of interventions by HM Treasury and a considerable number of regulatory or professional bodies, concerned about their ability to recover fees for enforcing other regulatory schemes, which might be regarded as similar to that presently under consideration. Westminster City Councils case has been put in two alternative ways. The first way is that the concept of authorisation procedures and formalities in article 13(2) can be interpreted widely enough to cover all aspects of the licensing scheme, including the costs of its enforcement against unlicensed operators. The second way is that article 13(2) (and so regulation 18) is concerned and concerned only with charges made in respect of authorisation procedures and their cost. The refundable charges which accompany any licence application do not relate to authorisation procedures or their cost. They relate to the running and enforcement of the licensing scheme for the benefit of those whose applications are successful; it is for that reason they are refundable to those whose applications are unsuccessful. I have no hesitation in rejecting the first way in which Westminster City Council puts its case. Article 13(2) is only concerned with authorisation procedures and formalities at the stage when a person is seeking permission to access or exercise a service activity. That is its natural meaning, read with the definition of authorisation scheme in article 4. Article 13(2) is not concerned with fees which may be required to be paid (eg annually) for the possession, retention or renewal of a licence, once the authorisation stage is satisfactorily past. The charges which the applicants may incur from their application to which article 13(2) refers cannot sensibly embrace fees of this nature payable by successful applicants for the licence or its retention or renewal after the authorisation stage. Nor can they in other language versions eg the French, where les charges qui peuvent en dcouler refers to charges arising from the procedures and formalities, and the German, where eventuelle dem Antragsteller mit dem Antrag entstehende Kosten refers to costs associated with the application. The respondents do not, as the court understands their position, quarrel with the conclusion expressed in para 15. It is also consistent with recitals 39 to 49 to the Directive, which are admissible as aids to its construction. These recitals include the following: (39) The concept of authorisation scheme should cover, inter alia, the administrative procedures for granting authorisations, licences, approvals or concessions, and also the obligation, in order to be eligible to exercise the activity, to be registered as a member of a profession or entered in a register, roll or database, to be officially appointed to a body or to obtain a card attesting to membership of a particular profession. Authorisation may be granted not only by a formal decision but also by an implicit decision arising, for example, from the silence of the competent authority or from the fact that the interested party must await acknowledgement of receipt of a declaration in order to commence the activity in question or for the latter to become lawful. (42) The rules relating to administrative procedures should not aim at harmonising administrative procedures but at removing overly burdensome authorisation schemes, procedures and formalities that hinder the freedom of establishment and the creation of new service undertakings therefrom. (43) One of the fundamental difficulties faced, in particular by SMEs (small and medium sized enterprises), in accessing service activities and exercising them is the complexity, length and legal uncertainty of administrative procedures. For this reason, following the example of certain modernising and good administrative practice initiatives undertaken at Community and national level, it is necessary to establish principles of administrative simplification, inter alia through the limitation of the obligation of prior authorisation to cases in which it is essential and the introduction of the principle of tacit authorisation by the competent authorities after a certain period of time elapsed. Such modernising action, while maintaining the requirements on transparency and the updating of information relating to operators, is intended to eliminate the delays, costs and dissuasive effects which arise, for example, from unnecessary or excessively complex and burdensome procedures, the duplication of procedures, the red tape involved in submitting documents, the arbitrary use of powers by the competent authorities, indeterminate or excessively long periods before a response is given, the limited duration of validity of authorisations granted and disproportionate fees and penalties. Such practices have particularly significant dissuasive effects on providers wishing to develop their activities in other Member States and require coordinated modernisation within an enlarged internal market of 25 Member States. Recital (49) also expressly contemplates that there can be fees of a supervisory body. It follows from paras 15 and 16 above that article 13(2) (and so regulation 18) is concerned and concerned only with charges made in respect of authorisation procedures and their cost, and that nothing in article 13(2) precludes a licensing authority from charging a fee for the possession or retention of a licence, and making this licence conditional upon payment of such fee. Any such fee would however have to comply with the requirements, including that of proportionality, identified in section 2 of Chapter III and section 1 of Chapter IV. But there is no reason why it should not be set at a level enabling the authority to recover from licensed operators the full cost of running and enforcing the licensing scheme, including the costs of enforcement and proceedings against those operating sex establishments without licences. In over long written submissions submitted after the hearing in response to a letter from the Court, the respondents have, however, emphasised that they do not accept that this enables a licensing authority to stipulate for the payment of such a fee on the grant or renewal of a licence in or as part of the application for a licence. Although the respondents did not develop their case in this way or identify any such typology, the logic of the respondents case must, as I understand it, be that article 13(2) precludes a licensing authority from operating a scheme of either of the following types: Type A: Applications for licences are made on terms that the applicant must pay: i) on making the application, the costs of the authorisation procedures and formalities, and on the application being successful, a further fee to cover the costs of the running and enforcement of the licensing scheme. ii) Type B: Applications for licences are made on terms that the applicant must pay: i) on making the application, the costs of the authorisation procedures and formalities at the same time, but on the basis that it is refundable if the application is unsuccessful, a further fee to cover the costs of the running and enforcement of the licensing scheme. ii) Westminster City Council has until now operated a scheme of type B, as set out in paras 2 and 3 above. The respondents case is that, under both types of scheme (A and B), the requirement to pay the further fee mentioned in sub paras (ii) above is an aspect of the authorisation scheme within the meaning of the Directive. In the case of a type A, I have no doubt that it is not. It is a mere provision that, if and when authorisation is successfully obtained, the actual grant or renewal of a licence will be subject to payment of a fee to cover enforcement costs. Once it is accepted (paras 15 to 17 above) that article 13(2) permits a licensing authority to levy on a successful applicant, in respect of the possession or retention of a licence, charges enabling the authority to recover the full cost of running and enforcing the scheme, it would be incongruous if an application could not refer to or include a requirement to pay such charges on the application being successful. The inclusion in the application of a requirement to pay a licence fee for the possession or retention of a licence, if the application is successful, does not turn that requirement into an authorisation procedure or formality or into a charge incurred from the application. It remains a licence fee incurred for the possession or retention of the licence. That leaves for consideration whether article 13(2) permits a scheme of type B. In the view of at least some members of the Court, this is more problematic. Under a scheme of type B, every applicant is required to pay up front even though on a refundable basis a sum which is referable not to the costs of handling the application, but to costs which will be incurred for the benefit only of successful applicants. This is a requirement which attaches to the application, not to its success. The question is whether it infringes article 13(2). The argument for treating article 13(2) as applicable to the requirement to pay the further fee mentioned in (ii) under a scheme of type B starts with the proposition that the requirement amounts to an authorisation procedure or formality. It is not suggested that the requirement could or would unduly complicate or delay the provision of the service. But, as the argument developed before the Supreme Court, two other points emerged: i) First, the respondents submit that a requirement to make even a refundable payment could have a potentially dissuasive effect on applicants. ii) Second, they submit that even a refundable payment constitutes a charge, and that such a charge infringes article 13(2) because it exceeds the cost, understood as the cost to Westminster City Council, of the procedures. The first point was not the subject of any submissions, evidence or investigation in the courts below, where the arguments were put more broadly. Whether something is dissuasive is on the face of it a question of fact and judgment. The refundable part of the fee payable on application is quite substantial, but sex shops are no doubt profitable or there would be no applicants, and the refundable part is a sum which anyone applying for a licence must be willing and able to pay for a licence. The Supreme Court was also informed by Mr Kolvin QC, counsel for the respondents, that it takes typically two months for an application to be decided, with the refund being then made if the application is refused; and that, if such a refusal is challenged by judicial review, any refund will await the outcome of the judicial review, which takes about six months. There is, on the material before the Supreme Court, no factual or evidential basis for a conclusion that a requirement to accompany an application with a payment refundable if the application fails could or would be likely to dissuade these or any other applicants from making any application for a sex establishment licence. I would not therefore accept the respondents submission on the first point. As to the second point, I agree that the reference in article 13(2) to the cost of the procedures means their cost to Westminster City Council. The question is therefore whether the requirement to make a payment refundable on failure of an application is a charge. When the application succeeds, the payment becomes due unconditionally. When the application fails, the payment is refundable and refunded. But is it a charge to have to advance the payment, in order to await one or other of these occurrences? Again, so far as this is a question of fact, there is no evidence that it cost these respondents, or any other applicants for sex establishment licences, anything to put up and make such payments during the period while any application was being considered. If the onus is on the respondents to establish that making such a payment on a refundable basis cost them anything, they have not done so. On the other hand, there might sometimes be a cost attached, eg by way of borrowing costs or even loss of interest. The questions thus arising are (1) whether the requirement to pay a fee including the second refundable part means, as a matter of law and without more, that the respondents incurred a charge from their applications which was contrary to article 13(2) in so far as it exceeded any cost to Westminster City Council of processing the application, or (2) whether a conclusion that such a requirement should be regarded as involving a charge or, if it is so to be regarded, a charge exceeding the cost to Westminster City Council of processing the application depends on the effect of further (and if so what) circumstances, for example: (a) any evidence establishing that the payment of the second refundable part involved or would be likely to involve an applicant in some cost or loss, (b) any saving in the costs to Westminster City Council of processing applications (and so in their non refundable cost) that would result from requiring an up front fee consisting of both parts to be paid by all applicants. No authority addressing these questions was cited to the Supreme Court, and the answers to them are in my view unclear. Accordingly, it is, I consider, necessary for the Court to make a reference to the Court of Justice in Luxembourg on this point. The respondents sought to raise further objections going outside their case under article 13(2) on the requirement to make up front a refundable payment on account of the costs of running and enforcing a licensing scheme for the benefit of licensed operators of sex establishments. The new objections are that to charge licensed operators with such costs was and is, as a matter of principle and/or on the facts of this case, disproportionate and/or contrary to articles 9(1)(c) and/or 16 of the Directive and/or contrary to articles 49 and/or 56 TFEU. These are new and wider allegations involving issues of fact and law, which could and should have been raised for consideration and adjudication in the courts below, and which are not now open to the respondents. I need say no more about them. It follows from the above that Westminster City Councils appeal should in my view succeed to an extent entitling it to a declaration that a scheme of type A is and would be consistent with regulation 18 of the Regulations and article 13(2) of the Directive. The question whether and when a scheme of type B is as a matter of law consistent with article 13(2) should be referred to the Court of Justice. I would invite the parties to make any proposals they may wish for any reformulation of the above questions within 14 days for the Supreme Courts consideration. |
This appeal raises a question concerning the role of this court in relation to the principles governing the award of costs in lower courts. The facts The material facts can be shortly stated. The appellant, Mr Gourlay, is a life prisoner. The respondent is the Parole Board. In 2014 the Board met to consider whether it would be appropriate to direct the appellants release. If it did not direct his release, it was required to consider whether to recommend his transfer to open conditions. On 10 March 2014 the Board issued its decision. It did not direct his release or recommend his transfer to open conditions. The appellant then brought proceedings for judicial review of the decision. In the claim form, both aspects of the decision were challenged. The Board did not take part in the proceedings. In its acknowledgment of service, it ticked the box stating that the defendant is a court or tribunal and does not intend to make a submission. At the hearing, counsel for the appellant confined his challenge to the decision not to recommend a transfer to open conditions. The challenge was successful, and that aspect of the decision was quashed: [2014] EWHC 4763 (Admin). The treatment of costs at first instance The appellant then applied for an order finding the Board liable for his costs. His submissions in support of that application reflected the established practice, described in R (Davies) v Birmingham Deputy Coroner [2004] EWCA Civ 207; [2004] 1 WLR 2739, of not making an award of costs against a court or tribunal which adopted a neutral stance in proceedings in which its decision was challenged, in the absence of exceptional circumstances, such as flagrantly improper behaviour. In Davies, Brooke LJ, with whom Longmore LJ and Sir Martin Nourse agreed, identified four issues as arising for consideration, at para 3: (1) What is the established practice of the courts when considering whether to make an order for costs against an inferior court or tribunal which takes no part in the proceedings, except, in the case of justices, to exercise their statutory right to file an affidavit with the court in response to the application? (2) What is the established practice of the courts when Brooke LJ set out his conclusions on those issues at para 47: considering whether to make an order for costs against, or in favour of, an inferior court or tribunal which resists an application actively by way of argument in the proceedings in such a way that it makes itself an active party to the litigation? (3) Did the courts adopt an alternative established practice in those cases in which the inferior court or tribunal appeared in the proceedings in order to assist the court neutrally on questions of jurisdiction and procedure and such like but did not make itself an active party to the litigation? (4) Whatever the answers to the first three questions, are there any contemporary considerations, including the coming into force of the Civil Procedure Rules 1998, which should tend to make the courts exercise their discretion as to costs in these cases in a different way from the way in which it was regularly exercised in the past? (l) The established practice of the courts was to make no order for costs against an inferior court or tribunal which did not appear before it except when there was a flagrant instance of improper behaviour or when the inferior court or tribunal unreasonably declined or neglected to sign a consent order disposing of the proceedings. (2) The established practice of the courts was to treat an inferior court or tribunal which resisted an application actively by way of argument in such a way that it made itself an active party to the litigation, as if it was such a party, so that in the normal course of things costs would follow the event. (3) If, however, an inferior court or tribunal appeared in the proceedings in order to assist the court neutrally on questions of jurisdiction, procedure, specialist case law and such like, the established practice of the courts was to treat it as a neutral party, so that it would not make an order for costs in its favour or an order for costs against it whatever the outcome of the application. (4) There are, however, a number of important considerations which might tend to make the courts exercise their discretion in a different way today in cases in category (3) above, so that a successful applicant . who has to finance his own litigation without external funding, may be fairly compensated out of a source of public funds and not be put to irrecoverable expense in asserting his rights after a coroner (or other inferior tribunal) has gone wrong in law, and there is no other very obvious candidate available to pay his costs. Against that background, the appellant argued in the present proceedings first, that the Board was not a court or tribunal falling within the scope of the practice described in Davies, and secondly, that there were in any event exceptional circumstances, arising from the Boards behaviour in relation to the proceedings. His submissions were recorded by the judge, King J, in a reasoned order dated 2 February 2015: 4. The claimants submission is that the defendant is not to be treated as a court or tribunal. Its legislative history is set out showing its development into an independent executive Non Departmental Public Body (NDPB) and body corporate. In that capacity it is said unlike a court or tribunal, this defendant does have the discretion to compromise a claim, it can actively contest a case or concede a case, and hence taking a neutral stance should not entitle the defendant to avoid an order for costs in circumstances where (as here) the claim against it has been successful and its Decision under challenge has been quashed. It is said that it had always been open to the defendant to concede this claim and to convene a fresh panel to re consider the claimants case The claimant prisoner would have been entitled to a new Review in any event which could have been brought forward. The defendants decision not to concede but to take a neutral stance led to an unnecessary hearing before this court. 5. The claimant relies on the Court of Appeal judgments in Bahta [R (Bahta) v Secretary of State for the Home Department] [2011] EWCA Civ 895, that even against government departments the normal provisions as to costs contained in the CPR apply, including the general rule starting point(rule 44.3(2)) that a successful claimant is entitled to his costs and the importance of complying with Pre action Protocols (an aspect of conduct identified in rule 44.3(5)). The point is made in this context that here the defendant did not respond to the letter before the claim. 6. There are, says the claimant, no circumstances apparent in these proceedings which should lead the court when exercising its discretion as to costs, to depart from the usual position in judicial review proceedings that the unsuccessful defendant public body whose decision has been under challenge will normally be ordered to pay costs to the successful claimant. The fact that the claimant is publicly funded is not a good reason to decline an award of costs which would otherwise be appropriate (again see Bahta). In any event as a fallback position the claimant submits that even if the defendant is to be treated differently, there are exceptional circumstances here to justify an order of costs, in that the defendant did not respond to the letter before claim, was late in filing its AOS [acknowledgment of service], and that which is described as a failure to compromise the claim (as invited by the claimants letter of 29 September 2014) is only to be interpreted as a defended claim and puts the defendant in an adversarial role. 7. The judge rejected those submissions. He stated that the first and critical issue was whether, for the purpose of the exercise of the courts discretion as to costs, the Board was to be treated as a court or tribunal, or at least a judicial decision making body, when making the decision under challenge. There was no doubt that it was acting in a judicial capacity when making its decision whether or not to direct a prisoners release. The second, consequent, decision was whether to recommend a transfer to open conditions: a recommendation which was not binding on the Secretary of State. It was that aspect which had been challenged. Although a theoretical distinction might be drawn between these two matters, the judge concluded: [I]n reality in the process before the defendant when the prisoner appears on a Review the question as to transfer is so bound up with the question of the prospects of the ultimate release of the prisoner, that I consider it artificial to characterise the defendant as acting in a judicial capacity one moment and then not the next. On any view in my judgment the defendant is acting in at least a quasi judicial capacity throughout. Approaching the application for costs on that basis, and following the practice described in Davies, the judge concluded that he should make no order as to costs: On the facts I have set out above this is not a case in which the defendant made itself an active party to the litigation and actively resisted the claim. The defendants failure to respond to the letter before the claim is to be regretted but that omission in itself cannot be interpreted as making the defendant an active party. In my view it was clear from the date the AOS was lodged that the defendant was not actively resisting the claim. I do not consider there was anything improper in the defendant taking a neutral stance and I cannot accept that by taking such a stance the defendant was adopting an adversarial role. I am not persuaded that the fact that the defendant could have agreed to convene a fresh panel to hold a further Review changes this analysis. Nor do I consider that there are any circumstances here of improper or unreasonable behaviour which should lead me to make an order for costs against a body such as the defendant notwithstanding it has not actively resisted the claim, despite the emphasis put by the claimant on the failure to respond to the letter before claim and the failure to compromise the claim when invited to do so. The judgment of the Court of Appeal The appellant appealed against that decision to the Court of Appeal: [2017] EWCA Civ 1003; [2017] 1 WLR 4107. Senior counsel was instructed and presented a more elaborate argument than King J had heard. The appeal was, however, presented on a limited basis. The court noted, at para 33 of the judgment delivered by Hickinbottom LJ, with whom Gloster and David Richards LJJ agreed: The sole ground relied upon by Mr Southey [senior counsel for the appellant] is that the principles set out in Davies as applicable to courts and tribunals do not apply to the Board. Hickinbottom LJ also noted at para 44: Mr Southey in my view, properly conceded that this court is bound by Davies. Although it seemed to me that at times he came painfully close to doing so, he unconditionally accepted that he could not argue before this court that Davies was not still good law. The only ground upon which he relied was that the principles and practice set out in that case, and expressly applied by King J below, simply do not apply to the Board when it performs its function of making recommendations to the Secretary of State in respect of the transfer of a prisoner to open conditions. In support of that proposition, counsel for the appellant made a number of submissions, which can be summarised as follows: (1) The Board did not fulfil the criteria of a court or tribunal for the purposes of Davies, because the relationship of the executive and the Board was closer than it should be. In that regard, counsel relied upon a direction which the Secretary of State had given to the Board as to how it should approach its decision making in relation to transfers to open conditions. (2) The Board could not properly maintain a neutral stance in response to a challenge to its decisions, since it could review its decisions or concede a challenge. Its failure to do so was tantamount to contesting the challenge. (3) Davies should now be read in the light of R (M) v Croydon London Borough Council [2012] EWCA Civ 595; [2012] 1 WLR 2607, which signalled a new approach to costs in public law cases. That new approach was designed to encourage the compromise and settlement of claims against public bodies. (It should be explained that M was a more recent case following and elaborating upon the reasoning in the earlier case of R (Bahta) v Secretary of State for the Home Department [2011] EWCA Civ 895; [2011] 5 Costs LR 857, which had been cited to the judge.) (4) It would be helpful for the Board to be a party to a challenge to one of its decisions. The historic concern over the possibility of the decision maker having to pay costs out of his own pocket had been alleviated in the case of the Board, which had been constituted as a body corporate. (5) Davies proceeded on the basis that it was irrelevant whether a claimant judicially reviewing a court or tribunal was legally aided, with the consequence that the fees paid to his legal representatives were below the rates paid for privately funded work. However, following In re appeals by Governing Body of JFS [2009] UKSC 1; [2009] 1 WLR 2353, that was or might be a relevant factor. Lord Hope of Craighead said in that case at para 25 that [i]t is, of course, true that legally aided litigants should not be treated differently from those who are not. But the consequences for solicitors who do publicly funded work is a factor which must be taken into account. A court should be very slow to impose an order that each side must be liable for its own costs in a high costs case where either or both sides are publicly funded . (6) The scope of Davies should therefore be restricted, and it should not be applied where the Board was a defendant to a judicial review. (7) Even if Davies applied to the Board when deciding questions of release, it should not apply when the Board was considering whether to recommend a transfer to open conditions. Those submissions were carefully considered by Hickinbottom LJ, and each of them was rejected, for reasons which, taking each point in turn, can be summarised as follows: (1) There was no doubt as to the independence and impartiality of the Board. The direction merely confirmed the self evident need for the Board, when considering a transfer to open conditions, to balance the benefits to the prisoner against the risks to the public. (2) A party did not contest a claim simply because he did not concede it. A tribunals power to review any decision it made did not detract from the judicial nature of the reviewable decision; nor did it mean that Davies was not applicable when such a decision was judicially reviewed. (3) The argument that M modified Davies had been considered, and rejected, in the case of R (Gudanaviciene) v First tier Tribunal (Immigration and Asylum Chamber) [2017] EWCA Civ 352; [2017] 1 WLR 4095. In that case Longmore LJ, with whom David Richards and Moylan LJJ agreed, held that M did not constitute a new approach at all, but merely decided that to make no order for costs in a public law claim might not be appropriate where, as a result of some settlement or compromise, there had been some degree of success. It was only in that limited situation that M broke new ground. However, that had no relevance to the different question of whether a party that was wholly successful should obtain an order for costs against the other party. Hickinbottom LJ also cited para 36 of Longmore LJs judgment, where it was said: It would be a serious step to say that in any undefended appeal or judicial review, the tribunal would be at risk as to costs and any such conclusion cannot be implied into the decision of M. If such a step is to be taken, it cannot be by a court of coordinate jurisdiction with the court which decided Davies. Hickinbottom LJ observed at para 57 that Gudanaviciene was binding upon the court, and that he would in any event adopt Longmore LJs analysis and conclusions: M did not materially affect the approach of the courts to costs orders in public law cases involving a court or tribunal, ie the principles and application of Davies; and, in particular, the encouragement given by M to the early settlement of public law cases by the threat of costs sanctions has no application to judicial review claims against courts or tribunals. (4) The principle that, unless it had acted improperly or had actively participated in the challenge, a court or tribunal was not required to pay the costs of rectifying one of its orders whether by way of judicial review or appeal was therefore well settled. It was a principle supported by many strands of public policy, and it had been well established since Davies. It could not be undermined in the case of a particular court or tribunal simply because one of the historic concerns that it sought to address was absent, for example where, as in the present case, the relevant judicial decision maker had an indemnity against costs. Nor was it undermined by the fact that the active intervention of the court or tribunal in the proceedings might be of assistance. As Brooke LJ indicated in Davies, it was open to a court or tribunal to make a neutral submission without incurring a costs order. The Administrative Court could also ask for the assistance from the tribunal. The fact that specialist courts or tribunals might assist in this way was no reason for overriding the principle in Davies. (5) Lord Hopes comments in JFS were made in an entirely different context, in which they were consistent with the proposition that legally aided litigants should not be treated differently from those who are not. He was not dealing with a retrospective application for costs, or with an application made against a court or tribunal. Nor were the present proceedings a high costs case. Following Davies, the source of funding was immaterial to the principle that, where a court or tribunal had not acted improperly and had taken no active part in the claim, the appropriate course was to make no order for costs. In respect of decisions concerning the release of prisoners, the Board (6) was clearly acting as a court or tribunal for the purposes of Davies. The principles of Davies thus applied to challenges to such decisions. (7) Although the recommendation of the Board in relation to transfer was only advisory, a similar approach to the costs of challenging decisions of the Board was appropriate. Whether dealing with decisions concerning release or decisions concerning transfer, the Board performed a similar function, in that it had to obtain relevant material from the National Offender Management Service and the offender himself, and evaluate that material in making an assessment of the risk posed by the offender, and of whether that risk was at an appropriate level for him to progress by way of transfer to a category D prison or release on licence, as the case might be. In respect of release, it had to reach its own objective judicial decision, in order to comply with the requirements of article 5(4) of the European Convention on Human Rights. In respect of transfer, it reached its decision in the same way, and to the same procedural standards. It had to use the same procedures for practical reasons: it was often the case that a panel was considering both transfer and release at the same time. However, it was also required to adopt the same procedural standards, not as a result of article 5(4), but by the common law. Therefore, in considering transfer decisions, the Board both in practice acted, and in principle was required to act, as if it were a court or tribunal. Hickinbottom LJ added that it was likely to be open to the prisoner to make the Secretary of State a party to any challenge to a decision in relation to transfer, so that in appropriate cases the prisoner would be able to obtain a costs order against the Secretary of State. The appeal to this court The issues arising on this appeal were agreed by the parties to be, first, whether Davies continues to represent the approach that should be adopted to costs orders against courts or tribunals, and secondly, if Davies continues to apply, whether the Board should be treated as a court or tribunal for that purpose. In relation to the first of those issues, counsel for the appellant submitted that Davies is wrong: a submission which, it was said, was not available to him below. In support of his submission, counsel argued that the rationale for the practice described in Davies had not been explained or justified. To the extent that reasons were given, many if not all of them had fallen away. In that regard, counsel referred to a number of changes which were said to have occurred since Davies was decided: in particular, the decline of legal aid, a diminution (in real terms) in legal aid payment rates, an increased reliance on conditional fees, and the introduction of the general rule that costs follow success, in CPR rule 44.2(2). Davies was argued to be incompatible with CPR rule 44.2(2), since it created an exception to that general rule. The Board must be viewed as the unsuccessful party even if it played no active part in the proceedings, since its decision had been quashed. If the Board did not concede a challenge, then in substance it opposed it. In relation to the second issue, counsel submitted, as in the courts below, that the Board should not be treated as a court or tribunal, at least when deciding whether to recommend a transfer to open conditions. In support of that submission, counsel referred to a number of factors, placing particular emphasis on the fact that the Boards recommendation was not binding on the Secretary of State, and on the fact that the Board had published a litigation strategy, which noted that in any form of litigation, it could decide to concede the case. In response, counsel for the Board submitted that the Court of Appeal was correct to hold that Davies was good law, and that the approach which it laid down applied to the Board. That approach, it was argued, accorded with the settled and long established approach of the High Court and the Court of Appeal, and ensured the continuing impartiality of judicial decision making bodies where their decisions were challenged by way of judicial review. Any decision which swept away their long established ability to maintain neutrality in proceedings challenging their decisions would have a very significant impact on the way in which litigation was conducted. An approach which declined to award costs against a neutral party was compatible with CPR rule 44.2(2). Such a party was not unsuccessful, and in any event rule 44.2(2) provided that the court may make a different order. At an early stage in the hearing of the appeal, the court raised with the parties the question whether the issues which were said to arise on the appeal (para 13 above) raised any question of law, as distinct from questions of practice in relation to the award of costs, which it might be appropriate for this court to leave to the courts below. The parties were invited to file written submissions on the question after the hearing. In the post hearing submissions filed on behalf of the appellant, counsel submitted that the Court of Appeal regarded itself as bound by its decision in Davies, as was apparent from para 36 of Gudanaviciene (para 11(3) above) and para 57 of Hickinbottom LJs judgment in the present case (ibid), and from its acceptance in the present case of the appellants concession that Davies was binding upon it (para 9 above). That understanding was also apparent from the judgment of Hickinbottom LJ, with which Davis and Ryder LJJ agreed, in R (Faqiri) v Upper Tribunal (Immigration and Asylum Chamber) [2019] EWCA Civ 151; [2019] 1 WLR 4497, para 24, where Gudanaviciene was said to have confirmed that Davies was still good law, and binding on this court. It followed that only the Supreme Court could decide whether Davies was good law. If, however, the question was one of practice, then it followed that the Court of Appeal had been mistaken in regarding itself as bound by the decision in Davies. This court should therefore find in favour of the appellant, on the ground that the courts below were mistaken in regarding Davies as imposing a strict rule, when their discretion was in reality much broader. The submissions on behalf of the respondent identified the relevant question of law as being whether King J had exercised his discretion correctly, or whether his approach was erroneous in law. In response to the submission of the appellant summarised at para 19 above, counsel observed that, given that counsel for the appellant had conceded before the Court of Appeal that it was bound by Davies, the implication of his argument was that the Court of Appeal should, of its own motion, have decided the appeal on a basis for which the appellant was not contending. Discussion Section 51(1) of the Senior Courts Act 1981 provides, so far as material: (1) Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in (a) (b) the civil division of the Court of Appeal; the High Court; shall be in the discretion of the court. (2) Without prejudice to any general power to make rules of court, such rules may make provision for regulating matters relating to the costs of those proceedings (3) The court shall have full power to determine by whom and to what extent the costs are to be paid. Section 51 is concerned with the jurisdiction of the court to make orders as to costs. That jurisdiction is expressed to be subject to rules of court. It is therefore open to the rule making authority (now the Civil Procedure Rule Committee established under section 2 of the Civil Procedure Act 1997) to make rules which control the exercise of the courts jurisdiction under section 51(1). It is also open to appellate courts to provide guidance to lower courts as to how their discretion should be exercised. As Lord Goff of Chieveley remarked in Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965, 975, section 51(1) is consistent with a policy under which jurisdiction to exercise the relevant discretionary power is expressed in wide terms, thus ensuring that the court has, so far as possible, freedom of action, leaving it to the rule making authority to control the exercise of discretion (if it thinks it right to do so) by the making of rules of court, and to the appellate courts to establish principles upon which the discretionary power may, within the framework of the statute and the applicable rules of court, be exercised. The rules of court relating to the courts discretion as to costs set out a number of general principles. Some are contained in CPR rule 44.2. Under paragraph (1), the court has discretion as to whether costs are payable by one party to another, the amount of those costs, and when they are to be paid. Under paragraph (2), if the court decides to make an order about costs, the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, but the court may make a different order. Certain exceptions to the general rule are set out in paragraph (3), but do not apply in the present case. Under paragraph (4), in deciding what order (if any) to make about costs, the court is to have regard to all the circumstances, including the conduct of the parties. Other principles are set out in other rules, notably CPR rule 44.3, and apply to circumstances falling within the scope of those rules. The rules of court do not, however, set out a comprehensive code. It is also important, as Lord Goff indicated, that the appellate courts establish principles upon which the discretionary power may, within the framework of the statute and the applicable rules of court, be exercised. This court, like the House of Lords before it, proceeds on the basis that responsibility for developing those principles falls principally upon the Court of Appeal. In proceeding on that basis, the court recognises that such principles are generally matters of practice, rather than matters of law, and follows its general approach to matters of practice. In modern times, that approach was articulated by Lord Hope in Girvan v Inverness Farmers Dairy 1998 SC (HL) 1, an appeal from the Inner House of the Court of Session concerned with the level of damages for personal injuries which had been awarded by a jury. In the course of his speech, with which the other members of the Appellate Committee agreed, Lord Hope considered a submission that a change in practice should be introduced in the Court of Session, so that juries would be given guidance by the judge as to the appropriate level of damages. He observed at p 21: In the first place it would, I believe, be inappropriate for your Lordships to recommend changes in the practice which is followed by the Court of Session in the conduct of jury trials in its own court. The Court of Session is, in a very real sense, the master of its own procedure. It has been said several times in the Inner House, on motions for leave to appeal in interlocutory matters, that it is not appropriate to refer matters of practice for decision by the House of Lords The basis for this view is that the Court of Session is far better placed than your Lordships can ever be to assess what changes in procedure or practice can appropriately be made and, if they were to be made, what would be their consequences. Lord Hope went on to explain that the Court of Session had a statutory power to make rules of court regulating its procedure, and that the Court of Session Rules Council, established under the same legislation, had the function of considering what changes ought to be made from time to time. Both branches of the legal profession were represented on the Rules Council, so that it provided an appropriate forum for consultation when changes to the rules were being proposed. In those circumstances, Lord Hope concluded: The Court of Session is thus well equipped to keep its own rules under regular review, and it has the ability to change or modify those rules with the minimum of delay by act of sederunt or practice note or by a decision of the court which can be reviewed, if necessary, by a larger court. By way of contrast, a decision by your Lordships on a matter of practice would lack the process of consultation which is needed to ensure general acceptability. It would also lack flexibility, as a decision of this House would be binding on the Court of Session and it would be very difficult to reverse except by legislation. The proper approach for this House to take therefore is to leave it to the Court of Session to decide what changes, if any, should be made to its own rules. That case was concerned with a different question from the one which arises in the present appeal. The emphasis on rules of court, in particular, distinguishes it from a case concerned with the principles upon which a discretionary power should be exercised, as set out in the judgments of appellate courts. Nevertheless, Lord Hopes remarks about the role of the House of Lords in relation to matters of practice, and about the greater ability of the Court of Session to assess what changes can appropriately be made, and to modify practice flexibly and without delay by means of judicial decisions, are of wider scope. They are relevant, mutatis mutandis, to the relationship between this court and the Court of Appeal of England and Wales, and the Court of Appeal of Northern Ireland, and have been cited in a number of different contexts in more recent decisions of the House of Lords and of this court. The case of Callery v Gray (Nos 1 and 2) [2002] UKHL 28; [2002] 1 WLR 2000, is more directly in point, as it concerned appeals against an order for costs. Questions arose, where the claimant had entered into a conditional fee agreement with his solicitors, as to whether the success fee, and an after the event insurance premium, were recoverable from the defendant as part of an award of costs; whether the amount of the success fee was reasonable; and whether the insurance premium was reasonable. The House of Lords decided not to intervene in the Court of Appeals determination of those questions. Lord Bingham of Cornhill, with whom Lord Nicholls of Birkenhead and Lord Hope agreed, stated at para 8: [T]he responsibility for monitoring and controlling the developing practice in a field such as this lies with the Court of Appeal and not the House, which should ordinarily be slow to intervene. The House cannot respond to changes in practice with the speed and sensitivity of the Court of Appeal, before which a number of cases are likely over time to come. Although this is a final and not an interlocutory appeal, there is in my view some analogy between appeals on matters of practice and interlocutory appeals, of which Lord Diplock in Birkett v James [1978] AC 297, 317 observed that only very exceptionally are appeals upon such matters allowed to come before the House. Lord Hoffmann added at para 17: My Lords, the Court of Appeal is traditionally and rightly responsible for supervising the administration of civil procedure. This is an area in which your Lordships have in the past seldom intervened and, it must be said, the few exceptions to this policy of self restraint have usually tended to confirm the wisdom of the general practice. Lord Hope, with whom Lord Nicholls also agreed, referred to his earlier observations in Girvan v Inverness Farmers Dairy, and said at para 56 that, for similar reasons to those which he gave in that case, responsibility for dealing with these issues lies pre eminently with the Court of Appeal and not with this House. Mention should also be made of the case of Global Torch Ltd v Apex Global Management Ltd (No 2) [2014] UKSC 64; [2014] 1 WLR 4495, which concerned an order striking out a defence as a result of the defendants non compliance with a case management decision. Lord Neuberger of Abbotsbury stated at para 39, in a judgment with which Lord Sumption, Lord Hughes and Lord Hodge agreed: [I]ssues such as those raised by this appeal are primarily for the Court of Appeal to resolve. It would, of course, be wrong in principle for this court to refuse to entertain an appeal against a decision simply because it involved case management and the application of the CPR. However, when it comes to case management and application of the CPR, just as the Court of Appeal is generally reluctant to interfere with trial judges decisions so should the Supreme Court be very diffident about interfering with the guidance given or principles laid down by the Court of Appeal. Similar remarks have been made in other decisions of this court concerned with analogous matters. For example, in the case of BPP Holdings Ltd v Revenue and Customs Comrs [2017] UKSC 55; [2017] 1 WLR 2945, which concerned guidance given by the Court of Appeal and the Upper Tribunal (UT) to the First tier Tribunal (F tT), Lord Neuberger, with whom the other members of the court agreed, stated at para 26: It is not for this Court to interfere with the guidance given by the UT and the Court of Appeal as to the proper approach to be adopted by the F tT in relation to the lifting or imposing of sanctions for failure to comply with time limits (save in the very unlikely event of such guidance being wrong in law). The position is different where an appeal on costs raises a question of law. Appeals to the House of Lords, or in more recent times to this court, which are purely on costs have long been discouraged, as a general rule, and will rarely meet the courts central criterion for the grant of permission to appeal, namely that the appeal must raise an arguable point of law of general public importance: Practice Direction 3.3.3. Nevertheless, where permission to appeal has been granted, the court will intervene if an error of law is established. The Aiden Shipping case is itself an example. Three more recent examples can be given. First, in R (Hunt) v North Somerset Council [2015] UKSC 51; [2015] 1 WLR 3575, the appellant successfully challenged the legality of a decision taken by the respondent council, but the Court of Appeal declined to grant a quashing order because of the practical problems which that would cause, given the time which had elapsed before the appeal came on for hearing. Declaratory relief was not sought. In those circumstances, the Court of Appeal dealt with costs on the basis that the council was the successful party to the appeal. Its order was set aside by this court, Lord Toulson stating at para 15: The discretion of a court in a matter of costs is wide and it is highly unusual for this court to entertain an appeal on an issue of costs alone. But the Court of Appeal said that it reached its decision as a matter of principle, treating the respondent as the successful party. In adopting that approach, I consider that the court fell into error. Secondly, in Cartier International AG v British Telecommunications plc [2018] UKSC 28; [2018] 1 WLR 3259 the question arose whether the costs to internet service providers (ISPs) of implementing website blocking orders should be borne by the ISPs or by the persons who had obtained the orders in order to protect their intellectual property rights. The courts below had considered that the costs should in principle be borne by the ISPs, first for reasons of commercial equity, and secondly on the view that that was required by EU directives. This court intervened, on the basis that the ordinary rule in equity, in situations where a person was ordered to prevent the use of his facilities by a third party to commit or facilitate a wrong, was that the applicant bore the costs of compliance by an innocent intermediary, and the EU directives contained no contrary requirement. A third example of intervention is the case of XYZ v Travelers Insurance Co Ltd [2019] UKSC 48; [2019] 1 WLR 6075, where this court reversed the decisions of the courts below in relation to the award of a non party costs order against a liability insurer. Earlier decisions of the Court of Appeal had laid down the applicable general principles, which in the context in question implied that the relevant question was whether the insurer had become the real defendant in relation to an insured claim, or had intermeddled in an uninsured claim, thereby causing additional costs to be incurred. The judge had erred in the exercise of her discretion by basing her order on conduct by the insurer, some of which could not reasonably be regarded as intermeddling, and the remainder of which had not in any event resulted in the incurring of additional costs. The Court of Appeal had also erred, by relying on an irrelevant consideration. In summary, therefore, this court will ordinarily be slow to intervene in matters of practice, including guidance given by the Court of Appeal as to the practice to be followed by lower courts in relation to the award of costs. The court recognises that responsibility for monitoring and controlling developments in practice generally lies with the Court of Appeal, which hears a far larger number of cases. This court is generally less well placed to assess what changes in practice can appropriately be made. It cannot respond to developments with the speed, sensitivity and flexibility of the Court of Appeal. Nevertheless, it can intervene where there has been an error of law, and has done so where a question of law arose which was of general public importance. Bearing in mind, however, the discretionary nature of decisions on costs, and the rarity of their raising any question of law of general public importance, appeals solely on costs are not ordinarily appropriate. The counterpart of this restraint on the part of the Supreme Court is that the Court of Appeal must fulfil its primary responsibility for monitoring and controlling developments in practice, including developments in relation to costs. It cannot do so, however, unless it is able to keep its decisions laying down principles of practice as to how lower courts should exercise their discretion in relation to costs, such as Davies, under review. That entails that its decisions on such matters cannot be treated as binding precedents, in the sense in which that expression is generally understood: that is to say, precedents which the Court of Appeal is required to follow in accordance with the principles laid down in authorities such as Young v Bristol Aeroplane Co Ltd [1944] KB 718 and Davis v Johnson [1979] AC 264. Were the position otherwise, the Court of Appeal would be severely restricted in its ability to introduce changes in practice, since any departure from its previous decisions could only be brought about by appeals to this court. However, the appellants submission that such decisions are treated by the Court of Appeal as binding precedents, in the same sense as decisions on questions of law, appears to be a misleading over simplification of the position. In the first place, the principles of practice laid down by the Court of Appeal to guide judges in the exercise of their discretion as to the award of costs are not strictly binding even upon those judges, in the way in which a decision of the Court of Appeal on a point of law is binding upon them. There is always a residual discretion as to costs. Since the discretion is to be judicially exercised (Pepys v London Transport Executive [1975] 1 WLR 234, 237), the application of the principles laid down by appellate courts must be tempered by an ability to respond flexibly to unusual situations, and to reach a just result in the individual case. As was said long ago in relation to the discretion to order a jury trial, the Court cannot be bound by a previous decision, to exercise its discretion in a particular way, because that would be in effect putting an end to the discretion (Jenkins v Bushby [1891] 1 Ch 484, 495 per Kay LJ). Brooke LJs judgment in Davies itself recognised that there was scope for judges to exercise their discretion: see para 47(4), cited at para 4 above. Secondly, since a decision such as Davies establishes principles which should generally be applied as a matter of practice, as Brooke LJ repeatedly made clear (see, for example, para 47, cited at para 4 above), rather than deciding a question of law, it falls outside the scope of the rules of precedent laid down in authorities such as Young v Bristol Aeroplane Co Ltd, which are concerned with the effect of a decision on a question of law (p 729). It also falls outside the scope of the rationale of those rules, namely to promote legal certainty. It is therefore appropriate for a decision on a matter of practice to be reviewed where sufficient reason, such as a material change of circumstances, is put forward. Indeed, the fourth of the issues which Brooke LJ identified in para 3 of his judgment in Davies (cited at para 3 above) was whether there were any contemporary considerations which should tend to make the courts exercise their discretion as to costs in these cases in a different way from the way in which it was regularly exercised in the past: a question to which he gave an affirmative answer in para 47. Previous decisions on matters of practice are not, therefore, binding in the ordinary sense of that term. At the same time, Brooke LJ observed at para 4 of his judgment in Davies that some of the issues in that case had recently been considered by the Court of Appeal in another case, R (Touche) v Inner London North Coroner [2001] EWCA Civ 383; [2001] QB 1206. He added (ibid): Needless to say, the latter judgment is binding on us unless we were satisfied that the court in Touches case overlooked relevant case law of a material nature or that its decision could be treated as not binding on us on other grounds. That approach, indicating that the court would only review its recent decision on the same issue of practice if persuaded that the previous case had been decided per incuriam, or that there was some other sufficient reason to do so, makes evident sense, if the Court of Appeal is to avoid repeated arguments about the principles to be adopted in costs cases, potentially divergent decisions, and the attendant risk of inconsistency and incoherence. Accordingly, although a previous decision of the Court of Appeal on a question of practice is not binding upon it in the sense in which its precedents on questions of law are binding, it is appropriate that such a decision should only be reviewed where there is sufficient reason to do so: as, for example, where there has been a material change of circumstances, or where the previous case was decided per incuriam. Following that approach, the Court of Appeal can ensure a consistent approach, and prevent the repeated re arguing of the same points without justification, while also avoiding a situation in which its previous decisions become a potential barrier to the development of practice. Placed in that context, the dictum of Longmore LJ in Gudanaviciene at para 36 (cited at para 11(3) above) takes on a different complexion. The central issue in that case was whether the approach to costs in cases of judicial review which had been adopted in the M case, and the observations of Lord Hope in the JFS case, required the guidance given in Davies to be revisited. The Court of Appeal did not close its mind to those arguments, on the basis that Davies was a binding precedent, but examined the issues fully. As has been explained, Longmore LJ concluded that M did not represent a new approach, as had been argued, but reflected the approach generally adopted to challenges to the decisions of public bodies. That approach did not impinge upon the distinct approach taken to cases involving courts and tribunals which adopted a neutral stance towards challenges, exemplified by Davies. The case of Gudanaviciene itself was a case of the latter kind. In addition, the observations in the JFS case had been made in very different circumstances and were not in point. It was in those circumstances, where the arguments in favour of a new approach had been considered and rejected by the Court of Appeal, that Longmore LJ observed at para 36 that, if such an approach were to be adopted, that step would have to be taken by this court. Similarly, in the present case, Hickinbottom LJ carefully examined the arguments which were advanced in support of a modification of the approach adopted in Davies. Since the arguments were in substance the same as those which had recently been rejected by the Court of Appeal in Gudanaviciene, and no good reason had been put forward for reviewing the decision in that case, Hickinbottom LJ was correct to conclude that that decision should be followed. His description of it as binding was perhaps open to misinterpretation, but did not in reality involve any error of law: he plainly did not treat Gudanaviciene as a binding precedent in the Bristol Aeroplane sense. The same is true of his description of the decision in Davies as binding, and of his similar remark in Faqiri, cited at para 18 above. The present case The central question raised in an appeal on costs is generally whether the decision awarding costs was vitiated by a failure to exercise the statutory discretion rationally and in accordance with established principles. In this case, the relevant decision was taken by King J. The submissions before him took as their starting point the established practice described in Davies, and argued that the Board should not be treated as a court or tribunal for that purpose since (in particular) it could concede a challenge to one of its decisions; that it should be treated in the same way as the generality of public bodies, and as such should normally be liable for the costs of successful challenges to its decisions; and that there were in any event circumstances justifying an exception to the usual practice, since its conduct, in failing to respond to the appellants letter before action in accordance with the relevant protocol, and in filing its acknowledgment of service after the due date, should be penalised by an award of costs. The judges reasons for declining to make such an award took full account of the appellants submissions, and reflected the established practice. In particular, he identified the point of central importance as being that the Board had taken the decision under challenge while acting in a judicial or quasi judicial capacity, and had not made itself an active party to the litigation. His conclusion that the Board consequently fell within the scope of the practice described in Davies did not involve any error of law. The question whether the Board should be treated as a court or tribunal for that purpose is itself a question of practice: it is not determined abstractly or on the basis of definitions used for other purposes, such as the meaning given to the expression court or tribunal in the European Convention on Human Rights. Nor was there any error of law involved in the judges conclusion that the Boards failure to respond to the letter before action was regrettable, but did not amount to improper or unreasonable behaviour which would justify an award of costs against it. In short, there is nothing in the judges reasoning which was erroneous in law, or with which this court would consider it appropriate to interfere as a matter of practice. Given that conclusion, it is difficult to see any basis upon which this court could properly allow this appeal. The same arguments were presented to the Court of Appeal in a more fully elaborated form, together with an argument concerning the significance of the appellants being in receipt of legal aid. The appellants contention that the Court of Appeal erred in law by regarding itself as bound, as a matter of precedent, to follow its decision in Davies, has already been considered and rejected. Although the court might have proceeded on the basis that no adequate grounds had been advanced for it to review its recent decision in Gudanaviciene, in which the same arguments had been considered and rejected, it considered the appellants submissions fully, and gave detailed reasons for rejecting them on their merits. In doing so, it committed no error of law. In particular, there is nothing in CPR rule 44.2 which is inconsistent with the approach which was described in Davies and followed in the present case. A body which takes a decision in a judicial or quasi judicial capacity, and then declines to defend it when it is challenged in court proceedings, choosing instead to maintain its impartiality and to let the reasons which it gave for its decision speak for themselves, acts in accordance with principles of judicial independence and impartiality which have long been recognised both in English law and at an international level: see, for example, the United Nations Commentary on the Bangalore Principles of Judicial Conduct, paras 72 and 74. A judicial or quasi judicial body which acts in that way cannot be what the framers of the CPR rule had in mind when they referred to an unsuccessful party. Furthermore, CPR rule 44.2 was in force at the time of the decision in Davies, although differently numbered. As Brooke LJ observed in Davies at para 45(1), the rule provides unequivocally that the general rule is that the unsuccessful party will be ordered to pay the costs of a successful party, but this does not throw any light on the position of a neutral party. The only additional observation that need be made in relation to the law is that the fact that a party is in receipt of legal aid cannot affect the principles on which the discretion to award costs is normally exercised. That is because section 30(1) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (re enacting a provision previously contained in section 22(4) of the Access to Justice Act 1999) provides: Except as expressly provided by regulations, any rights conferred by or under this Part on an individual for whom services are provided under this Part for the purposes of proceedings do not affect the rights or liabilities of other parties to the (a) proceedings, or (b) or tribunal is normally exercised. the principles on which the discretion of a court Furthermore, as a matter of principle, this court would respectfully agree with Lord Neuberger MRs statement in the M case, at para 46, that the basis upon which the successful partys lawyers are funded, whether privately in the traditional way, under a no win no fee basis, by the Community Legal Service, by a law centre, or on a pro bono arrangement, will rarely if ever make any difference to that partys right to recover costs. The dictum of Lord Hope in the JFS case which was cited in para 10(5) is clearly consistent with that approach in so far as he said that legally aided litigants should not be treated differently from those who are not. It may, however, appear at first sight to conflict with it in so far as he said that the consequences for solicitors who do publicly funded work is a factor which must be taken into account. However, as Hickinbottom LJ explained at para 60 of his judgment in the present case, there is no inconsistency when the dictum is placed in its context. In the relevant passage of his judgment, Lord Hope was considering, obiter, whether it would have been appropriate to make a protective costs order under which each party would be liable for its own costs whatever the outcome of the appeal, in the event that such an order had been sought. The result of making such an order would have been to disapply the principles which normally govern an award of costs, so as to prejudice the legally aided claimants lawyers by making it impossible for them to recover remuneration at the rates which would have applied if the claimant had been privately funded. The point made by Lord Hope, in explaining why such an order would not have been made, was therefore consistent with his endorsement of the principle that legally aided litigants should not be treated differently. In so far as the decision whether to award costs against the Board turns on matters of practice, it would not be appropriate for this court, for the reasons explained earlier, to impose on the Court of Appeal its own assessment of the merits of the parties arguments. Conclusion For all these reasons, I would dismiss this appeal. |
These proceedings arise out of the deaths of three young men who lost their lives while serving in the British Army in Iraq and the suffering by two other young servicemen of serious injuries. The units in which they were serving were sent to Iraq as part of Operation TELIC. This operation, which lasted from January 2003 to July 2009, had two distinct phases of military activity. The first began on 19 March 2003 when Iraq was invaded by coalition forces including those from the United Kingdom. The second phase began on 1 May 2003 when major combat operations ceased and were replaced by a period of military occupation. During much of that time there was a constant threat of enemy action by insurgents opposed to the interim Iraqi government. On 25 March 2003 Corporal Stephen Allbutt, who was the husband of the claimant Ms Deborah Allbutt, Lance Corporal Daniel Twiddy and Trooper Andrew Julien were serving with the Queens Royal Lancers as part of the Royal Regiment of Fusiliers battle group during the fourth day of the offensive by British troops to take Basra. They were in one of a number of Challenger II tanks which had been placed at a dam in hull down positions to minimise their visibility to the enemy. Just after midnight a Challenger II tank of the Second Royal Tank Regiment which had been assigned to the 1st Battalion Black Watch battle group and was commanded by Lt Pinkstone crossed over onto the enemy side of a canal to take up a guarding position some distance to the south east of the dam. At about 0050 hrs Lt Pinkstone identified two hot spots through his thermal imaging sights which he thought might be personnel moving in and out of a bunker. He described the location to Sgt Donlon who was unable to identify the hot spots for himself because the description he was given was incorrect. After Lt Pinkstone had identified a further four hot spots in the same area he was given permission to fire by Sgt Donlon. Lt Pinkstones tank fired a first round of high explosive shell at about 0120 hrs and a second round shortly afterwards. The hot spots that he had observed were in fact men on top of Cpl Albutts Challenger II tank at the dam. The first shell landed short of the tank, but the explosion blew off the men who were on top of it including Lance Corporal Twiddy. The second shell entered the tank and killed Cpl Allbutt, injured Trooper Julien and caused further injury to Lance Corporal Twiddy. It also killed Trooper David Clarke: see R (Gentle and another) v Prime Minister [2008] UKHL 20, [2008] AC 1356, para 1. Lt Pinkstone did not know of the presence at the dam of the Royal Regiment of Fusiliers battle group. He did not realise that he was firing back across the canal, as he was disorientated and believed that he was firing in a different direction. In 2005 Private Phillip Hewett, who was the son of the claimant Susan Smith, was serving with 1st Battalion the Staffordshire Regiment. On 10 May 2005 he was deployed to Camp Abu Naji, near the town of Al Amarah in the Maysan Province of Iraq. He was assigned to a battle group working alongside soldiers from other battalions. In mid July 2005 there was a substantial threat against Camp Abu Naji from rocket attacks and an operation was launched to counter this threat by restricting the movement of insurgent anti Iraqi forces. On 15 July 2005 Pte Hewett was assigned to a mobile unit which was sent that evening to patrol around Al Amarah. The unit consisted of three Snatch Land Rovers. Snatch Land Rovers are lightly armoured. Their armour is designed to provide limited protection against ballistic threats, such as those from small arms fire. It provided no protection, or no significant protection, against improvised explosive devices (IEDs). It was escorted into, but not around, the town by a Warrior fighting vehicle. Warriors are heavily armoured and tracked, and are capable of carrying seven or eight personnel as well as the crew. Pte Hewett was in the lead Snatch Land Rover as its driver with 2nd Lt Richard Shearer. It had no electronic counter measures (ECMs) to protect it against the threat of IEDs. At about 0115 hrs on 16 July 2005 an explosion was heard in the vicinity of the stadium in Al Amarah. 2nd Lt Shearer decided to investigate the explosion. As the Snatch Land Rovers were driving down the single road to the stadium an IED detonated level with the lead vehicle. Pte Hewett, 2nd Lt Shearer and another soldier who was acting as top cover died in the explosion, and two other occupants of the vehicle were seriously injured. In 2006 Private Lee Ellis, who was the father of the claimant Courtney Ellis and the brother of the claimant Karla Ellis, was serving with the 2nd Battalion the Parachute Regiment. His unit was attached to the Royal Scots Dragoon Guards and was based at Camp Abu Naji. On 28 February 2006 Pte Ellis was the driver of a Snatch Land Rover in a patrol of three Warriors and two Snatch Land Rovers which made a journey from the Camp to the Iraqi police headquarters in Al Amarah. Captain Richard Holmes and another soldier were in the same vehicle. On the return journey from the police headquarters an IED was detonated level with the lead Snatch Land Rover driven by Pte Ellis. He and Captain Holmes were killed by the explosion and another soldier in the vehicle was injured. The vehicle had been fitted with an ECM, but a new part of that equipment known as element A was not fitted to it at that time. Element A was fitted to the other Snatch Land Rovers used in the Camp within a few days of the incident. The claims The claims by Ms Deborah Allbutt, Lance Corporal Daniel Twiddy and Trooper Andrew Julien (the Challenger claims) are brought in negligence at common law only. They make two principal claims. First, they allege a failure to ensure that the claimants tank and the tanks of the battle group that fired on it were properly equipped with the technology and equipment that would have prevented the incident. That equipment falls into two categories: target identity devices that provide automatic confirmation as to whether a vehicle is a friend or foe; and situational awareness equipment that permits tank crews to locate their position and direction of sight accurately. Secondly, they allege that the Ministry of Defence (the MOD) was negligent in failing to provide soldiers with adequate recognition training pre deployment and also in theatre. The claims by Susan Smith and by Courtney and Karla Ellis (the Snatch Land Rover claims) fall into two parts. The first, which is common to all three claimants, is that the MOD breached article 2 of the European Convention on Human Rights by failing to take measures within the scope of its powers which, judged reasonably, it might have been expected to take in the light of the real and immediate risk to life of soldiers who were required to patrol in Snatch Land Rovers. The second, which is brought by Courtney Ellis only, is based on negligence at common law. The particulars of the Smith claim under article 2 of the Convention are that the MOD (i) failed to provide better/medium armoured vehicles for use by Pte Hewetts commander which, if provided, would have been used for Pte Hewetts patrol, (ii) failed to ensure that any patrol inside Al Amarah was led by a Warrior, (iii) caused or permitted a patrol of three Snatch Land Rovers to proceed inside Al Amarah, especially when there was no ECM on the lead Snatch Land Rover and it knew or ought to have known that ECMs were ineffective against the triggers that were in use by the insurgents and no suitable counter measures had been provided, (iv) permitted the patrol of Snatch Land Rovers to investigate the bomb blast, especially when there was only one road to the decoy bomb site, (v) failed to provide other vehicles for route clearing and route planning ahead of the Snatch Land Rovers, (vi) failed to provide suitable counter measures to IEDs in the light of the death of Lance Corporal Brackenbury, who was killed by an IED while in a Snatch Land Rover on 29 May 2005 and (vii) failed to use means other than patrols to combat the threat posed by the insurgents. The particulars of the Ellis claim under article 2 and in negligence are that the MOD failed (i) to limit his patrol to better, medium or heavily armoured vehicles, (ii) to provide any or any sufficient better or armoured vehicle for use by Pte Elliss commander which, had they been provided, would or should have been used for his patrol and (iii) to ensure that Element A had been fitted to the ECM on Pte Elliss Snatch Land Rover, without which it should not have been permitted to leave the Camp. The MODs primary case in reply to the Challenger claims and the Ellis claim in negligence is that they should all be struck out on the principle of combat immunity. It also pleads that it would not be fair, just or reasonable to impose a duty of care on the MOD in the circumstances of those cases. Its case for a strike out in reply to the Snatch Land Rover claims under article 2 of the Convention falls into two parts. First, it submits that at the time of their deaths Pte Hewett and Pte Ellis were not within the jurisdiction of the United Kingdom for the purposes of article 1 of the Convention. Secondly, it submits that on the facts as pleaded the MOD did not owe a duty to them at the time of their deaths under article 2. The strike out applications were heard by Owen J, who handed down his judgment on 30 June 2011: [2011] EWHC 1676 (QB), [2011] HRLR 795. He struck out the Snatch Land Rover claims under article 2 on the ground that Pte Hewett and Pte Ellis were not within the jurisdiction of the United Kingdom for the purposes of article 1 of the Convention when they died: para 48. He based this decision on R (Smith) v Oxfordshire Assistant Deputy Coroner (Equality and Human Rights Commission intervening) [2010] UKSC 29, [2011] 1 AC 1. He went on nevertheless, in a carefully reasoned judgment, to address the question whether, if the deceased were within the Convention jurisdiction, the MOD was under a substantive article 2 duty of the kind that the Snatch Land Rover claimants were contending for. He said that he would not have struck out their claims relating to the supply of equipment: para 80. But in his judgment there was no sound basis for extending the scope of the implied positive duty under article 2 to decisions made in the course of military operations by commanders: para 81. Holding that the doctrine of combat immunity should be narrowly construed, he refused to strike out the Challenger claims and the second and third of the three Ellis claims in negligence because he was not persuaded that their equipment and pre deployment training claims were bound to fail: paras 110, 111. But he struck out the first of the Ellis claims because he was of the opinion that this claim fell squarely within the scope of combat immunity: para 114. On 19 October 2012 the Court of Appeal (Lord Neuberger MR, Moses and Rimer LJJ) dismissed appeals by the Snatch Land Rover claimants on the question whether the deceased were within the jurisdiction of the United Kingdom for the purposes of article 1 of the Convention: [2012] EWCA Civ 1365, [2013] 2 WLR 27. It found it unnecessary to deal with the extent of the substantive obligations implicit within that article. It also dismissed the MODs appeal against the judges refusal to strike out the Challenger claims and the second and third of the Ellis claims in negligence on the ground of combat immunity. But it allowed a cross appeal by the Ellis claimants against the striking out of the first Ellis claim. This was because, although the allegation was of failures of the MOD away from the theatre of war, there might be factual questions as to the circumstances in which the decisions were made which would enable the MOD to raise the defence of combat immunity at the trial: para 63. All these issues are now the subject of appeals by the claimants and a cross appeal by the MOD to this court. It will be convenient to take first the question whether at the time of their deaths Pte Hewett and Pte Ellis were within the jurisdiction of the United Kingdom for the purposes of article 1 of the Convention. If they were, I propose to consider next the question whether article 2 imposes positive obligations on the states party to the Convention with a view to preventing the deaths of their own soldiers in active operations against the enemy. Finally, there are the claims made at common law where the question is whether the allegations of negligence by the Challenger and Ellis claimants should be struck out because they fall within the scope of combat immunity or because it would not be fair, just or reasonable to impose a duty to take care to protect against such death or injury. I. Jurisdiction: article 1 ECHR (a) the domestic authorities Article 1 of the Convention provides as follows: The High Contracting Parties shall secure to everyone within their jurisdiction the rights and freedoms defined in section 1 of this Convention. In Soering v United Kingdom (1989) 11 EHRR 439 at para 86 the Strasbourg court said that article 1 sets a limit, notably territorial, on the reach of the Convention and that the engagement undertaken by a contracting state is confined to securing the listed rights and freedoms to persons within its own jurisdiction. It does not govern the actions of states not parties to it, nor does it purport to be a means of requiring the contracting state to impose Convention standards on other states. The essentially territorial notion of jurisdiction was also emphasised by the Grand Chamber in Bankovic v Belgium (2001) 11 BHRC 435, para 67, where it said that it is only in exceptional cases that acts of the contracting states performed, or producing effects, outside their territories can constitute an exercise of jurisdiction by them within the meaning of article 1 of the Convention. In Andrejeva v Latvia, (Application No 55707/00), given 18 February 2009, para 56, the Grand Chamber reiterated that the concept of jurisdiction for the purposes of article 1 reflects that terms meaning in public international law and that it is closely linked to the international responsibility of the state concerned. The question that the Snatch Land Rover claims raise is whether the jurisdiction of the United Kingdom extends to securing the protection of article 2 of the Convention to members of the armed forces when they are serving outside its territory. For that to be so it would have to be recognised that service abroad by members of the armed forces is an exceptional circumstance which requires and justifies the exercise by the State of its jurisdiction over them extra territorially. In R (Al Skeini) v Secretary of State for Defence [2007] UKHL 26, [2008] AC 153 (Al Skeini (HL)) the House of Lords was asked to consider the case of the deaths of six Iraqi civilians which were the result of actions by a member or members of the British armed forces in Basra. One of them, Mr Baha Mousa, had died as a result of severe maltreatment in a prison occupied and run by British military personnel. It was argued for the civilians that, because of the special circumstances in which British troops were operating in Basra, the conduct complained of, although taking place outside the borders of the United Kingdom and any other contracting state, fell within the exceptions recognised by the Strasbourg jurisprudence. The House held that, although one such exception was recognised where a state through effective control of another territory exercised powers normally exercised by the government of that territory, the obligation to secure the Convention rights would arise only where a contracting state had such effective control over an area as to enable it to provide the full package of rights and freedoms guaranteed by article 1 of the Convention to everyone within that area: Lord Rodger of Earlsferry at para 79; Lord Brown of Eaton under Heywood at para 129. The United Kingdoms presence in Iraq fell far short of such control. As Lord Rodger put it in para 78, the idea that the United Kingdom was obliged to secure the observance of all the rights and freedoms as interpreted by the European court in the utterly different society of southern Iraq was manifestly absurd. The Secretary of State accepted that, as the events occurred in a British detention unit, Mr Mousa met his death within the jurisdiction of the United Kingdom for the purposes of article 1 of the Convention: Lord Rodger at para 61. So far as the other appellants were concerned, the United Kingdom did not have the kind of control of Basra and the surrounding area that would have allowed it to have discharged its obligations, including its positive obligations, as a contracting state under article 2. Three aspects of the discussion of the issue in that case should be noted at this stage. First, the appellants were all citizens of Iraq. They were not state agents of the United Kingdom or otherwise subject to its control or authority. British servicemen, on the other hand, are under the complete control of the UK authorities and are subject exclusively to UK law. Secondly, the House was plainly much influenced by the ruling on jurisdiction by the Grand Chamber in Bankovic which emphasised the centrality of territorial jurisdiction, the regional nature of the Convention and the indivisibility of the package of rights in the Convention: Lord Rodger at para 69. As Lord Brown noted in para 109, Bankovic stood, among other things, for the proposition that the rights and freedoms defined in the Convention could not be divided and tailored. In para 75 of Bankovic the proposition which attracted these observations was in these terms: . the Court is of the view that the wording of article 1 does not provide any support for the applicants suggestion that the positive obligation in article 1 to secure the rights and freedoms defined in section 1 of this Convention can be divided and tailored in accordance with the particular circumstances of the extra territorial act in question. In para 65 of its judgment in that case the Grand Chamber said that the scope of article 1 was determinative of the very scope of the contracting parties positive obligations and, as such, of the scope and reach of the entire Convention system of human rights protection. Thirdly, it was recognised that it was for the Strasbourg court to define the exceptions and evaluate the grounds for departing from the general rule: Lord Bingham of Cornhill at para 29. As Lord Brown put it at para 105, the ultimate decision on the question must necessarily be for that court. Lord Rodger referred at para 67 to the problem which the House had to face, which was that the judgments and decisions of the European court did not speak with one voice. On the one hand there was Issa v Turkey (2004) 41 EHRR 567, where the court said at para 71 that accountability for violation of the Convention rights and freedoms of persons in another state stems from the fact that article 1 of the Convention cannot be interpreted so as to allow a state party to perpetrate violations of the Convention on the territory of the other state which it could not perpetrate on its own territory. This appeared to focus on the activity of the contracting state, whereas the emphasis in Bankovic was on the requirement that the victim should be within the jurisdiction. In these circumstances the House was of the view that it would not be proper to proceed beyond the jurisprudence of the European court on jurisdiction as analysed and declared by the Grand Chamber in Bankovic. The appellants then sought just satisfaction in Strasbourg. In the meantime the jurisdiction question was considered by the domestic court in two further cases: R (Gentle) v Prime Minister [2008] AC 1356 and R (Smith) v Oxfordshire Assistant Deputy Coroner (Equality and Human Rights Commission intervening) [2010] UKSC 29, [2011] 1 AC 1 (Catherine Smith). The question in Gentle was whether article 2 of the Convention imposed a substantive duty on the state to take timely steps to obtain reliable legal advice before committing its troops to armed conflict: see para 3. The claimants were the mothers of two soldiers who were killed while serving in Iraq, one of whom was killed by the same shell as killed Cpl Allbutt and injured Trooper Julien and Lance Corporal Twiddy: see para 3, above. The issue which the claimants wished to explore was the lawfulness of the military action on which the United Kingdom had been engaged in Iraq before it was legitimised by United Nations Security Council Resolution 1546 of 8 June 2004. Lord Bingham said at para 8(3) that, although the soldiers were subject to the authority of the United Kingdom, they were clearly not within its jurisdiction as that expression in the Convention had been interpreted in Al Skeini (HL), paras 79 and 129. But the case was decided on the basis that the claimants were unable to establish the duty which they asserted: see Lord Bingham at para 6. In para 39 Lord Rodger said article 2 of the Convention did not impose an obligation on the government not to take part in an invasion that was unlawful in international law: see also Baroness Hale of Richmond, para 57. In para 19 I said that the guarantee in the first sentence of that article was not violated simply by deploying servicemen and women on active service overseas as part of an organised military force which was properly equipped and capable of defending itself, even though the risk of their being killed was inherent in what they were being asked to do. The issue in Catherine Smith was whether a British soldier in Iraq when outside his base was within the scope of the Convention. The appellant was the mother of Private Jason Smith who had been mobilised for service in Iraq as a member of the Territorial Army and was stationed at Camp Abu Naji. He collapsed while working off base. He was rushed by ambulance to the Camps medical centre but died there almost immediately of heat stroke. The issue in the case concentrated on the question whether the inquest into his death had to satisfy the procedural requirements of article 2. The Secretary of State conceded that, as Private Smith was on the base when he died, Mrs Smith was entitled to the relief which she sought. This meant that the issue had become largely academic, as Lord Phillips recognised in para 2. But on this occasion the Court decided to examine the question and express its opinion on it. The Court was divided on the issue by six to three. The majority held that the contracting states, in concluding the provisions of the Convention, would not have intended it to apply to their armed forces when operating outside their territories. Lord Collins, who delivered the leading judgment on behalf of the majority, said in para 307 that the case came within none of the exceptions recognised by the Strasbourg court, and that there was no basis in its case law, or in principle, for the proposition that the jurisdiction which states undoubtedly have over their armed forces abroad both in national law and international law means that they are within their jurisdiction for the purposes of article 1. Repeating a point that had been made by Lord Rodger in Al Skeini (HL), he said that, to the extent that Issa v Turkey stated a principle of jurisdiction based solely on authority and control by state agents, it was inconsistent with Bankovic. In para 308 he said that there were no policy grounds for extending the scope of the Convention to armed forces abroad, as this would ultimately involve the courts in issues relating to the conduct of armed hostilities which was essentially non justiciable. The leading judgment for the minority was delivered by Lord Mance, with whom Lady Hale and Lord Kerr agreed. It is not possible to do justice to it in a brief summary. But some points that are of particular importance should be noted. In para 188 he said that, to the extent that jurisdiction under the Convention exists over occupied territory, it does so only because of the occupying states pre existing authority and control over its own armed forces. An occupying state cannot have any jurisdiction over local inhabitants without already having jurisdiction over its own armed forces, in both cases in the sense of article 1 of the Convention. In para 194 he said that the United Kingdoms jurisdiction over its armed forces was essentially personal. It could not be expected to take steps to provide in Iraq the full social and protective framework and facilities which it would be expected to provide domestically. But the United Kingdom could be expected to take steps to provide proper facilities and proper protection against risks falling within its responsibility or its ability to control or influence when despatching and deploying armed forces overseas. In paras 195 197 he examined the question whether there would be consequences beyond or outside any that the framers of the Convention could have contemplated and concluded that none of the matters that might give cause for concern justified giving to the concept of jurisdiction a different or more limited meaning to that which in his opinion followed from the guidance that the Strasbourg court had already given in Bankovic. It is however worth noting that he did not attach the same importance as the majority did to the proposition in Bankovic that the rights and freedoms defined in the Convention could not be divided and tailored, and that he was inclined to give more weight than they were to a principle of jurisdiction based on the authority and control which the contracting state had over its armed forces. (b) Al Skeini in Strasbourg The structure of the relevant part of the Grand Chambers judgment, at (2011) 53 EHRR 589, falls into two parts. First, there is a comprehensive statement of general principles relevant to the issue of jurisdiction under article 1 of the Convention. Secondly, those principles are applied to the facts of the case. Although the facts of that case are different from those which are before this Court in these appeals, both parts of the judgment provide important guidance as to how we should resolve the issue with which we have to deal. The statement of general principles begins in para 130 with the observation that the exercise of jurisdiction, which is a threshold condition, is a necessary condition for a contracting state to be able to be held responsible for acts or omissions imputable to it which give rise to an allegation of the infringement of rights and freedoms set forth in the Convention. The significance of this observation in the context of these appeals is that it is not disputed that the United Kingdom has authority and control over its armed forces when serving abroad. It has just as much authority and control over them anywhere as it has when they are serving within the territory of the United Kingdom. They are subject to UK military law without any territorial limit: Armed Forces Act 2006, section 367(1). The extent of the day to day control will, of course, vary from time to time when the forces are deployed in active service overseas, especially when troops are in face to face combat with the enemy. But the legal and administrative structure of the control is, necessarily, non territorial in character. are set out: In paras 131 132 the general principles relevant to the territorial principle 131 A states jurisdictional competence under article 1 is primarily territorial. Jurisdiction is presumed to be exercised normally throughout the states territory. Conversely, acts of the contracting states performed, or producing effects, outside their territories can constitute an exercise of jurisdiction within the meaning of article 1 only in exceptional cases. 132 To date, the Court in its case law has recognised a number of exceptional circumstances capable of giving rise to the exercise of jurisdiction by a contracting state outside its own territorial boundaries. In each case, the question whether exceptional circumstances exist which require and justify a finding by the Court that the state was exercising jurisdiction extra territorially must be determined with reference to the particular facts. One can take from these paragraphs two important points. First, the word exceptional is there not to set an especially high threshold for circumstances to cross before they can justify a finding that the state was exercising jurisdiction extra territorially. It is there to make it clear that, for this purpose, the normal presumption that applies throughout the states territory does not apply. Secondly, the words to date in para 132 indicate that the list of circumstances which may require and justify a finding that the state was exercising jurisdiction extra territorially is not closed. In Catherine Smith, para 303 Lord Collins said that Bankovic made it clear in paras 64 and 65 that article 1 was not to be interpreted as a living instrument in accordance with changing conditions. That can no longer be regarded as an entirely accurate statement. The general principles are derived from the application to particular facts of the requirement of jurisdictional competence. The particular facts to which those principles must now be applied may be the product of circumstances that were not foreseen by the framers of the Convention. But that is no reason to disregard them if they can be shown to fall within the general principles relevant to jurisdiction under article 1. The Grand Chamber in Al Skeini then set out to divide the general principles relevant to jurisdiction into three distinct categories: state agent authority and control; effective control over an area; and the Convention legal space. We are not concerned in the case of the Snatch Land Rover claims with a situation where, as a consequence of military action, the United Kingdom was in effective control of an area outside its territory. Its presence in Iraq in 2005 and 2006 was to provide security and help with the reconstruction effort in that country pursuant to a request by the Iraqi government. The local administration was in the hands of the Iraqi government. Nor are we concerned with the risk of a vacuum in the Convention legal space. The category relevant to this case is that of state agent authority and control, which is described in paras 133 to 137. This category is introduced by para 133, which is in these terms: The Court has recognised in its case law that, as an exception to the principle of territoriality, a contracting states jurisdiction under article 1 may extend to acts of its authorities which produce effects outside its own territory: see Drozd and Janousek v France and Spain (1992) EHRR 745, para 91; Loizidou v Turkey (1995) 20 EHRR 99 (preliminary objections), para 62; Loizidou v Turkey (1997) 23 EHRR 513 (merits), para 52; Bankovic v Belgium (2004) 44 EHRR SE75, para 69. The statement of principle, as it appears in Drozd and the other cases just cited, is very broad: the Court states merely that the contracting partys responsibility can be involved in these circumstances. It is necessary to examine the Courts case law to identify the defining principles. There then follow three paragraphs in which the principles are defined by reference to the Courts case law. The first principle is set out in para 134. It refers to the acts of diplomatic and consular agents, who are present on foreign territory in accordance with provisions of international law. This may amount to an exercise of jurisdiction when these agents exert authority and control over others. The cases cited are X v Federal Republic of Germany (1965) 8 Yearbook of the European Convention on Human Rights 158; X v United Kingdom (1977) 12 DR 73; M v Denmark (1992) 73 DR 193; and Bankovic, para 73, where the Court noted that other recognised instances of the extra territorial exercise of jurisdiction by a state include cases involving the activities of its diplomatic or consular agents abroad and on board craft and vessels registered in, or flying the flag of, that state. In these specific situations, customary international law and treaty provisions have recognised the extra territorial exercise of jurisdiction by the relevant state. The second principle is set out in para 135. It refers to the fact that the Court has recognised the exercise of extra territorial jurisdiction by a contracting state when, through the consent, invitation or acquiescence of the government of that territory, it exercises all or some of the public powers normally to be exercised by that government: Bankovic, para 71. So, where in accordance with custom, treaty or other agreement, authorities of the contracting state carry out executive or judicial functions on the territory of another state, the contracting state may be responsible for breaches of the Convention that result from their exercise, so long as the acts in question are attributable to it rather than to the state in whose territory the acts take place. The cases cited are Drozd and Janousek v France and Spain (1992) 14 EHRR 745; Gentilhomme v France (Application Nos 48205, 48207 and 48209), given 14 May 2002; and X and Y v Switzerland (1977) 9 DR 57. The third principle is set out in para 136. It refers to the fact that the Courts case law demonstrates that in certain circumstances the use of force by a states agents operating outside its territory may bring the individual thereby brought under control of the states authorities into the states article 1 jurisdiction. Four examples are given of the application of this principle to cases where an individual was taken into the custody of state agents abroad: calan v Turkey (2005) 41 EHRR 985, where an individual was handed over to Turkish officials outside the territory of Turkey by officials from Kenya; Issa v Turkey (2004) 41 EHRR 567, where the Court indicated in paras 74 77 that if it had been established that Turkish soldiers had taken the shepherds into custody in a nearby cave in Northern Iraq and executed them, the deceased would have been within Turkish jurisdiction by virtue of the soldiers authority and control over them; Al Saadoon v United Kingdom (2009) 49 EHRR SE95 where the Court held that two Iraqi nationals detained in a British controlled prison in Iraq fell within the jurisdiction of the United Kingdom as the United Kingdom exercised total control over the prison and the individuals detained in them; and Medvedyev v France (2010) 51 EHRR 899, where crew members of a Cambodian registered merchant ship suspected of drug smuggling were taken into custody and detained on a French frigate while it was taken to France. A more recent example of the application of the same principle is to be found in Jamaa v Italy (2012) 55 EHRR 627, where the applicant asylum seekers were detained on an Italian ship after their vessels had been intercepted by the Italian Revenue Police and Coastguard. The following words are set out at the end of para 136 which sum up the essence of the general principle: The Court does not consider that jurisdiction in the above cases arose solely from the control exercised by the contracting state over the buildings, aircraft or ship in which the individuals were held. What is decisive in such cases is the exercise of physical power and control over the person in question. The description of the category of state agent authority and control concludes with an important statement in para 137. It is in these terms: It is clear that, whenever the state through its agents exercises control and authority over an individual, and thus jurisdiction, the state is under an obligation under article 1 to secure to that individual the rights and freedoms under section 1 of the Convention that are relevant to the situation of that individual. In this sense, therefore, the Convention rights can be divided and tailored . I do not read the first sentence of this paragraph as adding a further example to those already listed in paras 134 136. No further cases are cited in support of it, which the Court would have been careful to do if that were the case. The point that the Grand Chamber was making in para 137, as is made clear by the last sentence, is that the package of rights in the Convention is not indivisible, as Bankovic, para 75, which is cited here, appeared to indicate. The Grand Chamber had stated in that paragraph of its judgment in Bankovic that it was of the view that the wording of article 1 did not provide any support for the applicants suggestion that the positive obligation in article 1 to secure the rights and freedoms defined in section 1 of this Convention can be divided and tailored in accordance with the particular circumstances of the extra territorial act in question. The effect of para 137 of the Al Skeini judgment is that this proposition, which informed much of the thinking of the House of Lords in Al Skeini (HL) and of the majority in Catherine Smith, that the rights in Section 1 of the Convention are indivisible, is no longer to be regarded as good law. The extra territorial obligation of the contracting state is to ensure the observance of the rights and freedoms that are relevant to the individual who is under its agents authority and control, and it does not need to be more than that. The dividing and tailoring concept relative to the situation of the individual was applied in the Hirsi Jamaa case to resolve the issue whether the asylum seekers were subject to the jurisdiction of Italy while they were detained on the ship flying the Italian flag: 55 EHRR 627, para 74. The second part of the judgment of the Grand Chamber applies the principles described in the first part to the facts of the case. The state of affairs in Iraq during the period when the applicants deaths at the hands of British forces occurred is reviewed in paras 143 to 148. They were killed on various dates between May and September 2003. This was during a period when the United States and the United Kingdom were exercising the powers of government for the provisional administration of Iraq through a Coalition Provisional Authority, which had been created for the purpose in May 2003. They included the maintenance of civil law and order. That remained the position until 28 June 2004, when full authority for governing Iraq passed from the Coalition Provisional Authority to the Interim Iraqi Government. In the light of these facts the Court held in para 149 that the United Kingdom, through its soldiers engaged in security operations in Basra during the period in question, exercised authority and control over individuals killed in the course of such security operations. This established a jurisdictional link between the deceased and the United Kingdom for the purposes of article 1 of the Convention. The Court does not say which of the general principles led it to this conclusion, but it is reasonably clear that the facts come closest to those referred to in para 135. The United Kingdom was not exercising public powers through the consent, invitation or acquiescence of the government of Iraq as during the relevant period no such government was in existence. But it was exercising powers normally to be exercised by that government had it existed. The case thus fell within the general principle of state authority and control. It should be noted, however, that the situation in Iraq had changed by the time the incidents that have given rise to the Snatch Land Rover claims occurred. These incidents took place on 16 July 2005 and 28 February 2006. By that stage the occupation of Iraq had come to an end and the Coalition Provisional Authority had ceased to exist. Full authority for governing the country had passed to the Interim Iraqi Government. The United Kingdom was no longer exercising the public powers normally to be exercised by that countrys government. (c) discussion The question whether at the time of their deaths Pte Hewett and Pte Ellis were within the jurisdiction of the United Kingdom for the purposes of article 1 of the Convention does not receive a direct answer from the Grand Chamber in its Al Skeini judgment. This is not surprising, as that was not the question it had to decide. As it made clear in para 132, the question whether the state was exercising jurisdiction extra territorially in any given case must be determined with reference to the particular facts of that case. But the insertion of the words to date at the beginning of that paragraph indicate that one should not be too troubled by the fact that no case has yet come before the Strasbourg court which required it to consider whether the jurisdiction which states undoubtedly have over their armed forces abroad in both national and international law means that they are within their jurisdiction for the purposes of article 1 of the Convention. Care must, of course, be exercised by a national court in its interpretation of an instrument, the correct interpretation of which can be authoritatively expounded only by the Strasbourg court: R (Ullah) v Special Adjudicator [2004] UKHL 26, [2004] 2 AC 323, para 20 per Lord Bingham. He had already acknowledged in Brown v Stott [2003] 1 AC 681 that, as an important constitutional instrument, the Convention was to be seen as a living tree capable of growth and expansion within its natural limits (Edwards v Attorney General for Canada [1930] AC 124 at p 136 per Lord Sankey LC). But he said that those limits will often call for very careful consideration. As he put it at the end of para 20 in Ullah, the duty of national courts is to keep pace with the Strasbourg jurisprudence as it evolves over time. Lord Binghams point was that Parliament never intended by enacting the Human Rights Act 1998 to give the courts of this country the power to give a more generous scope to the Convention rights than that which was to be found in the jurisprudence of the Strasbourg court. To do so would have the effect of changing them from Convention rights, based on the treaty obligation, into free standing rights of the courts own creation. In Al Skeini (HL), paras 105 106, Lord Brown of Eaton under Heywood saw a greater danger in the national court construing the Convention too generously in favour of an applicant than in construing it too narrowly. The question before us here, however, is not one as to the scope that should be given to the Convention rights, as to which our jurisprudence is still evolving. It is a question about the states jurisdictional competence under article 1. In this context, as the question of jurisdiction is so fundamental to the extent of the obligations that must be assumed to have been undertaken by the contracting states, the need for care is all the greater. In Catherine Smith, para 93, I endorsed the view expressed by Lord Brown in Al Skeini (HL), para 107 that article 1 should not be construed as reaching any further than the existing Strasbourg jurisprudence clearly shows it to reach. I would take that as being for us, as a national court, the guiding principle. It seems to me that three elements can be extracted from the Grand Chambers Al Skeini judgment which point clearly to the conclusion that the view that was taken by the majority in Catherine Smith that the states armed forces abroad are not within its jurisdiction for the purposes of article 1 can no longer be maintained. The first is to be found in its formulation of the general principle of jurisdiction with respect to state agent authority and control. The whole structure of the judgment is designed to identify general principles with reference to which the national courts may exercise their own judgment as to whether or not, in a case whose facts are not identical to those which have already been held by Strasbourg to justify such a finding, the state was exercising jurisdiction within the meaning of article 1 extra territorially. While the first sentence of para 137 does not add a further example of the application of the principle to those already listed in paras 134 136, it does indicate the extent to which the principle relating to state agent authority and control is to be regarded as one of general application. The words whenever the state through its agents exercises control and authority over an individual, and thus jurisdiction, can be taken to be a summary of the exceptional circumstances in which, under this category, the state can be held to be exercising its jurisdiction extra territorially. As I said in para 30, above, the word exceptional does not set an especially high threshold for circumstances to cross before they can justify such a finding. It is there simply to make it clear that, for this purpose, the normal presumption that applies throughout the states territory does not apply. Lord Collinss comment in Catherine Smith, para 305, that other bases of jurisdiction are exceptional and require special justification should be understood in that sense. The second is to be found in the way, albeit with a degree of reticence, that this formulation resolves the inconsistency between Issa v Turkey and Bankovic on the question whether the test to be applied in these exceptional cases can be satisfied by looking only at authority and control or is still essentially territorial. The problem that was created by this inconsistency was articulated most clearly by Lord Rodger in Al Skeini (HL), paras 71 75. How can one reconcile the decision in Bankovic, which showed that an act which would engage the Convention if committed on the territory of a contracting state does not ipso facto engage the Convention if carried out by that contracting state on the territory of another state outside the Council of Europe, with the test that was described in Issa that required the court to ascertain whether the deceased were under the authority and control of the respondent state? We now know that Issa cannot be dismissed as an aberration because, as Lord Collins said in Catherine Smith, para 307, it is inconsistent with Bankovic. It is Bankovic which can no longer be regarded as authoritative on this point. The fact that Issa is included in para 136 as one of the examples of cases that fall within the general principle of state agent authority and control is particularly noteworthy. It anchors that case firmly in the mainstream of the Strasbourg courts jurisprudence on this topic. The third is to be found in the way that the Grand Chamber has departed from the indication in Bankovic that the package of rights in the Convention is indivisible and cannot be divided and tailored to the particular circumstances of the extra territorial act in question. It was always going to be difficult to see how, if that was to be the guiding principle, it could be possible to accept that a states armed forces abroad in whatever circumstances were within their jurisdiction for the purposes of article 1 as its ability to guarantee the entire range of the Convention rights would in many cases be severely limited. The problem was solved in the case of the actions of Turkish soldiers in northern Cyprus because the Convention rights were also engaged by the acts of the local administration which survived by virtue of Turkish military and other support: Cyprus v Turkey (Application No 25781/94), given 10 May 2001, para 77. Other cases were likely to be more difficult, and Lord Collins recognised in Catherine Smith, para 302 that cases such as Markovic v Italy (2006) 44 EHRR 1045 suggested that some qualification would have to be made to the principle of indivisibility of Convention rights. The Grand Chamber has now taken matters a step further. The concept of dividing and tailoring goes hand in hand with the principle that extra territorial jurisdiction can exist whenever a state through its agents exercises authority and control over an individual. The court need not now concern itself with the question whether the state is in a position to guarantee Convention rights to that individual other than those it is said to have breached: see Jamaa v Italy 55 EHRR 627. There is one other point arising from the Grand Chambers Al Skeini judgment that should not pass unnoticed. The Equality and Human Rights Commission points out in para 49 of its written case that the anterior question that presents itself in state agent cases is whether the state agent himself is within his states jurisdiction within the meaning of article 1. As Lord Mance observed in Catherine Smith, para 188, to the extent that a states extra territorial jurisdiction over local inhabitants exists because of the authority and control that is exercised over them, this is because of the authority and control that the state has over its own armed forces. It would seem to follow therefore that an occupying state cannot have any jurisdiction over local inhabitants without already having jurisdiction over its own armed forces, in each case in the sense of article 1 of the Convention. That this is so has never been questioned by the Strasbourg court, and it may be said that it is the premise from which extra territorial jurisdiction based on state agent authority and control has been developed. In Cyprus v Turkey (1975) 2 DR 125, which appears to have been the first case in which the concept of state agent authority and control was mentioned (see Al Skeini, para 121), the European Commission of Human Rights observed at p 136, para 8, that authorised agents of a state, including diplomatic or consular agents and armed forces, not only remain under its jurisdiction when abroad but bring other persons or property within the jurisdiction of that state, to the extent that they exercise authority over such person or property. In so far as, by their acts or omissions, they affect such persons or property, the responsibility of the state is engaged. The same formulation is to be found in the Commissions decisions in W v Ireland (1983) 32 DR 211, 215 and Vearncombe v Germany and United Kingdom (1989) 59 DR 186, 194. It no longer appears in references by the Strasbourg court to the acts of diplomatic and consular agents present on foreign territory in accordance with provisions of international law: see X and Y v Switzerland 9 DR 57, para 2; Bankovic, para 73; Al Skeini, para 134. But it has never been disapproved. It was quoted without comment or criticism in Chrysostomos v Turkey (1991) 34 Yearbook of the European Convention on Human Rights 35, para 32. The Grand Chamber in Al Skeini was referred by the applicants to the same passage in the Cyprus judgment: see para 121. The quotation from it in that paragraph includes the proposition that authorised agents of a state remain under its jurisdiction when abroad. The Grand Chamber had the opportunity to say that there was something wrong with it, but it did not do so. The Cyprus case was referred to by Lord Phillips in Catherine Smith, paras 49 50. He did not attach any significance to it, as it seemed to him that the reasoning of the Commission was far wider than that of the Court when it dealt with Turkeys jurisdiction in Northern Cyprus in Loizidou v Turkey (1995) 20 EHRR 99. It receives a passing mention also by Lord Collins in para 249 in the course of a brief review of the cases on acts of diplomatic and consular officials abroad. As matters now stand, given the guidance that has now been given in Al Skeini, it deserves more attention. The logic which lies behind it, as explained by Lord Mance in Catherine Smith, para 188, is compelling. It is plain, especially when one thinks of the way the armed forces operate, that authority and control is exercised by the state throughout the chain of command from the very top all the way down to men and women operating in the front line. Servicemen and women relinquish almost total control over their lives to the state. It does not seem possible to separate them, in their capacity as state agents, from those whom they affect when they are exercising authority and control on the states behalf. They are all brought within the states article 1 jurisdiction by the application of the same general principle. In Demir and Baykara v Turkey (Application No 34503/97), given 12 November 2008, para 74, the Grand Chamber said that in a number of judgments it had used, for the purposes of interpreting the Convention, intrinsically non binding instruments of Council of Europe organs, in particular recommendations and resolutions of the Committee of Ministers and the Parliamentary Assembly. These resolutions and recommendations constitute agreements within the meaning of article 31(3)(a) of the Vienna Convention, account of which may be taken in the interpretation of a treaty or the application of its provisions. It is therefore worth noting recommendation 1742 (2006) of the Parliamentary Assembly on the human rights of members of the armed forces of 11 April 2006, which was made in the light of a debate on a report on this issue of its Committee on Legal Affairs and Human Rights (doc 10861). In para 2 of recommendation 1742 the point was made that members of the armed forces are citizens in uniform who must enjoy the same fundamental freedoms and the same protection of their rights and dignity as any other citizen, within the limits imposed by the specific exigencies of military duties. In para 3 it was emphasised that members of the armed forces cannot be expected to respect humanitarian law and human rights in their operations unless respect for human rights is guaranteed within the army ranks. The Parliamentary Assembly recommended that the Committee of Ministers should prepare and adopt guidelines in the form of a new recommendation to member states designed to guarantee respect for human rights by and within the armed forces. A draft recommendation prepared by a steering committee was adopted by the Committee of Ministers on 24 February 2010 with an explanatory memorandum (CM/Rec (2010) 4) in which it was stated that member states should, so far as possible, apply the principles set out in the recommendation to their armed forces in all circumstances, including in time of armed conflict. The conclusion which I would draw from the jurisprudence of the Strasbourg court derives further support from these non binding recommendations. For these reasons I would hold that the decision in Catherine Smith should be departed from as it is inconsistent with the guidance that the Grand Chamber has now given in its Al Skeini judgment. I would also hold that the jurisdiction of the United Kingdom under article 1 of the Convention extends to securing the protection of article 2 to members of the armed forces when they are serving outside its territory and that at the time of their deaths Pte Hewett and Pte Ellis were within the jurisdiction of the United Kingdom for the purposes of that article. To do so would not be inconsistent with the general principles of international law, as no other state is claiming jurisdiction over them. The extent of that protection, and in particular whether the MOD was under a substantive duty of the kind for which the Snatch Land Rover claimants contend, is the question which must now be considered. The article 2 ECHR claims Article 2(1) of the Convention provides as follows: 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. The relevant guarantee for the purposes of this case is set out in the first sentence. It has two aspects: one substantive, the other procedural. We are not concerned here with the procedural obligation which is implied into the article in order to make sure that the substantive right is effective in practice: see R (Gentle) v Prime Minister [2008] AC 1356, para 5, per Lord Bingham. The Snatch Land Rover claims, details of which are set out in paras 11 and 12, above, are all directed to the substantive obligation, which requires the state not to take life without justification and also, by implication, to establish a framework of laws, precautions, procedures and means of enforcement which will, to the greatest extent reasonably practicable, protect life: R (Middleton) v West Somerset Coroner [2004] UKHL 10, [2004] 2 AC 182, para 2. As Owen J pointed out, these claims involve issues of procurement as well as allegations relating to operational decisions made by commanders: [2011] EWHC 1676 (QB), para 51. (a) preliminary observations Lord Collins said in Catherine Smith, para 308 that to extend the scope of the Convention to armed forces abroad would ultimately involve the courts in issues relating to the conduct of armed hostilities which are essentially non justiciable. That some issues relating to the conduct of armed hostilities are non justiciable is not really in doubt. But in my opinion a finding that in all circumstances deaths or injuries in combat that result from the conduct of operations by the armed forces are outside the scope of article 2 would not be sustainable. It would amount, in effect, to a derogation from the states substantive obligations under that article. Such a fundamental departure from the broad reach of the Convention should not be undertaken without clear guidance from Strasbourg as to whether, and in what circumstances, this would be appropriate. It may be noted in this context that the intervener JUSTICE drew attention to article 15 of the Convention in reply to concerns about the practical consequences of finding that soldiers are within the jurisdiction of the United Kingdom under article 1. It provides that in time of war or other public emergency threatening the life of the nation any High Contracting Party may take measures derogating from its obligations under the Convention to the extent required by the exigencies of the situation. But the phrase threatening the life of the nation suggests that the power to derogate under this article is available only in an exceptional situation of crisis or emergency which affects the whole population and constitutes a threat to the organised life of the community of which the state is composed: Lawless v Ireland (No 3) (1961) 1 EHRR 15, para 28. It will be recalled that in A v Secretary of State for the Home Department [2004] UKHL 56, [2005] 2 AC 68 it was held that the Human Rights Act 1998 (Designed Derogation) Order 2001, which had been made to derogate from the right to personal liberty under article 5(1) to enable the appellants to be detained indefinitely without trial, should be quashed. And in R (Al Jedda) v Secretary of State for Defence (JUSTICE intervening) [2007] UKHL 58, [2008] AC 332, para 38, Lord Bingham said that it was hard to think that the conditions of article 15 could ever be met when a state had chosen to conduct an overseas peacekeeping operation, however dangerous the conditions, from which it could withdraw. He also noted that it had not been the practice of states to derogate in situations such as those in Iraq in 2004 and that as subsequent practice in the application of a treaty may, under article 31(3)(b) of the Vienna Convention, be taken into account in interpreting the treaty it seemed proper to regard the power in article 15 as inapplicable. I do not think therefore that it would be right to assume that concern about the practical consequences in situations such as those with which we are dealing in this case can be answered by exercising the power to derogate. The circumstances in which that power can properly be exercised are far removed from those where operations are undertaken overseas with a view to eliminating or controlling threats to the nations security. The jurisprudence of the Strasbourg court shows that there are other ways in which such concerns may be met. The Strasbourg court has repeatedly emphasised that, when it comes to an assessment of the positive obligations that are to be inferred from the application in any given case of the Convention rights, a fair balance must be struck between the competing interests of the individual and of the community as a whole. It has also recognised that there will usually be a wide margin of appreciation if the state is required to strike a balance between private and public interests and Convention rights: Hristozov v Bulgaria (Application Nos 47039/11 and 358/12), given 13 November 2012, paras 118, 124. That was a case about a refusal to authorise an experimental medicinal product which the applicants had wished to be administered to them. But the competition between the interests of the state and those of the individual is no less acute where issues arise about the risk to life of soldiers in the context of military operations conducted on the states behalf. The challenge this court faces when dealing with the Snatch Land Rover claims is to determine where the boundary lies between the two extremes in the circumstances that the armed forces were facing in Iraq in 2005 and 2006. In Gentle, para 19, I said that the proper functioning of an army in a modern democracy includes requiring those who serve in it to undertake the operations for which they have been recruited, trained and equipped, some of which are inherently dangerous, and that the jurisprudence developed from the decision in Soering v United Kingdom (1989) 11 EHRR 439 about decisions taken in this country to send people abroad to places where they face a real risk of being subjected to torture or to inhuman or degrading treatment or punishment does not apply. The guarantee in the first sentence of article 2(1) is not violated simply by deploying servicemen and women on active service overseas as part of an organised military force which is properly equipped and capable of defending itself, even though the risk of their being killed is inherent in what they are being asked to do. The other side of the coin, as Lord Mance explained in Catherine Smith, para 195, is that there is nothing that makes the Convention impossible or inappropriate of application to the relationship between the state and its armed forces as it exists in relation to overseas operations in matters such as, for example, the adequacy of equipment, planning or training. Lord Rodger recognised in the same case at para 126 that, while a coroner will usually have no basis for considering at the outset that there has been a violation of article 2 where a serviceman or woman has been killed by opposing forces in the course of military operations, new information might be uncovered as the investigation proceeds which does point to a possible violation of the article. He referred to the death of a soldier as a result of friendly fire from other British forces as an extreme example. And, as I said in Catherine Smith, para 105, one must not overlook the fact that there have been many cases where the death of service personnel indicates a systemic or operational failure on the part of the state, ranging from a failure to provide them with the equipment that was needed to protect life on the one hand to mistakes in the way they are deployed due to bad planning or inadequate appreciation of the risks that had to be faced on the other. So failures of that kind ought not to be immune from scrutiny in pursuance of the procedural obligation under article 2 of the Convention. The extent to which the application of the substantive obligation under article 2 to military operations may be held to be impossible or inappropriate will, however, vary according to the context. Military operations conducted in the face of the enemy are inherently unpredictable. There is a fundamental difference between manoeuvres conducted under controlled conditions in the training area which can be accurately planned for, and what happens when troops are deployed on active service in situations over which they do not have complete control. As Lord Rodger observed in Catherine Smith, para 122, the job of members of the armed forces involves their being deployed in situations where, as they well know, opposing forces will be making a determined effort, and using all their resources, to kill and injure them. The best laid plan rarely survives initial contact with the enemy. The best intelligence cannot predict with complete accuracy how the enemy will behave, or what equipment will be needed to meet the tactics and devices that he may use to achieve his own ends. Speed may be essential if the momentum of an attack is to be maintained or to strengthen a line of defence. But lines of communication may become stretched. Situations may develop where it is simply not possible to provide troops in time with all they need to conduct operations with the minimum of casualties. Things tend to look and feel very different on the battlefield from the way they look on such charts and images as those behind the lines may have available to them. A court should be very slow indeed to question operational decisions made on the ground by commanders, whatever their rank or level of seniority. Then there is the issue of procurement. In A v Secretary of State for the Home Department [2005] 2 AC 68, para 29, Lord Bingham said that the more purely political (in a broad or narrow sense) the question is, the more appropriate it would be for political resolution, and the less likely it is to be an appropriate matter for judicial decision. The allocation of resources to the armed services and as between the different branches of the services, is also a question which is more appropriate for political resolution than it is by a court. Much of the equipment in use by the armed forces today is the product of advanced technology, is extremely sophisticated and comes at a very high price. Procurement depends ultimately on the allocation of resources. This may in turn be influenced as much by political judgment as by the judgment of senior commanders in Whitehall as to what they need for the operations they are asked to carry out. It does not follow from the fact that decisions about procurement are taken remote from the battlefield that they will always be appropriate for review by the courts. This, then, is a field of human activity which the law should enter into with great caution. Various international measures, such as those contained in the 3rd Geneva Convention of 1929 to protect prisoners of war, have been entered into to avoid unnecessary hardship to non combatants. But subjecting the operations of the military while on active service to the close scrutiny that may be practicable and appropriate in the interests of safety in the barrack block or in the training area is an entirely different matter. It risks undermining the ability of a state to defend itself, or its interests, at home or abroad. The world is a dangerous place, and states cannot disable themselves from meeting its challenges. Ultimately democracy itself may be at risk. (b) the Strasbourg authorities Fundamentally, article 2 requires a state to have in place a structure of laws which will help to protect life: Savage v South Essex NHS Trust [2008] UKHL 74, [2009] AC 681, para 19, per Lord Rodger. As he explained, with reference to the European courts discussion of this issue in Osman v United Kingdom (1998) 29 EHRR 245, para 115, the primary duty is to secure the right to life by putting in place effective criminal law offences backed up by law enforcement machinery. But the states duty goes further than that. It may also imply, in certain well defined circumstances, a positive obligation on the authorities to take preventive operational measures to protect the lives of those within their jurisdiction. In para 88 of its judgment in Keenan v United Kingdom (2001) 33 EHRR 913, the court began by reciting the high level of duty of the state to put in place effective criminal law sanctions to deter the commission of offences against prisoners. But that was just part of what Lord Rodger described in para 30 of Savage as the tralatician jurisprudence of the court on positive obligations under article 2. The positive duties on the state operate at various levels, as one idea is handed down to another. There is a lower level, but still general, duty on a state to take appropriate measures to secure the health and well being of prisoners or people who are in some form of detention. This in its turn gives rise, at a still lower level, to two general obligations: Savage, para 36; Rabone v Pennine Care NHS Trust (INQUEST and others intervening) [2012] UKSC 2, para 12, per Lord Dyson; neryildiz v Turkey (2004) 41 EHRR 325, para 89. The first is a systemic duty, to put in place a legislative and administrative framework which will make for the effective prevention of the risk to their health and well being or, as it was put in neryildiz, para 89, effective deterrence against threats to the right to life. Depending on the facts, this duty could extend to issues about training and the procurement of equipment before the forces are deployed on operations that will bring them into contact with the enemy. The second, which is also directly in point in this case, is to ensure that, where there is a real and immediate risk to life, preventative operational measures of whatever kind are adopted to safeguard the lives of those involved so far as this is practicable. The Strasbourg court has not had occasion to examine the extent to which article 2(1) offers protection at any level to a states armed forces when engaged in operations such as those that were being conducted in Iraq in 2005 and 2006. But there are some straws in the wind which may offer some guidance. In Engel v The Netherlands (No 1) (1976) 1 EHHR 647, para 54, in a well known passage, the Court said that, when interpreting and applying the rules of the Convention, the court must bear in mind the particular characteristics of military life and its effect on the situation of individual members of the armed forces. That was a case about the preservation of military discipline, as were en v Turkey (Application No 45824/99), given 8 July 2003) and Grigoriades v Greece (1997) 27 EHHR 464, where it was observed at p 8 that the extent of the protection given to members of the armed forces must take account of the characteristics of military life, the nature of the activities they are required to perform and of the risk that they give rise to. These comments, however brief, do seem to make it clear that it would not be compatible with the characteristics of military life to expect the same standard of protection as would be afforded by article 2(1) to civilians who had not undertaken the obligations and risks associated with life in the military. That is plainly so in the context of the exercise of military discipline over members of the armed forces when they are on active service. It is hard to see why servicemen and women should not, as a general rule, be given the same protection against the risk of death or injury by the provision of appropriate training and equipment as members of the police, fire and other emergency services. But it is different when the serviceman or woman moves from recruitment and training to operations on active service, whether at home or overseas. It is here that the national interest requires that the law should accord the widest measure of appreciation to commanders on the ground who have the responsibility of planning for and conducting operations there. This approach receives some support from Stoyanovi v Bulgaria (Application No 42980/04), given 9 November 2010, where an application was made under article 2(1) by the family of a soldier who had died during a parachute exercise. In paras 59 61 the Court examined the difference between the primary positive obligation under that article to establish a framework of laws and procedures to protect life and the obligation to take preventative operational measures to protect the life of an individual which may be imposed by implication, as it was put in Osman v United Kingdom (1998) 29 EHRR 245, para 115, only in certain and well defined circumstances. In para 59, recalling what was said in para 116 of Osman where the allegation was of a failure to take preventive measures where there was a known risk of a real, direct and immediate threat to the life of an individual posed by another individual, the Court said: Subject to considerations as to the difficulties involved in policing modern societies, the unpredictability of human conduct and the operational choices which must be made in terms of priorities and resources, such an obligation must be interpreted in a way which does not impose an impossible or disproportionate burden on the authorities and which also conforms with the other rights guaranteed by the Convention. In para 61 it observed that positive obligations will vary in their application depending on the context. Having noted that the case concerned an accident during a military training exercise and that parachute training was inherently dangerous but an ordinary part of military duties, it said: Whenever a state undertakes or organises dangerous activities, or authorises them, it must ensure through a system of rules and through sufficient control that the risk is reduced to a reasonable minimum. If nevertheless damage arises, it will only amount to a breach of the states positive obligations if it was due to insufficient regulations or insufficient control, but not if the damage was caused through the negligent conduct of an individual or the concatenation of unfortunate events. That was a case where the state was in control of the situation, as the accident occurred during a training exercise. It was not claimed that any specific risk to the life of the deceased should have been foreseen in advance, nor was it argued that the legislative and administrative framework was defective in any general or systemic sense: paras 62 63. The whole focus of the courts supervision was on the authorities response to the accident. It was not suggested that there could not have been a breach of the general or systemic duties in such a case. There is, however, a sharp contrast between that situation and operations undertaken in a situation where it was known or could reasonably have been anticipated that troops were at risk of attacks from insurgents by unconventional means such as by the planting of IEDs. Regulation and control of the kind contemplated in Stoyanovi is likely to be very difficult, if not impossible, to achieve on the ground in situations of that kind. Even where those directing operations are remote in place and time from the area in which the troops are operating, great care is needed to avoid imposing a burden on them which is impossible or disproportionate. Another example of the Strasbourg courts concern not to impose a disproportionate and unrealistic obligation on the state is provided by Giuliani and Gaggio v Italy (Application No 23458/02), given 24 March 2011. The applicants in that case complained of the death of their son and brother during demonstrations surrounding the G8 summit in Genoa which had degenerated into violence. The Court held that the Italian authorities did not fail in their obligation to do what could reasonably be expected of them to provide the level of safeguards required during operations potentially involving the use of lethal force. It drew a contrast between dealing with a precise and identifiable target and the maintenance of order in the face of possible disturbances spread over the entire city as regards the extent to which the officers involved could be expected to be highly specialised in dealing with the tasks assigned to them. So too, in the case of the armed forces, a contrast can be drawn between their situation in the training area that can be planned for precisely and that which they are likely to encounter during operations when in contact with the enemy. The same approach is indicated by Finogenov v Russia (Application Nos 18299/03 and 27311/03), given 20 December 2011, para 213, where the Court was prepared to give a margin of appreciation to the domestic authorities, in so far as the military and technical aspects of the situation were concerned, in connection with the storming of a theatre in which many people were held hostage by terrorists, even if with hindsight some of the decisions they took might appear open to doubt. The guidance which I would draw from the Courts jurisprudence in this area is that the court must avoid imposing positive obligations on the state in connection with the planning for and conduct of military operations in situations of armed conflict which are unrealistic or disproportionate. But it must give effect to those obligations where it would be reasonable to expect the individual to be afforded the protection of the article. It will be easy to find that allegations are beyond the reach of article 2 if the decisions that were or ought to have been taken about training, procurement or the conduct of operations were at a high level of command and closely linked to the exercise of political judgment and issues of policy. So too if they relate to things done or not done when those who might be thought to be responsible for avoiding the risk of death or injury to others were actively engaged in direct contact with the enemy. But finding whether there is room for claims to be brought in the middle ground, so that the wide margin of appreciation which must be given to the authorities or to those actively engaged in armed conflict is fully recognised without depriving the article of content, is much more difficult. No hard and fast rules can be laid down. It will require the exercise of judgment. This can only be done in the light of the facts of each case. (c) should the claims be struck out? The circumstances of the Snatch Land Rover cases are not precisely analogous to those of any previous case in which the implied positive obligation under article 2 has been imposed, and the allegations made in each of the claimants particulars of claim (see paras 11 and 12, above) are not identical. This is because the explosion in which Pte Hewett was killed occurred more than six months before that which killed Pte Ellis. The claim in Pte Elliss case concentrates on the provision of what is said, in the light of experience, to have been inadequate equipment and a failure to limit his patrol to vehicles which offered better protection or had been fitted with element A. The claims in Pte Hewetts case are less precise and range more widely. But they too extend to criticism of operational decisions taken by those in charge of the patrols as well as to alleged failures in the provision of appropriate vehicles and equipment in the light of the death of L Cpl Brackenbury in similar circumstances seven weeks previously. I am conscious, however, of the fact that these particulars are no more than the briefest outline of the case that the claimants seek to make. Account should also be taken of the fact that the claims were issued in January 2008, in the case of Pte Hewett, and in February 2009, in the case of Pte Ellis. In both cases this was before the judgment was delivered in Stoyanovi v Bulgaria. The European Court has now provided greater clarity as to the approach that should be taken to claims of this kind, as has the discussion about the distinct elements that are to be found in the positive duty to protect life that is to be found in Savage and Rabone. Some of the failures which the claimants allege appear to be of the systemic kind (see para 68, above). Others are of the operational kind that was described in the Osman case, where there was an implied positive obligation to take preventative operational measures to protect those who were at risk of a real, direct and immediate threat to life. Measures of that kind could extend to procurement decisions taken on the ground about the provision of vehicles and equipment, as well as to decisions about their deployment. How precisely the allegations fit into the structure of the duties implied by the article cannot be determined without knowing more about the facts, bearing in mind that it must be interpreted in a way which does not impose an unrealistic or disproportionate burden on the authorities. The overall aim of the courts procedure must be to achieve fairness, and I think that it would be unfair to the relatives of the deceased to apply too exacting a standard at this stage to the way the claims have been pleaded. The circumstances in which the various decisions were made need to be inquired into before it can be determined with complete confidence whether or not there was a breach of the implied positive obligation. The details which are needed to place those circumstances into their proper context will only emerge if evidence is permitted to be led in support of them. This seems to me to be a classic case where the decision on liability should be deferred until after trial. I agree with Owen J that the procurement issues may give rise to questions that are essentially political in nature but that it is not possible to decide whether this is the case without hearing evidence. He said that there was no sound basis for the allegations that relate to operational decisions made by commanders, and for this reason took a different view as to whether they were within the reach of article 2. But it seems to me that these allegations cannot easily be divorced from the allegations about procurement, and that here too the question as to which side of the line they lie is more appropriate for determination after hearing evidence. Much will depend on where, when and by whom the operational decisions were taken and the choices that were open to them, given the rules and other instructions as to the use of equipment under which at each level of command they were required to operate. I would therefore dismiss the MODs appeal against Owen Js decision, which the Court of Appeal found it unnecessary to consider, that none of these claims should be struck out. The claimants are, however, on notice that the trial judge will be expected to follow the guidance set out in this judgment as to the very wide measure of discretion which must be accorded to those who were responsible on the ground for the planning and conduct of the operations during which these soldiers lost their lives and also to the way issues as to procurement too should be approached. It is far from clear that they will be able to show that the implied positive obligation under article 2(1) of the Convention to take preventative operational measures was breached in either case. III. Combat immunity (a) background The Challenger claims proceed on the basis that there is no common law liability for negligence in respect of acts or omissions on the part of those who are actually engaged in armed combat. So it has not been suggested that Lt Pinkstone or anyone else in the Black Watch battle group was negligent. Nor, as his decision to fire was taken during combat, would it have been appropriate to do so. The Challenger claimants concentrate instead on an alleged failure to ensure that the claimants tank and the tanks of the battle group that fired on it were properly equipped with technology and equipment that would have prevented the incident, and an alleged failure to ensure that soldiers were provided with adequate recognition training before they were deployed and also in theatre. Their case is founded entirely on failings in training and procurement. The Ellis claim at common law also raises issues about procurement. The MOD invokes in reply the doctrine of combat immunity, which it says should be given a sufficiently broad scope to cover all acts or omissions that are alleged to have caused death or injury in the course of combat operations. It is plain that the effect of the doctrine, if it applies, would be to remove the issue of liability for negligence from the jurisdiction of the court altogether. But the MOD also submits that, if the court does have jurisdiction, it would not be fair, just or reasonable to impose a duty of care on it to protect the soldiers in such circumstances against death or injury. The justification for these arguments is the same, whichever of the two formulations is adopted. It is that the interests of the state must prevail over the interests of the individual. As Mr Eadie QC for the MOD put it, the fair, just and reasonable test chimes with the doctrine of combat immunity. His appeal against the Court of Appeals decision that the negligence claims should not be struck out was directed primarily to that doctrine. This may be considered to be an application to given facts of the test as to what is fair, just and reasonable. But the structure of the law is important and combat immunity is best thought of as a rule, because once a case falls within it no further thought is needed to determine the question whether a duty of care was owed to the claimant. The scope of this rule deserves attention as a separate issue in its own right. (b) the authorities Combat immunity made its first appearance in Shaw Savill & Albion Co Ltd v Commonwealth (1940) 66 CLR 344. A collision had occurred between HMAS Adelaide and a civilian vessel, the MV Coptic. It took place on 3 December 1940 while the civilian vessel was on a voyage from Brisbane to Sydney. The owners of the civilian vessel claimed that the collision had been caused by negligence on the part of the naval authorities and sought damages. The High Court was adjudicating on the plaintiffs demurrer to the defence and a strike out summons by the Commonwealth. The defence was that, while in the course of actual operations against the enemy, the forces of the Crown are under no duty of care to avoid loss or damage to private individuals. Both applications were dismissed and the case proceeded to trial. The Commonwealth was ultimately found liable on the ground of the captains fault in his navigation of the Adelaide: see Attorney General (New South Wales) v Perpetual Trustee Co Ltd (1952) 85 CLR 237, 252 per Dixon CJ. Dixon J, with whom Rich ACJ and McTiernan J agreed, said in the demurrer proceedings at p 361 that it could hardly be maintained that during an actual engagement with the enemy the navigating officer of a ship of war was under a common law duty to avoid harm to such non combatant ships as might appear in the theatre of operations: To concede that any civil liability can rest upon a member of the armed forces for supposedly negligent acts or omissions in the course of an actual engagement with the enemy is opposed alike to reason and to policy. But the principle cannot be limited to the presence of the enemy or to occasions when contact with the enemy has been established. Warfare perhaps never did admit of such a distinction, but now it would be quite absurd. The development of the speed of ships and the range of guns were enough to show it to be an impracticable refinement, but it has been put out of question by the bomber, the submarine and the floating mine. The principle must extend to all active operations against the enemy. At p 362 he acknowledged that it might not be easy under conditions of modern warfare to say in a given case upon which side of the line an act or omission falls. But the uniform tendency of the law had been to concede to the armed forces complete legal freedom in the field, that is to say in the course of active operations against the enemy, so that the application of private law by the ordinary courts may end where the active use of arms begins. Starke J said at pp 355 356 that acts done in the course of operations of war are not justiciable and that this had been decided by Ex P D F Marais [1902] AC 109, where the Judicial Committee of the Privy Council applied the test of whether actual war was raging at the time of the incident. In Groves v Commonwealth (1982) 150 CLR 113, para 3 Gibbs CJ said that he had no difficulty in accepting the correctness of what was said by Dixon J: To hold that there is no civil liability for injury caused by negligence of persons in the course of an actual engagement with the enemy seems to me to accord with common sense and sound policy. In Mulcahy v Ministry of Defence [1996] QB 732 Neill LJ said at p 746 that it seemed to have been recognised in the Australian cases that warlike activities fell into a special category. He concluded at p 748 that an English court should approach a claim of negligence by a soldier who was injured while a gun of whose team he was a member was fired into Iraq during the first Iraq war in the same way as in the High Court of Australia did in the Shaw Savill case. At pp 749 750 he examined what the position would have been, in the absence of the Australian cases, as to whether it would have been fair, just or reasonable to impose a duty of care on one soldier in his conduct to another when engaging the enemy during hostilities. Echoing the words of Gibbs CJ in Groves, he reached the same conclusion, as there was no duty on the defendants in battle conditions to maintain a safe system of work. Sir Iain Glidewell said at p 751 that at common law one soldier does not owe a duty of care to another member of the armed forces when engaging the enemy in the course of hostilities. In his judgment in this case, at para 93, Owen J referred to his judgment in Multiple Claimants v The Ministry of Defence [2003] EWHC 1134 (QB) in which he drew from the cases the proposition that the immunity is not limited to the presence of the enemy or the occasions when contact with the enemy has been established. It extends to all active operations against the enemy in which service personnel are exposed to attack or the threat of attack, including the planning and preparation for the operations in which the armed forces may come under attack or meet armed resistance. He qualified the latter part of this proposition by saying that the extension of the immunity to the planning of and preparation for military operations applied to the planning of and preparation for the operations in which injury was sustained, and not to the planning and preparation in general for possible unidentified further operations. (c) discussion: combat immunity There is not much by way of close reasoning in Shaw Savill and Groves, apart from assertions that where combat immunity applies the doctrine is justified by reason and policy. But the doctrine itself, as explained in Mulcahy, is not in doubt. The question is as to the extent of the immunity. With great respect, I doubt the soundness of the extension of it that in the Multiple Claimants case Owen J drew from the very few cases on this topic. They included Burmah Oil Co Ltd v Lord Advocate [1965] AC 75, where the House held that the destruction of oil installations to avoid their falling into the hands of the enemy did not fall into the category of damage done during the course of battle. That was a very unusual case, which does not really bear on the issue we have to decide. It seems to me that the extension of the immunity to the planning of and preparation for the operations in which injury was sustained that the judge seems to have favoured is too loosely expressed. It could include steps taken far away in place and time from those operations themselves, to which the application of the doctrine as a particular application of what is just, fair and reasonable would be at the very least questionable. Such an extension would also go beyond the situations to which the immunity has so far been applied. In Bici v Ministry of Defence [2004] EWHC 786 (QB), para 90, Elias J noted that combat immunity was exceptionally a defence to the government, and to individuals too, who take action in the course of actual or imminent armed conflict and cause damage to property or death or injury to fellow soldiers or civilians. It was an exception to the principle that was established in Entick v Carrington (1765) 19 State Tr 1029 that the executive cannot simply rely on the interests of the state as a justification for the commission of wrongs. In his opinion the scope of the immunity should be construed narrowly. That approach seems to me to be amply justified by the authorities. The Challenger claims are about alleged failures in training, including pre deployment and in theatre training, and the provision of technology and equipment. They are directed to things that the claimants say should have been done long before the soldiers crossed the start line at the commencement of hostilities. The equipment referred to consists of target identity devices to provide automatic confirmation as to whether a vehicle is a friend or a foe, and situation awareness equipment that would permit tank crews to locate their position and direction of sight accurately. The claim is that, if the Challenger II tanks that were involved in this incident had been provided with this equipment before they went into action, the claimants tank would not have been fired on. The training referred to is described as recognition training. It is said that this should have been provided pre deployment and in theatre. Here too the essence of the claim is that these steps should have been taken before the commencement of hostilities. The claimants are careful to avoid any criticism of the actions of the men who were actually engaged in armed combat at the time of the incident. The question which these claims raise is whether the doctrine of combat immunity should be extended from actual or imminent armed conflict to failures at that earlier stage. I would answer it by adopting Elias Js point, with which Owen J agreed in para 99 of his judgment in this case, that the doctrine should be narrowly construed. To apply the doctrine of combat immunity to these claims would involve an extension of that doctrine beyond the cases to which it has previously been applied. That in itself suggests that it should not be permitted. I can find nothing in these cases to suggest that the doctrine extends that far. In the Shaw Savill case the argument for the Commonwealth at the demurrer stage was that at the time of the collision the warship was engaged in active naval operations against the enemy, that those operations were urgently required and necessary for the safety of the realm and that the national emergency called for the taking of the measures that the warship adopted. Both vessels were said to have been proceeding without any navigation or other lights, in pursuance of instructions from the Australian naval authorities which had been authorised to give them as part of the Crowns function of waging war by sea and protecting vessels from enemy action. It was not said where the enemy were, or what exactly the warship was doing when the collision occurred. But the phrase active naval operations against the enemy makes the point that it was assumed that it occurred during, and not before, the vessels engagement in those operations. The fact that the Commonwealth was ultimately found liable at trial suggests that the judge found that at the material time the warship was not, after all, engaged in actual operations against the enemy. The accident in Mulcahys case occurred while the gun was being fired into Iraq during, and not before, the actual engagement with the enemy. Then there is the point that, as was noted in Jones v Kaney [2011] UKSC 13, [2011] 2 AC 398, paras 108 and 161, any extension of an immunity needs to be justified. It has to be shown to be necessary. Starke J observed in the Shaw Savill case at p 354 that not every warlike operation done in time of war is an operation or an act of war. It is to operations or acts of war only that the doctrine extends, on the ground that the armed forces must be free to conduct such operations without the control or interference of the courts of law. As Dixon J said in the same case at p 361, no one can imagine a court undertaking the trial of an issue as to whether a soldier on the field of battle or a sailor fighting on his ship might reasonably be more careful to avoid causing civil loss or damage. The principle, as he described it, is not limited to acts or omissions in the course of an actual engagement with the enemy. It extends to all active operations against the enemy. While in the course of actually operating against the enemy, the armed forces are under no duty of care to avoid causing loss or damage to those who may be affected by what they do. But, as Dixon J also said at p 362, there is a real distinction between actual operations against the enemy and other activities of the combatant services in time of war. He referred by way of example to a warship proceeding to her anchorage or manoeuvring among other ships in a harbour. At that stage no reason was apparent for treating her officers as under no civil duty of care, remembering always that the standard of care is that which is reasonable in the circumstances. The same point can be made about the time when the failures are alleged to have taken place in the Challenger claimants case. At the stage when men are being trained, whether pre deployment or in theatre, or decisions are being made about the fitting of equipment to tanks or other fighting vehicles, there is time to think things through, to plan and to exercise judgment. These activities are sufficiently far removed from the pressures and risks of active operations against the enemy for it to not to be unreasonable to expect a duty of care to be exercised, so long as the standard of care that is imposed has regard to the nature of these activities and to their circumstances. For this reason I would hold that the Challenger claims are not within the scope of the doctrine, that they should not be struck out on this ground and that the MOD should not be permitted, in the case of these claims, to maintain this argument. The Ellis common law claim relates to a different phase of the United Kingdoms engagement in Iraq, but it was a phase during which there was a constant threat of enemy action by insurgents which was liable to cause death or injury. These claims are less obviously directed to things done away from the theatre in which Pte Ellis was engaged at the time of his death: see para 12, above. Their wording suggests that at least some of the failures alleged may have been due to decisions taken by local commanders during active operations on the ground. If that was the situation, it may be open to argument that these claims are within the doctrine. As Moses LJ recognised in the Court of Appeal, para 63, factual issues of that kind must be left for determination at the trial. The information that would be needed for a decision either way is lacking at this stage. As in the case of their claims under article 2 of the Convention, the details that are needed to place the claims in context will only emerge if evidence is permitted to be led in support of them. So I would hold that it would be premature for these claims to be struck out on the ground of combat immunity. I would leave this issue open to further argument in the light of the evidence. (d) discussion: fair, just and reasonable Mr Eadie QC also renewed the argument that was advanced below that the common law claims should be struck out on the ground that it would not be fair, just and reasonable to impose a duty of care at common law to protect against such death or injury as occurred in these cases. He referred, for example, to Van Colle v Chief Constable of Hertfordshire Police [2008] UKHL 50, [2009] AC 225, Brooks v Comr of Police of the Metropolis [2005] UKHL 24, [2005] 1 WLR 1495 and Stovin v Wise [1996] AC 923 in support of this part of his argument. In Brooks, para 30 Lord Steyn affirmed what he described as the core principle in Hill v Chief Constable of West Yorkshire [1989] AC 53, where it was held on grounds of public policy that the police did not owe legal duties to victims or witnesses in the performance of their function in keeping the Queens peace: see also Elguzouli Daf v Commissioner of Police of the Metropolis [1995] QB 335, where Lord Steyn held, also on grounds of public policy, that the Crown Prosecution Service did not owe a duty of care to those whom it was prosecuting; and Hughes v National Union of Mineworkers [1991] ICR 669, where May J held that it would be detrimental to the public interest if police officers charged with deploying of other officers in times of serious public disorder were to have to concern themselves with possible negligence claims from their subordinates. These can all be seen as cases where, for reasons of public policy, it was not fair, just or reasonable for the defendant to be under a duty of care to avoid injury. The closest the cases have come to applying that reasoning to cases involving members of the armed forces is Mulcahy v Ministry of Defence [1996] QB 732, where Neill LJ said at p 750 that there was no duty on the defendants in battle conditions to maintain a safe system of work and Sir Iain Glidewell said at p 751 that one soldier does not owe to another a duty of care when engaged in battle conditions. As in the other cases, the question whether a duty should be held not to exist depends on the circumstances on who the potential claimants are and when, where and how they are affected by the defendants acts. The circumstances in which active operations are undertaken by our armed services today vary greatly from theatre to theatre and from operation to operation. They cannot all be grouped under a single umbrella as if they were all open to the same risk, which must of course be avoided, of judicialising warfare. For these reasons, I think that the question whether the claims in this case fall within the exclusion that was recognised in Mulcahy or any extension of it that can be justified on grounds of public policy cannot properly be determined without hearing evidence. In Van Colle, para 58 Lord Bingham said that one would ordinarily be surprised if conduct which violated a fundamental right or freedom of the individual under the Convention did not find a reflection in a body of law as sensitive to human needs as the common law. So Lord Rodgers observation in Catherine Smith, para 126 that there would be reason to believe that the military authorities may have failed in their article 2 duty if a soldier dies as a result of friendly fire from other British forces is capable of being read across as indicating that the question in the case of the Challenger claims is not whether a duty was owed but whether, on the facts, it was breached. Whether the situation in Iraq at the time of the incidents that gave rise to the Ellis claims was comparable to battle conditions when a nation is at war is a matter that also needs to be investigated. It needs to be emphasised, however, that the considerations mentioned in paras 64 66 and 76 81, above in the context of the claims made under article 2 of the Convention are just as relevant in the context of the common law claims. Close attention must be paid to the time when the alleged failures are said to have taken place, and to the circumstances in which and the persons by whom the decisions that gave rise to them were taken. It will be easier to find that the duty of care has been breached where the failure can be attributed to decisions about training or equipment that were taken before deployment, when there was time to assess the risks to life that had to be planned for, than it will be where they are attributable to what was taking place in theatre. The more constrained he is by decisions that have already been taken for reasons of policy at a high level of command beforehand or by the effects of contact with the enemy, the more difficult it will be to find that the decision taker in theatre was at fault. Great care needs to be taken not to subject those responsible for decisions at any level that affect what takes place on the battlefield, or in operations of the kind that were being conducted in Iraq after the end of hostilities, to duties that are unrealistic or excessively burdensome. The sad fact is that, while members of the armed forces on active service can be given some measure of protection against death and injury, the nature of the job they do means that this can never be complete. They deserve our respect because they are willing to face these risks in the national interest, and the law will always attach importance to the protection of life and physical safety. But it is of paramount importance that the work that the armed services do in the national interest should not be impeded by having to prepare for or conduct active operations against the enemy under the threat of litigation if things should go wrong. The court must be especially careful, in their case, to have regard to the public interest, to the unpredictable nature of armed conflict and to the inevitable risks that it gives rise to when it is striking the balance as to what is fair, just and reasonable. Conclusion For these reasons I would allow the Snatch Land Rover claimants appeal against the decision of the Court of Appeal that the soldiers in these cases were not within the United Kingdoms jurisdiction for the purposes of article 2 of the Convention at the time of their deaths. I would, however, dismiss the MODs application that the Snatch Land Rover claims should be struck out on the ground that the claims are not within the scope of that article. I would dismiss the MODs application that the Challenger claims should be struck out on the ground of combat immunity and on the ground that it would not be fair, just or reasonable to extend the duty of care to those cases. I would also dismiss the MODs cross appeal against the decision of the Court of Appeal to dismiss its application to strike out the Ellis claim based on negligence. LORD MANCE (with whom Lord Wilson agrees) Introduction This first issue is whether soldiers in the British army are within the jurisdiction of the United Kingdom when serving both on and off base in Iraq for the purposes of article 1 of the European Convention on Human Rights. On this issue, I am in complete agreement with Lord Hope. I have nothing to add to what he says in his paragraphs 17 55. On this basis, this case raises once again for consideration the difficult line or inter relationship between national law and substantive Convention rights, to which I referred in Rabone v Pennine Care NHS Trust [2012] UKSC 2; [2012] 2 AC 72, para 121. It is in general terms clear from Strasbourg jurisprudence that article 2 of the Human Rights Convention includes substantive duties on the part of the state, namely (a) a systems or framework duty, viz to establish a framework which is appropriately protective of life and (b) an operational duty, viz in appropriate circumstances, a positive duty to take preventive operational measures to protect an individual whose life is at risk: Watts v United Kingdom (2010) 51 EHRR SE66, para 82. Although the operational duty was said in Osman v United Kingdom (1998) 29 EHRR 245 to apply in certain well defined circumstances, the subsequent recognition of its application in new sets of circumstances (including by this Court in Rabone) leaves its scope uncertain. As Lady Hale notes in Rabone, para 97 99, it is conceivable that the Strasbourg jurisprudence accepts or is moving towards a broad principle that engages article 2 and requires the state to react reasonably in any situation where the state knows or ought to know of a real and immediate threat to human life. It is also unclear how far the two substantive duties are separated, with middle ground between them, or form part of a continuum covering almost every aspect of state activity. In neryildiz v Turkey (2005) 41 EHRR 325, paras 89 90 the Strasbourg court treated the framework duty as indisputably apply[ing] in the particular context of dangerous activities, where special emphasis must be placed on regulations geared to the special features of the activity in question, adding that They must govern the licensing, setting up, operation, security and supervision of the activity and must make it compulsory for all concerned to take practical measures to ensure the effective protection of citizens whose lives might be endangered by the inherent risks. On the other hand, there are some circumstances in which death occurs as a result of the activities of state agents, but article 2 is not engaged. They include casual errors of judgment or acts of negligence (which I described in R (Catherine Smith) v Oxfordshire Assistant Deputy Coroner [2010] UKSC 29; [2011] 1 AC 1, para 201, as operational as opposed to systematic failures), a principle established in the context of medical negligence. The present appeal concerns the operation and application of the principles of common law negligence and of article 2 in a factual context which is very largely uncharted by previous authority. The right approach is I believe to take first the common law position. A primary aspect of the framework duty on states is to have a legislative and administrative framework appropriately protective of life: neryildiz, para 89, quoted in Rabone, para 12. So article 2 naturally directs attention first to the question whether domestic law provides such a framework, including the recourse to compensation for non pecuniary damages which the Strasbourg court has indicated should in principle be available as part of the range of redress where a state is held responsible for a death: Z v United Kingdom (2001) 34 EHRR 97, para 109. The claims I gratefully adopt Lord Hopes summary of the various claims in paras 9 to 12 of his judgment. Some preliminary observations may be made. First, although the Challenger claims are based only on allegations of lack of technology, equipment and/or training, the Particulars of Claim alone show that the factual circumstances of these sad deaths would require examination and that failings on the ground of those with command over the firing tank are in fact held directly responsible for such deaths. In particular, it is alleged that Major McDuff under whose command the firing tank fell was told of the presence of the tanks subsequently fired upon and had such tanks visually identified to him, that he was shown, but refused to accept, the boundaries of responsibility marked on a map which had been given to such tanks and that he failed to communicate any of this information to anyone, with the result that, some 12 hours later, the firing tank wrongly identified the tanks fired on as enemy. Second, the particulars relied upon in Mrs Smiths claim under article 2 include both decisions or omissions on the ground and equipment and tactical decisions at a higher level. Third, the particulars relied upon in the Ellis claims in negligence and/or under article 2 relate mainly at least to equipment and tactical decisions at a higher level (although they also embrace allegations as to what equipment should have been used if available). As pleaded, the complaint regarding the decision to deploy Snatch Land Rovers on the patrol might be read as a complaint about a decision made on the ground. But their case (para 188) explains that it relates to a decision made well away from the heat of battle at a time when the decision maker was neither under attack nor threat of attack. It did not form part of the planning of this particular patrol. Common law The questions arising are (i) the existence and scope of any common law responsibility on the part of the state towards its soldiers, in particular in respect of deaths in active service and (ii) the nature and scope of any common law doctrine of combat immunity. The claimants starting point is that the state owes to its soldiers a general duty to take appropriate measures to secure their safety, like that owed by any other employer, and that it must also answer vicariously for any breach of duty by one soldier killing or injuring another. It is only therefore by virtue of some exceptional immunity that the state can escape liability for breach of any such duty, and the only principle giving any such immunity is a limited principle of combat immunity. That the Crown is in tort generally in the same position as any employer follows from s.2 of the Crown Proceedings Act 1947, providing Liability of the Crown in tort. (1) 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: (a) in respect of torts committed by its servants or 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. However, there is authority that where actual war is raging acts done by the military authorities are not justiciable by the ordinary tribunals: Ex p Marais [1902] AC 109, 114. That was a case of alleged wrongful detention where the Privy Council declared that the principle applied where martial law had been declared, even though the military commander had allowed ordinary courts, before which the claimant might have been brought, to continue in operation. In Burmah Oil Co Ltd v Lord Advocate [1965] AC 75, Lord Reid recognised (at p 110) an exception (to the Crowns liability to pay compensation for property seized or destroyed) in relation to battle damage consisting of accidental or deliberate damage done in the course of fighting operations. In Shaw Savill & Albion Co Ltd v Commonwealth (1940) 66 CLR 344, Ex p Marais was cited by Starke and Williams JJ, but all the members of the High Court also assimilated the question of justiciability with the question whether the state owed a legal duty to take care in the particular circumstances. Starke J stated that it is for the court to determine whether a state of war exists and whether the matters complained of were done or omitted in the conduct of an operation or act of war. He added (consistently with Ex p Marais) that the immunity arising from conduct of war cannot be confined to the theatre of operations where combatants are actively engaged: it must extend, in modern times, to all theatres in which action on the part of the Kings enemies is imminent. In terms of the modern law of tort, the right analysis is, I consider, that combat immunity is not so much an entirely separate principle as the result of a general conclusion that it is not fair, just or reasonable to regard the Crown or its officers, soldiers or agents as under a duty of care to avoid injury or death in their acts or omissions in the conduct of an active military operation or act of war. That is how the matter was seen in Mulcahy v Ministry of Defence [1996] QB 732. The Court of Appeal there, rightly in my view, followed the approach in Shaw Savill in holding that a gun commander firing live rounds into Iraq during the first Gulf War in 1991 owed the claimant, a serving soldier in the same team, no duty of care for breach of which the Ministry could be held vicariously liable. It held equally that the Ministry itself owed the claimant no duty to maintain a safe system of work. Among the points considered in Mulcahy was whether the repeal of the immunity in tort formerly provided by section 10 of the Crown Proceedings Act 1947, subject to the right (never yet utilised) to revive section 10 for all or limited purposes under s.2 of the Crown Proceedings (Armed Forces) Act 1987 bore on the existence or scope of any doctrine of combat immunity. Neill LJ held it did not, because it was still necessary to consider the common law position. I agree. In Bici v Ministry of Defence [2004] EWHC 786 (QB), concerning the killing of two civilians by British soldiers during the course of peace keeping operations in Kosovo, Elias J treated separately the doctrine of combat immunity and the question whether there existed a duty of care, viewing the former as an exclusion of justiciability and so as a doctrine to be strictly confined on constitutional grounds. But on that basis it was still necessary to consider whether any duty of care existed. Elias J held it did, because the case involved the single question whether the soldiers were justified in firing on the civilians, and there was no basis for concluding that they did not owe a duty of care in doing so: Troops he said (para 104) frequently have to carry out difficult and sensitive peace keeping functions, such as in Northern Ireland, whilst still being subject to common law duties of care. The difficulties of their task are reflected in the standard of the duty rather than by denying its applicability. As Lord Hope has noted, the cases on combat immunity are focused on acts or omissions occurring and causing injury or death in the course of hostilities. In the present case the Challenger claimants are careful to put their case in a way which relies solely on allegedly negligent conduct occurring prior to and distant from the actual hostilities, and involving failures, in Whitehall or elsewhere, properly to equip and train the soldiers sent to fight in Iraq. The same applies, at least for the most part, to the Ellis claims. The question is whether the state, or indeed those of its officers responsible for procurement and training decisions, owe any duty of care in respect of injury or death in the course of combat operations allegedly attributable to their negligence in the performance of such responsibility. This is a question of public policy about the answer to which Lord Rodger (at para 127), with whom Lord Walker expressly agreed (at para 131), can, I think, have had no doubt in R (Catherine Smith) v Oxfordshire Assistant Deputy Coroner [2010] UKSC 29, [2011] 1 AC 1. Although they were addressing explicitly the position under article 2, they cannot have thought that their remarks were or could be made irrelevant simply be reformulating a claim in negligence. It is not difficult to identify situations in which the common law has concluded on policy grounds that no duty of care should exist. I agree with all that Lord Carnwath has said in this connection in paras 161 to 175 of his judgment. In Hill v Chief Constable of West Yorkshire [1989] AC 53, the House held that the police had owed no enforceable duty of care with respect to the last victim of the Yorkshire Ripper, properly to investigate the crimes committed by the Yorkshire Ripper before the murder of, and so to save the life of, the last victim. Lord Keith said, at p 63: From time to time they [the police] make mistakes in the exercise of that function, but it is not to be doubted that they apply their best endeavours to the performance of it. In some instances the imposition of liability may lead to the exercise of a function being carried on in a detrimentally defensive frame of mind. The possibility of this happening in relation to the investigative operations of the police cannot be excluded. Further it would be reasonable to expect that if potential liability were to be imposed it would be not uncommon for actions to be raised against police forces on the ground that they had failed to catch some criminal as soon as they might have done, with the result that he went on to commit further crimes. While some such actions might involve allegations of a simple and straightforward type of failure for example that a police officer negligently tripped and fell while pursuing a burglar others would be likely to enter deeply into the general nature of a police investigation, as indeed the present action would seek to do. The manner of conduct of such an investigation must necessarily involve a variety of decisions to be made on matters of policy and discretion, for example as to which particular line of inquiry is most advantageously to be pursued and what is the most advantageous way to deploy the available resources. Many such decisions would not be regarded by the courts as appropriate to be called in question, yet elaborate investigation of the facts might be necessary to ascertain whether or not this was so. A great deal of police time, trouble and expense might be expected to have to be put into the preparation of the defence to the action and the attendance of witnesses at the trial. The result would be a significant diversion of police manpower and attention from their most important function, that of the suppression of crime. Closed investigations would require to be reopened and retraversed, not with the object of bringing any criminal to justice but to ascertain whether or not they had been competently conducted. In Brooks v Comr of Police of the Metropolis [2005] 1 WLR 1495, the House applied similar reasoning when holding that the police have no duty of care not to cause by positive acts or omissions harm to victims of serious crime, or witnesses to serious crime, with whom they have contact. Lord Steyn said (para 30): It is, of course, desirable that police officers should treat victims and witnesses properly and with respect: compare the Police (Conduct) Regulations 2004 (SI 2004/645). But to convert that ethical value into general legal duties of care on the police towards victims and witnesses would be going too far. The prime function of the police is the preservation of the Queen's peace. The police must concentrate on preventing the commission of crime; protecting life and property; and apprehending criminals and preserving evidence: . A retreat from the principle in Hill's case would have detrimental effects for law enforcement. Whilst focusing on investigating crime, and the arrest of suspects, police officers would in practice be required to ensure that in every contact with a potential witness or a potential victim time and resources were deployed to avoid the risk of causing harm or offence. Such legal duties would tend to inhibit a robust approach in assessing a person as a possible suspect, witness or victim. By placing general duties of care on the police to victims and witnesses the police's ability to perform their public functions in the interests of the community, fearlessly and with despatch, would be impeded. It would, as was recognised in Hill's case, be bound to lead to an unduly defensive approach in combating crime. Van Colle v Chief Constable of the Hertfordshire Police (Secretary of State for the Home Department intervening) [2008] UKSC 50, [2009] AC 225 is a further case in which there was in Lord Hopes words a highly regrettable failure to react to a prolonged campaign by Jeffrey threatening the use of extreme criminal violence against Mr Smith, which in the event did culminate in Jeffrey attacking Mr Smith and very severely injuring him. The House again applied the approach in Hill and Brooks in concluding that there was no actionable duty of care. In all these cases the existence of a duty of care was negatived, although it could not be said that the police action or inaction occurred in the heat of the moment and the failings occurred over considerable periods when the police had the opportunity to think about and investigate the position and take protective measures. In Multiple Claimants v Ministry of Defence [2003] EWHC 1134 (QB), it was claimed that the Ministry was in breach of a duty of care to provide service personnel with a safe system of work. Owen J considered (para 2.C.16) that In aggressive operations the objective will be defeat of the enemy; in defensive operations the successful repulse of the enemy. In the planning of and preparation for such operations the interests of service personnel must be subordinate to the attainment of the military objective. In my judgment the military cannot be constrained by the imposition of civil liability in the planning of and preparation for such operations any more than in their execution. The planning of and preparation for military operations will include decisions as to the deployment of resources. On that basis, he dismissed a claim that the Ministry had failed to make proper arrangements for psychiatric support in combat on the basis that Decisions as to the deployment of medical resources in operations in which service personnel may engage in hostilities fall within the combat immunity . (para 10.12). However, he disagreed with the Ministrys more extended submission that no cause of action can arise in relation to injury sustained in combat irrespective of whether the acts or omissions to which such injury is attributable fall within the combat immunity (para 2.C.18). He reiterated his view on this point in his judgment at first instance in the present cases concerning the Challenger and Ellis claims. Mr Eadie QC takes issue with Owen J on the point. However, it was explained by Owen J with an example which suggests that he had in mind a relatively narrow situation not presently relevant. The explanation was in these terms: If the restriction to the duty of care does not arise on the facts, and a claimant is able to demonstrate breach of duty resulting in injury and consequential loss and damage, it is immaterial that the injury was sustained in the course of combat. The question with regard to the injury is then simply one of causation; is it attributable to the breach of duty? The point can be illustrated by reference to the claimants' contention that the MoD was under a duty to devise and implement a system for screening recruits so as, and I paraphrase, to eliminate those vulnerable to stress, and that as a result of breach of that duty recruits who should have been rejected were enlisted, and subsequently sustained psychiatric injury when exposed to the trauma of battle. If that contention is well founded, it will obviously not be open to the MoD to argue that the combat immunity applies to the relevant acts or omissions. The injury will have been sustained in combat; but the exposure to stress in combat is simply the mechanism by which the breach causes injury. In considering the Challenger claims and the Ellis claim for negligence, Owen J referred to his previous decision in Multiple Claimants as well as to Elias Js decision in Bici. He accepted the latter as standing for the proposition that any exception on grounds of combat immunity should be narrowly construed. He confined the extension of the doctrine of combat immunity, recognised in Multiple Claimants, to the planning and preparation of the particular operations in which injury was sustained, as opposed to planning and preparation made . in general for possible unidentified further military operations (para 94). He was not persuaded that the fact that the equipment claims were likely to give rise to issues of procurement and allocation of resources demonstrated conclusively that it would not be fair, just and reasonable to impose the duties of care for which the claimants contend (para 107). He was not persuaded that either the equipment or the claims based on lack of pre deployment training had no real prospect of success. He thought that different considerations might apply to the claims so far as based on lack of in theatre training, but that this issue would be better determined by the trial judge. He struck out the Ellis claim for negligence in para 26.1 (failure to limit patrols to other vehicles) as falling squarely within combat immunity. The Court of Appeal upheld Owen Js conclusion that the equipment and training claims arguably fall outwith the scope of combat immunity, and also allowed the appeal in respect of para 26.1. Three points arise. First, in my opinion, the decisions below underestimate the inevitable inter linking of issues relating to the supply of technology and equipment and to training for active service with decisions taken on the ground during active service. As noted in para 110 above, it is not possible to consider the Challenger claims without considering the conduct of those on the ground. If it were suggested, as might be possible, that the real cause of the incident was the failings of a local commander, the court would, on the claimants case, find itself having to adjudicate on this suggestion in order to establish whether there was any relevant causative failure regarding the prior supply of equipment or training. As Lord Hope notes (para 91), the claimants have, quite naturally, been careful not to make any criticism of those actually engaged on the ground. But that indicates, rather than resolves, the problem. The proper attribution of responsibility cannot depend upon how a claimant frames his case. The Ministry of Defence could itself advance a case that the real cause was not the fault of someone responsible for procurement, but of someone on the ground. In any event, as the present pleadings show, all the facts would be laid before the court, which would have to decide upon causation looking at them as a whole. Allegations about procurement cannot in the case of the Challenger claims be divorced from consideration of the conduct of those using the equipment on the ground. Lord Hope recognises this in paragraph 80, but draws the opposite conclusion to that which I would draw. He considers that all such circumstances must be evaluated with a view to striking a balance between competing considerations (paras 61, 78 80 and 98 99). I would conclude the opposite that all such circumstances are inter related and essentially non justiciable. Second, Mr Hermer QC for the Challenger claimants accepts that tactical decisions, wherever taken, are not actionable. Mr Hermer must on any view be correct, I consider, on this point. But, if so, it opens the question in relation to the Snatch Land Rover claim by Ms and Mrs Ellis whether a complaint of failure to supply a better armoured or equipped vehicle is not really a complaint about tactics. (In contrast to Mr Hermer, Mr Weir QC for the Smith and Ellis claimants would confine combat immunity so narrowly that it could not embrace in the case of the Ellis claimants either a question why allegedly available equipment (Element A) was not fitted to Private Elliss Snatch Land Rover on the day of the casualty or a question why the patrol to the Iraqi police station was not delayed a day or two to enable it to be fitted.) Third, both in that connection and more widely, I consider that Owen J was clearly right to conclude in Multiple Claimants that the military cannot be constrained by the imposition of civil liability in the planning of and preparation for such operations any more than in their execution. The planning of and preparation for military operations will include decisions as to the deployment of resources. I would also refer to cautionary words of Lord Keith in Rowling v Takaro Properties Ltd [1988] AC 473, 502D F: The third [matter] is the danger of overkill. It is to be hoped that, as a general rule, imposition of liability for negligence will lead to a higher standard of care in the performance of the relevant type of act; but sometimes not only may this not be so, but the imposition of liability may even lead to harmful consequences. In other words, the cure may be worse than the disease. The claims that the Ministry failed to ensure that the army was better equipped and trained involve policy considerations of the same character as those which were decisive in Hill, Brooks and Van Colle. They raise issues of huge potential width, which would involve courts in examining procurement and training policy and priorities over years, with senior officers, civil servants and ministers having to be called and to explain their decisions long after they were made. Policy decisions concerning military procurement and training involve predictions as to uncertain future needs, the assessment and balancing of multiple risks and the setting of difficult priorities for the often enormous expenditure required, to be made out of limited resources. They are often highly controversial and not infrequently political in their nature. These may well also be influenced by considerations of national security which cannot openly be disclosed or discussed. Lord Rodger summarised the position in relation to responsibility, accountability and investigation in Catherine Smith (para 127) in terms with which, as I have said, Lord Walker agreed, as I also do: Once it is established, say, that a soldier died because the blast from a roadside bomb penetrated the armour plating on his vehicle, it may well be inferred that he would not have died if the plating had been stronger. And that simple fact may be worth pointing out as a possible guide for the future. But questions, say, as to whether it would have been feasible to fit stronger protection, or as to why the particular vehicles were used in the operation or campaign, or as to why those vehicles, as opposed to vehicles with stronger protection, were originally purchased by the Ministry of Defence, or as to whether it would have been better to have more helicopters available etc, all raise issues which are essentially political rather than legal. That being so, a curious aspect of counsel's submissions before this court was the complete absence of any reference to Parliament as the forum in which such matters should be raised and debated and in which ministers should be held responsible. Of course, in consequence of pressure brought to bear by Parliament, the government might set up an independent inquiry with wide terms of reference to look into all aspects of a situation, including the political aspects. Also in Catherine Smith Lord Brown at para 146 asked rhetorically: Is it really to be suggested that even outside the area of the Council of Europe Strasbourg will scrutinise a contracting state's planning, control and execution of military operations to decide whether the state's own forces have been subjected to excessive risk (risk, that is, which is disproportionate to the objective sought) ? May Strasbourg say that a different strategy or tactic should have been adopted perhaps the use of airpower or longer range weaponry to minimise the risk to ground troops notwithstanding that this might lead to higher civilian casualties? The question was asked in the context of jurisdiction, but, jurisdiction having been established under article 1, both the question and Lord Browns evident scepticism remain relevant. The claimants case is that during or after any war any injured soldier or the relatives or dependants of any soldier killed in combat could sue the state for alleged failures in the preparation or equipping of the armed forces for combat. Logically, if that is so, then a soldier might, even during the war, complain that his or her equipment or training was inadequate and that it would be a breach of the states common law duty of care and/or duties under the Human Rights Convention even to order him or her to go into combat with it. If domestic legislation compelled this, then the soldier could seek relief in the Strasbourg court maybe even interim relief prohibiting the further use or giving of orders to use the allegedly defective equipment. One may also recall the facts of R v Jones (Margaret) [2006] UKHL 16; [2007] 1 AC 136, where protestors sought to disrupt Fairford Airbase in order to prevent intervention in Iraq, and pleaded in defence that they were preventing the international crime of aggression. Pointing to defective equipment and seeking to ban its use could have a considerable disruptive effect. Not only would there be a huge potential diversion of time and effort in litigation of such issues in an area of essential national interest (whether before, during or after hostilities). There must be risks that the threat of exhaustive civil litigation following any active military operation would affect decision making and lead to a defensive approach, both at the general procurement and strategic stages and at the tactical and combat stages when equipment was being deployed. The duties of care owed by soldiers to civilians during peace keeping operations or by the state to its soldiers in peace are not in issue and raise different considerations. I examined some of the cases which the Strasbourg court has decided in this area in para 196 of my judgment in Catherine Smith. When considering whether a duty of care exists, it is always relevant to ask in what context and to avoid what consequences. (Compare in another branch of the law South Australia Asset Management Corporation v York Montague Ltd [1997] AC 191 and Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No 2) [1997] 1 WLR 1627.) Equipment should at least be safe and training adequate for peacetime training and activities, and its adequacy in the face of enemy action will not be tested in the same way. But procurement and training decisions and priorities are geared primarily to the needs and risks inherent in active military operations, when enemy activity will be aimed at killing British soldiers in as many unexpected ways as possible. It is after a death or injury occurring in such operations that, as the present cases show, questions can be raised as to whether different technology, equipment or training or different decisions regarding deployment and use of equipment like vehicles might not have made all the difference to the incidence of the death or injury. The relevant question for present purposes is therefore whether the state owed a duty of care to avoid the death or injury during the course of active service which actually occurred. It will often not be difficult with hindsight to point to different decisions that might have been made or preparations made. Would the disaster of Isandlwana have been avoided had the army command equipped Lord Chelmsfords forces with the heliograph? Or was the cause the failure to form a laager? Or the deployment of troops over too wide a perimeter? Or the lack of screwdrivers to open the ammunition boxes quickly enough? And would many disastrous casualties of the First World War have been avoided if the War Office had recognised the significance of the proposal for a tank put to it in 1912, 1914 and 1916 by the Australian engineer Lancelot de Mole of whom a post war Commission on Awards to Inventors said in 1919: We consider that he is entitled to the greatest credit for having made and reduced to practical shape as far back as the year 1912 a very brilliant invention which anticipated and in some respects surpassed that actually put into use in the year 1916. It was this claimant's misfortune and not his fault that his invention was in advance of his time, and failed to be appreciated and was put aside because the occasion for its use had not then arisen. Was the fall of Singapore to numerically inferior forces, with the ensuing slaughter and torture, due to culpable failures to fortify the Malay peninsular or landward side of Singapore or to provide armoured vehicles or aircraft to protect both? Or was it due to failures of military commanders on the ground? Or was it inevitable in the context of what Churchill described as our bitter needs elsewhere? To offer as a panacea in relation to these points the injunction that courts should be very cautious about accepting such claims is to acknowledge the problem, but to offer no real solution. Had it been, the same panacea would have been adopted as the solution by the House in Hill, Brooks and Van Colle. My conclusions do not mean that every death or injury occurring in the course of military conflict falls necessarily outside the scope of any duty of care. There will be deaths and injuries occurring during active service which are unconnected with the risks of active combat or which arise, as Owen J recognised was possible (para 123 above), from breaches of duty independent of active combat. An accident arising from a defect in equipment which could just as well have occurred on Salisbury Plain and owed nothing significant to any risk of war would be an example. Private Smiths sad death in Catherine Smith likewise. I consider that that the Challenger claims, which are only in common law negligence, should be struck out in their entirety on the basis that the state owes no such duty of care as alleged with regard to the provision of technology, equipment or training to avoid death or injury in the course of an active military operation. Similarly, with regard to the Ellis claim in negligence, I would hold that there was no such duty of care as alleged regarding the provision of different or differently equipped vehicles or, a fortiori, regarding the deployment on patrol on 28 February 2006 of the Snatch Land Rovers which were deployed. Moses LJ suggested in the Court of Appeal (para 60) that it was necessary to consider the evidence in order to decide when active operations start and when they finish and that Owen J had recognised that the present cases may not fall within the scope of combat immunity. But, so far as this suggests that Owen J doubted whether active operations were afoot at the dates relevant to either the Smith claim (16 July 2005) or the Ellis claim (28 February 2006), it is wrong. No such argument even appears to have been raised before Owen J or before the Court of Appeal, in relation to either claim. Further, in paras 113 114 of his judgment Owen J expressly struck out the Ellis claim, so far as it relied on the failure to limit the patrol, on the basis that combat immunity did apply as at 28 February 2006. Before the Supreme Court, the nearest there is to any suggestion is the elliptical statement made in para 186 of the Ellis case in the context of combat immunity that Private Ellis was not engaged in a major combat operation that had ended in May 2003. He was part of an armed force providing security and stability to a region of Iraq; at the time of his death he was on a patrol returning from a trip to the Iraqi police headquarters in Al Amarah. It is the Ellis claimants case that this activity should be treated as akin to a peace keeping, police or anti terrorist activity so that the ambit of combat immunity should be very tightly constrained around the actual patrol in question. Even that statement does not challenge the existence of a combat operation involving the patrol, and in any event there is no basis for allowing an entirely new point, contrary to the basis on which the matter was put before the judge, to be raised at this stage. I would therefore also hold that the Ellis claim should be struck out in so far as it is made for common law negligence. Article 2 As stated in para 103 above, article 2 is said to involve two substantive obligations: framework and operational. In Stoyanovi v Bulgaria (Application No 42980/04) decided 9 November 2010, the Strasbourg court was concerned with an accidental death in a military training exercise a practice parachute jump during which the deceaseds head hit the aircrafts wheel rendering him unconscious and so unable to open his parachute. The court referred to the operational duty arising, on the authority of Osman v United Kingdom and neryildiz v Turkey, where authorities know or ought to know of a real and immediate risk to life, or of a situation inherently dangerous to life, and to the framework duty in the public health sphere to make regulations compelling hospitals to adopt appropriate measures to protect patients lives and to have an effective independent judicial system to determine the cause of death of patients in hospital and make those responsible accountable. It then went on, at para 61, Positive obligations will vary therefore in their application depending on their context. In the present case, which concerns an accident during a military training exercise, the Court notes that while it may indeed be considered that the armed forces' activities pose a risk to life, this is a situation which differs from those dangerous situations of specific threat to life which arise exceptionally from risks posed by violent, unlawful acts of others or man made or natural hazards. The armed forces, just as doctors in the medical world, routinely engage in activities that potentially could cause harm; it is, in a manner of speaking, part of their essential functioning. Thus, in the present case, parachute training was inherently dangerous but an ordinary part of military duties. Whenever a State undertakes or organises dangerous activities, or authorises them, it must ensure through a system of rules and through sufficient control that the risk is reduced to a reasonable minimum. If nevertheless damage arises, it will only amount to a breach of the State's positive obligations if it was due to insufficient regulations or insufficient control, but not if the damage was caused through the negligent conduct of an individual or the concatenation of unfortunate events (see, for comparison, Kalender v Turkey, Application No 4314/02), 43 47, 15 December 2009). The courts reasoning appears to have been that, in so far as military life is inherently dangerous, there could be no question of any operational duty to prevent that danger. This seems fairly self evident, and is certainly consistent with the Strasbourg courts recognition in other cases of the need to bear in mind the particular characteristics of military life and its effects on the situation of individual members of the armed forces (Engel v The Netherlands (No 1) (1976) 1 EHRR 647, para 54), meaning, for example, also that many acts that would constitute degrading or inhuman treatment in respect of prisoners may not reach the threshold of ill treatment when they occur in the armed forces, provided that they contribute to the specific mission of the armed forces in that they form part of, for example, training for battlefield conditions (Chember v Russia, (Application No 7188/03) (unreported) given 3 July 2008, para 49). However, as the court stated in Stoyanovi, the state must by the same token have a system of rules and sufficient control to reduce the risks to a reasonable minimum. In Kalender v Tutrkey (Application No 4314/02) (unreported) given 15 December 2009, cited by the court, liability under the substantive aspect of article 2, was held to exist in the light of numerous failings in the structure and operation of a railway station, leading to passengers having, without supervision or warning, to disembark and cross a line used by other trains and being killed in the process. Accordingly, it appears that the framework duty may in appropriate circumstances operate at a low level. In domestic contexts where the state is taking armed action affecting or liable to affect third persons, the court has undertaken quite close and in the upshot critical examination of the states conduct. I cited examples in para 196 of my judgment in Catherine Smith: Such cases start with McCann v United Kingdom (1995) I EHRR 97, relating to the shooting by SAS officers of members of the Provisional IRA suspected of planning to attack the Royal Anglian Regiment in Gibraltar, and include Isayeva, Yusupova and Bazayeva v Russia (Applications Nos 57947/00, 57948/00 and 57949/00), 24 February 2005, and Isayeva v Russia (Application No 57950/00), 24 February 2005, relating to the conduct of military operations by the Russian armed forces against Chechen separatist fighters which led to the deaths of civilians. In such cases, it appears that the exigencies of military life go to the standard and performance, rather than the existence of, any Convention duty. The question is whether the Strasbourg court would take a similar attitude to the responsibility of a state for the death of a member of its own armed forces in circumstances alleged to have involved mistaken decisions in the course of an operation or act of war (such as alleged by Mrs Smith in at least paragraphs 26.2 to 26.5 of her claim), or failings in planning or in the equipping or training of such forces (such as alleged by Mrs Smith in paras 26.1 and it seems paras 26.6 and 26.7 of her claim and by the Ellis claimants in probably all three particulars in their para 26). In this connection it is relevant to bear in mind that the Strasbourg court has curtailed the operational duty, so that it does not embrace mere casual acts of negligence, certainly in the field of health care and, as appears logical, in other fields: see my judgment in Catherine Smith, para 201 and the cases there cited, to which can now be added Stoyanovi v Bulgaria (Application No 42980/04), para 61, where the European Court of Human Rights said that a death occurring during an inherently dangerous training activity (parachute jumping) undertaken by a soldier would not involve any breach of article 2 if caused through the negligent conduct of an individual (see para 138 above). Mr Weir QC regretted this qualification as deeply unsatisfactory, and as a manifestation of the fact that (in his words) the search for principle has been called off in this area. An alternative view might be that it would have been better if the Strasbourg court had left the development and application of the law of tort to domestic legal systems, subject to clearly defined criteria, rather than set about creating what amounts in many respects to an independent substantive law of tort, overlapping with domestic tort law, but limited to cases involving death or the risk of death. Be that as it may be, the exception for casual acts of negligence is relevant to show that liability under article 2 can be tailored and limited in what the Strasbourg court regards as appropriate circumstances. In the present circumstances, the question arises whether that the Strasbourg court would regard article 2 in its substantive aspect as making the state liable for the death in combat of one soldier due to alleged negligence of his commander or of another soldier. The prospect of the Strasbourg court reviewing the conduct of combat operations in this way seems to me sufficiently striking, for it to be impossible to give this question a positive answer. If the European Court considers that the Convention requires it to undertake the retrospective review of armed conflicts to adjudicate upon the relations between a state and its own soldiers, without recognising any principle similar to combat immunity, then it seems to me that a domestic court should await clear guidance from Strasbourg to that effect. That leaves for consideration whether the framework duty involves an obligation on the part of the state to exercise due care in the course of planning armed operations, and in equipping and training its armed forces, so as to reduce or limit the risks to life involved in such operations. In my opinion it is not possible to conclude that the Strasbourg court would hold that such matters are justiciable under the Convention, any more than they are at common law. I am not over enamoured of the cautionary warning to this court that the road to Strasbourg is a one way street, which a claimant can tread if this Court has not gone far enough, but which the state cannot tread if this Court goes too far. If it is clear from prior authority or this Court is otherwise confident about what Strasbourg will decide, then we should decide the issue as we believe correct. But in the present very difficult case, two connected considerations lead me to consider that caution is called for. First, having decided that the common law recognises no such duty or care or claims as the claimants advance, we should not lightly conclude, in so important and sensitive an area of national life, that the Strasbourg court would take a different view. Second, since I have no confidence about the scope or application of any positive duties which the Strasbourg court might recognise under article 2 in the area, I believe it would be wrong for this Court to advance way ahead of anything that it has yet decided. It should be for the Strasbourg court to decide whether it will review the procurement and training policy of the British army over recent decades in the context of claims under article 2 for compensation arising from deaths of serving soldiers during active military operations. Support for the view that the Strasbourg court does recognise areas of policy into which the Convention protection does not stretch is afforded by two cases. First, in Taylor v United Kingdom (Application No 23412/94) (unreported) 30 August 1994, the Commission held that article 2 did not require the investigation into the killing by Beverley Allitt, a hospital nurse, of child patients to enquire into the responsibility in the NHS for alleged inadequate systems, resource shortages and weak leadership. In holding the application manifestly ill founded and inadmissible, it stated: The Commission acknowledges that neither the criminal proceedings nor the Inquiry addressed the wider issues relating to the organisation and funding of the National Health Service as a whole or the pressures which might have led to a ward being run subject to the shortcomings apparent on Ward Four. The procedural element contained in article 2 of the Convention however imposes the minimum requirement that where a state or its agents potentially bear responsibility for loss of life, the events in question should be subject to an effective investigation or scrutiny which enables the facts to become known to the public, and in particular to the relatives of any victims. The Commission finds no indication that the facts of this case have not been sufficiently investigated and disclosed, or that there has been any failure to provide a mechanism whereby those with criminal or civil responsibility may be held answerable. The wider questions raised by the case are within the public domain and any doubts which may consequently arise as to policies adopted in the field of public health are, in the Commissions opinion, matters for public and political debate which fall outside the scope of article 2 and the other provisions of the Convention. The second case concerned article 3 of the Convention. In Banks v United Kingdom (2007) 45 EHRR SE2, the ECtHR rejected a claim that article 3 required a public inquiry into allegations of torture and inhuman treatment of prisoners at a UK prison. The Court held that the facts had been sufficiently investigated and that: The wider questions raised by the case as to the background of assaults and the remedial measures apt to prevent any recurrence in a prison in the future are, in the Courts opinion, matters for public and political debate which fall outside the scope of article 3 of the Convention. In my opinion therefore this Court should proceed on the basis that the policy considerations which guide its domestic law in the present area of national interest will find an echo in Strasbourg, and not invade a field which would involve, in the context of claims for civil compensation, extensive and highly sensitive review with the benefit of hindsight the United Kingdoms countrys policies, strategy and tactics relating to the deployment and use of its armed forces in combat. The United Kingdoms performance of its investigatory and procedural duties under article 2 is not in doubt, as attested by the sadly numerous inquests (investigating and recording the circumstances of each death) and the still incomplete Chilcot Enquiry (delayed inter alia it is understood by problems relating to the release or use of documents with national security implications). The issue with which this judgment is concerned is whether deaths and (at common law) injuries in combat fall to be investigated in the civil courts, at whatever level in the armed forces, Whitehall or the government responsibility for them is suggested to arise. The answer I would give is, no. The majority approach I agree with Lord Hope (para 100) about the paramount importance that the work that the armed services do in the national interest should not be impeded by having to prepare for or conduct active operations against the enemy under the threat of litigation if things should go wrong. But I do not consider that the majority approach reflects or meets this imperative. In summary, I understand that this approach: (a) recognises at common law a principle of combat immunity, as excluding liability for negligence in respect of any act or omission on the part of those who are actually engaged in active combat (paragraph 82), since no one can imagine a court undertaking the trial of an issue as to whether a soldier on the field of battle or a sailor on his ship might reasonably be more careful to avoid causing civil loss or damage (para 94); (b) recognises allegations as beyond the reach of article 2 . if they relate to things done or not done when those who might be thought to be responsible for avoiding the risk of death or injury to others were actively engaged in direct contact with the enemy (para 76), and extends this to operational decisions made on the ground by commanders, whatever their rank or level of seniority (para 64); but also; (c) suggests that liability (under the Osman v United Kingdom principle, (1998) 29 EHRR 245, para 115) for failure to take preventative operational measures in the face of a real, direct and immediate threat to life could extend to procurement decisions taken on the ground about the provision of vehicles or equipment, as well as to decisions taken about their deployment (para 78); (d) recognises that the more political (in a broad or narrow sense) a decision, the slower a court should be to impose liability at common law and/or under article 2 (para 65), so that it will easy to find that allegations are beyond the reach of article 2 and do not give rise to liability in common law negligence if they concern decisions that were or ought to have been taken about training, procurement or the conduct of operations . at a high level of command and closely linked to the exercise of political judgment and issues of policy (paras 76 and 99). It is unclear to me whether on this approach liability is said to be beyond the reach of article 2 because of its nature or simply because of an injunction that courts should be very slow to find fault in the areas concerned. Whatever the position in that respect, I see real difficulties in the undefined boundaries and the suggested middle ground between on the one hand (a) and (b) and on the other (d). The suggestion in para 78 that Osman type liability could exist as mentioned in point (c) would also appear liable to extend fault based liability to all aspects of decision making during combat operations. What is the logical distinction between deployment of equipment and of troops? The inter twining of issues of procurement and training with issues relating to the causation of injury or death on the battlefield seems highly likely to lead to a court undertaking the trial of unimaginable issues as to whether a soldier on the field of battle or a sailor on his ship might reasonably have been more careful. Further, I see little attraction in a scheme according to which the acts or omissions of the man on the ground and the policy maker in Whitehall give rise either to no liability at all or only to liability in egregious cases, but the procurement, training and deployment decisions of a middle rank commander (query, in Whitehall or in local headquarters or both) are subject to scrutiny under conventional principles of fault based liability. All depends, as I understand it, under article 2 upon balancing private and public interests and Convention rights (para 61); or upon balancing (i) the need to avoid undermining the ability of a state to defend itself, or its interests, at home or abroad (para 66) and the paramount importance of not impeding the armed forces against (ii) the consideration that (at common law) soldiers injured or (at common law and under the Convention) the relatives and dependants of soldiers killed should be able, wherever possible, to benefit by the more substantial civil measure of recovery that fault based liability brings, over and above the no fault compensation available in cases of injury or death as described by Lord Carnwath in para 181 of his judgment. Still more fundamentally, the approach taken by the majority will in my view make extensive litigation almost inevitable after, as well as quite possibly during and even before, any active service operations undertaken by the British army. It is likely to lead to the judicialisation of war, in sharp contrast with Starke Js dictum in Shaw Savill (1940) 66 CLR 344 that war cannot be controlled or conducted by judicial tribunals. No doubt it would be highly desirable if all disputes with international legal implications were to be submitted to international judicial resolution, with those involved abiding by the outcome; and if wars were no more. But, in the present imperfect world, there is no precedent for claims to impose civil liability for damages on states whose armed forces are killed or injured in armed combat as a result of alleged failures of decision making either in the course of, or in procuring equipment or providing training for, such combat. All the claims made in these appeals fall in my view within one or other of these areas where the common law should not tread. Similarly, we should not assume that the European Court of Human Rights would regard it as appropriate to enter such areas under article 2, and there is to my mind wholly insufficient guidance to lead to any conclusion that it would. We cannot, at least at present, refer a case to Strasbourg to seek its guidance on the proper interpretation of article 2. But my conclusions as to the common law position and its rationale, the dearth of any authority for any like claim in the Strasbourg jurisprudence and statements in that jurisprudence showing that policy decisions can be non justiciable all lead me to conclude that we should for the present proceed on the basis that the outcome in Strasbourg would in the present areas be no different from the outcome at common law. Conclusion The upshot is that, in my opinion, although the soldiers involved in these cases were within the United Kingdoms jurisdiction for the purposes of article 2 of the Convention of Human Rights at the material times, the claims made under article 2 and/or in negligence in respect of their deaths were, in the case of the Smith and Ellis claims, rightly struck out by the courts below and the Ministry of Defences appeal seeking to strike out the Challenger claims should be allowed. LORD CARNWATH Introduction I agree entirely with Lord Hopes treatment of the jurisdiction issue. There is also much with which I agree in his discussion of the substantive issues, in particular his comment (para 100) on the paramount importance that the preparation for and conduct of active operations should not take place under the threat of litigation if things should go wrong. However, in agreement with Lord Mance, I do not think it is an adequate response at this level for us simply to send the claims for trial with general injunctions to exercise great caution or special care. Having heard full argument on all these issues, we should be able to rule whether the claims are in principle viable or not; or at least to give clearer guidance as to what answers to what questions of fact may or may not lead to a favourable result following trial. I also agree with Lord Mance that, contrary to the approach adopted by Lord Hope, we should first concentrate on the common law aspects of the claims. In this respect, the balance of the relevant issues may have been distorted by the sequence of submissions at the hearing. It is understandable, given the importance of the jurisdictional issues arising under the Convention, that much of the oral hearing time was taken up with submissions on that subject, and as a natural extension with arguments about the substantive scope of article 2 itself. On the latter aspect, I have nothing to add to Lord Mances reasoning and conclusions, with which I agree. However, like him, I consider that our primary responsibility should be for the coherent and principled development of the common law, which is within our own control. We cannot determine the limits of article 2. Indeed, the multiplicity of views expressed by the nine members of this court, when this issue was previously considered in Catherine Smith, shows how difficult and unproductive it can be, even at this level, to attempt to predict how Strasbourg will ultimately draw the lines. The trial judge will be in no stronger position. With respect to Lord Hope (para 79), if the problem is a lack of directly relevant guidance from Strasbourg, it is hard to see how, simply by hearing further evidence or finding further facts, he or she will be better able to fill that gap, still less to do so with complete confidence. Common law the nature of the issues It is important to recognise that we are being asked to authorise an extension of the law of negligence (as indeed of article 2), into a new field. We have not been referred to any authority in the higher courts, in this country or any comparable jurisdiction, in which the state has been held liable for injuries sustained by its own soldiers in the course of active hostilities. Further we are concerned only with duties at common law, rather than under statute. As the Court of Appeal recognised [2013] 2 WLR 27 (para 38), statutory regulations governing the responsibilities of the Ministry as employers do not apply outside the United Kingdom. Mr Eadies case, on behalf of the Ministry, was advanced on a broad front. As formulated in his printed case, this involved a root and branch objection to any form of civil liability in this area. It was introduced by a lengthy section headed: The difficulties courts would face grappling with the issues raised in these claims (paras 72 92). Not only were the courts institutionally incompetent to resolve such issues which are essentially matters of political and military judgement; but there are strong reasons both of public policy and democratic accountability for them not seeking to do so. There is some common ground. There is no dispute as to the existence in domestic law of a principle known as combat immunity, relating to decisions and actions in the heat of battle. Furthermore, at the other end of the spectrum Lord Hope accepts, as I understand it, that high level decisions about procurement or conduct of operations are not open to review in the courts. This dichotomy is most clearly stated in his para 76: It will be easy to find that allegations are beyond the reach of article 2 if the decisions that were or ought to have been taken about training, procurement or the conduct of operations were at a high level of command and closely linked to the exercise of political judgment and issues of policy. So too if they relate to things done or not done when those who might be thought to be responsible for avoiding the risk of death or injury to others were actively engaged in direct contact with the enemy. Although this comes as part of his consideration of article 2, he treats it as equally relevant to the common law claims (para 99). On that view, the difference between us is over the extent (if any) of what he calls the middle ground, and whether its boundaries can only be determined after the finding of further facts. Here too the balance of the discussion may have been distorted by the course of the submissions at the hearing. The emphasis of the common law debate was directed mainly to the scope of the combat immunity defence as such, rather than issues arising under the general law of negligence. No doubt reflecting that emphasis, the wider issues are dealt with relatively shortly at the end of Lord Hopes judgment. In my view, however, it is within that broader compass that the solution to these difficult questions must be found if not at this preliminary stage, then following the trial. In truth, the claimants are caught on the horns of a dilemma. The operational phases of the undertaking, which might otherwise under ordinary principles have been expected to give rise to a duty of care (see eg Wade and Forsyth Administrative Law, 10th ed (2009), p 653ff; Craig Administrative Law, 7th ed (2012), p 908ff) are, as the claimants accept, the very phases which are excluded from review by the combat immunity defence. On the other hand the further back in time they seek to direct their challenge so as to include issues of planning, procurement, and training, the more they have to confront the competing principle that discretionary decisions about policy and resources are not justiciable. The issue is whether it is possible to carve out some middle ground of potential liability. The answer to that question raises issues of principle, policy and practicality. Mr Weir QC rightly emphasises that the importance of another policy consideration, the principle that where there is a wrong there should be a remedy, described by Lord Dyson JSC as a cornerstone of our system of justice (Jones v Kaney [2011] UKSC 13; [2011] 2 AC 398, para 113). From that principle he draws the submission that: The default position is one whereby the MoD owes its soldiers an orthodox employers duty of care. So it falls for the MoD to establish that public policy must operate to deny the existence of that recognised duty of care. However, that formulation begs a logically prior question. I agree that it is for the Ministry to make the case for any policy exception to any recognised duty of care. But the scope and content of any such duty of care are themselves matters for determination. In the modern law of negligence, the starting point for determining that issue is the application of the familiar three fold test laid down in Caparo Industries plc v Dickman [1990] 2 AC 605, 618 per Lord Bridge. In that context, the scope of any so called immunity necessarily overlaps with the question, under the third part of that test, whether it is fair, just and reasonable for the law to impose a duty of care at all (see Clerk & Lindsell On Torts 20th ed (2010), para 14 39ff Immunities). As Lord Browne Wilkinson has said: a holding that it is not fair, just and reasonable to hold liable a particular class of defendants whether generally or in relation to a particular type of activity is not to give immunity from a liability to which the rest of the world is subject. It is a prerequisite to there being any liability in negligence at all that as a matter of policy it is fair, just and reasonable in those circumstances to impose liability in negligence. (Barrett v Enfield London Borough Council [2001] 2 AC 550, 559) For that reason I agree with Lord Mance that the scope of combat immunity should now be discussed, not as a separate principle, but as part of the third element of the Caparo analysis. Equally, in my view, we should not see ourselves as necessarily constrained by the limits illustrated by the existing case law on combat immunity, developed in very different circumstances and (until Mulcahy) without reference to the modern law of negligence. Working by analogy In determining whether a duty of care should be imposed in a new factual situation, precedent is an important guide. In Caparo Lord Bridge proposed that the emphasis should be less on the search for underlying general principles, but rather on the development of the law incrementally and by analogy with established categories (ibid p 618, quoting Brennan J. in the High Court of Australia, Sutherland Shire Council v Heyman (1985) 60 ALR 1, 43 44). In the present context, apart from the cases on combat immunity as such (discussed by Lord Hope and Lord Mance) the closest analogies in my view are to be found in two lines of authority: first, the sequence of authorities relating to the immunity of the police, culminating in Van Colle v Chief Constable of the Hertfordshire Police (Secretary of State of the Home Department intervening) [2009] AC 225; secondly, in respect of the issue of breach, assuming an actionable duty of care is established, the cases relating to the law of negligence as applied to the emergency services, in particular to claims by employees. Police immunity On the issue whether a duty of care should be imposed, the most useful parallel in the modern law, in my view, is to be found in the sequence of authorities dealing with the possible liability of the police for alleged negligence in the course of investigating crime. In Hill v Chief Constable of West Yorkshire [1989] AC 53 it was held that for reasons of public policy the police owed no actionable duty of care to a victim in such circumstances. They were said to be immune from actions of this kind (p 64, per Lord Keith). Initial concerns that this approach might conflict with article 6 of the Convention by precluding consideration of the merits of the claim (see Osman v United Kingdom (1998) 29 EHRR 245) were dispelled by the Strasbourg court in Z v United Kingdom (2001) 34 EHRR 97. The Grand Chamber, following the lead of Lord Browne Wilkinson (X (Minors) v Bedfordshire County Council [1995] 2 AC 633,751) accepted the legitimate role of policy in determining the limits of liability: the Court is not persuaded that the House of Lords' decision that as a matter of law there was no duty of care in the applicants' case may be characterised as either an exclusionary rule or an immunity which deprived them of access to court the House of Lords was concerned with the issue whether a novel category of negligence, that is a category of case in which a duty of care had not previously been held to exist, should be developed by the courts in their law making role under the common law. The House of Lords, after weighing in the balance the competing considerations of public policy, decided not to extend liability in negligence into a new area. In so doing, it circumscribed the range of liability under tort law. (para 96, emphasis added) Echoing that approach, in Brooks v Comr of Police of the Metropolis [2005] UKHL 24; [2005] 1 WLR 1495, the House confirmed but qualified the core principle established in Hill. In his leading speech Lord Steyn said: since the decision of the European Court of Human Rights in Z v United Kingdom (2001) 34 EHRR 97, 138, para 100, it would be best for the principle in Hills case to be reformulated in terms of the absence of a duty of care rather than a blanket immunity. (para 27) Finally, in Van Colle v Chief Constable of the Hertfordshire Police [2009] AC 225, the House by a majority held that the same principle applied even where the police were aware of a specific threat to an individual witness. That is particularly helpful in the present context because it was concerned with the scope of the states liability both at common law and under article 2 of the Convention. I draw the following points from the judgments: The common law claim was to be considered on its own merits i) (stand on its own feet) rather than assimilated with the article 2 claim (para 82, per Lord Hope; para 136, Lord Brown). ii) The common law analysis began from the three fold test laid down in Caparo by which it must be shown that harm to B was a reasonably foreseeable consequence of what A did or failed to do, that the relationship of A and B was one of sufficient proximity, and that in all the circumstances it is fair, just and reasonable to impose a duty of care on A towards B. (para 42, per Lord Bingham). iii) The majority were able to support an exception based on public policy reasons which were accommodated within the third element of that test, that being accepted as a price to be paid by individuals denied for public policy reasons (as not being fair, just and reasonable within the Caparo principle) a civil claim in the interests of the community as a whole (para 139, per Lord Brown) iv) There was no suggestion that, because the core principle involved an exception to ordinary principles of liability, it should be narrowly construed. On the contrary, as Lord Brown put it, the wider public interest is best served by maintaining the full width of the Hill principle (para 139). v) The House was able to determine the limits of this principle on the basis of the pleadings. Again I quote Lord Brown (para 140): In common, I think, with all your Lordships, I regards this issue as plainly one which the House should decide one way or the other on the pleaded facts. Either a duty of care arises on these facts or it does not. No useful purpose would be served by allowing the action to go to trial for facts to be found and then for further consideration to be given to the applicable law. vi) Finally, the policy considerations justifying immunity in respect of the polices function of investigating crime were contrasted with civil operational tasks, in relation to which liability had been accepted in some decided cases (Lord Hope, para 79). Those examples were not regarded as undermining the core principle. This line of cases shows that it remains a proper function of the court, faced with a potential clash between public and private interests, to determine as a matter of policy the limits of any actionable duty of care, and to do so at the preliminary stage (see also Jonathan Morgan, Negligence into Battle [2013] CLJ 14, commenting on the Court of Appeals reasoning in the present case). Furthermore, so to determine the limits of liability in negligence in a new area, by balancing competing considerations of public policy, is within the margin allowed to the national courts by Convention law. Lord Hope acknowledges this line of authority, but declines to apply the same approach to the present context (paras 97 98). With respect, I find this difficult to understand. If this was an appropriate exercise in relation to the purely domestic policy concerns arising from police powers of investigation, how much more so in relation to the issues of vital national security raised by the preparation for and conduct of war? Negligence and the emergency services Assuming a duty of care is not excluded under the principles considered so far, the closest analogies are to be found in cases relating to the duties owed by employees to their staff in the context of the delivery of emergency services. King v Sussex Ambulance Service NHS Trust [2002] ICR 1413 contains an authoritative exposition of the relevant principles. The Court of Appeal dismissed a claim related to injuries sustained by an ambulance technician, who was required in the course of an emergency call to help in carrying a patient downstairs. Hale LJ, giving the majority judgment, summarised the relevant law (paras 21 23): The starting point is that an ambulance service owes the same duty of care towards its employees as does any other employer. There is no special rule in English law qualifying the obligations of others towards fire fighters, or presumably police officers, ambulance technicians and others whose occupations in the public service are inherently dangerous: see Ogwu v Taylor [1988] 1 AC 431. Such public servants accept the risks which are inherent in their work, but not the risks which the exercise of reasonable care on the part of those who owe them a duty of care could avoid. An employer owes his employees a duty to take reasonable care to provide safe equipment and a safe system of work, which includes assessing the tasks to be undertaken, training in how to perform those tasks as safely as possible, and supervision in performing them. This was subject to two qualifications: first, the further dimension identified by Denning LJ (Watt v Hertfordshire County Council [1954] 1 WLR 835, 838): It is well settled that in measuring due care you must balance the risk against the measures necessary to eliminate the risk. To that proposition there ought to be added this: you must balance the risk against the end to be achieved. and secondly (citing Colman J in Walker v Northumberland County Council [1995] ICR 702, 712): what is reasonable may have to be judged in the light of the service's duties to the public and the resources available to it to perform those duties In Hughes v National Union of Mineworkers ([1991] 4 All ER 278, cited by Lord Hope, para 97), this approach was taken a stage further so as to deny the existence of a duty of care at all. The claim was by a police officer who had been injured when, in the course of policing a strike at a colliery, he was knocked to the ground by an advancing crowd of pickets. He alleged negligence by the police officers on the day, rather than wider issues relating to police deployment generally or training (p 281a). The claim was rejected. It was held by May J, applying Caparo principles, and following Hill v Chief Constable of West Yorkshire that public policy requires that senior police officers should not generally be liable to their subordinates who may be injured by rioters or the like for on the spot operational decisions taken in the course of attempts to control serious public disorder. That, in my judgment, should be the general rule in cases of policing serious public disorders. (p 288d e). In Multiple Claimants (at para 2.C.17) Owen J treated Hughes as example of the application of the combat immunity defence, noting that it had been cited in that context by the Court of Appeal in Mulcahy v Ministry of Defence [1996] QB 732, ((at pp 747, 751). He was considering the question: Does the immunity apply to anti terrorist, policing and peace keeping operations of the kind in which British forces were engaged in Northern Ireland and in Bosnia? (para 2.C.17) He gave a qualified yes, concluding that the immunity would apply to peace keeping/policing operations in which service personnel are exposed to the attack or threat of attack (para 2.C.20). This interpretation seems open to question. However violent was the situation facing the police during the mineworkers strike, there could be no argument that it had anything to do with the conduct of war, nor was the judges reasoning linked to that group of cases. While I would not wish to question the actual decision in Hughes, it is in my view better seen as an application of King principles in an extreme situation. The decisions in both King and Hughes were concerned with the operations, rather than with prior policy decisions about the nature of the service and the resources to be committed to them, or issues such as procurement and training. To illustrate the possible limits of operational liability in relation to the emergency services, a useful analogy can be found in Rigby v Chief Constable of Northamptonshire [1985] 1 WLR 1242. The police were held liable by Taylor J for damage caused by firing a gas canister into the plaintiffs premises without having fire fighting equipment available. On the other hand (relying on Dorset Yacht Co Ltd v Home Office [1970] AC 1004, and cases following it) the judge rejected a claim based on the failure of the Chief Constable to equip the force with an alternative CS gas device, known as Ferret, which did not carry the same fire risk. In that respect he accepted the submission that the constable was exercising a statutory discretion which could not be impugned if exercised bona fide (pp 1250 1251). That decision, which is cited by Wade (op cit p 656) as an illustration of the policy operational decision, has not as far as I aware been questioned in later authority. Statutory intervention Before drawing some conclusions, and for completeness, although it did not figure prominently in the oral argument, I should address the suggestion that the claim gains at least implicit support from the Crown Proceedings (Armed Forces) Act 1987. In short, it is said, there is no policy reason to extend the scope of immunity beyond acts or omissions occurring in the heat of battle, given that Parliament has now provided a new statutory framework covering both general liability and the means to secure greater protection where exceptionally it is required. It was the Crown Proceedings Act 1947 which opened the way generally to proceedings in tort against the Crown. However, section 10 preserved a specific and precisely defined statutory exception for the armed forces in relation to injury or death on service subject to the conditions outlined in the section, one being a certificate of entitlement to a service pension (see Clerk & Lindsell op cit para 5 08ff). That exclusion was repealed by the 1987 Act, but (by section 2) subject to a power for the Secretary of State to make an order reviving the effect of section 10 in certain circumstances. By section 2(2): The Secretary of State shall not make an order reviving the effect of the said section 10 for any purposes unless it appears to him necessary or expedient to do so (a) by reason of any imminent national danger or of any great emergency that has arisen; or (b) for the purposes of any warlike operations in any part of the world outside the United Kingdom or of any other operations which are or are to be carried out in connection with the warlike activity of any persons in any such part of the world. Although we were not referred by the parties to any background materials relating to that change, the Parliamentary history is of some interest. A written answer by the Secretary of State for Defence explains that it followed a review of the working of section 10 (Hansard HC Deb 08 December 1986 vol 107 cc85 86W). He said: Section 10 was included in the 1947 Act on the grounds that members of the Armed Forces, by the very nature of their profession, undertake hazardous tasks which ordinary members of the public do not. At that time it was believed that this provision would not result in any overall financial penalty against servicemen, because they received benefits, payable regardless of fault, which were in most cases comparable with those which a civilian might expect from the courts. Our review has, however, shown that damages which courts have awarded in some cases of personal injury have now risen to a level which can considerably exceed the benefits which the serviceman receives. The Government have concluded that repeal of section 10 is the only satisfactory course which will remove this disadvantage We shall need to be able to reactivate the provisions of section 10 in the event of impending or actual hostilities or grave national emergency. It was indicated that, while the government did not have time to promote its own legislation within the current programme, it would be ready to support a suitable Bill brought by a private Member. This invitation was taken up by Mr Winston Churchill MP (HC Deb 13 February 1987 vol 110 cc567 609). The Parliamentary Under Secretary of State, welcoming the Bill on the part of the government commented: The Bill seeks to retain the power to reactivate section 10 at a time of great national emergency or in the event of actual or impending hostilities. That is widely accepted by the House. Indeed, I have not heard any hon. Member advocate in the debate that section 10 should not be reimposed in time of war. It is not possible or desirable to draw hard and fast definitions of the circumstances in which the Government might seek to reimpose section 10, but the wording of clause 2 is satisfactory in this respect, making it clear from that the Secretary of State will need to consider it necessary or expedient to make an order to reactivate section 10 by reason of a great national emergency or imminent national danger or in the event of warlike operations or connected activities outside the United Kingdom. We are talking about a grave situation in Britain or elsewhere, and I draw the attention of the House to the fact that the wording of clause 2 to a large extent mirrors the wording of the provisions of the Reserve Forces Act 1980 dealing with the call up of reserves. Although there is no intention to create a formal link between, say, mobilisation and the reimposition of section 10, hon Members will recognise that that gives an indication of the gravity of the circumstances in which reimposition of section 10 would arise. Those passages raise a number of possible issues, on which we have heard no argument, as to either relevance or substance. One indeed might be the scope of phrase warlike activities (cf Reserve Forces Act 1996, s 54) in its possible application to peace keeping operations such as are in issue in the Snatch claims. We cannot resolve those questions within the scope of the arguments we have heard, and it is unnecessary to do so. It should be noted in any event that the provisions for no fault compensation have changed materially since 1987 when that debate took place. The governing legislation is now the Armed Forces (Pensions and Compensation) Act 2004, with the Armed Forces Compensation Scheme made under it. Awards are based on a detailed tariff, which is kept under review, and there is provision for appeal to a specialised tribunal. The scheme was most recently revised in 2011, following a review by Lord Boyce. However, it was not part of Mr Eadies case that the existence of that scheme, or its overlap with the law of negligence, should affect our consideration of the issues before us. In my view these two sets of statutory provisions are no more than neutral, and neither assists in establishing the limits of the duty of care in the present context. It is not argued for the claimants that the 1987 Act impinges in any way on the defence of combat immunity as hitherto understood. At most it is said to be relevant in determining what is fair, just and reasonable under Caparo principles. However, there is nothing in the 1987 Act to suggest that it was intended to inhibit the ordinary, and logically prior, function of the court in determining the limits of potential liability under the law of negligence. It is only in so far as liability is so established that the scope of immunity under the Act becomes relevant. Finally, under this section, it is of interest to note how similar issues have been dealt with in the USA, although again we have not heard any submissions on this aspect. Until 1946 claims against the Federal Government without its consent were barred by the doctrine of sovereign immunity. This position was altered by the Federal Tort Claims Act (FTCA), 28 U.S.C.A 1346(b), which can be seen as the equivalent of the Crown Proceedings Act 1947 in the United Kingdom. The FTCA abrogated sovereign immunity in relation to the Federal Government in most circumstances. However, pursuant to 28 U.S.C.A. 2680(j), the sovereign immunity of the Federal Government is not abrogated in respect of [a]ny claim arising out of the combatant activities of the military or naval forces, or the Coast Guard, during time of war. A further exception relating to injuries incident to service has been developed judicially, known as the Feres doctrine (Feres v United States, 340 U.S. 135 (S.Ct. 1950)). According to a leading textbook (Speiser, Krause and Gans The American Law of Torts (2010) para 17:5): The critical and lasting rationale of the Feres doctrine is the third one the military disciplinary structure. The lawsuit cannot require a civilian court to second guess military decisions [see Stencel Aero Engineering Corp v United States, 431 U.S. 666, 673 (1977)], and the suit cannot conceivably impair essential military discipline [see Chappell v Wallace, 462 U.S. 296, 300, 302, 304 (1983) (such complex, subtle and professional decisions as the composition, training . and control of a military force are essentially professional military judgments]. Despite certain confusion in the broad statements of the courts, and notwithstanding critical comments, the Feres doctrine of denial of recovery has displayed a charmed life and continuing vitality. The cases show that in practice the Feres doctrine has been applied so as to give immunity in a wide range of situations, not directly linked to armed conflict. Conclusions I have discussed these issues at some length, albeit in a minority judgment, because in my view they deserve greater attention than they have been given in the oral argument or the majority judgment. They remain matters which will need to be considered when the case goes to trial. In this respect I do not regard my analysis as conflicting significantly with the majoritys approach. The main difference is that I would have preferred to reach decisions at this stage. In agreement with Lord Mance, and for the same reasons, I would have struck out the Challenger claims. As I have said, in considering the scope of any actionable duty of care relating to the preparation for or conduct of war activities in the modern law of negligence, I do not think we should regard ourselves as constrained by the limits of combat immunity as established in the earlier cases. The proper application of Caparo principles, as illustrated by the sequence of authorities on police liability, enables us to extend and adapt those limits within the scope of the modern law of negligence, and to hold that there is no middle ground of potential liability in relation to the preparation for, or conduct of, war. As I understand Lord Hopes judgment, it leaves the trial judge free, albeit after further factual inquiry, to reach the same conclusion. In my view, differing from Lord Mance in this respect only, we should apply different considerations to the later Snatch claims. They occurred in July 2005 and February 2006, after the time (May 2003) when (as Lord Hope explains: para 1) major combat operations ceased and were replaced by a period of military occupation. Now that the cases are to go to trial, I would not regard consideration of this issue as necessarily constrained by the shape of the arguments in the lower courts or before us. It is not surprising that Owen J drew no such distinction since, as I have noted, he had already held in Multiple Claimants that such operations were in principle within the scope of the combat immunity defence. The Court of Appeal did not address this issue in detail, but as I understand their judgment left it as raising questions of fact to be decided at trial. If as I believe the policy reasons for excluding liability are related to the special features of war or active hostilities, it would be wrong in my view to apply the same approach to peace keeping operations, however intrinsically dangerous. The ordinary principles of negligence, as illustrated by cases such as Hughes and Rigby, can when necessary be sufficiently restrictive to ensure that most such claims, whether relating to advance procurement and training, or decisions on the ground, will be doomed to failure. On the other hand, the pleaded claims in the present cases go further. It is alleged, as I understand, that there was an unjustified failure, following earlier incidents, to take readily available steps to deal with a known and preventable risk. I would not regard such claims as necessarily excluded as a matter of general policy, either at common law or under article 2. Since all the issues will now have to be considered at trial, it is unnecessary and probably undesirable for me to say more. |
This is another case arising out of the economically controversial but legally well established policy of the EU relating to parallel imports of genuine goods bearing registered trade marks. Broadly stated, the question at issue is whether a person who has imported goods bearing the mark into the EEA and offered them for sale there without the consent of the trade mark proprietor, is entitled to defend an action for infringement on the ground that the proprietor of the mark is engaged in conduct calculated to obstruct the free movement of such goods between member states or to distort competition in the EEA market for them. Ever since the Trade Marks Act 1994 gave effect in the United Kingdom to directive 89/104/EC, the rights of proprietors of registered trade marks have been governed by a uniform scheme of EU law. That directive has now been replaced by the current directive 2008/95/EC, but the two directives are in the same terms in every respect relevant to the present dispute. I shall refer to them indifferently as the Trade Mark Directive or the directive. The fundamental provisions are articles 5 and 7. Article 5 defines the rights of the trade mark proprietor. It provides, so far as relevant: Rights conferred by a trade mark 1. The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade: (a) any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered; 3. The following, inter alia, may be prohibited under paragraphs 1 and 2: (a) affixing the sign to the goods or to the packaging thereof; (b) offering the goods, or putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder; (c) importing or exporting the goods under the sign; (d) using the sign on business papers and in advertising. Article 5 is subject to article 7, which provides: Exhaustion of the rights conferred by a trade mark 1. The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent. 2. Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market. It has been accepted ever since the decisions of the Court of Justice in Silhouette International Schmied GmbH & Co. KG v Hartlauer Handelsgesellschaft mbH (Case C 355/96) [1999] Ch 77 and Sebago Inc v GB Unic SA (Case C 173/98) [2000] Ch 558, that the combined effect of articles 5 and 7.1 of the directive is to confer on the trade mark proprietor the exclusive right to control the first marketing in the EEA of goods bearing his trade mark, even if they are genuine goods which have previously been put on the market by him or with his consent outside the EEA. This is the only right attaching to the trade marks which is relevant in the present case. The subsequent decision of the Court in Zino Davidoff SA v A&G Imports Ltd (Joined Cases C 414/99 to 416/99) [2002] Ch 109, underlined its absolute nature by establishing that the consent of the trade mark proprietor had to be such as to amount to an unequivocal renunciation of the right. It could therefore rarely be implied, and never from the mere fact of his having placed the goods on the market outside the EEA and/or his silence on the question whether they had been lawfully placed in the market within the EEA: see paras 53 56. These decisions are understandably unpopular with parallel traders not forming part of the authorised distribution network of the trade mark proprietors. But they are securely established as part of the legal order of the EU in the domain of trade mark protection. Proposals to modify their effect or to adopt a rule of international exhaustion have been firmly rejected by the EC Commission and the Economic and Social Committee and no attempt was made to change the position when the new directive was adopted in 2008. There is an interesting account of these debates in Stothers, Parallel Trade in Europe (2007), at pp. 347 354. The Claimants, Oracle America Inc, were at the relevant time called Sun Microsystems and that is how I shall refer to them. They are manufacturers of computer systems, workstations and related goods. They are also the proprietors of five relevant Community trade marks and two relevant United Kingdom trade marks registered for use in connection with computer hardware. M Tech is a supplier of computer hardware in Manchester, which in 2009 fulfilled a trap order from a purchaser called KSS Associates in Epsom for 64 new Sun disk drives. The disk drives had originally been supplied by Sun to purchasers in China, Chile and the United States. M Tech had bought them through a broker in the United States and imported them into the United Kingdom. Although there was at one time a dispute about this, it is now common ground that Sun had not consented to their being put on the market in the EEA. On the face of it, therefore, M Tech infringed the marks contrary to article 5.1(a) by using them in circumstances where Suns exclusive right had not been exhausted under article 7.1. The present appeal arises out of an application initially made by Sun to Kitchin J for summary judgment for (among other things) damages for the infringement, and an injunction restraining any further infringements of the same kind. There is no challenge to the validity of the trade marks, nor to the facts said to constitute the infringement. M Techs defence is set out in a number of witness statements, whose contents are the basis of a draft pleading served shortly after Sun applied for summary judgment. In summary, M Tech say that Suns trade marks are not enforceable because (i) the object and effect of enforcement would be to partition the EEA market in Sun hardware contrary to the treaty provisions relating to the free movement of goods (articles 34 to 36 of the Treaty on the Functioning of the European Union); and (ii) the exercise of Suns trade mark rights is connected with its distribution agreements, which are said to contain restrictive provisions inconsistent with article 101. After the hearing before Kitchin J, M Tech added a third argument, to the effect that enforcement of Suns trade marks would constitute an abuse of rights as that concept is understood in EU law. Euro defences of this kind have been deployed by alleged infringers of intellectual property rights for many years, and the English courts have varied in the robustness with which they approach them. The dilemma is that litigation devalues intellectual property rights, by increasing the cost and delay associated with their enforcement. It may also serve to confer on the alleged infringer a temporary immunity or an improvement of his bargaining power in settlement negotiations, to which he will turn out not to be entitled. The effect can often extend beyond the parties or transactions in issue, to many other cases in which similar questions might be raised. These factors mean that defences like the present one must be scrutinised with some care, even if that requires a certain amount of analysis. On the other hand, a defendant must be allowed to go to trial if it has raised a triable issue of fact which is relevant in point of law. For obvious reasons, this is especially important when the case is founded on fundamental principles of the European Union such as the free movement of goods and undistorted competition. Kitchin J resolved this dilemma in favour of the trade mark proprietor. He gave summary judgment, ordering (among other things) an inquiry as to damages and an injunction. The Court of Appeal (Lord Neuberger of Abbotsbury MR, Arden LJ and Tomlinson LJ) allowed the appeal and set aside the order. This court has been invited to order a reference to the Court of Justice of the European Union. It is I think common ground that if there is an arguable defence in EU law, there will have to be a reference at some stage, either now or after the facts have been found at a trial. But the first question is whether there is. Articles 34 to 36: Free movement of goods Articles 34 and 35 of the treaty prohibit quantitative restrictions on imports and exports between member states and measures having equivalent effect. Both are subject to article 36, which provides that they do not apply to prohibitions or restrictions. justified on grounds of. the protection of industrial and commercial property, provided that these do not constitute a means of arbitrary discrimination or a disguised restriction on trade between member states. The facts on which M Tech relies as engaging these provisions are disputed, at least in part, but must for present purposes be assumed to be true. They can be summarised as follows. There is a large global market for second hand computer hardware, much of which is in the hands of independent resellers who do not belong to the manufacturers authorised distribution networks. In 2007, according to M Tech, the secondary market in the EEA for Sun hardware alone was worth US$1.07 billion, of which US$0.64 billion was sold by independent resellers. Much of the trade which independent resellers handle is entirely lawful because it involves goods which were previously marketed in the EEA by or with the consent of the trade mark proprietors. The allegation is that since 2007 Sun has deliberately set about securing this market for itself and its authorised dealers by declining to supply information which would enable independent resellers to discover whether any particular equipment was first put on the EEA market by or with Suns consent. This information is not available from any other source. It is not apparent from the goods themselves. Nor can it be inferred from the circumstances in which they have been acquired. This is because the same goods may be resold several times in the course of their serviceable life and they are not necessarily located in the same territory as the vendor or broker selling them. The result, they say, is to produce a chilling effect on independent sellers, deterring them from dealing in any Sun hardware, whether it is legitimately present on the EEA market or not, because their inability to distinguish between the two exposes them to the risk of enforcement actions by Sun. This risk is increased by the vigour with which Sun enforces its trade mark rights against independent resellers found dealing in the EEA in hardware which has not been marketed there by them or with their consent. The combination of aggressive enforcement of its trade mark rights and the withholding of information about provenance has, says M Tech, both the object and the effect of eliminating the legitimate as well as the illegitimate parallel trade in the EEA, thus giving Sun effective control of the secondary market in its products there, and enabling them to partition that market through its control of an authorised network of dealers. M Tech say that they have been harmed by Suns practice of withholding information about the provenance of their products, because that practice was among the reasons why they had largely ceased to deal with Sun equipment by about 2007 or 2008. The KSS transaction of 2009 is said to have occurred as a result of a failure of their ordinary procedures. However, it is important to note that the 64 disk drives supplied to KSS were new goods which were imported into the EEA and first marketed there by M Tech themselves, without Suns consent as they now accept. M Tech do not say that this happened as a result of any policy on Suns part of withholding information about the provenance of the goods. The position is exactly the same in relation to transactions affected by the injunction. In the form that Kitchin J granted it, the injunction restrained only the marketing by M Tech within the EEA of Suns trade marked goods which had not previously been marketed there by Sun or with its consent. There is a proviso designed to ensure that Sun does supply information about the provenance of goods potentially affected by the injunction. Its effect is that the injunction is not to apply to goods marketed by M Tech unless Sun have confirmed within ten days of being told the serial and part numbers of the goods in question that their records show that they have not been put on the EEA market by them or with their consent. It will be apparent that it is not good enough for M Techs purposes to establish a breach of the treaty. It has to show that that breach gives them a defence to an action for infringement of the marks. There is a principle of English public policy, which is common to the national legal systems of most member states, that a person may not profit from his own illegal act. The Court of Justice has held that it is open to member states to apply that principle to causes of action arising from directly applicable provisions of EU law, as indeed it has sometimes done itself: see Courage Ltd v Crehan (Case C 453/99) [2002] QB 507, at para 31. However, Mr. Vajda QC (who appeared for M Tech) disclaimed any reliance on the principle. His case is that Sun has no enforceable rights under article 5 of the Trade Mark Directive in the circumstances of this case, because that article is subject to an implied limitation to be derived as a matter of construction from articles 34 to 36 of the EU treaty. The effect of the suggested limitation is to preclude any exercise of trade mark rights which would have the object or effect of partitioning the EU internal market. What this amounts to is a general suspension of a proprietors trade mark rights as against the entire EEA market, and not just in respect of those transactions which are affected by Suns policy of refusing to disclose the provenance of the goods. M Tech must, as it seems to me, put its case in this way because the chilling effect on the secondary market, which is said to result from that policy, has not affected the particular transaction which has given rise to the allegation of infringement in this case and cannot affect any future transactions restrained by the injunction. It follows that the fundamental question on this appeal is whether the implied limitation on the application of article 5 of the directive for which Mr. Vajda contends can be supported as a matter of EU law. The Trade Mark Directive is in most respects substantially based on the case law of the Court of Justice as it had developed over the two previous decades. It is a harmonising measure concerned with (among other things) the achievement of the internal market and the free movement of goods: see recitals (2) and (10). Its efficacy as a harmonising measure uniformly applicable across the whole of the EU depends on treating it as an exhaustive statement of the rights of trade mark proprietors. For that reason, the Court of Justice held in Silhouette International Schmied GmbH & Co. KG v Hartlauer Handelsgesellschaft mbH (Case C 355/96) [1999] Ch 77, at para 25 that articles 5 to 7 of the Trade Mark Directive must be construed as embodying a complete harmonisation of the rules relating to the rights conferred by a trade mark. In Zino Davidoff SA v A&G Imports Ltd (Joined Cases C 414/99 to 416/99) [2002] Ch 109 the Court of Justice reaffirmed the principle, observing that articles 5 to 7 of the Directive accordingly define the rights of proprietors of trade marks in the Community: paras 32, 39. These statements reflect the general rule that where a particular area of commercial activity engaging the principle of the free movement of goods is regulated by harmonising legislation of the EU, then that legislation supersedes the general provisions of articles 34 to 36 of the treaty. The rule, which originates in the decision of the Court of Justice in Tedeschi v Denkavit Commerciale Srl (Case 5/77) [1977] ECR 1555, has been reiterated many times in many contexts, including the EU legislation relating to trade marks: see Bristol Myers Squibb v Paranova A/S (Joined Cases C 427/93, C 429/93, C 436/93) [2003] Ch 75 at paras 25 26; Phytheron International SA v Jean Bourdon SA (Case C 352/95) [1997] ECR I 1729 at para 17. Its rationale is not that the EU legislator is at liberty to override or displace the provisions of the treaty. It is that harmonisation measures are directed to the achievement of the single market. They must therefore be treated, assuming that they are valid, as giving effect in the relevant commercial context both to the principle of the free movement of goods and to the limitations on that principle embodied in article 36. In its Guide to the Application of Treaty Provisions governing the Free Movement of Goods (2010), at para 3.1.1, the European Commission, after stating the Tedeschi principle, puts the point in this way: This is due to the fact that harmonising legislation can be understood as substantiating the free movement of goods principle by establishing actual rights and duties to be observed in the case of specific products. Therefore, any problem that is covered by harmonising legislation would have to be analysed in the light of such concrete terms and not according to the broad principles enshrined in the treaty. Mr. Vajda submits that the treaty remains relevant as the dominant instrument which informs the construction of the directive. For my part, I need no persuasion of this. To say that the directive is the relevant source of law is entirely consistent with resort to the treaty as an aid to discovering what it means. The Trade Mark Directive must be construed on the assumption that it was intended to be consistent with treaty provisions relating to the free movement of goods, and indeed with other relevant treaty provisions. The case law which I shall cite below can be treated as so many variations on that theme. But I do not think that this carries the argument any further, because there is no potential inconsistency between the language of the directive and the provisions of the treaty which calls to be resolved by reference to the latter. This is because the scheme of articles 5 and 7 of the directive already embodies both the primary provisions governing the free movement of goods in articles 34 and 35, and the limited exception in article 36 for the protection of industrial and commercial property. Article 5 of the directive provides that the proprietor of a trade mark shall be entitled to exercise certain rights, including the right to prevent the use by others of his own or an identical trade mark in connection with goods of the class for which the mark is registered. It is not qualified by any proviso relating to the free movement of goods within the EU, because it does not need to be. The reason is that the reconciliation between article 5 of the directive and articles 34 to 36 of the treaty is achieved in the directive by article 7. The rights derived from article 5 of the directive are exhausted under article 7.1 as soon as the goods are first put on the market in the EU by or with the consent of the proprietor of the mark. Thereafter, subject to article 7.2, the proprietor has no subsisting rights capable of engaging the prohibition in articles 34 and 35 of restrictions on trade between member states. As the Court of Justice observed in Bristol Myers Squibb v Paranova A/S (Joined Cases C 427/93, C 429/93, C 436/93) [2003] Ch 75 at para 40: Article 7 of the Directive, like article 36 of the treaty, is intended to reconcile the fundamental interest in protecting trade mark rights with the fundamental interest in the free movement of goods within the common market, so that those two provisions, which pursue the same result, must be interpreted in the same way. The one exception to the EU rule of exhaustion stated in article 7.1 of the directive is the situation envisaged by article 7.2. This deals with the only circumstances in which a proprietor may, by virtue of his trade mark, control the marketing (commercialisation) of the goods after they have been put on the market in the EEA by him or with his consent. It is therefore qualified by the requirement that there should be legitimate reasons for him to exercise that control. Since the exception in article 36 for the protection of industrial or commercial property does not extend to the use of the rights derived from that property as disguised restrictions on trade between member states, it goes without saying that a desire to achieve such restrictions does not constitute legitimate reasons. The case law of the Court of Justice accordingly differentiates between (i) cases where the goods have not previously been marketed in the EEA by the proprietor or with his consent and the proprietor is seeking to exercise his rights under article 5 of the Trade Mark Directive in circumstances where his rights are not yet exhausted under article 7.1, and (ii) cases governed by article 7.2, where the goods are legitimately in circulation within the EEA but the proprietor nevertheless claims to have legitimate reasons to oppose their further commercialisation. Category (i): Enforcement to prevent first marketing in the EEA The law relating to cases in this category was stated in EMI Records Ltd v CBS United Kingdom Ltd (Case 51/75) [1976] ECR 811. This case was decided long before the first Directive was adopted in 1989, and turned on direct application of what are now articles 34 to 36 of the treaty. The main question at issue was whether EMI, which owned the Columbia trademark throughout the European Community, could consistently with those provisions of the treaty prevent CBS from marketing in the Community records bearing the mark that had been imported from third countries. The Court considered that the principle of the free movement of goods was incapable of restricting the right of a trade mark proprietor to prevent the first marketing within the Community of goods imported from outside the Community: 9 Article 36, in particular, after stipulating that Articles [34 and 35] shall not preclude restrictions on imports, exports or goods in transit justified inter alia on grounds of the protection of industrial and commercial property, states that such restrictions shall in no instance constitute a means of arbitrary discrimination or disguised restriction on trade between Member States. 10 Consequently the exercise of a trade mark right in order to prevent the marketing of products coming from a third country under an identical mark, even if this constitutes a measure having an effect equivalent to a quantitative restriction, does not affect the free movement of goods between Member States and thus does not come under the prohibitions set out in Article [34] et seq. of the Treaty. In such circumstances the exercise of a trade mark right does 11 not in fact jeopardize the unity of the common market which Article [34] et seq. are intended to ensure. 21 It follows that neither the rules of the Treaty on the free movement of goods nor those on the putting into free circulation of products coming from third countries nor, finally, the principles governing the common commercial policy, prohibit the proprietor of a mark in all the Member States of the Community from exercising his right in order to prevent the importation of similar products bearing the same mark and coming from a third country. This decision is not an aberration, nor does it depend on any quirk of the facts. It has subsequently been applied in the context of the corresponding rule of exhaustion relating to patent protection: see Generics (UK) Ltd and Harris Pharmaceuticals Ltd v Smith Kline & French Laboratories Ltd. (Case C 191/90) [1992] ECR I 5335, at para. 17. It is regularly cited as authoritative by Advocates General, for example Advocate General Jacobs in his opinions in Criminal proceedings against Aim Richardt and Les Accessoires Scientifiques (Case C 367/89) [1991] ECR I 4621, at para 14, and Silhouette [1999] Ch 77, at para 49. It has continued to be regarded as self evident by text book writers: see, in particular, Kerlys Law of Trade Marks and Trade Names, 15th ed. (2011), para 16.091. In Levi Strauss & Co v Tesco Stores Ltd [2003] RPC 18, Pumfrey J observed at para 51 that it could hardly be clearer. It has formed, with the principle of exhaustion, the basis for the application of the principles of free movement in the context of trade marks and other intellectual property rights. I agree with this observation, and I think that it is worth pausing to note the context in which it was made. The Levi Strauss case was, like the present one, concerned with goods imported into the European Community without the consent of the trade mark proprietor. It had been joined in the same reference to the Court of Justice as Zino Davidoff SA v A&G Imports Ltd (Joined Cases C 414/99 to 416/99) [2002] Ch 109. I have already referred to the Courts decision on this reference as part of a consistent line of authority for the propositions (i) that the Directive must be construed as a definitive statement of the harmonised law concerning the rights of trade mark proprietors, and (ii) that it confers on trade mark proprietors a right to control the first marketing of their goods in the EEA save in cases where that right had been unequivocally renounced. Pumfrey J, after noting these propositions and referring to the statement of principle in EMI Records, proceeded to reject a submission very similar to M Techs in the present case, that the exercise of a right to control the first marketing of the goods in the EEA could be precluded by the treaty provisions relating to the free movement of goods. He gave summary judgment in favour of the proprietor, and declined to refer the question to the Court of Justice: see paras 51 55, 58. Category (ii): Enforcement to prevent further commercialisation The position in relation to the exercise of the proprietors extended right under article 7.2 is different. This is because in cases governed by article 7.2 the goods have by definition been put onto the market in the EEA by or with the consent of the proprietor, who is seeking to prevent their further commercialisation. It follows that the principle of the free movement of goods may be engaged, depending on the facts. The great majority of cases in this category are repackaging cases. Their characteristic feature is that the trade mark proprietor is seeking to prevent a trader who has acquired the proprietors branded goods in one member state from altering them so as to enable them to be sold in another member state, commonly by repackaging them with the same mark so as to comply with different national languages, regulations or marketing practices. The proprietor in these cases is generally attempting to exercise his trade mark rights in a way which directly partitions the internal market by objecting to a repackaging which is necessary to enable the goods to be sold in a particular national market. The case law on what may constitute legitimate reasons really begins with the decision of the Court of Justice in Hoffmann La Roche AG & Co v Centrafarm Vertriebsgesellschaft Pharmazeutischer Erzeugnisse mbH (Case C 102/77) [1978] ECR I 1139, but the leading modern decision is Bristol Myers Squibb v Paranova A/S (Joined Cases C 427/93, C 429/93, C 436/93) [2003] Ch 75. Two arguments were advanced in Bristol Myers Squibb to justify the proprietors position. The first was that article 7.1 provided for the exhaustion of the proprietors trade mark rights only in respect of the goods in the exact form in which they were originally put on the market in the EEA. Therefore, even without article 7.2, the proprietor was said to be entitled to object to their being marketed in their repackaged form. The Court of Justice rejected this contention because one of the objectives of the EU principle of exhaustion was precisely to allow trade in branded goods between member states once they had been put on the market in the EEA by or with the consent of the trade mark proprietor: paras 34 37. The second argument was that article 7.2 justified the proprietors position because there were legitimate reasons for opposing the further commercialisation of the goods in their repackaged form. In addressing this argument, the Court took it for granted that the protection of a national market within the EU was not a legitimate reason. It then proceeded to formulate the conditions on which a trade mark proprietor might oppose repackaging which was necessary for sales to be made in a particular market. Broadly speaking, the least that he would have to show was that his opposition was objectively justified by some adverse effect of the repackaging on the condition or reputation of the goods. The same principles were applied in two cases decided at the same time, Eurim Pharm Arzneimittel GmbH v Beiersdorf AG (Joined Cases C 71 73/94) [1996] ECR I 3603 and MPA Pharma GmbH v Rhone Poulenc Pharma GmbH (Case 232/94) [1996] EC I 3671; and later in Pharmacia & Upjohn SA v Paranova A/S (Case C 379/97) [2000] Ch 571. On the same ground, it has been held that a trade mark proprietor may not object to the removal of identification codes or marks which would reveal the traders sources of supply to the trade mark proprietor and thereby make it impossible for the trader to serve that market at all: Frits Loendersloot (t/a F Loendersloot Internationale Expeditie) v George Ballantine & Sons Ltd. (Case C 349/95) [1997] ECR I 6227, at para 40. The reasoning of these decisions is applicable only in cases where the goods are already lawfully in circulation within the EEA with the consent of the trade mark proprietor, and he is trying to exercise the only right of control which the directive allows him in that situation. It is right to add that even in that context, the Court did not hold that a right expressly conferred by the directive in unqualified terms was unenforceable when the effect of enforcement would be to impede trade between member states. What it held was that the right did not exist at all. That conclusion was possible in the case of rights governed by article 7.2 because it provides that the rights exist only if there are legitimate reasons. A corresponding conclusion would not have been possible in the case of rights governed by article 5 which were not exhausted under article 7.1, because those rights are in every relevant respect unqualified. There was a good deal of debate before us, as there was in the courts below, about the effect of the case law of the Court of Justice concerning the burden of proving whether the trade mark proprietor did or did not consent to the marketing of the goods in the EEA. This question does not arise in the present case, because it is now accepted that the goods were first marketed in the EEA by M Tech and that Sun did not consent. But the case law is said to have a broader relevance, as authority for the general approach of the Court of Justice to the enforcement of trade mark rights in a manner said to be inconsistent with the free movement of goods. In summary, the rule is that while national law may place the burden of proving consent on the alleged infringer who asserts it, nevertheless if the effect would be to enable the trade mark proprietor to partition national markets within the EU, the burden of proof must lie with the proprietor. The authority for this is Van Doren + Q GmbH v Lifestyle sports and sportswear Handelsgesellschaft mbH (Case C 244/00) [2003] ECR I 3051, paras 37 41. It is apparent from the judgment in that case at paras 21 and 40, that the concern of both the referring court and the Court of Justice was that a requirement that the alleged infringer should prove that the goods had been marketed in the EEA with the proprietors consent would in practice require him to identify an authorised distributor in the EEA from whom he had obtained his supplies, thereby enabling the proprietor to use his control over his distribution network to prevent him from obtaining any more. However, the rule does not apply (indeed, the problem does not arise) in a case where it is admitted or clear, as it is in the present case, that the goods in question were imported into to the EEA by third parties without the proprietors consent: Zino Davidoff SA v A&G Imports Ltd (Joined Cases C 414/99 to 416/99) [2002] Ch 109 at para 54; subsequently reaffirmed in Class International BV v Colgate Palmolive Company (Case C 405/03) [2006] Ch 154, at paras 71 74. The difference between the two situations is discussed in the judgment in Van Doren, at paras 28 31. It corresponds to the long standing distinction between trademarked goods which are already legitimately in circulation in the EEA and those which are not. The reason for the difference of treatment is that where it is established that the goods have not previously been on the market in the EEA, the proprietor is only exercising his right to control the first marketing of his branded goods in the EEA. This right is conferred on him by EU law and does not engage the treaty provisions concerning the free movement of goods. Where, on the other hand, it may turn out that the goods were already legitimately circulating in the EEA because the trade mark proprietor had consented to their previous marketing there, the attempted enforcement of the trade mark rights potentially affects trade between member states. Application to the facts alleged by M Tech The real question in the present case is whether, applying those principles, the facts alleged by M Tech would give them a defence if they could be proved. Like Kitchin J, I do not consider that they would. The reason is that, once the scheme of articles 5 and 7 of the directive are correctly understood, it is clear that the unlawful conduct alleged by M Tech is collateral to the particular right which Sun is seeking to enforce. The first and main reason follows directly from the scheme of those articles. On the agreed facts, these goods were never marketed in the EEA until they were imported and marketed there by M Tech without Suns consent. It is therefore not in dispute that the only right derived from its trade marks which Sun is seeking to enforce by these proceedings is its right to control the first marketing of the goods in the EEA. This is an exercise of rights which does not engage the principle of the free movement of goods between member states embodied in articles 34 to 36 of the treaty. It affects only the entry of the goods onto the EEA market, not the movement of the goods within it. It is specifically authorised by articles 5 and 7.1 of the Trade Mark Directive, which are part of an exhaustive code that itself fully reflects the requirements of articles 34 to 36 of the treaty. M Techs argument to the contrary, and the decision of the Court of Appeal accepting it, are both substantially based on decisions of the Court of Justice under article 7.2 concerning the use of trade mark rights to obstruct the trading between member states of goods already legitimately in circulation within the EEA. That is a different, and for present purposes irrelevant situation. Second, what produces the impediment to the free movement of goods is not the enforcement of Suns right to control the first marketing of its products in the EEA. On M Techs account of the facts, the adverse effect on the free movement of goods arises from the partitioning of the market through Suns controlled distribution network. That is made possible by the disappearance of the independent secondary market for its hardware, which removes any alternative source of supply. The disappearance of the independent secondary market is in turn the result of Suns refusal to disclose where any particular goods were first marketed and, if it was in the EEA, whether it happened with its consent. This is said to achieve the chilling effect on both the legitimate and the illegitimate parallel trade, which has served to eliminate independent resellers in both categories. This is the only economically intelligible way in which M Techs case may be understood. It is also the mechanism which is clearly being put forward in the evidence of the two witnesses, Mr. Marion and Mr. Buta, who deal with this matter on their behalf. The difficulty about M Techs argument is that the act of a trade mark proprietor in seeking to control the first marketing of his products in the EEA is in principle an ordinary exercise of the essential right conferred on him by articles 5 and 7.1 of the directive. He may or may not also engage in activities such as withholding information about provenance, which are designed to eliminate the independent parallel trade. But Sun cannot be prevented from doing something which is in itself entirely lawful and consistent with the principle of the free movement of goods, simply because it proposes to do something else as well which is unlawful and inconsistent with that principle. It does not advance the argument to say, as M Tech does, that Suns policy of withholding information about provenance is effective only because it is combined with a policy of vigorously enforcing its trade mark rights. The only conceivable relevance of the fact that Sun seeks to control the first marketing of its trade marked products in the EEA is that if they did not do this, then it would be impossible to eliminate independent resellers by withholding information about provenance, because they could supply themselves with stock from outside the EEA regardless of provenance and market it in the EEA regardless of Suns objection. But that is the very thing that EU law unquestionably says that they cannot do. It cannot therefore follow that because Sun enforces its trade mark rights vigorously it should have no trade mark right to enforce in those circumstances. Nor, in my view, does it advance the argument to refer to the enforcement of Suns trade mark rights as part of a scheme to eliminate the independent resellers from the secondary market. This is simply a pejorative way of making the same unsustainable point. Third, even if (which is not the case) the jurisprudence arising from article 7.2 about the obstruction of trade within the EEA in goods which are already legitimately in circulation there had any application to the particular right which Sun is seeking to enforce, the case law would not justify the conclusion pressed upon us by M Tech. I have already discussed the cases on article 7.2. They are authority for the proposition that a trade mark proprietor cannot claim a right under the directive to oppose the further commercialisation of the goods if the exercise of that right would itself unjustifiably impede the free movement of goods between member states. However, none of the cases go so far as to hold non existent or unenforceable rights whose exercise would in itself have no impact on trade between member states, merely because they are accompanied by other acts which do. The law responds to this situation by restraining the acts which do. It does not pull down the whole temple. Fourth and last, it is a consequence of the collateral character of the unlawful acts alleged against Sun that M Tech have to advance a case which may fairly be characterised as extreme. The argument that article 5 of the directive is impliedly limited in the manner suggested by Mr. Vajda necessarily operates to suspend Suns trade mark rights indiscriminately as against the entire EEA market, including traders who are entirely unaffected by the withholding of information about provenance because, for example, they are knowingly importing Suns goods without their consent. The argument would be exactly the same, and just as sound or unsound whether or not the trader needed to be told the provenance of the goods. Mr. Vajda accepts this. Logically, as he also acknowledged, the effect would be to make the rights unavailable not only as against unauthorised parallel importers like M Tech but as against any other categories of infringer, for example industrial counterfeiters. This is a submission of truly remarkable breadth. In Imperial Chemical Industries Ltd v Berk Pharmaceuticals Ltd [1981] 2 CMLR 91, at [9], Sir Robert Megarry V C characterised a somewhat similar argument as a proposal to treat a person guilty of collateral breaches of the treaty as an outlaw, unable to enforce any of his rights against any one. None of the cases relied upon by M Tech come close to justifying such a proposition, which would be quite unnecessary to vindicate the principles of the treaty and contrary to the object and express terms of the directive. It may well be that M Tech has a perfectly good cause of action against Sun based on articles 34 to 36 of the treaty for damages for preventing them from selling Sun products by their policy of withholding information about the previous history of the goods. I make no comment on that, because it is irrelevant to this appeal. We are not concerned in these proceedings with business that M Tech have been prevented from doing, still less with business that other traders have been prevented from doing. We are concerned with business which M Tech have done in infringement of Suns trade marks. It is not a defence to proceedings brought on that basis that there is other business that M Tech have been prevented from doing by Suns arguably unlawful policy of withholding information. Article 101: anti competitive agreements Article 101 of the treaty prohibits agreements and concerted practices so far as they have as their object or effect the prevention, restriction or distortion of competition within the internal market. An intellectual property right is not itself an agreement or concerted practice capable of contravening article 101 of the treaty. But there are undoubtedly circumstances in which it may be unenforceable because there is a sufficient nexus between the exercise of the right and the agreement or concerted practice in question. The test, which dates back to the venerable but still authoritative decision of the Court of Justice in Sirena Srl v Eda Srl (Case 40/70) [1971] ECR 69, at para 9, is whether it is the subject, the means or the result of a restrictive practice: see also Keurkoop BV v Nancy Kean Gifts BV (Case C 144/81) [1982] ECR 2853, at para 27 (the exercise of that right may be subject to the prohibitions contained in the Treaty when it is the purpose, the means or the result of an agreement or concerted practice. The facts relied upon as engaging article 101 in this case are that Sun distributes its products through a network of authorised dealers. The dealers are said to be bound by distribution agreements which require them to obtain their supplies from Sun or from other authorised Sun dealers, unless the goods in question cannot be supplied from those sources. It is alleged that this is contrary to article 101, and for present purposes Sun is prepared to assume that it is. The question is whether that has any relevant connection with the exercise by Sun of its right to control the first marketing in the EEA of its trade marked goods. The argument seems to have undergone a certain amount of refinement since it was presented to the judge. As presented in M Techs printed case, it was that the restriction in the distribution agreements served to reinforce the chilling effect of withholding information about the provenance of the goods. This is because, so it is said, Suns authorised dealers are able to access the Sun database from which the provenance of the goods can be identified. They are not therefore inhibited from sourcing their supplies from independent resellers by Suns policy of withholding provenance information from the independent market. Therefore, in order to achieve its objective of eliminating the independent secondary market, it is necessary to prevent the authorised dealers contractually from buying from them. In effect, what is being said is that Sun has two tactics for eliminating the independent secondary market, one (withholding information) aimed directly against independent resellers and the other aimed at their own distributors. The two tactics. , say M Tech, work in tandem. There are two insuperable difficulties about this part of M Techs case. The first is that there is no relevant connection between the policy of withholding information about provenance and the prevention, restriction and distortion of competition by means of the distribution agreements. The whole premise of the argument is that the policy of withholding information has no anti competitive effect on the choices of Suns authorised distributors. The second difficulty is that there is no relevant connection between the policy of withholding information about provenance and the enforcement of Suns right to control the first marketing of its trade marked products in the EEA, for the same reasons as there is no such connection in the context of articles 34 to 36. More generally, neither the trade marks nor the rights conferred on their proprietor by the directive can be characterised as the subject, the means or the result of an agreement or concerted practice contravening article 101. Abuse of rights The final point taken by M Tech seems to me to be incapable of succeeding in circumstances where their other points have failed. The leading case on the EU concept of abuse of rights is the decision of the Court of Justice in Halifax Plc v Customs and Excise Comrs (Case C 255/02) [2006] Ch 387, in which a tax saving scheme which formally complied with the requirements of the Sixth VAT Directive was said to be abusive. In his opinion, at paras 62 71, Advocate General Poiares Maduro traced the development of the concept in the jurisprudence of the Court of Justice, before expressing the principle as being that no provision of Community law can be formally relied on to secure advantages manifestly contrary to its purposes and objectives: para. 74. This test was adopted by the Grand Chamber in its judgment. The Court said: 74 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 Secondly, 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. The rule of EU law which Sun is invoking in the present case is to be found in articles 5 and 7.1 of the Trade Mark Directive. It is beyond argument that the purpose of those provisions was (among other things) to enable the trade mark proprietor to control the first marketing of his trade marked goods in the EEA. The exercise of that right by Sun did not only satisfy the formal requisites of those articles. It was entirely consonant with their purpose. Even if (contrary to my view) M Tech were right to say that by achieving that purpose Sun was enabled to do other things which tended to eliminate independent resellers from the secondary market, that would not make it an abuse of rights. Reference Once the Court of Justice has laid down the relevant principles of law in terms which are clear, consistent, and sufficient for the decision of the case, it is the function of national courts to apply them. That there are obscurities in parts of this area of EU law is beyond question. But the particular legislative provisions and legal principles which make M Techs case impossible are in my judgment entirely clear. A reference is not required to elucidate them. M Techs real problem, under all three heads of their argument, is that they are unable to establish a relevant connection between the exercise of Suns right to control the first marketing of their trade marked goods in the EEA and any breach of the treaty. Conclusion I would allow the appeal and restore the order of Kitchin J. |
This appeal raises an important question about the application of copyright law to the technical processes involved in viewing copyright material on the internet. The owner of a copyright has the exclusive right to do or to authorise a number of acts defined in sections 16 to 26 of the Copyright, Designs and Patents Act 1988. Broadly speaking, it is an infringement to make or distribute copies or adaptations of a protected work. Merely viewing or reading it is not an infringement. A person who reads a pirated copy of a protected book or views a forgery of a protected painting commits no infringement although the person who sold him the book or forged the painting may do. The ordinary use of the internet will involve the creation of temporary copies at several stages. Copies will be created in the course of transmission in internet routers and proxy servers. Where a web page is viewed by an end user on his computer, without being downloaded, the technical processes involved will require temporary copies to be made on screen and also in the internet cache on the hard disk. The screen copy is self evidently an essential part of the technology involved, without which the web page cannot be viewed by the user. It will remain on screen until the user moves away from the relevant web page. The function of the internet cache is somewhat more complex. It is a universal feature of current internet browsing technology. It would be possible to design browsing software without an internet cache, but in the present state of technology the result would be that the internet would be unable to cope with current volumes of traffic and would not function properly. The cache may be deliberately cleared by the end user, but otherwise it will in the ordinary course be overwritten by other material after an interval which will depend on its capacity and on the volume and timing of the end users internet usage. The above is a crude, but for present purposes sufficient, description of the technical processes. Like most things in the digital world, their operation is capable of being modified. The capacity of the internet cache may within limits be modified by altering the browser settings on the users computer. Deleted material can sometimes be retrieved by special software or highly proficient technicians. But this refinement is not characteristic of the ordinary use of the internet and can for present purposes be ignored. The important point is that in none of these cases does the end user set out to make a copy of the web page unless he chooses to download it or print it out. His object is to view the material. The copies temporarily retained on the screen or the internet cache are merely the incidental consequence of his use of a computer to do that. The question which arises on this appeal is whether they are nonetheless infringing copies unless licensed by the rights owner. The appellant is a professional association of public relations professionals who, among other things, monitor news coverage on behalf of clients. One way of doing this is to use on line monitoring or search services. This appeal is about the services provided to members of the association by the Meltwater group of companies. The Meltwater companies use automated software programmes to create anindex of words appearing on newspaper websites. Meltwaters customers provide them with search terms of interest to them, and Meltwater produces a monitoring report listing the results of a search of the index for those keywords. For each search hit, the monitoring report will present the opening words of the article, the keyword together with several words on either side of it, and a hyperlink (in the form of a reproduction of the headline) which enables the user to access the article on the relevant source website. It should, however, be noted that if that website has a paywall, the link will not enable the user to avoid it. He will have to pay for access to the material behind the paywall on the same terms as anyone else. Meltwater sends the monitoring report to the customer by email or the customer accesses it on the Meltwater website. A number of points are common ground. It is common ground that Meltwater agreed to take a licence from the publishers of the newspapers to provide their service on terms which have been settled by the Copyright Tribunal. It is also common ground, and has been from an early stage of these proceedings, that Meltwaters customers require a licence to receive the service in its present form. This is because in its present form the service automatically involves the transmission of the monitoring report by e mail. The email copy is not temporary. It is stored on the recipients hard drive until the end user chooses to delete it. The real question on this appeal is whether Meltwaters customers would need a licence to receive its service if the monitoring report were made available only on Meltwaters website. Obviously, to the extent that the customer downloads the report from the website he is making a copy that will infringe the newspapers copyright unless he is licensed. But what if he merely views the material on the website? Proudman J held that he also needed a licence for that, and the Court of Appeal agreed with her. The issue has reached this court because it affects the operation of a service which is being made available on a commercial basis. But the same question potentially affects millions of non commercial users of the internet who may, no doubt unwittingly, be incurring civil liability by viewing copyright material on the internet without the authority of the rights owner, for example because it has been unlawfully uploaded by a third party. Similar issues arise when viewers watch a broadcast on a digital television or a subscription television programme via a set top box. Directive 2001/29/EC Temporary copies created as part of the technical processes involved in viewing copyright material on a computer are dealt with by section 28A of the Copyright, Designs and Patents Act 1988. Section 28A was added to the Act by regulation in 2003 to give effect to Directive 2001/29/EC of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society. It is not disputed that the effect of the Directive and the English statutory provision is the same, and it is convenient to refer to the terms of the Directive. Directive 2001/29/EC originated in Commission Green Paper on Copyright and Related Rights in the Information Society, published in July 1995, which identified as an issue the use of data processing systems to reproduce copyright material in a form which cannot be apprehended directly by the human senses, i.e. as digital code. This would make it necessary to decide, among other things, whether the right of a copyright owner to control the reproduction of his work should come into play in the ordinary use (digitization, intermediate copies, downloading into main memory) of the computers and other equipment which characterize the information society. This was followed, after a period for consultation, by a proposal of the EC Commission issued in its final form in December 1997, which identified very clearly the problem which has arisen on this appeal. It addressed the prospect of the commercial transmission from digital databases of music, films or other copyright material as digital signals over the internet or other high speed networks for display or downloading, which would dispense with the need for physical media of transmission and storage such as books, disks, tapes, and the like. On the one hand the EU has traditionally afforded, as a matter of policy, a high level of protection for intellectual property rights, and the widespread use of these technologies was likely to facilitate piracy. On the other, it is clear that there was concern that the over rigid application of copyright law devised for physical media of transmission or storage would retard the commercial development of the internet and other form of electronic media technology. In particular, there was uncertainty about the status of temporary or incidental reproductions in the electronic environment. Article 9(2) of the Berne Convention for the Protection of Literary and Artistic Works authorised signatory states to legislate for limited exceptions to the authors exclusive right to authorise the reproduction of his work: It shall be a matter for legislation in the countries of the Union to permit the reproduction of such works in certain special cases, provided that such reproduction does not conflict with a normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author. The problem, as the Commission saw it in 1997, was that different member states had made use of the liberty conferred by article 9(2) to legislate in different ways for the treatment of copyright works made available in digital form and these differences were liable to impede the development of the internal market. The purpose of the Directive, a draft of which was annexed to the proposal, was to harmonise the rules across the EU. Directive 2001/29/EC was an internal market measure designed to adapt and supplement existing copyright law to respond adequately to economic realities such as new forms of exploitation (Recital 5). Its object was to ensure a high level of protection for copyrights, while modifying those rights to allow the ordinary use of the internet. Recital 31 declared: A fair balance of rights and interests between the different categories of rightholders, as well as between the different categories of rightholders and users of protected subject matter must be safeguarded. The existing exceptions and limitations to the rights as set out by the Member States have to be reassessed in the light of the new electronic environment. Recital 33 referred directly to the problem of temporary copies in the following terms: The exclusive right of reproduction should be subject to an exception to allow certain acts of temporary reproduction, which are transient or incidental reproductions, forming an integral and essential part of a technological process and carried out for the sole purpose of enabling either efficient transmission in a network between third parties by an intermediary, or a lawful use of a work or other subject matter to be made. The acts of reproduction concerned should have no separate economic value on their own. To the extent that they meet these conditions, this exception should include acts which enable browsing as well as acts of caching to take place, including those which enable transmission systems to function efficiently, provided that the intermediary does not modify the information and does not interfere with the lawful use of technology, widely recognised and used by industry, to obtain data on the use of the information. A use should be considered lawful where it is authorised by the rightholder or not restricted by law. Chapter II of the Directive deals with Rights and Exceptions. The rights of the copyright owner are dealt with separately in articles 2, 3 and 4 under three heads: reproduction rights, communication rights and distribution rights respectively. Article 5 then qualifies these rights. Article 5.1 creates an exception for temporary copies which applies only to the reproduction right defined by article 2. It provides: 1. Temporary acts of reproduction referred to in Article 2, which are transient or incidental [and] an integral and essential part of a technological process and whose sole purpose is to enable: (a) a transmission in a network between third parties by an intermediary, or (b) a lawful use of a work or other subject matter to be made, and which have no independent economic significance, shall be exempted from the reproduction right provided for in Article 2. 5. The exceptions and limitations provided for in paragraphs 1, 2, 3 and 4 shall only be applied in certain special cases which do not conflict with a normal exploitation of the work or other subject matter and do not unreasonably prejudice the legitimate interests of the rightholder. Chapters III and IV then make extensive provision for the enforcement of copyright owners rights in the digital world. The case law of the Court of Justice The Court of Justice of the European Union has considered article 5.1 in three recent cases which have laid down broad principles for application by national courts. They are, in the order in which they were decided, (Case C 5/08) Infopaq International A/S vs Danske Dagblades Forening (Infopaq I) [2010] F.S.R. 495; (Case C 403/08) Football Association Premier League Ltd v QC Leisure and Others and (Case C 429/08) Karen Murphy v Media Protection Services Ltd (Premier League) [2012] 1 CMLR 769; and (Case C 302/10) Infopaq International A/S vs Danske Dagblades Forening (Infopaq II), 17 January 2012. It should be noted that only the first of these cases was cited to Proudman J or the Court of Appeal. Neither the Premier League case or Infopaq II had been decided at the time when they gave judgment. Infopaq I In Infopaq I [2010] F.S.R. 495, at [54], the Court of Justice paraphrased article 5.1 as making the exemption for an act of reproduction dependent on five conditions being fulfilled: the act is temporary; it is transient or incidental; it is an integral and essential part of a technological process; the sole purpose of that process is to enable a transmission in a network between third parties by an intermediary of a lawful use of a work or protected subject matter; and the act has no independent economic significance. This formulation has been repeated in this form in the subsequent case law, and it is undoubtedly convenient. It is, however, important to remember that it is a paraphrase. Notwithstanding that the five conditions are laid out in five separate sub paragraphs, they are not free standing requirements. They are overlapping and repetitive, and each of them colours the meaning of the others. They have to be read together so as to achieve the combined purpose of all of them. This is, as the case law demonstrates, what the Court of Justice has always done. In particular, it was the approach of the Court of Justice in Infopaq I itself, which was a reference from Denmark concerning commercial media monitoring service, Infopaq, which was not unlike Meltwaters. The issue was about Infopaqs data capture process, i.e. the electronic search process by which it identified relevant newspaper extracts. It was not, as the present case is, about the method by which the result of the search was communicated to Infopaqs clients. However, Infopaqs methods did make it necessary to consider generally how article 5.1 applied to the storage and viewing of digital data. They involved the creation of copies at four successive stages: (i) the creation of a scanned image of the original article, (ii) the conversion of that image into a searchable text file, (iii) the extraction of the keywords from that text file together with the five words on either side, and their storage as a text file, and (iv) the printing out and retention of copy (iii). The issue turned on the temporary or transient character of copies made in the course of this procedure. It was held that article 5.1 might apply to (i), (ii) and (iii), if the national court was satisfied that these copies were deleted automatically, i.e. without any discretionary human intervention, when the technical need for them had passed. On the other hand, (iv) was not transient because the print outs were destroyed only when a human agent decided to destroy them. Although the Court of Justice was directly concerned only with the first two conditions, it construed them in the light of the third. In substance what the court held was that the requirement of the third condition that the copying should be an integral and essential part of a technological process meant that it could only be regarded as temporary or transient if it was inherent in the technological process that the copy would be deleted when that process was complete. The courts analysis began by drawing attention to the fact that the exception in article 5.1 was a derogation from the rights conferred on copyright owners: 56 For the interpretation of each of those conditions in turn, it should be borne in mind that, according to settled case law, the provisions of a Directive which derogate from a general principle established by that Directive must be interpreted strictly (Criminal Proceedings against Kapper (C 476/01) [2004] E.C.R. 1 5205, ECJ at [72], and Commission of the European Communities v Spain (C 36/05) [2006] E.C.R. 1 10313 ECJ at [31]). 57 This holds true for the exemption provided for in art.5(1) of Directive 2001/29, which is a derogation from the general principle established by that Directive, namely the requirement of authorisation from the rightholder for any reproduction of a protected work. 58 This is all the more so given that the exemption must be interpreted in the light of art.5(5) of Directive 2001/29, under which that exemption is to be applied only in certain special cases which do not conflict with a normal exploitation of the work or other subject matter and do not unreasonably prejudice the legitimate interests of the rightholder. At paras 61 64 the court summarised the position in this way: 61 The court finds, in the light of the third condition referred to in [54] of this judgment, that a temporary and transient act of reproduction is intended to enable the completion of a technological process of which it forms an integral and essential part. In those circumstances, given the principles set out in [57] and [58] of this judgment, those acts of reproduction must not exceed what is necessary for the proper completion of that technological process. 62 Legal certainty for rightholders further requires that the storage and deletion of the reproduction not be dependent on discretionary human intervention, particularly by the user of protected works. There is no guarantee that in such cases the person concerned will actually delete the reproduction created or, in any event, that he will delete it once its existence is no longer justified by its function of enabling the completion of a technological process. 63 This finding is supported by recital 33 in the preamble to Directive 2001/29 which lists, as examples of the characteristics of the acts referred to in art.5(1) thereof, acts which enable browsing as well as acts of caching to take place, including those which enable transmission systems to function efficiently. Such acts are, by definition, created and deleted automatically and without human intervention. 64 In the light of the foregoing, the court finds that an act can be held to be transient within the meaning of the second condition laid down in art.5(1) of Directive 2001/29 only if its duration is limited to what is necessary for the proper completion of the technological process in question, it being understood that that process must be automated so that it deletes that act automatically, without human intervention, once its function of enabling the completion of such a process has come to an end. Addressing the question of copy (iii) (the text file containing the keyword extracts), the court added, 66 . It is for the national court to ascertain whether the deletion of that file is dependent on the will of the user of the reproduction and whether there is a risk that the file might remain stored once the function of enabling completion of the technological process has come to an end. The Premier League case In the important case of Football Association Premier League Ltd v QC Leisure and Karen Murphy v Media Protection Services Ltd [2012] 1 CMLR 769, the ambit of article 5.1 arose in the context of a dispute about the fourth and fifth conditions, which had not been considered in Infopaq I. It was, however, impossible to form a view about the effect of those conditions without construing article 5.1 as a whole, and examining the function of each of the five conditions. This is what the Court of Justice did. The facts were that Mrs. Murphy had subscribed to a pay TV service in Greece and acquired a Greek satellite decoder, but used it without the authority of the rights owner to receive broadcasts of football matches in her pub in the United Kingdom, where they were viewed by her customers. The copies said to infringe were the temporary copies made in the memory of the decoder and on the television screen in the course of the streaming of the material. Functionally, these were similar to the copies made in the internet cache and on the screen of a personal computer. On any view, the infringement alleged was against the consumption of the copyright material by Mrs Murphy and the customers in her pub as end users. At paras 162 164, the court reminded itself that while any exception from the prima facie right of the copyright owner to control reproduction must be strictly construed, that right had to be balanced against the purpose of the exception, which was to encourage the development and operation of new technologies and the rights of users who wished to use those technologies. It was held that Mrs. Murphy was protected by article 5(1). The first question was whether the allegedly infringing copies made in the cache of Mrs Murphys decoder were made for one of the two purposes specified in sub paragraphs (a) and (b) of article 5.1. Since they were not made for the purpose of the transmission of the material through a network, it was necessary for Mrs Murphy to rely on sub paragraph (b). This required her to establish that the copies were made to enable some other use which was lawful. The court held that they were. It put the matter in this way: 168 As is apparent from recital 33 in the preamble to the Copyright Directive, a use should be considered lawful where it is authorised by the right holder or where it is not restricted by the applicable legislation. 169 Since in the main proceedings the use of the works at issue is not authorised by the copyright holders, it must be determined whether the acts in question are intended to enable a use of works which is not restricted by the applicable legislation. 170 In this regard, it is undisputed that those ephemeral acts of reproduction enable the satellite decoder and the television screen to function correctly. From the television viewers' standpoint, they enable the broadcasts containing protected works to be received. 171 Mere reception as such of those broadcaststhat is to say, the picking up of the broadcasts and their visual displayin private circles does not reveal an act restricted by EU legislation or by that of the United Kingdom, as indeed follows from the wording of Question 5 in Case C 403/08, and that act is therefore lawful. Furthermore, it follows from [77][132] of the present judgment that such reception of the broadcasts must be considered lawful in the case of broadcasts from a Member State other than the United Kingdom when it is brought about by means of a foreign decoding device. 172 Accordingly, the acts of reproduction have the sole purpose of enabling a lawful use of the works within the meaning of art.5(1)(b) of the Copyright Directive. 173 Acts of reproduction such as those at issue in the main proceedings thus satisfy the fourth condition laid down by that provision. This section of the judgment is critical to an understanding of the current issue and to the whole of the jurisprudence of the court upon it. EU law might have treated any use of copyright material apart from its transmission through a network as unlawful, if it lacked the authority of the copyright owner. A suggestion was in fact made by the Economic and Social Committee that the Commissions original proposal should be amended (expanded and clarified) so that [a]ny reproduction that in effect is consumption of the work should be unlawful if it occurred without the copyright owners authority: see OJ C 407/32, 28.12.98, at paragraph 3.7.1.2. The suggestion was not, however, adopted, and in the Premier League case the Court of Justice decisively rejected an attempt to arrive at the same result on the construction of article 5.1 as issued. Because Mrs. Murphys use of the material was not contrary to the applicable legislation, it was held to be lawful for the purpose of article 5.1(b) even though it was not authorised by the rights owner. In a later section of its judgment, the court went on to hold that Mrs Murphys use of the material infringed the separate communication right defined by article 3 of the Directive, and was to that extent unlawful. That did not, however, affect its conclusion that her use of the material was lawful for the purpose of article 5.1(b). This was because article 5.1 was concerned only with the ambit of the reproduction right defined in article 2. The only requirement was therefore that the relevant use should be consistent with EU legislation governing the reproduction right, including article 5.1 itself. The court then turned to the fifth condition, which is concerned with the economic significance of the use made of the material. The Court interpreted this condition as meaning that the use made of the material by the alleged infringer must not have any economic value other than that which was inherent in its mere reception and viewing: 174 So far as concerns, finally, the fifth condition laid down by that provision, these acts of reproduction carried out in the course of a technological process make access to the protected works possible. Since the latter have an economic value, access to them necessarily has economic significance. 175 However, if the exception laid down in art.5(1) of the Copyright Directive is not to be rendered redundant, that significance must also be independent in the sense that it goes beyond the economic advantage derived from mere reception of a broadcast containing protected works, that is to say, beyond the advantage derived from the mere picking up of the broadcast and its visual display. 176 In the main proceedings, the temporary acts of reproduction, carried out within the memory of the satellite decoder and on the television screen, form an inseparable and non autonomous part of the process of reception of the broadcasts transmitted containing the works in question. Furthermore, they are performed without influence, or even awareness, on the part of the persons thereby having access to the protected works. 177 Consequently, those temporary acts of reproduction are not capable of generating an additional economic advantage going beyond the advantage derived from mere reception of the broadcasts at issue. 178 It follows that the acts of reproduction at issue in the main proceedings cannot be regarded as having independent economic significance. Consequently, they fulfil the fifth condition laid down in art.5(1) of the Copyright Directive. 179 This finding, and the finding set out in [172] of the present judgment [that the copying had the purpose of enabling a lawful use], are moreover borne out by the objective of that provision, which is intended to ensure the development and operation of new technologies. If the acts at issue were not considered to comply with the conditions set by art.5(1) of the Copyright Directive, all television viewers using modern sets which, in order to work, need those acts of reproduction to be carried out would be prevented from receiving broadcasts containing broadcast works, in the absence of an authorisation from copyright holders. That would impede, and even paralyse, the actual spread and contribution of new technologies, in disregard of the will of the EU legislature as expressed in recital 31 in the preamble to the Copyright Directive. Finally, the court dealt briefly with the requirement of article 5.5 that the exception should be applied only in special cases which do not conflict with a normal exploitation of the work or other subject matter and do not unreasonably prejudice the legitimate interests of the rightholder. It held that in view of the considerations which had led it to hold that article 5.1 applied, article 5.5 must be regarded as satisfied also. I shall return to this point in the context of Infopaq II, where the reasoning is repeated in expanded form. Infopaq II Infopaq II was a second reference in the same case as Infopaq I. It concerned the third, fourth and fifth conditions, which had not been directly in issue on the previous reference. The court substantially repeated what it had said in the Premier League case about the test of lawfulness under article 5.1(b) and it decided on that basis that the fourth condition was satisfied. No further discussion of that point is called for here. The other issues related to the third condition (integral and essential part of a technological process), the fifth condition (no independent economic significance), and the effect of article 5.5. The Danish courts problem with the third condition was that the courts previous emphasis on the absence of human intervention appeared to rule out the application of article 5.1 to the scanned copy which initiated the process, since the original article had to be manually inserted into the scanner. In dealing with this question, the court pointed out that in Infopaq 1 it had been concerned to emphasise that it was the deletion of a temporary copy which must not depend on human intervention. It had not said that there must be no human intervention at any stage: see para 32. It followed from this that the discretionary nature of the users decision to initiate the process (for example by switching on his computer or accessing a particular web page) was irrelevant. Having dealt with this point, the court took the opportunity to deal more generally with the requirement that the copying should be an integral and essential part of a technological process: 30 The concept of the integral and essential part of a technological process requires the temporary acts of reproduction to be carried out entirely in the context of the implementation of the technological process and, therefore, not to be carried out, fully or partially, outside of such a process. This concept also assumes that the completion of the temporary act of reproduction is necessary, in that the technological process concerned could not function correctly and efficiently without that act (see, to that effect, Infopaq International, paragraph 61). 37 Finally, it should be noted that the technological process in question could not function correctly and efficiently without the acts of reproduction concerned. That technological process aims at identifying predefined key words in newspaper articles and extracting them on a digital medium. Such electronic research thus requires a transformation of those articles, from a paper based medium, into digital data, since that transformation is necessary in order to recognise that data, to identify the key words and to extract those key words. The court returned to this theme in dealing with the fifth condition about the absence of independent economic significance: 48 In that regard, it should be recalled that the acts of temporary reproduction, within the meaning of Article 5(1), aim to make access to the protected works and their use possible. Since those works have a specific economic value, access to them and their use necessarily has economic significance (see, to that effect, Football Association Premier League [2012] 1 CMLR 769, paragraph 174). 49 Furthermore, as is apparent from Recital 33 in the preamble to Directive 2001/29, the acts of temporary reproduction like the acts enabling browsing and caching have the purpose of facilitating the use of a work or making that use more efficient. Thus, an inherent feature of those acts is to enable the achievement of efficiency gains in the context of such use and, consequently, to lead to increased profits or a reduction in production costs. 50 However, those acts must not have independent economic significance, in that the economic advantage derived from their implementation must not be either distinct or separable from the economic advantage derived from the lawful use of the work concerned and it must not generate an additional economic advantage going beyond that derived from that use of the protected work (see, to that effect, Football Association Premier League and Others, paragraph 175). 51 The efficiency gains resulting from the implementation of the acts of temporary reproduction, such as those in issue in the main proceedings, have no such independent economic significance, inasmuch as the economic advantages derived from their application only materialise during the use of the reproduced subject matter, so that they are neither distinct nor separable from the advantages derived from its use. 52 On the other hand, an advantage derived from an act of temporary reproduction is distinct and separable if the author of that act is likely to make a profit due to the economic exploitation of the temporary reproductions themselves. Finally, the court in Infopaq II expanded on what it had said in the Premier League case about article 5.5: 56 In that regard, suffice it to note that if those acts of reproduction fulfil all the conditions of Article 5(1) of Directive 2001/29, as interpreted by the case law of the Court, it must be held that they do not conflict with the normal exploitation of the work or unreasonably prejudice the legitimate interests of the rightholder (Football Association Premier League and Others, paragraph 181). 57 Consequently, the answer to the seventh question is that Article 5(5) of Directive 2001/29 must be interpreted as meaning that, if they fulfil all the conditions laid down in Article 5(1) of that directive, the acts of temporary reproduction carried out during a 'data capture' process, such as those in issue in the main proceedings, must be regarded as fulfilling the condition that the acts of reproduction may not conflict with a normal exploitation of the work or unreasonably prejudice the legitimate interests of the rightholder. This last conclusion may at first sight seem odd, since it means that article 5.5 adds nothing to article 5.1. But the apparent oddity disappears when one appreciates that article 5.5 reflects the terms of article 9(2) of the Berne Convention by which both the EU and its member states are bound. Under that article, signatories have a right to authorise by legislation copying which would otherwise be an infringement, in special cases provided that this does not conflict with the normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author. Article 5.1 is the legislation in question. The Court of Justice is pointing out that it has been drafted so as to determine legislatively what exploitation is to be regarded as normal, and what derogations from the authors exclusive rights are to be regarded as reasonable and legitimate. This does not make article 5.5 redundant. Its effect is to require article 5.1 to be as narrowly construed as is consistent with its purpose: see Infopaq I at para 58. But its purpose must nevertheless be at the forefront of any attempt to construe it. The effect of the CJEU decisions The effect of this body of authority can be summarised as follows: (1) Subject to the limitations which I shall summarise in the following sub paragraphs, the exception in article 5.1 applies to copies made as an integral and necessary part of a technological process, in particular the digital processing of data. For this purpose, the making of copies is a necessary part of the process if it enables it to function correctly and efficiently: Infopaq II, at paras 30, 37. (2) These copies must be temporary. This requirement is explained and defined by the words which follow, namely that the making of the copies must be transient or incidental and an integral and essential part of a technological process. It means (i) that the storage and deletion of the copyright material must be the automatic consequence of the users decision to initiate or terminate the relevant technological process, as opposed to being dependent on some further discretionary human intervention, and (ii) that the duration of the copy should be limited to what is necessary for the completion of the relevant technological process: see Infopaq I, at paras 62 and 64. (3) The exception is not limited to copies made in order to enable the transmission of material through intermediaries in a network. It also applies to copies made for the sole purpose of enabling other uses, provided that these uses are lawful. These other uses include internet browsing: Infopaq I, at para 63 and Infopaq II, at para 49. (4) For the purpose of article 5.1, a use of the material is lawful, whether or not the copyright owner has authorised it, if it is consistent with EU legislation governing the reproduction right, including article 5.1 itself: Premier League, at paras 168 173, Infopaq II, at para 42. The use of the material is not unlawful by reason only of the fact that it lacks the authorisation of the copyright owner. (5) The making of the temporary copy must have no independent economic significance. This does not mean that it must have no commercial value. It may well have. What it means is that it must have no independent commercial value, i.e. no value additional to that which is derived from the mere act of digitally transmitting or viewing the material: Premier League, at para 175, Infopaq II, at para 50. (6) If these conditions are satisfied no additional restrictions can be derived from article 5.5. Application to the present case The first and fundamental question is whether article 5.1 applies at all to temporary copies generated by an end users use of the internet. Mr. Howe QC, who appeared for the Newspaper Licensing Agency, submitted that it did not. He argued that it applied only to copies made in the course of the transmission of the material within a network, for example in the caches of intermediate routers and proxy servers. In my opinion, this is an impossible contention. In the first place, it is clear from the Directives recitals, and in particular from recital 33, that it was intended that the exception should include acts which enable browsing as well as acts of caching to take place. Browsing is not part of the process of transmission. It is the use of an internet browser by an end user to view web pages. It is by its very nature an end user function. The acts referred to are the acts of temporary reproduction referred to at the outset of the recital, with which the whole recital is concerned. The acts of temporary reproduction which enable browsing to occur are accordingly the making of temporary copies in the internet cache of the end users hard drive and on his screen. It follows that the recital expressly envisages that the exception will apply to end user viewing of web pages. Secondly, if Mr Howe is right the scope of the exception corresponds only to that part of the process which is covered by article 5.1(a) (transmission in a network between third parties by an intermediary). In fact, caching is concerned with the transmission of material in a network, because its purpose is to make the operation of the internet more efficient by easing constraints on its capacity: see paragraph 2 above. But the exception in any event is wider than that, for it also extends to operations covered by article 5.1(b) (lawful use). Lawful use refers to the use of the work which is the subject of the copyright. It extends to use, as the Court of Justice made clear in the Premier League case and Infopaq II, whether or not authorised by the copyright owner, which is not restricted by the applicable legislation. This necessarily includes the use of the work by an end user browsing the internet. Third, Mr. Howes submission is directly contradicted by the judgment in the Premier League case, where article 5 was applied to Mrs Murphys use of the copyright material by displaying it on her television. She was the end user. She and her customers were consuming the product. In the context of the fifth condition, that the copy should have no independent economic significance, the court considered at para 176 the status of the copy made on the television screen, because it had been suggested by the Advocate General (at AG95) that the screen copy might have an independent economic significance that the cached copy lacked. At para 179, the court pointed out that if article 5.1 did not apply to the viewing of copyright material by a television end user, such viewers would be prevented from receiving broadcasts. in the absence of an authorisation from copyright holders, which would impede and even paralyse the actual spread and contribution of new technologies in disregard of the will of the EU legislature as expressed in recital 31. For this purpose, there is no rational distinction to be made between viewing copyright material on a television screen and viewing the same material on a computer. Once it is accepted that part of the purpose of article 5.1 is to authorise the making of copies to enable the end user to view copyright material on the internet, the various conditions laid down by that article must be construed so far as possible in a manner consistent with that purpose. It must, if the exception is to be coherent, apply to the ordinary technical processes associated with internet browsing. There is, to my mind, no room for argument on the facts of this case about the third, fourth and fifth conditions in article 5.1. The third condition is that the making of copies in the internet cache and on screen should be an integral and essential part of a technological process. Manifestly it is. These were at the time of the Directive and remain today basic features of the design of modern computers. It would no doubt be possible to design computers that did not cache material in the course of internet browsing, but in the words of the judgment in Infopaq II, the technological processes required to browse the internet could not function correctly and efficiently without the acts of reproduction concerned: see paras 30 and 37. The fourth condition, as applied to end users like Meltwater's customers, is that its use should be lawful. Once it is established, as it is by the decisions in the Premier League case and Infopaq II, that this means lawful apart from any lack of authorisation by the copyright owner, it is equally clear that this condition is satisfied. The fifth condition, that the copying should have no independent economic significance, is satisfied for the same reason as it was satisfied in the Premier League case, namely that it has no independent economic value to Meltwaters customers. This is because unless they download or print out the material (in which case it is not disputed that they require a licence), the sole economic value which they derive from accessing information on Meltwaters website is derived from the mere fact of reading it on screen. These considerations no doubt explain why Mr. Howes submissions were addressed mainly to the first two conditions, that the copies generated by the technical processes involved in browsing should be temporary and transient or incidental. It is not suggested that transient means anything different from temporary, and in my view they are the same. Transience is simply part of the elaborate explanation of temporary which follows that word. If, as the Court of Justice has accepted, browsing copyright material on the internet is a method of using it which is within the scope of article 5.1, and if the making of copies in the internet cache or on screen is indispensable to the correct and efficient operation of the technical processes involved in browsing, it would be strange if the law said that the period of time for which these copies will exist in the ordinary course of that operation was insufficiently temporary or transient to qualify. As I have explained above by reference to the judgment in Infopaq I, the relevant requirements are (i) that the storage and deletion of the copyright material should be automatic, as opposed to being dependent on discretionary human intervention, and (ii) that the duration of the copy should be limited to what is necessary for the completion of the technological processes in question: see paras 62 and 64. The storage of the material, i.e. the creation of copies in the cache or on screen, is the automatic result of browsing the internet. It requires no other human intervention than the decision to access the relevant web page. Its deletion is the equally automatic result of the lapse of time coupled with the continuing use of the browser. The technological processes in question are those necessarily associated with web browsing, including the retention of material in the cache. It is retained there for no longer than the ordinary processes associated with internet use continue. Standing back for a moment from this fine verbal analysis of the language of the court, the purpose of these formulations is plain. It is to distinguish between the use of a computer or other equipment simply to view the relevant material, and its use to record it. The object of the restriction to temporary or transient copies is to ensure that the exception does not apply to protect downloading or other forms of digital or physical copying which will remain in existence until the user chooses to delete or destroy them and are therefore as permanent as he chooses to make them. Mr Howes argument was that cached material was not temporary or transient because the user could make a discretionary decision to close down the computer, thereby leaving the material in the cache indefinitely until the browser was used again. Or he could adjust the settings so as to enlarge the cache, thereby extending the period for which material might remain in it even while the browser was in use. He could also access a web page and leave his computer on with the web page on screen indefinitely. These are certainly examples of discretionary human intervention, but they are irrelevant because they do not involve a discretionary decision whether to retain the material in memory or not. They are merely rather artificial ways of extending the duration of the relevant technological processes. They call for three comments in the present context. The first is that the effect of creating copies in the internet cache or on screen in the course of browsing, must be judged in the light of the normal operation of a computer or its browser. It is not enough that forensic ingenuity can devise a method of extending to some extent the life of copies which are by their nature temporary. Secondly, the question is whether human intervention is required to delete the material: see Infopaq I at para 66. There is a difference, which is fundamental to the object of article 5.1, between a discretionary decision to extend the duration of what remains an automatic process, and the storage of a copy of material in the course of the browsing in a manner which will ensure that it is permanent unless and until a discretionary decision is made to delete or destroy it. The decisions of the Court of Justice show that in principle the former satisfies the first two conditions in article 5.1 whereas the latter does not. Third, the Respondents examples, as examples go, prove too much. If the mere fact that it is in principle possible to close down a computer, alter the browser settings to enlarge the internet cache or leave an image on screen indefinitely were enough to prevent article 5.1 from applying, then it would never apply to internet browsing. This would frustrate the purpose of the legislation. If, as I consider, the copies made in the internet cache or on screen are transient, it is strictly speaking unnecessary to consider whether they are also incidental. But I think it clear that they are. The software puts a web page on screen and into the cache for the purpose of enabling a lawful use of the copyright material, i.e. viewing it. The creation of the copies is wholly incidental to the technological process involved. Once these matters are established, it follows that article 5.5 is also satisfied. Consequences It is the policy of the EU to maintain a high level of protection of intellectual property. That policy is acknowledged both in the Directive itself (see recitals 4 and 9), and in the case law (for example, Premier League at para 186). We were pressed with the argument that if the viewing of copyright material on a web page did not require a licence from the copyright owner, he would be exposed to large scale piracy of a kind which would be difficult to detect or prevent. I am not persuaded by this argument and nor, it is clear, was the Court of Justice on the successive occasions when it has dealt with this issue. Of course, any diminution in the rights of copyright owners necessarily narrows the scope of the protection which they enjoy for their works. But we need to keep this point in proportion. In the first place, article 5.1 is an exception to the copyright owners right to control the reproduction of his work. It necessarily operates to authorise certain copying which would otherwise be an infringement of the copyright owners rights. Secondly, it has never been an infringement, in either English or EU law, for a person merely to view or read an infringing article in physical form. This state of affairs, which is recognised in the enumeration of the copyright owners rights in articles 2, 3 and 4 of the Directive, has never been thought inconsistent with a high level of protection for intellectual property. All that article 5.1 of the Directive achieves is to treat the viewing of copyright material on the internet in the same way as its viewing in physical form, notwithstanding that the technical processes involved incidentally include the making of temporary copies within the electronic equipment employed. Third, if it is an infringement merely to view copyright material, without downloading or printing out, then those who browse the internet are likely unintentionally to incur civil liability, at least in principle, by merely coming upon a web page containing copyright material in the course of browsing. This seems an unacceptable result, which would make infringers of many millions of ordinary users of the internet across the EU who use browsers and search engines for private as well as commercial purposes. Fourth, nothing in article 5.1 affects the obligation of Meltwater to be licensed in order to upload copyright material onto their website or make non temporary copies of it in some other way. At the moment, the licence fee payable by Meltwater is fixed on the basis that its customers need a licence of their own from the publishers and that the service will be supplied only to end users who have one. It seems very likely (although I am not deciding the point) that the licence fee chargeable to Meltwater will be substantially higher if end users do not need a licence because on that footing the value of the rights for which Meltwater is licensed will be significantly higher. The respondents have lodged an alternative claim with the Copyright Tribunal on that basis. In my view it is altogether more satisfactory that a single large licence fee should be payable representing the value to the person who puts the material onto the internet, than that tiny sums should be separately collectable from hundreds (in other cases it may be millions) of internet viewers. Fifth, if merely viewing a web page is not an infringement, that does not leave the copyright owner without effective remedies against pirates. It simply means that his remedy must be found against others who on the face of it are more obviously at fault. Nothing in article 5.1 impairs the copyright owners right to proceed against those who unlawfully upload copyright material onto the internet, just as the copyright owner has always been entitled to proceed against those who make or distribute pirated copies of books, films, music or other protected works. The Directive itself contains in Chapters III and IV important provisions enlarging the range of procedures and sanctions available against piracy. The decisions below Proudman J decided that Meltwaters customers needed a licence both to receive the monitoring reports by email and to access them on Meltwaters website. Her reasons were (i) that the making of copies, however temporary, in the end users computer in the course of browsing was not part of the technological process because it was generated by his own volition, i.e. by his voluntary decision to access the web page; (ii) that it was outside the scope of the technological process for the additional reason that it was in reality the end result of that process since it was what the end user viewed; and (iii) that the viewing of these copies did not constitute lawful use because they were not authorised by the copyright owner: see para 109. These reasons are of course related, and all three of them lead to the conclusion that, in the judges words, the kind of circumstance where the defence may be available is where the purpose of the copying is to enable efficient transmission in a network between third parties by an intermediary, typically an internet service provider para 110. The Court of Appeal agreed with her, essentially on her ground (i). In their view the acts of reproduction are those occasioned by the voluntary human process of accessing that web page para 35. For practical purposes, this amounted to an endorsement of Proudman Js view that unlicensed internet browsing could never satisfy the conditions in article 5.1. It will be apparent that Proudman J and the Court of Appeal could not have arrived at these conclusions if they had had the benefit of the judgments in Premier League and Infopaq II. In particular, the far broader meaning given by the Court of Justice in these cases to the concept of lawful use makes it impossible to confine the scope of the exception to the internal plumbing of the internet. Once it is accepted that article 5.1 extends in principle to temporary copies made for the purpose of browsing by an unlicensed end user, much of the argument which the courts below accepted unravels. Reference In its recent recommendations in relation to references, OJ C338, 6.11.2012, the Court of Justice of the European Union has observed that while a national court may consider that sufficient guidance is available in the existing case law of the Court of Justice to enable a case to be decided, a reference may be useful where there is a new question of interpretation of general interest for the uniform application of European Union law or where the existing case law does not appear to be applicable to a new set of facts. I have set out in this judgment the conclusions that I have reached on the effect of the Directive, as the Court of Justice has interpreted and applied it to date. However, I recognise the issue has a transnational dimension and that the application of copyright law to internet use has important implications for many millions of people across the EU making use of what has become a basic technical facility. These considerations make it desirable that any decision on the point should be referred to the Court of Justice for a preliminary ruling, so that the critical point may be resolved in a manner which will apply uniformly across the European Union. In my view, before making any order on this appeal, this court should refer to the Court of Justice the question whether the requirements of article 5.1 of the Directive that acts of reproduction should be (i) temporary, (ii) transient or incidental and (iii) an integral and essential part of the technological process, are satisfied by the technical features described at paragraphs 2 and 31 32 of this judgment, having regard in particular to the fact that a copy of protected material may in the ordinary course of internet usage remain in the cache for a period of time after the browsing session which has generated that copy is completed until it is overlaid by other material, and a screen copy will remain on screen until the browsing session is terminated by the user. I would invite Counsel to comment on the proposed issue to be referred and to prepare and if possible agree a draft reference for consideration by this court. |
These three appeals raise questions as to the circumstances in which the Parole Board (the board) is required to hold an oral hearing. One of the appeals (that of the appellant Osborn) concerns a determinate sentence prisoner who was released on licence but then recalled to custody. The other appeals (those of the appellants Booth and Reilly) concern indeterminate sentence prisoners who have served their minimum terms. It may be helpful to summarise at the outset the conclusions which I have reached. i) In order to comply with common law standards of procedural fairness, the board should hold an oral hearing before determining an application for release, or for a transfer to open conditions, whenever fairness to the prisoner requires such a hearing in the light of the facts of the case and the importance of what is at stake. By doing so the board will also fulfil its duty under section 6(1) of the Human Rights Act 1998 to act compatibly with article 5(4) of the European Convention for the Protection of Human Rights and Fundamental Freedoms, in circumstances where that article is engaged. ii) It is impossible to define exhaustively the circumstances in which an oral hearing will be necessary, but such circumstances will often include the following: a) Where facts which appear to the board to be important are in dispute, or where a significant explanation or mitigation is advanced which needs to be heard orally in order fairly to determine its credibility. The board should guard against any tendency to underestimate the importance of issues of fact which may be disputed or open to explanation or mitigation. b) Where the board cannot otherwise properly or fairly make an independent assessment of risk, or of the means by which it should be managed and addressed. That is likely to be the position in cases where such an assessment may depend upon the view formed by the board (including its members with expertise in psychology or psychiatry) of characteristics of the prisoner which can best be judged by seeing or questioning him in person, or where a psychological assessment produced by the Ministry of Justice is disputed on tenable grounds, or where the board may be materially assisted by hearing evidence, for example from a psychologist or psychiatrist. Cases concerning prisoners who have spent many years in custody are likely to fall into the first of these categories. c) Where it is maintained on tenable grounds that a face to face encounter with the board, or the questioning of those who have dealt with the prisoner, is necessary in order to enable him or his representatives to put their case effectively or to test the views of those who have dealt with him. d) Where, in the light of the representations made by or on behalf of the prisoner, it would be unfair for a paper decision made by a single member panel of the board to become final without allowing an oral hearing: for example, if the representations raise issues which place in serious question anything in the paper decision which may in practice have a significant impact on the prisoners future management in prison or on future reviews. In order to act fairly, the board should consider whether its iii) independent assessment of risk, and of the means by which it should be managed and addressed, may benefit from the closer examination which an oral hearing can provide. iv) The board should also bear in mind that the purpose of holding an oral hearing is not only to assist it in its decision-making, but also to reflect the prisoners legitimate interest in being able to participate in a decision with important implications for him, where he has something useful to contribute. v) The question whether fairness requires a prisoner to be given an oral hearing is different from the question whether he has a particular likelihood of being released or transferred to open conditions, and cannot be answered by assessing that likelihood. vi) When dealing with cases concerning recalled prisoners, the board should bear in mind that the prisoner has been deprived of his freedom, albeit conditional. When dealing with cases concerning post-tariff indeterminate sentence prisoners, it should scrutinise ever more anxiously whether the level of risk is unacceptable, the longer the time the prisoner has spent in prison following the expiry of his tariff. vii) The board must be, and appear to be, independent and impartial. It should not be predisposed to favour the official account of events, or official assessments of risk, over the case advanced by the prisoner. viii) The board should guard against any temptation to refuse oral hearings as a means of saving time, trouble and expense. ix) The boards decision, for the purposes of this guidance, is not confined to its determination of whether or not to recommend the prisoners release or transfer to open conditions, but includes any other aspects of its decision (such as comments or advice in relation to the prisoners treatment needs or the offending behaviour work which is required) which will in practice have a significant impact on his management in prison or on future reviews. x) Paper decisions made by single member panels of the board are provisional. The right of the prisoner to request an oral hearing is not correctly characterised as a right of appeal. In order to justify the holding of an oral hearing, the prisoner does not have to demonstrate that the paper decision was wrong, or even that it may have been wrong: what he has to persuade the board is that an oral hearing is appropriate. xi) In applying this guidance, it will be prudent for the board to allow an oral hearing if it is in doubt whether to do so or not. xii) The common law duty to act fairly, as it applies in this context, is influenced by the requirements of article 5(4) as interpreted by the European Court of Human Rights. Compliance with the common law duty should result in compliance also with the requirements of article 5(4) in relation to procedural fairness. xiii) A breach of the requirements of procedural fairness under article 5(4) will not normally result in an award of damages under section 8 of the Human Rights Act unless the prisoner has suffered a consequent deprivation of liberty. The legislative framework Section 239(2) of the Criminal Justice Act 2003 (the 2003 Act) provides that it is the duty of the board to advise the Secretary of State with respect to any matter referred to it by him which is to do with the early release or recall of prisoners. This includes advising on licence conditions: R (Brooke) v Parole Board [2008] EWCA Civ 29; [2008] 1 WLR 1950, para 47. Section 239(5) permits the Secretary of State to make rules with respect to the proceedings of the board. Section 239(6) permits the Secretary of State to give the board directions as to the matters to be taken into account by it in discharging its functions under Chapter 6 of Part 12 of the 2003 Act, which concerns the release, licences and recall of determinate sentence prisoners, or under Chapter II of Part II of the Crime (Sentences) Act 1997 as amended (the 1997 Act), which concerns the release, licences and recall of indeterminate sentence prisoners. It will be necessary to return to the rules and directions which were in force at the material time. Determinate sentence prisoners who are serving a sentence of 12 months or more are automatically entitled to be released on licence at the halfway point in their sentence: section 244 of the 2003 Act. Section 254 confers on the Secretary of State the power to revoke the licence and to recall the prisoner to prison. There is no obligation on the Secretary of State to consult the board before doing so, and any direct challenge to the Secretary of States decision to revoke a licence can only be made by way of an application for judicial review. At the material time, section 255C(4) of the 2003 Act (as inserted by the Criminal Justice and Immigration Act 2008) imposed a duty upon the Secretary of State to refer the recalled prisoners case to the board. Section 255C(5) provided that, where on such a reference the board recommended the prisoners immediate release, the Secretary of State must give effect to that recommendation. In relation to indeterminate sentence prisoners, section 28(5) of the 1997 Act imposes a duty on the Secretary of State to release the prisoner as soon as he has served the tariff part of his sentence and the board has directed his release. Section 28(6) prohibits the board from giving such a direction unless it is satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined. The Rules The rules in force at the material time were the Parole Board Rules 2004 as amended by the Parole Board (Amendment) Rules 2009 (the rules): those currently in force, the Parole Board Rules 2011 (SI 2011/2947), contain analogous provisions. The rules applied where an indeterminate sentence prisoners case was referred to the board for a decision as to whether he should be released. It is common ground between the parties that they had no application where a determinate sentence prisoners case was referred, following his recall, for a decision as to whether he should be re-released. The rules therefore applied in the cases of the appellants Booth and Reilly, but not in the case of the appellant Osborn. The rules made provision for the listing of the prisoners case, following which the Secretary of State was required to serve on the board, and on the prisoner or his representative, specified information and reports. The prisoner was then required to serve on the board and on the Secretary of State any representations about his case that he wished to make. Rule 11 provided for the initial consideration of a prisoners case by a single member of the board, without a hearing. It provided: 11. (1) Within 14 weeks of the case being listed, a single member panel shall consider the prisoners case (sic) without a hearing. 11. (2) The single member panel must either (a) decide that the case should receive further consideration by an oral panel, or (b) make a provisional decision that the prisoner is unsuitable. 11. (3) The decision of the single member panel shall be recorded in writing with reasons, and shall be provided to the parties within a week of the date of the decision. It was implicit in rule 11(2) that an oral hearing would always be held before an indeterminate sentence prisoner was released. Rule 12 was headed Provisional decision against release, and applied where a decision was taken under rule 11(2)(b). It provided: 12. (1) In any case where the single member panel has made a provisional decision under rule 11(2)(b) that the prisoner is unsuitable for release, the prisoner may request an oral panel to give consideration to his case with a hearing. 12. (2) Where the prisoner does so request consideration of his case with a hearing, he must serve notice to that effect, giving full reasons for the request on the board and the Secretary of State within 19 weeks of the case being listed. 12. (3) If no notice has been served in accordance with paragraph (2) after the expiry of the period permitted by that paragraph, the provisional decision shall become final and shall be provided to the parties within 20 weeks of the case being listed. The rules were silent as to how requests for an oral hearing were to be decided and by whom. Where a decision was made under rule 11(2)(a) or a hearing was ordered pursuant to a request under rule 12(2), Part 4 of the rules applied. Provision was made for such matters as the prisoners attendance at the hearing, the submission of documentary evidence and the calling of witnesses. In relation to the procedure to be followed at the hearing, rule 19 provided that the panel was required so far as possible to make its own enquiries in order to satisfy itself of the level of risk of the prisoner. The parties were entitled to appear and be heard and to take such part in the proceedings as the panel thought fit. They were permitted to hear each others evidence, put questions to each other, call any witnesses whom the board had authorised to give evidence, and put questions to any witness or other person appearing before the panel. After all the evidence had been given, the prisoner was to be given a further opportunity to address the panel. Under the rules as introduced in 2004, an indeterminate sentence prisoner was entitled under rule 12(1), in any case where a single member panel had made a provisional decision under rule 11(2)(b), to require a three member oral panel to give consideration to his case with a hearing. This right was taken away by the Parole Board (Amendment) Rules 2009 (SI 2009/408), which came into effect on 1 April 2009. There is a difference between the position in England and Wales following that amendment and the position in the rest of the United Kingdom, where indeterminate sentence prisoners (and some other categories of prisoner) remain entitled to an oral hearing: see the Parole Board (Scotland) Rules 2001 (SSI 2001/1315) rule 20, and the Parole Commissioners Rules (Northern Ireland) 2009 (SR 2009 No 82), rule 17(2). The directions At the time when the appellants cases were considered by the board, the directions given by the Secretary of State in relation to determinate sentence prisoners recalled to prison, such as the appellant Osborn, stated that the assumption is that the board will seek to re-release the prisoner or set a future re- release date in all cases where it is satisfied that the risk be safely managed in the community (sic). The board was required to consider a number of matters, including the likelihood of the offender complying with the requirements of probation supervision. In assessing that likelihood, the board was required to consider the offenders conduct during the licence period to date. In relation to indeterminate sentence prisoners such as the appellants Booth and Reilly, the board was required by the relevant directions to consider a number of matters, including whether the prisoner had made positive and successful efforts to address the attitudes and behavioural problems which led to the commission of the index offence, the nature of any offences against prison discipline which he had committed, his attitude and behaviour to other prisoners and staff, any medical, psychiatric or psychological conditions, particularly if there was a history of mental instability, and any indication of predicted risk as determined by a validated actuarial risk predictor model, or any other structured assessments of risk and treatment needs. Other directions assumed that the board had the power to recommend the transfer of indeterminate sentence prisoners to open conditions, and to give directions relating to the exercise of that power. Practice determinate sentence prisoners recalled to custody In relation to determinate sentence prisoners recalled to custody, such as the appellant Osborn, the practice of the board, following the decision of the House of Lords in R (West) v Parole Board [2005] UKHL 1; [2005] 1 WLR 350, was to grant an oral hearing to any prisoner who requested one following a provisional decision. That practice changed in February 2007, when the board published a notice stating that it would require reasons from the prisoner when applying for an oral hearing, and would grant such applications only where it appeared to the board that a hearing was necessary and fell within the ambit of the House of Lords ruling. The practice followed by the board in relation to such prisoners is set out in unpublished guidance to panels. That guidance states: All recalled prisoners are initially considered by a paper panel. That panel can decide whether to send the case to an oral hearing. An oral hearing will normally be granted in three sets of circumstances: 1. where the prisoner disputes the circumstances of the recall and the facts of the recall are central to the question of risk and re-release; or 2. where the prisoner argues that the recall incident was not justified for some reason, or was not as serious as alleged and this affects the assessment of risk; 3. any case where the assessment of risk requires live evidence from the prisoner and/or witnesses. Where the prisoner asks for an oral hearing, the panel should: Consider whether it is possible to decide the issues and release on the papers; Otherwise, send the case for an oral hearing Where a prisoner submits representations challenging his or her recall the panel should: Consider whether it is possible to decide the issues and release on the papers; or Refuse the representations ... or Send the case to an oral hearing. This should only be done when the panel is unable to decide the issues on the papers and concludes that they can only be determined after hearing oral evidence. (emphasis in original) Practice indeterminate sentence prisoners Historically, as I have explained, indeterminate sentence prisoners were entitled to an oral hearing. Following the amendment of the rules in 2009, guidance was issued which was in force at the material time. It stated: Decisions on oral hearings will be taken by the ICM [Intensive Case Management] member. The member will consider this in all cases, regardless of whether the prisoner has requested one. An oral hearing will normally be granted in two sets of circumstances: 1. Where the ICM member considers there is a realistic prospect of release or a move to open conditions; or 2. In any case where the assessment of risk requires live evidence from the prisoner and/or witnesses. This would include a case where a progressive move is not a realistic outcome, but where live evidence is needed to determine the risk factors. It is envisaged that this will be a rare step to take and would normally only be necessary where experts disagreed about a risk factor; for example, whether or not there was a sexual element to an offence that needed exploring. It is only intended to apply this principle where there is a dispute about whether an issue is a risk factor at all, not necessarily whether it has been addressed or not. An oral hearing will not be granted where there is no realistic prospect of release or open conditions, but where such outcomes are requested by the prisoner, detailed reasons will be given for refusing, in particular where the prisoner is already in category C or D. This guidance is thoroughly illogical. First, if an oral hearing will normally be granted in two sets of circumstances, the first being that there is a realistic prospect of release or a move to open conditions, it cannot be correct to say that an oral hearing will not be granted where there is no prospect of release or open conditions: if that were true, the second alternative would not exist. Secondly, if, applying the guidance, the board has been able to conclude that there is no realistic prospect of release or a move to open conditions, then it is difficult to see how it can nevertheless consider that the assessment of risk requires live evidence. The facts Michael Osborn The appellant Osborn was convicted in 2006 of putting people in fear of violence by harassment, and possession of an imitation firearm, during an incident when he was said to have brandished the imitation firearm at the home of his estranged wife. He received a sentence of six years imprisonment, the custodial element of which expired on 20 February 2009, when he was released on licence. He was assessed as presenting a very high risk of harm, and was placed under surveillance from the point of his leaving prison. He was recalled to custody the same day, after arriving at the hostel where he was to live 20 minutes after the time when he was required by his licence conditions to be there, having visited an address at a village in Staffordshire en route. His licence was revoked the same day. He was informed by the Ministry of Justice that he had been recalled to prison because it had been reported by the probation service that he had breached a condition of his licence by failing to confine himself to an address approved by his supervising officer during the hours of a curfew. He was informed that his licence had been revoked by the Secretary of State for Justice because in view of the offences for which he was originally sentenced, the risk suggested by his offending history and his behaviour as described in the breach report completed by the probation service, the Home Secretary (sic) was no longer satisfied that it was right for him to remain on licence. The appellants case was then listed before the board, which was provided with a request for recall report or recall pack, written with a view to justifying the recall, and a report for review of re-release. These documents, prepared by the Ministry of Justice or its agencies, contained accounts of events prior to and after his release by his offender manager, a line manager and a senior manager, all of whom agreed that he could not be safely released. In particular, the offender manager raised concerns about the appellants willingness to comply with licence conditions. He reported that the appellant had stated to him, before being released, his refusal to comply with the requirements of his licence, initially challenging whether he should be required to reside at approved premises, and also challenging the extent of an exclusion zone. The offender manager had also received information that on the day of his release, when reminded that he could not have access to firearms, the appellant had said not for another two hours. He was reported to have said that he would be back in prison shortly after he had done what he needed to do. It was also reported that shortly before the appellant had left the address which he had visited en route to the hostel he had telephoned the hostel manager to tell her that he would be late, saying falsely that he was on the A38. On returning to his car he had removed and rearranged items in the boot. This gave rise to concern in view of his comment about access to firearms. He was also reported to have told the hostel manager earlier that week that he could not share a room as he had a multi-personality disorder. In view of this reported statement, the offender manager considered it crucial that the prisoner should undergo a full psychiatric assessment before being considered for release. In a letter dated 6 April 2009, the appellants solicitors made representations to the board in support of his release, attaching a handwritten statement in which the appellant provided a detailed account of the events of the day on which he had been released and recalled to custody. He maintained that there had been a delay in his release while the prison waited for the surveillance team to arrive, and that the hostel manager had in consequence agreed to a 30 minute extension of the deadline for his getting there. He had arrived at the hostel before that deadline expired. He had stopped in the village in order to drop off his sister-in-law, who was one of the passengers in the car in which he had been collected from prison. The solicitors accepted that the appellant had expressed initial concerns about the licence conditions, but said that he had now been advised of the proper channels for challenging such conditions and understood that they were binding. They stated that he had demonstrated in custody that he could behave well, and that he could be expected to comply with his licence. They maintained that any risk could be safely managed within the community, as probation reports indicated. His previous offending, before the index offence, had taken place when he was 16 or 17 years of age. He was now 37. His record within prison had been good: he held trusted employment and was adjudication free. His risk level had been altered to very high on the day before his release, by his recently appointed offender manager, without a proper review or assessment, so as to enable the surveillance and emergency recall to be arranged. The solicitors also said that the offender managers report had only been received that day, and that they had not been able to obtain the appellant's comments on the allegations made against him. They noted that the offender manager had stated that the appellant was devoid of any victim sympathy/awareness, but commented that he had had very little contact with their client. They confirmed that the appellant suffered from mental health problems, but said that the probation service was fully aware of them. It was understood that the prison service had also been aware of them throughout the appellants incarceration, and that he had remained in contact with the psychiatric nurse at his current prison until being signed off. On 22 April 2009 the appellants case was considered by a paper panel comprising an anonymous member of the board, who decided to make no recommendation that he should be released. In its written decision, the panel noted the nature of the index offence and the previous record. It summarised the offender managers account of the appellants attitude towards the licence conditions and of events on the date of release. The removal and rearrangement of items in the car boot were again linked to the alleged comment about access to firearms. The panel stated that it had considered representations dated 2 March 2009 submitted by the appellants legal advisers. It was noted that those representations provided no explanation for the appellants detour to the village. The risk assessments were noted, including the assessment of a lack of victim empathy. It was noted that the hostel was unwilling to accommodate the appellant, and that report writers considered that other approved premises were unlikely to offer him accommodation until his motivation to comply improved. The panel referred to the appellants apparent unwillingness to comply with the requirements of licence supervision: an important finding based on the account of events provided by the offender manager. It was concluded that the assessment of risk was such that it could not be safely managed within the community. The panel does not appear to have considered the letter from the appellants solicitors dated 6 April 2009 or the appellants statement, enclosed with that letter. The appellant was notified of the decision by a standard form letter from the Ministry of Justice (not the board) dated 24 April 2009. The letter informed him that he was entitled to request an oral hearing within 14 days. His solicitors did so, by letter dated 28 April 2009. In the letter, they pointed out that the appellants statement did not appear to have been taken into account. They commented that the panel had relied on information which had not been disclosed to them and which they had not had an opportunity to consider, such as the information about the availability of hostel accommodation. They requested directions that specified witnesses and written documentation should be available at the oral hearing. The proposed witnesses included the hostel manager, who could confirm the appellants account of the telephone calls and could give evidence about the availability of a hostel place; the prison officer who was the source of the allegations about the appellants statements on the day of his release; the minutes of the body responsible for altering the appellants risk level the day before his release; the appellants sister-in-law, whom he claimed to have dropped off in the village; the offender manager; and a psychologist, in case his evidence should be necessary. In a further letter dated 13 May 2009 the solicitors reiterated that the appellant disputed the allegations made against him by the offender manager. By a decision dated 5 June 2009 the request for an oral hearing was refused by another anonymous single member panel. The decision stated that the panel had seen the oral hearing request from the prisoner/solicitor, together with the paper recall panel decision dated 22.4.09 and the dossier they reviewed. The decision then stated that the request for an oral hearing had been refused for the following reasons: Michael Osborn's solicitor's representations dated 27/5/09 and 28/4/09 dispute parts of the behaviour on the day of release which led to recall (eg Mr Osborn's detour) as well as brandishing a firearm in the index offences. This panel has carefully considered the full dossier and concludes that the disputed facts are not central either to the recall decision or the panel's risk assessment of the panel (sic) on 22/4/09; Mr Osborn's denial of the index offences was known to the panel already. So far as appears from the decision, this panel proceeded on the basis of the same material as had been before the earlier panel, with the addition of two subsequent letters from the appellants solicitors. There is no indication that the letter dated 6 April, or the appellants statement, were taken into account. The appellants claim that the time when he was due to arrive at the hostel had been extended does not appear to have been considered. The fact that the appellant disputed many of the allegations made against him, and the potential bearing of that dispute upon the assessment of risk, do not appear to have been taken into account. Langstaff J dismissed the appellants application for judicial review ([2010] EWHC 580 (Admin)). The judge considered that the facts in the appellants case were only minimally in contention, that the focus of the letter dated 28 April 2009 had been on matters which were peripheral to the decision made, and that the bulk of the letter indicated a desire to ask questions about matters of fact which were not in dispute and did not have any relevance to the risk to the public on re-release. On appeal to the Court of Appeal ([2010] EWCA Civ 1409, [2011] UKHRR 35), where the case was considered together with that of the appellant Booth, Carnwath LJ (with whom Sedley and Moses LJJ agreed) accepted that there was some force in the submission that, contrary to the understanding of the judge, there were significant factual disputes on matters relevant to the decision (para 45). He considered however that the judge was right to consider that the boards decision on release did not ultimately depend on resolution of these issues (para 47). The lack of information about the appellants current mental health status and the recommendation that a full psychiatric assessment should be carried out, combined with the very high risk of harm should he re-offend, provided ample reason for not allowing release (ibid). The appellant was eventually allowed an oral hearing in November 2010. His application for release was refused. The facts John Booth The appellant Booth received a discretionary life sentence in 1981 for attempted murder, with a minimum term of six and a half years. The conviction concerned the attempted murder by strangulation of an elderly woman in a train compartment. He has remained in custody ever since, save for a short period in 1993, when he was released but recalled after three months. Psychiatric treatment has continued throughout his sentence. Although he has progressed to open conditions on various occasions, he has failed on each occasion in that setting, most recently in 2003. In July 2009 the appellants case was referred to the board by the Secretary of State under section 28 of the 1997 Act, to consider whether or not it would be appropriate to direct the appellants release. If the board did not consider it appropriate to direct release, it was invited to advise the Secretary of State whether the appellant should be transferred to open conditions. If the board made such a recommendation, it was invited to comment on the degree of risk involved. It was also invited to advise the Secretary of State on the continuing areas of risk that needed to be addressed. The dossier provided to the board included reports from the deputy lifer manager, the appellants offender supervisor, and a psychologist in training. The appellant was described in the dossier as a very institutionalised man who, if not encouraged, would be satisfied to remain in custody for the remainder of his life. The referral letter, following the standard form, requested the board to give full reasons for its decision or recommendation, but also stated that the board was not being asked to comment on or make any recommendation about any specific treatment needs or offending behaviour work required. Notwithstanding that statement, it is apparent from the papers concerning the appellants Booth and Reilly that in practice the board may comment on treatment needs and on the offending behaviour work required. It is indeed difficult for it to avoid doing so, if it is to give reasons for its decisions and recommendations which address the matters that it is required by the Secretary of States directions to consider, and if it is to comply with the request for advice about areas of risk that need to be addressed. It also appears that such comments may have an impact on the prisoners management in prison and on the courses offered to him, as one would expect. The appellant subsequently received from the board a letter in a standard tick-box form, dated 21 October 2009. It stated: The Parole Board has decided not to direct your release (or recommend your transfer to open conditions if applicable). This is a decision taken on the papers and the full decision is attached. The letter continued: You can appeal the decision and ask for a full oral hearing before a panel of the Parole Board if you believe that there are significant and compelling reasons for this. You have four weeks (28 days) from the date of this letter to decide if you wish to lodge an appeal. This letter mischaracterises the nature of the single member decision, the rights of the prisoner following the making of such a decision, and the function of the board at that stage under rules 11 and 12. The implication of the letter is that the board has decided that the prisoner should not be released or recommended for transfer to open conditions, subject to a right of appeal. The prisoner is requested by the form either to signify his acceptance of that decision or to put forward reasons why he does not accept it: in other words, his grounds of appeal. The reference to compelling reasons implies that there is a significant onus on the prisoner. As I have explained, however, the decision made by the single member under rule 11(2)(b) is merely provisional. Where a provisional decision is made, the prisoners entitlement under rule 12(1) is not to appeal against that decision, but to request an oral panel to give consideration to his case with a hearing. The board then has to consider that request. If it grants the request, the matter is then considered by an oral panel de novo, as I have explained. Enclosed with the letter was the decision taken by an anonymous intensive case management (ICM) member. It stated: A single Parole Board member reviewed your case on the papers on the 14th October 2009. The Parole Board is empowered to direct your release if it is satisfied that it is no longer necessary for the protection of the public that you continue to be detained. The member was not so satisfied and does not direct release; nor recommend transfer to open conditions. There was nothing in the decision to indicate its provisional nature. The decision summarised the appellants history as set out in the dossier, and stated: In order to improve your ability to cope the thinking skills programme (TSP) has been recommended for you and this was considered a good starting point in order to start addressing your risk and to deal with your long term problems of dealing with stress The report by the psychologist reports that you have made progress with your coping skills as evidenced by your current behaviour as compared to the severe difficulties you have had in the past. The concern, however, is that you have little awareness of what may unsettle you in the future and that your relapse prevention strategies rely solely on professional support. The report states you do not see it as your responsibility to change but for others to look after you. The psychologist recommends the TSP for you In order to fully benefit from this programme it is suggested that some 1:1 work with the treatment team would be needed before you started the programme No report writers are in a position to recommend release or a progressive move to open conditions for you. You feel you may benefit from a direct release to Box Tree Cottage which offers a high level of supportive accommodation for offenders but it is felt that such plans are somewhat premature for you although the offender manager and the psychologist have not ruled out this type of progression in the longer term. In response to the letter, the appellants solicitors requested an oral hearing by letter dated 17 November 2009. They stated that the appellants was a complex case. Since his last review, he had been working on a one-to-one basis with a psychiatrist in the prison on cognitive skills, and was currently covering some of the elements of the thinking skills programme. He had completed work to reduce his risk since his last review. He had not had any adjudications. He had had successful releases on temporary licence. His application for release might therefore be successful. He would require psychiatric intervention when released. This needed to be considered at an oral hearing. His probation officer was currently arranging for him to visit Box Tree Cottage, which provided accommodation with psychiatric support on hand. It was likely that he would request direct release to that accommodation. By letter dated 19 November 2009, headed Appeal against Paper Decision, the board informed the appellant that the appeal has been refused. The letter stated: The ICM assessor's duty is to consider whether the grounds of the appeal are justified and if an oral hearing would make any material difference to the paper hearing decision. The implication of that statement is that a decision which was taken before any representations were received from the prisoner should be reconsidered only if representations subsequently made demonstrated that an oral hearing would result in a different decision. The letter continued: The criteria for granting an oral hearing is (sic) where the member considers there is a realistic chance of release or open conditions and where the assessment of risk requires live evidence to determine the risk factors. In Mr. Booth's case the offender manager, the offender supervisor and the prison psychologist all agree on the current risk factors which are thinking skills deficits and anger management issues and that interventions need to be completed to address these risk factors. They all conclude that Mr. Booth is unsuitable for release or open conditions. There is no evidence or argument put forward in the representations which persuades the ICM assessor that an oral hearing is justified. The paper decision is therefore final. The decision does not explain why the points made on behalf of the appellant in the letter dated 17 November 2009 had been discounted by the anonymous ICM assessor, beyond reiterating the contrary opinions of the offender manager, the offender manager and the prison psychologist. The facts James Reilly The appellant Reilly was convicted in 2002 of offences of robbery, attempted robbery and possession of an imitation firearm, relating to the attempted robbery of a post office and the robbery of another post office. He had 19 previous convictions, two of which were for robbery. He received an automatic life sentence with a minimum term of six years and eight months, which expired in September 2009. During the course of his sentence he was transferred to Northern Ireland, but remained subject to the jurisdiction of the board under section 28 of the 1997 Act. By letter dated 3 March 2009 the board notified the appellant that he was being considered for release. He was told that he would receive a copy of his dossier and would have 28 days to submit written representations. The board would consider his case and notify him of its decision whether to grant an oral hearing. He would then have 28 days to decide whether he accepted the decision or whether he wished to appeal the decision. On 19 March 2009 the appellants solicitors replied, requesting an oral hearing and indicating that the appellant would be legally represented. On 29 April 2009 they wrote to the board, drawing to its attention that they had not yet received the dossier. On 8 May 2009 the solicitors were informed by the board that the appellant had a target month for oral hearing of September 2009, and that it had not yet received the dossier. On 21 May 2009 the solicitors wrote to the prison authorities requesting confirmation that the dossier had been submitted to the board. On 3 June they learned that a copy of the dossier had been provided to the appellant, but not to them. At some point in about June 2009 the appellant received an undated letter from the board, in the standard form described in para 33. Like the similar letter addressed to the appellant Booth, it informed the appellant that the board had decided not to direct his release or to recommend his transfer to open conditions, and that he could appeal the decision and ask for a full oral hearing. Enclosed with the letter was an undated and anonymous decision. It took as its starting point a pre-tariff review carried out by the board in 2006, which stated that the appellant needed to show a sustained period of good behaviour, and that he was working on drug relapse prevention and undertaking specified courses. In relation to the first of these, the panel noted that since 2007 the appellant had been adjudicated upon for matters including possession of unauthorised articles, attempted assault on staff, damaging prison property, possession of a knife, disobeying orders and abusive behaviour. He had failed a number of drug tests. He had undertaken one of the relevant courses with apparent success, but the drug tests indicated that he had been unable to translate this work into positive action. Given the drug test results, he was unsuitable for the other recommended course. The panel concluded that there was more work to be done, particularly in relation to the use of violence, and that the appellant would need to demonstrate that he could maintain his behaviour and motivation before less secure conditions could be considered. By letter dated 10 July 2009 the appellants solicitors requested an oral hearing. They pointed out, first, that the panel had not had before it any representations from the appellant. Secondly, they noted that the major reservations in the panels decision reflected the comments in the dossier about the appellants prison record and failed drug tests. They submitted that the appellants adjudication record did not on examination indicate an unacceptable risk. The charge of possession of unauthorised articles related to items from the tuck shop. The charge of attempted assault concerned his flicking a sock in the direction of a prison officer. The charge of damaging prison property concerned a torn bed sheet. Possession of a knife concerned a knife which the appellant had removed from another prisoner in order to avoid an incident. In relation to disobeying orders, the appellant had objected to being in the vicinity of heavy machinery in the prison workshop as he was epileptic. Following the adjudication he worked instead in another part of the prison. The charge of abusive behaviour had been dismissed. In relation to the drugs tests, during the relevant periods the appellant had been prescribed medications which might account for the results. It was submitted that the appellant had progressed sufficiently to be seriously considered for open conditions. It was believed that the necessary remaining courses could be accessed by prisoners in such conditions. Not all the report writers had commented on the appropriateness of open conditions. By letter dated 20 July 2009, headed Appeal Against Paper Decision, the appellant was notified that his appeal had been refused. The letter, whose author was unidentified, stated: The appeal has been refused on the grounds that while individual adjudications may have explanations there still remains significant offending behaviour work for you to carry out, particularly with regard to instrumental violence. Until such work is successfully completed, the risk of reconviction or of causing serious harm cannot be regarded as reduced. No report writers recommend a move to open or release at this review. This panel endorses the view that no recommendation can be made at this time and the appeal is refused. The paper decision is therefore final. The letter did not address the possibility that the recommendations of the report writers had been influenced by the appellants history of adjudications and failed drug tests, to which they had referred, or the possibility that the boards independent assessment might be affected if the appellants explanations were accepted. Nor did it address the possibility, raised in the appeal, that any further courses might be undertaken in open conditions. There is no indication that the explanation put forward for the failed drug tests was taken into account. By letter dated 23 July 2009 the appellant was informed that the Secretary of State agreed with the panels recommendation for the reasons which it gave, and considered that a number of risk factors were outstanding and required further work. In particular, the appellant needed to address his behaviour and drug use in prison over a sustained period. It appears from the latter conclusion, which did not form part of the appeal decision, that the Secretary of State may have been proceeding on the basis of the paper decision, which had become final. On an application for judicial review, Treacy J held that the board had acted in breach of its common law duty to act fairly, and incompatibly with the appellants Convention rights under article 5(4), in failing to provide him with an oral hearing ([2010] NIQB 46). In a subsequent judgment ([2010] NIQB 56), Treacy J decided that the appropriate remedy was the award of certiorari to quash the boards decision. He declined to make an award of damages under section 8 of the Human Rights Act, noting that it was agreed that the appellant could not establish that he had been deprived of liberty as a result of the decision, and concluding that any frustration or distress which he might have suffered was not of such intensity as to justify an award of damages. An appeal against the first of these decisions was allowed by the Court of Appeal in Northern Ireland ([2011] NICA 6). The court followed the approach which had been adopted by the Court of Appeal of England and Wales in the cases of the appellants Osborn and Booth, and concluded that, since the factual issues highlighted by the appellants solicitors were not of critical importance, it followed that the board could fairly conclude that an oral hearing would not assist it in its determination of the relevant issue. The appellant was eventually allowed an oral hearing in May 2011. His application for release was refused. Domestic law and Convention rights The submissions on behalf of the appellants focused on article 5(4), and paid comparatively little attention to domestic administrative law. As I shall explain, that approach does not properly reflect the relationship between domestic law (considered apart from the Human Rights Act) and Convention rights. The guarantees set out in the substantive articles of the Convention, like other guarantees of human rights in international law, are mostly expressed at a very high level of generality. They have to be fulfilled at national level through a substantial body of much more specific domestic law. That is true in the United Kingdom as in other contracting states. For example, the guarantee of a fair trial, under article 6, is fulfilled primarily through detailed rules and principles to be found in several areas of domestic law, including the law of evidence and procedure, administrative law, and the law relating to legal aid. The guarantee of a right to respect for private and family life, under article 8, is fulfilled primarily through rules and principles found in such areas of domestic law as the law of tort, family law and constitutional law. Many other examples could be given. Article 5, in particular, is implemented through several areas of the law, including criminal procedure, the law relating to sentencing, mental health law and administrative law: indeed, article 5(4) is said to have been inspired by the English law of habeas corpus (Sanchez-Reisse v Switzerland (1986) 9 EHRR 71, 88). As these examples indicate, the protection of human rights is not a distinct area of the law, based on the case law of the European Court of Human Rights, but permeates our legal system. The values underlying both the Convention and our own constitution require that Convention rights should be protected primarily by a detailed body of domestic law. The Convention taken by itself is too inspecific to provide the guidance which is necessary in a state governed by the rule of law. As the European court has said, a norm cannot be regarded as a law unless it is formulated with sufficient precision to enable the citizen to regulate his conduct (Sunday Times v United Kingdom (1979) 2 EHRR 245, 271). The Convention cannot therefore be treated as if it were Moses and the prophets. On the contrary, the European court has often referred to the fundamentally subsidiary role of the Convention (see eg Hatton v United Kingdom (2003) 37 EHRR 611, para 97). In relation to article 5(4) in particular, the court has made it clear that in order for there to be compliance with that guarantee, there must in the first place be compliance with the relevant substantive and procedural rules of domestic law (Koendjbiharie v The Netherlands (1990) 13 EHRR 820, para 27). Domestic law may however fail to reflect fully the requirements of the Convention. In that situation, it has always been open to Parliament to legislate in order to fulfil the United Kingdoms international obligations; as it has done, for example, in response to judgments of the European court concerning the application of article 5(4). The courts have also been able to take account of those obligations in the development of the common law and in the interpretation of legislation. The Human Rights Act has however given domestic effect, for the purposes of the Act, to the guarantees described as Convention rights. It requires public authorities generally to act compatibly with those guarantees, and provides remedies to persons affected by their failure to do so. The Act also provides a number of additional tools enabling the courts and government to develop the law when necessary to fulfil those guarantees, and requires the courts to take account of the judgments of the European court. The importance of the Act is unquestionable. It does not however supersede the protection of human rights under the common law or statute, or create a discrete body of law based upon the judgments of the European court. Human rights continue to be protected by our domestic law, interpreted and developed in accordance with the Act when appropriate. That approach is now well established. A few examples may be given. In R (Daly) v Secretary of State for the Home Department [2001] UKHL 26; [2001] 2 AC 532 a policy that prisoners should be absent from their cells while they were being searched for contraband, as applied to a prisoner who had correspondence with his solicitor in his cell, was held to be unlawful on the ground that it infringed the prisoners common law right that the confidentiality of privileged legal correspondence be maintained. Lord Bingham of Cornhill noted in the final paragraph of his speech that that result was compatible with article 8 of the Convention. In that regard he adopted the observations of Lord Cooke of Thorndon, who said (para 30): It is of great importance, in my opinion, that the common law by itself is being recognised as a sufficient source of the fundamental right to confidential communication with a legal adviser for the purpose of obtaining legal advice. Thus the decision may prove to be in point in common law jurisdictions not affected by the Convention. Rights similar to those in the Convention are of course to be found in constitutional documents and other formal affirmations of rights elsewhere. The truth is, I think, that some rights are inherent and fundamental to democratic civilised society. Conventions, constitutions, bills of rights and the like respond by recognising rather than creating them. When the House of Lords considered in R (West) v Parole Board [2005] UKHL 1; [2005] 1 WLR 350 the circumstances in which determinate sentence prisoners recalled to prison were entitled to an oral hearing before the board, it took the common law as its starting point, and considered judgments of the European court, together with judgments from a number of common law jurisdictions, in deciding what the common law required. It went on to hold that the boards review of the prisoners case would satisfy the requirements of article 5(4) provided it was conducted in a manner that met the common law requirements of procedural fairness. That decision is of obvious relevance to the present appeals. Similarly, when the House of Lords rejected the admission of evidence obtained by torture, it did so on the basis of the common law: A v Secretary of State for the Home Department (No 2) [2005] UKHL 71; [2006] 2 AC 221. Lord Bingham observed at para 51 that English common law had regarded torture and its fruits with abhorrence for over 500 years, and concluded at para 52 that the principles of the common law, standing alone, compelled the exclusion of third party torture evidence. He noted that that was consistent with the Convention. More recently, the importance of the continuing development of the common law, in areas falling within the scope of the Convention guarantees, was emphasised by the Court of Appeal in R (Guardian News and Media Ltd) v City of Westminster Magistrates Court (Article 19 intervening) [2012] EWCA Civ 420; [2013] QB 618. The case concerned access by the Press to documents referred to in court, and was decided on the basis of the common law, including authorities from other jurisdictions, rather than on the basis of article 10 of the Convention. Toulson LJ, with whose reasoning the other members of the court agreed, stated at para 88: The development of the common law did not come to an end on the passing of the Human Rights Act 1998 . It is in vigorous health and flourishing in many parts of the world which share a common legal tradition. This case provides a good example of the benefit which can be gained from knowledge of the development of the common law elsewhere. Finally, in this connection, in R (Faulkner) v Secretary of State for Justice [2013] UKSC 23; [2013] 2 WLR 1157, para 29, the ordinary approach to the relationship between domestic law and the Convention was described as being that the courts endeavour to apply and if need be develop the common law, and interpret and apply statutory provisions, so as to arrive at a result which is in compliance with the UKs international obligations, the starting point being our own legal principles rather than the judgments of the international court. Against the background of those authorities, the error in the approach adopted on behalf of the appellants in the present case is to suppose that because an issue falls within the ambit of a Convention guarantee, it follows that the legal analysis of the problem should begin and end with the Strasbourg case law. Properly understood, Convention rights do not form a discrete body of domestic law derived from the judgments of the European court. As Lord Justice-General Rodger once observed, it would be wrong to see the rights under the European Convention as somehow forming a wholly separate stream in our law; in truth they soak through and permeate the areas of our law in which they apply (HM Advocate v Montgomery 2000 JC 111, 117). Procedural fairness at common law three preliminary matters Following the approach I have described, it is necessary to begin by considering the practice followed by the board in the light of domestic principles of procedural fairness. In doing so, it may be helpful to clarify three matters at the outset. The first matter concerns the role of the court when considering whether a fair procedure was followed by a decision-making body such as the board. In the case of the appellant Osborn, Langstaff J refused the application for judicial review on the ground that the reasons given for refusal [to hold an oral hearing] are not irrational, unlawful nor wholly unreasonable (para 38). In the case of the appellant Reilly, the Court of Appeal in Northern Ireland stated at para 42: Ultimately the question whether procedural fairness requires their deliberations to include an oral hearing must be a matter of judgment for the Parole Board. These dicta might be read as suggesting that the question whether procedural fairness requires an oral hearing is a matter of judgment for the board, reviewable by the court only on Wednesbury grounds. That is not correct. The court must determine for itself whether a fair procedure was followed (Gillies v Secretary of State for Work and Pensions [2006] UKHL 2; 2006 SC (HL) 71; [2006] 1 WLR 781, para 6 per Lord Hope of Craighead). Its function is not merely to review the reasonableness of the decision-makers judgment of what fairness required. The second matter to be clarified concerns the purpose of procedural fairness. In the case of the appellant Osborn, Langstaff J stated at para 6 that in determining whether an oral hearing was necessary, what fell to be considered was the extent to which an oral hearing would guarantee better decision making in terms of the uncovering of facts, the resolution of issues and the concerns of the decision-maker, due consideration being given to the interests at stake. In the Court of Appeal, Carnwath LJ interpreted Lord Binghams speech in R (West) v Parole Board [2005] UKHL 1; [2005] 1 WLR 350 as implying that the underlying rationale of procedural fairness at common law was one in which the emphasis is on the utility of the oral procedure in assisting in the resolution of the issues before the decision-maker (para 38). There is no doubt that one of the virtues of procedurally fair decision- making is that it is liable to result in better decisions, by ensuring that the decision- maker receives all relevant information and that it is properly tested. As Lord Hoffmann observed however in Secretary of State for the Home Department v (AF (No 3) [2009] UKHL 28; [2010] 2 AC 269, para 72, the purpose of a fair hearing is not merely to improve the chances of the tribunal reaching the right decision. At least two other important values are also engaged. The first was described by Lord Hoffmann (ibid) as the avoidance of the sense of injustice which the person who is the subject of the decision will otherwise feel. I would prefer to consider first the reason for that sense of injustice, namely that justice is intuitively understood to require a procedure which pays due respect to persons whose rights are significantly affected by decisions taken in the exercise of administrative or judicial functions. Respect entails that such persons ought to be able to participate in the procedure by which the decision is made, provided they have something to say which is relevant to the decision to be taken. As Jeremy Waldron has written (How Law Protects Dignity [2012] CLJ 200, 210): Applying a norm to a human individual is not like deciding what to do about a rabid animal or a dilapidated house. It involves paying attention to a point of view and respecting the personality of the entity one is dealing with. As such it embodies a crucial dignitarian idea respecting the dignity of those to whom the norms are applied as beings capable of explaining themselves. This point can be illustrated by Byles Js citation in Cooper v Wandsworth Board of Works (1863) 14 CB (NS) 180, 195 of a dictum of Fortescue J in Dr Bentleys Case (R v Chancellor of Cambridge, Ex p Bentley (1748) 2 Ld Raym 1334): The laws of God and man both give the party an opportunity to make his defence, if he has any. I remember to have heard it observed by a very learned man, upon such an occasion, that even God himself did not pass sentence upon Adam before he was called upon to make his defence. The point of the dictum, as Lord Hoffmann explained in AF (No 3) at para 72, is that Adam was allowed a hearing notwithstanding that God, being omniscient, did not require to hear him in order to improve the quality of His decision-making. As Byles J observed (ibid), the language used by Fortescue J is somewhat quaint, but has been the law from that time to the present. This aspect of fairness in decision-making has practical consequences of the kind to which Lord Hoffmann referred. Courts have recognised what Lord Phillips of Worth Matravers described as the feelings of resentment that will be aroused if a party to legal proceedings is placed in a position where it is impossible for him to influence the result Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28; [2010] 2 AC 269, para 63). In the present context, research has established the importance attached by prisoners to a process of risk assessment which provides for their contribution to the process (see Attrill and Liell, Offenders Views on Risk Assessment, in Who to Release? Parole, Fairness and Criminal Justice (2007), ed Padfield). Other research reveals the frustration, anger and despair felt by prisoners who perceive the boards procedures as unfair, and the impact of those feelings upon their motivation and respect for authority (see Padfield, Understanding Recall 2011, University of Cambridge Faculty of Law Research Paper No 2/2013 (2013)). The potential implications for the prospects of rehabilitation, and ultimately for public safety, are evident. The second value is the rule of law. Procedural requirements that decision- makers should listen to persons who have something relevant to say promote congruence between the actions of decision-makers and the law which should govern their actions (see eg Fuller, The Morality of Law, revised ed (1969), p 81, and Bingham, The Rule of Law (2010), chapter 6). The third matter to be clarified concerns the cost of oral hearings: a consideration which appears to have underlain some of the changes to the rules and practice of the board which have given rise to the present appeals, and which is reflected in the boards annual reports, where figures are given for the savings achieved by the refusal of oral hearings in recall cases. The easy assumption that it is cheaper to decide matters without having to spend time listening to what the persons affected may have to say begs a number of questions. In the context of parole, where the costs of an inaccurate risk assessment may be high (whether the consequence is the continued imprisonment of a prisoner who could safely have been released, or re-offending in the community by a prisoner who could not), procedures which involve an immediate cost but contribute to better decision- making are in reality less costly than they may appear. In the present cases, counsel for the board accepted that cost was not a conclusive argument against the holding of oral hearings. R (West) v Parole Board The circumstances in which the board should afford an oral hearing to determinate sentence prisoners who have been released on licence and then returned to prison were considered by the House of Lords in R (West) v Parole Board [2005] UKHL 1; [2005] 1 WLR 350. The case was decided at a time when such prisoners were entitled to challenge the revocation of their licence before the board (whereas now, as explained earlier, the board cannot adjudicate directly upon the appropriateness of the revocation of the licence, but must determine whether the prisoner should be re-released, having regard to his conduct during the licence period, amongst other matters). The case was also decided at a time when indeterminate sentence prisoners in England and Wales were entitled to an oral hearing. The House considered the requirements of procedural fairness in the light of a wide-ranging review of authorities from a number of common law jurisdictions, and also a number of judgments of the European court, including Waite v United Kingdom (2002) 36 EHRR 1001, to which it will be necessary to return. Lord Bingham, with whose speech the majority of the committee expressed agreement, stated (para 31): While an oral hearing is most obviously necessary to achieve a just decision in a case where facts are in issue which may affect the outcome, there are other cases in which an oral hearing may well contribute to achieving a just decision. The duty to afford an oral hearing therefore exists where there are facts in dispute which may affect the outcome, but it is not confined to such circumstances. Lord Bingham did not attempt to define exhaustively the other circumstances in which an oral hearing was required, but gave some examples, and some general guidance (para 35): Even if important facts are not in dispute, they may be open to explanation or mitigation, or may lose some of their significance in the light of other new facts. While the board's task certainly is to assess risk, it may well be greatly assisted in discharging it (one way or the other) by exposure to the prisoner or the questioning of those who have dealt with him. It may often be very difficult to address effective representations without knowing the points which are troubling the decision-maker. The prisoner should have the benefit of a procedure which fairly reflects, on the facts of his particular case, the importance of what is at stake for him, as for society. Lord Hope added two observations about the approach then followed by the board in relation to cases of the type in question, according to which it professed its willingness to hold oral hearings where the decision turned on disputed issues of fact, but in practice rarely held such hearings. First, there appeared to be a long- standing institutional reluctance on the part of the board to deal with cases orally: It would not be surprising if a consequence of that reluctance was an approach, albeit unconscious and unintended, which undervalued the importance of any issues of fact that the prisoner wished to dispute (para 66). As Lord Hope pointed out, this approach was liable to lead to reliance upon assumptions based on general knowledge and experience, and to a lack of focus on the prisoner as an individual. The institutional reluctance of the board to hold oral hearings in determinate recall cases appears to have continued during the period with which these appeals are concerned. The boards annual report for 2009-2010 records, in relation to determinate recall cases considered under the Criminal Justice and Immigration Act 2008, that of a total of 12,388 cases considered that year, only 145 were sent to an oral hearing: in other words, 1%. The proportion the following year was the same. That reluctance can also be detected in the tone of the internal guidance discussed earlier. The statistics also indicate a low rate of success in applications for oral hearings by indeterminate sentence prisoners: of 1054 negative paper decisions considered by ICM assessors in 2009-2010, 174 were sent to an oral hearing on appeal: in other words, 83% of appeals were refused. Lord Hopes second observation concerned the allowance of oral hearings where there were disputed issues of fact: The question is not whether the case ultimately turns on a disputed issue of fact when the decision is taken. It is whether, when the papers are first looked at, it is likely to do so (para 67). In other words, one cannot decide whether a disputed issue of fact will prove to be determinative at the stage of considering whether an oral hearing is appropriate. The most one can do at that stage is to identify the issues which appear to be important, and then decide in the light of that assessment (and other relevant factors) whether an oral hearing should be held. Finally, in relation to West, it is useful to note how the House dealt with the cases before it. The appellant West had breached his licence conditions in a number of ways. He had an explanation for some but not all of the breaches. He was refused an oral hearing. The House concluded that his explanations could not properly be rejected without hearing him. In so far as he had no explanation, the question whether the breach had an unacceptable impact on the risk posed to the public could not fairly be resolved without an oral hearing. The appellant Smith had repeatedly used class A drugs after his release on licence, while living in designated hostels. He maintained that he had succeeded in freeing himself from drugs while in prison, but had relapsed in the hostels because of the prevailing drug culture. He did not request an oral hearing, but it was nevertheless held that such a hearing should have been offered: the board might have been assisted by evidence from his psychiatrist, and should have allowed the appellant an opportunity to persuade it that the community would be better protected by allowing him to remain on licence under supervision than by returning him to prison with the prospect of eventual unsupervised release. The circumstances in which fairness requires an oral hearing What fairness requires of the board depends on the circumstances. As these can vary greatly from one case to another, it is impossible to lay down rules of universal application. The court can however give some general guidance. Generally, the board should hold an oral hearing whenever fairness to the prisoner requires such a hearing in the light of the facts of the case and, as was said in West, the importance of what is at stake. The board should consider whether its independent assessment of risk, and of the means by which it should be managed and addressed, may benefit from the closer examination which an oral hearing can provide. It is presumably because of the possibility of such assistance that the board must hold an oral hearing under rule 11(2)(a) in any case where an indeterminate sentence prisoner appears to the single member panel to be potentially suitable for release or for a transfer to open conditions. The assumption must be that an oral hearing has the potential to make a difference. But that potential may also exist in other cases. The boards annual report for 2005-2006 contains a statement by a psychiatrist member of the board which demonstrates how valuable oral hearings can be: I find the oral hearings particularly rewarding in that the evidence on the day can sometimes illuminate a situation sufficiently to turn around my preliminary view of the case. There is no substitute for being able to hear from, and ask questions of the prisoner. The board should also bear in mind that the purpose of holding an oral hearing is not only to assist it in its decision-making, but also to reflect the prisoners legitimate interest in being able to participate in a decision with important implications for him, where he has something useful to contribute. An oral hearing should therefore be allowed where it is maintained on tenable grounds that a face to face encounter with the board, or the questioning of those who have dealt with the prisoner, is necessary to enable him or his representatives to put their case effectively or to test the views of those who have dealt with him. When dealing with cases concerning recalled prisoners, the board should bear in mind that the prisoner has been deprived of his freedom, albeit conditional: a factor upon which Lord Bingham placed emphasis in West. In relation to cases concerning post-tariff indeterminate sentence prisoners, it has been said more than once that the board should scrutinise ever more anxiously whether the level of risk is unacceptable, the longer the time the prisoner has spent in prison following the expiry of his tariff (R v Parole Board, Ex p Bradley [1991] 1 WLR 134, 146; R v Parole Board, Ex p Wilson [1992] QB 740, 747). It also has to be borne in mind that the issues which are considered by the board are not in practice confined to the question whether the prisoner should or should not be released or transferred. As I have explained, the statutory directions given to the board require it to consider numerous matters. The boards findings in relation to these matters may in practice affect the prisoners future progress in prison, for example in relation to the courses which he is required to undertake and his future reviews. The board may also be asked specifically to advise the Secretary of State on matters affecting the prisoner. For example, when post-tariff indeterminate sentence prisoners are referred to the board, it is generally asked to advise on the continuing areas of risk that need to be addressed. In such cases, the fair disposal of issues of that kind may require an oral hearing even if the question whether the prisoner should be released or transferred does not. In accordance with the guidance provided in West, an oral hearing is required when facts which appear to be important are in dispute, or where a significant explanation or mitigation is advanced which needs to be heard orally if it is to be accepted. An oral hearing is also necessary when for other reasons the board cannot otherwise properly or fairly make an independent assessment of risk, or of the means by which it should be managed and addressed. That is likely to be the position in cases where such an assessment may depend upon the view formed by the board (including its members with expertise in psychology or psychiatry) of characteristics of the prisoner which can best be judged by seeing or questioning him in person, or where a psychological assessment produced by the Ministry of Justice is disputed on tenable grounds, or where the board may be materially assisted by hearing evidence, for example from a psychologist or psychiatrist. As is illustrated by the judgments of the European Court of Human Rights in Hussain v United Kingdom (1996) 22 EHRR 1, Singh v United Kingdom 21 February 1996, Reports of Decisions and Judgments, 1996-I, p 280 and Waite v United Kingdom (2002) 36 EHRR 1001, cases concerning prisoners who have spent lengthy periods in custody are likely to fall into the first of these categories, since an independent assessment of their continuing dangerousness will require a judgment to be made of the extent to which they have developed over the period since their conviction: a matter which cannot normally be independently and fairly assessed without seeing the person concerned. Whether a prisoners right to a fair hearing requires the holding of an oral hearing does not depend on his establishing that his application for release or transfer stands any particular chance of success: that approach would not allow for the possibility that an oral hearing may be necessary in order for the prisoner to have a fair opportunity of establishing his prospects of success, and thus involves circular reasoning. The point can be illustrated by the example of a prisoner who is unable to participate effectively in a written procedure due to learning difficulties. To decide whether he should be allowed an oral hearing on the basis of his prospects of success as they appeared on the basis of the official dossier and his written representations, if any, would plainly be unfair. The problem with reliance on the prospects of success, as they appear from the written material, as the touchstone of what fairness requires is not however confined to prisoners who are manifestly disadvantaged by a written procedure. In so far as the boards practice is to require that a realistic prospect of success be demonstrated, as a precondition of the grant of an oral hearing, that practice should therefore cease. It is in addition fundamental to procedural fairness that the board must be, and appear to be, independent and impartial. The dossier provided to the board by the Ministry of Justice is plainly important to the boards discharge of its functions: it records the prisoners progress in the prison system and the rehabilitation courses which he has undertaken, and it includes expert views on the likelihood of his re-offending. Nevertheless, as was said in R (Brooke) v Parole Board [2008] EWCA Civ 29; [2008] 1 WLR 1950 at para 96, the board has to evaluate the material placed before it by the Ministry and reach its own objective judicial decision. The board should therefore have no predisposition to favour the official version of events, or the official risk assessment, over the case advanced by the prisoner. In that regard, the court was referred to a study of the recall of determinate sentence prisoners which concluded that the single member panels were little more than a rubber stamp (Padfield, Understanding Recall 2011, University of Cambridge Faculty of Law Research Paper No 2/2013 (2013) p 40). That conclusion is supported, in relation to the period when the appellant Osborns case was considered, by the statistics which I have mentioned. It is equally important that the board should not give way to the temptation, identified in West by Lord Hope, to discount the significance of matters which are disputed by the prisoner in order to avoid the trouble and expense of an oral hearing. It is also important that the administrative procedure adopted by the board should be well adapted to ensuring that an oral hearing is held when such a hearing is necessary. In that regard, it has to be said that the procedural rules in force at the material time, and the analogous rules currently in force, are liable to give rise to a number of problems, as the present appeals demonstrate (problems which might be avoided if the board took a decision about the appropriate form of hearing, and nothing else, only after any representations on behalf of the prisoner had been received). First, the rule requiring a single member panel either to decide that the case should receive further consideration by an oral panel, or to make a provisional decision that the prisoner is unsuitable for release or for a transfer to open conditions, should not be understood as meaning that an oral hearing is appropriate only if the single member panel forms the provisional view that the prisoner is suitable for release or transfer. Secondly, it is important to understand the provisional nature of a decision made by the single member panel that the prisoner is unsuitable for release. The right conferred on the prisoner, following that decision, to request an oral hearing is not a right of appeal. The prisoner does not have to demonstrate that the decision was (or may have been) wrong: what he has to persuade the board is simply that an oral hearing is appropriate. The unfairness which results from the boards treatment of the request for an oral hearing as an appeal is illustrated by the case of the appellant Booth, in which the ICM assessor identified the critical question as being whether the grounds of the appeal are justified and if an oral hearing would make any material difference to the paper decision. The request for an oral hearing was thus decided on the basis that the earlier decision was presumptively correct. This is to put the cart before the horse. If fairness requires an oral hearing, then a decision arrived at without such a hearing is unfair and cannot stand. The question whether an oral hearing is required cannot therefore be decided on the basis of a presumption that a decision taken without such a hearing is correct. Thirdly, since the effect of the refusal of an oral hearing is that the provisional decision becomes final, it follows that an oral hearing should be granted in any case where it would be unfair to the prisoner for that to happen. For example, if the representations made in support of the prisoners request for an oral hearing raise issues which place in question anything in the provisional decision which may in practice have a significant impact on the prisoners future management in prison or on his future reviews, such as reports of poor behaviour or recommendations that particular courses should be undertaken to reduce risk, it will usually follow that an oral hearing should be allowed for that reason alone, even if there is no doubt that the prisoner should remain in custody or in closed conditions (see eg Roose v Parole Board [2010] EWHC 1780 (Admin)). The present appeals The requirements of procedural fairness at common law were not met in the cases of the appellants. In the case of the appellant Osborn, there were several facts which the paper recall panel treated as important and which were in dispute, or for which a significant explanation or mitigation was advanced: the appellants attitude to the licence conditions; the basis of the official assessment of the risk which he presented; the events on the date of his release, including his alleged statement about firearms; his claim that the hostel manager had agreed to put back the time when he was due to arrive; and his explanation for the detour to the village. An oral hearing should therefore have been held. In the case of the appellant Booth, the approach adopted by the board to the application of rule 12(1) was mistaken, as explained in paras 94 and 95. The points put forward in support of his so-called appeal raised significant issues on which the input of his psychiatrist might have been helpful and which merited the depth of consideration which only an oral hearing could provide. In that regard, it is relevant that the appellant had spent so long in custody post-tariff and that the board had been asked to advise on continuing areas of risk that needed to be addressed. In the case of the appellant Reilly, the history of adjudications and failed drugs tests was treated as important by the paper panel, and must have influenced the risk assessments which were before it; but that history was disputed in some significant respects, and in other respects was open to explanation or mitigation, according to the representations made on the appellants behalf. An oral hearing should therefore have been held. The unfairness resulting from the failure to hold such a hearing was compounded, in the manner explained in para 96, when his appeal was refused and the paper panel decision became final. The Secretary of State then expressed agreement with the decision and required the appellant to undertake work aimed at addressing misbehaviour and drug use in prison: matters which the ICM assessor had left out of account because they were not considered critical to the question whether to recommend release or transfer, but which remained part of a decision which had become final. Furthermore, the approach adopted by the board to the application of rule 12(1) was also mistaken, as explained in para 94. Convention rights It is unnecessary to consider Convention rights in order to determine the validity of the decisions in question. It is however appropriate to do so in order to consider whether compliance with common law requirements will satisfy the requirements of article 5(4) of the Convention, or whether that article imposes more far-reaching obligations in respect of the holding of oral hearings. It is also necessary to consider article 5(4) for the purpose of determining the claim advanced on behalf of the appellant Reilly for an award of damages under section 8 of the Human Rights Act. Article 5(4) and the present appeals Article 5(4) of the Convention provides: Everyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings by which the lawfulness of his detention shall be decided speedily by a court and his release ordered if the detention is not lawful. As was explained in A v United Kingdom (2009) 49 EHRR 625, paras 202-203, prisoners are entitled under article 5(4) to a review of the lawfulness of their detention in the light of the requirements of domestic law and of the Convention. The review must be carried out in accordance with a procedure which has a judicial character and provides guarantees appropriate to the type of deprivation of liberty in question. As explained earlier, prisoners who have been recalled to prison following release on licence are entitled to a review by the board of whether they should be re-released, the test under the relevant directions being whether the risk posed by the prisoner can be safely managed in the community. Indeterminate sentence prisoners whose tariff period has expired are entitled to a review by the board of whether their continued detention is necessary for the protection of the public. It is not in issue in these appeals that the board possesses the essential features of a court within the meaning of article 5(4). On that basis, the boards discharge of its functions should satisfy the requirements of article 5(4), provided its reviews are conducted speedily and in accordance with a procedure which meets Convention standards of fairness. In R (West) v Parole Board [2005] UKHL 1; [2005] 1 WLR 350, Lord Bingham cited a number of judgments of the European Court of Human Rights, including the case of Waite v United Kingdom, in his discussion of the common law, in accordance with the long-established understanding that the Convention is relevant to the development of the common law. Having provided the guidance as to the requirements of common law fairness which I have discussed, Lord Bingham concluded, in agreement with the other members of the appellate committee, that review by the board would satisfy the requirements of article 5(4) provided it was conducted in a manner that met the requirements of the common law (para 37). Lord Hope also referred to the case of Hussain v United Kingdom (1996) 22 EHRR 1. The case of Hussain concerned an applicant who had been convicted of murder at the age of 16 and sentenced to detention during Her Majestys pleasure, with a tariff of 15 years. Following the expiry of the tariff, he was reviewed by the board on several occasions, but had no opportunity to take part in the proceedings in any way, and did not see the reports before the board. Its recommendations were not binding upon the Secretary of State, and were not followed. By the time his case was considered by the European court, he had been detained for over 17 years. In its judgment, the court observed that an indeterminate term of detention for a young person, which might be as long as that person's life, could only be justified by considerations based on the need to protect the public. Those considerations, centred on an assessment of the young offender's character and mental state and of his or her resulting dangerousness to society, must of necessity take into account any developments in the young offender's personality and attitude as he or she grew older (para 53). Following the expiry of the tariff, the applicant was entitled under article 5(4) to take proceedings to have the justification for his continuing detention decided by a court at reasonable intervals (para 54). The board could not be regarded as a court for the purposes of article 5(4), given that it could not order the release of a prisoner, and the proceedings before it were not of an adversarial nature (para 58). The court continued: 59. The court recalls in this context that, in matters of such crucial importance as the deprivation of liberty and where questions arise which involve, for example, an assessment of the applicant's character or mental state, it has held that it may be essential to the fairness of the proceedings that the applicant be present at an oral hearing. 60. The court is of the view that, in a situation such as that of the applicant, where a substantial term of imprisonment may be at stake and where characteristics pertaining to his personality and level of maturity are of importance in deciding on his dangerousness, article 5(4) requires an oral hearing in the context of an adversarial procedure involving legal representation and the possibility of calling and questioning witnesses. As I understand this passage, para 59 contains general observations reflecting the previous case law, whereas para 60 expresses a principle applicable specifically to cases such as that of the applicant, where (1) a substantial term of imprisonment may be at stake and (2) characteristics pertaining to his personality and level of maturity are of importance in deciding on his dangerousness. The court repeated paras 59-60 of its Hussain judgment in the case of Singh v United Kingdom 21 February 1996, Reports of Decisions and Judgments, 1996-I, p 280, issued on the same day as Hussain. That case also concerned a young offender sentenced to detention during Her Majestys pleasure, who had been released on licence and then had his licence revoked in the light of concerns as to his conduct. The case of Waite v United Kingdom also concerned a young offender who had been sentenced to detention during Her Majestys pleasure, released on licence, and then had his licence revoked in the light of concerns as to his conduct, which included misuse of drugs, a sexual relationship with a minor, attempted suicide and failure to maintain contact with his supervising officer. The board upheld the decision to revoke his licence without holding an oral hearing. The court held that there had been a breach of article 5(4), and rejected the contention that, since the applicant had admitted the facts leading to his recall, the board was bound to conclude that public protection required that he should be confined: Art 5(4) is first and foremost a guarantee of a fair procedure for reviewing the lawfulness of detention - an applicant is not required, as a precondition to enjoying that protection, to show that on the facts of his case he stands any particular chance of success in obtaining his release (para 59). That passage is consistent with, and supports, the approach which I have concluded applies at common law. The court continued (ibid): In matters of such crucial importance as the deprivation of liberty and where questions arise involving, for example, an assessment of the applicant's character or mental state, the court's case law indicates that it may be essential to the fairness of the proceedings that the applicant be present at an oral hearing. In such a case as the present, where characteristics pertaining to the applicant's personality and level of maturity and reliability are of importance in deciding on his dangerousness, art 5(4) requires an oral hearing in the context of an adversarial procedure involving legal representation and the possibility of calling and questioning witnesses. The first sentence in that passage repeats the summary of the earlier case law in para 59 of the Hussain judgment. The second sentence repeats the principle stated in para 60 of that judgment. Although Waite, like Hussain and Singh, concerned a person who had committed the index offence as a young offender, the language of the second sentence is not confined to young offenders. The conditions mentioned by the European court are likely to apply to most indeterminate sentence prisoners who have served their minimum terms. That is not to say that they will necessarily apply on every occasion when such a prisoners case is considered by the board: a prisoners case may be considered in different circumstances and at different intervals of time. Bearing in mind however that the continued detention of a post-tariff prisoner must be justified by his continuing dangerousness as independently assessed by the board, and taking account of the importance of what is at stake, it will in most cases be necessary as a matter of fairness that he should have an opportunity to appear in person before the board. That is consistent with the common law, as explained earlier. Since the board failed in its duty of procedural fairness to the appellants at common law, it follows that it also failed to act compatibly with article 5(4). Damages The appellant Reilly sought to have his case remitted to the High Court for consideration of an award of damages as just satisfaction under section 8 of the Human Rights Act. The circumstances in which such an award is appropriate in respect of a breach of article 5(4) were considered in R (Faulkner) v Secretary of State for Justice [2013] UKSC 23; [2013] 2 WLR 1157. Although that case was principally concerned with breaches of the requirement that a review of the lawfulness of detention must be held speedily, the court also considered violations of the requirement that reviews must follow a fair procedure. At paras 55-61, the court considered in particular the judgment of the Grand Chamber in Nikolova v Bulgaria (1999) 31 EHRR 64 and the later judgment in HL v United Kingdom (2004) 40 EHRR 761. In the latter case, Nikolova was described as having endorsed the principle that, where a violation of article 5(3) or (4) was of a procedural nature, just satisfaction could be awarded only in respect of damage resulting from a deprivation of liberty which would not otherwise have occurred. Although, as was noted in Faulkner at para 61, there have been cases since Nikolova, not concerned with delay, in which modest awards of damages have been made as compensation for frustration and anxiety, none of those cases is comparable with that of the appellant. In particular, the cases mentioned there which concerned post-tariff indeterminate sentence prisoners, such as Curley v United Kingdom (2000) 31 EHRR 401 and Von Blow v United Kingdom (2003) 39 EHRR 366, date from the period when there was no review of the continued lawfulness of detention by a body with the power to order release or with a procedure containing judicial safeguards. It is not argued that the appellant Reilly has suffered any deprivation of liberty as a result of the breach of article 5(4): damages are sought in respect of feelings of frustration and distress which the court is invited to assume he experienced. In the circumstances, taking into account the principles applied by the European court as required by section 8(4) of the Human Rights Act, the finding of a violation constitutes sufficient just satisfaction. Conclusion I would in each case allow the appeal, and make a declaration that the board breached its duty of procedural fairness to the appellant by failing to offer him an oral hearing, and was accordingly in breach of article 5(4) of the Convention. |
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 appeal gives the Supreme Court the opportunity to revisit the decision of the House of Lords in Stack v Dowden [2007] UKHL 17, [2007] 2 AC 432. That case, like this, was concerned with the determination of the beneficial interests in a house acquired in joint names by an unmarried couple who intended it to be their family home. Its reasoning was closely examined, in particular by Rimer LJ, in the present appeal: [2010] EWCA Civ 578, [2010] 1 WLR 2401. The fact that the Court of Appeal itself gave permission to appeal is a mark of the difficulties felt by the majority, not only with the reasoning but also with the outcome to which it led. The decision in Stack v Dowden has also attracted a good deal of comment from legal scholars, which we have read although it was not referred to by counsel (who took a sensibly economical approach to the presentation of the appeal). This ranges from qualified enthusiasm (K Gray & S Gray, Land Law, 6th ed (2009) para 7 072) to almost unqualified disapprobation (Swadling, The Common Intention Trust in the House of Lords: An Opportunity Missed (2007) 123 LQR 511; Dixon, The Never Ending Story Co Ownership After Stack v Dowden [2007] Conv 456). But counsel have not argued that Stack v Dowden was wrongly decided or that this court should now depart from the principles which it laid down. This appeal provides an opportunity for some clarification. Stack v Dowden Mr Stack and Ms Dowden lived together for 19 years, from 1983 to 2002. They did not marry but they had four children born between 1986 and 1991. Ms Dowden was a well qualified electrical engineer, and throughout the time when they lived together she worked full time (except for periods of maternity leave) for the LEB and its successor. Mr Stack was a self employed builder and decorator until 1987, after which he was employed by Hammersmith and Fulham LBC. They started living together in 1983 in a house acquired in Ms Dowdens sole name at the price of 30,000. The deposit of 8,000 was paid out of a building society account in Ms Dowdens sole name; there was a conflict of evidence as to whether Mr Stack had made any contributions to the account. The balance of 22,000 was raised on a mortgage for which Ms Dowden alone was responsible. She made the mortgage payments and paid other household outgoings. Mr Stack kept his finances separate (he had most of his post, including his bank statements, sent to his fathers address). They carried out extensive repairs and improvements to the house. The judge found that Mr Stack was responsible for most of this work but could not put a figure on its contribution to the sale value of the house. They moved house in 1993. Ms Dowden received over 66,000 from the sale of their first home. Their new home was bought for 190,000. Nearly 129,000 came from Ms Dowdens building society account and the balance from a bank loan secured on the house and on two endowment policies, one in joint names and one in Ms Dowdens sole name. The house was transferred into their joint names with no express declaration of trust, but a standard form provision that the survivor could give a good receipt. Mr Stack paid the mortgage interest and the premiums on the joint policy, to a total amount of nearly 34,000. The principal of the mortgage loan was repaid by a series of lump sum payments, to which Mr Stack contributed 27,000 and Ms Dowden over 38,000. The utility bills were in Ms Dowdens name and she paid all or most of them. There were some improvements to the property, but not on a large scale. The parties continued to maintain separate bank accounts and each made a number of separate investments. In short, there was a substantial disparity between their respective financial contributions to the purchase. The trial judge held that the proceeds of sale should be divided in equal shares. Although Ms Dowden had been the bigger earner, they have both put their all into doing the best for themselves and their family as they could. The Court of Appeal allowed Ms Dowdens appeal and divided the proceeds 65% to 35% as she had asked. The House of Lords (Lord Hoffmann, Lord Hope, Lord Walker, Lady Hale and Lord Neuberger) unanimously upheld that order, although Lord Neuberger did so for different reasons from the majority. The curious feature of the decided cases up until then had been that, once an intention to share ownership had been established, the courts had tended to adopt a more flexible and holistic approach to the quantification of the parties shares in cases of sole legal ownership than they had in cases of joint legal ownership. In the former, they had adopted a concept of the common intention constructive trust which depends upon the shared intentions of the parties. In the latter, they had tended to analyse the matter in terms of a resulting trust, which depends upon the laws presumption as to the intention of the party who makes a financial contribution to the purchase. This point was made by Lady Hale in Stack v Dowden, paras 64 and 65 (see also Peter Gibson LJ in Drake v Whipp [1996] 1 FLR 826, 827, cited in Stack v Dowden, para 29). The leading opinion in the House of Lords was that of Lady Hale. Lord Hoffmann, Lord Hope and Lord Walker all agreed with it, though Lord Hope and Lord Walker added some observations of their own. Lord Hope discussed Scots law, drawing attention to the importance in Scotland of the law of unjust enrichment. Lord Walker contributed what he referred to as an extended footnote, with a detailed commentary on Lord Diplocks speech in Gissing v Gissing [1971] AC 886. The conclusions in Lady Hales opinion were directed to the case of a house transferred into the joint names of a married or unmarried couple, where both are responsible for any mortgage, and where there is no express declaration of their beneficial interests. In such cases, she held that there is a presumption that the beneficial interests coincide with the legal estate. Specifically, in the domestic consumer context, a conveyance into joint names indicates both legal and beneficial joint tenancy, unless and until the contrary is proved: Lady Hale, at para 58; Lord Walker at para 33. Secondly, the mere fact that the parties had contributed to the acquisition of the home in unequal shares would not normally be sufficient to rebut the presumption of joint tenancy arising from the conveyance: It cannot be the case that all the hundreds of thousands, if not millions, of transfers into joint names . are vulnerable to challenge in the courts simply because it is likely that the owners contributed unequally to their purchase: Lady Hale, at para 68. Thirdly, the task of seeking to show that the parties intended their beneficial interests to be different from their legal interests was not to be lightly embarked upon. In family disputes, strong feelings are aroused when couples split up. These often lead the parties, honestly but mistakenly, to reinterpret the past in self exculpatory or vengeful terms. They also lead people to spend far more on the legal battle than is warranted by the sums actually at stake. A full examination of the facts is likely to involve disproportionate costs. In joint names cases it is also unlikely to lead to a different result, unless the facts are very unusual: Lady Hale, at para 68; also Lord Walker at para 33. Fourthly, however, if the task is embarked upon, it is to ascertain the parties common intentions as to what their shares in the property would be, in the light of their whole course of conduct in relation to it: Lady Hale, at para 60. It is the way in which this point was made which seems to have caused the most difficulty in the lower courts. The difficulty is well illustrated in Lord Wilsons judgment, at paras 85 to 87, which read the judgment in a way which we would not read it. It matters not which reading is correct. It does matter that any confusion is resolved. It was also accepted that the parties common intentions might change over time, producing what Lord Hoffmann referred to in the course of argument as an ambulatory constructive trust: Lady Hale, at para 62. An example, given in para 70, was where one party had financed or constructed an extension or major improvement to the property, so that what they had now was different from what they had first acquired. But of course there are other examples. The principal question in this case is whether this is one. At its simplest the principle in Stack v Dowden is that a common intention trust, for the cohabitants home to belong to them jointly in equity as well as on the proprietorship register, is the default option in joint names cases. The trust can be classified as a constructive trust, but it is not at odds with the parties legal ownership. Beneficial ownership mirrors legal ownership. What it is at odds with is the presumption of a resulting trust. A single regime? In an interesting article by Simon Gardner and Katherine Davidson, The Future of Stack v Dowden (2011) 127 LQR 13, 15, the authors express the hope that the Supreme Court will make clear that constructive trusts of family homes are governed by a single regime, dispelling any impression that different rules apply to joint names and single name cases. At a high level of generality, there is of course a single regime: the law of trusts (this is the second of Mustill LJs propositions in Grant v Edwards [1986] Ch 638, 651). To the extent that we recognise that a common intention trust is of central importance to joint names as well as single names cases, we are going some way to meet that hope. Nevertheless it is important to point out that the starting point for analysis is different in the two situations. That is so even though it may be necessary to enquire into the varied circumstances and reasons why a house or flat has been acquired in a single name or in joint names (they range, for instance, from Lowson v Coombes [1999] Ch 373, where the property was in the womans sole name because the man was apprehensive of claims by his separated wife, to Adekunle v Ritchie [2007] WTLR 1505, where an enfranchised freehold was in joint names because the elderly tenant could not obtain a mortgage on her own). The starting point is different because the claimant whose name is not on the proprietorship register has the burden of establishing some sort of implied trust, normally what is now termed a common intention constructive trust. The claimant whose name is on the register starts (in the absence of an express declaration of trust in different terms, and subject to what is said below about resulting trusts) with the presumption (or assumption) of a beneficial joint tenancy. The official Land Registry application form (TR1) for registration of a transfer was replaced on 1 April 1998 by a new form with a box enabling joint transferees to clarify the beneficial ownership of the property. That should help to avoid uncertainty but in practice it does not always do so (this is explained in detail in a case note: Anything to Declare? Express Declarations of Trust in Stack v Dowden [2007] Conv 364). We understand that the Land Registry does not propose to implement the recommendations for change made by an expert working party which it convened in response to Stack v Dowden: see Elizabeth Cooke, In the wake of Stack v Dowden: the tale of TR1 [2011] Fam Law 1142. The presumption of a beneficial joint tenancy is not based on a mantra as to equity following the law (though many non lawyers would find it hard to understand the notion that equity might do anything else). There are two much more substantial reasons (which overlap) why a challenge to the presumption of beneficial joint tenancy is not to be lightly embarked on. The first is implicit in the nature of the enterprise. If a couple in an intimate relationship (whether married or unmarried) decide to buy a house or flat in which to live together, almost always with the help of a mortgage for which they are jointly and severally liable, that is on the face of things a strong indication of emotional and economic commitment to a joint enterprise. That is so even if the parties, for whatever reason, fail to make that clear by any overt declaration or agreement. The court has often drawn attention to this. Jacob LJ did so in his dissenting judgment in this case: [2010] EWCA Civ 578, [2010] 1 WLR 2401, para 90. One of the most striking expressions of this approach is in the judgment of Waite LJ in Midland Bank plc v Cooke [1995] 4 All ER 562, 575. It is worth quoting it at some length, even though the case was a single name case and the couple were married (the husband was 19, and the wife a little older, at the time of the marriage): Equity has traditionally been a system which matches established principle to the demands of social change. The mass diffusion of home ownership has been one of the most striking social changes of our own time. The present case is typical of hundreds, perhaps even thousands, of others. When people, especially young people, agree to share their lives in joint homes they do so on a basis of mutual trust and in the expectation that their relationship will endure. Despite the efforts that have been made by many responsible bodies to counsel prospective cohabitants as to the risks of taking shared interests in property without legal advice, it is unrealistic to expect that advice to be followed on a universal scale. For a couple embarking on a serious relationship, discussion of the terms to apply at parting is almost a contradiction of the shared hopes that have brought them together. There will inevitably be numerous couples, married or unmarried, who have no discussion about ownership and who, perhaps advisedly, make no agreement about it. It would be anomalous, against that background, to create a range of home buyers who were beyond the pale of equitys assistance in formulating a fair presumed basis for the sharing of beneficial title, simply because they had been honest enough to admit that they never gave ownership a thought or reached any agreement about it. Gardner and Davidson make the same point at (2011) 127 LQR 13, 15 16: The context under discussion is one in which people will not normally formulate agreements, but (this is crucial) the very reason for this the parties familial trust in one another also warrants the laws intervention nonetheless. Unless the law reacts to such trust as much as to more individualistic forms of interaction, those who put their faith in the former rather than the latter will find their interests thereby exposed. Gardner has termed this a materially communal relationship: ie one in which, in practical terms, they pool their material resources (including money, other assets, and labour): An Introduction to Land Law, 2nd ed (2009) para 8.3.7.) The notion that in a trusting personal relationship the parties do not hold each other to account financially is underpinned by the practical difficulty, in many cases, of taking any such account, perhaps after 20 years or more of the ups and downs of living together as an unmarried couple. That is the second reason for caution before going to law in order to displace the presumption of beneficial joint tenancy. Lady Hale pointed this out in Stack v Dowden at para 68 (see para 12 above), as did Lord Walker at para 33: In the ordinary domestic case where there are joint legal owners there will be a heavy burden in establishing to the courts satisfaction that an intention to keep a sort of balance sheet of contributions actually existed, or should be inferred, or imputed to the parties. The presumption will be that equity follows the law. In such cases the court should not readily embark on the sort of detailed examination of the parties relationship and finances that was attempted (with limited success) in this case. The competing presumption: a resulting trust? 72, 73, footnote 6) William Swadling has commented: In an illuminating article, Explaining Resulting Trusts (2008) 124 LQR A resulting trust also traditionally arose where A and B contributed unequally to the purchase price and the title was conveyed to A and B as joint tenants, whereby A and B held as equitable tenants in common in proportion to their contributions (Lake v Gibson (1729) 1 Eq Cas Abr 290). In Stack v Dowden [2007] UKHL 17, a majority of the House of Lords held that this rule no longer applied in the case of matrimonial or quasi matrimonial homes. That is probably a reference to para 31 of Lord Walkers opinion. Lady Hales opinion does not in terms reach that conclusion. But the extended discussion from para 56 to para 70 (and in particular, the express disapproval of Walker v Hall [1984] FLR 126, Springette v Defoe [1992] 2 FLR 388 and Huntingford v Hobbs [1993] 1 FLR 736) is inconsistent with a resulting trust analysis in this context. It is not possible at one and the same time to have a presumption or starting point of joint beneficial interests and a presumption (let alone a rule) that the parties beneficial interests are in proportion to their respective financial contributions. In the context of the acquisition of a family home, the presumption of a resulting trust made a great deal more sense when social and economic conditions were different and when it was tempered by the presumption of advancement. The breadwinner husband who provided the money to buy a house in his wifes name, or in their joint names, was presumed to be making her a gift of it, or of a joint interest in it. That simple assumption which was itself an exercise in imputing an intention which the parties may never have had was thought unrealistic in the modern world by three of their Lordships in Pettitt v Pettitt [1970] AC 777. It was also discriminatory as between men and women and married and unmarried couples. That problem might have been solved had equity been able to extend the presumption of advancement to unmarried couples and remove the sex discrimination. Instead, the tool which equity has chosen to develop law is the common intention constructive trust. Abandoning the presumption of advancement while retaining the presumption of resulting trust would place an even greater emphasis upon who paid for what, an emphasis which most commentators now agree to have been too narrow: hence the general welcome given to the more promising vehicle of the constructive trust: see Gardner and Davidson at (2011) 127 LQR 13, 16. The presumption of advancement is to receive its quietus when section 199 of the Equality Act 2010 is brought into force. The time has come to make it clear, in line with Stack v Dowden (see also Abbott v Abbott [2007] UKPC 53, [2007] 2 All ER 432), that in the case of the purchase of a house or flat in joint names for joint occupation by a married or unmarried couple, where both are responsible for any mortgage, there is no presumption of a resulting trust arising from their having contributed to the deposit (or indeed the rest of the purchase) in unequal shares. The presumption is that the parties intended a joint tenancy both in law and in equity. But that presumption can of course be rebutted by evidence of a contrary intention, which may more readily be shown where the parties did not share their financial resources. Inference or imputation? In Stack v Dowden Lord Neuberger observed (paras 125 126): While an intention may be inferred as well as express, it may not, at least in my opinion, be imputed. That appears to me to be consistent both with normal principles and with the majority view of this House in Pettitt [1970] AC 777, as accepted by all but Lord Reid in Gissing v Gissing [1971] AC 886, 897H, 898B D, 900E G, 901B D, 904E F, and reiterated by the Court of Appeal in Grant v Edwards [1986] Ch 638 at 651F 653A. The distinction between inference and imputation may appear a fine one (and in Gissing v Gissing [1971] AC 886, at 902G H, Lord Pearson, who, on a fair reading I think rejected imputation, seems to have equated it with inference), but it is important. An inferred intention is one which is objectively deduced to be the subjective actual intention of the parties, in the light of their actions and statements. An imputed intention is one which is attributed to the parties, even though no such actual intention can be deduced from their actions and statements, and even though they had no such intention. Imputation involves concluding what the parties would have intended, whereas inference involves concluding what they did intend. Rimer LJ made some similar observations in the Court of Appeal in this case [2010] EWCA Civ 578, [2010] 1 WLR 2401, paras 76 77. Both observations had been to some extent anticipated as long ago as 1970 by Lord Reid in his speech in Gissing v Gissing [1971] AC 886, 897: Returning to the crucial question there is a wide gulf between inferring from the whole conduct of the parties that there probably was an agreement, and imputing to the parties an intention to agree to share even where the evidence gives no ground for such an inference. If the evidence shows that there was no agreement in fact then that excludes any inference that there was an agreement. But it does not exclude an imputation of a deemed intention if the law permits such an imputation. If the law is to be that the court has power to impute such an intention in proper cases then I am content, although I would prefer to reach the same result in a rather different way. But if it were to be held to be the law that it must at least be possible to infer a contemporary agreement in the sense of holding that it is more probable than not there was in fact some such agreement then I could not contemplate the future results of such a decision with equanimity. The decision of the House of Lords in Gissing v Gissing has been so fully analysed and discussed that it is almost impossible to say anything new about it. However it may be worth pointing out that their Lordships speeches were singularly unresponsive to each other. The only reference to another speech is by Viscount Dilhorne (at p 900) where he agreed with Lord Diplock on a very general proposition as to the law of trusts. The law reporter has managed to find a ratio for the headnote (at p 886) only by putting these two propositions together with some remarks by Lord Reid (at p 896) which have a quite different flavour. We can only guess at the order in which the speeches were composed, but the third and fourth sentences of the passage from Lord Reids speech, set out in the preceding paragraph, suggest that Lord Reid had read Lord Diplocks speech in draft, and thought that it was about an imputation of a deemed intention. This sort of constructive intention (or any other constructive state of mind), and the difficulties that they raise, are familiar in many branches of the law. Whenever a judge concludes that an individual intended, or must be taken to have intended, or knew, or must be taken to have known, there is an elision between what the judge can find as a fact (usually by inference) on consideration of the admissible evidence, and what the law may supply (to fill the evidential gap) by way of a presumption. The presumption of a resulting trust is a clear example of a rule by which the law does impute an intention, the rule being based on a very broad generalisation about human motivation, as Lord Diplock noted in Pettitt v Pettitt [1970] AC 777, 824: It would, in my view, be an abuse of the legal technique for ascertaining or imputing intention to apply to transactions between the post war generation of married couples presumptions which are based upon inferences of fact which an earlier generation of judges drew as to the most likely intentions of earlier generations of spouses belonging to the propertied classes of a different social era. That was 40 years ago and we are now another generation on. The decision in Stack v Dowden produced a division of the net proceeds of sale of the house in shares roughly corresponding to the parties financial contributions over the years. The majority reached that conclusion by inferring a common intention (see Lady Hales opinion at para 92, following her detailed analysis of the facts starting at para 86). Only Lord Neuberger reached the same result by applying the classic resulting trust doctrine (which involved, it is to be noted, imputing an intention to the parties). In deference to the comments of Lord Neuberger and Rimer LJ, we accept that the search is primarily to ascertain the parties actual shared intentions, whether expressed or to be inferred from their conduct. However, there are at least two exceptions. The first, which is not this case, is where the classic resulting trust presumption applies. Indeed, this would be rare in a domestic context, but might perhaps arise where domestic partners were also business partners: see Stack v Dowden, para 32. The second, which for reasons which will appear later is in our view also not this case but will arise much more frequently, is where it is clear that the beneficial interests are to be shared, but it is impossible to divine a common intention as to the proportions in which they are to be shared. In those two situations, the court is driven to impute an intention to the parties which they may never have had. Lord Diplock, in Gissing v Gissing [1971] AC 886, 909, pointed out that, once the court was satisfied that it was the parties common intention that the beneficial interest was to be shared in some proportion or other, the court might have to give effect to that common intention by determining what in all the circumstances was a fair share. And it is that thought which is picked up in the subsequent cases, culminating in the judgment of Chadwick LJ in Oxley v Hiscock [2005] Fam 211, paras 65, 66 and 69, and in particular the passage in para 69 which was given qualified approval in Stack v Dowden: the answer is that each is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property. Chadwick LJ was not there saying that fairness was the criterion for determining whether or not the property should be shared, but he was saying that the court might have to impute an intention to the parties as to the proportions in which the property would be shared. In deducing what the parties, as reasonable people, would have thought at the relevant time, regard would obviously be had to their whole course of dealing in relation to the property. However, while the conceptual difference between inferring and imputing is clear, the difference in practice may not be so great. In this area, as in many others, the scope for inference is wide. The law recognizes that a legitimate inference may not correspond to an individuals subjective state of mind. As Lord Diplock also put it in Gissing v Gissing [1971] AC 886, 906: As in so many branches of English law in which legal rights and obligations depend upon the intentions of the parties to a transaction, the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that partys words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party. This point has been developed by Nick Piska, Intention, Fairness and the Presumption of Resulting Trust after Stack v Dowden (2008) 71 MLR 120. He observes at pp 127 128: Subjective intentions can never be accessed directly, so the court must always direct itself to a consideration of the parties objective intentions through a careful consideration of the relevant facts. The point is that the imputation/inference distinction may well be a distinction without a difference with regard to the process of determining parties intentions. It is not that the parties subjective intentions are irrelevant but rather that a finding as to subjective intention can only be made on an objective basis. In several parts of the British Commonwealth federal or provincial legislation has given the court a limited jurisdiction to vary or adjust proprietary rights in the home when an unmarried couple split up. Most require a minimum period of two years cohabitation (or less if there are children) before the jurisdiction is exercisable. In England the Law Commission has made recommendations on similar lines (Law Com No 307, Cohabitation: The Financial Consequences of Relationship Breakdown, 2007), but there are no plans to implement them in the near future. In the meantime there will continue to be many difficult cases in which the court has to reach a conclusion on sparse and conflicting evidence. It is the courts duty to reach a decision on even the most difficult case. As the deputy judge (Mr Nicholas Strauss QC) said in his admirable judgment [2009] EWHC 1713 (Ch), [2010] 1 WLR 2401, para 33 (in the context of a discussion of fairness) that is what courts are for. That was an echo (conscious or unconscious) of what Sir Thomas Bingham MR said, in a different family law context, in Re Z (A Minor) (Identification: Restrictions on Publication) [1997] Fam 1, 33. The trial judge has the onerous task of finding the primary facts and drawing the necessary inferences and conclusions, and appellate courts will be slow to overturn the trial judges findings. The facts of this case The parties met in 1980. Ms Jones worked as a mobile hairdresser. Mr Kernott worked as a self employed ice cream salesman during the summer and claimed benefits during the winter if he could find no other work. The judge found that their incomes were not very different from one another. Ms Jones bought a mobile home in her sole name in 1981. Mr Kernott moved in with her (according to the agreed statement of facts and issues) in 1983. Their first child was born in June 1984. In May 1985 Ms Jones sold her mobile home and the property in question in these proceedings, 39 Badger Hall Avenue, Thundersley, Essex, was bought in their joint names. The purchase price was 30,000. This was relatively cheap because the house had belonged to the elderly mother of a client of Ms Jones. The deposit of 6000 was paid from the proceeds of sale of Ms Jones mobile home. The balance was raised by way of an endowment mortgage in their joint names. Mr Kernott paid 100 per week towards the household expenses while they lived at the property. Ms Jones paid the mortgage and other household bills out of their joint resources. In March 1986 they jointly took out a loan of 2000 to build an extension. Mr Kernott did some of the labouring work and paid friends and relations to do other work on it. The judge found that the extension probably enhanced the value of the property by around 50%, from 30,000 to 44,000. Their second child was born in September 1986. Mr Kernott moved out of the property in October 1993. The parties had lived there together, sharing the household expenses, for eight years and five months. Thereafter Ms Jones remained living in the property with the children and paid all the household expenses herself. Mr Kernott made no further contribution towards the acquisition of the property and the judge also found that he made very little contribution to the maintenance and support of their two children who were being looked after by their mother. This situation continued for some 14 and a half years until the hearing before the judge. The Badger Hall Avenue property was put on the market in October 1995 for 69,995, but was not sold. This may be some indication of its market value at that time but no more than that. At some date which is not entirely clear, the parties agreed to cash in a joint life insurance policy (not, of course, the endowment policy supporting the mortgage) and the proceeds were divided between them. The judge held that this was to enable Mr Kernott to put down a deposit on a home of his own. This he did in May 1996, when he bought 114 Stanley Road, Benfleet, for around 57,000 with a deposit of 2,800 and a mortgage of 54,150. The judge observed that he was able to afford his own accommodation because he was not making any contribution towards the former family home, nor was he making any significant contribution towards the support of his children. The judge also found that whilst the intentions of the parties may well have been at the outset to provide them as a couple with a home for themselves and their progeny, those intentions have altered significantly over the years to the extent that [Mr Kernott] demonstrated that he had no intention until recently of availing himself of the beneficial ownership in this property, having ignored it completely by way of any investment in it or attempt to maintain or repair it whilst he had his own property on which he concentrated. At the time of the hearing before the judge in April 2008, 39 Badger Hall Avenue was valued at 245,000. The outstanding mortgage debt was 26,664. The endowment policy supporting that mortgage was worth 25,209. On the basis that they had contributed jointly to the endowment for eight years and five months and that Ms Jones had contributed alone for fourteen and a half years, it was calculated that Mr Kernott was entitled to around 4712 of its value, which would leave Ms Jones with 20,497. 114 Stanley Road was valued at 205,000, with an outstanding mortgage of 37,968 (suggesting that this was a repayment rather than an endowment mortgage). If the whole of the endowment policy was used to discharge the mortgage, the net worth of 39 Badger Hall Avenue would be 243,545. If the mortgage on 114 Stanley Road was an ordinary repayment mortgage, the net worth of 114 Stanley Road would be 167,032. These proceedings Mr Kernott initiated correspondence with a view to claiming his interest in the property in 2006. Ms Jones began proceedings in the Southend County Court in October 2007, claiming a declaration under section 14 of the Trusts of Land and Appointment of Trustees Act 1996: (i) that she owned the entire beneficial interest in 39 Badger Hall Avenue; alternatively (ii) if Mr Kernott had any beneficial interest in 39 Badger Hall Avenue, that she also had a beneficial interest in 114 Stanley Road, and that these respective interests be determined by the court; and (iii) that either she be registered as sole proprietor of 39 Badger Hall Avenue, or that they be registered as joint proprietors of 114 Stanley Road. At the trial, which took place in April 2008, Ms Jones conceded that, in 1993 when the couple separated, there would not have been enough evidence to displace the presumption that their beneficial interests followed the legal title, so that they were then joint tenants in law and equity. She also conceded that she had no legal claim on 114 Stanley Road. Her contention was that its purchase, along with other events since their separation, was evidence that their intentions with respect to the beneficial interests in 39 Badger Hall Avenue had changed. The judge accepted that contention. In the light of Stack v Dowden and Oxley v Hiscock he had to consider what is fair and just between the parties bearing in mind what I have found with regard to the whole course of dealing between them. He concluded that the value of the property should be divided as to 90% for Ms Jones and 10% for Mr Kernott. On the figures given above, had the property been sold then, and the whole of the endowment policy used to defray the mortgage debt, that would have given her 219,190 and him 24,355 (giving him a total of 191,387 from the equity in his home and the sale of the property). Mr Kernott appealed to the High Court, arguing that the judge was wrong to infer or impute an intention that the parties beneficial interests should change after their separation and to quantify these in the way which he considered fair. The deputy judge, Mr Nicholas Strauss QC, after a careful review of the authorities, concluded that the change in intention could readily be inferred or imputed from the parties conduct: [2009] EWHC 1713 (Ch), [2010] 1 WLR 2401, para 47. In the absence of any indication by words or conduct as to how their shares should be altered, the appropriate criterion was what he considered to be fair and just: para 49. The judges assessment could be justified, given that their direct contributions were a little over 4:1 in Ms Jones favour and that the larger part of the capital gain on the property must have arisen after 1993. By not contributing to that property, Mr Kernott had been able to buy another property on which there was almost as great a capital gain. The parties could not be taken to have intended that he should have a significant part of the increased value of 39 Badger Hall Avenue as well as the whole of the capital gain from 114 Stanley Road: para 51. The Court of Appeal, by a majority, allowed Mr Kernotts appeal and declared that the parties owned the property as tenants in common in equal shares: [2010] EWCA Civ 578, [2010] 1 WLR 2401. Jacob LJ, who dissented, held that the judge had applied the right legal test and that there was a proper basis in the evidence for concluding that the parties must be taken to have intended that they should each have a fair and just share. He would not interfere with the judges assessment of the fair proportions. Rimer LJ, in the majority, held that there was nothing to indicate that the parties intentions had changed after their separation. A crucial part of his reasoning was his interpretation of the decision in Stack v Dowden: that it did not enable courts to find, by way of the imputation route, an intention where none was expressly uttered nor inferentially formed: para 77. Wall P also concluded that he could not infer an intention to change the beneficial interests from the parties conduct: paras 57, 58. Discussion It is always salutary to be confronted with the ambiguities which later emerge in what seemed at the time to be comparatively clear language. The primary search must always be for what the parties actually intended, to be deduced objectively from their words and their actions. If that can be discovered, then, as Mr Nicholas Strauss QC pointed out in the High Court, it is not open to a court to impose a solution upon them in contradiction to those intentions, merely because the court considers it fair to do so. In a case such as this, where the parties already share the beneficial interest, and the question is what their interests are and whether their interests have changed, the court will try to deduce what their actual intentions were at the relevant time. It cannot impose a solution upon them which is contrary to what the evidence shows that they actually intended. But if it cannot deduce exactly what shares were intended, it may have no alternative but to ask what their intentions as reasonable and just people would have been had they thought about it at the time. This is a fallback position which some courts may not welcome, but the court has a duty to come to a conclusion on the dispute put before it. In this case, there is no need to impute an intention that the parties beneficial interests would change, because the judge made a finding that the intentions of the parties did in fact change. At the outset, their intention was to provide a home for themselves and their progeny. But thereafter their intentions did change significantly. He did not go into detail, but the inferences are not difficult to draw. They separated in October 1993. No doubt in many such cases, there is a period of uncertainty about where the parties will live and what they will do about the home which they used to share. This home was put on the market in late 1995 but failed to sell. Around that time a new plan was formed. The life insurance policy was cashed in and Mr Kernott was able to buy a new home for himself. He would not have been able to do this had he still had to contribute towards the mortgage, endowment policy and other outgoings on 39 Badger Hall Avenue. The logical inference is that they intended that his interest in Badger Hall Avenue should crystallise then. Just as he would have the sole benefit of any capital gain in his own home, Ms Jones would have the sole benefit of any capital gain in Badger Hall Avenue. Insofar as the judge did not in so many words infer that this was their intention, it is clearly the intention which reasonable people would have had had they thought about it at the time. But in our view it is an intention which he both could and should have inferred from their conduct. A rough calculation on this basis produces a result so close to that which the judge produced that it would be wrong for an appellate court to interfere. If we take the value of the property as 60,000 in late 1993 (or 70,000 in late 1995) and the value in 2008 as 245,000, and share the 60,000 (or 70,000) equally between the parties, but leave the balance to Ms Jones, that gives him 30,000 (35,000) and her 215,000 (210,000), roughly 12% (14%) and 88% (86%) respectively. This calculation ignores the mortgage, which may be the correct approach, as in 2008 the mortgage debt was almost fully covered by the endowment policy which was always meant to discharge it. Introducing the mortgage liability in 1993 (or 1995) into the calculation would be to Mr Kernotts disadvantage, because at that stage the endowment policy would not have been sufficient to discharge the debt, so the equity would have been less. Further accounting On this approach, there is no scope for further accounting between the parties (which was obviously contemplated as a future possibility by Rimer LJ on his approach). Had their beneficial interests in the property remained the same, there would have been the possibility of cross claims: Mr Kernott against Ms Jones for an occupation rent, and Ms Jones against Mr Kernott for his half share in the mortgage interest and endowment premiums which she had paid. It is quite likely, however, that the court would hold that there was no liability to pay an occupation rent, at least while the home was needed for the couples children, whereas the liability to contribute towards the mortgage and endowment policy would accumulate at compound interest over the years since he ceased to contribute. This exercise has not been done. In a case such as this it would involve a quite disproportionate effort, both to discover the requisite figures (even supposing that they could be discovered) and to make the requisite calculations, let alone to determine what the ground rules should be. The parties legal advisers are to be commended for the proportionate approach which they have taken to the preparation of this case. Conclusion In summary, therefore, the following are the principles applicable in a case such as this, where a family home is bought in the joint names of a cohabiting couple who are both responsible for any mortgage, but without any express declaration of their beneficial interests. tenants both in law and in equity. (1) The starting point is that equity follows the law and they are joint (2) That presumption can be displaced by showing (a) that the parties had a different common intention at the time when they acquired the home, or (b) that they later formed the common intention that their respective shares would change. (3) Their common intention is to be deduced objectively from their conduct: the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that partys words and conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party (Lord Diplock in Gissing v Gissing [1971] AC 886, 906). Examples of the sort of evidence which might be relevant to drawing such inferences are given in Stack v Dowden, at para 69. (4) In those cases where it is clear either (a) that the parties did not intend joint tenancy at the outset, or (b) had changed their original intention, but it is not possible to ascertain by direct evidence or by inference what their actual intention was as to the shares in which they would own the property, the answer is that each is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property: Chadwick LJ in Oxley v Hiscock [2005] FAm 211, para 69. In our judgment, the whole course of dealing in relation to the property should be given a broad meaning, enabling a similar range of factors to be taken into account as may be relevant to ascertaining the parties actual intentions. (5) Each case will turn on its own facts. Financial contributions are relevant but there are many other factors which may enable the court to decide what shares were either intended (as in case (3)) or fair (as in case (4)). This case is not concerned with a family home which is put into the name of one party only. The starting point is different. The first issue is whether it was intended that the other party have any beneficial interest in the property at all. If he does, the second issue is what that interest is. There is no presumption of joint beneficial ownership. But their common intention has once again to be deduced objectively from their conduct. If the evidence shows a common intention to share beneficial ownership but does not show what shares were intended, the court will have to proceed as at para 51(4) and (5) above. The assumptions as to human motivation, which led the courts to impute particular intentions by way of the resulting trust, are not appropriate to the ascertainment of beneficial interests in a family home. Whether they remain appropriate in other contexts is not the issue in this case. judge. It follows that we would allow this appeal and restore the order of the I agree that the appeal should be allowed for the reasons given in the joint LORD COLLINS judgment of Lord Walker and Lady Hale. It is not surprising that the decision in Stack v Dowden [2007] UKHL 17, [2007] 2 AC 432 gave rise to difficulties. It was a decision which was responding to the increasing number of co habiting couples with joint interests in their homes, and to the fact that couples (whether married or unmarried) rarely make agreements about their respective shares in their homes, and to the enormous inflation in property prices which has made the division of ownership by reference to initial financial contributions artificial and potentially productive of injustice. The absence of legislative intervention (which continues despite the Law Commission Report on Cohabitation: the Financial consequences of Relationship Breakdown, 2007) made it necessary for the judiciary to respond by adapting old principles to new situations. That has not been an easy task. It is illustrated by the fact that in both Stack v Dowden and in this case the results at the highest appellate level have been unanimous but the reasoning has not. I would hope that this decision will lay to rest the remaining difficulties, and that it will not be necessary to revisit this question by reconsideration of the correctness of Stack v Dowden, by which this court is bound (subject to the application of Practice Statement (Judicial Precedent) [1966] 1 WLR 1234 regarding departure from previous decisions). It should not be necessary because the differences in reasoning are largely terminological or conceptual and are likely to make no difference in practice. But should it be necessary, the court (no doubt with a panel of seven or nine) would need much fuller argument (together with citation of the enormous critical literature which the decision has spawned) than was presented to the court on this appeal. There have been at least three causes of the difficulties with Stack v Dowden. The first is that the previous authorities were mainly concerned with a different factual situation, namely where the property was registered in the name of only one of the parties. Second, they did not in any event speak with one voice, particularly on that part of Stack v Dowden which has caused most difficulty, namely whether in this part of the law there is any useful distinction between inferred intention and imputed intention: contrast Gissing v Gissing [1971] AC 886 with Lloyds Bank v Rosset [1991] 1 AC 107. The third reason is that (despite it being trite that it is wrong to do so) Baroness Hales speech has been treated as if it were a statute, and ambiguities in it have been exploited or exaggerated, particularly the passage at para 60 in which she has been taken as having treated inferred intention and imputed intention as interchangeable, and the passage at para 61 in which she approved, or substantially approved, the reasoning of Chadwick LJ in Oxley v Hiscock [2005] Fam 211, para 69. The reasoning of Baroness Hale and Lord Walker, taken together, in Stack v Dowden was as follows: (1) When property is held in joint names, and without any express declaration of trust, the starting point is that the beneficial interest is held equally and there is a heavy burden on the party asserting otherwise: paras 14, 33, 54, 56, 68. (2) That is because it will almost always have been a conscious decision to put the property into joint names, and committing oneself to spend large sums of money on a place to live is not normally done by accident or without giving it thought: para 66. (3) Consequently it is to be expected that joint transferees would have spelled out their beneficial interests when they intended them to be different from their legal interests ([54]) and cases in which the burden will be discharged will be very unusual (para 68). (4) The contrary can be proved by looking at all the relevant circumstances in order to discern the parties common intention: [59]. (5) There is no presumption that the parties intended that the beneficial interest be shared in proportion to their financial contributions to the acquisition of the property: paras 31, 59 60 (thereby rejecting the approach of the resulting trust analysis as a starting point favoured by Lord Neuberger, dissenting, but not as to the result). (6) The search is to ascertain the parties shared intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it: para 60. (7) The search was for the result which reflected what the parties must, in the light of their conduct, be taken to have intended, and it did not enable the court to abandon that search in favour of the result which the court itself considered fair: para 61. (8) The matters to be taken into account are discussed in detail at paras 33 34 and 68 70, and it is not necessary to rehearse them here. The crucial parts of Chadwick LJs summary of the principles in his magisterial judgment in Oxley v Hiscock [2005] Fam 211, paras 68 69 take their main inspiration from the speech of Lord Diplock in Gissing v Gissing [1971] AC 886 and the judgment of Nourse LJ in Anderson v Stokes [1991] 1 FLR 391, 400 401. For present purposes it is only necessary to note that his discussion is dealing with the case where a home is purchased in the sole name of one party in a co habiting couple, each of them has made some financial contribution to the purchase, and there is no declaration of trust as to the beneficial ownership. After a treatment of the way in which a common intention that each will have a beneficial interest can be inferred from discussions between the parties or, in the absence of discussion, from the fact that each has made contributions to the purchase price, Chadwick LJ moved at para 69 to a second question, namely what is the extent of the parties respective beneficial interests in the property?. It was in that context that he said: [I]n many such cases, the answer will be provided by evidence of what they said and did at the time of the acquisition. But, in a case where there is no evidence of any discussion between them as to the amount of the share which each was to haveand even in a case where the evidence is that there was no discussion on that pointthe question still requires an answer. It must now be accepted that the answer is that each is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property. And, in that context, the whole course of dealing between them in relation to the property includes the arrangements which they make from time to time in order to meet the outgoings (for example, mortgage contributions, council tax and utilities, repairs, insurance and housekeeping) which have to be met if they are to live in the property as their home. It was in the light of the whole of Chadwick LJs reasoning that in Stack v Dowden Baroness Hale referred to the Law Commission Discussion Paper on Sharing Homes, para 4.27, and went on to say at para 61: First, it emphasises that the search is still for the result which reflects what the parties must, in the light of their conduct, be taken to have intended. Second, therefore, it does not enable the court to abandon that search in favour of the result which the court itself considers fair. In its context that was plainly a reference to the first stage of the enquiry, namely whether there was a common intention that the property be beneficially owned other than in line with the legal title. I agree, therefore, that authority justifies the conceptual approach of Lord Walker and Lady Hale that, in joint names cases, the common intention to displace the presumption of equality can, in the absence of express agreement, be inferred (rather than imputed: see para 31 of the joint judgment) from their conduct, and where, in such a case, it is not possible to ascertain or infer what share was intended, each will be entitled to a fair share in the light of the whole course of dealing between them in relation to the property. That said, it is my view that in the present context the difference between inference and imputation will hardly ever matter (as Lord Walker and Lady Hale recognise at para 34), and that what is one persons inference will be another persons imputation. A similar point has arisen in many other contexts, for example, the difference between implied terms which depend on the parties actual intention, terms based on a rule of law, and implied terms based on an intention imputed to the parties from their actual circumstances: Luxor (Eastbourne) Ltd v Cooper [1941] AC 108, 137, per Lord Wright. Or the point under the law prior to the Contracts (Applicable Law) Act 1990 as to whether (in the absence of an express choice) the proper law of the contract depended on an intention to be inferred from the circumstances or on the law which had the closest connection with the contract. Nor will it matter in practice that at the first stage, of ascertaining the common intention as to the beneficial ownership, the search is not, at least in theory, for what is fair. It would be difficult (and, perhaps, absurd) to imagine a scenario involving circumstances from which, in the absence of express agreement, the court will infer a shared or common intention which is unfair. The courts are courts of law, but they are also courts of justice. LORD KERR I agree that this appeal should be allowed. There are differences of some significance in the reasoning that underlies the joint judgment of Lord Walker and Lady Hale and that contained in Lord Wilsons judgment. I agree with Lord Collins that these are both terminological and conceptual. I am less inclined to agree, however, that the divergence in reasoning is unlikely to make a difference in practice. While it may well be that the outcome in many cases will be the same, whether one infers an intention or imputes it, that does not mean that the process by which the result is arrived at is more or less the same. Indeed, it seems to me that a markedly and obviously different mode of analysis will generally be required. Before elaborating briefly on that proposition, let me turn very shortly to the areas in which, as I see it, there is consensus among the other members of the court. The following appear to be the areas of agreement: (i) In joint names cases, the starting point is that equity follows the law. One begins the search for the proper allocation of shares in the property with the presumption that the parties are joint tenants and are thus entitled to equal shares; (ii) That presumption can be displaced by showing (a) that the parties had a different common intention at the time when they acquired the home or (b) that they later formed the common intention that their respective shares would change; (iii) The common intention, if it can be inferred, is to be deduced objectively from the parties conduct; (iv) Where the intention as to the division of the property cannot be inferred, each is entitled to that share which the court considers fair. In considering the question of what is fair the court should have regard to the whole course of dealing between the parties The areas of disagreement appear to be these: (a) is there sufficient evidence in the present case from which the parties intentions can be inferred? (b) is the difference between inferring and imputing an intention likely to be great as a matter of general practice? How far should the court go in seeking to infer actual intention as to shares? At para 33 above Lord Walker and Lady Hale have quoted the important judgment of Chadwick LJ in Oxley v Hiscock [2005] Fam 211 and at para 52(4) have said that, on the authority of what was said in para 69 of Oxley, where it is not possible to ascertain what the actual intention of the parties was as to the shares in which they would own the property, each is entitled to the share which the court considers fair having regard to the whole course of dealing between them in relation to the property. This, I believe, casts the test somewhat differently from the way that it was formulated by Chadwick LJ. At para 69 of Oxley he said this: in a case where there is no evidence of any discussion between them as to the amount of the share which each was to haveand even in a case where the evidence is that there was no discussion on that pointthe question still requires an answer. It must now be accepted that (at least in this court and below) the answer is that each is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property Chadwick LJ did not confine the circumstances in which an intention is to be imputed to those where it was impossible to infer an intention. Rather, he considered that it was proper and necessary to impute it when there had been no discussion about the amounts of the shares that each was to have or where there was no evidence of such a discussion. Lord Walker and Lady Hale have pointed out that Oxley v Hiscock received qualified approval in Stack v Dowden [2007] 2 AC 432. It seems clear, however, that there was no approval of the notion that an intention should be imputed where there had been no discussion between the parties for in para 69 of her opinion in Stack Lady Hale listed several factors that required to be considered in divining the parties true intentions few of which would involve any verbal exchange whatever. It is hardly controversial to suggest that the parties intention should be given effect to where it can be ascertained and that, although discussions between them will always be the most reliable basis on which to draw an inference as to that intention, these are not the only circumstances in which that exercise will be possible. There is a natural inclination to prefer inferring an intention to imputing one. If the parties intention can be inferred, the court is not imposing a solution. It is, instead, deciding what the parties must be taken to have intended and where that is possible it is obviously preferable to the courts enforcing a resolution. But the conscientious quest to discover the parties actual intention should cease when it becomes clear either that this is simply not deducible from the evidence or that no common intention exists. It would be unfortunate if the concept of inferring were to be strained so as to avoid the less immediately attractive option of imputation. In summary, therefore, I believe that the court should anxiously examine the circumstances in order, where possible, to ascertain the parties intention but it should not be reluctant to recognise, when it is appropriate to do so, that inference of an intention is not possible and that imputation of an intention is the only course to follow. In this context, it is important to understand what is meant by imputing an intention. There are reasons to question the appropriateness of the notion of imputation in this area but, if it is correct to use this as a concept, I strongly favour the way in which it was described by Lord Neuberger in Stack v Dowden [2007] 2 AC 432 para 126, where he said that an imputed intention was one which was attributed to the parties, even though no such actual intention could be deduced from their actions and statements, and even though they had no such intention. This exposition draws the necessary strong demarcation line between attributing an intention to the parties and inferring what their intention was in fact. The reason that I question the aptness of the notion of imputing an intention is that, in the final analysis, the exercise is wholly unrelated to ascertainment of the parties views. It involves the court deciding what is fair in light of the whole course of dealing with the property. That decision has nothing to do with what the parties intended, or what might be supposed would have been their intention had they addressed that question. In many ways, it would be preferable to have a stark choice between deciding whether it is possible to deduce what their intention was and, where it is not, deciding what is fair, without elliptical references to what their intention might have or should have been. But imputing intention has entered the lexicon of this area of law and it is probably impossible to discard it now. While the dichotomy between inferring and imputing an intention remains, however, it seems to me that it is necessary that there be a well marked dividing line between the two. As soon as it is clear that inferring an intention is not possible, the focus of the courts attention should be squarely on what is fair and, as I have said, that is an obviously different examination than is involved in deciding what the parties actually intended. Is there sufficient evidence in the present case from which the parties intentions can be inferred? Lord Walker and Lady Hale have concluded that the failure of the parties to sell their home in Badger Hall Avenue in late 1995, leading as it did to the cashing in of the life insurance policy, meant that Mr Kernott intended that his interest in the Badger Hall Avenue property should crystallise then. That may indeed have been his intention but, for my part, I would find it difficult to infer that it actually was what he then intended. As the deputy High Court judge, Nicholas Strauss QC put it in para 48 of his judgment, the bare facts of his departure from the family home and acquisition of another property are a slender foundation on which to conclude that he had entirely abandoned whatever stake he had in the previously shared property. On the other hand, I would have no difficulty in concluding, as did Mr Strauss and as would Lord Wilson, that it was eminently fair that the property should be divided between the parties in the shares decreed by Judge Dedman. Like Lord Wilson, therefore, I would prefer to allow this appeal on the basis that it is impossible to infer that the parties intended that their shares in the property be apportioned as the judge considered they should be but that such an intention should be imputed to them. LORD WILSON In the light of the continued failure of Parliament to confer upon the courts limited redistributive powers in relation to the property of each party upon the breakdown of a non marital relationship, I warmly applaud the development of the law of equity, spear headed by Lady Hale and Lord Walker in their speeches in Stack v Dowden [2007] 2 AC 432, and reiterated in their judgment in the present appeal, that the common intention which impresses a constructive trust upon the legal ownership of the family home can be imputed to the parties to the relationship. In his speech of dissent (other than in relation to the result) in Stack v Dowden Lord Neuberger observed, at para 125, that the distinction between inference and imputation was important. He proceeded as follows: 126 An inferred intention is one which is objectively deduced to be the subjective actual intention of the parties, in the light of their actions and statements. An imputed intention is one which is attributed to the parties, even though no such actual intention can be deduced from their actions and statements, and even though they had no such intention. Imputation involves concluding what the parties would have intended, whereas inference involves concluding what they did intend. Almost 40 years earlier, in Pettitt v Pettitt [1970] AC 777, Lord Diplock sought to develop the law in a way similar to that achieved in Stack v Dowden. The action was between spouses and, analogously, was brought at a time when the divorce court lacked power to make a property adjustment order in relation to the matrimonial home. Lord Diplock said, at p 823F G: Unless it is possible to infer from the conduct of the spouses at the time of their concerted action in relation to acquisition or improvement of the family asset that they did form an actual common intention as to the legal consequences of their acts upon the proprietary rights in the asset the court must impute to them a constructive common intention which is that which in the courts opinion would have been formed by reasonable spouses. In Gissing v Gissing [1971] AC 886, 904E F, however, Lord Diplock accepted that in Pettitt he had been in the minority in suggesting that the common intention could be imputed. So he proceeded to analyse the case in terms of whether the necessary intention could be inferred; but he added ingeniously at p 909 C E that it might be possible to infer a common intention on the part of the spouses that their interests in the property should be in such proportions as might ultimately be seen to be fair! It is worthy of note, that in Pettitt Lord Reid had, at p 795D G, also been cautiously amenable to the idea of imputing the necessary intention but had, at p 797A B, expressed a firm preference for Parliamentary intervention; and that in Gissing, in the passage quoted by Lady Hale and Lord Walker at para 29 above, Lord Reid saw fit to reiterate those views notwithstanding that the argument in favour of a power to impute had for the time being already been lost. In Oxley v Hiscock [2005] Fam 211, paras 68 and 69 Chadwick LJ, pointed out that assertions that the family home was held under a constructive trust raised two questions. The home had been held in Mr Hiscocks sole name so, for Chadwick LJ, the first question was whether Mrs Oxley could establish that they had nevertheless had a common intention that she should have some beneficial share in it. In the present case, however, the home is held in the joint names of the parties so, for us, the first question is whether Ms Jones can establish that they nevertheless had (albeit not necessarily at the outset) a common intention that the beneficial shares of herself and Mr Kernott should be in some proportions other than joint and equal. The second question, which arises in the event only of an affirmative answer to the first, is to determine the proportions in which the beneficial shares are held. In relation to the second question Chadwick LJ concluded, in his summary at para 69, that, where there was no evidence of any discussion between the parties as to the proportions in which their beneficial shares in the family home were to be held, each was entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property; and he had made clear, at para 66, that such an entitlement arose because what the court is doing, in cases of this nature, is to supply or impute a common intention as to the parties respective shares (in circumstances in which there was, in fact, no common intention) on the basis of that whichis shown to be fair. Emboldened by developments in the case law since the decision in Gissing, and apparently in particular by the decision of the Court of Appeal in Drake v Whipp [1996] FLR 826, Chadwick LJ thus saw fit to reassert the power to impute. In Pettitt Lord Diplock had referred to reasonable spouses rather than to fairness; but reasonable spouses will intend only what is fair. The analysis by Chadwick LJ of the proper approach to the second question was correct. In paras 31 and 51(4) above Lord Walker and Lady Hale reiterate that, although its preference is always to collect from the evidence an expressed or inferred intention, common to the parties, about the proportions in which their shares are to be held, equity will, if collection of it proves impossible, impute to them the requisite intention. Before us is a case in which Judge Dedman, the trial judge, found and, was entitled on the evidence to find that the common intention required by the first question could be inferred. Thus the case does not require us to consider whether modern equity allows the intention required by the first question also to be imputed if it is not otherwise identifiable. That question will merit careful thought. In para 61 of her ground breaking speech in Stack v Dowden Lady Hale quoted, with emphasis, the words of Chadwick LJ in para 69 of Oxley v Hiscock, which I have quoted in para 83 above. Then she quoted a passage from a Discussion Paper published by the Law Commission in July 2002 and entitled Sharing Homes about the proper approach to identifying the proportions which were intended . Finally she added four sentences to each of which, in quoting them as follows, I take the liberty of attributing a number: [1.] That may be the preferable way of expressing what is essentially the same thought, for two reasons. [2.] First, it emphasises that the search is still for the result which reflects what the parties must, in the light of their conduct, be taken to have intended. [3.] Second, therefore, it does not enable the court to abandon that search in favour of the result which the court itself considers fair. [4.] For the court to impose its own view of what is fair upon the situation in which the parties find themselves would be to return to the days before Pettitt v Pettitt without even the fig leaf of section 17 of the 1882 Act. I leave on one side Lady Hales first sentence although, whereas Chadwick LJ was identifying the criterion for imputing the common intention, the context of the passage in the Discussion Paper suggests that the Law Commission was postulating a criterion for inferring it. On any view Lady Hales second sentence is helpful; and, by her reference to what the parties must, in the light of their conduct, be taken to have intended (as opposed to what they did intend), Lady Hale made clear that, by then, she was addressing the power to resort to imputation. Lady Hales fourth sentence has been neatly explained by Mr Nicholas Strauss QC, deputy judge of the Chancery Division, who determined the first appeal in these proceedings, at para 30 as being that, in the event that the evidence were to suggest that, whether by expression or by inference, the parties intended that the beneficial interests in the home should be held in certain proportions, equity would not impose different proportions upon them; and, at para 47 above, Lord Walker and Lady Hale endorse Mr Strausss explanation. The problem has lain in Lady Hales third sentence. Where equity is driven to impute the common intention, how can it do so other than by search for the result which the court itself considers fair? The sentence was not obiter dictum so rightly, under our system, judges below the level of this court have been unable to ignore it. Even in these proceedings judges in the courts below have wrestled with it. Mr Strauss observed, at para 31, that it was difficult to see how at that final stage of the inquiry the process could work without the courts supply of what it considered to be fair. In his judgment on the second appeal Lord Justice Rimer went so far as to suggest, at para 77, that Lady Hales third sentence must have meant that, contrary to appearances, she had not intended to recognise a power to impute a common intention at all. I respectfully disagree with Lady Hales third sentence. Lord Walker and Lady Hale observe, at para 34 above, that in practice the difference between inferring and imputing a common intention to the parties may not be great. I consider that, as a generalisation, their observation goes too far at least if the court is to take (as in my view it should) an ordinarily rigorous approach to the task of inference. Indeed in the present case they conclude, at paras 48 and 49, that, in relation to Chadwick LJs second question the proper inference from the evidence, which, if he did not draw, the trial judge should have drawn, was that the parties came to intend that the proportions of the beneficial interests in the home should be held on a basis which in effect equates to 90% to Ms Jones and to 10% to Mr Kernott (being the proportions in favour of which the judge ruled). As it happens, reflective perhaps of the more rigorous approach to the task of inference which I prefer, I regard it, as did Mr Strauss at [48] and [49] of his judgment, as more realistic, in the light of the evidence before the judge, to conclude that inference is impossible but to proceed to impute to the parties the intention that it should be held on a basis which equates to those proportions. At all events I readily concur in the result which Lord Walker and Lady Hale propose. |
The Finance Act 2015 introduced a regulatory scheme requiring wholesalers supplying duty paid alcohol to be approved by Her Majestys Revenue and Customs Commissioners (HMRC or the Commissioners) under section 88C of the Alcoholic Liquor Duties Act 1979 (ALDA). Approval may only be given if HMRC are satisfied that the person seeking to carry on the activity is a fit and proper person to do so. OWD, Hollandwest and Budge Brands (the wholesalers) were already involved in the wholesale supply of duty paid alcohol when the scheme was introduced. They needed HMRC approval to continue to trade. Approval was refused because HMRC were not satisfied that they were fit and proper. Each wholesaler appealed to the First tier Tribunal (FTT) against the decision, inviting HMRC to permit them to continue trading whilst the appeals were pending. When HMRC refused to permit this, the wholesalers brought judicial review proceedings in the High Court challenging that refusal, and seeking orders that would permit them to carry on trading until after the determination of the FTT appeal. Having failed in the High Court, they obtained a measure of relief in the Court of Appeal, but on terms that they did not find satisfactory. Both they and HMRC appeal to this court against aspects of the Court of Appeals decision. The principal questions for determination in this court Two principal questions arise for determination on the appeal. The first, in broad outline, is this: when HMRC have refused a persons application for approval under section 88C of ALDA, what, if any, power do they have to permit that person to carry on trading pending the determination of an appeal to the FTT? HMRCs case is that they have no power to grant temporary approval pending the determination of a wholesalers appeal. The wholesalers argue that section 88C of ALDA enables HMRC to grant such approval or, failing that, HMRC can do so under section 9 of the Commissioners for Revenue and Customs Act 2005 (the 2005 Act). The Court of Appeal held that temporary approval can be granted to a person under section 88C of ALDA, but not under section 9 of the 2005 Act. However, contrary to the wholesalers argument, it held that considerations of hardship and the impact on the persons appeal rights were irrelevant to the decision whether to grant temporary approval to cover the appeal period, and that HMRCs focus must be purely on whether the person was fit and proper for that limited purpose. The issues that require attention in relation to this first question are, therefore, whether HMRC have any power at all, and if so, on what basis it is to be exercised. The second question concerns the position if HMRC either do not have power to permit trading pending the determination of an appeal to the FTT, or have power but decline to exercise it. In those circumstances, what interim relief, if any, can the High Court grant to ensure that the appeal to the FTT is not thwarted by the wholesaler going out of business whilst awaiting its determination? The Court of Appeal held that the High Court was able to grant injunctive relief under section 37 of the Senior Courts Act 1981. Drawing on CC & C Ltd v Revenue and Customs Comrs [2014] EWCA Civ 1653; [2015] 1 WLR 4043 (CC & C Ltd), it held that relief would only be granted in rare circumstances, but that this could include where there was a clear and properly evidenced claim that a failure to grant interim relief would render the appeal to the FTT illusory. This accorded with the position of HMRC. The wholesalers disagreed with the narrow limits imposed by the Court of Appeal on the scope for relief, but were refused permission to appeal to this court on that ground. Accordingly, the hearing before us began on the basis that the High Court had power to grant injunctive relief, exercisable in exceptional circumstances. As a result of questions which arose in the course of oral argument about the High Courts power, we received further written submissions on the point, after the hearing. Although both parties continued to support the existence of a power in the High Court, the issue needs attention in this judgment. The regulatory scheme: background The regulatory scheme introduced by the Finance Act 2015 was designed to combat fraud in relation to tax due on alcohol. Alcoholic liquors are subject to excise duty. Generally the charge to duty arises at the moment of importation into the United Kingdom, or at the moment of production here. The charge normally falls exclusively on the distiller/manufacturer/importer of alcohol. The duty paid is then reflected in the price of the alcohol as it passes down the supply chain. Alcohol was, however, entering the supply chain without the requisite duty being paid, resulting in a significant loss of tax revenue. There had long been a requirement for those dealing in duty suspended alcohol to be approved by HMRC, but there was no equivalent requirement for those dealing in duty paid alcohol. The introduction of the present scheme, known as the Alcohol Wholesaler Registration Scheme (AWRS), closed that gap. The statutory provisions Section 54 of the Finance Act 2015 inserted Part 6A and Schedule 2B into ALDA. Much of the fine detail of the statutory provisions is not necessary for present purposes and what follows is, at times, a broad summary only. A central concept is controlled activity. By virtue of section 88A(8), controlled activity means selling controlled liquor wholesale, offering it for sale wholesale, or arranging in the course of a trade or business for it to be sold or offered for sale wholesale. By section 88A(2), a sale is of controlled liquor if it is a sale of dutiable alcoholic liquor on which duty is charged under the Act at a rate greater than nil, with the excise duty point for the liquor falling at or before the time of the sale. By section 88A(3), subject to some exceptions, the sale is wholesale if the seller makes the sale, in the course of his trade or business, to a trade or business buyer, for the buyer to sell or supply in the course of his trade or business. It must be noted that one of the exceptions is, by section 88A(3)(d), an excluded sale. Section 88A(7) defines a sale as an excluded sale if it is of a description prescribed by or under regulations made by the Commissioners. Section 88B gives the Commissioners power to make provision, by regulations, for certain matters, including as to the cases in which sales are, or are not, to be treated for the purposes of Part 6A as (amongst other things) wholesale sales, and sales of controlled liquor. Section 88C deals with approval to carry on controlled activity. It provides: 88C. Approval to carry on controlled activity (1) A UK person may not carry on a controlled activity otherwise than in accordance with an approval given by the Commissioners under this section. (2) The Commissioners may approve a person under this section to carry on a controlled activity only if they are satisfied that the person is a fit and proper person to carry on the activity. (3) The Commissioners may approve a person under this section to carry on a controlled activity for such periods and subject to such conditions or restrictions as they may think fit or as they may by or under regulations made by them prescribe. (4) The conditions or restrictions may include conditions or restrictions requiring the controlled activity to be carried on only at or from premises specified or approved by the Commissioners. (5) The Commissioners may at any time for reasonable cause revoke or vary the terms of an approval under this section. (6) In this Part approved person means a person approved under this section to carry on a controlled activity. Section 88D obliges HMRC to maintain a register of approved persons. It is to contain such information relating to approved persons as the Commissioners consider appropriate (section 88D(2)). HMRC may make publicly available such information contained in the register as they consider necessary to enable those who deal with a person who carries on a controlled activity to determine whether the person in question is an approved person in relation to that activity (section 88D(3)). This publicly available information is important as section 88F provides that [a] person may not buy controlled liquor wholesale from a UK person unless the UK person is an approved person in relation to the sale. Section 88G supports the statutory scheme by establishing various criminal offences. For example, section 88G(1) makes it an offence to contravene section 88C(1) by selling liquor wholesale knowing, or having reasonable grounds to suspect, that the buyer is carrying on a trade or business and the liquor is for sale or supply in the course of that trade or business. Buying controlled liquor from an unapproved person, contrary to section 88F, is also an offence, if the person knows or has reasonable grounds to suspect the unapproved status of the supplier. The Wholesaling of Controlled Liquor Regulations 2015 The Wholesaling of Controlled Liquor Regulations 2015 (SI 2015/1516) (the 2015 Regulations) were made under Part 6A of ALDA. They provide for the manner in which an application for approval is to be made and processed. The application must be on a prescribed form, regulation 3(1). If HMRC refuse an application, they must notify the applicant of that In the present context, the following provisions of the Regulations are of note: i) ii) and give reasons, regulation 4(4). iii) In addition to any conditions or restrictions imposed by HMRC under section 88C(3) of ALDA, the approval of a person is subject to such conditions and restrictions as the Commissioners may prescribe, regulation 7. iv) HMRC may prescribe descriptions of sales that are excluded sales for the purposes of Part 6A of ALDA, regulation 10. v) Part 6 of the Regulations provides for dutiable alcoholic liquor to be subject to forfeiture where a person contravenes section 88C or section 88F or any condition or restriction imposed under Part 6A of ALDA or under the Regulations. vi) By regulation 2, prescribed means prescribed by the Commissioners in a published notice. Excise Notice 2002: Alcohol Wholesaler Registration Scheme Excise Notice 2002: Alcohol Wholesaler Registration Scheme (EN2002) was made under ALDA and the 2015 Regulations. It explains what the AWRS is about and addresses various particular aspects of it. It has been amended many times since its first publication in November 2015. The version which is relevant to the decisions of HMRC in this case is that in force between 21 June 2016 and 26 March 2017; unless otherwise specified, references are to that version. Existing wholesalers who sought approval after the introduction of the scheme were informed, by the relevant version of EN2002, that they could continue to trade as normal until receipt of HMRCs decision (para 6.5). Para 6.10 set out how HMRC would assess whether an applicant was fit and proper to carry on a controlled activity. It contains a list of relevant points, and a general statement that: HMRC must be satisfied the business is genuine and that all persons with an important role or interest in it are law abiding, responsible, and dont pose any significant threat in terms of potential revenue non compliance or fraud. Para 10 dealt with conditions and restrictions. It said that HMRC may decide to apply specific conditions or restrictions where they consider that a wholesaler is fit and proper to be approved but some additional controls are still needed, which would be used to address specific concerns HMRC had about the business. In contrast, if HMRC considered a wholesaler was not fit and proper to be approved, approval would be refused or revoked rather than allowing the wholesaler to trade subject to added conditions. In para 15(4), which dealt with revocation by HMRC of an existing approval, circumstances were identified in which approval was likely to be revoked, and it was pointed out that the controlled activity could not be carried on after revocation. However, the paragraph ended with a passage to which it will be necessary to return: Where HMRC think the circumstances merit, they may allow a reasonable period of time to wind down the business, for example, to dispose of any legitimate stock. Doubts have been expressed about HMRCs power to allow a period of grace in this way. The version of EN2002 published on 27 March 2017 put the position in relation to disposal of stock on winding down on a rather firmer footing by providing, under regulation 10 of the 2015 Regulations, for such sales to be excluded sales. Challenging a refusal of approval A wholesaler can challenge HMRCs refusal of approval by seeking a review of it by HMRC and/or appealing to the FTT. Sections 13A 16 of the Finance Act 1994 (FA 1994) (as amended by article 1(2) of and Schedule 1 to the Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (SI 2009/56) govern the review and appeal process. Reviews are covered by section 15A F. By section 15F, the nature and extent of the review are such as appear appropriate to HMRC in the circumstances, but account must be taken of representations made. The review may conclude that the decision is to be upheld, varied, or cancelled. An appeal to the FTT can be brought either as an alternative to seeking a review or, where there has been a review, against the review decision. The provisions as to appeals are set out in section 16. A central concept is that of a relevant decision. This is defined in section 13A which, in subsection (2)(a) (j), lists the decisions which are relevant decisions. A decision for the purposes of Part 6A of ALDA as to whether or not a person is to be approved and registered, or as to the conditions or restrictions on approval and registration, features in subsection (2)(j). By section 16(8) of FA 1994, such a decision is classed as an ancillary matter. Section 16(4) sets out the FTTs powers on an appeal in relation to any decision as to an ancillary matter, or any decision on the review of such a decision. It provides that the tribunals powers shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say (a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct; (b) to require the Commissioners to conduct, in accordance with the directions of the tribunal, a review or further review as appropriate of the original decision; and (c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a review or further review as appropriate, to declare the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken the that unreasonableness do not occur when comparable circumstances arise in future. repetitions of for securing These limited powers contrast with the wider powers available to the FTT, under section 16(5), when dealing with other relevant decisions which are not classed as decisions as to ancillary matters. In those appeals, the FTT can also vary the decision or quash it and substitute its own decision. It is to be noted that, in ALDA appeals such as the present ones, FA 1994 gives the FTT no power to suspend the effect of a challenged decision pending an appeal, nor is any such power contained in the Tribunal Procedure (First tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273). This contrasts with the position in appeals relating to relevant decisions which come within section 13A(2)(a) (h) of FA 1994, which include a variety of decisions as to payment of duties, levies, assessments, security and penalties. Normally, by section 16(3) of FA 1994, an appeal in such a case will not be entertained unless the amount of duty which HMRC have determined, by the challenged decision, is payable has been paid or deposited with them. However, the appeal can proceed without full payment if HMRC issue a certificate stating that they have accepted such security as appears to them to be adequate, or that, on the grounds of the hardship that would otherwise be suffered by the appellant, they do not require security or have accepted such lesser security as they consider appropriate. If no certificate is issued, the appellant will be able to bring the appeal nonetheless, if the FTT decides that the certificate should not have been refused, and are satisfied that HMRC have been given such security (if any) as it would have been reasonable for them to accept. The Court of Appeal in the present case said (para 29) that this amounts to the FTT having a circumscribed power to provide interim relief. The Commissioners of Revenue and Customs Act 2005, section 9 Section 9(1) of the 2005 Act confers ancillary powers on HMRC in the following terms: The Commissioners may do anything which they think (a) necessary or expedient in connection with the exercise of their functions, or (b) functions. incidental or conducive to the exercise of their Section 51(2) of the 2005 Act provides the following assistance in interpreting the meaning of functions: (2) In this Act (a) function means any power or duty (including a power or duty that is ancillary to another power or duty), and (b) a reference to the functions of the Commissioners or of officers of Revenue and Customs is a reference to the functions conferred by or by virtue of this Act, or (i) (ii) by or by virtue of any enactment passed or made after the commencement of this Act. Issue 1A: what powers do HMRC have under section 88C ALDA to permit trading pending the determination of an appeal to the FTT? When HMRC refuse approval under section 88C, do they nevertheless have power under that section to grant temporary approval pending a wholesalers appeal to the FTT? To recap, HMRC deny that they have any such power under section 88C, whereas the wholesalers support the conclusion of the Court of Appeal that there is power, but challenge the Court of Appeals conclusion that hardship and the impact on a wholesalers appeal rights are irrelevant to the exercise of the power. The Court of Appeals reasoning for its conclusion about section 88C is to be found in paras 52 to 54 of the judgment of Burnett LJ, with whom the other members of the court agreed. Para 52 deals with HMRCs submissions. As Burnett LJ explained, it had been readily accepted on behalf of HMRC through their counsel (then, as now, Sir James Eadie QC) that subsections (2) and (3) [of section 88C] hang together. It was not a question simply of whether, in the abstract, a person was fit and proper, HMRC accepting that it was feasible for persons to fail to satisfy HMRC that they are fit and proper to conduct a wholesale alcohol business without conditions, but to satisfy them that they are fit and proper subject to conditions. Nevertheless, HMRC submitted that a temporary approval lasting a finite period could not be a proper basis to use the combined operation of the two subsections. It is important to identify the precise reason for this submission, which is reflected in HMRCs submissions to this court as well. It was, as summarised in the concluding lines of para 52: because there would have been no relevant change of circumstance relating to fitness since the general decision was made. Mr Eadie QC accepted that the statute envisaged an approval being given for a limited time but only, as he put it, if HMRC were satisfied on day one that the person concerned was fit and proper. Para 53 set out the following examples of situations in which approval might properly be limited in some way: In the following two paragraphs, Burnett LJ set out his conclusion in these terms: 53. It is possible to envisage that HMRC might have well founded concerns about the operation of a business at one of is locations, but not others. A condition limiting trading to specified sites might follow. They might consider the involvement of a particular proprietor, director or senior employee as critical to the grant of approval. By contrast, they might consider the involvement of a particular person to be inimical to the grant of approval. They might limit the period of approval to coincide with the known plans for retirement of an individual of significance in the business. They might limit the period to enable systems to be improved about which there is some concern. They might insist on the production of regular information to meet underlying concerns about record keeping and the like. 54. A conclusion that a person is not fit and proper for unconditional approval does not preclude conditional approval of that person. In my view HMRC have power under section 88C(3) to grant a temporary approval pending appeal if they conclude that a person is fit and proper for that limited period, perhaps with additional conditions. That is a possible conclusion that might be reached even if a general approval is being denied. In substance, if not in form, that is what HMRC were doing before 27 March when they purported to grant 30 days or more grace. The focus of a decision would remain whether the person was fit and proper but for the more limited purpose. Hardship and the impact on appeal rights would be extraneous considerations. Section 88C does not confer upon HMRC a broad discretionary power of approval but it is possible that they could conclude that a person is fit and proper for a limited time to continue trading. To the extent that HMRC apprehended that they had no power to do what was asked of them by the claimant, in my view they erred. 55. there is nothing in the statutory scheme relied upon by HMRC which excludes the possibility of what amounts to an ancillary application for temporary approval in the face of a refusal of the general application. In the light of these conclusions, Burnett LJ determined (para 87) that HMRCs decisions that they had no power to grant temporary approval to the wholesalers to trade pending appeal should be quashed, and the question returned to them for reconsideration. HMRC submit that the Court of Appeal was wrong to conclude that they had power to grant temporary approval to the wholesalers under section 88C. However, if it is found that section 88C does confer such power then, in HMRCs submission, the Court of Appeal was correct as to the criteria for the exercise of the power. It is necessary to appreciate exactly how HMRC put their criticism of the Court of Appeal. The following passage from their written case goes to the heart of the argument: It is therefore submitted that HMRC could not properly conclude someone was not fit and proper to carry on the controlled activity (even on conditions which include the power to approve for a limited time only); yet then separately conclude in response to a request that the same business and leadership might be fit and proper to carry on the controlled activity pending appeal to the FTT against the first finding (Emphasis in the original) From this, it is clear that HMRCs argument is addressed to a situation in which they have already concluded that someone is not fit and proper even for a limited period, and whatever conditions might be imposed. In their submission, the introduction of an extraneous factor which has nothing to do with fitness and propriety (ie the fact that an appeal is pending) cannot alter this assessment of fitness. The wholesalers appear to interpret HMRCs argument rather differently. They have taken HMRC to be contending that whether a person is fit and proper is an absolute question, that must be determined without considering whether the imposition of a time limit or other conditions might make it possible to approve someone as fit and proper. For example, they refer, in their written case, to HMRCs thesis that unless it is satisfied that a person is fit and proper to carry on a controlled activity (ie without consideration of whether that person might be fit and proper for a period, with conditions, with restrictions or any combination of these) it cannot approve a person under section 88C If HMRC were advancing the thesis there set out, it would be an untenable one, in my view. But as I have said, they are not doing so. They are not insisting that absolute fitness and propriety is required in all cases, but addressing the situation where, as here, they have concluded that no conditions or limitations will enable them to be satisfied that the person is fit and proper. The power to incorporate such conditions/limitations is always present, and the relevant technical guidance given to HMRC officers making AWRS decisions specifically drew attention to the option of approval with conditions, including an example of imposing a time limit on the approval. On the facts of these appeals, HMRC had nevertheless concluded that the wholesalers were not fit and proper. I would accept their argument that in those circumstances there is no power to grant temporary approval pending appeal. If the person is not fit and proper for even a limited period of time, that holds good whatever purpose the time limited approval would be designed to achieve. If considerations of hardship and the impact that maintaining the decision would have on the efficacy of the appeal were relevant to HMRCs decision, it might be different. But I am satisfied that the Court of Appeal was right to conclude that such considerations are not to the point. Section 88C operates through the medium of HMRC being satisfied that the person is a fit and proper person to carry on the activity, and the impact upon the person, or his business, of a refusal of approval is not material to that evaluation. The wholesalers invite attention to HMRCs practice, prior to the 27 March 2017 version of EN2002, of allowing a winding down period to a business whose approval was revoked, where they thought the circumstances merited it (see para 21 above). They submit that such temporary approval was granted under section 88C, noting that the Court of Appeal saw it that way (para 54), and submitting that it demonstrates the existence of the power that HMRC now deny. HMRC respond that the provision of a winding down period is different in character from temporary approval pending appeal, being closed ended, and presuming the rationality of the refusal. In my view, the practice (now, of course, ceased) of continuing approval during a winding down period cannot prove the existence of the power for which the wholesalers contend. It may serve to provoke a closer look at the scope of section 88C, but if, after that exacting inspection, the conclusion is reached that it does not encompass the power to grant temporary approval pending appeal, the fact that HMRC may have proceeded, in the past, on the basis of a looser construction of the section, does not alter that conclusion. It may not be irrelevant that HMRC took the opportunity in the 27 March 2017 EN2002 to regularise the position through the route of excluded sales (see para 22 above). Notwithstanding the earlier practice relating to a winding down period, I remain of the view that section 88C does not permit the temporary approval for which the wholesalers argue. Issue 1B: can HMRC give temporary approval pending appeal under section 9 of the 2005 Act? The wholesalers primary argument in the Court of Appeal, renewed as part of their case before this court, was that HMRC have power to grant approval pending appeal under section 9 of the 2005 Act. Section 9, which is set out in full at para 28 above, permits the Commissioners to do anything which they think necessary or expedient in connection with, or incidental or conducive to, the exercise of their functions. The Court of Appeal was not prepared to accept that this permitted the temporary approval sought. Burnett LJ gave this summary of his reasons for rejecting that construction: 35. In my judgment section 9 of the 2005 Act does not provide HMRC with power to approve persons as fit and proper to trade in wholesale alcohol pending appeal to the FTT, when they have concluded they are not fit and proper persons. Such an action could not be either necessary or expedient in connection with the exercise of their functions; nor would it be incidental or conducive to the exercise of their functions. It would be inconsistent with the statutory scheme. The wholesalers argue that there is nothing inconsistent with the statutory scheme in section 9 being interpreted as enabling HMRC to approve them to trade pending appeal. HMRC say, first, that the only route by which permission can be granted is the section 88C route, and secondly that to use section 9 for temporary approvals would run counter to the statutory scheme as a whole. Their first point is shortly stated: section 88C(1) provides that a person may not carry on a controlled activity otherwise than in accordance with an approval given by the Commissioners under this section (my italics). The wholesalers reply that there is nothing in section 88C(1) that prohibits HMRC from granting permission by a different route, and complain that if the provision were to be interpreted in this way, there would be no scope for the use of the powers set out in section 9. It is put this way in their written case: Allowing a decision maker to do something that that decision maker could otherwise not do in the performance of a function is precisely what ancillary and incidental powers do. If an ancillary power never enables the decision maker to do something that the decision maker otherwise lacks the power to do, then the ancillary power is left with nothing to do. I have no doubt that there are situations in which the sort of considerations identified by the wholesalers in this passage would lead the court to accept that the Commissioners have indeed got ancillary powers of one sort or another. But it all depends upon the general attributes, and detailed provisions, of the particular statutory scheme in relation to which the question arises, and the nature of the ancillary powers being considered. There are, in the authorities, plentiful statements to this effect, made in various contexts, see for example the following, from Hazell v Hammersmith and Fulham London Borough Council [1992] 2 AC 1 at p 31D E: The authorities deal with widely different statutory functions but establish 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. Section 9 concerns ancillary powers which are necessary or expedient in connection with the Commissioners exercise of their functions, or incidental or conducive to that exercise, not ancillary powers which undermine or contradict those functions. I do not accept that recourse can be had to it to provide an alternative route to time limited approval, supplementing section 88C in the way that the wholesalers suggest. I say that not only because of the terms of section 88C itself, which permit authorisation only under that section (approval given by the Commissioners under this section), but also because of the attributes of the whole scheme of which section 88C forms part. Rather than assisting the Commissioners exercise of their functions under the scheme, such a use would, in my view, undermine the scheme. To start with section 88C itself, it is important to take sections 88C(1) and (2) together. By subsection (1), a person may not carry on a controlled activity otherwise than in accordance with an approval given by the Commissioners under section 88C. By subsection (2), the Commissioners may only give the required approval if they are satisfied that the person is a fit and proper person to carry on the activity. So where, as here, they are not so satisfied, they may not give approval under section 88C, and without approval under section 88C, the person may not carry on the controlled activity. Amongst the consequences that follow if he does act without approval, the person will be guilty of an offence (section 88G). It can hardly be said to be necessary or expedient to the exercise of the functions under that tightly drafted scheme, which has at its heart that the Commissioners will only approve people to sell controlled liquor wholesale if satisfied that they are fit and proper to do so, for the Commissioners to be able to draw upon the ancillary powers in section 9 to grant approval to someone in relation to whom they are not satisfied, nor yet can that be said to be incidental or conducive to the exercise of their functions under the scheme. Furthermore, approval granted under section 9 would not be of any practical assistance to the wholesaler unless he were also put on the register of approved persons under section 88D. By sections 88F and 88G, a person may commit a criminal offence by buying from a person who is not approved, and would need to have recourse to the register to confirm the status of the wholesaler before buying. By using section 9 powers to enter the wholesaler on the register, HMRC would appear to be holding out as fit and proper a person in relation to whom they have formed the opposite view. It is unreal to suggest, as the wholesalers do, that this could be satisfactorily addressed by HMRC including information about the wholesaler under section 88D(2), to the effect that the approval is only temporary pending the outcome of the wholesalers appeal to the FTT and that actually HMRC do not consider the person fit and proper. But, says Mr Coppel QC for the wholesalers, it is necessary to look at HMRCs functions as a whole, not just their functions under section 88C, or under Part 6A of ALDA. I readily accept that as a general proposition, but I do not think that it justifies HMRC using section 9 to grant temporary approval. Mr Coppel relies on the fact that HMRCs section 88C decisions are attended by a review and appeal process, in which HMRC have a role, including a duty to give effect to whatever decision the FTT reaches. He argues that, as part and parcel of their functions in the appeal process, HMRC must be able to take steps to ensure the effectiveness of the wholesalers right to have his appeal heard, especially bearing in mind that, even if it ultimately turns out that approval was wrongly refused, the wholesaler will receive no compensation for the damage suffered whilst awaiting the appeal, including potentially the final closure of the business. So, where implementation of the challenged decision pending appeal is likely to result in the wholesaler suffering substantial, and irreversible, harm, he submits that HMRC must take as their starting point that temporary approval should be granted so as to keep the appeal right alive, although he would concede that the starting point could be displaced if the likelihood and scale of harm to the revenue would be greater, if temporary approval were to be granted, than the likelihood and scale of the harm to the wholesaler from a refusal. I am not persuaded by this argument. I do not accept that the fact that HMRCs decision is subject to an appeal, to which they are a party, is a proper foundation upon which to conclude that it is necessary or expedient, incidental or conducive, to the exercise of their functions to assume a power to grant temporary approval so as to preserve the wholesalers position pending that appeal. With certain other types of relevant decision, HMRC do have a role in facilitating an appeal to the FTT, by relaxing the normal requirement for duty to be paid prior to an appeal. As can be seen from para 27 above, they can effectively waive the standard security required under section 16(3) of FA 1994 on the grounds of hardship, and, if they are not prepared to do so, the FTT can intervene to allow the appeal to proceed nevertheless, if it decides that HMRC should not have refused to provide the required certificate. It cannot be said, therefore, that the review and appeal provisions were drafted without heed to the possibility that HMRC/the FTT might need powers to allow relief pending appeal, but when it comes to ancillary decisions such as the decisions in question here, there is nothing in sections 13A 16 of FA 1994 (see above at para 23 et seq), or in the Tribunal Procedure (First tier Tribunal) (Tax Chamber) Rules 2009, conferring any power on either HMRC or the FTT to suspend, or circumvent, the consequences of the decision that is being challenged pending determination of the appeal. R (Wilkinson) v Inland Revenue Comrs [2005] 1 WLR 1718 offers some insight as to how this absence of express power might bear upon the operation of a general provision such as section 9 of the 2005 Act. It concerned bereavement allowance, which at that time was payable only to widows and not to widowers. The House of Lords rejected the argument that section 1 of the Taxes Management Act 1970, which said that income tax shall be under the care and management of the Commissioners of Inland Revenue, could be construed as giving the revenue a discretionary power to grant an extra statutory concession allowing a widower to claim the equivalent to a widows bereavement allowance. Lord Hoffmann observed at para 21, with the agreement of the rest of the House, that the power could not be construed so widely as to enable the commissioners to concede, by extra statutory concession, an allowance which Parliament could have granted but did not grant. Although the context was not the same as in the present case, section 1 of the Taxes Management Act 1970 not being concerned with ancillary powers in quite the same way as section 9 of the 2005 Act, it can similarly be said here that section 9 should not be construed as conferring on HMRC a power to grant temporary approval pending appeal which Parliament could have conferred through Part 6A or the FA 1994, but did not. That temporary approval pending appeal is not part of the scheme is perhaps underlined also by the fact that express provision was made in section 54(12) of the Finance Act 2015 for the time from which the prohibition on trading in section 88C was to apply, namely when the wholesalers application to HMRC was disposed of (ie by section 54(13), has been determined by HMRC, withdrawn, abandoned, or otherwise ceases to have effect), rather than from the conclusion of any appeal against the decision on the application. Issue 2: High Court powers (1) The approach of the Court of Appeal in CC & C Ltd and in the present case In the Court of Appeal, it was common ground that the High Court has power to grant injunctive relief to assist a wholesaler pending his appeal to the FTT, but there was a dispute between the parties as to the basis on which relief could be granted. In determining this issue, the Court of Appeal drew heavily upon its earlier decision in CC & C Ltd and it will be necessary to look, therefore, at that decision. There are considerable similarities between CC & C Ltd and the present case, although CC & C Ltd concerned wholesale trade in duty suspended goods, not duty paid goods. Those trading wholesale in duty suspended goods were required to be approved and registered by HMRC. The claimant company had been approved and registered for some years, when HMRC revoked the registration on the basis that it was no longer fit and proper. Like HMRCs decisions in the present case, the decision in CC & C Ltd was classed, for the purposes of sections 13A 16 of the FA 1994, as a decision relating to an ancillary matter. The company appealed to the FTT against the decision and also commenced proceedings in the Administrative Court to obtain interim relief pending the determination of the appeal, claiming that there was a risk that it would be irreparably damaged meanwhile. Underhill LJ, with whom the other members of the court agreed, had no doubt that the court has jurisdiction, in the formal sense, under section 37(1) of the [Senior Courts Act 1981] to make an order of the kind sought (para 38, and see also Lewison LJs short judgment commencing at para 48). The court was concerned with the approach that should be taken to the exercise of that jurisdiction. At para 39, Underhill LJ said that it was trite law that where Parliament has enacted a self contained scheme for challenging decisions, it would normally be wrong for the High Court to permit such decisions to be challenged by way of judicial review. He cited a passage from a judgment of the Privy Council, in Harley Development Inc v Comr of Inland Revenue [1996] 1 WLR 727, 735 736, culminating in the following: Their Lordships consider that, where a statute lays down a comprehensive system of appeals procedure against administrative decisions, it will only be in exceptional circumstances, typically an abuse of power, that the courts will entertain an application for judicial review of a decision which has not been appealed. Underhill LJ set out in paras 41 and 42 why, where Parliament could have made provision for suspensory orders to be made pending appeal to the FTT but had not done so, the court was not entitled to intervene to grant a trader interim relief simply on the basis that there is a pending appeal with a realistic chance of success. But, he said, it did not follow that there were no circumstances in which the court may grant such relief, and he noted that HMRC did not so contend. He went on, in paras 43 and 44, to set out when relief may be granted. He said that: where the challenge to the decision is not simply that it is unreasonable but that it is unlawful on some other ground, then the case falls outside the statutory regime and there is nothing objectionable in the court entertaining a claim for judicial review or, where appropriate, granting interim relief in connection with that claim. A precise definition of that additional element may be elusive and is unnecessary for present purposes. The authorities cited in the Harley Development case refer to abuse of power, impropriety and unfairness. [Counsel for HMRC] referred to cases where HMRC had behaved capriciously or outrageously or in bad faith. Those terms sufficiently indicate the territory that we are in, but I would sound a note of caution about capricious and unfair. A decision is sometimes referred to rhetorically as capricious where all that is meant is that it is one which could not reasonably have been reached; but in this context that is not enough, since a challenge on that basis falls within the statutory regime. As for unfair, I am not convinced that any allegation of procedural unfairness, however closely connected with the substantive unreasonableness alleged, will always be sufficient to justify the intervention of the court: [counsel for HMRC] submitted that cases of unfairness would fall within the statutory regime to the extent that the unfairness impugned the reasonableness of the decision. As I have noted above, the types of unfairness contemplated in [R v Inland Revenue Comrs, Ex p Preston [1985] AC 835] which is the source of the use of the term in the Harley Development case were of a fairly fundamental character. But since procedural unfairness is not relied on in this case I need not consider the point further. Summarising his conclusion at para 44, he said that the court may entertain a claim where it is arguable that the decision was not simply unreasonable but was unlawful on one of the more fundamental bases identified above. He said that such cases will, of their nature, be exceptional. The CC & C case was not one of them, and relief was not available. following components: In the present case, Burnett LJ analysed the ratio of CC & C as having the 61. (i) The High Court has jurisdiction to grant an injunction maintaining registration pending appeal to the FTT, which has been revoked by HMRC, when a parallel challenge to that decision is made in judicial review proceedings. (ii) The jurisdiction should not be exercised simply on the basis that the person concerned has a pending appeal with a realistic chance of success. If the decision is challenged only on the basis that (iii) HMRC could not reasonably have come to it, the case falls within section 16 of the Finance Act 1994 and the court should not intervene. (iv) If the challenge to the decision is on some other ground outside the statutory regime the court may entertain judicial review or grant interim relief. (v) A definition of the additional element needed is elusive but would include abuse of power, impropriety and unfairness as envisaged in Harley Development Inc v Comr of Inland Revenue [1996] 1 WLR 727. Having lost their argument that CC & C Ltd had been decided per incuriam or should be distinguished, the wholesalers accepted that their cases did not fall within any of what Burnett LJ described (para 73) as the exceptions identified as examples in CC & C Ltd but submitted that interim relief should be granted because otherwise there was a risk that their rights under article 6 and article 1 protocol 1 (A1P1) of the European Convention on Human Rights (ECHR) would be violated. The argument, both in relation to article 6 and A1P1, was put on the basis that by the time the appeal is heard, the wholesalers would have ceased to be viable and their appeals to the FTT would be ineffective. The Court of Appeal found it sufficient to deal with the argument by focussing on article 6 alone, finding it unnecessary to explore the altogether more complicated route of A1P1, para 82, and in due course I will take the same approach. Burnett LJs conclusion was as follows: 81. In my opinion, a statutory appeal against a refusal of approval which is unable to provide a remedy before an appellant has been forced out of business, rendering the appeal entirely academic (or theoretical or illusory in the language of the Strasbourg Court) is capable of giving rise to a violation of article 6 which the High Court would be entitled to prevent by the grant of appropriate injunctive relief under section 37 of the 1981 Act. To that extent, the exceptions enumerated by Underhill LJ in the CC & C Ltd case [2015] 1 WLR 4043 can be expanded to include cases in which a claimant can demonstrate, to a high degree of probability, that the absence of interim relief would violate its ECHR rights. Moreover, such an injunction need not be ancillary to a claim for judicial review of any decision of HMRC, although it might be. Burnett LJs reasoning for his conclusion (see paras 77 to 81) involved the following steps: i) The dispute concerns civil rights and obligations for the purposes of article 6, see Tre Traktrer AB v Sweden (1989) 13 EHRR 309, in which the Strasbourg court concluded that there was a violation of article 6 where a company had its licence to sell alcohol revoked by two administrative bodies, neither of which was a court or tribunal. ii) Unlike in Tre Traktrer AB, the wholesalers have appeals to the FTT which satisfy the requirement for a hearing by a tribunal. iii) However, the ECHR is intended to guarantee rights that are practical and effective, not theoretical or illusory, see Airey v Ireland (1979) 2 EHRR 305 and other authorities set out at para 80 of Burnett LJs judgment. iv) If an appellant is forced out of business before the statutory appeal concludes, the appeal is rendered theoretical or illusory. It is important to recognise the lack of debate that there was in the Court of Appeal about this element of the case. At para 76, Burnett LJ recorded that Sir James Eadie accepted on behalf of HMRC that the High Court may grant an interim injunction to vindicate the Convention rights of the wholesalers, though emphasising (1) that (as Burnett LJ himself expressly accepted) the first port of call must be the FTT itself, which could be expected to expedite the appeal to avoid the problem, and (2) that proper evidential support would be required for an argument based on the ECHR. It was not argued on behalf of the wholesalers that interim relief should issue automatically, without it being demonstrated that the wholesaler could not survive until the appeal was heard. As Burnett LJ set out at para 83, Mr Coppel recognised that factors such as the strength of the appeal and the nature of the concern that led to the refusal to approve would be factors to be weighed when considering whether to grant an injunction, reflecting the fact that the scheme exists to protect the public purse and legitimate traders. Burnett LJ set out the sort of compelling evidence that would be required before relief would be granted: 85. A claimant seeking an injunction would need compelling evidence that the appeal would be ineffective. It would call for more than a narrative statement from a director of the business speaking of the dire consequences of delay. The statements should be supported by documentary financial evidence and a statement from an independent professional doing more than reformulating his clients stated opinion. Otherwise, a judge may be cautious about taking prognostications of disaster at face value. It should not be forgotten that a trader who sees ultimate failure in the appeal would have every incentive to talk up the prospects of imminent demise of the business, in an attempt to keep going pending appeal. Equally, material would have to be deployed which provided a proper insight into the prospects of success in an appeal. There is no permission filter for an appeal to the FTT. The High Court would not intervene in the absence of a detailed explanation of why the decision of HMRC was unreasonable. It must not be overlooked that the FTT is not exercising its usual appellate jurisdiction in these types of case where it makes its own decision. Finally, there would have to be detailed evidence of the attempts made to secure expedition in the FTT and the reasons why those attempts failed. Burnett LJ anticipated that the circumstances in which it was appropriate for injunctive relief of this kind to issue would be rare, as practical relief would be achievable by obtaining temporary approval from HMRC under section 88C (not a route that I consider available for the reasons set out earlier) or, failing that, by seeking expedition from the FTT. The evidence in support of injunctive relief in the present cases had not been sufficient to satisfy either of the two judges who entertained the proceedings at first instance that the appeals would be rendered nugatory without interim relief, as Burnett LJ set out: 86. In the ABC Ltd case William Davies J considered himself bound by the CC & C Ltd case to refuse injunctive relief even if the claimants could show that the appeal would be rendered nugatory. However, at para 48 he concluded that the evidence did not suggest that was inevitable. The evidence demonstrated that there was a prospect that the appeal would be rendered nugatory, no more. In the X Ltd and Y Ltd case, Andrew Baker J dealt with the strength of the evidence relating to the business prospects of the claimants in paras 39 and 40. He was unpersuaded by the assertions that they would not survive the appeal process. In those circumstances, even if either judge had considered a free standing injunction by reference to rights guaranteed by article 6 of the ECHR, it would have been refused. (2) The limited scope of Issue 2 This courts engagement in the issue as to the High Courts powers is narrowly confined for procedural reasons. Only the wholesalers sought to appeal against the Court of Appeals determination on this aspect of the case. Their notice of appeal sought permission to appeal on three grounds. The first ground challenged the Court of Appeals decision that section 9 of the 2005 Act did not give HMRC any power to permit temporary trading pending the outcome of an appeal to the FTT. Permission was given for this ground to be pursued and I have addressed it above. Ground 2 was that the Court of Appeal were wrong to conclude that it was only in exceptional circumstances that the High Court could grant interim relief pending an appeal to the FTT. Ground 3 was that the Court of Appeal were wrong to conclude that even where implementation of HMRCs decision prior to the outcome of an appeal to the FTT would violate a wholesalers ECHR rights, the High Court should not grant interim relief as the first port of call must be to the FTT to expedite the appeal. Permission to appeal was not granted in relation to either of these grounds. In these circumstances, both parties understandably approached the appeal to this court on the basis that the High Court has power to grant injunctive relief where the wholesalers article 6 rights would otherwise be infringed by the business ceasing to be viable before the FTT could consider the matter, rendering the appeal provided by statute entirely academic, and that the circumstances in which that power would be exercised were as set out in CC & C Ltd, as interpreted by the Court of Appeal in the present case. This courts refusal of permission to appeal in relation to the High Courts injunctive powers immunises that position from challenge in the present proceedings. Furthermore, it has not been the role of this court to review the established finding that the evidence produced by the wholesalers in support of their application for injunctive relief on an article 6 basis failed to meet the required standard (see para 86 of Burnett LJs judgment, set out above). The question that arose during the course of the hearing before us was the discrete question of what form the High Courts order could legitimately take, where a case for injunctive relief was made out. If minded to make an order, what, if anything, could the High Court order HMRC to do to protect the position of a wholesaler pending appeal? Supplementary written submissions were provided following the hearing directed to this point. (3) The parties supplementary submissions In their supplementary submissions, both sides adhere to the position that the Court of Appeal was correct to conclude that the power in section 37 of the Senior Courts Act 1981 could be exercised in the AWRS context, in exceptional cases. HMRC emphasise the breadth of the High Courts power under section 37, being a power to make orders and grant interim relief whenever it considers it just and convenient to do so, including when necessary to protect effective rights of access to court, whether derived from article 6 of the ECHR or the common law. This enables it, they say, to make an order which will have the effect of holding the ring pending the appeal, unconstrained by the limitations and conditions imposed upon HMRC by the legislation and public law principles. They also submit that Parliament can be taken to have enacted the AWRS on the basis that the High Courts powers to grant interim relief remain intact. In their submission, an order can be made requiring them to give the wholesaler provisional approval, under section 88C, to sell controlled liquor, and also to add the wholesaler to the section 88D register. They support this on the basis that, although they could not act in this way of their own initiative, they could do so pursuant to a court order because the courts role is part of the statutory scheme. In the alternative, HMRC propose that an order could be made requiring them to exercise their power, under regulation 10 of the 2015 Regulations (see para 16 above), to exclude certain descriptions of sales from ALDA. As with temporary approval, HMRC would not, they stress, independently use this power to exclude sales in circumstances like the present, but they would do so if ordered by the court to do that. If this route were to be taken, the wholesaler would be outside the ALDA regime whilst the appeal to the FTT was pending. It would be necessary, therefore, for the court to impose conditions that would need to be met by the wholesaler for the exclusion to continue, for example as to record keeping and due diligence. HMRC seek to explain why their own exclusion of sales to allow a winding down period (see above) should not be taken to indicate that they have power, without court intervention, to grant a wholesaler relief pending an appeal. They draw a distinction between their limited exercise of power, which is consistent with the statutory scheme, and an open ended exclusion pending appeal. The latter would, in their view, be a stretch too far for them, but not for the High Court when intervening on the basis that the case was exceptional and that there was a need to protect effective access to justice. Like HMRC, the wholesalers also submit that the High Court can order HMRC to approve and register a wholesaler temporarily under section 88C and section 88D. They say this on the basis that unless HMRC has decided that the wholesaler is not fit and proper to carry on any controlled activity for any period of time, regardless of all conditions and restrictions HMRC might impose, there is a residual power in the High Court to order HMRC to act under section 88C and D. Failing that, they propose that the order could focus upon section 9 of the 2005 Act. If neither of those routes is available, they rely upon section 8(1) of the Human Rights Act 1998, which they say gives the court power to act to ensure the efficacy of the appeal to the FTT, as required by article 6 ECHR (and, they say, A1P1). (4) Discussion It will be apparent, from what I have set out of their submissions, that the parties do not share the courts anxieties as to what, if any, form of order the High Court could make to safeguard the position of a wholesaler, without requiring HMRC to trespass impermissibly outside the statutory provisions relevant to the AWRS. As a result of this, the court has not had the benefit of any testing analysis, in the written or oral argument, of the parties essentially agreed position. This is not intended as a criticism (the parties were entitled to make the legal submissions they considered appropriate) but the result is that the process has not entirely dispelled the courts unease about the form that the High Courts order might legitimately take. To illustrate the point, let me take the suggestion that the High Court could order HMRC to grant temporary approval under section 88C to a wholesaler whose application they have rejected, but who has appealed to the FTT and has established an article 6 case for relief pending the appeal. Section 88C approval, whether indefinite or limited in time, depends on HMRC being satisfied that the wholesaler is fit and proper to carry on the controlled activity; that is an essential condition for approval under the section. For matters to have reached this point, however, HMRC must necessarily have concluded that they are not satisfied that the wholesaler is fit and proper, even for a limited period of trading. If the High Court orders HMRC to grant temporary approval to the wholesaler in these circumstances, it is necessarily requiring HMRC to be satisfied when they are not satisfied, and I question how that can properly be done. That example points to a more fundamental concern. Generally the High Courts power to order a person to do something by mandatory injunction is exercisable for the purpose of making that person do something that he has it within his powers to do and should have done, but has failed to do. Here, the court has concluded, and HMRC agree, that there is in fact nothing which HMRC can properly do in the exercise of their statutory functions. They may fairly be said to have no relevant power which they could legitimately exercise in this context without straying outside the purpose for which the power was given. In such circumstances, a conclusion that the High Court could nonetheless solve the problem by granting an injunction looks worryingly like endorsing the exercise of some sort of inherent authority to override an Act of Parliament, on the basis that the end justifies the means. It would take a lot of persuading for me to conclude that this would be a proper exercise of the High Courts undoubtedly wide power to grant injunctive relief, but the parties agreement that it is permissible has closed off adversarial submissions on the point. The absence of debate between the parties makes it undesirable to make any definitive pronouncement as to whether an appropriate form of order might be found as a vehicle for the exercise, by the High Court, of its power to grant relief to a wholesaler pending an appeal to the FTT. Since the case for relief was not, in fact, made out on the evidence in the present case (see para 86 of the Court of Appeal judgment, set out at para 61 above), it is unnecessary to do so, and I will say no more on the subject. It should be noted that Mr Coppel invites the court to broaden its interpretation of section 88C of ALDA and section 9 of the 2005 Act by viewing them with ECHR considerations in mind, and/or bearing in mind article 47 of the Charter of Fundamental Rights and Freedoms of the European Union. Just as I am uneasy about accepting that the statutory scheme can be interpreted in such a way as to enable the High Court to come to the assistance of a wholesaler whose ECHR rights are in issue, so I do not readily see how section 88C and section 9 could be more broadly interpreted to the same end. I need not say more on the subject, however, as Mr Coppels argument would not, in any event, assist the wholesalers in this case, given that their evidence did not establish that their ECHR rights are endangered. Conclusions I would allow HMRCs appeal against the Court of Appeals order remitting to HMRC the question of whether the wholesalers should be given temporary approval under section 88C. HMRC do not, in my view, have power, in circumstances such as the present ones, to grant such temporary approval under that section. I would dismiss the wholesalers appeal against the Court of Appeals determination that HMRC do not have power to grant temporary approval under section 9 because, in my view, the Court of Appeal were right. LORD HUGHES: (with whom Lord Sumption agrees) For the reasons so clearly set out by Lady Black, I agree that: (i) HMRC has no power under section 88C of the Alcoholic Liquor Duties Act 1979 (ALDA) to approve temporarily an existing trader whom it has determined not to be a fit and proper person even for a short period and even subject to conditions; and (ii) nor has HMRC any power to do this under section 9 of the Commissioners for Revenue and Customs Act 2005; moreover (iii) although this is not for decision in the present case, it is also difficult to see, where a trader has been refused registration, on the grounds that HMRC is not satisfied that it is a fit and proper person, even for a limited period or on conditions, that a power to preserve its ability to trade pending appeal to the FTT can be found in the High Court. As to (iii), it is highly significant that HMRC, which sponsored the legislation in question, thought it right to contend in these proceedings that the High Court does have the third mentioned kind of power pending appeal, albeit only in cases where it is clearly established that otherwise good grounds of appeal would be rendered nugatory if the power did not exist. The principle underlying that approach is correct, and responsible. Neither in English law nor under the ECHR is there any general right to an appeal against an adverse decision, such as the one here under consideration, viz a determination that a trader is not a fit and proper person to be approved under ALDA. But in this instance a right of appeal has been conferred by section 16 of the Finance Act 1994, albeit the grounds upon which it can succeed are limited: see para 25 of Lady Blacks judgment. Where such a right exists in law it would potentially be a breach of article 6 ECHR (right to a fair trial), read with article 13 (right to an effective remedy) if it were rendered illusory or nugatory by the absence of any power to suspend or stay the adverse decision of HMRC until the appeal can be determined. In the particular case of a trader who had an existing business at the time when the registration scheme introduced by section 88C of ALDA, his right of appeal to the FTT might be rendered illusory or nugatory if he would be forced out of business before a good case on appeal could be determined. There may be few who are genuinely in this position, and with the passage of time those thus affected must be a reducing number. But some are enough to result in potential incompatibility of the legislation with the ECHR. It is not possible for courts to invent a remedial legislative provision where, as seems here to be the case, the language of the self executing scheme adopted by ALDA and of the appellate structure adopted by the Finance Act 1994 do not admit of a construction which allows for a power to stay a decision of HMRC pending appeal. Nor, if the courts reading of the legislation is correct, can there be a remedy under section 8 of the Human Rights Act, since there is no unlawfulness if no other course is possible see section 6(2). But if potential incompatibility is to be avoided, those responsible for legislation in this field may wish urgently to address amendment, for example to give either the FTT or the High Court a limited power to impose a stay pending appeal in defined circumstances. |
SeaFrance SA was a subsidiary of the French state rail group SNCF. It operated a ferry service between Dover and Calais until 16 November 2011, when it went into liquidation in France and its operations ceased. On 2 July 2012, in circumstances which I will describe more fully below, substantially all of its assets were acquired by Groupe Eurotunnel SE (which I shall call GET). GET is the parent company of the group which operates the Channel Tunnel between the United Kingdom and France. It acquired the assets as part of an arrangement with Socit Cooprative de Production SeaFrance SA (or SCOP), a workers cooperative formed to secure the continuance of the ferry service and thus the jobs of SeaFrances employees. The essence of this arrangement was that while the ferry service would be operated by GET or a subsidiary of GET, the ships would be operated and crewed by SCOP. The service was subsequently resumed on this basis on 20 August 2012 using three of the same ships and operated by employees almost all of whom had previously worked for SeaFrance. In September 2014 the Competition and Markets Authority, after an investigation of the impact of the transaction on competition on the cross Channel routes, prohibited GET from operating any ferry service from Dover using the passenger ships acquired from SeaFrance for a period of ten years. Its jurisdiction to do this depended on whether GETs acquisition of the SeaFrance assets created a relevant merger situation for the purpose of the Enterprise Act 2002. The question at issue on this appeal is whether that condition was satisfied. This in turn depends on whether what GET and SCOP acquired on 2 July 2012 was an enterprise or merely the assets of a defunct enterprise. The Authority considered that what GET acquired was an enterprise and that accordingly a merger situation existed. The Competition Appeal Tribunal, sitting as a court of judicial review, held that they were entitled to reach that conclusion. But the Court of Appeal allowed the appeal by a majority (Tomlinson LJ and Sir Colin Rimer, Arden LJ dissenting: [2015] EWCA Civ 487). In their view what had been acquired was not the enterprise formerly carried on by SeaFrance, but only the means to construct a similar but new enterprise. Accordingly no merger situation had been created and there was no jurisdiction to impose remedies. They held that that it had been irrational for the Authority, on the facts which it had found, to reach any other conclusion. The statutory framework The statutory control of the competition aspects of mergers has been one of the more stable parts of the United Kingdoms competition law. It was introduced by the Monopolies and Mergers Act 1965, at a time when the only other country with a comprehensive system of merger control was the United States, and its broad outlines have remained unchanged ever since. The current statutory framework is in Part 3 of the Enterprise Act 2002. Before 1 April 2014, merger control had been the responsibility of the Office of Fair Trading and, successively, the Monopolies and Mergers Commission and the Competition Commission. On that date important organisational changes came into effect as a result of the amendment of the Act by Parts 3, 4 and 5 of the Enterprise and Regulatory Reform Act 2013. The Office of Fair Trading and the Competition Commission were abolished and the relevant functions of both were transferred to a new body, the Competition and Markets Authority. These changes occurred while the reference which has given rise to the present appeal was in progress. But they do not affect the issues before us. I shall therefore refer to the Act throughout in its amended form. The purpose of merger control is to regulate in advance the impact of concentrations on the competitive structure of markets. Some merger regimes, notably that of the United States, apply to any acquisition which is liable to bring about such a concentration. It is, however, a fundamental feature of the United Kingdoms scheme that it distinguishes between the acquisition of assets constituting a business and the acquisition of bare assets. Concentrations arising from the acquisition of bare assets are not subject to statutory merger control ex ante, even if they have potentially adverse effects on competition, although they may be subject to heightened regulation ex post under Part 1, Chapter II of the Competition Act 1998 (Abuse of Dominant Position). The reason for the distinction is that it is thought to be inappropriate to inhibit the organic growth of businesses simply because it is achieved by means of factors of production previously employed in another business, if control of the other business has not itself been achieved. Part 3, Chapter 1 of the Enterprise Act, deals separately with completed and anticipated mergers. Under section 22(1), which is concerned with completed mergers, the Competition and Markets Authority must, subject to limited exceptions, refer arrangements or transactions to a specially constituted group of panellists if it believes that it is or may be the case that: (a) a relevant merger situation has been created; and (b) the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services. Once a reference has been made, the Authority is required by section 35(1) to decide (among other things) whether a relevant merger situation has been created, and if it has whether the stipulated effects on competition have resulted or may be expected to result. What constitutes a relevant merger situation depends on section 23. Under section 23(2)(a), a relevant merger situation has been created if two or more enterprises have ceased to be distinct enterprises at a time or in circumstances falling within section 24, provided that the enterprise being taken over had a specified minimum turnover in the accounting period preceding the date when it ceased to be a distinct enterprise: see sections 23(1)(b), 28(3) and the Enterprise Act 2002 (Merger Fees and Determination of Turnover) Order SI 2003/1370, articles 2(c) and 11. Under section 26(1): for the purposes of this Part any two enterprises cease to be distinct enterprises if they are brought under common ownership or common control For this purpose, associated persons and any bodies corporate which they or any of them control are to be treated as one person: section 127(1). Associated persons include persons acting together to secure or exercise control over any enterprise or assets: section 127(4)(d). Of critical importance to these provisions, and to the issues on this appeal, are the definitions of enterprise and business in section 129(1). An enterprise means the activities, or part of the activities, of a business. A business includes a professional practice and includes any other undertaking which is carried on for gain or reward or which is an undertaking in the course of which goods or services are supplied otherwise than free of charge. There is no statutory definition of activities. It is, finally, necessary to refer to the provisions of sections 24 and 27. These deal with the timing of any reference. The effect of section 24 is that a reference must be made within four months of the relevant enterprises ceasing to be distinct or (if later) within four months of the transaction being made public or notified to the Authority. Section 27 provides that where the relevant arrangements or transaction take effect in stages, then two enterprises are deemed to have ceased to be distinct when the parties to the relevant arrangements or transaction become bound to such extent as will result in their ceasing to be distinct: sub section (2). By sub sections (5) and (6), if the enterprises cease to be distinct by virtue of each of a number of successive events occurring within a period of two years, the Authority may, for the purposes of a reference, treat successive events to which this subsection applies as having occurred simultaneously on the date on which the latest of them occurred. The facts The question whether GET acquired an enterprise or the bare assets of a defunct enterprise turns on exactly what happened to the business of SeaFrance during the hiatus of seven and a half months between its cessation of operations and the transaction of 2 July 2012. Since the Authoritys conclusion on this point is said to be irrational, it is necessary to examine with some care the facts on which it was based. The following summary is based on the Authoritys report and on the earlier report issued by the Competition Commission. I shall come back to the circumstances in which a second report was required. Before going into liquidation, SeaFrance had operated the ferry service with four vessels. There were three passenger ferries, the Rodin, the Berlioz and the Molire, and a freight ship, the Nord Pas de Calais. They were all owned by SeaFrance except for the Molire, which was operated by SeaFrance on a bareboat charter. The Molire was redelivered to its owners when the company went into liquidation and for present purposes can be ignored. The service was overmanned, dogged by poor labour relations and unprofitable, and by the spring of 2010 SeaFrance was insolvent. On 28 April 2010, it applied to the Tribunal de Commerce de Paris for protection from its creditors. On 30 June it was placed by the court in the hands of court appointed administrators. They continued to operate the ferry service, while trying without success to sell the business. No acceptable offers having been received, on 16 November 2011 the French Court made what amounted to a provisional order for the liquidation of SeaFrance. The court ruled that for the time being the ferry service could continue, but in fact it ceased from that date. The ships were placed in hot lay up while further attempts were made to find a buyer. This was a minimal operating mode which would enable their condition to be maintained so that they could become fully operational in a short time if a buyer was found. It is, however, plain that a maintenance programme of this kind was a substantial undertaking. It required the services of 190 employees. On 9 January 2012, the French Court formally placed the company in liquidation and ordered it to cease trading. Under French law, the consequence of this order was that all of the SeaFrance employees had to be made redundant within 15 days, apart from those required for the purposes of the liquidation. The latter included the staff engaged in maintaining the vessels in hot lay up. The court minutes record that the dismissals were not the end of the road: On pronouncement, the liquidator under the control of the bankruptcy judge and the court must undertake any discussions that are necessary with the interested parties. Clearly, there must be a trade off between the value of the assets, which are mainly the vessels, and the continuance of employment contracts. The market exists; the vessels are quite new and even the business may be sold later on. He will ensure that the bodies governing the proceedings are particularly attentive to the dramatic social company aspects and to do this he knows that SNCF will do its duty regarding its Group obligations and its capacity to reclassify collaborators under conditions to be negotiated. Among the steps which the liquidator was directed to take was: Reclassification of the business as a competitive and competent organisation in the sea transportation business with enhancement of the assets This was to be achieved by a Plan de Sauvegarde de lEmploi (known as PSE3). Such a plan was required by French law to be prepared by the employer during the 15 day period allowed for the redundancies, with a view to safeguarding the employment of those made redundant. Accordingly, the liquidator began negotiations with the SeaFrance works council to agree a plan. On 23 January 2012, agreement was reached. An important feature of the plan agreed was that SeaFrances parent, SNCF, would make an incentive payment to any alternative employer for each ex SeaFrance employee whom it took on. The amount of the payment would vary from 3,600 to 25,000 according to the nature of the alternative employment. The highest payment, 25,000, would be made for any ex SeaFrance employee who was ultimately re employed on the SeaFrance vessels in operations similar to those carried on by SeaFrance before its liquidation. Subsequently, the liquidator invited sealed bids for the SeaFrance assets by 4 May 2012. A number of bids were received, which were opened in court on 10 May 2012. GET bid 65m for all the assets other than customer contracts, an exception which the Commission regarded as insignificant. The assets acquired included the vessels, the logos, brands and trade names, the computer software, websites and domain names, IT systems and hardware, the office equipment, the customer lists and records, and the inventory of technical and spare parts. It was an integral part of GETs proposal that it would enter into a long term relationship with SCOP under which SCOP would provide the crews and shore staff for the vessels, using as many as possible of the redundant former employees of SeaFrance. The bid documents put the point in this way: The project for which Groupe Eurotunnel is signing up is intended, however, to allow a partnership with the former SeaFrance employees who will be involved as part of a SCOP, so as to revive the operations previously undertaken by SeaFrance. The liquidator recommended the GET bid because, among other reasons, the arrangement with SCOP meant that it was the only one which would safeguard the jobs of at least a substantial part of the workforce. On 11 June 2012, the court accepted the liquidators recommendation, and the acquisition of the SeaFrance assets was completed on 2 July 2012. On 20 August 2012 a subsidiary of GET, MyFerryLink SAS, recommenced the ferry service with the three vessels acquired from SeaFrance. SCOP operated the service under contract with MyFerryLink (or MFL). Between 80% and 90% of those employed in the service, whether on board or ashore, were former SeaFrance employees, although because MFL ran three ships instead of four and at manning levels lower than those of SeaFrance, this accounted for a smaller proportion of those who had been made redundant. The reference to the Competition Commission and the Competition and Markets Authority On 29 October 2012, the Office of Fair Trading referred the acquisition of the SeaFrance assets to the Competition Commission under the legislation then in force. The Commission reported on 6 June 2013 that a relevant merger situation existed which could be expected substantially to lessen competition in the market for ferry services across the Channel. The Commission considered that the question whether the assets acquired constituted an enterprise depended on which assets of the enterprise could be said to constitute the activities or part of the activities of its business. For some businesses the activities are enabled by physical assets alone. In others, such as skilled service industries, key staff may constitute an enterprise (paragraph 4.10). The Commission considered that the enterprise of SeaFrance was constituted essentially by the combination of the vessels, the employees and to a limited extent the brand and goodwill. It approached the acquisition of these three classes of asset on the footing that the extent of the co operation between GET and SCOP made it appropriate to treat them together as associated persons for the purpose of section 127 of the Act, and thus as a single acquirer of all three classes of asset. The Commission thought that the hiatus in SeaFrances operations before the acquisition by GET and SCOP was of some importance, but was outweighed by the indications of continuity. In paragraph 7 of its summary, the Commission explained its decision on the jurisdictional condition as follows: We considered whether the transaction was a relevant merger situation within the meaning of the Enterprise Act 2002 (the Act), in particular whether the transaction, as structured, meant that an enterprise had been acquired. Our assessment turned on the ease and speed with which the Vessels were put back into operation; the fact that GET and the SCOP acted together to secure control of the Vessels and other assets and/or that GET had material influence over the SCOP; the fact that a large proportion of the staff provided by the SCOP to run the MFL service were previously employed by SeaFrance; and the fact that GETs bid had assigned some value to the brand and goodwill. We concluded that, in the context of the particular industry concerned, these elements met the statutory definition of an enterprise, and constituted the activities, or part of the activities, of a business. In the light of the subsequent course of the proceedings, it should be noted that the Commission made only brief and oblique reference to PSE3. They simply remarked (paragraph 3.29) that it was public knowledge in France that under the terms of the liquidation agreed between SeaFrances owner (SNCF), the court and the SCOP, the SCOP would receive an indemnity of 25,000 for each SeaFrance employee that it employed. GET and SCOP challenged this part of the decision before the Competition Appeal Tribunal (CAT), along with other parts which are no longer relevant. The CAT gave judgment on 4 December 2013. This judgment has been referred to in these proceedings as Eurotunnel I [2013] CAT 30, and I shall follow the same convention. At paras 105 106, the CAT set out the principle on which the acquisition of an enterprise fell to be distinguished from an acquisition of bare assets: 105. The key to distinguishing between bare assets and an enterprise lies in: (a) Defining or describing exactly what, over and above bare assets, the acquiring entity obtained; and (b) Asking whether and if so how this placed the acquiring entity in a different position than if it had simply gone out into the market and acquired the assets. The question, then, is whether this difference is capable of constituting what would otherwise be bare assets into something that may properly be described as the activities of a business. Inevitably, this is a question of fact and degree, and there will be no single criterion giving a clear answer. However, if a guiding principle is sought, then we consider that it lies in an understanding of what an enterprise the activities or part of the activities of a business does. An enterprise takes inputs (assets of all forms) and by combining them transforms those inputs into outputs that are provided for gain or reward. It thereby also may generate intangible but valuable assets such as know how or goodwill. It is in this combination of assets that the essence of an enterprise lies. In those cases where the acquiring entity takes over the business of the acquired entity, the answer will be self evident: the same enterprise is simply continuing, albeit under different ownership or control. The difficult case arises where the combination of assets is fractured, such that the assets are no longer, or no longer to the same extent, being used in combination. This case is a particularly good one, where what was clearly once an enterprise was wound down: the difficult question is whether, even though the business of SeaFrance had been wound down to a very considerable extent, there still remained the embers of an enterprise. 106. In this context, it is necessary to make two points: (a) First, it is perfectly possible for an enterprise to wind down, and to wind down to such an extent that it ceases to be an enterprise. The mere fact that in the past the activities of a business were being carried on by an entity does not necessarily mean that, as at the time of the merger, that entity was an enterprise. Of course, it is also important to recognise that some businesses (eg those involved in tourism) trade for some periods and not for others (eg during the low season). Such a hiatus does not preclude the existence of an enterprise. Continuous trading is not essential. (b) Secondly, the fact that the acquiring entity emulates the business of the acquired entity, and even uses that entitys assets, does not necessarily mean that the acquiring entity has acquired an enterprise. As regards the question of whether a relevant merger situation exists, the statutory test is not whether the acquiring entity is carrying out the same activity that was once carried out by the acquired entity, even with the same assets. The statutory test is not satisfied if the acquiring entity reconstructs a business that was once conducted by a different entity, even if the assets of that entity were used to do so. The statutory test in section 26(1) turns on two enterprises ceasing to be distinct because they are brought under common ownership or common control. It is critical that there are two enterprises, not one enterprise (the acquiring enterprise) and a collection of assets. The CAT expressed some doubt about whether the transaction as described by the Commission amounted to any more than an acquisition of bare assets. The reason for its doubt was that the CAT regarded the transfer of the employees as a critical part of the Commissions analysis. But it found no evidence in the Commissions report to show that what had happened amounted to a transfer of the employees, as opposed to their mere re engagement. Referring to the redundancies of January 2012, the CAT remarked that on the face of the Commissions analysis the employees contracts of employment were terminated with no thought as to how they might be employed in the future (para 115). But they pointed to the potential significance of the inducement payments of 25,000 per ex SeaFrance employee, to which the Commission had briefly referred at paragraph 3.29 of its report (quoted above), and noted that this might, if fully explored, provide the necessary link between their employment by SeaFrance and their re employment by SCOP. It also observed that the Commission had failed to explain how the maintenance of the vessels in hot lay up and the employment of ex SeaFrance crews had contributed to the ability of the purchaser to resume the service. It therefore remitted the matter to the Commission so that it could address these points. The reference was subsequently taken over by the Competition and Markets Authority when the functions of the Office of Fair Trading and the Commission were transferred to the Authority on 1 April 2014. On 27 June 2014 the Authority issued its decision on the remittal. The Authority reiterated the conclusion of the Commission that a relevant merger situation existed. At paragraph 2.12, it observed: In making a judgment as to whether or not the acquisition by GET/SCOP of certain SeaFrance assets has resulted in enterprises ceasing to be distinct under the Act, we have had regard to the substance of the arrangements rather than merely their legal form. We did not find that one single factor was determinative in reaching our conclusion; instead we based this on the totality of all the relevant considerations, taking into account the nature of the industry and the particular characteristics of the assets that were acquired (as well as those that were not acquired) in that context. The substance of this report is specifically focused on what we understand the CAT asked us to address. The Authoritys report dealt in detail with the history of the successive attempts to save or sell the business after it had been put into administration in April 2010. In particular it described PSE3 and the role that it had played in the liquidation of SeaFrance, in the dismissal of the employees and in the courts decision to accept GETs bid. The Authority found that the object of PSE3 and the court procedures for the sale of the assets was to achieve some form of business continuity: while various transactions involving one or both of the parties were considered, they all had the aim of continuing SeaFrances activities in some form and providing employment to SeaFrance employees. We noted that many of those involved in the various stages of the sale process, including the liquidator and the French Court, sought to ensure the re employment of ex SeaFrance staff in the Dover Calais region, preferably on the SeaFrance vessels. One reflection of this is the successful negotiation by the SeaFrance works council of an indemnity payment funded by SNCF which was substantially higher in the event that the ex SeaFrance staff were re employed on the SeaFrance vessels used in a similar operation and which ultimately provided the SCOP with a substantial amount of working capital. (para 3.49) The Commission concluded: Overall, we consider that a review of the background to the transaction shows that there is considerable continuity and momentum between the time of SeaFrances operation of the Dover Calais ferry and the commencement of MFLs operation of the same ferries on that route involving ex SeaFrance employees. This is not a situation where a collection of assets (used at some point in the past to carry on a business activity) comes to the market, and a buyer is successful in acquiring them, and then uses them to set up a business similar to the one for which the assets were originally used. For reasons set out above, the circumstances of this case are fundamentally different. (para 3.54) Accordingly, the Commission rejected the suggestion of the CAT that the employees had been dismissed with no thought as to how they might be employed in the future: The indemnity that SNCF SeaFrances parent company at the time agreed to pay created a strong incentive for ex SeaFrance employees to be employed on the SeaFrance Berlioz, SeaFrance Rodin and SeaFrance Nord Pas de Calais in similar operations to those of SeaFrance. It creates a link between the vessels and the employees and it was aimed at ensuring, and ultimately did ensure, to the extent possible , that a significant number of employees transferred from SeaFrance to the operator of the vessels. We consider that this shows that a large proportion of the SeaFrance workforce effectively transferred from SeaFrance to the SCOP. (para 3.107) Turning to the CATs criticism that the Commission had failed to explain how the hot lay up and the continuity of personnel had contributed to the prompt resumption of the service after the acquisition by GET, the Authority pointed out that the vessels were efficient modern vessels specifically designed to operate on the Dover Calais route, and of a size and configuration designed to permit economies of scale. They were not readily replaceable by other, comparable vessels. Their maintenance in hot lay up was the cheapest and most efficient way of enabling them to be brought back into service in the shortest possible time. In addition, the availability of ex SeaFrance crews already trained to operate these vessels was a material advantage enabling a purchaser to restart operations quickly. These points were supported by an extensive analysis of the alternative ways in which the ferry service might have been resumed by another entity after the liquidation of SeaFrance. At paras 4.19 4.20, the Authority expressed its conclusions as follows: 4.19 We therefore conclude that: The combination of acquired assets (in particular, but not limited to, the vessels and employees) means that what was acquired was more than a bare asset in that it enabled the acquirer to establish ferry operations, more quickly, more easily, more cheaply and with less risk than if the relevant assets had been otherwise acquired in the market. Although, in light of the period of inactivity, GET/SCOP did not acquire the SeaFrance assets as a going concern, in reality they obtained much of the benefit of so acquiring them. That is because, in our view, the commercial operability and coherence of the assets used by SeaFrance for the Dover Calais ferry service was actively maintained, and thus impairment was minimised, during the period of inactivity. The result of the combination of steps taken in relation to the vessels and the staff was that substantially the same business activities as had previously been undertaken by SeaFrance were able to be, and were in fact, resumed within a very short period of time following the acquisition. The intention, for good and understandable commercial and employment reasons, was to seek to preserve the former business or something as closely approximating to it as possible. That intention was achieved. Moreover, GET was significantly motivated to acquire the assets that it did by the advantages of continuity (and the consequent ability to resume substantially the same operations as had previously been undertaken by SeaFrance on the Dover Calais route) that those steps had preserved. 4.20 We conclude that the collection of tangible and intangible assets (including the transferred ex SeaFrance employees) that GET/SCOP acquired meets the legal definition of an enterprise in that together they constitute the activities or part of the activities of a business. There was then a further appeal to the CAT, which gave judgment on 9 January 2015. Like the parties, I shall call this Eurotunnel II [2015] CAT 1. It is unnecessary to summarise its reasoning at any length. The CAT reviewed the findings of the Commission and the Authority in the two reports and held that on those findings the Authority had been entitled to reach the conclusion it did. The decision of the Court of Appeal SCOP appealed from the decision in Eurotunnel II to the Court of Appeal. GET did not appeal. In the Court of Appeal, the leading judgment for the majority was delivered by Sir Colin Rimer, with whom Tomlinson LJ agreed. Sir Colin thought (para 167) that the definition of an enterprise as meaning the activities or part of the activities of a business showed that Parliaments intention was focused only on the case in which the acquiring entity takes over another business as a going concern. He thought it possible that activities could be regarded as continuing even during a period when they were not being carried on, for example where a seasonal business traded from May to October and was sold in December, or where a scheme was devised for the suspension of the activities before the transaction with a view to evading the operation of the Act. But the present case was different because when SeaFrance was ordered finally to cease its trading activities in January 2012 there was no prospect of their being resumed in the future. Their continuation was judicially prohibited, SeaFrances ferry activities were therefore at an end and it was anyway incapable of carrying them on. All that remained to be done was for the liquidator to dismiss its employees as redundant, dispose of its assets and, presumably, then to give SeaFrance its final quietus under French law. (para 158) However, Sir Colin did not decide the case on this ground, because the CAT had held in Eurotunnel I that even in these circumstances a hiatus in the activities of a business might be consistent with the subsistence of the enterprise. That judgment had not been appealed, and the correctness of the guidance given in it had not been challenged. He therefore confined himself to the application of the CATs test to the facts. Sir Colin held that the facts found by the Commission and the Authority did not disclose that GET and SCOP had acquired the enterprise of SeaFrance. He approached the matter on the footing, which was common ground before us, that the Authoritys conclusion could be supported only if GET and SCOP had acquired both the vessels and their crews. They had unquestionably acquired the vessels, but had they acquired the crews? Sir Colin thought not. In his view, they would in all probability have acquired the crews if the SeaFrance assets had been acquired from the liquidator before 9 January 2012 when the French Court directed the company to cease operations and to dismiss most of the employees. But that event had made all the difference. It finally and irreversibly brought the relevant activities of SeaFrance to an end, together with the relationship between SeaFrance and its employees. GET and SCOP had merely started up a similar business after 2 July 2012 by hiring ex SeaFrance employees whose services had become available on the market in consequence of their redundancy. His reasons are encapsulated in paras 198 200 of his judgment: 198. The effect of the court order of 9 January 2012 was that the activities in which the workforce had formerly been engaged were finally to cease and that the employees must be dismissed within 15 days as redundant, as they were. At the point of dismissal, the employees connections with SeaFrance were finally severed. It is also true that, at such point, PSE3 was already in place. It was a statutory job saving plan directed at assisting the dismissed employees to find re employment elsewhere than with SeaFrance; and paragraph 3.3.3, its most generous provision, of course raised a high likelihood that they, or most of them, would obtain re employment with any purchaser of the SeaFrance vessels which proposed to use them for ferry operations similar to SeaFrances. 199. PSE3 was, however, in no manner directed at preserving any connection between the employees and SeaFrance, let alone its activities (which had ceased), nor did it do so. In the event, following the successful GET bid, many of the former employees were later re engaged by the SCOP. There is no sustainable basis for any conclusion that such engagements by SCOP resulted from, or were referable to, or were explained by any transfer, or by what was said to be in effect a transfer, by SeaFrance to GET/SCOP as part of the GET/SCOP acquisition. That is not what happened as a matter of law or according to any rational assessment of the facts or by reference to the supposed reality of the situation. Nor would any objective observer of the scene at the time that PSE3 was adopted have considered that if, at some future stage, there were to be a mass re employment of the ex employees by a purchaser of the SeaFrance vessels, such re employment could at that point be characterised as, in reality, a transfer of the employees to the purchaser by SeaFrance together with the purchased vessels. They would foresee such re employment as being simply that which it was, namely a true re employment of employees whose services were available for hire in the market, albeit a re employment incentivised by the terms of PSE3. 200. The CMAs different finding that upon such mass re employment there was in reality a transfer, or a transfer in effect by SeaFrance, is one that I therefore regard as irrationally wrong. It is one that could not properly have been made. Arden LJ dissented, essentially on the ground that a hiatus in the business activities of the enterprise being acquired was not legally decisive, and that in those circumstances its significance was a matter of fact and degree, for evaluation by the Authority as the tribunal of fact. The present appeal On 31 July 2015, shortly after this court gave permission for the present appeal, SCOP went into liquidation. Its liquidator subsequently indicated that it did not propose to participate in the appeal. In the absence of the respondent we have been greatly assisted by Ms Kelyn Bacon QC, who appeared as Advocate to the Court, and by Mr Richard Gordon QC who appeared for GET as Intervener. Their participation, together with the able submissions of Ms Demetriou QC for the Authority, enabled the issues to be fully examined before us. The approach to construction It is necessary to deal first with a threshold issue. To what extent should the question whether a relevant merger situation exists be treated as lying within the specialised expertise of the Competition and Markets Authority? I hope that it will not be thought disrespectful of the learning deployed on this issue, if I deal with it shortly. Under sections 22(1) and 35(1) the existence of a relevant merger situation is a precondition of the Authoritys jurisdiction to proceed with a reference. Section 35 requires the Authority to decide in the first instance whether such a situation has been created, subject to review by the CAT and appeal from the CAT to the Court of Appeal. But the test for determining what are the relevant activities whose absorption by another enterprise founds the jurisdiction of the Authority is a question of law. It depends on the construction of the Enterprise Act. Of course, the process of construction must necessarily be informed by the purpose of these provisions, and to that extent the economic implications of different interpretations may be relevant. Moreover, once the test has been identified its application to particular facts may call for expert economic judgments by the tribunal of fact, in this case the Authority. But otherwise the Authoritys expertise and the specialised nature of its functions do not clothe it with any wider power to determine its statutory jurisdiction than is enjoyed by other administrative decision makers, and its conclusions on the point are entitled to no greater deference on a review or appeal. The legal relevance of a cessation of trading The starting point is the relevance (if any) of the fact that SeaFrance was not actively trading on the date of the transaction by which GET acquired its assets. It was common ground before us, as it had been in the Court of Appeal, that the merger control provisions of the Act were not limited to the acquisition of a business as a going concern. Therefore, it did not necessarily follow from the cessation of the ferry service that SeaFrance had no activities to be acquired in July 2012. Sir Colin Rimer expressed doubts about this, at any rate as a general proposition. But I think that it was correct, and that it is of some importance to understand why. Under section 23(2)(a), what must cease to be distinct in order to create a relevant merger situation are the two enterprises of SeaFrance and GET, ie their business activities. The reason for defining an enterprise by reference to its activities is to show that the merger control regime depends on the merger of business activities, as opposed to the merger of the entities that carry them on. It is no part of the purpose of the definition of an enterprise to fix the time at which the relevant enterprise must actually be performing these activities. Nor is there any other provision of the Act that requires the activities to have been performed at any particular time. Part 3 of the Act does contain provisions relating to timing, but they are limited to determining the latest time after the enterprises have ceased to be distinct when the matter may be referred to the Authority for assessment and possible action. The result is that the possession of relevant activities is simply a descriptive characteristic of an enterprise. It may be characteristic of the enterprise notwithstanding that the activities are not actually being performed at the moment of the transaction, provided that there still exists the capacity to carry them on as part of the same business, whether in the hands of the existing proprietor or of someone else. That is why Sir Colin Rimer was right in his instinctive view that the sale of a seasonal business out of season would in principle be subject to statutory merger control. This is consistent with the purpose of Part 3 of the Act. Merger control is the principal weapon in the laws armoury for pre empting concentrations liable adversely to affect the structure of markets before they do so. Whether an enterprises activities are being carried on at the moment when it ceases to be distinct is likely to depend on adventitious factors, such as the timing of the execution of documents, the rhythm of the business, and so on. It does not necessarily tell us anything about the nature of the business. If the merger control regime is incapable of applying to anti competitive concentrations where the relevant activities are not actually being carried on at the moment when the concentration is achieved, then the result will be a significant limitation of the scope and efficacy of the statutory scheme. That limitation cannot be related to the economic rationale of the legislation, or to any discernible purpose which the legislature can sensibly be thought to have had in mind. The point may be illustrated by considering two situations in addition to the case of the seasonal business which has already been mentioned. One is the familiar situation, one of the commonest occasions for a merger, where a business goes into liquidation and is temporarily mothballed by the liquidator in the hope that a buyer can be found for the whole concern. It would be surprising if the mere fact of the suspension of its business were to remove the possibility of merger control, regardless of the adverse effect of a subsequent purchase on the competitive structure of the relevant market. The other example is the case where the proprietor of a business suspends its activities shortly before selling it to a competitor, in a deliberate attempt to avoid statutory merger control. This is not particularly common, but only because the practice of the competition authorities is to treat a temporary suspension of a firms business activities as inconclusive. The paradigm case is the decision of the Monopolies and Mergers Commission in AAH Holdings Plc and Medicopharma NV (1992), which involved a scheme of just this kind. The Commission rejected the suggestion that the scheme was a sham. It nevertheless considered that the relevant merger situation existed. Once a transaction of this kind is recognised as genuine, it is not easy to see how the intent to avoid the Act could make any difference to the analysis. Either the suspension of the activities did avoid the operation of the Act or it did not. If it did not, it must be by reference to some principle which declines to treat a suspension as decisive whatever the motive for it. Common control of an enterprise: the test The next question is in what circumstances may a firm be said to acquire an enterprise whose activities are no longer actively being carried on. Of course, a hiatus in those activities before the acquisition will usually be relevant even if it is not decisive. But if it is not decisive, its significance must necessarily vary according to its duration, its economic impact, and all the other relevant surrounding circumstances. Under section 106 of the Enterprise Act, the Authority is required to publish general advice and information about (among other things) the making and consideration of references under section 22. In January 2014, it published Mergers: Guidance on the CMAs Jurisdiction and Procedure. In the relevant respects, this broadly corresponds to the guidance formerly issued by the Office of Fair Trading. The implications of a cessation of business are discussed at paras 4.10 4.11: 4.10 The fact that a target business may no longer be actively trading does not in itself prevent it from being an enterprise for the purposes of the Act. In such cases, while the relevant criteria may vary according to the particular circumstances of a case, the CMA will consider, for example: the period of time elapsed since the business was last trading; the extent and cost of the actions that would be required in order to reactivate the business as a trading entity; the extent to which customers would regard the acquiring business as, in substance, continuing from the acquired business; and whether, despite the fact that the business is not trading, goodwill or other benefits beyond the physical assets and/or site themselves could be said to be attached to the business and part of the sale. 4.11 None of these factors, individually, is likely to be conclusive. The CMA will assess all relevant circumstances (including whether there is evidence that the closure of the business was designed to avoid merger control), with a view to determining whether the target business constitutes an enterprise under the Act. This is not so much a test as a list of potentially relevant factors. So what is the underlying principle? The first point to be made is that in applying a scheme of economic regulation of this kind, the Authority is necessarily concerned with the economic substance of relevant transactions and not just with their legal form. Any situation in which an enterprise (call it the target enterprise) ceases to be distinct will involve a transfer of control over assets, whether tangible or intangible. The phrase bare assets does not appear in the Act, and simply as a matter of language may not convey much. But it is a useful concept when it comes to analysing the purpose of this legislation. The object of distinguishing between bare assets and assets amounting to an enterprise is to prevent the merger control regime from capturing an acquisition of assets which simply serve as factors of production in a new enterprise or as a means of achieving organic growth. It is designed to distinguish a case in which the acquirer acquires a business exploiting a combination of assets and a case where he acquires no more than he might have acquired by going into the market and buying equipment, hiring employees, and so forth separately. In the latter case, the fact that the equipment or the employees were previously employed in the target enterprise is irrelevant. He has got no more than he would have done if they had not been. So if the assets of which he acquires control are to be regarded as constituting an enterprise, (i) they must give him more than he might have acquired by going into the market and buying factors of production, and (ii) the extra must be attributable to the fact that the assets were previously employed in combination in the activities of the target enterprise. Plainly, the longer the interval between a target enterprises cessation of trading and the acquisition of control of its assets, the less likely it is that either criterion will be satisfied. The alternative is to conclude that the target enterprise has ceased to exist because its business is no longer characterised by any activities capable of being continued by someone else. Ultimately the question turns on what Ms Bacon, rightly to my mind, called economic continuity. This is substantially the principle stated at paras 105 106 of the CATs judgment in Eurotunnel I, which I have set out above. Put crudely, it depends on whether at the time of the acquisition one can still say that economically the whole is greater than the sum of its parts. While I would wish to guard against any attempt to state a single governing test to answer every case, I consider that the CATs statement of the principle is correct as applied to the generality of cases, including this one. Irrationality The Authority directed itself according to the principle set out by the CAT in Eurotunnel I, which I have held to be correct. Once that point is reached, the application of the principle to the facts is a matter of expert evaluation. In these circumstances, the Authoritys evaluation could not properly be discarded by a court of review unless it was irrational. Sir Colin Rimer found that it was. He considered that the Authority had erred in principle because the facts which it had found did not logically lead to the conclusion that the employees were transferred from SeaFrance to the business operated by GET and SCOP after 2 July 2012. That was also the essence of the case made by Ms Bacon and Mr Gordon. I think that this criticism is unjustified. GET and SCOP acquired substantially all the assets of SeaFrance, including the trademarks and goodwill. The assets included ships specially designed for the particular route, which had been continuously maintained by the liquidator in a condition which enabled the service to be resumed significantly faster and at lower cost and commercial risk than would have been the case if GET had acquired suitable ships elsewhere. The arrangement with SCOP enabled the service to be resumed with substantially the same personnel, again with a substantial advantage in terms of time and operational efficiency. Moreover, each employee came with a dowry of 25,000 paid by SeaFrances parent for the specific purpose of encouraging the re employment of its former crews and shore staff. The payments created a link between the vessels and the employees, and between the old employees and the new. The Authoritys evaluation was that in these circumstances, there was considerable continuity and momentum between the activities carried on by SeaFrance before 16 November 2011 and those carried on with its assets after 2 July 2012. Although GET and SCOP did not acquire the ferry business as a going concern, they did acquire much of the benefit of doing so. This was because the commercial operability and coherence of the assets used by SeaFrance for the Dover Calais ferry service was actively maintained, and thus impairment was minimised, during the period of inactivity paragraph 26(b). These conclusions seem to me to follow logically from the Authoritys findings. The Authoritys conclusion that there still remained what the CAT had called the embers of an enterprise capable of passing under the control of GET and SCOP, was unimpeachable. The essential reason why Sir Colin Rimer thought otherwise was that in his view the order of the French Court on 9 January 2012 directing the dismissal of the employees terminated the link between them and SeaFrance. This, he thought, meant that their future re employment by GET could not amount to a transfer, even when the arrangements embodied in PSE3 were taken into account. In point of form, this was so. But as a matter of economic substance it was not. True it is that the employees were not directly transferred from SeaFrance to SCOP. They were re employed by SCOP after some months in which they had been unemployed or had found other work. However, the question was not whether the dismissals severed the connection between the employees and SeaFrance. The question was whether it severed their connection with a business that could be acquired and operated by someone else. One may test this by asking how the position would have differed if instead of making the employees redundant SeaFrance had kept them on but sent them on gardening leave. The result would have been legally different but its economic implications for what GET and SCOP acquired on 2 July 2012 would have been the same. It is in this context that one must view the impact of PSE3. The connection between the employees and the business was not severed by the court ordered redundancies, because the court directed the redundancies on the express basis, required by French law, that a plan would be prepared within 15 days to safeguard their future employment. PSE3, the plan which emerged, provided a significant financial inducement for any acquirer of the ships to re employ their former crews and shore staff to operate them in the same service as before. The Authority regarded this as a significant pointer to the economic continuity of the business. I think that they were right to do so, but it is enough for present purposes to say that it was a conclusion that they were entitled to reach. This court has recently emphasised the caution which is required before an appellate court can be justified in overturning the economic judgments of an expert tribunal such as the Authority and the CAT: British Telecommunications Plc v Telefnica and others [2014] UKSC 42; [2014] Bus LR 765; [2014] 4 All ER 907 at paras 46, 51. This is a particularly important consideration in merger cases, where even with expedited hearings successive appeals are a source of additional uncertainty and delay which is liable to unsettle markets and damage the prospects of the businesses involved. Concepts such as the economic continuity between the businesses carried on by successive firms call for difficult and complex evaluations of a wide range of factors. They are particularly sensitive to the relative weight which the tribunal of fact attaches to them. Such questions cannot usually be reduced to simple points of principle capable of analysis in purely legal or formal terms. In this case, the majority of the Court of Appeal sought to reduce the question of economic continuity to the single question whether the legal effect of the decisions of the French Court in January 2012 was definitively to terminate the employment relationship between SeaFrance and its crews. In my opinion this led them to take an unduly formal approach to the issue before them, and to discount the depth of economic analysis which underlay the Authoritys original conclusion. Conclusion For these reasons, which substantially correspond to those given by Arden LJ in her dissenting judgment, I would allow the appeal. |
The issue raised on this appeal and cross appeal is whether three products manufactured by the Actavis group of companies (Actavis) would infringe a patent whose proprietor is Eli Lilly & Company (Lilly), namely European Patent (UK) No 1 313 508 (the Patent), and its corresponding designations in France, Italy and Spain. This judgment was circulated in draft to the parties legal representatives in the normal way on 5 July 2017, on the basis that it would be handed down a week later. On the following day, just after midday, Actaviss solicitors emailed the Court expressing concern about the potential prejudice which their clients could suffer if they did not know of the outcome of this appeal until 12 July. Not least because publication of our decision could have an effect on the share prices of Actavis or Lilly or both of them, the Court proposed to the parties respective solicitors that we should announce our decision at once, while maintaining the intention, in accordance with this Courts usual practice, to hand down the judgment a week after circulation of the draft. This was agreed by both solicitors, and accordingly on 7 July at 11.30 am, the following announcement appeared on the Courts website: The Supreme Court allows Eli Lillys appeal and holds that Actaviss products directly infringe Eli Lillys patent in the United Kingdom, France, Italy and Spain. The Court dismisses Actaviss cross appeal on the basis that if its products did not directly infringe, they would indirectly infringe to the extent held by the Court of Appeal. Accordingly, these are technically the reasons for those conclusions. The factual and technical background The factual background Pemetrexed is a chemical which has been known for some time to have therapeutic effects on cancerous tumours. However, when used for that purpose on its own, pemetrexed can often have seriously damaging, sometimes even fatal, side effects. Accordingly, its use as an anti cancer drug was effectively precluded in practice. The essential disclosure of the Patent was that the damaging side effects could largely be avoided if a compound called pemetrexed disodium was administered together with vitamin B12. This has enabled pemetrexed disodium to be used for treatment in the form of a medicament which includes the vitamin. Such a medicament has been successfully marketed, under the brand name Alimta, by Lilly since 2004. The Patent primarily claims the use of pemetrexed disodium in the manufacture of a medicament for use in combination with vitamin B12 (and, optionally, folic acid) for the treatment of cancer. Pemetrexed itself is a member of a class of chemicals known as antifolates, and its molecular structure is shown below, with C, N, O and H being respectively the chemical symbols for carbon, nitrogen, oxygen and hydrogen; and the unallocated points on the chains and the rings being carbon. The presence of the two CO2H units results in pemetrexed being an acid (hence it is also known as pemetrexed diacid), or as it is sometimes called, a free acid. When pemetrexed is dissolved in water, the hydrogens in those two units separate from the rest of the molecule as positively charged entities, protons, and the rest of the molecule becomes a negatively charged entity called an anion. The structure of pemetrexed disodium is similar except that, instead of the two CO2H units, it has two CO2Na units (Na being the symbol for sodium). Pemetrexed disodium dissolves in water, where the two sodiums separate from the rest of the molecule as positively charged entities called cations, and the rest of the molecule becomes an anion. Because it is the pemetrexed anion which is of interest, the sodium cation is often referred to as a counter ion. A substance such as pemetrexed disodium, where the acidic hydrogens have been replaced, is known chemically as a salt. Although one might have thought that the actual invention should have been characterised as a disclosure that pemetrexed could be administered safely if it was combined in a medicament with vitamin B12, the claimed invention in the Patent is, as mentioned in para 4 above, the manufacture of such a medicament. This formulation was required by the then prevailing law contained in article 52(4) of the European Patent Convention 1973 (EPC 1973), which prohibited from patentability any method of treatment of humans or animals. This led to inventions which otherwise might have been expected to be expressed as being new therapeutic treatments being cast as manufacturing claims. Such claims are known as Swiss form claims, and they were illuminatingly discussed by Kitchin J in Ranbaxy (UK) Ltd v Astrazeneca AB [2011] FSR 45, paras 42 to 60. As he explained, the prohibition was substantially modified in article 53 in the European Patent Convention 2000 (EPC 2000), but that modification had not come into force when Lilly applied for the Patent. Actaviss proposed products involve pemetrexed compounds being used together with vitamin B12 for cancer treatment. However, rather than pemetrexed disodium, the active ingredient in those products (the Actavis products) is (a) pemetrexed diacid, (b) pemetrexed ditromethamine, or (c) pemetrexed dipotassium. In other words, rather than including the disodium salt referred to in claim 1 of the Patent, the Actavis products include as the active ingredient (a) pemetrexed itself (ie the free acid), or pemetrexed with the hydrogens on the two CO2H units replaced by (b) tromethamine, or (c) potassium. Actavis contend that, because they intend to use the Actavis products which do not include pemetrexed disodium, the claims of the Patent, which are expressed as involving the use of pemetrexed disodium, would not be infringed. By contrast, Lilly contends that there would be either direct or indirect infringement of the Patent if Actavis launch any of the Actavis products on the market in the UK or in France, Italy, or Spain. The allegation of direct infringement is based simply on the proposition that marketing or use of the Actavis products would infringe the Patent; indirect infringement is said to arise because pemetrexed disodium is claimed to be involved in the preparation of the Actavis products before they are administered. After a four day trial, Arnold J decided that none of the Actavis products would directly or indirectly infringe the Patent in the UK or in France, Italy or Spain [2015] Bus LR 154; [2015] RPC 6. The Court of Appeal allowed Lillys appeal to the limited extent of holding that there would be indirect infringement in the four jurisdictions, but they agreed with the Judge that there would be no direct infringement [2015] Bus LR 1068. Lilly appeals against the rejection of its case that there would be direct infringement, and Actavis cross appeal against the rejection of their case that there would be no indirect infringement. As Floyd LJ explained in the Court of Appeal, the appeal raises the issue of the correct approach under UK law (and the law of the three other states) to the interpretation of patent claims, and in particular the requirement of EPC 2000 to take account of equivalents, and also the extent to which it is permissible to make use of the prosecution history of a patent when determining its scope. The issue on the cross appeal is rather more fact specific, namely whether the application of the law of contributory infringement justifies a finding of indirect infringement in this case. It is appropriate to start by setting out the relevant provisions of the Patent and the knowledge of its assumed addressee, topics on which my account is largely taken from the clear judgment of Floyd LJ in the Court of Appeal. I will then turn to the issue of direct infringement, which involves considering the proper approach to that issue generally, and also the relevance of the prosecution history. I will then consider the position in the three other states and finally I will address the issue of indirect infringement. The specification and claims in the Patent The Patent is entitled Combination containing an antifolate and methylmalonic acid lowering agent, and it has a claimed priority date of 30 June 2000. The specification begins at para [0001] by stating that [p]otentially, life threatening toxicity remains a major limitation to the optimal administration of antifolates. It then explains at para [0002] that antifolates work by inhibiting anti folate requiring enzymes by competing with reduced folates for binding sites on those enzymes. The specification identifies several antifolate drugs as being in development, including Lillys branded product Alimta. The specification then explains at para [0003] that a limitation to the development of these drugs is that they may be associated with substantial toxicity, including mortality, for some patients. These toxicity effects had led to the abandonment of the development of some antifolates. In para [0004] the specification explains that previous work had been done on the use of folic acid as a treatment for toxicity in this area. It also records work on vitamin B12 as a predictor of cytotoxic events. The specification then states in para [0005]: Surprisingly and unexpectedly, we have now discovered that certain toxic effects such as mortality and non hematologic events, such as skin rashes and fatigue, caused by antifolates, as a class, can be significantly reduced by the presence of a methylmalonic acid lowering agent as vitamin B12, without adverse adversely affecting therapeutic efficacy. The present invention thus generally relates to a use in the manufacture of a medicament for improving the therapeutic utility of antifolate drugs by administering to the host undergoing treatment with a methylmalonic acid lowering agent as vitamin B12. Para [0006] of the specification continues: Additionally, we have discovered that the combination of a methylmalonic acid lowering agent as vitamin B12 and folic acid synergistically reduces the toxic events associated with the administration of antifolate drugs. Although, the treatment and prevention of cardiovascular disease with folic acid in combination with vitamin B12 is known, the use of the combination for the treatment of toxicity associated with the administration of antifolate drugs was unknown heretofore. These early, general statements are made in relation to antifolates as a class. However, at para [0010] the specification says, in what is known as a consistory clause, that the invention: specifically provides the use of the antifolate pemetrexed disodium in the manufacture of a medicament for use in combination therapy for inhibiting tumour growth in mammals wherein said medicament is to be administered in combination with a methylmalonic acid lowering agent selected from vitamin B12 and pharmaceutical derivatives thereof. Having referred specifically to pemetrexed disodium, the specification reverts to generality at para [0016], where it states: The current invention concerns the discovery that administration of a methylmalonic acid lowering agent such as vitamin B12 or a pharmaceutical derivative thereof, in combination with an antifolate drug such as pemetrexed disodium reduces the toxicity of the said antifolate drug. Para [0022] contains a definition: The terms antifolate and antifolate drug generally refer to a chemical compound which inhibits at least one key folate requiring enzyme of the thymidine or purine biosynthetic pathways . by competing with reduced folates for binding sites of these enzymes. The antifolate or antifolate drug for use in this invention is Pemetrexed Disodium (ALIMTA), as manufactured by Eli Lilly & Co. The invention is then illustrated by reference to a number of examples relating to animal and human tests, in which the only antifolate used is pemetrexed disodium. At para [0035] the specification states that animals were treated with pemetrexed disodium (ALIMTA) (100 mg/kg or 150 mg/kg) once daily by intraperitoneal injection alone or along with folic acid. The specification also indicates at para [0044] that, in a typical clinical evaluation using cancer patients, the antifolate is to be administered in four doses over a two week period by rapid intravenous injection. Turning to the claims, it is only necessary for present purposes to refer to claims 1 and 12, which are in these terms: 1. Use of pemetrexed disodium in the manufacture of a medicament for use in combination therapy for inhibiting tumour growth in mammals wherein said medicament is to be administered in combination with vitamin B12 or a pharmaceutical derivative thereof [which it then specifies]. 12. A product containing pemetrexed disodium, vitamin B12 or a pharmaceutical derivative thereof said pharmaceutical derivative [which it again specifies], and, optionally, a folic binding protein binding agent selected from [a specified group of chemicals including folic acid], as a combined preparation for the simultaneous, separate or sequential use in inhibiting tumour growth. The notional addressee of the Patent A patent is interpreted on the basis that it is addressed to a person or group of persons who is or are likely to have a practical interest in the claimed invention, ie through the eyes of a person or persons skilled in the article There is now no challenge to the Judges conclusion that the notional addressee of the Patent would be a group consisting of an oncologist and a chemist, a conclusion upheld by the Court of Appeal. The Judge found that the common general knowledge of an oncologist as at the relevant time, 2001/2002, included the following: i) Antifolates were used in cancer chemotherapy, but their use caused toxic side effects which it would be desirable to avoid or reduce. ii) Pemetrexed was the subject of clinical trials for use in chemotherapy, and it targeted multiple enzymes and was administered intravenously. iii) The only form of pemetrexed which had been shown to be effective and safe to any extent was pemetrexed disodium, which was manufactured by Lilly under the trade mark Alimta. iv) The characteristics of both vitamin B12 and folic acid were well understood, and it was well known that there were many different safe and effective forms of both available. The Judge also concluded that oncologists did not think about drugs such as pemetrexed in their ionic form, nor did they consider issues regarding the choice of counter ion or the effect, if any, of counter ions on the efficacy, safety or other properties of the drug. This was the province of the chemist and, because the properties of different salt forms and free acids were difficult to predict, a chemist would need to address any such issue by conducting experiments. The Judge made the following findings as to the common general knowledge of a chemist as at 2001/2002: i) Where a drug is or is based on an acid, different salts of the parent acid can be formed by reacting it with a complementary base or acid. The salt will often have different properties from the parent acid, and different salts will often have different properties from each other. So, salt screening is a routine but important exercise in determining the most suitable form of a drug. ii) The facts set out in paras 5 and 6 above. iii) Solid salts consist of the anions and cations regularly arranged in a fixed lattice structure. Because the cations and anions are present in fixed proportions and in fixed relative positions it is possible to speak meaningfully of the salt as being present in solid form. iv) When a salt is dissolved in water, the ions dissociate, forming free cations and anions in solution. Although the salt ceases to exist, it is common to refer to a salt solution or a salt in solution. v) The salt form can have a significant impact on the effectiveness of a drug in that it can modify many aspects of the drug. vi) When considering a drug for intravenous chemotherapy, the solubility of the salt form is crucial, as good solubility is an indicator of how likely it is that the drug will be absorbed in the gut. vii) But if a salt is too soluble, it cannot be made in solid form. viii) In general, there can be many dead ends and false leads when attempting to prepare salts of a parent molecule for the first time. ix) One cannot predict (a) whether one could make a particular salt form of a parent molecule, (b) what its properties would be once it was made or (c) whether it would affect the efficacy of the drug. The Judge made specific findings about a chemists state of knowledge about three types of salts and about free acids: i) Sodium was generally the preferred counter ion, and so would be first choice. Sodium salts generally were not toxic, and would be expected to be reasonably soluble, but they were not always easy to make. ii) Potassium salts were also generally soluble, but there were exceptions. There were concerns about the potential toxicity of such salts, which was particularly significant if large quantities of the drug were involved. iii) There were only a small handful of examples of tromethamine salts being used in 2001. It was known that tromethamine salts might well be too soluble, so one would not be able to make and harvest the solid form. In principle, the acidic parent molecule could be administered in the iv) form of the free acid. But it was often necessary to change from the free acid to a salt form for various reasons including solubility. Direct infringement In a nutshell, the rival contentions are these. Lilly argues that the Actavis products infringe the Patent because they are medicaments to be used as a treatment for cancer consisting of pemetrexed diacid, or a pemetrexed salt, with vitamin B12, which represents the essence of the teaching and claim of the Patent. By contrast, Actavis argues that their products do not infringe because the claims of the Patent are limited to a specific pemetrexed salt, namely pemetrexed disodium, and the Actavis products contain either pemetrexed diacid or different pemetrexed salts. The legislative context The domestic provision governing direct patent infringement is section 60(1) of the Patents Act 1977. However, section 130(7) declares that certain provisions of that Act, including section 60, are so framed as to have, as nearly as practicable, the same effects in the United Kingdom as the corresponding provisions of the European Patent Convention have in the territories to which [that Convention applies]. Accordingly, it is common ground that it is appropriate to consider the present case by reference to the EPC 2000. Article 69(1) EPC 2000 provides that [t]he extent of the protection conferred by a European patent shall be determined by the claims, although it is followed by another sentence, namely [n]evertheless, the description and drawings shall be used to interpret the claims. As a matter of ordinary language, it is quite clear that the only type of pemetrexed compound to which the Patents claims expressly extend is pemetrexed disodium. One only needs to read claim 1 and claim 12 to justify that: as a matter of ordinary language, pemetrexed disodium means that particular salt, and no other salt, let alone the free acid. If the first few words of each claim were not enough to make this good, the contrast between the specific reference to pemetrexed disodium and the wider reference to vitamin B12 or a pharmaceutical derivative thereof underlines the point. As Floyd LJ said, this conclusion is also supported by what is said in the specification eg in paras [0010] and [0022] quoted above. It is fair to say that para [0016] could be said to point the other way, but it is far too weak a basis for even arguing that the Patents claims extend, as a matter of language, to pemetrexed compounds other than pemetrexed sodium. In these circumstances, The Protocol on the Interpretation of article 69 as amended in 2000 (the Protocol) is crucial to Lillys contention that the scope of protection afforded by the Patent extends to the Actavis products. The Protocol provides: Article 1 General principles Article 69 should not be interpreted as meaning that the extent of the protection conferred by a European patent is to be understood as that defined by the strict, literal meaning of the wording used in the claims, the description and drawings being employed only for the purpose of resolving an ambiguity found in the claims. Nor should it be taken to mean that the claims serve only as a guideline and that the actual protection conferred may extend to what, from a consideration of the description and drawings by a person skilled in the art, the patent proprietor has contemplated. On the contrary, it is to be interpreted as defining a position between these extremes which combines a fair protection for the patent proprietor with a reasonable degree of legal certainty for third parties. Article 2 Equivalents For the purpose of determining the extent of protection conferred by a European patent, due account shall be taken of any element which is equivalent to an element specified in the claims. The original Protocol was agreed in 1973; the amendments made in 2000 effected very slight modifications to what is now article 1, and introduced article 2 for the first time. The drafting of the Protocol bears all the hallmarks of the product of a compromise agreement. This is unsurprising. There is an inevitable conflict between the desirability of giving an inventor an appropriate degree of protection in a particular case and the need for clarity of principle as to the extent of such protection generally; and, of course, there is an unavoidable tension between the appropriateness of giving an inventor a monopoly and the public interest in maximising competition. In addition, the EPC 2000 and the Protocol apply in many different states which have different traditions and approaches in relation to the law of patents. In that connection, as the Supreme Court observed in Schtz (UK) Ltd v Werit (UK) Ltd (Nos 1 to 3) [2013] Bus LR 565; [2013] RPC 16, para 40, complete consistency of approach between different national courts of the EPC states is not a feasible or realistic possibility at the moment, but nonetheless it is sensible for national courts at least to learn from each other and to seek to move towards, rather than away from, each others approaches. More specifically, two points appear to be clear from the Protocol. The first, which can be deduced from article 1, is that the scope of protection afforded to a patentee is not to be limited by the literal meaning of the claims. However, it is not at all clear how far a court is permitted to move away from the literal meaning. I do not consider that the last part of the first sentence of article 1 only enables the description (ie the specification) and the drawings to be taken into account when interpreting the claims, in cases where the claims would otherwise be ambiguous. Any doubt about this must be put to rest by the second and third sentences, which make it clear to my mind that that would be too narrow a reading. However, it is very hard to be confident how far they were intended to permit a court to go beyond the actual language of a claim when interpreting a claim. Secondly, it is apparent from article 2 that there is at least potentially a difference between interpreting a claim and the extent of the protection afforded by a claim, and, when considering the extent of such protection, equivalents must be taken into account, but no guidance is given as to precisely what constitutes an equivalent or how equivalents are to be taken into account. The question of how far one can go outside the wording of a claim to enable the patentee to enjoy protection against products or processes which are not within the ambit of the actual language, construed in accordance with ordinary principles of interpretation, has been considered in three significant UK cases and in a number of significant cases decided in the courts of other Convention states. The domestic case law The UK case of Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183 was decided under the previous, purely domestic, legislation, the Patents Act 1949. At pp 242 to 243, Lord Diplock deprecated the notion that there were two types of infringement, textual infringement and infringement of the pith and marrow of the invention, and said that there was a single cause of action, which involved asking the question: He continued: whether persons with practical knowledge and experience of the kind of work in which the invention was intended to be used, would understand that strict compliance with a particular descriptive word or phrase appearing in a claim was intended by the patentee to be an essential requirement of the invention so that any variant would fall outside the monopoly claimed, even though it could have no material effect upon the way the invention worked. The question, of course, does not arise where the variant would in fact have a material effect upon the way the invention worked. Nor does it arise unless at the date of publication of the specification it would be obvious to the informed reader that this was so. Where it is not obvious, in the light of then existing knowledge, the reader is entitled to assume that the patentee thought at the time of the specification that he had good reason for limiting his monopoly so strictly and had intended to do so, even though subsequent work by him or others in the field of the invention might show the limitation to have been unnecessary. It is to be answered in the negative only when it would be apparent to any reader skilled in the art that a particular descriptive word or phrase used in a claim cannot have been intended by a patentee, who was also skilled in the art, to exclude minor variants which, to the knowledge of both him and the readers to whom the patent was addressed, could have no material effect upon the way in which the invention worked. In that case, the patent was for a novel type of galvanised steel lintel, which the relevant claim described as including a rear support back plate extending vertically from a horizontal plate. The allegedly infringing article included a rear support member which was inclined between 6 degrees and 8 degrees from the vertical. Overruling the Court of Appeals decision that this meant that there was no infringement, Lord Diplock said at p 244, that it would have been: obvious to a builder familiar with ordinary building operations that the description of a lintel in the form of a weight bearing box girder of which the back plate was referred to as extending vertically from one of the two horizontal plates to join the other, could not have been intended to exclude lintels in which the back plate although not positioned at precisely 90 degree to both horizontal plates was close enough to 90 degree to make no material difference to the way the lintel worked when used in building operations. He then added this: No plausible reason has been advanced why any rational patentee should want to place so narrow a limitation on his invention. On the contrary, to do so would render his monopoly for practical purposes worthless, since any imitator could avoid it and take all the benefit of the invention by the simple expedient of positioning the back plate a degree or two from the exact vertical. A few years later, Hoffmann J (as he then was) gave judgment in Improver Corpn v Remington Consumer Products Ltd [1990] FSR 181. The case concerned a patent for a depilator, known as the Epilady, which worked by trapping hairs in a rotating coiled helical spring, and the alleged infringement worked in very much the same way save that, instead of a spring, it used a slotted rubber rod. The case had already gone on an interlocutory issue to the Court of Appeal, where it was held that Lord Diplocks approach in Catnic [1982] RPC 183 was consistent with the 1977 Act, the EPC 1973 and the Protocol as it then was see [1989] RPC 69. At [1990] FSR 181, 189, Hoffmann J suggested the following approach, largely based on his reading of the reasoning in Catnic [1982] RPC 183, 242 to 243: If the issue was whether a feature embodied in an alleged infringement which fell outside the primary, literal or a contextual meaning of a descriptive word or phrase in the claim (a variant) was nevertheless within its language as properly interpreted, the court should ask itself the following three questions: (1) Does the variant have a material effect upon the way the invention works? If yes, the variant is outside the claim. If no (2) Would this (ie that the variant had no material effect) have been obvious at the date of publication of the patent to a reader skilled in the art? If no, the variant is outside the claim. If yes (3) Would the reader skilled in the art nevertheless have understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention? If yes, the variant is outside the claim. On the other hand, a negative answer to the last question would lead to the conclusion that the patentee was intending the word or phrase to have not a literal, but a figurative meaning (the figure being a form of synecdoche or metonymy) denoting a class of things which included the variant and the literal meaning, the latter being perhaps the most perfect, best known or striking example of the class. Hoffmann J then proceeded to apply those three questions to the facts of the case before him. He held that the first two questions were to be answered in the patentees favour and then turned to the third question. On that question, he held that the patentee failed for the reasons he gave at p 197, namely that [t]he rubber rod is not an approximation to a helical spring, that the spring [cannot] be regarded as an inessential or the change from metal spring to rubber rod as a minor variant, and that it could be appreciated that the patentee would wish to restrict his claim to helical springs as [i]t would be obvious that the rubber had problems of hysteresis which might be very difficult to overcome. Thereafter, for the next 15 years or so, this three stage approach was almost routinely applied by judges in UK patent infringement cases, where the three Improver questions were subsequently renamed the three Protocol questions see Wheatley v Drillsafe Ltd [2001] RPC 7, para 23. Lord Hoffmann (as he had by then become) addressed the issue again in his speech in Kirin Amgen Inc v Hoechst Marion Roussel Ltd [2005] RPC 9, where one of the issues was whether a protein manufactured by gene activation infringed a patent relating to production of the same protein by recombinant DNA technology. At paras 27 to 35, Lord Hoffmann discussed the English rules of construction. At paras 30 to 32 he effectively equated Lord Diplocks approach to patents in Catnic [1982] RPC 183, 243 with purposive construction of commercial contracts. At para 34, he said that [t]he question is always what the person skilled in the art would have understood the patentee to be using the language of the claim to mean. And for this purpose, the language he has chosen is usually of critical importance. Lord Hoffmann then turned to the doctrine of equivalents, which he explained in para 37 had been developed in the United States courts and allow[ed] the patentee to extend his monopoly beyond his claims, so as to prevent the unscrupulous copyist [from making] unimportant and insubstantial changes and substitutions in the patent which, though adding nothing, would be enough to take the copied matter outside the claim, and hence outside the reach of law, quoting Jackson J in Graver Tank & Manufacturing Co Inc v Linde Air Products Co 339 US 605, 607 (1950). Lord Hoffmann expressed concern that once the monopoly had been allowed to escape from the terms of the claims, it is not easy to know where its limits should be drawn, and concluded that, rather than adhering to literalism and adopting the doctrine, the solution was to adopt a principle of construction which actually gave effect to what the person skilled in the art would have understood the patentee to be claiming, as Lord Diplock had done in Catnic [1982] RPC 183. He also said that article 69 EPC 2000 firmly shuts the door on any doctrine which extends protection outside the claims (see at paras 39 and 42 to 44). Having considered the issue in the three preceding paragraphs of his speech, at para 48 Lord Hoffmann stated that the approach adopted by Lord Diplock was precisely in accordance with the Protocol, as it was intended to give the patentee the full extent, but no more than the full extent, of the monopoly which a reasonable person skilled in the art, reading the claims in context, would think he was intending to claim. He concluded his discussion by quoting with approval the passages quoted above from Catnic [1983] RPC 183, 243 and Improver [1990] FSR 181, 189, and saying in para 52 that the principle of purposive construction as Lord Diplock and he had explained it, gave effect to the requirements of the Protocol and was the bedrock of patent construction, universally applicable, whereas the Protocol or Improver questions were simply guidelines for applying that principle to equivalents , more useful in some cases than in others. The approach in the courts of other EPC states In Germany, the Bundesgerichtshof has stated that a variant will infringe if (i) it solves the problem underlying the invention with modified but objectively equivalent means, (ii) this would be recognised by the person skilled in the relevant art, and (iii) that person focus[sing] on the essential meaning of the technical teaching protected in the patent would regard the variant as being equivalent to the solution offered by the invention see Case No X ZR 168/00, 2002 GRUR 519 (Schneidmesser I), para 30. (It is worth noting that in paras 36 to 38 of its judgment in that case, the Bundesgerichtshof expressly considered the approach which had been adopted in Catnic [1982] RPC 183 and Improver [1990] FSR 181.) Judge Meier Beck of the Bundesgerichtshof, writing extra judicially (The Scope of Patent Protection The Test for Determining Equivalence (2005) 36 IIC 339, 342 to 343) has suggested that the second step involves asking whether the person skilled in the art, using his specialist knowledge, [would be] able to find the modified means at the priority date as having the same effect, which he then says has the meaning that no inventive step is needed. That seems to be supported by what was said by the Bundesgerichtshof in Case No X ZR 156/97, 1999 GRUR 977, (Rumschild), paras II.2(c)(aa) and III.1. Further guidance as to the German approach to equivalents was very recently given by the Munich Oberlandesgericht, upholding the decision of the Landgericht, in Case No 6 U 3039/16 (Eli Lilly & Co v ratiopharm GmbH), when considering whether pemetrexed ditromethamine infringed the German equivalent of the Patent in this case. At para II.B.3(a), the Oberlandesgericht said that in order for an embodiment that deviates from the literal meaning of the claim to be within the scope of protection, generally three requirements must be met. The first was that the embodiment must solve the problem underlying the invention with means that are indeed modified, but are objectively equivalent. The second requirement was that the expertise of the person skilled in the art must enable him to discover the modified embodiment with its divergent means to be equivalent. Thirdly, the thought processes that the person skilled in the art has to perform in order to do so must be oriented on the meaning of the teaching protected in the claim. In para II.B.3(b)(aa), the Oberlandesgericht suggested that the decisive factor was what individual effects the features according to the patent provide in order to attain the object underlying the claims and whether these effects are achieved through other means by the [allegedly infringing] embodiment. The court added that the doctrine of equivalence would apply to an embodiment if it not only essentially achieves the entire effect of the invention, but specifically also achieves the effect that the feature, which has not been literally implemented, is supposed to achieve. French law, according to the expert witnesses in this case, applies the doctrine of equivalents where the variant is different in form but perform[s] the same function as the invention, but only where the function [claimed in the patent] is a new one. This seems to be supported by Azma and Galloux, Droit de la proprit industrielle, 7th ed (2012), which distinguishes at p 442 between two categories of patents. The first category is those which in general terms claim the means that provide for a particular function (moyens gnraux), or as Arnold J put it in para 160 of his judgment, claims which cover general means. The second category is patents which indicate the particular means which infer such function (moyens particuliers), or claims which are narrowly worded to cover specific means as Arnold J expressed it. The doctrine is only normally applicable to the first category of claims. Arnold J added in para 160 that the categorisation of a patent for this purpose may depend in part on what was known at the priority date see the decisions of the Cour de Cassation in Appeal S 09 15668 Institut Pasteur v Chiron Healthcare, 23 November 2010 and of the Paris Tribunal de Grande Instance in Case 09/01863 Mundipharma Laboratories GmbH v Sandoz SAS, 2 July 2010. As Arnold J also explained in para 159 of his judgment, there is no need for the claim to be unclear or for it to be widely worded for the doctrine of equivalents to be invoked in the French court. Thus, in the decision of the Cour de Cassation in Appeal No 06 17915 B2M Industries v Acome, 20 November 2007, the function of the particular integer that was said to be infringed pursuant to an equivalent was held to be novel, and therefore because the means that was said to be equivalent to that integer performed the same function and produced the result sought by the invention the means was equivalent to that integer, to quote from para 161 of Arnold Js judgment. In the Italian courts, the expert witnesses in this case agreed that a variant would be held to infringe if (i) it reproduced the inventive core of the patent and (ii) it was an obvious variation, although (iii) the fact that the variant included some modifications which were not obvious and/or the fact that the variant does not include some of the elements of the patent claim does not necessarily prevent the variant infringing see per Arnold J at para 171 of his judgment. This analysis is supported by the Corte di Cassazione decisions in Case No 257, Forel SpA v Lisec (13 January 2004), Case No 30234, Barilla GER Fratelli SpA v Pastifico Fazion SpA (30 December 2012) and Case No 622, Entsorga Italia Srl v Ecodeco Srl (11 January 2013). At any rate at local appellate level, Spanish courts appear to have effectively adopted the approach embodied in the three questions suggested by Hoffmann J in Improver [1990] FSR 181 see for instance Laboratorios Cinfa SA v Eli Lilly & Co Ltd (Olanzapine) Court of Appeal of Barcelona judgment no 8/2008, 17 January 2008. Following circulation of this judgment in draft, Actavis referred us to a decision of the Spanish Tribunal Supremo Lundbeck v Cinfa, no 223/2015, 29 April 2015. In the closely reasoned section ELEVEN of its judgment, the Tribunal Supremo (i) recorded the fact that none of the parties challenged the approach of the Court below which applied the three Improver questions (para 5), (ii) stated that the real issue in the case centred on the second question (para 6), (iii) cast some doubt on the applicability of the Improver questions in Spanish law (para 10), (iv) disapproved the notion that the test for obviousness in patentability is necessarily applicable to the second Improver question (paras 10 and 14), (v) disapproved the notion that, for the second Improver question to be answered yes, the skilled person must be absolutely certain that the variant would work successfully in resolving the technical problem faced by the patented invention (paras 11 and 12), (vi) preferred instead, a test of easy to see or comprehend and a degree of predictability (paras 11 and 18), which involves a high probability, rather than a reasonable expectation that the variant would work (paras 15 and 18), and (vii) concluded on this basis that the Court of Appeal was right to rule that the allegedly infringing products in that case did not infringe (paras 18 and 19). As for the Netherlands, helpful guidance may be found in a lecture given in 2016 by Judge Kalden, the head of the IP division in the Court of Appeal in The Hague Article 69 EPC the Scylla and Charybdis of the European Patent Convention Which route did the Dutch courts take? (2016 Symposium German Bundespatentgericht). She said that, although there have been subtle changes of emphasis in its decisions, the Supreme Court tends to focus on the inventive concept in order to prevent a too literal interpretation of the claims, which could do injustice to fair protection for the patentee (or lead to an unnecessary broad interpretation). She also explained that the doctrine of equivalents applies if (i) the variant is foreseeable at the priority date, (ii) the inventive concept is sufficiently broad to cover [the] variant, (iii) the variant makes use of and thus benefits from the inventive concept, and (iv) reasonable legal certainty [is not thereby] unduly compromised. She added that, despite the first condition: Variants that are not foreseeable at the priority date may well, due to later developments, become an obvious variant at a later date. This may happen in case of a pioneer invention, where at the priority date the full breadth of the possible applications could or has not been fully recognised and therefore was not sufficiently taken into account when drafting a claim. Another possibility is that a new technique becomes available after the patent was granted, which makes available an obvious variant. It would be harsh and contrary to fair protection for the patentee to deny him the right to attack those, again provided such variant falls within the inventive concept and reasonable legal certainty is taken into account. So infringement by equivalence is not limited to foreseeable variants only. It may be of some significance that the product which Hoffmann J concluded in Improver [1990] FSR 181 was non infringing was held by the German, Italian and Dutch courts to infringe. Of course, the fact that courts of two states reach different conclusions on the same issue does not of itself mean that there is a difference in the law of those states, let alone that one court is wrong and the other right: the evidence may be different, and there may be issues of judgment on which reasonable judges could differ. However, consideration of the judgments in those three other courts does suggest a difference of approach. Thus, in Germany, the Dsseldorf Oberlandesgericht based its conclusion on the propositions that a person skilled in the art will not interpret the coil spring as a spring, but as an elastic body with gaps . as it is obvious that the helical spring is not used as a spring per se, and that its only essential function, which was shared by the allegedly infringing products slitted rubber rod, was that it could enter between adjacent areas of the body (walls), and that the walls must approach it up to clamping it see Epilady Germany II (1993) 24 IIC 838. In Italy, the Milan District Court held that there was infringement because the slitted rubber rod had structural characteristics which enabled it to perform the same function in the same way as the coiled spring referred to in the patent in suit see Epilady Italy (1992) Giur Ann Dir Ind, Case No 2823. In the Netherlands, the Gerechtshof upheld the first instance decision that the allegedly infringing device embodies an application of the patented invention, on the grounds that the hair engaging component [ie the slitted rubber rod] of the device is a mechanical equivalent of the helical spring specified in the patent claims, and the rod was not state of the art in the field of depilatory devices Epilady Netherlands III (1993) 24 IIC 832, paras 9 and 11. The proper approach to infringement claims Any patent system must strike a balance between the two competing factors referred to at the end of article 1 of the Protocol, namely a fair protection for the patent proprietor [and] a reasonable degree of legal certainty for third parties. The balance cannot be struck on an ad hoc case by case basis without any guiding principles, as that would mean that there was no legal certainty. On the other hand, striking the balance by adopting a normal approach to interpretation would risk depriving patentees of a proper measure of protection; as explained in paras 37 to 39 and 52 above, that is clear from the approach of all the courts which considered the Epilady patent, where it could not seriously have been suggested that, as a matter of language, a slotted rubber rod falls within the expression helical metal spring, even if one was construing those words in the context of the claim in the patent in suit. But, if one departs from ordinary language, it is necessary to have some guidance or to draw some lines, as Lord Hoffmann implied in Kirin Amgen [2005] RPC 9, para 37. That is why he promulgated his three questions in Improver [1990] FSR 181, 189. By means of an extended version of the ordinary concept of construction or interpretation, Hoffmann J explained how our domestic law, as laid down in Catnic [1982] RPC 183, implements article 2 of the Protocol and thus, as I see it, how it gives effect to the doctrine of equivalents. That approach was (perhaps unsurprisingly) then adopted in Kirin Amgen [2005] RPC 9. In my view, notwithstanding what Lord Diplock said in Catnic [1982] RPC 183, 242, a problem of infringement is best approached by addressing two issues, each of which is to be considered through the eyes of the notional addressee of the patent in suit, ie the person skilled in the relevant article Those issues are: (i) does the variant infringe any of the claims as a matter of normal interpretation; and, if not, (ii) does the variant nonetheless infringe because it varies from the invention in a way or ways which is or are immaterial? If the answer to either issue is yes, there is an infringement; otherwise, there is not. Such an approach complies with article 2 of the Protocol, as issue (ii) squarely raises the principle of equivalents, but limits its ambit to those variants which contain immaterial variations from the invention. It is also apparent that the two issues comply with article 1 of the Protocol in that they involve balancing the competing interests of the patentee and of clarity, just as much as they seek to balance the encouragement of inventions and their disclosure with the need for a competitive market. In my view, issue (i) self evidently raises a question of interpretation, whereas issue (ii) raises a question which would normally have to be answered by reference to the facts and expert evidence. In Kirin Amgen [2005] RPC 9, Lord Hoffmann, following his approach in Improver [1990] FSR 181 (which itself had followed Lord Diplocks analysis in Catnic [1982] RPC 183) effectively conflated the two issues, and indicated that the conflated issue involved a question of interpretation. I have considerable difficulties with the notion that there is a single conflated, or compound, issue, and, even if that notion is correct, that that issue raises a question of interpretation. Indeed, in my view, to characterise the issue as a single question of interpretation is wrong in principle, and unsurprisingly, therefore, can lead to error. While normal principles of interpretation could, I think, accommodate the notion that vertically extended to an item which was not at precisely 90 to another item, I do not see how such principles could possibly lead to the conclusion that a slotted rubber rod was within the expression helical metal spring. As Hoffmann J said in Improver [1990] FSR 181, 197, the angle of the support member [in the allegedly infringing product in Catnic [1982] RPC 183] can be regarded as an approximation to the vertical, but [t]he rubber rod is not an approximation to a helical spring. The problem with treating the issue as one of normal interpretation is thus that that point alone may be thought to have been sufficient to put an end to the patentees infringement argument on facts such as those in Improver [1990] FSR 181, and there would seem to have been little purpose in going through the three questions in that case. I had wondered whether the question whether issue (ii) truly involves a question of interpretation raised what was merely an arid issue of categorisation. However, I have concluded that that nettle needs to be grasped, because, so long as the issue is treated as one of interpretation, it will lead to a risk of wrong results in patent infringement cases and it will also lead to a risk of confusing the law relating to the interpretation of documents. In my opinion, issue (ii) involves not merely identifying what the words of a claim would mean in their context to the notional addressee, but also considering the extent if any to which the scope of protection afforded by the claim should extend beyond that meaning. As Sir Hugh Laddie wrote in his instructive article Kirin Amgen The End of Equivalents in England? (2009) 40 IIC 3, para 68, [t]he Protocol is not concerned with the rules of construction of claims but with determining the scope of protection. I might add that the notion of a product or process which infringes despite an immaterial variation from the invention as claimed is by no means new to domestic patent law. That point is convincingly demonstrated by Sir Hugh in his article at paras 33 to 39. Thus, in Walton v Potter & Horsfall (1843) 1 WPC 585, Tindal CJ told the jury that they had to decide whether the defendants product was perfectly distinct from the patented product, or whether it varied only in certain circumstances, which are not material to the principle and substance of the invention. And Lord Cairns LC in Clark v Adie (1877) 2 App Cas 315, 320, referred to the alleged infringer having really taken and adopted the substance of the instrument patented, and having taken in substance the pith and marrow of the invention. The patents in these cases included relatively primitive forms of claim, but that does not undermine the fact that our domestic law has long recognised that an immaterial variation does not get an infringer off the hook. Particularly in the light of what he said in Catnic [1983] RPC 183, 242, it is worth mentioning that Lord Diplock himself in Beecham Group Ltd v Bristol Laboratories Ltd [1978] RPC 153, 200 rejected a submission that [t]he increasing particularity with which claims are drafted has made the doctrine [of pith and marrow] obsolete, and said that the doctrine still remains a part of patent law. Turning to the two issues identified in para 54 above, issue (i), as already mentioned, involves solving a problem of interpretation, which is familiar to all lawyers concerned with construing documents. While the answer in a particular case is by no means always easy to work out, the applicable principles are tolerably clear, and were recently affirmed by Lord Hodge in Wood v Capita Insurance Services Ltd [2017] 2 WLR 1095, paras 8 to 15. In the present case, there is no doubt that, according to normal principles of interpreting documents, the Actavis products do not infringe the Patent, as in no sensible way can pemetrexed free acid, pemetrexed ditromethamine, or pemetrexed dipotassium mean, ie be said to fall within the expression, pemetrexed disodium in claim 1 of the Patent, any more than a slotted rubber rod can be said to be within the expression a helical metal spring in the claim in the Improver patent. According to normal principles of interpreting documents, then, this would be the end of the matter. However, the second issue poses more difficulties of principle: what is it that makes a variation immaterial? In that connection, I consider that Hoffmann Js three questions in Improver [1990] FSR 181 provide helpful assistance, a view supported by the fact explained in paras 44 to 52 above that similar but not identical tests have been adopted in other EPC jurisdictions. However, each of the three questions requires some exegesis, and, particularly the second question, some reformulation. The first Improver question, which asks whether the variant has a material effect on the way in which the invention works, seems generally satisfactory. It is a question which was framed in the context of a mechanical patent, and is not wholly aptly expressed for every type of case. However, in practice, the question as framed by Hoffmann J, with its emphasis on how the invention works, should correctly involve the court focussing on the the problem underlying the invention, the inventive core, or the inventive concept as it has been variously termed in other jurisdictions. In effect, the question is whether the variant achieves the same result in substantially the same way as the invention. If the answer to that question is no, then it would plainly be inappropriate to conclude that it could infringe. If, by contrast, the answer is yes, then it provides a sound initial basis for concluding that the variant may infringe, but the answer should not be the end of the matter. The second Improver question is more problematic. In my view, it imposes too high a burden on the patentee to ask whether it would have been obvious to the notional addressee that the variant would have no material effect on the way in which the invention works, given that it requires the addressee to figure out for himself whether the variant would work. The facts of the present case serve to make that proposition good. As Floyd LJ explained in para 65 of his judgment below, because a chemist would not be able to predict the effect of [a] substitution [for the sodium counter ion] without testing at least the solubility of the [active ingredient in the Actavis products], it followed that predicting in advance whether any particular counter ion would work was not possible, and therefore that the second Improver test could not be answered yes. However, as mentioned in para 25(i) above, salt screening is a routine exercise in determining suitability, and as Floyd LJ said, the chemist would be reasonably confident that he would come up with a substitute for the sodium counter ion. In those circumstances, given that the inventive concept of the patent is the manufacture of a medicament which enables the pemetrexed anion to be administered with vitamin B12, it appears to me that application of the second Improver question fails to accord a fair protection for the patent proprietor as required by article 1 of the Protocol. In my opinion, the second question is better expressed as asking whether, on being told what the variant does, the notional addressee would consider it obvious that it achieved substantially the same result in substantially the same way as the invention. In other words, it seems to me that the second Improver question should be asked on the assumption that the notional addressee knows that the variant works to the extent that it actually does work. That, I think, would be a fair basis on which to proceed in terms of balancing the factors identified in article 1 of the Protocol, and it is, I think, consistent with the approach of the German, Italian and Dutch courts. It is also consistent with the fact that the notional addressee is told (in the patent itself) what the invention does. This reformulated second question should also apply to variants which rely on, or are based on, developments which have occurred since the priority date, even though the notional addressee is treated as considering the second question as at the priority date. Such an approach is supported by the desirability of both consistency of approach and pragmatic justice. It seems right in principle to have the same question, including the same assumption (ie that the variant works) for all cases. As to pragmatism, the point is touched on by Judge Kalden in the passage quoted at the end of para 51 above: while the notional addressee may answer the reformulated second question affirmatively even where the variant was unforeseeable at the priority date, he is less likely to do so than in relation to a variant which was unforeseeable as at that date. The second test applied by the German courts, as I understand it, at least sometimes appears to require the variation not to be inventive, but I am not sure that that is an appropriate requirement, although it is unnecessary to decide that point on this appeal. If the variation represents an inventive step, while it may render it less likely that the patentee will succeed on the second reformulated question, I find it hard to see why that alone should prevent the resultant variant from infringing the original invention. It may entitle the infringer to a new patent, in the same way as the invention of a novel use for a patented invention can itself be patented, but like such a novel use I see no reason why the variant should not infringe the original patent. Having said that, it should be added that the German version of the second test will, I suspect, usually produce the same result as the reformulated second question. The third Improver question as expressed by Hoffmann J is whether the notional addressee would have understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention. That is in my view an acceptable test, provided that it is properly applied. In that connection, I would make four points. First, although the language of the claim is important, consideration of the third question certainly does not exclude the specification of the patent and all the knowledge and expertise which the notional addressee is assumed to have. Secondly, the fact that the language of the claim does not on any sensible reading cover the variant is certainly not enough to justify holding that the patentee does not satisfy the third question. Hence, the fact that the rubber rod in Improver [1990] FSR 181 could not possibly be said to be an approximation to a helical spring (to quote from p 197) was not the end of the infringement issue even in Hoffmann Js view: indeed, as I have already pointed out, it was because the rubber rod could not possibly be said to be a helical spring that the allegedly infringing product was a variant and the patentee needed to invoke the three Improver questions. Thirdly, when considering the third question, it is appropriate to ask whether the component at issue is an essential part of the invention, but that is not the same thing as asking if it is an essential part of the overall product or process of which the inventive concept is part. So, in Improver [1990] FSR 181, 197, Hoffmann J may have been (and I mean may have been) wrong to reject the notion that the spring could be regarded as an inessential: while it was undoubtedly essential to the functioning of the Epilady, the correct question was whether the spring would have been regarded by the addressee as essential to the inventive concept, or inventive core, of the patent in suit. Fourthly, when one is considering a variant which would have been obvious at the date of infringement rather than at the priority date, it is, as explained in para 63 above, necessary to imbue the notional addressee with rather more information than he might have had at the priority date. In these circumstances, given the weight that has been given by courts in this jurisdiction (and indeed in some other jurisdictions) to the three Improver questions, I think it must be right for this court to express in our own words our reformulated version of those questions. In doing so, it is right to emphasise, as Lord Hoffmann did in Kirin Amgen [2005] RPC 9, para 52, that these questions are guidelines, not strict rules (as indeed the Oberlandesgericht indicated in Case No 6 U 3039/16, when saying that it was generally true that three requirements must be met). While the language of some or all of the questions may sometimes have to be adapted to apply more aptly to the specific facts of a particular case, the three reformulated questions are as follows: i) Notwithstanding that it is not within the literal meaning of the relevant claim(s) of the patent, does the variant achieve substantially the same result in substantially the same way as the invention, ie the inventive concept revealed by the patent? ii) Would it be obvious to the person skilled in the art, reading the patent at the priority date, but knowing that the variant achieves substantially the same result as the invention, that it does so in substantially the same way as the invention? iii) Would such a reader of the patent have concluded that the patentee nonetheless intended that strict compliance with the literal meaning of the relevant claim(s) of the patent was an essential requirement of the invention? In order to establish infringement in a case where there is no literal infringement, a patentee would have to establish that the answer to the first two questions was yes and that the answer to the third question was no. Provisional conclusion on direct infringement in the UK Given that the Actavis products do not infringe on the basis of a normal interpretation of claim 1 of the Patent, it is necessary to consider whether they represent an immaterial variation on that claim. I propose to address that issue initially disregarding the prosecution history, and having reached a provisional conclusion, I will then address that history and its effect on the provisional conclusion. In my view, application in the present case of the three questions just identified results in the conclusion that the Actavis products infringe. So far as the first question is concerned, there can be no doubt but that those products work in the same way as the invention: they all ultimately involve a medicament containing the pemetrexed anion and vitamin B12. Thus, they achieve substantially the same result in substantially the same way as the invention. Indeed, as in the Court of Appeal, Actavis realistically accept that the first question is to be answered yes. As to the second question, it seems to me clear that the notional addressee of the Patent would appreciate (and would have appreciated as at the priority date) that each of the Actavis products would work in precisely the same way as pemetrexed disodium when included in a medicament with vitamin B12. When it comes to different versions of pemetrexed medicaments, it is clear that the use of a free acid, and of ditromethamine and dipotassium salts was in each case well established as at the priority date see para 26(ii) to (iv) above. Furthermore, the notional addressee of the Patent would regard investigating whether pemetrexed free acid, pemetrexed ditromethamine or pemetrexed dipotassium worked as a purely routine exercise see para 25(i) above. The reason why I differ from the Court of Appeal and Arnold J on this second question is that, in accordance with the second question as formulated in Improver [1990] FSR 181, 189, they considered that the notional addressee should not be treated as knowing that the Actavis products did in fact work at all, whereas, as explained above, that seems to me to involve too strict a test. Turning to the third question, the Court of Appeal considered that the notional addressee would understand that the patent was clearly limited to the disodium salt, and did not extend to the diacid, or the dipotassium or ditromethamine salts. They based this conclusion on the fact that the specification of the Patent contains a number of passages (eg in Para [0022] of the specification, quoted in para 19 above) which refer to anti folates and the like and other passages which refer to pemetrexed disodium, which is a highly specific chemical compound, and the fact that the claim is limited to pemetrexed disodium would therefore lead the notional addressee to conclude that the claim is indeed intended to be so limited (see paras 71 and 72 of Floyd LJs judgment). In my opinion, the Court of Appeal adopted an approach which places too much weight on the words of the claim and not enough weight on article 2 of the Protocol (and it is only right to add that, in doing so, they were, like Arnold J at first instance, following Lord Hoffmanns guidance in Kirin Amgen [2005] RPC 9). Thus, when considering the third test, Floyd LJ made the point at para 72(ii) of his judgment that there is no obvious leeway as a matter of language for giving it a broad as opposed to a narrow construction. That seems to me to demonstrate the risk of treating the issue raised by the third question as being one of normal interpretation. (Another way of looking at the point is, in the language of Sir Hugh Laddie, that it involves wrongly conflating the issue of interpretation with the issue of scope of protection.) As already explained, if it was a decisive point it would make a nonsense of asking the three questions: if one cannot depart from the language of the claim when considering those questions, what is the point of the questions in the first place? More specifically, I do not agree with the Court of Appeals view that, because the specification referred to anti folates and anti folate drugs, the fact that the claims were limited to pemetrexed disodium means that the drafter of the Patent would have been understood to intend that the other pemetrexed compounds would not infringe. As Mr Mitcheson QC contended in his well argued case, the point is neutral because there is no reference to pemetrexed salts as a class in the specification, and the contrast therefore does not help on the question whether pemetrexed salts other than pemetrexed disodium were intended to be excluded. Further, contrary to the Court of Appeals reasoning, I would have thought that if the specification had not referred to anti folates but had only referred to pemetrexed disodium, that would have been a more powerful indication that the patentee was intending to limit himself to pemetrexed disodium. The very fact that the specification teaches that there are other anti folate drugs which have a similar effect to pemetrexed disodium (coupled with the fact that it was generally known that cations other than sodium could be successfully used with anti folates) highlights a point similar to that made by Lord Diplock in Catnic [1982] RPC 183, 244, namely No plausible reason has been advanced why any rational patentee should want to place so narrow a limitation on his invention as to limit the scope of protection afforded by the Patent to pemetrexed disodium a telling but not always conclusive point. Additionally, there is no teaching in the specification which relates to the relevance or importance of the sodium cation. Looking at matters more broadly, the addressee of the Patent would, as I see it, understand that the reason why the claims were limited to the disodium salt was because that was the only pemetrexed salt on which the experiments described in the specification had been carried out. However, it does not follow that the patentee did not intend any other pemetrexed salts to infringe: the suggestion confuses the disclosure of the specification of a patent with the scope of protection afforded by its claims. Particularly given the facts set out in para 25 above, it seems to me very unlikely that the notional addressee would have concluded that the patentee could have intended to exclude any pemetrexed salts other than pemetrexed disodium, or indeed pemetrexed free acid, from the scope of protection. Accordingly, I would conclude that, subject to considering the prosecution history, the Actavis products infringe claim 1 of the Patent. The effect of the prosecution history The application for the patent was filed at the EPO in June 2001, and it contained claims directed to a method of treatment, claims in Swiss form, and purpose related product claims. In January 2003, Dr Burnside, Lillys patent attorney, filed a revised set of claims which omitted the method of treatment claims. Claims 1 and 2 were as follows: 1. Use of a methylmalonic acid lowering agent in the preparation of a medicament useful in lowering the mammalian toxicity associated with an antifolate, and the medicament is administered in combination with an antifolate. 2. Use of a methylmalonic acid lowering agent in the preparation of a medicament useful in lowering the mammalian toxicity associated with an antifolate, and the medicament is administered in combination with an antifolate and a FBP binding agent. Claim 10 was a dependent claim wherein the antifolate is ALIMTA. As Floyd LJ said, these claims are in the reverse order from the claims ultimately granted (as they start with the use of the methylmalonic lowering agent rather than pemetrexed disodium), but nothing hangs on that. The essential point is that these claims were entirely general as to the identity of the antifolate. In March 2004, the EPO examiner wrote raising various objections including some under articles 83 and 84 EPC 2000 (disclosure and clarity). The clarity and lack of disclosure objections were that the claims related to too many possible combinations of compounds by using general expressions such as antifolate, methylmalonic acid lowering agent and FBP binding agent. Moreover, the examiner was concerned that the claims covered all compounds having these characteristics or properties, whereas the application provided support and disclosure for only a very limited number of such compounds. Dr Burnside replied in a letter of December 2004, under cover of which he filed new claims 1 and 2, this time starting with the use of the antifolate, now limited to pemetrexed in these terms: 1. Use of pemetrexed in the manufacture of a medicament for use in combination therapy for inhibiting tumour growth in mammals wherein said medicament is to be administered in combination with vitamin B12 or a pharmaceutical derivative thereof. 2. Use according to claim 1 wherein said medicament is to be administered in combination with vitamin B12 or a pharmaceutical derivative thereof and a folic binding protein binding agent [which was then defined]. In support of these new claims, Dr Burnside said that, in order to expedite the application proceeding to grant, Lilly had elected to amend the claims so as to reflect more closely the specific examples provided. However, he added, the amendments were made without prejudice to Lillys right to obtain protection for other patentable subject matter in one or more divisional applications. Notwithstanding these amendments, in May 2005 the EPO examiner formally objected to the admissibility of the new claims. He contended that the amendments introduced subject matter beyond the content of the originally filed documents, contrary to article 123(2) EPC 2000. Thus, he said, the inclusion in claim 1 of use of pemetrexed . and similar provisions in other claims did not find any basis in the application documents as filed. According to the examiner, pemetrexed was a distinct compound from pemetrexed disodium. (This is supported by the Chemical Abstracts Service Registry, where the pemetrexed is recorded as being the free diacid.) The patent does contain one mention of the term pemetrexed at para [0004] of the specification, followed by a Lilly reference number which shows it to be pemetrexed disodium. It was therefore, at best, uncertain as to what the term pemetrexed on its own was intended to refer. Dr Burnside replied in March 2006 by a letter under cover of which he filed new claims, which this time were limited to pemetrexed disodium, and are now embodied in the claims of the Patent as set out in para 21 above. Dr Burnside said: The Claims have been amended to refer to the preferred embodiment, the use of pemetrexed disodium (ALIMTA) as manufactured by Eli Lilly and Company, as the antifolate drug. The Claims have also been amended to incorporate the list of vitamin B12 derivatives set out on p 7 lines 6 7 of the application as filed. The EPO examiner accepted the claims in this form, and the application proceeded to grant. Actavis contends that the prosecution history, as summarised in paras 76 to 80 above, makes it clear that the claims of the Patent should be interpreted as being limited to pemetrexed disodium not only as a matter of language, but in the sense that the use of any other pemetrexed compound, including other pemetrexed salts and the free acid, could not infringe. This contention gives rise to two issues. The first is one of relatively general application, namely whether and if so when it is permissible to have recourse to the prosecution history of a patent when considering whether a variant infringes that patent. The second issue is whether the prosecution history of the Patent in this case alters the provisional conclusion reached in para 75 above. So far as the first issue is concerned, Lord Hoffmann said in Kirin Amgen [2005] RPC 9, para 35: The courts of the United Kingdom, the Netherlands and Germany certainly discourage, if they do not actually prohibit, use of the patent office file in aid of construction. There are good reasons: the meaning of the patent should not change according to whether or not the person skilled in the art has access to the file and in any case life is too short for the limited assistance which it can provide. It is however frequently impossible to know without access, not merely to the file but to the private thoughts of the patentee and his advisors as well, what the reason was for some apparently inexplicable limitation in the extent of the monopoly claimed. In the absence of good reason to the contrary, it would be wrong to depart from what was said by the House of Lords. It is said by Actavis that there is good reason to depart from what Lord Hoffmann said on the ground that he was wrong in his description of the German and Dutch approaches to this issue, and that anyway he failed to have regard to the jurisprudence of other European courts. In my view, Lord Hoffmann was right about the approach of the German and Dutch courts to this issue. Thus, the Bundesgerichtshof, in a decision involving the German equivalent of the instant Patent, Case No X ZR 29/15 (Eli Lilly v Actavis Group PTC), paras 39 40, stated that it is permissible to use statements made by the applicant [and the examiner] during the grant procedure as an indication of how the person skilled in the art understands the subject matter of the patent but such indications cannot be readily used as the sole basis for construction. And in Ciba Geigy AG v Ot Optics BV (1995) 28 IIC 748, the Dutch Supreme Court said that a court will only be justified in using clarifying information from the public part of the granting file, when it holds that even after the average person skilled in the art has considered the description and the drawings, it is still open to question how the contents of the claims must be interpreted. It is argued by Actavis that this limited approach to the circumstances in which reference can be made to the prosecution file may be more restrictive than the approach adopted in France, Italy, and Spain, as analysed by Arnold J. Thus, he said in para 162 of his judgment, that the Cour dAppel observed in Case No 08/00882, Hewlett Packard GmbH v Agilent Technologies Deutschland GmbH (27 January 2010) that the patentee who amended its clauses to give them a limited scope may not, without putting the safety of third parties at risk, claim that the amendments were not necessary, nor that the limited claims have the same scope as the broader claims. However, the court in that case had already decided on the natural meaning of the patent, and the contents of the file were merely being invoked to confirm the decision. The position in Italy, according to Arnold J in para 174 of his judgment, is that there is no doctrine of prosecution history estoppel and there is no clear rule as to the relevance, if any, of the prosecution history as an aid to the interpretation of claims. In Spain there is a doctrine of actos propios, which as Arnold J explained in para 184, is the doctrine of ones own acts, but it only justifies relying on the prosecution file in relation to statements which are unequivocal, clear, precise, conclusive, undoubted and [do] not reflect any kind of ambiguity. While the French courts appear to be more ready to refer to the prosecution file on issues of interpretation or scope than the German or Dutch courts, it is unclear how much, if any, difference there is in outcome. The position in relation to the Italian courts is more unclear, and it may well be that the effect of the approach of the Spanish courts is the same in outcome as that of the German and Dutch courts. In those circumstances, particularly as it may be inevitable that there is a degree of difference in the approach of different national courts on such an issue, there is nothing in the French, Italian, or Spanish jurisprudence which causes me to depart from the conclusion expressed by Lord Hoffmann. In my judgment, it is appropriate for the UK courts to adopt a sceptical, but not absolutist, attitude to a suggestion that the contents of the prosecution file of a patent should be referred to when considering a question of interpretation or infringement, along substantially the same lines as the German and Dutch courts. It is tempting to exclude the file on the basis that anyone concerned about, or affected by, a patent should be entitled to rely on its contents without searching other records such as the prosecution file, as a matter of both principle and practicality. However, given that the contents of the file are publicly available (by virtue of article 128 EPC 2000) and (at least according to what we were told) are unlikely to be extensive, there will be occasions when justice may fairly be said to require reference to be made to the contents of the file. However, not least in the light of the wording of article 69 EPC 2000, which is discussed above, the circumstances in which a court can rely on the prosecution history to determine the extent of protection or scope of a patent must be limited. While it would be arrogant to exclude the existence of any other circumstances, my current view is that reference to the file would only be appropriate where (i) the point at issue is truly unclear if one confines oneself to the specification and claims of the patent, and the contents of the file unambiguously resolve the point, or (ii) it would be contrary to the public interest for the contents of the file to be ignored. The first type of circumstance is, I hope, self explanatory; the second would be exemplified by a case where the patentee had made it clear to the EPO that he was not seeking to contend that his patent, if granted, would extend its scope to the sort of variant which he now claims infringes. Turning to the second issue, I do not consider that the contents of the prosecution file in this case justify departing from the provisional conclusion expressed in para 75 above. It seems to me clear that the reason why the examiner considered that the claims in the patent should be limited to pemetrexed disodium was because the teaching in the specification did not expressly extend to any other anti folates. It is unnecessary to decide the issue, but, at least as at present advised, I am inclined to think that the examiner was wrong in taking that view. Indeed, in the course of his well presented argument for Actavis, Mr Alexander QC seemed to accept that Lilly could have expressed its claims more widely than it did (albeit that this was not a point which was carefully explored). However, even if the examiner was right or at least justified in taking the stance that he did, I do not consider that that consideration can have any bearing on the question whether any pemetrexed salts other than pemetrexed disodium should be within the scope of the patent pursuant to the doctrine of equivalents. The whole point of the doctrine is that it entitles a patentee to contend that the scope of protection afforded by the patent extends beyond the ambit of its claims as construed according to normal principles of interpretation. This point was well made by the Dutch Court of Appeals in Boston Scientific Ireland Ltd v Cordis Europa NV 01/639 (unreported) 3 July 2003, when they held that the contents of the prosecution file were of no assistance, as they related to a concern which the examiner had expressed about added matter which went to disclosure, whereas that had no relevance to the point at issue which was the scope of the claim which properly included equivalents. I draw comfort from the fact that neither party was able to refer to a case where a French or Spanish Court had relied upon the patentees response to a disclosure or added matter objection by the examining officer as being relevant to the scope of claim. It is true that the Madrid Appeal Court in Inmobiliaria Masife SL v Vale y Tino SA (decision 268/2013) (unreported) 27 September 2013 held that a patentee was bound by an exclusion which he had agreed during prosecution but that was to overcome an objection of the examiner based on the prior art, a very different point. I draw even greater comfort from the fact that the Bundesgerichtshof reached the same conclusion on this very issue in relation to the German equivalent of the Patent in this case in Case No X ZR 29/15 (Eli Lilly v Actavis Group PTC), para 72. Direct infringement in France, Italy and Spain Having concluded that the Actavis products directly infringe the Patent as a matter of UK law, it is necessary to consider whether the same result obtains under French, Italian and Spanish law. In my judgment, direct infringement is established in those jurisdictions as well. Turning first to French law, it appears to me that the answer to the question of direct infringement ultimately turns on whether the Patent in this case falls into the moyens gnraux category or the moyens particuliers category, because, as discussed in para 46 above, the doctrine of equivalents is apparently only applicable to patent claims in the former category. With some diffidence, I have reached a different conclusion from Arnold J on this issue and have concluded that the Patent in this case falls into the former category. It is of course true that an appellate court should be very slow indeed to differ from the trial judge on a question of fact. However, the notion that the resolution of a dispute as to foreign law involves a factual finding rather than a legal conclusion is somewhat artificial, and in any event, the Judge did not hear any oral evidence from the expert foreign law witnesses. We are therefore in as good a position as he was to analyse the effect of the evidence as to foreign law. The Judge considered that the Patent in this case represents a moyen particulier, because pemetrexed disodium was the relevant means and the Patent did not reveal it having a novel function: it merely revealed a new and better way in which its function could be achieved. To my mind the better analysis is that the Patent discloses that pemetrexed disodium could be used for a function for which it could not previously have been satisfactorily or safely used in practice; specifically, that pemetrexed disodium could be used with vitamin B12 to achieve an end which could not have been achieved by either chemical on its own, pemetrexed disodium because of its harmful side effects and vitamin B12 because it would not have worked. The essential point, as I see it, is that the Patent revealed for the first time the existence of a combined means which functioned in a certain way, namely to alleviate certain cancers without serious side effects. It would be different if the overall function of the combination of the two chemicals had not been new. Support for this conclusion appears in the book referred to in para 46 above, Droit de la proprit industrielle, whose two authors were the expert witnesses on French law in this case. At para 719, p 443, they wrote when the claim is over a combination of means for which global function is novel, any combination of means with a different structure but achieving the same global function is a priori equivalent and thus infringing. That passage was effectively applied by the Cour de Cassation in Appeal P08 14741, Diffusion Equipements Loisirs v Helge, 15 September 2009. As to Italian law, Arnold J said at paras 178 and 179 of his judgment that he had concluded that the Actavis products did not infringe the Italian designation of the Patent on two grounds. The first (which he only accepted with some hesitation) was because on its face the patent clearly demonstrated a conscious intention of the patentee to limit the claims to pemetrexed disodium. The second ground was because if there was any doubt about that, it was amply confirmed by the prosecution history. It is clear that (as one would expect) the Italian courts accept the doctrine of equivalents, and accordingly for the reasons given in paras 70 to 74 above, I would reject the first ground; and, for the reasons given in paras 91 to 93 above, I would reject the second ground also. So far as Spanish law is concerned, it is common ground that the Spanish courts have followed the United Kingdom approach, which leads to the difficult question whether one should assume that they would follow this decision in modifying the Improver questions and in particular the second question. I incline to the view that judicial comity would tend to suggest that the Spanish courts would follow this court in modifying the Improver questions, not least because this appears to render the UK courts and therefore the Spanish courts more consistent with the German and Dutch courts, and no more inconsistent with the French and Italian courts. In a written note dated 10 July 2017, Actavis applied for what would amount to a reconsideration of the conclusion expressed in para 97 above, on the ground that the reasoning of the Spanish Tribunal Supremo in the Lundbeck decision, discussed in para 50 above, should lead to the opposite conclusion, namely that marketing Actaviss products in Spain would not infringe the Patent. In my view, it is too late for Actavis to raise such an argument. Lilly had sought to rely on the Lundbeck decision in its written case in this appeal, and Actavis had objected on the ground that the decision had been given after the Court of Appeal decision in these proceedings. It seems to me that in these circumstances it would be wrong to permit Actavis to raise the Lundbeck decision to support their case, especially as they are seeking to do so after knowing the result of this appeal and the reasons for that result. I am unimpressed by Actaviss argument that their application is nonetheless justified because the reasoning in para 97 above was not raised on this appeal. Actaviss written case stated that Spanish law has been directly modelled on Catnic and Improver, and in paras 182 and 187 of his judgment on this case Arnold J effectively treated the Improver questions as part of Spanish law. It appears to me that the conclusion that, if the UK Supreme Court modifies the Improver questions, the Spanish courts would adopt any such modification, was therefore within the scope of the argument raised in this Court. Furthermore, I consider that it would be wrong for Actavis to be permitted to raise a new ground in support of their contention that their products would not infringe in Spain, after publication of our decision, which was done with their consent and at their instigation following receipt of our draft judgment which concluded that their products would infringe in Spain. It is not as if Actavis had come across new information since they had agreed to that publication. It is true that, as explained in para 2 above, Actaviss solicitors wrote to the Court very shortly after they received the draft judgment, but thereafter they had nearly a full 24 hours within which they could have withdrawn their agreement to publication of our decision. In any event, there is obvious force in the simple point that, having agreed to publication of the decision in advance of the handing down of the judgment, they have to take the consequences. I do not suggest that, in every case where the decision is published with the consent of the parties after they have seen the draft judgment, it would be impossible for either party to invite the court to change the decision, or any aspect of it. However, it seems to me that, in the absence of a good reason, the interests of finality and certainty should prevail, and I do not consider that Actavis have come up with a good enough reason in this case. It is right to add that I am by no means convinced that, even if we had permitted Actavis to re argue their case in relation to Spain, on the basis of the Lundbeck decision, I would have reached a different conclusion from that expressed in para 97 above. Quite what constitutes a degree of predictability or a high probability when it comes to assessing whether the notional addressee would expect the variant to work must be fact sensitive. Further, if, as seems likely but not, I accept, certain, the German, Dutch, French and Italian courts would all hold that Actaviss products infringed, there would have been much to be said for the view, which I have already expressed, that the Spanish courts would follow suit. Accordingly, I would hold that the French, Italian and Spanish designations of the Patent are also directly infringed by the Actavis products. Indirect infringement In these circumstances, Actaviss cross appeal, which seeks to challenge the Court of Appeals conclusion that its products indirectly infringed does not, I think, arise in the sense that it has no practical effect on the parties (other, perhaps, than on the issue of costs). However, as the point was fully argued, gave rise to a disagreement between the Court of Appeal and the trial judge, and can be dealt with shortly, it is appropriate to consider it. Indirect infringement is provided for in section 60(2) of the 1977 Act, and it states that a person infringes a patent if, without the patentees consent, he supplies or offers to supply in the United Kingdom to someone not authorised by the patentee with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect. The reason why Lilly contends that, even if they did not directly infringe, the Actavis products would indirectly infringe is because, when they are supplied to a doctor or a pharmacist, they are, as Actavis would know, dissolved in a saline solution in order to enable them to be administered to patients. Saline is a solution of common salt, ie sodium chloride, in water, and when common salt is dissolved in water, it separates into sodium cations and chloride anions. Accordingly, when one of Actaviss products, say that containing pemetrexed dipotassium, is dissolved in saline, the solution contains pemetrexed anions and potassium cations plus sodium cations and chloride anions. In those circumstances, argues Lilly, even if pemetrexed dipotassium would not of itself infringe if it was administered with vitamin B12, at least provided that the ratio of sodium ions to pemetrexed ions was at least 2:1, there will be infringement when it is administered in saline solution, because the solution which is administered will contain pemetrexed disodium. The Court of Appeal, disagreeing with the Judge, acceded to Lillys argument on this point. Actavis argue that a solution consisting of, or including, pemetrexed ions and sodium ions is not within the expression pemetrexed disodium in the Patent, because it is limited to the solid, or crystalline, chemical. I agree with Floyd LJ in rejecting that argument. There is no reason to think that the patentee intended to limit the expression in that way; quite the contrary. It is clear that solubility was an important issue, and indeed that was one of the two main reasons on which Actavis rested their contention that their products did not infringe, as discussed in paras 24 to 25, 59, and 66 above. Further, and even more in point, as Floyd LJ said, in the passages quoted in para 19 above the specification made it clear that references to pemetrexed disodium extended to that chemical in solution. Actavis also argue that there is an inconsistency between the Court of Appeal holding, when considering direct infringement, that the notional addressee could not be assumed to know that pemetrexed dipotassium would dissolve, and holding, when considering indirect infringement, that pemetrexed dipotassium did in fact dissolve. Even if I had not concluded that the notional addressee should be treated as knowing that pemetrexed dipotassium could dissolve, I would have rejected that argument which seems to me to involve a non sequitur. By the time that they were ready to market their products, Actavis knew perfectly well that they were all soluble. Actavis further argue that a solution of pemetrexed dipotassium dissolved in saline does not in any event contain pemetrexed disodium within the meaning of that term in the Patent; it is simply pemetrexed dipotassium dissolved in saline. In my view that is a bad point. If dissolving pemetrexed disodium in an aqueous solution of potassium chloride can be said to result in a solution containing pemetrexed disodium (as Actaviss argument impliedly accepts), then it must follow as a matter of elementary chemical logic that dissolving pemetrexed dipotassium in saline also result in a solution which contains pemetrexed disodium: the two solutions are chemically identical, as each would consist of potassium and sodium cations and chloride and pemetrexed anions in water. Actavis additionally argue that it is irrational to hold that there could be indirect infringement because it would all depend on the solvent in which the Actavis product is dissolved, and, even if that solvent was saline, it would depend on the proportion of sodium ions and pemetrexed ions in the solution which would vary by reference to the weight of the patient. The fact that infringement may depend on the nature of solvent and the relative amounts of ions in the solution does not seem to me to be irrational. It is simply a result of the extent of the scope of protection afforded by the patent given that (as determined by the Court of Appeal) its claims are limited to pemetrexed disodium, which, when dissolved in water produces two sodium cations to every one pemetrexed anion. Finally, Actavis argue that, rather than being used in the manufacture of a medicament as described in claim 1 of the Patent, pemetrexed disodium is part of the medicament. Like the Court of Appeal, I do not agree. The pemetrexed disodium comes into the manufacturing process rather later than it would if the original medicament included pemetrexed disodium rather than pemetrexed dipotassium, but that cannot alter the fact that, before it is administered to the patient, the medicament includes pemetrexed disodium and vitamin B12. Accordingly, I would uphold the Court of Appeals determination that Actavis are liable to Lilly for indirect infringement in the United Kingdom with respect to their products if Actavis know, or it is obvious in the circumstances, that ultimate users will dilute in saline or at least Actavis would be liable for indirect infringement if they were not liable for direct infringement. The Court of Appeal said that this conclusion would apply equally to France, Italy, and Spain, and there is no challenge to that from Actavis. Conclusion For these reasons, I would (i) allow Lillys appeal in direct infringement and hold that the Actavis products infringe the Patent in the United Kingdom, and also in France, Italy and Spain, (ii) dismiss Actaviss cross appeal on the basis that if its products did not directly infringe, they would indirectly infringe to the extent held by the Court of Appeal. |
This is the judgment of the court. The appellant, Mr Zoumbas, challenges a decision by the Secretary of State for the Home Department dated 4 October 2011 that he did not qualify for asylum or humanitarian protection and that his further representations were not a fresh human rights claim under paragraph 353 of the Immigration Rules. He challenged the Secretary of States decision for the manner in which she dealt with the best interests of his children in the light of the decision of this court in ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166. He was unsuccessful in his judicial review application before both the Lord Ordinary, Lady Clark of Calton, and an Extra Division of the Inner House of the Court of Session. The judicial review application and this appeal are concerned only with the fifth of the questions which Lord Bingham of Cornhill set out in para 17 of his speech in R (Razgar) v Secretary of State for the Home Department [2004] 2 AC 368. That is, in this case, whether the interference with the family life of Mr Zoumbas family unit by his removal to the Republic of Congo was proportionate to the legitimate public end which the Secretary of State sought to achieve. Before this court Mr Zoumbas made his challenge in three parts. First, he submitted that the Secretary of State had erred by failing to have regard to the interests of his children as a primary consideration in the proportionality assessment under article 8 of the European Convention on Human Rights (ECHR). This entailed, he submitted, a breach of the Secretary of States duty under section 55 of the Borders, Citizenship and Immigration Act 2009 (the 2009 Act), which required her to make arrangements for ensuring that her functions in relation to immigration were discharged having regard to the need to safeguard and promote the welfare of children who are in the United Kingdom. He suggested that this amounted to punishing the children for their parents poor immigration history. Secondly, he criticised the Secretary of States findings in relation to the best interests of the children. He asserted that (i) she had failed to make clear findings, (ii) it was irrational to conclude that the childrens best interests would be served by their removal to the Republic of Congo, (iii) she had failed to carry out a careful examination of their best interests, and (iv) the findings assumed that he and his wife would be returned to the Congo. Thirdly, in a submission which depended on the success of either or both of the first and second submissions, he argued that the Secretary of State had erred in concluding under paragraph 353 of the Immigration Rules that further representations made by him did not have a realistic prospect of success before an immigration judge. The facts Mr Zoumbas and his wife have an unedifying immigration history. They are citizens of the Republic of Congo. He entered the United Kingdom illegally on 27 May 2001 using a French passport that did not belong to him. He claimed asylum and was granted temporary admission. The woman who became his wife entered the United Kingdom on 30 July 2002 using a forged French passport. She also claimed asylum. Their claims for asylum were refused and her appeal was dismissed. On 7 November 2003 they married. Mrs Zoumbas initiated an appeal under article 8 ECHR, which was refused. Mr Zoumbas appeal against the refusal of his asylum claim was also refused. Their eldest child, Angemarcel Massengo Fleury, was born on 27 April 2004. On 8 April 2005 Mr Zoumbas was considered for the family indefinite leave to remain exercise but was found not to be eligible. In October 2005 Mrs Zoumbas and Angemarcel were detained and removed to the Republic of Congo. That same month, Mr Zoumbas failed to report to the immigration authorities and was treated as an absconder. For several months the authorities did not know his whereabouts. On 31 March 2006 Mrs Zoumbas and Angemarcel returned to the United Kingdom illegally using passports and a residence permit that did not belong to them. Mrs Zoumbas claimed asylum again and named her husband and Angemarcel as dependents in her claim. In about August 2006 Mr Zoumbas started to report to the immigration authorities again. On 25 May 2006 the Secretary of State refused Mrs Zoumbas asylum claim. She appealed but her appeal was dismissed on 24 July 2006. She was granted a statutory review of her appeal but on 3 July 2007 the First tier Tribunal refused her appeal after a reconsideration hearing. On 3 February 2007 Mrs Zoumbas gave birth to a daughter, Rosangel Shekma Massengo Fleury, and on 14 April 2011 she gave birth to another daughter, Shaun Keziah Massengo Fleury. Mr and Mrs Zoumbas did not have permission to work. They received state benefits because Mr Zoumbas claimed that he was destitute. But between September 2008 and April 2010 credits of 27,693.75 from unidentified sources were paid into bank accounts of Mrs Zoumbas and of the older two children. On 22 June 2010 Mr Zoumbas submitted further representations in which he asserted that there had been a change of circumstances because he, his wife and his children had been in the United Kingdom for several years and had established a family and private life which should be respected under article 8 ECHR. Documents which accompanied his representations showed that the eldest child, Angemarcel, was at primary school, that Mrs Zoumbas was attending college, and that they were members of a church, all in Glasgow. By letter dated 4 October 2011 the Secretary of State intimated to Mr Zoumbas her decision that his representations did not qualify him for asylum or humanitarian protection and that he did not merit a grant of limited leave to enter or remain in the United Kingdom. She also held that his submissions would not amount to a fresh claim under paragraph 353 of the Immigration Rules because they did not create a realistic prospect of success before an immigration judge. Mr Zoumbas has challenged that decision in his application for judicial review. The legal framework In their written case counsel for Mr Zoumbas set out legal principles which were relevant in this case and which they derived from three decisions of this court, namely ZH (Tanzania) (above), H v Lord Advocate 2012 SC (UKSC) 308 and H(H) v Deputy Prosecutor of the Italian Republic [2013] 1 AC 338. Those principles are not in doubt and Ms Drummond on behalf of the Secretary of State did not challenge them. We paraphrase them as follows: (1) The best interests of a child are an integral part of the proportionality assessment under article 8 ECHR; In making that assessment, the best interests of a child must be a (2) primary consideration, although not always the only primary consideration; and the childs best interests do not of themselves have the status of the paramount consideration; (3) Although the best interests of a child can be outweighed by the cumulative effect of other considerations, no other consideration can be treated as inherently more significant; (4) While different judges might approach the question of the best interests of a child in different ways, it is important to ask oneself the right questions in an orderly manner in order to avoid the risk that the best interests of a child might be undervalued when other important considerations were in play; (5) It is important to have a clear idea of a childs circumstances and of what is in a childs best interests before one asks oneself whether those interests are outweighed by the force of other considerations; (6) To that end there is no substitute for a careful examination of all relevant factors when the interests of a child are involved in an article 8 assessment; and (7) A child must not be blamed for matters for which he or she is not responsible, such as the conduct of a parent. These principles arise from the United Kingdoms international obligations under the United Nations Convention on the Rights of the Child, and in particular article 3.1 which 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. That general principle of international law has influenced the way in which the Strasbourg court has interpreted the ECHR: Neulinger v Switzerland (2010) 28 BHRC 706, para 131. Mr Lindsay for Mr Zoumbas also founded on a statement in the judgment of Lord Kerr of Tonaghmore in ZH (Tanzania) at para 46 in support of the proposition that what is determined to be in a childs best interests should customarily dictate the outcome of cases and that it will require considerations of substantial moment to permit a different result. In our view, it is important to note that Lord Kerrs formulation spoke of dictating the outcome of cases such as the present and that in ZH (Tanzania) the court was dealing with children who were British citizens. In that case the children by virtue of their nationality had significant benefits, including a right of abode and rights to future education and healthcare in this country, which the children in this case, as citizens of the Republic of Congo, do not. The benefits of British citizenship are an important factor in assessing whether it is reasonable to expect a child with such citizenship to live in another country. Moreover in H(H) Lord Kerr explained (at para 145) that what he was seeking to say was that no factor should be given greater weight than the interests of a child. See the third principle above. We would seek to add to the seven principles the following comments. First, the decision maker is required to assess the proportionality of the interference with private and family life in the particular circumstances in which the decision is made. The evaluative exercise in assessing the proportionality of a measure under article 8 ECHR excludes any hard edged or bright line rule to be applied to the generality of cases: EB (Kosovo) v Secretary of State for the Home Department [2009] AC 1159, per Lord Bingham at para 12. Secondly, as Lord Mance pointed out in H(H) (at para 98) the decision maker must evaluate the childs best interests and in some cases they may point only marginally in one, rather than another, direction. Thirdly, as the case of H(H) shows in the context of extradition, there may be circumstances in which the weight of another primary consideration can tip the balance and make the interference proportionate even where it has very severe consequences for children. In that case an Italian prosecutor issued a European arrest warrant seeking the surrender of a person who had earlier broken his bail conditions by leaving Italy and ultimately seeking safe haven in the United Kingdom and had been convicted of very serious crimes. This court held that the treaty obligations of the United Kingdom to extradite him prevailed over his childrens best interests. The third principle in para 10 above is subject to the first and second qualifications and may, depending on the circumstances, be subject to the third. But in our view, it is not likely that a court would reach in the context of an immigration decision what Lord Wilson described in H(H) (at para 172) as the firm if bleak conclusion in that case, which separated young children from their parents. The decision letter In the letter of 4 October 2011, Ms G Dickin, the official acting on behalf of the Secretary of State, summarised Mr Zoumbas submissions and listed the documents which he had produced in its support. She considered the first four questions which Lord Bingham set out in R (Razgar) at para 17. She held that Mr Zoumbas had established a private life and a family life in the United Kingdom and that his removal would interfere with his private and family life. It was implicit in her discussion that article 8 ECHR was engaged. She then concluded that the interference would be in accordance with the law and in pursuit of the legitimate aim of maintaining effective immigration control. She introduced the consideration of the proportionality of the interference with the words: Below is a consideration of why any interference is proportionate to the permissible aim. She then referred to the familys unlawful residence and the fact that Mr Zoumbas and his wife had established their family life in the full knowledge that they both had no legal right to reside in the United Kingdom and could be removed at any time. She summarised the appalling immigration history of Mr and Mrs Zoumbas and the familys receipt of state benefits while receiving the unidentified credits which I have mentioned. She considered in turn the proportionality of the interference with Mr Zoumbas private and family life before discussing the article 8 rights of any family members who were not party to the proceedings in accordance with the guidance which the House of Lords gave in Beoku Betts v Secretary of State for the Home Department [2009] AC 115. She concluded that there was no evidence of family ties in the United Kingdom other than Mr Zoumbas wife and children who would be removed to the Congo with him, thus preserving his family life. She then addressed the Secretary of States obligation under section 55 of the 2009 Act to carry out her functions in a way which has regard to the need to safeguard and promote the welfare of children in the United Kingdom. She made it clear that the interests of the three children had been taken into account in the assessment of the proportionality of the interference with private and family life. She stated: Full consideration has been given to the best interests of your three children, which is a primary consideration in the evaluation of the proportionality of a decision to remove a family. It is noted that you have not provided any information which pertains specifically to the best interests of your three children. A new immigration judge would conclude that although health care and education in Congo may not be of the same standard as in the United Kingdom, the childrens best interests will be to remain with their parents and raised in their own culture. Furthermore, if you return together there is no reason to believe that relocation to Congo would have a particularly detrimental effect on your children. She concluded that the balance of the competing interests was in favour of the familys removal (a) because of the need to maintain effective immigration control, (b) because they had built up a family life in the United Kingdom when their residence was precarious, and (c) because the immigration history involved findings of fabricated asylum claims, deception, fraud and absconding. Discussion of the challenges We are satisfied that there is no substance in the first of Mr Zoumbas challenges which we have summarised in para 3 above. It rests on a mistaken construction of the Secretary of States letter. There has been no failure to consider the best interests of Mr and Mrs Zoumbas children in the article 8 proportionality exercise. Mr Lindsay accepted that the status of the well being of the children as a primary consideration did not require the Secretary of State in every case to consider the childrens best interests first and then to address other considerations which might outweigh those interests. There is nothing to bar the official who acts for the Secretary of State from considering the various issues, including the proportionality exercise under article 8 ECHR before drafting the decision letter. The official set out the Secretary of States conclusion before explaining the reasons for that conclusion. It is important to read the decision letter as a whole and to analyse the substance of the decision. It is a misreading of the letter to assert, as Mr Lindsay did, that the Secretary of State had made a decision on proportionality before addressing the well being of the children. The consideration of the childrens best interests was, as the letter stated (para 17 above), a primary consideration in the proportionality exercise. Mr Lindsay submitted in his written case that this appeal raised an issue of general public importance because the structure of the decision letter was one which the Secretary of State frequently used. Ms Drummond understandably submitted in her written case that there was no issue of general public importance. Be that as it may, the appeal demonstrates a misunderstanding of the effect of the decision in ZH (Tanzania) which can usefully be corrected. If officials in the Home Department who draft such decision letters are using a template to give structure to the articulation of their decisions, we see nothing wrong with a template that provides for the statement of the Secretary of States conclusion to be followed by her reasoning. What is important, as Lord Mance said in H(H) at para 98, is that the interests of the children must be at the forefront of the decision makers mind. In this context the fourth, fifth and sixth principles which we have listed in para 10 above are relevant. That leads us to consider the second of Mr Lindsays challenges. We are not persuaded that there is any lack of clarity in the Secretary of States findings on the childrens best interests or any indication that there had not been a careful examination of those interests. The decision letter sets out the Secretary of States conclusions briefly. But that does not give rise in this case to any inference that there has not been careful consideration. The substance of Mr Lindsays complaint was that the Secretary of State either had not considered or had failed to record her findings on matters which were disclosed in the documents lodged in support of Mr Zoumbas claim. Those matters were (a) that the children were born in the United Kingdom, (b) that they were English speakers and saw themselves as British, (c) that they had integrated well into the community in Glasgow, (d) that the eldest child was doing well at school, and (e) that two of the three children had never been to the Congo. In our view, the Secretary of State does not have to record and deal with every piece of evidence in her decision letter. The decision maker was clearly aware that the children were born in the United Kingdom as it is recorded on the fourth page of the decision letter. The letter also recorded that the children were aged seven years, four years, and five months respectively and referred to the evidence that the eldest child was at primary school. The decision maker would also have been aware from the narrative of the familys immigration history that two of the children had not been to the Republic of Congo. There is no irrationality in the conclusion that it was in the childrens best interests to go with their parents to the Republic of Congo. No doubt it would have been possible to have stated that, other things being equal, it was in the best interests of the children that they and their parents stayed in the United Kingdom so that they could obtain such benefits as health care and education which the decision maker recognised might be of a higher standard than would be available in the Congo. But other things were not equal. They were not British citizens. They had no right to future education and health care in this country. They were part of a close knit family with highly educated parents and were of an age when their emotional needs could only be fully met within the immediate family unit. Such integration as had occurred into United Kingdom society would have been predominantly in the context of that family unit. Most significantly, the decision maker concluded that they could be removed to the Republic of Congo in the care of their parents without serious detriment to their well being. We agree with Lady Dorrians succinct summary of the position in para 18 of the Inner Houses opinion. Finally, we see no substance in the criticism that the assessment of the childrens best interests was flawed because it assumed that their parents would be removed to the Republic of Congo. It must be recalled that the decision maker began by stating the conclusion and then set out the reasoning. It was legitimate for the decision maker to ask herself first whether it would have been proportionate to remove the parents if they had no children and then, in considering the best interests of the children in the proportionality exercise, ask whether their well being altered that provisional balance. When one has regard to the age of the children, the nature and extent of their integration into United Kingdom society, the close family unit in which they lived and their Congolese citizenship, the matters on which Mr Lindsay relied did not create such a strong case for the children that their interest in remaining in the United Kingdom could have outweighed the considerations on which the decision maker relied in striking the balance in the proportionality exercise (paras 17 and 18 above). The assessment of the childrens best interests must be read in the context of the decision letter as a whole. As we have not upheld either of the first or second challenges, the third challenge cannot succeed. We therefore dismiss the appeal. the content of any template for decision letters. But we venture the view that challenges, such as this one, would be less likely if her advisers were to express the test in the way in which it was expressed in ZH (Tanzania) and to expand the explanation of the separate consideration that was given to the interests of the children. It is of course the task of the Secretary of State and not this court to decide |
The issue that arises on this appeal is whether the Financial Services Authority (the FSA) has power to prosecute offences of money laundering contrary to sections 327 and 328 of the Proceeds of Crime Act 2002 (POCA). The appellant contends that the FSAs powers to prosecute criminal offences are limited to the offences referred to in sections 401 and 402 of the Financial Services and Markets Act 2000 as amended (FSMA), which do not include offences under POCA. The Court of Appeal (Richards LJ, Irwin J and HH Judge Baker QC) held that the FSAs powers were not limited in that way and that it had the power to bring prosecutions in respect of other offences. The appellant faces charges for (i) offences of insider dealing contrary to section 52 of the Criminal Justice Act 1993 and (ii) offences of money laundering contrary to sections 327 and 328 of POCA. The former offences relate to the sale of shares in a company by which he was employed. The latter relate to the transfer of part of the proceeds of the sale from his bank account to a bank account in his fathers name. He does not challenge the FSAs power to prosecute the insider dealing offences, since this is expressly provided for by section 402(1) of FSMA. But he does challenge the FSAs power to prosecute the money laundering offences, since this is not provided for by section 402(1) of FSMA. The FSA The FSA is a company limited by guarantee. It was incorporated in June 1985 under the name of The Securities and Investments Board (the SIB). Its name was changed to the FSA in October 1997. The April 2000 version of its memorandum and articles of association, reflecting various amendments since the original incorporation of the company as the SIB, expressed the companys objects and powers in broad terms. For example, by clause 3(A)(i)(a) of the memorandum its objects included to promote and maintain high standards of integrity and fair dealing in the carrying on of investment business, deposit taking business, insurance business, business carried on by building societies, friendly societies, industrial and provident societies and credit unions and the provision of other financial services. More specifically, but without prejudice to the generality of paragraph (i), by clause 3(A)(ii)(a) its objects included to do anything with a view to or arising in connection with the transfer to the Company of all or any of the functions to which section 114 of the Financial Services Act 1986 applies or the vesting in the Company of powers or functions pursuant to any other law or any regulation from time to time having effect in any part of the United Kingdom. As to powers, clause 3(B) provided as follows: With respect to the foregoing objects the powers of the Company shall include (but not be limited to) powers to do any of the following where the directors of the Company consider the same to be incidental or conducive to the objects of the Company: . (vi) to institute legal or arbitration proceedings or itself to establish and operate procedures for the settlement of disputes. In February 2001, following the enactment of FSMA, clause 3 was amended and simplified. In its amended form it reads: The Authoritys objects are: (A) to carry out any functions conferred on the Authority by or under any provision of any legislation, as amended from time to time, and to carry out such other functions or exercise such powers as, from time to time, may be carried out or exercisable by the Authority; (B) to carry out any other function or exercise any other power as may, in the Authoritys view, assist or enable it to carry out the functions and powers referred to above or which the Authority considers incidental, desirable or expedient. The relevant provisions of FSMA (as amended) So far as material, FSMA (as amended) provides: 1. The Financial Services Authority 2. The Authoritys general duties (1) The body corporate known as the Financial Services Authority (the Authority) is to have the functions conferred on it by or under this Act. (2) The Authority must comply with the requirements as to its constitution set out in Schedule 1. (3) Schedule 1 also makes provision about the status of the Authority and the exercise of certain of its functions. (4) Section 249 of the Banking Act 2009 provides for references to functions of the Authority (whether generally or under this Act) to include references to functions conferred on the Authority by that Act (subject to any order under that section). (1) In discharging its general functions the Authority must, so far as is reasonably possible, act in a way (a) which is compatible with the regulatory objectives; and (b) which the Authority considers most appropriate for the purpose of meeting those objectives. (2) The regulatory objectives are (a) market confidence; (ab) financial stability; (b) public awareness; (c) the protection of consumers; and (d) the reduction of financial crime. 401. Proceedings for offences (1) In this section offence means an offence under this Act or subordinate legislation made under this Act. (2) Proceedings for an offence may be instituted in England and Wales only (a) by the Authority or the Secretary of State; or (b) by or with the consent of the Director of Public Prosecutions. (3) Proceedings for an offence may be instituted in Northern Ireland only (a) by the Authority or the Secretary of State; or (b) by or with the consent of the Director of Public Prosecutions for Northern Ireland. (4) Except in Scotland, proceedings for an offence under section 203 may also be instituted by the Office of Fair Trading. (5) In exercising its power to institute proceedings for an offence, the Authority must comply with any conditions or restrictions imposed in writing by the Treasury. 402. Power of the Authority to institute proceedings for certain other offences (6) Conditions or restrictions may be imposed under subsection (5) in relation to (a) proceedings generally; or (b) such proceedings, or categories of proceedings, as the Treasury may direct. (1) Except in Scotland, the Authority may institute proceedings for an offence under (a) Part V of the Criminal Justice Act 1993 (insider dealing); (b) prescribed regulations relating to money laundering; or (c) Schedule 7 to the Counter Terrorism Act 2008 (terrorist financing or money laundering). (2) In exercising its power to institute proceedings for any such offence, the Authority must comply with any conditions or restrictions imposed in writing by the Treasury. (3) Conditions or restrictions may be imposed under subsection (2) in relation to (a) proceedings generally; or (b) such proceedings or categories of proceedings, as the Treasury may direct. The FSAs powers to prosecute before the enactment of FSMA The central submission of Mr Miskin QC is that sections 1(1), 401 and 402 of FSMA provide a complete code within which the FSA must operate and that its only powers to prosecute are those referred to in sections 401 and 402. As we shall explain, before the enactment of FSMA the FSA could initiate criminal proceedings for any offence which fell within its objects as defined by its memorandum and articles of association, subject to any restriction or condition that was imposed by the statute which created the offence. Every person has the right to bring a private prosecution: see, for example Gouriet v Union of Post Office Workers [1978] AC 435, 497H per Lord Diplock. The right to bring private prosecutions has been expressly preserved by section 6 of the Prosecution of Offences Act 1985 which provides: (1) Subject to subsection (2) below, nothing in this Part shall preclude any person from instituting any criminal proceedings or conducting any criminal proceedings to which the Directors duty to take over the conduct of proceedings does not apply. Nothing in section 6(1) excludes bodies corporate from the definition of any person. A corporation may therefore bring a prosecution provided that it is permitted to do so by the instrument that gives it the power to act. As Lord Mance noted in Jones v Whalley [2007] 1 AC 67 at para 38, private prosecutions may be initiated by private bodies such as high street stores, by charities such as NSPCC and RSPCA, or by private individuals. In Broadmoor Special Health Authority v Robinson [2000] QB 775 at para 25, Lord Woolf MR said: The statutes only rarely provide expressly that a particular public body may institute proceedings in protection of specific public interests. It is usually a matter of implication. If a public body is given responsibility for performing public functions in a particular area of activity, then usually it will be implicit that it is entitled to bring proceedings seeking the assistance of the courts in protecting its special interests in the performance of those functions. In R (Hunt) v Criminal Cases Review Commission [2001] QB 1108 at para 20, Lord Woolf CJ said in relation to the common law power of the Inland Revenue Commissioners to bring prosecutions: Great importance has always been attached to the ability of an ordinary member of the public to prosecute in respect of breaches of the criminal law. If an ordinary member of the public can bring proceedings for breaches of the criminal law, it would be surprising if the Inland Revenue were not in a similar position. The general position, therefore, is that the FSA has always been able to bring any prosecution subject to statutory restrictions and conditions and provided that it is permitted to do so by its memorandum and articles of association. Most statutes which create offences do not specify who may prosecute or on what conditions. Typically, they simply state that a person who is guilty of the offence in question shall be liable to a specified maximum penalty, it being assumed that anybody may bring the prosecution. Examples of this technique of statutory drafting are to be found in the provisions of POCA which are in play in the present case. Section 327(1) provides that a person commits an offence if he (a) conceals criminal property; (b) disguises criminal property etc. Section 328 provides that a person commits an offence if he enters into or becomes concerned in an arrangement which . A person guilty of an offence under section 327 or 328 is liable to the maximum penalties specified in section 334. It follows that before the enactment of FSMA, the FSA could have prosecuted the appellant for offences contrary to sections 327 and 328 of POCA, if POCA had been in force at that time. But some statutes specify who may prosecute and impose restrictions and conditions on their power to prosecute. These are often statutes which create technical or financial offences. An example of such a statute which affected the FSA before FSMA was enacted was the Financial Services Act 1986. Section 201(1) of that Act provided that proceedings in respect of an offence under any provision of that Act (other than section 133 or 185) should not be instituted in England and Wales except by or with the consent of the Secretary of State or the Director of Public Prosecutions (DPP). Section 114 provided that the Secretary of State could transfer certain functions to other bodies. Section 201(4) provided that these functions included the institution of proceedings but any transfer of that function shall be subject to a reservation that it is to be exercisable by him concurrently with the designated authority and so as to be exercisable by the agency subject to such conditions or restrictions as the [Secretary of State] may from time to time impose. By article 7 of the Financial Services Act 1986 (Designation) Order 1987, the function of the Secretary of State under section 201(1) of the 1986 Act to institute proceedings with respect to any offence specified in Schedule 3 to the Order was transferred to the SIB subject to a reservation that it is to be exercisable by the Secretary of State concurrently with the [SIB] and so as to be exercisable by the [SIB] subject to such conditions or restrictions as the Secretary of State may from time to time impose. The general position before the enactment of FSMA was that the FSA had the power of a private individual to prosecute provided that this fell within the scope of its objects and prosecution was not precluded or restricted by the terms of the relevant statute. It is against that background that the true construction of FSMA falls to be considered. The particular question that arises is whether the effect of sections 1(1), 401 and 402(1) was to deprive the FSA of the general power it previously enjoyed to bring prosecutions and confine it to the power to bring prosecutions falling within sections 401 and 402(1). The true construction of FSMA Section 401 deals with the prosecution of offences under FSMA itself or any subordinate legislation made under it. Section 401(2) provides that proceedings for such an offence may be instituted in England and Wales only by the FSA or the Secretary of State or by or with the consent of the Director of Public Prosecutions. We agree with the Court of Appeal that the purpose of this provision is not to confer the power to prosecute, but to limit the persons who may prosecute for such offences. If the statute had not specified who could prosecute, then any individual could have prosecuted as could any corporate body, provided that it was authorised by its constitution to do so. As for section 402(1), Mr Miskin submits that it defines exhaustively the other offences which the FSA may prosecute. If that is not its purpose, he asks: what is its purpose? Before we turn to the detail of section 402, it is legitimate to ask why Parliament should have intended to deprive the FSA (but no one else) of the power it previously enjoyed to bring prosecutions for offences other than those mentioned in sections 401 and 402. Mr Miskin was unable to identify any policy reason why Parliament should have intended to do this. No mischief has been identified which required such action. Far from there being any reason why Parliament would have intended to remove from the FSA a power to prosecute which it previously enjoyed, there are reasons internal to FSMA itself which suggest that Parliament would not have intended to deprive the FSA of the power to prosecute for offences of financial crime (of which sections 327 and 328 of POCA are examples). One of the functions of the FSA is, so far as is reasonably practicable, to act in a way which it considers most appropriate for the purpose of meeting the regulatory objectives which include the reduction of financial crime: see section 2 of FSMA. One of the ways that the FSA might reasonably consider that this objective can be met is by prosecuting those who commit offences of a financial nature. It would have been perverse of Parliament to impose on the FSA the general duties set out in section 2 of FSMA and yet at the same time deprive it of the power it previously enjoyed to prosecute financial offences. It would have been even more perverse not to remove the power to bring prosecutions for offences (other than those under FSMA and its subordinate legislation itself) from anyone else, including private individuals. It is most unlikely that Parliament would have intended to create such a regime. Further, if the power of the FSA is limited to the prosecution of offences under sections 401 and 402 then, as Mr Perry QC points out, there are consequences which it is unlikely that Parliament intended. For example, it means that, if in the course of its investigations, the FSA discovers evidence which would support a prosecution under section 401 or 402 of FSMA and a prosecution for other offences, it has to refer the question whether to prosecute those other offences to the DPP. This is a most inefficient and unsatisfactory way of prosecuting crime. It also means that, if the evidence given at trial does not support a count on the indictment which is being prosecuted by the FSA, but it does support a different offence which ex hypothesi the FSA cannot prosecute, an application for leave to amend the indictment to add a new count to reflect the evidence cannot be made by the FSA, even though a prosecutor would ordinarily make such an application. Parliament cannot have intended to create such an absurd state of affairs. Finally, it also means that the FSA cannot prosecute an offence of conspiracy to commit offences under FSMA, since the offence of conspiracy, whether under section 1 of the Criminal Law Act 1977 or at common law, falls outside the powers of prosecution expressly conferred by sections 401 and 402. As to this last point, Mr Miskin responds that the substantive offence of insider dealing may be committed by encouraging another to deal or disclosing information to another: see section 52(2) of the Criminal Justice Act 1993. But a conspiracy to deal is different from encouraging another to deal or disclosing information to another, not least because it may be committed at an earlier stage of the enterprise. Mr Miskin also makes the point that offences under the prescribed regulations relating to money laundering (section 402(1)(b)), Schedule 7 to the Counter Terrorism Act 2008 (section 402(1)(c)) and under FSMA and its subordinate legislation (section 401(1)) are all conduct offences or regulatory compliance offences. But that does not mean that it is impossible for one person to conspire with another to commit such an offence. In these circumstances, it is unlikely that Parliament would have intended to restrict the power of the FSA to the prosecution of the offences mentioned in sections 401 and 402. The technique usually employed by the legislature to indicate an intention to limit the class of persons who may prosecute a particular offence is the obvious one of stating expressly that a particular offence may only be prosecuted by a specified person or persons. That is the technique that was employed in section 401(2). It is striking that it was not employed in section 402(1). Other forms of words are sometimes used, but to the same effect. Thus section 66(1) of the Industrial and Provident Societies Act 1965 provides that proceedings for the recovery of a fine which is recoverable under that Act on summary conviction may be instituted by the persons specified (these include the FSA) and (except in Scotland) no other person may institute such proceedings. Another example is to be found in section 96(5) of the Banking Act 1987 which provides that no proceedings for an offence under that Act shall be instituted in England and Wales except by or with the consent of the Director of Public Prosecutions or the Bank. There is no such provision in FSMA excluding the power of the FSA to prosecute offences which are not mentioned in section 401 or 402. So what purpose is served by section 402(1)? It is necessary to consider each paragraph separately. In order to understand the reason for section 402(1)(a), regard must be had to section 61 of the Criminal Justice Act 1993 which provides for penalties and prosecutions in relation to the offence of insider dealing. Section 61(1) specifies the maximum penalties that may be imposed. Section 61(2) provides that proceedings for offences under this Part shall not be instituted in England and Wales except by or with the consent of the Secretary of State or the DPP. The effect of section 402(1)(a) and (2) in relation to prosecutions for insider dealing by the FSA is twofold. First, where a prosecution for the offence is instituted by the FSA, the need for the consent of the Secretary of State or DPP is dispensed with. It was correctly held by the Divisional Court in R (Uberoi and another) v City of Westminster Magistrates Court [2009] 1 WLR 1905 at para 29 that the effect of section 402(1)(a) is that the FSA can prosecute offences of insider dealing without first obtaining consent of the Secretary of State or the DPP. Sir Anthony May P reached this conclusion by construing may institute in section 402(1) as having the same meaning as may be instituted by in section 401(2). But the better view is simply that the effect of the plain language of section 402(1)(a) is to dispense with the requirement for consent imposed by section 61(2) of the 1993 Act. Secondly, in prosecuting for this (and any other offence under section 402(1)), the FSA must comply with any conditions or restrictions imposed in writing by the Treasury. As regards section 402(1)(b), it is true that its purpose is not to dispense with the need for the consent of the Secretary of State or the DPP. It is also true that the Money Laundering Regulations 1993 (SI 1993/1933) which, by the Financial Services and Markets Act 2000 (Regulations Relating to Money Laundering) Regulations 2001 (SI 2000/1819), were prescribed regulations for the purposes of section 402(1)(b) of FSMA, contained no restriction on who could prosecute offences created by those regulations and imposed no requirement that the consent of the Secretary of State or the DPP be obtained for such a prosecution. But section 402(1)(b) envisaged that there might be other prescribed regulations in the future and it provided in advance that the FSA would have the power to prosecute offences under those regulations. Indeed, the Money Laundering Regulations 2007 (SI 2007/2157), which came into force on 15 December 2007, were such prescribed regulations. Regulation 45 of these regulations created the offences of failing to comply with the requirements specified in various of the regulations. Regulation 46(1) provided that proceedings for an offence under regulation 45 may be instituted by a number of specified persons or bodies. These did not include the FSA, no doubt because section 402(1)(b) had already conferred that power on the FSA. But perhaps the main reason for section 402(1)(b) is that in this way Parliament ensured that any prosecution by the FSA of offences under the prescribed regulations relating to money laundering would be subject to the conditions and restrictions imposed by the Treasury. Section 402(1)(c) was inserted by paragraph 33(4) to Schedule 7 to the Counter Terrorism Act 2008. Paragraph 33(1) provides that proceedings for an offence under Schedule 7 may be instituted in England and Wales only by and there follows a list of five bodies including the FSA and the DPP. It is true, therefore, that there was no need to state in section 402(1) of FSMA (by amendment) that the FSA has the power to institute proceedings for an offence under Schedule 7 to the 2008 Act. This is not, however, the only place in FSMA where, oddly, one finds a cross reference to and statement of the effect of the provision of another statute: see section 1(4). But section 402(1)(c) also serves the important purpose of ensuring that any prosecution for offences under Schedule 7 to the 2008 Act is subject to the conditions and restrictions imposed by the Treasury. It follows that there are rational reasons for the inclusion in FSMA of section 402(1)(a), (b) and (c). There is no need to infer that Parliament must have intended to limit the FSAs power to the prosecution of the offences stated in those three paragraphs on the ground that there is no other explanation for their inclusion in the statute. In support of their view that FSMA did not provide a complete code, the Court of Appeal relied on section 1(4) of the Act: see para 20 of their judgment. They said that section 1(4), which refers in the context of the Banking Act 2009 to functions of the FSA whether generally or under this Act contemplates that the FSA has wider functions than those under FSMA. Mr Miskin submits that the Court of Appeal placed undue weight on the wording of section 1(4) as an aid to the construction of FSMA, since it was a later amendment introduced by the Banking Act 2009 and, in the absence of clear language, section 1(4) cannot widen the functions of the FSA if they were otherwise limited. We consider that at most section 1(4) is consistent with what we consider to be the true meaning and effect of sections 401 and 402. If it stood alone, it would not carry any weight. But there is a yet further reason why the complete code theory must be rejected. The effect of the Financial Services and Markets Act (Mutual Societies) Order 2001/2617 was to confer on the FSA powers (including the power to prosecute) previously enjoyed by other bodies. Examples are the power to prosecute for the recovery of a fine under section 66(1) of the Industrial and Provident Societies Act 1965; the power to take proceedings under section 111 of the Building Societies Act 1986; and the power to take proceedings under section 107 of the Friendly Societies Act 1992. The way this was done by the 2001 Order was to amend the earlier legislation by substituting the FSA for the body previously designated as the prosecuting authority. Thus, for example, para 190 of Schedule 3 to the 2001 Order provided that in section 111 of the Building Societies Act 1986 the FSA was substituted for the Commission. It did not provide that the power to prosecute conferred by these statutes was now deemed to be conferred by FSMA. It follows that the powers of the FSA under these statutes were not derived from FSMA and were not treated as being so derived. It is clear, therefore, that sections 401 and 402 do not exhaustively define the prosecutorial powers of the FSA. The force of this point is not weakened by the fact that there are provisions in other enactments on which Mr Miskin relies which provide that functions performed by the FSA under those other statutes are deemed to be performed under FSMA. For example, section 15(2) of the Insolvency Act 2000 provides that For the purposes of the Financial Services and Markets Act 2000, the functions conferred on the Financial Services Authority by virtue of Schedules 1 and 2 are to be treated as conferred by that Act. Other examples are para 38 of Schedule 11 to POCA and para 41(1) of Schedule 7 to the Counter Terrorism Act 2008. The latter provides that the functions of the FSA under this Schedule shall be treated for the purposes of Parts 1, 2 and 4 of Schedule 1 to the Financial Services and Markets Act 2000. as if they were functions conferred on the FSA under that Act. It is only if all functions performed by the FSA under other statutes were deemed to be performed under FSMA that these deeming provisions could be relied on in support of the argument that sections 401 and 402 create a complete code. But as has been seen, that is not the case. We should briefly refer to some of the other arguments advanced by Mr Miskin. He relies on paras 710 to 713 of the Explanatory Notes to FSMA which, we are prepared to accept, arguably suggest that the draftsman of the Notes believed that section 401 and 402 provides an exhaustive code. Para 712 states that section 402 allows the Authority to prosecute in England, Wales or Northern Ireland two criminal offences which are not in this Act (section 402(1)(c) was added in 2008). It is unnecessary to dwell on this point. The Notes, prepared by the Treasury, indicate the intention and belief of the Treasury. They cannot be relied on to determine the intention of Parliament: see R (Westminster City Council) v National Asylum Support Service [2002] 1 WLR 2956 per Lord Steyn at para 6. Mr Miskin also relies on section 1(1) as showing that the FSAs functions are limited to those conferred by FSMA. He submits that, unless it is so construed, the subsection is superfluous, since no purpose is served by providing that the functions conferred on the FSA by FSMA are the functions of the FSA. This is a weak argument as arguments based on superfluity usually are. But section 1(1) is not superfluous. Its purpose is to make clear at the outset that it is the FSA, rather than any other person or body, who is to have the functions that are conferred on it by FSMA. It neither states nor implies that the FSA is to have only those functions conferred on it by FSMA. As has been seen, the FSA unquestionably has other functions too. The next argument is that there is a symmetry between the FSAs prosecutorial powers contained in sections 401 and 402 and its investigative powers under Part XI, for example its powers to require information of authorised persons (section 167); its power to appoint persons to carry out investigations in particular cases (section 168); its power to require any person to attend and provide information or documents and to provide assistance (section 173); and to obtain warrants for entry of premises on a failure to comply with information requirements etc (section 176). It is also submitted that there is a symmetry between the FSAs prosecutorial powers in sections 401 and 402 and its powers under Part XXV to seek injunctions and restitution. It is said that all these particular powers, tailored to the offences in sections 401 and 402, support the complete code interpretation. But in the light of all the other factors which we have mentioned, it is impossible to infer from the inclusion of these powers that Parliament intended that the FSAs power to prosecute should be limited to offences under sections 401 and 402. As the Court of Appeal said at para 32, the right of private prosecution does not depend on the enjoyment of corresponding powers of investigation, and it will frequently be the case that a private prosecutor lacks relevant statutory powers of investigation. The fact that the FSA does not have statutory powers of investigation in relation to offences under POCA tells one nothing about its power to prosecute those offences. It is also to be noted that, in so far as FSMA applies to Scotland, the FSA has the powers of investigation but the Lord Advocate prosecutes the offences referred to in sections 401 and 402. Thus, there is no symmetry in Scotland. This provides further support for the view that the lack of symmetry in England and Wales is of no significance. Finally, Mr Miskin advanced, albeit faintly, the argument that a prosecution of offences contrary to sections 327 and 328 of POCA fell outside the objects of the FSAs memorandum and articles of association. But in view of the wide language of clause 3 of the amended memorandum of association and the general duties of the FSA imposed by section 2 of FSMA, this argument is hopeless. Overall conclusion For all these reasons, we would hold that the FSA has the power to prosecute offences of money laundering contrary to sections 327 and 328 of POCA. |
This appeal raises two issues as to the common law privilege against self incrimination. The first issue is as to the meaning of the words proceedings for infringement of rights pertaining to intellectual property in section 72(2)(a) of the Senior Courts Act 1981 (the 1981 Act). The second issue is whether, on the footing that the appellant, Mr Glenn Mulcaire, would by complying with an order of Mann J made on 19 November 2010 tend to expose himself to criminal proceedings for conspiracy, such proceedings would or would not be for a related offence within the meaning of section 72(5) of the 1981 Act. The facts These issues arise in the context of the interception of mobile phone messages, at present a topic of widespread interest and concern. The respondent, the claimant in the proceedings, is Ms Nicola Phillips. She worked for Max Clifford Associates (MCA), the corporate vehicle of Mr Max Clifford, the well known public relations consultant. Her responsibilities included both trying to place in the media favourable stories about clients of MCA, and trying to prevent the placing in the media of unfavourable stories about them. Mr Mulcaire was during 2005 and 2006 working as a private investigator. He was often engaged by staff on the News of the World, then a Sunday newspaper published by News Group Newspapers Ltd (NGN). NGN is a party to the proceedings but did not appear before the Court of Appeal or in this Court. During the same period Mr Clive Goodman was employed by NGN as a reporter on the News of the World with responsibility for news about the royal family and household. After an investigation by the Metropolitan Police Mr Mulcaire and Mr Goodman were charged with one count of conspiracy to intercept communications, contrary to section 1(1) of the Criminal Law Act 1977 (the 1977 Act). This charge related to voicemail messages of three members of the royal household. Mr Mulcaire was also charged with five further counts under section 1(1) of the Regulation of Investigatory Powers Act 2000, one relating to voicemail messages on Max Cliffords mobile phone. In November 2006 Mr Mulcaire pleaded guilty to all these counts, and Mr Goodman pleaded guilty to the count of conspiracy. In January 2007 Mr Mulcaire was sentenced to a total of six months imprisonment, and Mr Goodman to four months. During 2008, 2009 and 2010 a large number of civil claims were commenced by individuals who claimed that messages on their mobile phones had been unlawfully intercepted. These claims were brought against NGN, and sometimes against Mr Mulcaire as well. They were often referred to as phone hacking claims. Case management of the claims was undertaken by Vos J. Many of the claims have already been compromised. On 10 May 2010 Ms Phillips commenced proceedings against NGN (initially as the only defendant). Part of her case (set out in particulars within her re amended particulars of claim, para 8.5) is as follows: Ms Phillipss clients often leave voicemail messages on her mobile phone and she on theirs. In addition to dealing with their commercial affairs, Ms Phillips often develops amicable relationships with her clients over the course of time. Accordingly, voicemail messages left by Ms Phillipss clients sometimes contain factual information, some of which is private information and some of which is commercially confidential information. This includes private and/or confidential information relating to her clients personal lives and relationships, health, finances, incidents in which the police have become involved, personal security or publicity issues, commercial business transactions, professional relationships and future career plans. The first issue, in more concrete terms, is whether the information described in this pleading is technical or commercial information falling within the definition of intellectual property in section 72(5) of the 1981 Act. Paragraphs 9, 10 and 11 of her re amended particulars of claim plead facts on the basis of which it is contended that Mr Mulcaire and NGN owed Ms Phillips an equitable duty of confidence and a duty of privacy in respect of her incoming and outgoing voicemail messages. The pleading also states (para 15) that Mr Mulcaire was at the time a contracted employee of NGN (though counsel did not treat that as relevant to the issues in this appeal). Ms Phillips claims an injunction, detailed disclosure of information, delivery up of documents, and an inquiry as to damages or (at her election) an account of profits. She does not claim that the alleged interception of her emails has caused her personal financial loss. Her pleaded case is verified by her appended statement of truth and a short witness statement by her solicitor, Mr James Heath. On 12 October 2010 Ms Phillips applied for an order that Mr Mulcaire should be joined as a defendant in the proceedings and that he should serve a witness statement disclosing information under several heads. Mr Mulcaire did not resist being joined as a party, but he did resist the order for disclosure on the ground of his privilege against self incrimination. Against that Ms Phillips relied on section 72 of the 1981 Act as excluding the privilege. She was successful before Mann J, who gave judgment on 17 November 2010 [2010] EWHC 2952 (Ch). The Court of Appeal dismissed Mr Mulcaires appeal on 1 February 2012 [2012] EWCA Civ 48, [2012] 2 WLR 848. At the same time it dismissed a similar appeal from Vos J in proceedings brought by Mr Stephen Coogan, the well known comedian. Mr Mulcaire appeals to the Supreme Court with permission granted on 14 February 2012. In the meantime Mr Ian Edmondson, an employee of NGN, has been joined as a third defendant in the proceedings. Section 72 of the 1981 Act Section 72, as amended in immaterial respects by the Copyright, Designs and Patents Act 1988 and the Civil Partnership Act 2004, is in the following terms: (1) In any proceedings to which this subsection applies a person shall not be excused, by reason that to do so would tend to expose that person to proceedings for a related offence or for the recovery of a related penalty (a) from answering any questions put to that person in the first mentioned proceedings; or (b) from complying with any order made in those proceedings. (2) Subsection (1) applies to the following civil proceedings in the High Court, namely (a) proceedings for infringement of rights pertaining to any intellectual property or for passing off; (b) proceedings brought to obtain disclosure of information relating to any infringement of such rights or to any passing off; and (c) proceedings brought to prevent any apprehended infringement of such rights or any apprehended passing off. (3) Subject to subsection (4), no statement or admission made by a person (a) in answering a question put to him in any proceedings to which subsection (1) applies; or (b) in complying with any order made in any such proceedings, shall, in proceedings for any related offence or for the recovery of any related penalty, be admissible in evidence against that person or (unless they married or became civil partners after the making of the statement or admission) against the spouse or civil partner of that person. (4) Nothing in subsection (3) shall render any statement or admission made by a person as there mentioned inadmissible in evidence against that person in proceedings for perjury or contempt of court. (5) In this section intellectual property means any patent, trade mark, copyright, design right, registered design, technical or commercial information or other intellectual property; related offence, in relation to any proceedings to which subsection (1) applies, means (a) in the case of proceedings within subsection (2)(a) or (b) (i) any offence committed by or in the course of the infringement or passing off to which those proceedings relate; or (ii) any offence not within sub paragraph (i) committed in connection with that infringement or passing off, being an offence involving fraud or dishonesty; (b) in the case of proceedings within subsection (2)(c), any offence revealed by the facts on which the plaintiff relies in those proceedings; related penalty, in relation to any proceedings to which subsection (1) applies means (a) in the case of proceedings within subsection (2)(a) or (b), any penalty incurred in respect of anything done or omitted in connection with the infringement or passing off to which those proceedings relate; (b) in the case of proceedings within subsection (2)(c), any penalty incurred in respect of any act or omission revealed by the facts on which the plaintiff relies in those proceedings. (6) Any reference in this section to civil proceedings in the High Court of any description includes a reference to proceedings on appeal arising out of civil proceedings in the High Court of that description. The section was introduced as an amendment to the Bill which became (under its original name) the Supreme Court Act 1981. Its legislative purpose must be found within the four corners of the section; it is not part of any wider legislative scheme. But it is common ground that it was enacted as Parliaments response to the decision of the House of Lords in Rank Film Distributors Ltd v Video Information Centre [1982] AC 380. That was a case of large scale infringement of copyright by making and marketing unauthorised video copies of feature films made and distributed by the Rank Organisation. It was the first case in which the House of Lords considered Anton Piller orders: Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55. Such orders have been put on a statutory basis by section 7 of the Civil Procedure Act 1997 and are now called search orders. The House of Lords cast no doubt on the courts jurisdiction to grant such orders but held, reluctantly, that such an order could not be made because of the defendants potential exposure to a charge of conspiracy to defraud: see Lord Wilberforce at p 441 and Lord Fraser of Tullybelton at pp 445 446. The other Law Lords agreed with one or both of Lord Wilberforce and Lord Fraser. Lord Russell of Killowen observed (p 448): Inasmuch as the application of the privilege in question can go a long way in this and other analogous fields to deprive the owner of his just rights to the protection of his property I would welcome legislation somewhat on the lines of section 31 of the Theft Act 1968: the aim of such legislation should be to remove the privilege while at the same time preventing the use in criminal proceedings of statements which otherwise have been privileged. Section 31 of the Theft Act 1968 is only one of numerous statutory provisions by which Parliament has thought it right to restrict the privilege against self incrimination, while providing alternative means of protection in criminal proceedings, in order to avoid the injustice of victims of crime being deprived of an effective civil remedy. Mr Beloff QC (appearing with Mr Jeremy Reed for Ms Phillips) provided the Court with a list of no fewer than 25 statutory provisions, apart from section 72 of the 1981 Act, which qualify the privilege. A further list specifies a number of cases (including the decisions of both the Court of Appeal and the House of Lords in Rank and in AT & T Istel Ltd v Tully [1993] AC 45, the latter case being one which it will be necessary to return to) in which some very distinguished judges have criticised the privilege against self incrimination as it may operate in cases of serious commercial fraud or piracy. For the present it is sufficient to cite what Lord Neuberger MR said in the Court of Appeal in this case, [2012] 2 WLR 848, para 18. After referring to some of the earlier criticisms he observed: I would take this opportunity to express my support for the view that PSI has had its day in civil proceedings, provided that its removal is made subject to a provision along the lines of section 72(3). Whether or not one has that opinion, however, it is undoubtedly the case that, save to the extent that it has been cut down by statute, PSI remains part of the common law, and that it is for the legislature, not the judiciary, to remove it, or to cut it down. The second sentence of this paragraph must carry no less weight than the first. In relation to the correct general approach to the construction of section 72 Lord Neuberger stated (para 26): The purpose of section 72 is self evidently to remove PSI in certain types of case, namely those described in section 72(2). While there have been significant judicial observations doubting the value of PSI in civil proceedings, it would be wrong to invoke them to support an artificially wide interpretation of the expression, as it is clear that Parliament has decided that section 72 should contain only a limited exception from the privilege. On the other hand, in the light of the consistent judicial questioning as to whether PSI is still appropriate in civil proceedings, it would be rather odd for a court to interpret such a provision narrowly. Further, the fact that PSI is an important common law right does not persuade me that the expression should be given a particularly narrow meaning. He then referred with approval to some observations of Moore Bick LJ in Kensington International Ltd v Republic of Congo [2007] EWCA Civ 1128, [2008] 1 WLR 1144, para 36, as to the significance of the removal of the privilege being largely, if not entirely, balanced by the disclosed material being made inadmissible in criminal proceedings. Mr Millar QC (for Mr Mulcaire) submitted that the correct approach was to be found in cases like Sociedade Nacional de Combustiveis de Angola UEE v Lundqvist [1991] 2 QB 310, 337 (Beldam LJ) and R v Director of Serious Fraud Office, Ex p Smith [1993] AC 1. Committee agreed) said at p 40, In the latter case Lord Mustill (with whom the rest of the Appellate That there is strong presumption against interpreting the statute as taking away the right of silence, at least in some of its forms, cannot in my view be doubted. Recently, Lord Griffiths (delivering the opinion in the Privy Council in Lam Chi ming v The Queen [1991] 2 AC 212, 222) described the privilege against self incrimination as deep rooted in English law, and I would not wish to minimise its importance in any way. Nevertheless it is clear that statutory interference with the right is almost as old as the right itself. Since the 16th century legislation has established an inquisitorial form of investigation into the dealings and assets of bankrupts which is calculated to yield potentially incriminating material, and in more recent times there have been many other examples, in widely separated fields, which are probably more numerous than is generally appreciated. These statutes differ widely as to their aims and methods. In the first place, the ways in which the overriding of the immunity is conveyed are not the same. Sometimes it is made explicit. More commonly, it is left to be inferred from general language which contains no qualification in favour of the immunity. Secondly, there are variations in the effect on the admissibility of information obtained as a result of the investigation. The statute occasionally provides in so many terms that the information may be used in evidence; sometimes that it may not be used for certain purposes, inferentially permitting its use for others; or it may be expressly prescribed that the evidence is not to be admitted; or again, the statute may be silent. Since then Parliament has (by section 59 of and Schedule 3 to the Youth Justice and Criminal Evidence Act 1999) amended a considerable number of different statutory provisions of this type so as to introduce a prohibition on material disclosed under compulsion being used in evidence in criminal proceedings. This was no doubt in anticipation of the coming into force of the Human Rights Act 1998. I have some reservations as to whether the existence of a balancing provision of this sort alters the need for clear words if the privilege is to be removed or curtailed. As Moore Bick LJ acknowledged, there is not a perfect balance; material disclosed under compulsion may point to a line of inquiry producing evidence which is admissible in criminal proceedings, to the detriment of the accused. But I respectfully agree with Lord Neuberger that in a case where Parliament has left no room for doubt that it intends the privilege to be withdrawn, there is no need for the Court to lean in favour of the narrowest possible construction of the reach of the relevant provision. As already noted, an important part of the legislative purpose of these provisions is to reduce the risk of injustice to victims of crime, and that purpose might be frustrated by an excessively narrow approach. The structure and language of section 72 Section 72(1) contains the heart of the section. It provides (so far as relevant to this appeal) that in civil proceedings to which it applies, a person is not to be excused from answering any questions put to him, or from complying with any order, by reason that to do so would tend to expose that person to proceedings for a related offence. It is not suggested by either side that the meaning of the phrase tends to expose in the subsection is any different from its traditional meaning, which goes back at least to R v Boyes (1861) 1 B & S 311, and is now given statutory form in section 14 of the Civil Evidence Act 1968. The classic statement in R v Boyes, at p 330, was cited by Mann J in para 23 of his judgment. Subsection (2), in conjunction with the definition of intellectual property in subsection (5), raises the first issue: are the proceedings taken by Ms Phillips proceedings for infringement of rights pertaining to any intellectual property? The definition of related offence in subsection (5) raises the second issue: would a charge of conspiracy to commit offences under section 1(1) of the 1977 Act be the charge of an offence (i) committed by or in the course of the infringement to which Ms Phillipss civil proceedings relate, or (ii) committed in connection with that infringement . being an offence involving fraud or dishonesty? If such a conspiracy would not be a related offence, Mr Mulcaire is entitled to rely on his privilege against self incrimination, regardless of the fact that he might also be charged with another offence or offences which are related offences. A reasonable apprehension of being charged with a single non related offence would be enough to preserve the claim to privilege. In Rank [1982] AC 380, 441, Lord Wilberforce recognised the need to consider the practical probabilities (rather than theoretical possibilities) of what charges might be brought, and concluded on the facts of that case that a charge of conspiracy to defraud was the most likely charge so that (subject to a final escape route which was closed off) privilege must inevitably attach. These observations may possibly have had some influence on the drafting of the definition of related offence in section 72(5). Section 72(3) contains the balancing provision in a form which mirrors the structure of subsection (1). It is qualified (in relation to proceedings for perjury or contempt of court) by subsection (4). The definition of intellectual property Mr Millar, and to a lesser extent Mr Beloff, placed before the Court a variety of definitions of the expression intellectual property, some taken from statutes and some from the works of legal scholars. They are not particularly helpful because, as Vos J put it succinctly in his judgment on Mr Coogans claim, and another linked claim, reported as Gray v News Group Newspapers Ltd [2011] EWHC 349 (Ch), [2011] 2 WLR 1401, para 77: A review of intellectual property textbooks shows that there is no universal definition of the term, which is no doubt why Parliament has adopted a variety of definitions for different situations. The starting point must be the language of the definition in section 72(5). Bennion on Statutory Interpretation, 5th ed (2008) quotes this definition, at p 570, as an example of what he terms a clarifying definition, the purpose of which is to avoid doubt as to whether the term does or does not include certain matters: A common remedy is to specify the main ingredients, and rely for any others on the potency of the term defined. This greatly reduces the danger area. The form is T means A, B, C or D, or any other manifestation of T. The term potency is explained at pp 562 564, with a citation of what Lord Hoffmann said in MacDonald v Dextra Accessories Ltd [2005] UKHL 47, [2005] 4 All ER 107, para 18: a definition may give the words a meaning different from their ordinary meaning. But that does not mean that the choice of words adopted by Parliament must be wholly ignored. If the terms of the definition are ambiguous, the choice of the term to be defined may throw some light on what they mean. Here there is no particular potency about the expression intellectual property because there is a general consensus as to its core content (patents for inventions, literary, dramatic, musical and artistic copyright, copyright in recordings, films and broadcasts, registered and unregistered design rights and trademarks, all now governed by national statutes and international treaties), but no general consensus as to its limits. The sweeping up words at the end of the definition (or other intellectual property) no doubt include new and specialised statutory rights akin to those in the core content, such as plant breeders rights under the Plant Varieties Act 1997 and database rights under the Copyright and Rights in Databases Regulations 1997 (SI 1997/3032). But for present purposes the essential point is that the definition in section 72(5) contains the words technical or commercial information. Parliament has made plain that information within that description is, for the purposes of section 72, to be regarded as intellectual property, whether or not it would otherwise be so regarded. Such limited potency as there is in the expression intellectual property (and more generally, the legislative purpose of section 72 in enhancing protection against unlawful trade competition) may be of assistance in determining the meaning of technical or commercial information. It must be something in which a civil claimant has rights capable of being infringed, since infringement of rights pertaining to intellectual property is what section 72(2)(a) is concerned with. The fact that technical and commercial information ought not, strictly speaking, to be described as property (the majority view of the House of Lords in Boardman v Phipps [1967] 2 AC 46, 89 90, 103 and 127 128; cf 107 and 115) cannot prevail over the clear statutory language. Whether or not confidential information can only loosely, or metaphorically, be described as property is simply irrelevant. I cannot therefore accept Mr Millars submission that the natural meaning of technical or commercial information is limited (in practice, it would be almost nullified) by the sweeping up words or other intellectual property. Nor do I accept that that construction is supported by what Lord Lowry said in AT & T Instel Ltd v Tully [1993] AC 45, 64 65. Lord Neuberger went very fully into that point at paras 41 to 44 of his judgment in the Court of Appeal, and I respectfully and completely agree with his analysis. What Lord Lowry said was not obiter, but his use of the Latin phrase ejusdem generis tended to obscure the real point that he was making. That was that the case was not a claim for infringement of either intellectual property rights or rights in respect of confidential information. Istel (the first plaintiff) had bought control of Abbey (the second plaintiff) from the first two (of 25) defendants, and then discovered that under their control Abbey, a supplier of computer services, had perpetrated a large scale fraud on the Wessex Health Authority. They obtained an ex parte order for disclosure of a range of information and documents, which was then set aside on the ground of the first and second defendants privilege against self incrimination. This was upheld, with considerable reluctance, by the Court of Appeal and the House of Lords. It was not open to the first instance judge, Buckley J to attempt, as he did, to replace the privilege with some alternative protection of his own devising. Section 72 (which seems to have been the plaintiffs last ditch argument) was not in point at all because the claim was for equitable compensation for a breach of fiduciary duty and damages for fraud. The point that Lord Lowry was making was put more simply by Lord Donaldson MR in the Court of Appeal [1992] QB 315, 325: If section 72 were to avail the plaintiffs, they would have to show that they had brought proceedings to obtain disclosure of information relating to an infringement of rights pertaining to commercial information. In fact they are seeking information relating to alleged breaches of quite different rights, namely, the rights to damages for fraud or breach of trust in the various respects alleged in the statement of claim. Technical or commercial information The meaning of technical or commercial information is a more difficult point. Again, there is no doubt general consensus as to its core content. In Faccenda Chicken Ltd v Fowler [1987] Ch 117, a case concerned with the extent of an ex employees duty of confidence, Neill LJ said at p 136: It is clear that the obligation not to use or disclose information may cover secret processes of manufacture such as chemical formulae (Amber Size and Chemical Co Ltd v Menzel [1913] 2 Ch 239), or designs or special methods of construction (Reid & Sigrist Ltd v Moss & Mechanism Ltd (1932) 49 RPC 461), and other information which is of a sufficiently high degree of confidentiality as to amount to a trade secret. He also said at p 138: It is clearly impossible to provide a list of matters which will qualify as trade secrets or their equivalent. Secret processes of manufacture provide obvious examples, but innumerable other pieces of information are capable of being trade secrets, though the secrecy of some information may be only short lived. Whatever the difficulties of exhaustive enumeration, it is clear that the scope of trade secrets extends not only to products and processes, but also to a wide range of financial information about the management and performance of a business, and plans for its future. Mr Millar reminded the Court that the definition in section 72(5) does not refer in terms to confidential information. Not all technical or commercial information is confidential. Huge amounts of technical and commercial information are available to anyone with a personal computer. Businessmen may, especially when faced with losing a valued employee, seek to push out the boundaries of commercial confidentiality. Hoffmann J commented on this in Lock International plc v Beswick [1989] 1 WLR 1268, 1281, a case that warned against abuse of the Anton Piller jurisdiction: Many [employers] have great difficulty in understanding the distinction between genuine trade secrets and skill and knowledge which the employee may take away with him . Judges dealing with ex parte applications are usually also at a disadvantage in dealing with alleged confidential knowledge of technical processes described in technical language, such as the electric circuitry in this case. It may look like magic but turn out merely to embody a principle discovered by Faraday or Ampere. It is only if the information is indeed confidential in the eyes of the law that a claim for breach of confidence (that is, infringement of a right of confidence) can arise. Conversely not all confidential information can, in normal usage, be described as technical or commercial. A secret about a persons private life (for instance, to give an example already mentioned, a life threatening disease which the sufferer does not wish to disclose) is not naturally described in those terms, even if it could (where the individual involved is a celebrity) be turned to financial advantage by disclosing it, in breach of confidence, to the media. In para 32 of his judgment Lord Neuberger recognised this: As a matter of ordinary language, just as technical information means information of a technical nature, it seems to me that commercial information means information which is commercial in character, rather than information which, whatever its nature, may have a value to someone. In other words, the word commercial appears to be a description of the character of the information rather than the fact that it has value. But he went on to consider, in paras 45 to 52, whether confidential information about a persons private life might instead come in as other intellectual property. This was a point that Mann J (para 48) had noted and regarded as arguable, but said no more about. Vos J in Gray and Coogan [2011] 2 WLR 1401, para 84, noted that this point had been raised but received less and less emphasis in the argument of Mr Reed (who then appeared for both claimants). Vos J commented that it would be stretching the statutory definition far too widely to hold that it included confidential private information even where such information could be protected by action. It may not be strictly necessary to decide this point in order to dispose of this appeal, since there is evidence that many of the voicemails on Ms Phillipss mobile phone were both confidential and of a commercial nature. But the point is of general importance and may well be determinative of other claims which are focused on confidential information of a private and personal nature. On this point I respectfully disagree with Lord Neuberger and the other members of the Court of Appeal. In para 45 Lord Neuberger takes as the starting point of his discussion a proposition that I regard as the obviously correct conclusion: At first sight, it might seem that the answer [to the question: can personal information be other intellectual property?] is no, as the draftsman of the definition limited its ambit to technical and commercial information. He then considers a number of arguments leading towards the opposite conclusion. I have to say that I do not find these arguments at all convincing. Paras 46 to 52 make and develop the point that when section 72 was enacted in 1981, the law of confidence was routinely invoked in connection with trade secrets, but rarely in connection with personal secrets. Duchess of Argyll v Duke of Argyll [1967] Ch 302 was an isolated exception. That is so, but it is, with respect, simply confirmation of the natural reading of the definition. The legislative purpose of section 72 was to prevent remedies against commercial piracy, including in particular Anton Piller search orders, from being frustrated by the privilege against self incrimination. Then it is said (para 51) that it would be surprising if the privilege could be invoked by a defendant in relation to a claim for breach of confidence relating to private information of a personal nature, but not a claim for breach of confidence in respect of trade secrets or other information of a commercial nature. This is really the same point put in a different way. The numerous statutory exceptions to the privilege have been introduced in a fairly random way. They are something of a patchwork. The central purpose of section 72 is to fortify remedies against unlawful trading practices, not to cover the whole of the law of confidence, bifurcated as it now is. The last point (para 52) is that the same information could be commercial in one persons hands and personal in the hands of another. This is a point of considerable interest but I do not think that it leads to the conclusion that Lord Neuberger draws. In Douglas v Hello! Ltd (No 3), reported with OBG Ltd v Allan and Mainstream Properties Ltd v Young [2007] UKHL 21, [2008] AC 1, Lord Hoffmann discussed the point in considering the unauthorised photographs taken at the wedding in New York of Michael Douglas and Catherine Zeta Jones. He said at para 118: Whatever may have been the position of the Douglases, who, as I mentioned, recovered damages for an invasion of their privacy, OK!s claim is to protect commercially confidential information and nothing more. So your Lordships need not be concerned with Convention rights. OK! has no claim to privacy under article 8 nor can it make a claim which is parasitic on the Douglases right to privacy. The fact that the information happens to have been about the personal life of the Douglases is irrelevant. It could have been information about anything that a newspaper was willing to pay for. What matters is that the Douglases, by the way they arranged their wedding, were in a position to impose an obligation of confidence. They were in control of the information. This may be a pointer to some further development in the law. But it is not an argument for an unnatural construction of the definition in section 72(5). It is a recognition that in the world of celebrities (which is very much the milieu in which MCA and Ms Phillips were operating) there is commercial value in even the most intimate personal information, subject only to the restraints imposed by the developing law of privacy. For a few celebrities, their colourful private lives are part of their stock in trade. The implication is that, if the definition in section 72 remains in its present form, the court may have some difficult borderline cases as to the meaning of commercial information. But that is not a reason for adopting an unnatural construction of the definition as a whole. Lord Neuberger considered (para 53) that the difficulties of what he called mixed messages would be far greater if his construction were not adopted. But there is in my view no great difficulty about that point in this appeal. Ms Phillipss pleading, verified by her statement of truth and her solicitors witness statement, is to the effect that the voicemail messages left by her clients contained commercially confidential information, including information about finances, incidents in which the police have become involved, personal security or publicity issues, commercial business transactions, professional relationships and future career plans. Neither the pleading nor the witness statement attempts to quantify the proportions of personal and commercial information, but there was no reason to suppose that the latter was not significant. It is also pleaded, rather repetitively, that Ms Phillips regularly spoke on her mobile phone (para 6 of the re amended particulars of claim) to clients, predominantly entertainers and celebrities, many of whom are well known; individuals who are suddenly caught up in a breaking news story; newspapers and journalists; producers, editors, researchers, and journalists from various sectors of the media, including TV, radio, newspapers and magazines. I would therefore uphold, although for more limited reasons, the Court of Appeals conclusion that Ms Phillips proceedings are proceedings for rights pertaining to intellectual property within the meaning of section 72 of the 1981 Act. Related offence: the authorities There must be a sufficient connection between the subject matter of the claimants civil proceedings and the offence with which, under the test in R v Boyes (1861) 1 B & S 311, the defendant (as the person required to make disclosure under compulsion) has a reasonable apprehension of being charged. The requisite connection is defined, so far as now relevant, by section 72 (5)(a): (i) any offence committed by or in the course of the infringement . to which those proceedings relate; or (ii) any offence not within sub paragraph (i) committed in connection with that infringement . , being an offence involving fraud or dishonesty. So the offence must be committed by or in the course of the infringement, unless the offence involves fraud or dishonesty, in which case a looser connection (not further defined in the statute) is sufficient. In forming a view as to whether any criminal proceedings are likely to be commenced, and if so on what charges, the civil court has to proceed on a realistic assessment of what charges are likely in practice, rather than possible in theory. In Rank [1982] AC 380, 441, Lord Wilberforce noted that the Copyright Act 1956 created a number of criminal offences, each punishable by a maximum fine (for a first offence) of 50. In practice prosecutions were very rare. Lord Wilberforce thought that that potential liability should be disregarded. But there was a real likelihood of a charge of conspiracy to defraud: A charge of conspiracy to defraud, so far from being, as it sometimes is, a contrived addition to other charges, is here an appropriate and exact description of what is being done. So far from it being contrived, fanciful or imagined, it is the charge on which [an associate of the individual defendants] is to stand trial. Similar views were expressed in the cases mentioned in the next two paragraphs. The point has arisen several times in relation to section 31 of the Theft Act 1968. In Sociedade Nacional [1991] 2 QB 310, in which large quantities of crude oil had been sold at an undervalue by a dishonest consultant and his associates, the Court of Appeal held that a conspiracy was not an offence under the Theft Act, and that privilege was available because a charge of conspiracy was probable. Sir Nicolas Browne Wilkinson V C (at p 338) expressed the hope that Parliament would extend the scope of section 31. In Tate Access Floors Inc v Boswell [1991] Ch 512 privilege was relied on as a defence to an application for a Mareva freezing order and an Anton Piller search order in a case in which senior employees were suspected of misappropriating the plaintiff companies funds. The Vice Chancellor recognised that a single count of conspiracy would be a proper course for the prosecution to take. In consequence privilege was available and the stayed ex parte Anton Piller order was set aside. In Renworth Ltd v Stephansen [1996] 3 All ER 244 there was a full discussion of the authorities, including Khan v Khan [1982] 1 WLR 513, in which the Court of Appeal, in order to avoid what it saw as a monstrous result, took a fairly robust view of what the charges were in substance. In Renworth the defendant was an interior designer with responsibility for subcontractors engaged on the expensive refurbishment of a house. After she had submitted bills for about 670,000 the architect became suspicious and civil proceedings were taken against her. On an interlocutory application she claimed privilege and her counsel suggested six separate types of conspiracy with which she might be charged. The Court of Appeal upheld the disclosure order, taking the view that she was more likely to be charged, if at all, with substantive offences under the Theft Act. Neill LJ (who gave the leading judgment) preferred not to put his decision on the in substance approach taken in Khan v Khan. Related offence: discussion and conclusions The related offence point was not taken before Mann J, or before Vos J in Mr Coogans case. It was raised for the first time, without objection by Ms Phillipss counsel, in the Court of Appeal. Even then (so far as appears from Lord Neubergers judgment) Mr Millar was not relying on the likelihood of Mr Mulcaire being charged with conspiracy. The law report shows that Khan v Khan, Tate Access and Renworth were cited in the Court of Appeal, but none of them is mentioned in the judgment. The appellants written case in this court states (para 79) that the Master of the Rolls considered that the conspiracy took place in the course of the infringement. I have not found any reference to conspiracy in this part of Lord Neubergers judgment. The discussion in para 66 was addressing liability as an accessory, not conspiracy. In the Court of Appeal Mr Millars argument (as summarised in the judgment) seems to have been based on a supposed need for the disclosure order to be limited to matters occurring in the course of the infringement of Ms Phillipss right to confidentiality. That argument shows some confusion of thought as to the way section 72 works, and I am not surprised that Lord Neuberger did not accept it. He held that the claimant had a gateway under para (a)(i) of the definition, but not under para (a)(ii) or para (b). For practical purposes, therefore, the conspiracy issue is raised as a new issue in this court. It has to be said that it has not been fully explored in the parties written and oral submissions. The appellants written case cites Renworth [1996] 3 All ER 244, and in particular a passage in the judgment of Neill LJ at pp 248 249. But section 31 of the Theft Act refers simply to an offence under this Act, and it was clear that conspiracy (whether statutory or at common law) was not such an offence. Para (a)(i) of the definition in section 72 takes a different form, referring to any offence committed by or in the course of the relevant infringement which is, in Ms Phillipss case, a series of infringements occurring every time confidential information of a commercial character was intercepted on her voicemail. The respondents written case does not press any argument on para (a)(ii) or para (b). It submits that the language of para (a)(i) encompasses the infringement from conception to death and that any agreement which amounted to a criminal conspiracy to intercept messages is sufficiently wrapped up with the interception to come within para (a)(i). Neither the respondents written case nor Mr Beloffs oral submissions cited any authority in support of these metaphorical propositions. But there is authority which provides such support. It is well established that conspiracy is a continuing offence. While the offence is committed as soon as the unlawful agreement is made, the conspiracy continues until the point when the agreement is terminated by completion, abandonment or frustration. Viscount Dilhorne explained this principle in Director of Public Prosecutions v Doot [1973] AC 807, 825, which was concerned with territorial jurisdiction in an international drug smuggling case: though the offence of conspiracy is complete when the agreement to do the unlawful act is made and it is not necessary for the prosecution to do more than prove the making of such an agreement, a conspiracy does not end with the making of the agreement. It continues so long as the parties to the agreement intend to carry it out. It may be joined by others, some may leave it. Similarly Lord Pearson stated (p 827): A conspiracy involves an agreement express or implied. A conspiratorial agreement is not a contract, not legally binding, because it is unlawful. But as an agreement it has its three stages, namely (1) making or formation (2) performance or implementation (3) discharge or termination. When the conspiratorial agreement has been made, the offence of conspiracy is complete, it has been committed, and the conspirators can be prosecuted even though no performance has taken place: R v Aspinall (1876) 2 QBD 48, per Brett JA, at pp 58 59. But the fact that the offence of conspiracy is complete at that stage does not mean that the conspiratorial agreement is finished with. It is not dead. If it is being performed, it is very much alive. So long as the performance continues, it is operating, it is being carried out by the conspirators, and it is governing or at any rate influencing their conduct. The conspiratorial agreement continues in operation and therefore in existence until it is discharged (terminated) by completion of its performance or by abandonment or frustration however it may be. If Mr Mulcaire conspired with one or more persons to intercept messages on mobile phones, an offence was committed when the unlawful agreement was made. But the offence continued so long as the agreement was being performed. Every interception pursuant to the unlawful agreement would be in the course of the infringement, and Renworth and other cases on section 31 of the Theft Act 1968 are distinguishable. For these reasons I would dismiss this appeal. |
The object of damages in tort is to put the claimant, as far as possible, back in the position in which she would have been had the tort not been committed. Money has to compensate, as far as it can, for those injuries that cannot be cured. For some women, the ability to bear and to rear children is a vital part of their identity. What then should be the measure of damages for a woman who has been wrongfully deprived of the ability to bear children herself? Along with general damages for pain, suffering and loss of amenity, should it include the cost of making surrogacy arrangements with another woman to bear a child for her to bring up? In particular, should it include the cost of making commercial surrogacy arrangements abroad? The history The claimant was born in 1983 and so was aged 29 when the negligence in question was discovered. She had a cervical smear test in 2008 which was wrongly reported as negative when in fact it showed severe dyskariosis. She had another smear test in February 2012 which again was wrongly reported as inadequate when in fact it showed invasive carcinoma. She had a repeat smear test in September 2012 which again was wrongly reported as showing severe dyskariosis when in fact it showed features suggestive of invasive carcinoma. In September and October 2012 she underwent cervical biopsies and these too were wrongly reported as showing pre malignant changes when in fact they showed evidence of invasive carcinoma. The hospital admitted negligence in respect of the 2008 and February 2012 smear tests and both the biopsies. Had appropriate action been taken in 2008, there was a 95% chance of a complete cure, and she would not have developed cancer at all. The errors were detected in 2013 when her pathology was reviewed as a result of the symptoms she was suffering. In June 2013 she was told that she had cervical cancer and was referred to another hospital. That hospital assessed her condition as too far advanced for her to have the surgery which would have preserved her ability to bear a child. She was advised to have chemo radiotherapy which would result in her being unable to bear a child. This was confirmed by two further medical opinions. In June 2013, therefore, the claimant underwent a round of ovarian stimulation and egg collection as a result of which she has eight mature eggs frozen in storage. After that, she had surgery and chemo radiotherapy. As a result of this she suffered significant complications, long term disability and psychiatric injury, for which she has been awarded substantial damages. The damage to her womb was such that she could not bear children herself. The focus of this appeal is upon the damages payable for the loss of the ability to bear her own child. The claimant has always wanted a large family. Both her parents come from large families and they had one of their own. Her sister has ten children. Her partner also comes from a large family. They would like to have four children. The expert evidence is that it is probable that they can have two children using her eggs and his sperm. They would then like to have two further children using donor eggs and his sperm. The claimant would prefer to use commercial surrogacy arrangements in California. But if this is not funded, she will use non commercial arrangements in the United Kingdom. Liability was admitted and judgment entered in May 2016. Damages were assessed, after a hearing in June 2017, by Sir Robert Nelson in September 2017: [2017] EWHC 2318 (QB); [2018] PIQR Q2. Much of his judgment relates to matters other than the surrogacy claim. In relation to surrogacy he held that he was bound by the decision of the Court of Appeal in Briody v St Helens and Knowsley Area Health Authority [2001] EWCA Civ 1010; [2002] QB 856, first, to reject the claim for commercial surrogacy in California as contrary to public policy, and second, to hold that surrogacy using donor eggs was not restorative of the claimants fertility. Non commercial surrogacy using the claimants own eggs, however, could be considered restorative of the claimants fertility. Hence he awarded her the sum of 37,000 per pregnancy, a total of 74,000. The claimant appealed against the denial of her claim for commercial surrogacy and the use of donor eggs. The hospital cross appealed against the award for the two own egg surrogacies. The Court of Appeal (McCombe, King and Nicola Davies LJJ) dismissed the cross appeal and allowed the claimants appeal on both points: [2018] EWCA Civ 2832; [2019] 3 WLR 107. Public policy was not fixed in time and had now to be judged by the framework laid down by this court in Patel v Mirza [2016] UKSC 42; [2017] AC 467. Attitudes to commercial surrogacy had changed since Briody; perceptions of the family had also changed and using donor eggs could now be regarded as restorative. The hospital now appeals to this court. There are three issues: (1) Are damages to fund surrogacy arrangements using the claimants own eggs recoverable? If so, are damages to fund surrogacy arrangements using donor eggs (2) recoverable? (3) arrangements in a country where this is not unlawful recoverable? In either event, are damages to fund the cost of commercial surrogacy The UK law relating to surrogacy UK law on surrogacy is fragmented and in some ways obscure. In essence, the arrangement is completely unenforceable. The surrogate mother is always the childs legal parent unless and until a court order is made in favour of the commissioning parents. Making surrogacy arrangements on a commercial basis is banned. The details are more complicated. The starting point is that the woman who bears the child is always the childs legal mother when the child is born (Human Fertilisation and Embryology Act 1990, section 27; Human Fertilisation and Embryology Act 2008, section 33). This means that she has (in English law) parental responsibility or (in Scots law) parental responsibilities and rights. A person who has parental responsibility for a child may not surrender or transfer any part of that responsibility to another (Children Act 1989, section 2(9)). Even without the Surrogacy Arrangements Act 1985, this would mean that any contract between a surrogate mother and the commissioning parent or parents is unenforceable against her. But section 1A of that Act (as inserted by section 36(1) of the Human Fertilisation and Embryology Act 1990) goes further and expressly provides that no surrogacy arrangement is enforceable by or against any of the persons making it. If she refuses to surrender the child, the commissioning parent or parents will have to go to court seeking an order that the child is to live with them. The welfare of the child is the paramount consideration in deciding whether to make such an order. The agreement would be a relevant factor, but is by no means decisive. If the mother is not married or in a civil partnership, and the commissioning father has provided the sperm, then he will be the childs legal father. However, if the mother is married or in a civil partnership, her husband, wife or civil partner will automatically be the childs other legal parent, unless it is shown that he or she did not consent to the placing in her of sperm and eggs, or the embryo, or the artificial insemination which led to the pregnancy (1990 Act, section 28; 2008 Act sections 34, 35 and 42). This complicates any decision as to where the child should live with the gestational mother (who may also be the genetic mother) and her partner or with the commissioning parents one or both of whom will have a genetic relationship with the child but not a gestational one. It also makes it even more important that there be a mechanism for transferring legal parenthood from surrogate to commissioning family. That mechanism is to be found in the scheme for making parental orders, which has existed since 1994 but is now contained in sections 54 and 54A of the Human Fertilisation and Embryology Act 2008. Applications can be made jointly by a married couple, by civil partners or by two people who are living as partners in an enduring family relationship (but are not within the prohibited degrees of relationship, such as siblings) (section 54(2)). Applications can also now be made by a single person (following the insertion of section 54A(1) by the Human Fertilisation and Embryology Act 2008 (Remedial) Order 2018 (SI 2018/1413)), made after a declaration that their exclusion was incompatible with the right to respect for private and family life in article 8 of the European Convention on Human Rights (ECHR): In re Z (Surrogate Father: Parental Order) (No 2) [2016] EWHC 1191 (Fam); [2017] Fam 25. All applicants must be aged at least 18 when the order is made. The child must have been carried by another woman as a result of the placing in her of eggs and sperm, or an embryo, or her artificial insemination. The gametes of at least one of the applicants must have been used to create the embryo. This may have been done anywhere in the world, so the procedure is available after a foreign surrogacy and if the commissioning parents are the legal parents according to the law of the place where that took place. Without it, they would not be recognised as legal parents here. Applications cannot be made until after the child is born but must then be made within the period of six months beginning with the day on which the child was born (section 54(3); section 54A(2)). Nevertheless, in In re X (A Child) (Parental Order: Time Limit) [2014] EWHC 3135 (Fam); [2015] Fam 186, Sir James Munby, President of the Family Division held that the deadline could be relaxed and the courts now frequently make parental orders in respect of children who are much older (in A v C [2016] EWFC 42; [2017] 2 FLR 101, for example, as old as 12 and 13). The child must have his home with the applicants or sole applicant both at the time of making the application and at the time of making the order (section 54(4)(a), section 54A(3)(a)). This too was liberally interpreted in In re X, as not requiring the applicants to have a single family home, as long as the child had his home with both of them. This has been applied in many cases where the commissioning parents have separated either before the application or before it is granted. At least one of the applicants must be domiciled in the UK, Channel Islands or Isle of Man, both at the time of the application and at the time of the order (section 54(4)(b), section 54A(3)(b)). Residence here is neither necessary nor sufficient. The court must be satisfied that the woman who carried the child and anyone else who is a legal parent (not being an applicant) has freely and with full understanding of what is involved agreed unconditionally to the making of the order. The womans agreement is ineffective if given less than six weeks after the childs birth. The only exceptions to the agreement requirement are if the person cannot be found or is incapable of giving agreement. The surrogate mother may therefore refuse her consent even if she has handed over the child. Not only that, another legal parent may do so, even if the surrogate has agreed. In In re AB (Surrogacy: Consent) [2016] EWHC 2643 (Fam); [2017] 2 FLR 217, both the surrogate and her husband refused to agree to the order even though they had handed over the child to the commissioning parents. All the court could do was make a child arrangements order which gave them parental responsibility but left the child a member of the surrogates family. Theis J commented that an adoption order would be inappropriate as the parents would be asking to adopt their own children: a parental order recognises their genetic link to the child. She did, however, adjourn the parental order application generally in the hope of a change of mind or a change in the law, as the President had done in In re Z. The court must also be satisfied that no money or other benefit, other than for expenses reasonably incurred, has been given or received by any applicant for making the arrangements, handing over the child, giving agreement, or making the order, unless authorised by the court (section 54(8), section 54A(7)). This might be thought to discourage the making of parental orders following a foreign (or indeed any) commercial surrogacy. But what is the court to do when confronted with a fait accompli? It was soon held that payments other than reasonable expenses could be authorised retrospectively, after they had been made: In re Q (Parental Order) [1996] 1 FLR 369. In In re X and Y (Foreign Surrogacy) [2008] EWHC 3030 (Fam); [2009] Fam 71, which was the first case dealing with payments for a foreign commercial surrogacy, Hedley J asked himself whether the sums paid were disproportionate to reasonable expenses, whether the applicants were acting in good faith in their dealings with the surrogate, and whether they were party to any attempt to defraud the authorities. This set the tone. The Law Commissions are not aware of any case in which a parental order has been refused on the basis of payments which exceed reasonable expenses (Building families through surrogacy: a new law (2019) (LCCP 244, SLCDP 167), para 5.93). This is not surprising: the deed has been done, the child is here living with the commissioning parents, and his welfare will almost always require that he is not left legally parentless (and possibly also stateless). This has led one academic commentator to remark that: English law, as developed through the jurisprudence of the High Court in the 30 years since [the Warnock Report] does not view commercial surrogacy as an intrinsic wrong (Claire Fenton Glynn, Outsourcing Ethical Dilemmas: Regulating International Surrogacy Arrangements (2016) 24 Med LR 59, 67). Certain provisions in the Adoption and Children Act 2002 and its equivalent in Scotland are applied to parental order applications by Regulations (currently the Human Fertilisation and Embryology (Parental Orders) Regulations 2018 (SI 2018/1412), replacing those in 2010). These include the requirement that the court treat the welfare of the child as its paramount consideration: the court is required to have regard to the welfare of the child, not only during childhood, but throughout his life. As the Law Commissions comment, although laudable, this creates a tension: welfare considerations will almost always point towards making a parental order but this makes it difficult for the court to police even the requirements of sections 54 and 54A, let alone to enforce any public policy against commercial surrogacy arrangements which might be deduced from the Surrogacy Arrangements Act 1985. The Surrogacy Arrangements Act 1985 was passed as a result of the Report of the Committee of Inquiry into Human Fertilisation and Embryology chaired by Dame Mary Warnock (1984) (Cmnd 9314). The view of the majority was this (para 8.17): Even in compelling medical circumstances the danger of exploitation of one human being by another appears to the majority of us far to outweigh the potential benefits, in almost every case. That people should treat others as a means to their own ends, however desirable the consequences, must always be liable to moral objection. Hence they recommended that the criminal law should ban all agencies, whether profit or non profit making, recruiting surrogates and making surrogacy arrangements; and also ban all professionals from knowingly assisting in the establishment of a surrogate pregnancy; and that surrogacy agreements should be illegal contracts and unenforceable (paras 8.18, 8.19). The minority (Dr Wendy Greengross and Dr David Davies) took the view that the question of exploitation of the surrogate mother, or the treating of her as a means to other peoples ends, is not as clear cut a moral issue as our colleagues suggest (para 3). They agreed that there was no place for commercial surrogacy agencies, as with commercial adoption agencies; but they disagreed with preventing gynaecologists from helping couples to achieve a surrogate pregnancy; they thought that arrangements made by a regulated non profit making body should not be illegal; and that payments made to a surrogate mother should not be a barrier to adoption by the commissioning couple: most surrogate mothers would expect payment for their services (para 7). The resulting Act was a compromise. Professionals were not banned from taking part in surrogate pregnancies, but the activities of agencies, whether or not for profit, if on a commercial basis, and advertisements, were banned. Section 2 of the 1985 Act bans third parties (but not the surrogate or the commissioning parents) from initiating or taking part in negotiations, offering or agreeing to do so, and compiling information for use in making surrogacy arrangements on a commercial basis: this means for payment to the third party or anyone else except the surrogate mother (section 2(1), (2), (3)). However, amendments made by the 2008 Act permit non profit making bodies to initiate (but not actually take part in) negotiations with a view to making a surrogacy arrangement and to compile information for use in negotiating or making surrogacy arrangements in respect of which any reasonable payment is received by that body or another (section 2(2A), (2B)); payment to the body must not exceed the bodys reasonable costs in doing those things (section 2(2C)). Commercial surrogacy agencies are banned from receiving money from the surrogate or commissioning parents (section 2(5)) Taking part in the management and control of commercial surrogacy agencies is also banned (section 2(7), (8)). Once again, however, the 2008 Act introduced exceptions for non profit making bodies taking part in surrogacy arrangements in the UK (sections 2(5A), (8A), (8B)). Section 3 of the 1985 Act bans advertisements indicating that anyone might be willing to enter into or negotiate a surrogacy arrangement or that anyone is looking for a surrogate mother or asking for such persons (section 3(1)). Once again, however, the 2008 Act introduced an exception for advertisements placed by a non profit making body relating to acts done by that body which would not fall within the ban in section 2 even if done on a commercial basis (section 3(1A)). The surrogacy arrangements referred to might be anywhere in the world. The offences, however, can only be committed in the United Kingdom. There is nothing to stop agencies based abroad from helping to make surrogacy arrangements on a commercial basis abroad. Nor is there anything to stop commissioning parents and surrogate mothers from making their arrangements directly, either here or abroad, even on a commercial basis. The Review for Health Ministers of Current Arrangements for Payments and Regulation, chaired by Professor Margaret Brazier (1998) (Cm 4068), recommended that payments to the surrogate mother be expressly limited to expenses occasioned by the pregnancy; but this has not been implemented. Agreements for such payments are, of course, unenforceable and could result in the refusal of a parental order. As seen above, however, that is highly unlikely. In the circumstances, it is scarcely surprising that the claimants clear preference is for a commercial surrogacy arrangement in California. As Sir Robert Nelson said, the system is well established, the arrangement binding and the intended parents can obtain a pre birth order from the Californian court confirming their legal status in relation to the surrogate child (para 31). A further disadvantage of the UK system in the claimants eyes is that it is the surrogate mother who chooses the intended parent rather than the other way around the idea of being at the mercy of someone elses choosing, and attending informal parties to meet surrogate mothers frightens her (para 32). In other words, the friendship model of altruistic surrogacy arrangements promoted by surrogacy organisations here does not appeal. Briody v St Helens and Knowsley Area Health Authority Owing to medical negligence, the claimant underwent a sub total hysterectomy when aged around 19, having lost two babies in quick succession. Her ovaries were left intact. Many years later, she brought proceedings claiming damages for, among other things, the cost of a Californian surrogacy. The claim was on the basis that there should be two cycles of treatment using her own eggs, which it was accepted would probably fail, and four cycles using donor eggs, all using her partners sperm. Ebsworth J rejected both proposals, partly because the chances of success using her own eggs were so low and partly because a commercial surrogacy was not lawful here. By the time the case reached the Court of Appeal, however, eggs had been successfully recovered from the claimant and fertilised with her partners sperm. There were now six embryos in storage. Nevertheless, the chances of success were still no more than 1%. The claimant was now proposing two cycles using her own embryos and if that failed up to four more cycles using the surrogates eggs and if successful three more to have a second child. All of this would be arranged, not commercially abroad, but here through the well known self help group, Childlessness Overcome Through Surrogacy (COTS). I gave the leading judgment on the issue of principle. Having set out the law relating to surrogacy, I commented that these provisions do not indicate that surrogacy as such is contrary to public policy. They tend to indicate that the issue is a difficult one, upon which opinions are divided, so that it would be wise to tread with caution. If there is a trend, it is towards acceptance and regulation as a last resort rather than towards prohibition (para 11). On the Californian proposals put before the judge, I had no difficulty in agreeing with her that they were contrary to the public policy of this country, clearly established in legislation, and that it would be quite unreasonable to expect a defendant to fund it (para 15). As to the new proposals, I also agreed with the judge that it would not be reasonable to expect the defendant to pay for the implantation of the claimants embryos when this had such a slim chance of success (para 22). As to a surrogacy using donor eggs, I took the view that this was not in any sense restorative of Ms Briodys position before she was so grievously injured. It is seeking to make up for some of what she has lost by giving her something different. Neither the child nor the pregnancy would be hers (para 25). Having reached the conclusion that, even with the evidence of the new proposals, the claim should not succeed, it was not strictly necessary to decide whether that evidence should be admitted (para 33). I agreed, however, with Judge LJ, who explained that it should not be admitted because it would inevitably require a new trial and the claimant should not have two bites of the cherry (para 53). Judge LJ agreed with me that in any event there was no sufficient basis for an award of damages to reflect these new proposals (para 54). Henry LJ agreed with us both (para 56). Developments since Briody This Court is not, in any event, bound by the ratio of Briody. But the persuasiveness of that ratio is inevitably affected by the developments in law and social attitudes which have taken place since then. We have also had the benefit of the joint Consultation Paper issued in June 2019 by the Law Commission and the Scottish Law Commission, Building families through surrogacy: a new law (LCCP 244, SLCDP 167), which contains much useful information. The developments in the law have been quite dramatic. Under the 1985 Act, originally all third parties were banned from taking part in surrogacy arrangements for payment, whereas under the 2008 Act amendments, non profit making bodies may initiate negotiations and compile information for reasonable payment. Non profit making bodies can also advertise. There are now three not for profit organisations facilitating surrogacy arrangements in the UK, COTS, Brilliant Beginnings and Surrogacy UK (Building families through surrogacy: a new law, para 3.17). More dramatic still have been the developments in the laws ideas of what constitutes a family. Traditionally, families were limited to those related by consanguinity (blood) or affinity (marriage). Hence at first only opposite sex married couples could apply for parental orders. Now they have been joined by same sex married couples, by same sex and opposite sex civil partners, and by couples, whether of the same or opposite sexes, who are neither married nor civil partners, but are living together in an enduring family relationship. They have also been joined by single applicants. All of these would be regarded as family relationships within the meaning of article 8 of the ECHR. The law now recognises and supports same sex relationships and parenthood in almost exactly the same way as it recognises and supports opposite sex relationships. Civil partnerships between same sex couples were introduced throughout the UK by the Civil Partnerships Act 2004. Gay marriage was introduced in England and Wales by the Marriage (Same sex Couples) Act 2013, in Scotland by the Marriage and Civil Partnership (Scotland) Act 2014, and in Northern Ireland by the Marriage (Same sex Couples) and Civil Partnership (Opposite sex Couples) (Northern Ireland) Regulations 2019 (SI 2019/1514). Same sex couples have been able to adopt jointly in England and Wales since the Adoption and Children Act 2002 and in Scotland since the Adoption and Children (Scotland) Act 2007. In In re G (Adoption: Unmarried Couple) [2008] UKHL 38; [2009] 1 AC 173, this Court declared the exclusion of unmarried couples from the Northern Ireland Adoption Order incompatible with the equal enjoyment of the right to respect for family life protected by articles 8 and 14 of the ECHR. Obviously, male same sex couples can achieve parenthood only through adoption or surrogacy and there is evidence of a growing demand from them for surrogacy arrangements. The UK surrogacy organisations report a growing proportion of male same sex couples using their services, as many as 50% of those using COTS and Brilliant Beginnings (Building families through surrogacy: a new law, paras 3.18 to 3.21). All of this supports the observations of King LJ in this case (para 101): It is unnecessary to resort to statistics or research in order to appreciate the social changes in the years since Briody. These changes have led to the current acceptance of an infinite variety of forms of family life of which single sex, single person and so called blended families are but examples. The creation of these families is often facilitated consequent upon the advances in fertility treatment including the acceptance of and increased use of donor eggs. Not only does family law recognise a much wider set of relationships as family life these days. Government policy has moved strongly in the direction of supporting surrogacy arrangements in appropriate cases. The Children and Families Act 2014, section 122, provides for the extension of the right to shared parental leave under the Employment Rights Act 1996 and statutory paternity and adoption pay under the Social Security and Contributions Act 1992 to people who have applied for or intend to apply for a parental order under the 2008 Act. The Human Fertilisation and Embryology (Parental Orders) Regulations 2018 adapt the Children Act 1989 and the Foster Children (Scotland) Act 1984 so that commissioning parents who propose to apply for a parental order no longer fall within the definition of private foster parents who are required to inform the local authority that the child is living with them. As well as these statutory changes, the Department of Health and Social Care published guidelines on the practice of surrogacy in February 2018 (updated November 2019): The Surrogacy Pathway: Surrogacy and the legal process for intended parents and surrogates in England and Wales and Care in Surrogacy: guidance for the care of surrogates and intended parents in surrogate births in England and Wales. The former states as follows: The government supports surrogacy as part of the range of assisted conception options. Our view is that surrogacy is a pathway, starting with deciding which surrogacy organisation to work with, deciding which surrogate or intended parent(s) to work with, reaching an agreement about how things will work, trying to get pregnant, supporting each other through pregnancy and then birth, applying for a parental order to transfer legal parenthood and then helping your child understand the circumstances of their birth. This guidance gives more information about each stage. Not only that, it was the Department of Health and Social Care which asked the Law Commissions to consider reforms to the law of surrogacy in the United Kingdom. Another change which has taken place over the decades since the Surrogacy Arrangements Act was passed in 1985 is the progress of the medicine and science of assisted reproduction, coupled with their regulation by the Human Fertilisation and Embryology Authority (HFEA), and increasing public familiarity with and acceptance of such methods of founding a family. When the Act was passed, donor insemination had become safer because sperm could be successfully frozen, but IVF and embryo transfer were in their infancy and success rates were very low, and eggs could not be frozen. Public concern about the ethics of these techniques had led to the Warnock committees report, which in turn led to the pioneering work of the HFEA as the first body in the world to regulate such treatments. Since then, new techniques have been developed, success rates have improved, and people who are experiencing problems in conceiving or bearing children, or who are in same sex relationships, increasingly turn to assisted reproduction rather than to adoption in order to fulfil their desire to have a family. While treatment is sometimes available on the NHS, much of it is also provided commercially. It is probable that most gestational surrogacy arrangements in this country involve treatments provided by a clinic licensed by the HFEA. This is required where IVF or embryo transfer are involved. The HFEAs first Code of Practice had one paragraph about surrogacy: this advised that, because either the carrying mother, and in certain circumstances her husband or partner, or the commissioning parents might become the childs legal parents, the welfare of any resulting child should be assessed in relation to both sets of parents, and any risk of disruption to the childs early care and upbringing in the event of a dispute between them considered (para 3.16.a). The most recent, ninth, edition of the Code of Practice, version 2 (2019), has a section on The welfare of the child assessment process for surrogacy arrangements which emphasises the need for a standard operating procedure for centres offering surrogacy treatment (paras 8.9 to 8.13); and a whole chapter (paras 14.1 to 14.14) on surrogacy generally which emphasises the need for full information and discussion about the legal and other implications, as well as counselling, for both the surrogate and the commissioning parents. While this may be off putting for some, and centres are advised to be alive to the vulnerability of all parties, there is no suggestion that such arrangements should be viewed with particular suspicion or discouraged. As to changes in the attitudes of society in general to surrogacy arrangements, the Law Commissions say this (para 1.9): Whilst we acknowledge that there is a lack of public attitudinal research in this area, the research that exists suggests that public attitudes to surrogacy also now stand in stark contrast to the prevailing hostile attitudes at the time of the [Surrogacy Arrangements Act] 1985. The available research reflects the fact that the legislation is now out of step with attitudes towards surrogacy. They cite a YouGov poll in 2014 showing that 59% of adults in Great Britain supported using gestational surrogacy to have children. The Law Commissions paper, Building families through surrogacy: a new law, also includes a full discussion of the empirical evidence about the possible harmful effects of surrogacy on the participants involved and the children and of the ethical arguments about surrogacy (Chapter 2). The latter debate reflects a tension between autonomy and paternalism (para 2.69). The concerns about exploitation and commodification feature most prominently in relation to commercial arrangements. Domestically, those concerns could be alleviated by more effective regulation (para 2.71). Internationally, where the arrangements are almost invariably commercial in nature, it is impossible for UK law to effect change, except in situations involving intended parents who will bring the child back to the UK (para 2.72): In that respect, we make a provisional proposal for reform that would enable legal parenthood granted overseas to be recognised in the UK, only after an appraisal of the law and practice of surrogacy in each country. We hope that such a development would encourage UK intended parents who do look for an international surrogacy arrangement to use countries where there is a level of confidence in the protection provided to women who become surrogates. The reality is that there is a spectrum of surrogacy arrangements. At one end of the scale there are desperately poor women who are induced to sell one of the few things they have for sale, their wombs, and are often grossly exploited by the agents and middlemen who make serious profits from the large sums which desperate commissioning parents are prepared to pay. At the other end of the scale are altruistic women who enjoy being pregnant and are happy to make a gift of their child bearing capacity to people who need it. It is no longer thought that women should not have the right to choose to use their bodies in this way. But it is thought that both they and the commissioning parents should be protected from exploitation and abuse. It is also thought that surrogacy arrangements, whether altruistic or commercial, should guard against any possibility that children are being bought and sold: see the Report of the United Nations Special Rapporteur on the sale and sexual exploitation of children, including child prostitution, child pornography and other child sexual abuse material (A/HRC/37/60, 15 January 2018). Application to this case This case is about the assessment of reasonable damages to compensate a woman who has been wrongly deprived of the ability to bear her own children. With the greatest of respect to the argument on behalf of the claimant, accepted by the Court of Appeal, it is not about the illegality defence and the new framework adopted in Patel v Mirza [2017] AC 467. Nor is it to be likened to a case like Gray v Thames Trains Ltd [2009] UKHL 33; [2009] 1 AC 1339, where the injury suffered by the claimant led to his committing a serious criminal offence and suffering the consequences of doing so, for which he claimed but was denied compensation. Nothing which the claimant proposes to do involves a criminal offence either here or abroad. Her preferred solution is a Californian surrogacy which is lawful there and UK law does not prohibit her from arranging or taking part in it. Her second best solution would be lawful surrogacy arrangements here. The general principle upon which damages in tort are assessed was stated by Lord Blackburn in Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, 39: I do not think there is any difference of opinion as to its being a general rule that, where any injury is to be compensated by damages, in settling the sum of money to be given for reparation of damages you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation. There are qualifications to that principle, of course. The first is that some heads of damages which would readily fall within that principle are nevertheless irrecoverable because to allow this would be contrary to legal or public policy. A well known example is McFarlane v Tayside Health Board [2000] 2 AC 59. The Inner House of the Court of Session held that a couple who had a child after the husband had had a vasectomy, allegedly because of negligent advice, could claim damages, not only for the pregnancy and birth, but also for the cost of bringing up the child they never meant to have. The House of Lords held that they could not claim the costs of bringing up a healthy child. They gave a variety of reasons for this, but they all amount to a policy against awarding what would be the normal measure of the claimants loss. A second qualification is that, in seeking to restore what has been lost, the steps taken must be reasonable ones and the costs thereby incurred must be reasonable. The first question, therefore, is whether it is ever possible to claim damages for the cost of surrogacy arrangements, even where these are made on a lawful basis in this country and using the claimants own eggs. It might once have been possible to argue that the law should not facilitate the bringing into the world of children who would otherwise never have been born. But the acceptance and widespread use of assisted reproduction techniques, for which damages are payable, means that this is no longer possible. In Briody, I did not consider that an arrangement which conformed to English law would be contrary to public policy. The question was whether it was reasonable to seek to remedy the loss of a womb through surrogacy (para 30). This would depend upon the chances of a successful outcome. In that case they were vanishingly small. Nevertheless, had they been better, I expressed the tentative view that it would be a step too far. But I recognised the force of the contrary argument that, given the right evidence of the reasonableness of the procedure and the prospects of success, it should be capable of attracting an award (para 32). Sir Robert Nelson found it difficult to see why, on general principle, where the prospects of success are reasonable, if not good, and the claimant had delayed her cancer treatment to ensure that her eggs were harvested, the claim should not succeed (para 49). McCombe LJ agreed (para 84). So do I. The next question is whether it is possible to claim damages for UK surrogacy arrangements using donor eggs. In Briody, I expressed the view that this was not truly restorative of what the claimant had lost. It was seeking to make up for what she had lost by giving her something different (para 25). We need not concern ourselves with whether or not this view was technically obiter. In my view it was probably wrong then and is certainly wrong now. It was argued for the claimant that this is no different from other artificial means of replacing what has been lost, for example, by having an artificial limb fitted to replace the one which has been amputated. It is not ones own genetic material and it is not as good as a real limb, but it is the closest one can get to putting the claimant in the position she would have been in had she not been injured. Of course, the analogy is not exact, because the claimant is not being supplied with a replacement womb. But in many ways that is indeed what she is being supplied with, albeit temporarily, through the generosity of a surrogate mother who offers the use of her own womb. Not only that, as counsel had argued for Mrs Briody, a woman can hope for four things from having a child: the experience of carrying and giving birth to a child; the perpetuation of ones own genes; the perpetuation of ones partners genes; and the pleasure of bringing up a child as ones own (para 24). Donor egg surrogacy using a partners sperm gives her two of those. And for many women, the pleasure of bringing up children as ones own is far and away the most important benefit of having children. If this is the best that can be achieved to make good what she has lost, why should she be denied it? This view is reinforced by the dramatic changes in the idea of what constitutes a family which have taken place in recent decades, referred to earlier. There are many different kinds of family these days. As King LJ pointed out in the Court of Appeal, psychologically and emotionally the baby who is born is just as much their child as if one of them had carried and given birth to him or her (para 103). This is the experience of those judges who have the happy experience of granting parental orders. I would therefore hold that, subject to reasonable prospects of success, damages can be claimed for the reasonable costs of UK surrogacy using donor eggs. That leaves only the most difficult question: what about the costs of foreign commercial surrogacy? Surrogacy contracts are unenforceable here. It is well established that the UK courts will not enforce a foreign contract which would be contrary to public policy in the UK: see Rousillon v Rousillon (1880) 14 Ch D 351; Israel Discount Bank of New York v Hadjipateras [1984] 1 WLR 137. Why then should the UK courts facilitate the payment of fees under such contracts by making an award of damages to reflect them? In this case, we have the advantage of evidence about the comparative costs of UK and Californian surrogacy. One thing becomes clear. Many of the items in the Californian bill would also be claimable if the surrogacy took place here. The costs of the fertility treatment and egg donation itself, although they are higher in the US than here, would be recoverable for a UK surrogacy. Then there is the cost of the payment to the surrogate mother herself, which is higher than the reasonable expenses thought acceptable here. But, as we have seen, it is not unlawful for commissioning parents to make such payments here. And whether made here or abroad they are likely to be retrospectively authorised by the court. Then there are the fees paid to the UK lawyers, which would also be recoverable here, if reasonable. They are very much higher for a US than for a UK surrogacy, presumably because there is so much more work to be done, but we must also presume that such work does not fall foul of the Surrogacy Arrangements Act 1985. That leaves the fees paid to the US lawyers and surrogacy agency, which would be unlawful here but are not in the US. To what extent should that taint all of the items in the bill? The damages would be awarded to the claimant, the commissioning parent. It is not against the law in this country for a commissioning parent to do any of the acts which are prohibited by section 2(1) of the Surrogacy Arrangements Act 1985 (see section 2(2)(b)). Nor is it against the law in this country for an intending surrogate to do so (see section 2(2)(a)). That is true even of activities in this country, let alone in another country. It has never been the object of the legislation to criminalise the surrogate or commissioning parents. The only deterrent is the risk that the court hearing an application for a parental order might refuse retrospectively to authorise the payments. As we have seen, there is no evidence that that has ever been done. The courts paramount consideration is the welfare of the child involved, which will almost certainly be best served by cementing his home and his family links with the commissioning parents. Added to that are all the other developments which have taken place since the decision in Briody. The courts have bent over backwards to recognise the relationships created by surrogacy, including foreign commercial surrogacy. The government now supports surrogacy as a valid way of creating family relationships, although there are no plans to allow commercial surrogacy agencies to operate here. The use of assisted reproduction techniques is now widespread and socially acceptable. The Law Commissions have provisionally proposed a new pathway for surrogacy which, if accepted, would enable the child to be recognised as the child of the commissioning parents from birth, thus bringing the law closer to the Californian model, but with greater safeguards. While the risks of exploitation and commodification are heightened in commercial surrogacy, they are not thought an insuperable ethical barrier to properly regulated arrangements. For all those reasons, I conclude that it is no longer contrary to public policy to award damages for the costs of a foreign commercial surrogacy. However, that does not mean that such damages, still less damages such as are claimed in this case, will always be awarded. There are some important limiting factors. First, the proposed programme of treatments must be reasonable. There may be good reasons to think that, but for the negligence, the claimant would have had the number of children now proposed, but there may not. Second, it must be reasonable for the claimant to seek the foreign commercial arrangements proposed rather than to make arrangements within the UK. This is unlikely to be reasonable unless the foreign country has a well established system in which the interests of all involved, the surrogate, the commissioning parents and any resulting child, are properly safeguarded. Unregulated systems where both surrogate and commissioning parents are at the mercy of unscrupulous agents and providers and children may be bought and sold should not be funded by awards of damages in the UK. This has not been explored in this case, but it should not be concluded that, even in California, all is always well (as the Report of the United Nations Special Rapporteur shows). Third, the costs involved must be reasonable. This too has not been put in issue in this case, which has been argued as a matter of principle, but it should certainly not be taken for granted that a court would always sanction the sorts of sums of money which have been claimed here. With those caveats, therefore, I would dismiss this appeal. LORD CARNWATH: (dissenting) (with whom Lord Reed agrees) I am grateful for Lady Hales full exposition of the facts, and of the legislative and policy background. This enables me to deal with the remaining issues between us relatively briefly, without in any way diminishing the impact of these tragic events on the claimant, or the seriousness of the legal issues to which they give rise. On the first two issues identified by Lady Hale (para 8), I agree with her reasoning and conclusions. I differ only on the last issue: damages to fund the cost of commercial surrogacy arrangements in a country (in this case California) where this is not unlawful. As I think Lady Hale accepts, her conclusion on that issue is a departure from the clear, indeed emphatic, position on this issue, expressed in 2001 in her leading judgment in Briody v St Helens and Knowsley Area Health Authority [2001] EWCA Civ 1010; [2002] QB 856. It is important to note that in Briody there was a difference between the claimants case as presented to the judge, and as sought to be advanced in the Court of Appeal. Before the judge it was based solely on a proposed commercial surrogacy agreement in California (para 4). Before the Court of Appeal, as Lady Hale noted (para 9), the claimant had abandoned the Californian agreement and sought leave to adduce evidence of a proposed surrogacy arrangement through the self help group, COTS (Childlessness Overcome Through Surrogacy), governed by English law. Having observed that English law on surrogacy is quite clear, that the activities of commercial surrogacy agencies are unlawful, and that it is an offence for any person to take part in negotiating surrogacy arrangements on a commercial basis (para 10), and having reviewed the varying practice round the world, she had no difficulty in agreeing with the judge that the proposals put to her were contrary to the public policy of this country, clearly established in legislation, and that it would be quite unreasonable to expect a defendant to fund it. (para 15) By contrast, she found it impossible to say that the claimants new proposals were contrary to public policy in that sense (para 16). The remainder of the judgment is devoted largely to that aspect. We are not of course bound by that decision even as respects commercial surrogacy. But I do not understand it to have been seriously questioned as a reflection of the law and policy as it stood at the time. However, in her present judgment, Lady Hale has described the dramatic developments in law and social attitudes (para 28ff) which lead her to conclude ultimately that it is no longer contrary to public policy to award such damages (para 53). I agree with her (para 40) that the resolution of this issue is not assisted by reference to recent judgments of this court on the scope of the illegality defence (such as Patel v Mirza [2016] UKSC 42; [2017] AC 467). A commercial surrogacy arrangement, such as is proposed, is not in itself unlawful in the country in which it would take place. Nor is the claimants participation in such an arrangement from this country. For that reason I agree that the case cannot be likened directly to a case like Gray v Thames Trains Ltd [2009] UKHL 33; [2009] AC 1339, which involved a serious criminal offence by the claimant. However that is not the end of the enquiry. As Lady Hale recognises (para 42), there is a further question of legal or public policy perhaps best exemplified by McFarlane v Tayside Health Board [2000] 2 AC 59. It is not easy to extract a single ratio to support the conclusion in that case that the damages could not extend to the cost of bringing up a healthy but unwanted child. However further light was cast by the speeches in Rees v Darlington Memorial Hospital NHS Trust [2003] UKHL 52; [2004] 1 AC 309, in which the House had to consider the application of the McFarlane principles to the birth of an unwanted child to a mother with a severe visual handicap. Lord Bingham (para 6) spoke of the different approaches and different reasons adopted by the members of the House in McFarlane but thought it clear that all of them were moved to adopt it for reasons of policy (legal, not public, policy). He explained: The policy considerations underpinning the judgments of the House were, as I read them, an unwillingness to regard a child (even if unwanted) as a financial liability and nothing else, a recognition that the rewards which parenthood (even if involuntary) may or may not bring cannot be quantified and a sense that to award potentially very large sums of damages to the parents of a normal and healthy child against a National Health Service always in need of funds to meet pressing demands would rightly offend the communitys sense of how public resources should be allocated. Kirby J was surely right to suggest in Cattanach v Melchior [2003] HCA 38, para 178) that: Concern to protect the viability of the National Health Service at a time of multiple demands upon it might indeed help to explain the invocation in the House of Lords in McFarlane of the notion of distributive justice. To similar effect Lord Steyn said (para 29): The House did not rest its decision on public policy in a conventional sense Instead the Law Lords relied on legal policy. In considering this question the House was bound, in the circumstances of the case, to consider what in their view the ordinary citizen would regard as morally acceptable. Invoking the moral theory of distributive justice, and the requirements of being just, fair and reasonable, culled from case law, are in context simply routes to establishing the legal policy. Lord Millett also spoke of legal policy (para 105): In their speeches [in McFarlane] the individual members of the Appellate Committee all based this conclusion on legal policy, though they expressed themselves in different terms. My noble and learned friend, Lord Steyn, spoke of distributive justice; he asked himself what would be morally acceptable to the ordinary person. Others spoke of what was fair, just and reasonable which expresses the same idea. I spoke openly of legal policy. I said, at p 108: The admission of a novel head of damages is not solely a question of principle. Limitations on the scope of legal liability arise from legal policy, which is to say our more or less inadequately expressed ideas of what justice demands (see Prosser & Keeton on Torts, 5th ed (1984), p 264). This is the case whether the question concerns the admission of a new head of damages or the admission of a duty of care in a new situation. Legal policy in this sense is not the same as public policy, even though moral considerations may play a part in both. The court is engaged in a search for justice, and this demands that the dispute be resolved in a way which is fair and reasonable and accords with ordinary notions of what is fit and proper. It is also concerned to maintain the coherence of the law and the avoidance of inappropriate distinctions if injustice is to be avoided in other cases. Others too made it clear that this was not the same as public policy in the traditional sense of that expression. It would not have been contrary to public policy to award damages to the pursuers in McFarlane any more than it would be contrary to public policy to award damages for breach of contract beyond the limits imposed by the rule in Hadley v Baxendale (1854) 9 Exch 341. But in both cases the denial of damages rests upon policy considerations. It seems clear therefore that the issue is seen as one of legal policy, to be determined by the courts. It is more difficult to identify the criteria which the court is to use for that purpose. In the present context I find most helpful Lord Milletts emphasis on maintaining the coherence of the law. In that respect the present case seems to me easier than either McFarlane or Rees. It is difficult to think of a better guide to where to draw the line in a highly sensitive area such as this than that indicated by Parliament. Although this case is not concerned with illegality as such, the underlying principle of coherence or consistency in the law is of broader application. Although, as noted above, Gray v Thames Trains Ltd is not directly relevant, the speeches of Lord Hoffmann and Lord Rodger contain a valuable discussion of the underlying principle. The same idea is echoed in some of the judgments in Patel v Mirza (see para 155 per Lord Neuberger; para 191 per Lord Mance: the law must aspire to be a unified institution, the parts of which contract, tort, the criminal law must be in essential harmony quoting McLachlin J in Hall v Hebert [1993] 2 SCR 15, 175 176). Lord Rodger, in particular, referred in Gray to the desirability of different organs of the same legal system adopting a consistent approach to the same events (para 76). He continued: 77. In British Columbia v Zastowny [2008] 1 SCR 27, 38, para 23, Rothstein J treated the need to preserve the integrity of the justice system, by preventing inconsistency in the law, as a matter of judicial policy that underlay the ex turpi causa doctrine. In other words, in the circumstances of that case the application of the ex turpi causa doctrine helped to promote the more fundamental legal policy of preventing inconsistency in the law. That such a policy exists is beyond question. In Zastowny and the preceding cases, the need was to ensure that the civil and criminal courts were consistent in their handling of the plaintiffs criminal conduct and its consequences. But that is simply one manifestation of a desirable attribute of any developed legal system. In classical Roman law the jurists were at pains to ensure that the various civil law and praetorian remedies worked together in harmony in relation to the same facts. One of the hallmarks of a good modern code is that its provisions should interrelate and interact so as to achieve a consistent application of its overall policy objectives. Complete harmony may well be harder to achieve in an uncodified system hence the constant attention paid by the classical jurists to the problem since different remedies will have developed at different times and in response to particular demands. But the gradual drawing together of law and equity in English law illustrates the same pursuit of harmony and consistency. And, certainly, the courts are conscious that inconsistencies should be avoided where possible. So, for instance, a court should not award damages in tort if a contractual claim based on the same events would be excluded by some term in the contract between the parties. Similarly, a court should not give a remedy on the ground of unjust enrichment if this would be tantamount to enforcing a contract which the law would treat as void in the circumstances. Likewise, in the present case, when considering the claim for loss of earnings, a civil court should bear in mind that it is desirable for the criminal and civil courts to be consistent in the way that they regard what the claimant did. As Samuels JA observed in State Rail Authority of New South Wales v Wiegold [(1991)] 25 NSWLR 500, 514, failure to do so would generate the sort of clash between civil and criminal law that is apt to bring the law into disrepute. As that passage makes clear, the objective is consistency or coherence between the civil and criminal law within a particular system of law. The fact that the laws of other jurisdictions and other systems may reflect different policy choices seems to me beside the point. It would in my view be contrary to that principle for the civil courts to award damages on the basis of conduct which, if undertaken in this country, would offend its criminal law. It is true that there have been striking developments in societys approach to many issues affecting family life, including surrogacy, as the Law Commissions comprehensive report demonstrates. There has however been no change to the critical laws affecting commercial surrogacy, which led to the refusal in 2001 of damages on that basis. Nor does the Law Commission propose any material change in that respect. It is also apparent from recent studies that public attitudes remain deeply divided (see for example the Second Report of the Surrogacy UK Working Group on Surrogacy Law Reform (December 2018). So long as that remains the state of the law on commercial surrogacy in this court, it would not in my view be consistent with legal coherence for the courts to allow damages to be awarded on a different basis. In short, I consider that the decision of the Court of Appeal was correct in 2001, and remains correct today. I would therefore allow the appeal on the third issue. |
This judgment is concerned with a number of points which arise from this Courts decision in Coventry v Lawrence [2014] UKSC 13, [2014] 2 WLR 433. By that decision, we held that the occupiers of a Stadium, David Coventry trading as RDC Promotions, and a Track, Moto Land UK Limited, were liable in nuisance to the appellants, Katherine Lawrence and Raymond Shields, who were the owners and occupiers of a residential bungalow, Fenland, some 850 yards away. The nuisance arose from the use of the Stadium for speedway racing and other motorcar racing, and the use of the Track for motorcycle racing and similar activities. A summary of the factual and procedural history is set out in paras 7 27 of our earlier judgment. The appellants brought their proceedings not only against Mr Coventry and Moto Land (the respondents), but also against their respective landlords, Terence Waters and Anthony Morley and a predecessor landlord (the Landlords). The effect of our decision was to reverse the Court of Appeal and to restore the trial judges order of 4 March 2011, which was based on his finding that the respondents were liable in nuisance but the Landlords were not so liable. By the time of the trial, Fenland was unoccupied owing to a fire, and it remains in its fire damaged state to this day. The order made by the Judge included (i) an injunction against the respondents limiting the levels of noise which could be emitted from the Stadium and the Track to take effect on 1 January 2012 or, if [earlier, when] Fenland is again made fit for occupation, (ii) permission to the parties to apply to vary the terms of this injunction not earlier than 1 October 2011, (iii) awards of damages of some 10,350 against each of the two respondents, (iv) a provision dismissing the claims against the landlords, and (v) a direction that the respondents pay 60% of the appellants costs, to be subject to detailed assessment. Subject to further arguments, the effect of our earlier decision is to restore the orders for an injunction and for damages referred to in items (i) and (iii) above, and also the order for costs recorded in item (v). Four further or consequential issues now arise, and they are as follows. First, in relation to item (i), should the injunction be suspended until Fenland is rebuilt? The second issue, which arises out of item (ii), is when the parties should be able to apply to the judge. The third issue, which is raised by item (iv), is whether the Landlords are also liable to the appellants in nuisance. The fourth issue, which concerns item (v), is whether the order for costs against the respondents infringes article 6 of the European Convention on Human Rights (the Convention). The first two issues are of no general application, the third issue is of some significance, and the fourth issue concerns a matter which is important. The two minor issues On the first minor issue, the respondents contend that the injunction should be suspended until Fenland is rebuilt and fit to be occupied again as a residence, whereas the appellants argue that, as the Judge decided, there should be a specific long stop date, by which the injunction should take effect irrespective of the physical state of Fenland. On the face of it, at any rate, it seems to me that there is no reason why the injunction should start to bite so long as Fenland remains unoccupiable. The purpose of the injunction is to prevent activities at the Stadium and on the Track interfering with the ordinary residential use and enjoyment of Fenland. So long as such use and enjoyment is not possible, it is hard to see what justification there can be for maintaining the injunction: it would cause damage to the respondents with no concomitant benefit to the appellants. There are arguments the other way, but they are unpersuasive. Thus, the Judge imposed a long stop date, but (i) there is no apparent justification for it, and (ii) the date has long passed anyway, so this Court is free to exercise its own discretionary power. It is also said that there is reason to believe that the fire may have been started by one of the many people in the locality who support the continuation of the respondents activities. That is no more than a suspicion, and the Judge was unable to decide whether the fire had occurred accidentally or had been started deliberately. He did find that an earlier attack on Fenland with a forklift truck had been to exact revenge upon [the appellants] for the difficulties their complaints had caused to the activities at the Stadium or at the Track, although there was no proof as to who was responsible. In my view, unless it could be shown that the fact that injunction was still suspended in some way prevented Fenland being restored, I do not see why it should take effect before Fenland is restored. It was also argued that the effect of this decision would be that the respondents could postpone indefinitely the date when the injunction will take effect. However, it is not the respondents, but the appellants, who, by putting off the restoration of Fenland (as they are of course quite entitled to do) can indefinitely postpone the coming into force of the injunction. As the injunction is for the benefit of the residential use and occupation of Fenland, that is scarcely a surprising state of affairs. Turning to the second minor issue, I do not consider that there should be a delay before the parties are able to apply to vary the injunction. The Judge thought that there should a delay, apparently to enable either party to argue that the terms of the injunction were not satisfactory in practice. The appellants contend that, given that this was a matter for the Judge, this Court should adopt the same approach. However, the Judges approach was inherently flawed as, under his order, the injunction would not have come into effect under item (i) above before either party could have made an application under item (ii). Even more importantly, at least one reason which the respondents will very probably have in applying to the court is to argue that the court should discharge the injunction on the ground that damages would be an adequate remedy. As explained in para 149 151 of our earlier judgment, in the light of the state of the authorities before we gave our judgment, this argument was understandably not regarded as having much prospect of success, and therefore was not run by the respondents below. However, it now has a prospect of success, and, as is stated in para 152 of the earlier judgment, it should be considered on its merits if it is indeed raised. There is therefore now a good reason, which did not exist when the Judges order was being considered, for the respondents to be able to apply without having to wait. The first main issue: the liability of the Landlords in nuisance The first main issue concerns the extent to which the Landlords should be held liable for nuisance which is caused by their tenants, the respondents. At trial, the Landlords do not seem to have made much of the argument that they were in a different position from the respondents. It appears that it was the Judge who took the point that the terms of the leases under which the respondents occupied the Stadium and the Track (the Leases) contained covenants against nuisance, and that the law as set out in Clerk & Lindsell on Torts, 20th edition, para 20 81, indicated that landlords are not liable for nuisance created by their tenants, unless the nuisance was close to inevitable as a result of the letting. On that basis, relying primarily on the terms of the Leases, he dismissed the claims against the Landlords. That decision was upheld by the Court of Appeal on the ground that there was no nuisance, and therefore no consideration was given to the question whether the Judges reasons for rejecting the claims against the Landlords were justified. However, now that we have held that the respondents are liable in nuisance, the question which arises is whether the Judge was right in holding that their Landlords were nonetheless not liable. I should perhaps add that the appellants cross appeal on this issue to the Court of Appeal related simply to Terence Waters (Mr Waters) and his son James, although claims had been made unsuccessfully against one other defendant under this head. The law relating to the liability of a landlord for his tenants nuisance is tolerably clear in terms of principle. Lord Millett explained in Southwark London Borough Council v Mills [2001] 1 AC 1, 22A, that, where activities constitute a nuisance, the general principle is that the persons directly responsible for the activities in question are liable; but so too is anyone who authorised them. As he then said, when it comes to the specific issue of landlords liability for their tenants nuisance, [i]t is not enough for them to be aware of the nuisance and take no steps to prevent it. In order to be liable for authorising a nuisance, the landlords must either participate directly in the commission of the nuisance, or they must be taken to have authorised it by letting the property. In Smith v Scott [1973] Ch 314, referred to with approval by Lord Hoffmann in Mills at p 15D E, Sir John Pennycuick V C considered at p 321C D the appropriate test to be applied in order to decide whether landlords had authorised a nuisance by letting a property from which the tenant caused the nuisance. He described the authorities [as] not altogether satisfactory, but decided that they suggested that it must be a virtual certainty, or there must be a very high degree of probability, that a letting will result in a nuisance before the landlords can be held liable for the nuisance. As Pickford LJ put it in a case cited with approval by Lord Millett in Mills at p 22A, Malzy v Eichholz [1916] 2 KB 308, 319, [a]uthority to conduct a business is not an authority to conduct it as to create a nuisance, unless the business cannot be conducted without a nuisance, a view shared by Lord Cozens Hardy MR at pp 315 316. When it comes to landlords being liable for their tenants nuisance by participating in the nuisance, as a result of acts or omissions subsequent to the grant of the lease, the law was considered authoritatively in Malzy. Lord Cozens Hardy at p 316 had no hesitation in rejecting as an extraordinary proposition the contention that landlords could be rendered liable by accepting rent and refraining from taking any proceedings against their tenant, once they knew that their tenant was creating a nuisance. As he put it at p 315, by reference to an earlier, unreported case, there must be such circumstances as to found an inference that the landlord actively participated in the [relevant] use of the [property], and he referred a little later to the need for actual participation by [the landlord] or his agents. It was suggested that two decisions of the Court of Appeal, Sampson v Hodson Pressinger [1981] 3 All ER 710 and Chartered Trust Plc v Davies [1997] 2 EGLR 83, demonstrated that the law has developed since Malzy, so that it is now less easy for landlords to escape liability for their tenants nuisance than it was 100 years ago. We were not referred to any social, economic, technological or moral developments over the past century in order to justify a change in the law on this topic; indeed, as already mentioned, Smith (where Sir John Pennycuick relied on 19th century cases) and Malzy (which was decided a century ago) were both cited with approval in the House of Lords less than 15 years ago. Sampson was discussed in Mills at p 16B D by Lord Hoffmann, whose implied doubts about the decision I share. If, which I would leave open, the defendant landlords in Sampson were rightly held liable for nuisance in that case to the plaintiff tenant, it could only have been on the basis that the ordinary residential user of the neighbouring flat which they had let would inevitably have involved a nuisance as a result of the use of that flats balcony. In Chartered, although the nuisance resulted from the tenants use of the property, the actual nuisance was caused by people assembling in the common parts, impeding access to the plaintiffs property. Since the landlords were in possession and control of the common parts, where the nuisance was occurring, the decision may well have been justified on orthodox grounds, although, again, I would not want to be taken as approving (or indeed disapproving) the decision that there was a valid claim against the landlords in nuisance in that case. In the present case, there can be no question of the Landlords being liable to the appellants for the nuisance on the ground that it was an inevitable, or nearly certain, consequence of the letting to respondent tenants of their respective demised premises, the Stadium and the Track. The intended uses of those properties were well known to the Landlords at the time of the lettings and those uses have in fact resulted in nuisance, but that is not enough to render the Landlords liable in nuisance as a result of the letting. It is clear from what the Judge said in his judgment and from the terms of the injunction he granted that those uses could be, and could have been, carried on without causing a nuisance to the appellants. It also appears that, in the past, the use of the Stadium and the Track may well not have given rise to any nuisance. Accordingly, the Landlords cannot be liable in nuisance as a result of having let the Stadium and Track to the respondents. In reaching the same conclusion, the Judge was primarily impressed by the inclusion of covenants against nuisance in the Leases. Unfortunately, as is common ground, he misinterpreted the relevant clause in the Motoland lease. Even if the landlords would have been assisted by a clause prohibiting nuisance, this was not such a clause. On the contrary the prohibition was subject to the tenant being allowed to use the premises for the permitted motor cycle use. This might be taken, if anything, as an indication that the landlords had accepted the risk that the permitted use might cause a nuisance, and deprived themselves of power through the lease to do anything about it. I doubt in any event that such covenants could take matters further either way. If, at the time that the Leases were granted, it was inevitable, or close to inevitable, that the proposed or permitted uses would result in nuisance, then I do not think that the Landlords could have escaped liability by simply taking, or having taken, a covenant against nuisance (even assuming that the covenant, properly construed, would have served to prevent nuisance from the proposed or permitted uses in such circumstances). If, as was held in Malzy, landlords do not become liable for their tenants nuisance simply by failing to enforce a covenant which would put an end to the nuisance, it must follow that, if landlords would otherwise be liable for their tenants nuisance, they should not escape liability simply by including such a covenant in the lease. Conversely, in a case such as the present where the proposed uses would not necessarily result in nuisance, I do not consider that the Landlords position would have been weaker if the Leases had contained no covenant against nuisance. As Lord Cozens Hardy MR put it in Malzy at p 319 it is wrong to render [the landlord] a sort of trustee of [such a] covenant for the benefit of [a neighbour]. Accordingly, if the claim in nuisance against the Landlords is to succeed, it must be based on their active or direct participation to use the adjectives employed by Lord Cozens Hardy in Malzy and by Lord Millett in Mills. The judge appears to have ignored this alternative. Although he referred to the allegations of orchestration by Terence Waters, he regarded them as potentially relevant only to a separate claim of harassment, which had not been pleaded. Accordingly he made no, or limited, findings on this issue. That failure is attributable to the fact that the Landlords did not raise at trial the argument that they should not be liable for nuisance if the respondents were so liable, and, as mentioned above, it was the Judge who raised the point, and he went on to decide it on the misconceived basis described in para 16 above. In this Court, the appellants expressly disclaimed the right to contend that it was not open to the Landlords to rely on the argument that they had not authorised or participated in the nuisance despite not having taken the point properly at first instance. While I appreciate the concern shared by Lord Mance and Lord Carnwath in finding for the Landlords in these circumstances, I consider that we have to do our best to arrive at the right result in the light of the evidence and the findings which the Judge made. This creates a difficulty for this court. Although there is little authority on the issue, the question whether a landlord has directly participated in a nuisance must be largely one of fact for the trial judge, rather than law. The difficulty is compounded by the lack of pleadings on the point, attributable no doubt to the late stage at which it emerged. In other circumstances it might be appropriate to remit the matter for further findings on this issue. However, this was not sought by any of the parties, for understandable reasons, given the exorbitant expenditure of time and money already incurred. Accordingly we must do our best on the available material to decide whether the Landlords directly participated in the respondents nuisance creating activities. It is clear in my view that the issue whether a landlord directly participated in his tenants nuisance must turn principally on what happened subsequent to the grant of the Leases, although that may take colour from the nature and circumstances of the grant and what preceded it. In this case, Lord Carnwath considers that it is significant that (i) Mr Waters (and his son James) had been using the Stadium before the grant of the lease of it in 2005 and had tried to revive its commercial use in 2008, and (ii) Mr Waters initially developed the Track and used it from 1992 until the grant of the lease. I consider that information is of very marginal relevance to the question whether they directly or actively participated in the nuisance while the Stadium was let. At the most it may fairly be said to render it a little more probable that they participated, but in my view that is as far as it is likely to go in this case. In this case, the appellants rely on a number of factors to establish their case that Mr Waters participated in the nuisance. In particular, they rely on the fact that Mr Waters (i) did nothing as landlord to try to persuade his tenant to reduce the noise, (ii) erected a hay bale wall around Fenland to discourage complaints and to keep down the noise, (iii) co ordinated all dealings with the local authority on noise issues, leading for the respondents in discussions, (iv) appealed against the noise abatement notice served by the local authority in respect of the noise emanating from the Stadium and the Track, and (v) co ordinated the response to the appellants complaints about the noise, and often responded himself. I shall concentrate on the case against Mr Waters, as, if it fails, the case against his son James must fail, as the grounds for holding him liable are weaker. As to point (i), the fact that a landlord does nothing to stop or discourage a tenant from causing a nuisance cannot amount to participating in the nuisance (to use the expression employed by Lord Millett and Lord Cozens Hardy). As a matter of principle, even if a person has the power to prevent the nuisance, inaction or failure to act cannot, on its own, amount to authorising the nuisance. As already discussed, that is strongly supported by the reasoning in Malzy. I also consider point (ii) to be of very limited force. Absent very unusual circumstances, the fact that a landlord takes steps to mitigate a nuisance can scarcely give rise to the inference that he has authorised it. It is somewhat ironic that the appellants argue that Mr Waters should be liable for the nuisance because he did not take steps to prevent it, and then argue that the fact that he took steps to reduce the nuisance supports the contention that he is liable for it. Constructing the wall on land adjacent to Fenland could, it is fair to say, be regarded as a somewhat aggressive act. Indeed, the Judge said that he should have been inclined to regard [it] as an aggravating feature to be reflected in an award of damages, had [Mr Waters] been found to be liable in nuisance, but, as he immediately went on to observe, that does not mean that Mr Waters thereby participated in the nuisance. Points (iii), (iv) and (v), which are all based on Mr Waters leading part in fighting off the risk of nuisance abatement by the local authority and claims in common law, have somewhat more force, but, even taken together, they do not persuade me that Mr Waters participated in the nuisance. Any landlord, whose premises were being lawfully used for motor car and motorbike racing, would naturally wish to avoid, or else to minimise, any restriction on the emission of noise from the premises, whether by the local authority or by the court. Any such restriction would be very likely adversely to affect the value of his reversionary interest, as it would risk curtailing the racing activities on the premises, and therefore the commercial attraction of the premises, which in turn could be expected to depreciate the capital and rental values of the premises. On that ground alone, I find it hard to accept that, by trying to fight off allegations of nuisance against his tenants, a landlord can be said to be participating or authorising the nuisance. So far as point (iii) is concerned, a noise abatement notice was served by the local authority in December 2007, and it included a requirement for certain attenuation works, which were eventually carried out in January 2009. It is clear that, particularly during 2007, Mr Waters spoke against the service of an abatement notice and any further steps to curtail the activities at the Stadium and Track, at a number of meetings between the owners and operators of the Stadium and the Track and representatives of the local authority, and that in 2008 he made further representations about the need for any noise attenuation works. However, it has to be borne in mind that he was a local councillor and therefore had a legitimate interest in that capacity so far as the activities at the Stadium and the Track were concerned. Those activities commanded quite a lot of local support, as well as local opposition, and the fact that he spoke in support of them at such meetings is of less assistance to the appellants case than if he had not been a councillor. Nonetheless, while Mr Waters position as a councillor can fairly justify much of his involvement, I find it hard to accept that it can explain everything that he said at such meetings in support of the local authority taking no steps to curtail the activities at the Stadium or Track. In my view, however, the fact that a landlord seeks to persuade a local authority not to take action in relation to alleged noise or other nuisance emanating from his tenants activities does not involve his authorising or participating in the nuisance caused by those activities. It is worth recalling that the notion of authorising or participating in a nuisance is not limited to landlords: as Lord Millett pointed out in Mills, the notion of authorising and participating in a nuisance is a general principle of tortious liability Any person with an interest in the activities continuing, such as a local inhabitant, a participant, a spectator, or a person with an economic interest (eg someone employed at the Stadium or Track, with a car or bike manufacturing or repair business, or with a betting operation), might seek to persuade the local authority against taking action aimed at curtailing the activities. Such a person would not thereby be authorising or participating in the nuisance, so as to become liable for it. It would therefore be illogical if a landlord could be held liable because he takes such a course because of his economic interests. The fact that he joins with his tenant, even taking the lead, in making representations to the local authority cannot of itself undermine this analysis. The most it can do is to reinforce other factors which support the contention that he has authorised or participated in the nuisance. The fact that Mr Waters was a party to the appeal against the abatement notice when it was served in December 2007, point (iv), is not a powerful point. If he had been served with the notice, he was perfectly entitled to appeal against it. Even if he was not bound to appeal against it, indeed even if he was not served with it, a landlord may well wish to ensure that his reversionary interest in the property concerned is not damaged by such a notice. Point (v), that Mr Waters was primarily responsible for replying to the complaints made by the appellants solicitors in 2007 and 2009, is again explicable by reference to his interest as landlord in not having the use of the premises impeded. Further, given that he had much of the relevant information available to him as a councillor, and as a result of his discussions with the local authority, it is unsurprising that the detailed responses came from him. In any event, it appears that he was unaware that, as landlord, he was unlikely to be held liable for common law nuisance in any event, a point I return to in para 31 below. On behalf of the Landlords, Mr Denehan and Ms McGowan (neither of whom appeared at first instance) said that, during the time that nuisance is alleged by the appellants, the Landlords had no involvement in the activities carried on at the Stadium and the Track, they were not in possession of the Stadium or the Track, they enjoyed no share of the profits made from the activities at the Stadium and the Track, and their actions cannot be said to have been causative of the nuisance in any way. Those points are well founded, save that by playing a substantial part in seeking to fight off the local authoritys noise concerns, Mr Waters may well have indirectly caused a degree of nuisance, as he may have delayed service of the noise abatement notice, and he may have caused the noise levels to have been at a higher level than they would otherwise have been. But that is quite insufficient to amount to authorising or participating in the nuisance. For the reasons which I have given, none of the five points relied on by the appellants make good the contention that Mr Waters authorised or participated in the nuisance. While I agree with Lord Carnwath that they show that Mr Waters went further than most landlords would have done, I do not consider that, as a matter of ordinary language, any of the grounds relied on can be said to involve Mr Waters actively or directly participating in the respondents nuisance. I acknowledge that it is, at least in principle, possible that five points which, when taken separately cannot justify a certain conclusion, could, when taken together, justify that conclusion. Nonetheless, in relation to the five points relied on in this case, the reasons why each is not strong enough to enable the appellants to fix liability on Mr Waters are such that I do not see how they could fix such liability between them. Before turning to the final issue, it is right to say that, although I would uphold the dismissal of the appellants claim against the Landlords, my current view is that there should be no order for costs as between the appellants and the Landlords. The legal basis on which the Landlords have succeeded in this Court is not merely different from that on which they succeeded before the Judge: it is a basis which was not pleaded or developed in argument before the Judge. While the appellants expressly disclaimed any objection to the Landlords resting their case on this basis in this Court, it seems to me, at least at the moment, that the right course to take on costs as between the appellants and the Landlords is to let them lie where they fall. At one extreme, the Landlords could say that they should have their costs because they have fought off the appellants claim against them. At the other extreme, the appellants could say that they should have all their costs until the Landlords formally raised the point on which they have succeeded. Further, this could be said to be one of those unusual cases where the successful party brought the proceedings on himself (in the form of unusually confrontational behaviour for instance as mentioned in para 19 above). The second main issue: the level of costs The final issue arises out of the Judges order for costs, namely that the respondents should pay 60% of the appellants costs. The appellants costs at first instance consisted of three components, as permitted by the Courts and Legal Services Act 1990 as amended by sections 27 31 in Part II of the Access to Justice Act 1999. The first was the base costs, ie what their lawyers charged on the traditional basis, which was, in crude terms, calculated on an hourly rate and the costs of disbursements. The second component was the success fee (or uplift) to which the lawyers were entitled, because they were providing their services on a conditional fee (or no win no fee) basis. The third component was the so called ATE premium, a sum which is payable to an insurer who agreed to underwrite the appellants potential liability to the respondents for their costs if the respondents had won. The appellants base costs amounted to 398,000; the success fee, which (we will assume) was at the maximum permitted level of 100%, amounted to 319,000 odd (as the uplift does not apply to every item of costs), and the ATE premium was apparently about 350,000. Accordingly, if the respondents had been liable for the whole of the appellants costs up to the date the Judge made the order, they would have had to pay the appellants around 1,067,000. As it is they are liable for over 640,000. These figures are very disturbing. They give rise to grave concern even if one ignores the success fee and ATE premium. The fact that it can cost two citizens 400,000 in legal fees and disbursements to establish and enforce their right to live in peace in their home is on any view highly regrettable. The point is reinforced when one takes into account the value of their home, which is less than 300,000 (coupled with the effect of the nuisance on that value, 74,000 at the most) and the fact that there will have been very significant further base costs incurred as a result of four day appeals in the Court of Appeal and this Court. The point can equally forcefully be made from the point of view of the respondents. As relatively small business operators, they are not only having to fund their own costs, which presumably would be of the same order, but in addition they are going to have to pay some 240,000 towards the appellants costs. It is true that the respondents lost, but they were seeking to defend their businesses and they plainly had a reasonable case, as is evidenced by the fact that they won in the Court of Appeal. One of the main, and laudable, aims of the proposals made by Lord Woolf in his report Access to Justice (1996), which led to the enactment of the Civil Procedure Act 1997, and the introduction of the Civil Procedure Rules the following year, was to try and achieve a better relationship between the costs and benefits of litigation. As the figures in this case show, and as is reflected in many other cases, that target has not merely proved elusive, but it is often missed by a very wide margin indeed. It is, of course, easy to criticise, and, having been Master of the Rolls until 2013, I am as aware as anyone how hard it is to ensure that a case, particularly one that does not involve a very large sum of money but is potentially complex in terms of fact, law and expertise, such as the present case, is both properly and proportionately litigated. It is also right to acknowledge that the reforms proposed by Sir Rupert Jackson in 2010, which do not apply to this case, have been largely introduced and are being absorbed. Nonetheless, even without the effect of Part II of the 1999 Act, to which I must shortly turn, it would be wrong for this Court not to express its grave concern about the base costs in this case, and express the hope that those responsible for civil justice in England and Wales are considering what further steps can be taken to ensure better access to justice. It is only fair to emphasise that this concern relates to the current system and that it is not intended to imply any criticism of the lawyers in this case. The amount of the base costs in this case is however dwarfed by the total potentially recoverable costs, which are nearly three times as much. The figures illustrate the malign influence of the amendments made to the 1990 Act by Part II of the 1999 Act, and as implemented through CPR rule 44 and CPR44 PD now fortunately repealed and replaced by the provisions of Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, following Sir Rupert Jacksons Review of Civil Litigation Costs (2010), referred to above. As Sir Rupert pointed out in his Review, and as is explained in Zuckerman on Civil Procedure Principles and Practice (3rd ed 2013), the system introduced in 1999 had a number of unique and regrettable features, four of which are worth mentioning for present purposes. First, claimants had no interest whatever in the level of base costs, success fee or ATE premium which they agreed with their lawyers, as, if they lost they had to pay nothing, and if they won the costs would all be paid by the defendants, who, on the other hand, had no say about the costs (other than retrospectively on an assessment). Secondly, in many cases, unsuccessful defendants found themselves paying, in addition to the whole of their own costs, three times the claimants real costs. Thirdly, while proportionality had a part to play when assessing the recoverability of base costs (albeit a limited part see Home Office v Lownds [2002] 1 WLR 2450), it was excluded from consideration in relation to the recovery of success fee or ATE premium (which were simply required to be reasonable) see CPR44 PD, paras 11.7 11.10. Fourthly, the stronger the defendants case, the greater their liability for costs would be if they lost, as the size of the success fee and the ATE premium should have reflected the claimants prospects of success. Even accepting that they have no complaint about their liability for 60% of the appellants base costs, the respondents are understandably aggrieved by the consequences of the Judges order that they pay 60% of the appellants costs, because it means that they have to pay (i) 60% of the 100% success fee, and (ii) 60% of the ATE premium. Mr McCracken QC contends on their behalf that this is a grievance which can be accorded legal recognition through article 6 of the European Convention on Human Rights and/or article 1 of the First Protocol to the Convention (A1P1). His argument is that, by virtue of section 6 of the Human Rights Act 1998 the court, as a public body, must exercise its discretion when awarding costs in accordance with the Convention, save where otherwise required by primary legislation (such as the 1990 and 1999 Acts), and that secondary legislation (such as the CPR and Practice Directions) must be disapplied where it requires otherwise. Relying on the judgments of the Strasbourg Court in MGN Limited v United Kingdom (2011) 53 EHRR 5 and Dombo Beheer BV v Netherlands (1994) 18 EHRR 213, he contends that article 6 would be infringed if the court required the respondents to pay 60% of the success fee and the ATE premium. As to A1P1, he relies on the reasoning of the Strasbourg court in James v United Kingdom (1986) 8 EHRR 123. In MGN v UK at para 217, the Strasbourg Court said that the depth and nature of the flaws in the system introduced by the 1999 Act and the provisions of the CPR referred to above were such that the Court can conclude that [it] exceeded even the broad margin of appreciation to be accorded to the State in respect of general measures pursuing social and economic interests. That provides some support for the respondents case. However, the observation and the decision itself were made in connection with an alleged infringement of article 10, where the claimant was rich enough not to need to take advantage of a conditional fee agreement. In the present case, by contrast, article 10 does not apply and it is apparent that the appellants needed the protection of a conditional fee agreement and recoverable ATE premium in order to be able to bring their claim. Dombo Beheer was a case concerned with article 6, and the Strasbourg court said that it was clear that the requirement of equality of arms, in the sense of a fair balance between the parties applies in principle to cases concerning civil rights and obligations. However, it is by no means clear that that general observation would necessarily support the respondents argument. In James v UK at para 50, the Strasbourg court said that, when someone is deprived of property, there must be a reasonable relationship of proportionality between the means employed and the aim sought to be realised, and that a fair balance . must be struck between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights. I am unconvinced that this takes matters any further than the argument based on article 6. In Callery v Gray [2002] 1 WLR 2000, the House of Lords effectively confirmed that, subject to reasonableness, success fees and ATE premiums were recoverable, and in Campbell v MGN Ltd (No 2) [2005] 1 WLR 3394, the House of Lords held that the 1999 Act costs recovery regime did not infringe article 10. However, as I have mentioned, the Strasbourg court took a different view in the latter case. In those circumstances, it must, in my view, follow that the issue of whether the 1999 Act costs regime, and in particular a claimants right to recover any success fee and ATE premium from an unsuccessful defendant, infringes the Convention, is one which it is open to this Court to reconsider. In the light of the facts of this case and the Strasbourg court judgments relied on by Mr McCracken, it may be that the respondents are right in their contention that their liability for costs under the 1990 Act, as amended by Part II of the 1999 Act, and in accordance with the CPR, would be inconsistent with their Convention rights. However, it would be wrong for this Court to decide the point without the Government having had the opportunity to address the Court on the issue. This concern is based on the proposition that a declaration of incompatibility ought not be made by a court without the Government having the opportunity of addressing the court. It appears to me that there is a substantial argument to the effect that it is not merely secondary legislation, namely CPR 44 and CPR44 PD, but also Part II of the 1999 Act, which had the effect of requiring defendants who have been ordered to pay a claimants costs to pay the uplift and ATE premium in full, subject to the uplift and premium having been reasonable, but irrespective of proportionality. Section 58A(6) of the 1990 Act (added by section 27 of the 1999 Act) provides that an order for costs may, subject to rules of court, include provision requiring the payment of any fees payable under a conditional fee agreement which provides for a success fee, and section 29 of the 1999 Act has a similar provision in relation to an ATE premium. It is true that these provisions are not on their face mandatory, but it seems to me to be arguable that the costs charging and recovery system introduced by Part II of the 1999 Act simply would not work unless a claimants success fee and ATE premium were recoverable in full, irrespective of proportionality, from a defendant who had been ordered to pay the claimants costs. Accordingly, if the respondents argument based on article 6 or A1P1 is correct, it may well be that the proper outcome would not be to disregard paras 11.7 11.10 of CPR44 PD, but to grant a declaration of incompatibility, although that would be questionable as the relevant provisions of the 1990 and 1999 Acts have been repealed and replaced by a far less unsatisfactory system in Part 2 of the 2012 Act. Nonetheless, the system enacted in the 1999 Act remains in force in relation to litigation brought pursuant to conditional fee agreements made before April 2013 (see Simmonds v Castle (Practice Note) [2013] 1 WLR 1239). Quite apart from that, a determination by a United Kingdom court that the provisions of the 1999 Act infringed article 6 could have very serious consequences for the Government. Although the Strasbourg court would not be bound by the determination, it would, I suspect, be likely to agree or accept that conclusion, so that those litigants who had been victims of those provisions could well have a claim for compensation against the government for infringement of their article 6 rights. However, it would be inappropriate to go further into the contention that article 6 or A1P1 is infringed by the order for costs made against the respondents in this case. It seems to me that, if the respondents wish to maintain that contention, as they are plainly entitled to do, the present appeal should be re listed for hearing before us, after appropriate notice has been given to the Attorney General and the Secretary of State for Justice. In relation to that hearing, it is only right to flag up the point that, as Lord Bingham and Lord Hoffmann emphasised in Callery at paras 8 and 17 respectively, it is the Court of Appeal which has the primary supervisory and judicial policy making functions in connection with case management, procedural and costs issues in the courts of England and Wales; and members of the Court of Appeal have far greater experience than the members of this Court on matters concerning costs. It may therefore be inappropriate for us to decide the point raised by the respondents without the benefit of the Court of Appeals consideration of, and views on, the issue, particularly as there may be an argument that, although the outcome of the costs system produces an unattractive result in the present case, its compatibility has to be assessed by reference to the generality of cases, so that a few unfortunate results are inevitable. Further, as any claim based on the Convention is fact sensitive, and because the issue here concerns first instance costs, it may be inappropriate for an appellate court to decide the issue without having the views of the trial Judge. Accordingly, quite how far this Court should go at this subsequent hearing will have to be considered at the time. At one extreme, it may be right simply to decide that all the various points are arguable but should be remitted to the Court of Appeal or a first instance judge. At the other extreme, if we thought it appropriate to do so (particularly if all parties were agreed on that course) we could determine all the issues. And there are clearly a number of intermediate possibilities. Once the interveners are identified, it would be appropriate to consider how the matter is to proceed either at a short hearing or by way of written submissions. I would expect all those involved (including the Attorney General and the Secretary of State for Justice, and any other intervener sanctioned by the Court) to try and seek an agreed procedure, and then to contact the Court Registrar in writing explaining what had been agreed and what had not been agreed, so far as the identification of the issues and proposed procedure was concerned. We could then consider that written material, and give appropriate directions. I have, somewhat unusually, dealt with questions of future procedure in this judgment, because I am very concerned indeed about the possibility of a further escalation in the already exorbitant costs in this case. If I was satisfied that there was any satisfactory way of proceeding without incurring the parties in further costs, I would eagerly grasp it, but, sadly, I cannot see any such course. However, it is also right to record that it was suggested in argument that, even if the respondents article 6 or A1P1 rights were infringed by the present costs order, we could do nothing about it, as we would be interfering with the A1P1 rights of the appellants solicitors and counsel. On the basis of the arguments we have heard so far, we are inclined to dismiss that argument, but it may have some prospect of success in so far as it is based on reliance by those solicitors and counsel on the House of Lords decision in Campbell v MGN. Accordingly, it is an argument which the appellants are free to deploy if they are so advised. It remains to deal with the respondents argument that their liability for costs under the 1999 Act costs recovery regime would infringe article 9 of the Aarhus Convention. Articles 9.3 and 9.4 of that Convention require members of the public to enjoy appropriate access to administrative or judicial procedures and adequate and effective remedies, which involves them not being prohibitively expensive. However, those articles are concerned with those who wish to challenge acts and omissions which contravene provisions of [the] national law which relate to the environment. That may well apply to a claimant seeking to prevent a common law nuisance by noise, but I do not see how it can extend to a defendant who is being sued for causing a nuisance by noise. Conclusion Accordingly, I conclude that: a) The injunction against nuisance by noise imposed by the Judge against the respondents should be suspended until Fenland is fit to be occupied residentially, subject to the next point; b) The appellants and the respondents should each have liberty to apply at any time to vary or discharge the injunction, albeit on notice (save in case of urgency); c) The respondents claim in nuisance against the Landlords is dismissed, but, albeit that this is a preliminary view, the Landlords should recover no costs; d) Consideration of the respondents contention that the Judges order that the respondents liability for costs extends to the success fee and the ATE insurance premium infringes their rights under article 6 of the Convention is adjourned for further hearing after notice being given to the Attorney General and the Secretary of State for Justice, following which the parties (including any authorised interveners) must seek to agree issues and proposed procedure, and the Court will then give directions. LORD CARNWATH This judgment is directed principally to the first main issue identified by Lord Neuberger: the liability of the landlords in nuisance. I shall comment briefly at the end on the costs issue. On all other matters covered by Lord Neubergers judgment, I agree with him and have nothing to add. The authorities Like Lord Neuberger (para 11) I would start from Lord Milletts summary of the law in Southwark London Borough Council v Mills [2001] 1 AC 1, 22A, in particular that in order to be liable for authorising a nuisance, the landlords must either participate directly in the commission of the nuisance, or they must be taken to have authorised it by letting the property (emphasis added). In view of the limited discussion or findings of fact on this issue in the lower courts, this is not a suitable case for a detailed examination of the law. However, some brief comments on both alternatives may be helpful for future reference. It is convenient to deal first with the second. Authorising by letting head, and the test which he extracts. One additional authority which might have assisted the judge, because of its helpful review of the authorities in a similar factual context, is Tetley v Chitty [1986] 1 All ER 663. A local council had granted planning permission to a go kart club to develop a go kart track on land owned by the authority, and had granted the club a seven year lease to use it for that express purpose. The council were held liable in nuisance for noise arising from the use of the track. It was common ground that they would not be relieved of potential liability by clauses in the lease obliging the club not to commit a nuisance. Having reviewed the authorities cited to him (which did not apparently include Malzy v Eichholz), the judge (McNeill J) accepted that it was not necessary to show that the nuisance was a necessary consequence of the use. He had mentioned among other authorities Smith v Scott [1973] Ch 314 (to which Lord Neuberger has referred), where the phrases virtual certainty or a very high degree of probability had been used. Possible alternative tests, on which he found it unnecessary to express a concluded view, were whether the use was likely to cause a nuisance, or was the foreseeable result of the decision to permit the use for go karting. It was enough that, on the facts of this case, the nuisance was an ordinary and necessary consequence or a natural and necessary consequence of the use (expressions used in two of the older cases), and that there was accordingly express or implied consent to do that which on the facts here inevitably would amount to a nuisance (pp 670 671). I agree generally with Lord Neubergers analysis of the authorities under this Reference might also have been made to authorities from other common law jurisdictions which have adopted the same principles. A close parallel on the facts is the judgment of the Ontario Supreme Court in Banfai v Formula Fun Centre Inc [1984] OJ No 3444, 34 CCLT 171(HCJ). The court held that the owner, Hydro, was on the facts liable for nuisance caused by car race course run by its tenant because it arose from use in the way intended when the lease was granted. OLeary J, adopting the approach of the English authorities as to the landlord exception (including Smith v Scott), said: Hydro not only knew that Formula intended to use the land for an amusement ride, it knew and approved of the layout of the track. It knew the size, power and make of the cars to be raced thereon and the hours of the day the track would be in operation. the nuisance resulted from Formula operating the track, that is to say, using the land exactly as Hydro knew it intended to use it. By entering into the lease, Hydro authorized Formula to use the land in the manner that caused a nuisance. It follows that the nuisance was the natural and necessary result of what the landlord authorized the tenant to do (paras 44 48) It is of interest that the landlord was held liable even though there seems to have been no finding that it knew or should have known that a nuisance was likely to result from the permitted activity. It was enough that he was aware of the relevant aspects of the intended activity, from which, as found by the court, nuisance had resulted. I agree, however, with Lord Neuberger that, on the limited findings of fact made by the judge in this case, it is not possible to hold the landlords liable on the ground that nuisance was a necessary or highly probable consequence of the lettings. The less stringent tests suggested by the judge in Tetley v Chitty (likely, foreseeable) do not seem to be supported by earlier or later authority. I would reject them as insufficiently rigorous for a case where the sole basis for attributing responsibility to the landlord lies in the terms and circumstances of the grant of the lease. Participation I agree accordingly with Lord Neuberger that the case for the landlords liability stands or falls on the issue of participation, in the sense used in Malzy v Eichholz. In Malzy itself, the landlord was held not liable for nuisance caused by the activities of his tenant, because the evidence showed no more than that, with knowledge of the offending use, he had continued to accept rent and had not taken any steps under the lease to bring it to an end. As Lord Cozens Hardy MR explained (following Lord Collins MR in an unreported case): There must be something much more than that. There must be something which can fairly amount to his doing the act complained of or allowing the act complained of, either by actual participation by himself or his agents or by what Lord Collins called active participation in that which was complained of. (p 315) Unfortunately, very little help is to be gained from the English authorities as to the practical application of this test, in circumstances where the landlords involvement in his tenants activities goes beyond mere receipt of rent and failure to intervene, as in that case. Again some help might have been gained from other common law jurisdictions. A similar concept is found, for example, in the American Restatement. In Harms vs City of Sibley 702 N.W.2d 91 (Iowa 2005) pp 104 5, the Supreme Court of Iowa held (applying the American Restatement (Second) of Torts (1979), sections 834, 837) that a lessor may be liable if at the time of the lease he consents to the activity and he then knows or should know that it will necessarily involve or is already causing the nuisance or if he participates to a substantial extent in carrying it on. On the facts of that case the landlord of a ready mix plant site was held jointly liable with his tenant for a nuisance caused by the plant, where the evidence showed that the landlord had purchased the property with the intent of building a ready mix plant, had obtained a building permit for that purposed, and was president of the ready mix company which operated the plant. In reaching this conclusion, as I understand the judgment, that court did not draw a clear distinction between the two parts of the test, relying both on the landlords state of knowledge at the time of the lease and his personal involvement in the property both before and after. Even in the absence of direct authority, I see nothing in Lord Milletts formulation which requires a rigid division between the two parts of the test. The terms and circumstances of the lease, and the history, may be relevant in considering the significance of the landlords conduct thereafter. Participation is not a term of art nor a precise definition. What is required in my view is a broad, common sense judgment, based on the facts as a whole, as to whether there was such active involvement by the landlord in the offending activities as to make him jointly responsible in law for their consequences. We are concerned directly with the period from April 2006, when the claimants began to complain of nuisance, having acquired their house in January of that year. However, in considering the position of the landlords it is unrealistic in my view to ignore the earlier history. As far as concerns the stadium, Terence Waters had been the owner of the stadium since it was constructed by him in 1975 until August 2005, when he sold to his son James. The 1985 planning permission for continuation of speedway racing, which is still operative, was and remains personal to him. In September 2005, James granted a lease to a Mr Harris (not a party) which lasted until its surrender in January 2008. During that time the business at the Stadium was operated under an arrangement with Mr Harris by David Coventry (2nd defendant, trading as RDC Promotions), whose own involvement with the stadium had started in 1993 (judgment para 16). We were told that the application to extend the stadium facilities in 2006 was in James name. In January 2008 James, in the judges words (para 28), tried to revive the commercial activities at the stadium, before selling it to RDC Promotions in April 2008. They have owned and operated it ever since. However, James continued to take the lead in negotiations with the authorities, and it seems that the appeal against the abatement notice served in 2007 was in his name. The moto cross track was also developed initially by Terence Waters under a 1992 temporary permission personal to him (and a Mr Nunn). Permanent permission was granted in 2002, this time personal to Terence Waters and Moto land UK Ltd (the 3rd defendant) to whom Mr Waters and his co owners granted a 10 year lease in September 2003. This history shows a close involvement by Mr Terence Waters, and later his son, in the activities of the stadium and the track dating back to their inception. Although the precise legal basis of their involvement has varied over the years, their central role in the enterprise has not. It is against that background in my view that the issue of participation in the relevant period must be judged. Lord Neuberger (para 21) has summarised the factors on which the claimants rely in the present case. I do not understand there to be any material dispute about the factual allegations; the dispute is as to their significance in law. In my view they show clearly that the involvement of Terence and James Waters has gone far beyond the ordinary role of a landlord protecting and enforcing his interests under a lease. It has involved active encouragement of the tenants use and direct participation in the measures and negotiations to enable it to be continued. That these measures were directed in part to mitigating the problem does not alter the fact of participation nor the consequences for the landlord when the measures proved ineffective. It may be, as Lord Neuberger suggests, that they were motivated at least in part by their concurrent interests as freeholders, or even, in Terences case, as local councillor. But under the Malzy test, as I understand it, the issue is not why they participated, but whether they did so, and with what effect. Jamess involvement is more recent than that of his father, and there is a lack of evidence about the precise extent of his involvement in the activities at the stadium before and since the period of his direct occupation in early 2008. However, it seems clear that he took a leading role in the negotiations with the authority to allow the use to continue at its existing level, and in the appeal against the abatement notice, though not served on him. On the material available to us, there is no reason to treat him as a less active participant than his father. For these reasons, in respectful disagreement with Lord Neuberger, I would allow the appeal on this issue, and hold that Terence and James Waters are jointly liable for the nuisance. I understand that the majority of this court supports Lord Neubergers view that consideration of this aspect should be adjourned for further hearing, following notice to the Attorney General and Secretary of State. In those circumstances I prefer to express no view at this stage on the substantive issues, save that I agree with him (para 48) that the Aarhus Convention is of no help to the respondents for the reasons he gives. LORD MANCE I agree with Lord Neubergers judgment on all issues, save that concerning the liability of the Third and Fourth Respondents, Messrs Terence and James Waters, as landlords in nuisance, discussed by Lord Neuberger in his paras 10 to 31 and by Lord Carnwath in his paras 52 to 67. On that issue, I find myself in sympathy with Lord Carnwaths reasoning and conclusion. I am fortified in this by the course this litigation has taken with regard to the Third and Fourth Respondents liability. Lord Neuberger says in para 10 that At trial, the landlords do not seem to have made much of the argument that they were in a different position from the other defendants at trial. That appears an understatement. All the defendants were represented at trial by the same counsel (though not the same solicitor), and no suggestion at all was made in their opening or closing written submissions that, if there was a nuisance, the Third and Fourth Respondents were not liable for its commission in common with the other defendants held liable in nuisance. The only point made was that, assuming there was a nuisance, any damages awarded should not in the case of the Third and Fourth Respondents include exemplary and aggravated damages (but should be confined to ordinary damages): see especially para 53 of their opening submissions and paras 111 to 166 of their closing submissions. As explained in counsels submissions before us, it appears to have been the judge who, effectively of his own motion, raised at a very late stage a possible distinction between the Third and Fourth Respondents and other defendants as regards liability for any nuisance. According to para 22 of his judgment, a point to this effect seems to have been explored with counsel in the Appellants final oral submissions, and, in paras 22 to 25 of his judgment, the judge then picked the point up, deciding that the Third and Fourth Respondents had no liability because of the terms of the leases. In doing this, he not only misread one of them, as Lord Neuberger points out in his para 16, but also overlooked the principle that a landlord who participates in a nuisance may be liable, irrespective of the terms of the lease. The Court of Appeal judgment is of equally little assistance on the present issue, since the Court concluded that there was no nuisance at all and so did not need to consider any question about the Third and Fourth Respondents liability. The fact that the Third and Fourth Respondents were prepared to recognise their liability along with other defendants for any nuisance which existed, while denying that it extended to liability for exemplary or aggravated damages, appears to me not insignificant, when the question is whether they sufficiently participated in the nuisance for it to be appropriate to hold them liable for it. They and their counsel are likely to have had a much better feel for the reality of what was going on than we can have. But it also appears to me consistent with the facts and matters relied upon of which we are aware, and on which the Appellants place reliance in this connection. Hilary Term [2014] UKSC 13 On appeal from: [2012] EWCA Civ 26 JUDGMENT Coventry and others (Respondents) v Lawrence and another (Appellants) before Lord Neuberger, President Lord Mance Lord Clarke Lord Sumption Lord Carnwath JUDGMENT GIVEN ON 26 February 2014 Heard on 12, 13 and 14 November 2013 Appellant Stephen Hockman QC William Upton (Instructed by Richard Buxton Environmental and Public Law) Respondent Robert McCracken QC Sebastian Kokelaar (Instructed by Pooley Bendall Watson) LORD NEUBERGER The issues raised by this appeal 1. This appeal raises a number of points in connection with the law of private nuisance, a common law tort. While the law also recognises public nuisance, a common law offence, this appeal is only concerned with private nuisance, so all references hereafter to nuisance are to private nuisance. It should also be mentioned at the outset that the type of nuisance alleged in this case is nuisance in the sense of personal discomfort, in particular nuisance by noise, as opposed to actual injury to the claimants property (such as discharge of noxious material or removal of support). 2. As Lord Goff of Chieveley explained in Hunter v Canary Wharf Ltd [1997] AC 655, 688, [t]he term nuisance is properly applied only to such actionable user of land as interferes with the enjoyment by the plaintiff of rights in land, quoting from Newark, The Boundaries of Nuisance (1949) 65 LQR 480. See also per Lord Hoffmann at pp 705 707, where he explained that this principle may serve to limit the extent to which a nuisance claim could be based on activities which offended the senses of occupiers of property as opposed to physically detrimental to the property. 3. A nuisance can be defined, albeit in general terms, as an action (or sometimes a failure to act) on the part of a defendant, which is not otherwise authorised, and which causes an interference with the claimants reasonable enjoyment of his land, or to use a slightly different formulation, which unduly interferes with the claimants enjoyment of his land. As Lord Wright said in Sedleigh Denfield v O'Callaghan [1940] AC 880, 903, a useful test is perhaps what is reasonable according to the ordinary usages of mankind living in society, or more correctly in a particular society. 4. In Sturges v Bridgman (1879) 11 Ch D 852, 865, Thesiger LJ, giving the judgment of the Court of Appeal, famously observed that whether something is a nuisance is a question to be determined, not merely by an abstract consideration of the thing itself, but in reference to its circumstances, and what would be a nuisance in Belgrave Square would not necessarily be so in Bermondsey. Accordingly, whether a particular activity causes a nuisance often depends on an assessment of the locality in which the activity concerned is carried out. 5. As Lord Goff said in Cambridge Water Company v Eastern Counties Leather plc [1994] 2 AC 264, 299, liability for nuisance is kept under control by the principle of reasonable user the principle of give and take as between neighbouring occupiers of land, under which . those acts necessary for the common and ordinary use and occupation of land and houses may be done, if conveniently done, without subjecting those who do them to an action: see Bamford v Turnley (1862) 3 B & S 62, 83, per Bramwell B. I agree with Lord Carnwath in para 179 below that reasonableness in this context is to be assessed objectively. 6. The issues raised on this appeal are as follows: The extent, if any, to which it is open to a defendant to contend that he has established a prescriptive right to commit what would otherwise be a nuisance by means of noise; The extent, if any, to which a defendant to a nuisance claim can rely on the fact that the claimant came to the nuisance; The extent, if any, to which it is open to a defendant to a nuisance claim to invoke the actual use of his premises, complained of by the claimant, when assessing the character of the locality; The extent, if any, to which the grant of planning permission for a particular use can affect the question of whether that use is a nuisance or any other use in the locality can be taken into account when considering the character of the locality; The approach to be adopted by a court when deciding whether to grant an injunction to restrain a nuisance being committed, or whether to award damages instead, and the relevance of planning permission to that issue. A summary of the substantive facts 7. In February 1975, planning permission was granted to Terence Waters for the construction of a stadium (the Stadium) some three miles west of Mildenhall Suffolk, on agricultural land which he owned. The planning permission permitted the Stadium to be used for speedway racing and associated facilities for a period of ten years. Speedway racing involves racing speedway motorcycles over several laps of a circuit. 8. The Stadium was constructed during the ensuing year, and thereafter it was used for the permitted purpose by a company called Fen Tigers Ltd, Terence Waters licensee or lessee of the Stadium. The planning permission was renewed on a permanent basis in 1985, although it was made personal to Mr Waters. Stock car and banger racing started at the Stadium in 1984. Such uses were not permitted under the planning permission, but after ten years of such use, it was contended that they had become immune from planning control enforcement, pursuant to section 191 of the Town and Country Planning Act 1990, as substituted by section 10(1) of the Planning and Compensation Act 1991, and Mr Waters applied for a Certificate of Lawfulness of Existing Use or Development (a CLEUD), pursuant to section 191 in early 1995. In July 1997, a CLEUD was issued by the planning authority confirming that, for a period of ten years, there had been 20 stock car and banger racing events (at specified hours of the day) at the Stadium each year, so that such a use had become lawful in planning terms. In addition, greyhound racing has been going on at the Stadium since 1992. 9. To the rear of the stadium is a motocross track (the Track), an undulating track on which this particular type of motorbike racing and practice takes place. The Track was constructed and used pursuant to a personal planning permission for motocross events, which was granted in May 1992 for a year, and renewed from time to time thereafter, always subject to conditions which sought to control the frequency of events, and the amount of sound which was emitted during such events. Eventually, in 2002, a permanent personal planning permission was granted for this use, subject to similar conditions, including one which limited the use of the Track to a limited number of days within prescribed hours, and another which imposed a maximum noise level of LAeq 85 dB over any hour at the boundary of the Track. 10. In August 2005, the Stadium was acquired from Mr Waters by his son, James Walters, and he leased it a month later to Carl Harris, who entered into an arrangement whereby the business at the Stadium was operated by David Coventry. David Coventry and his brother later took on the lease and then acquired the Stadium in April 2008. They have owned and operated it since then. Fen Tigers Ltd itself continued to promote speedway racing at the Stadium until it went into liquidation in July 2010. Terence Waters is also one of the three joint owners of the Track, and, in September 2003, he and his co owners granted a lease of the track for ten years to Moto Land UK Ltd (M LUK), who since then have operated the activities on the Track. 11. The trial judge, His Honour Judge Richard Seymour QC (sitting as a Deputy Judge of the High Court), found that, between 1975 and 2009, the Stadium had been used for speedway racing between 16 and 35 times per year, save that for six years (1990, 1991, 1993 1994, 1997 and 2000) it was not used at all for speedway. As for stock car racing, the judge found that it had occurred at the Stadium between 16 and 27 times a year between 1985 and 2009, save that there was no stock car racing in 1991 or 1992. The judge also found that the Track had been used for motocross to the full extent permitted by the relevant planning permission (para 76). As he also mentioned, in 1995, this activity had resulted in the service of noise abatement notices, under section 80 of the Environmental Protection Act 1990, which were then the subject of inconclusive proceedings. 12. Across open fields, about 560 metres from the Stadium and about 860 metres from the Track, is a bungalow called Fenland, which was built in the 1950s. It stands in about 0.35 hectares of garden, and is otherwise surrounded by agricultural land. The nearest residential property to Fenland appears to be about half a mile away, and the small village of West Row is about 1.5 miles to the south east of Fenland (and about one mile to the south east of the Stadium). In January 2006, Katherine Lawrence and Raymond Shields (the 13. appellants) purchased and moved into Fenland; their vendors were a Mr and Mrs Relton, who had owned and lived in Fenland since 1984. By April 2006, the appellants had become concerned about the noise coming from the motocross events on the Track. They complained about this to the local council in and after April 2006, and they also wrote to Mr Coventry and M LUK, and to Terence and James Waters, threatening proceedings. The complaints to the council eventually resulted in the service of further noise abatement notices, required the carrying out of works to mitigate the noise emanation (the attenuation works). These notices were served during December 2007 on Mr Coventry, his brother, M LUK and Fen Tigers Ltd, and stated that the activities at the Stadium and on the Track each constituted a statutory nuisance. The attenuation works were carried out, albeit later than they should have been, by January 2009. 14. Meanwhile, the appellants had also been pursuing their contention that both the Stadium and the Track were being used in such a way as to constitute a nuisance. As discussions did not produce what they considered to be an acceptable outcome, the appellants issued proceedings against Mr Coventry, M LUK and Terence and James Waters (the respondents) in the High Court for an injunction to restrain the nuisance in early 2008. In those proceedings, the appellants contended that the activities at the Stadium and on the Track constituted a nuisance individually, or in the alternative cumulatively. They maintained this contention following the completion of the attenuation works. The respondents filed a joint Defence in December 2009 denying nuisance. In April 2010, Fenland suffered a serious fire, which caused extensive 15. damage and rendered it uninhabitable. Since then, no one has lived there, as it has yet to be rebuilt. Meanwhile, the proceedings came on before Judge Seymour on 26 January, and he heard them over 11 days. The judgments below 16. The judge gave his decision on 4 March 2011, and his judgment runs to 325 paragraphs and over 110 pages [2011] EWHC 360 (QB) (reported in part [2011] 4 All ER 1314). It is unnecessary to attempt to explain it in any detail for the purposes of this appeal. There are some parts which are difficult to follow, and there are one or two findings which he should have made, but did not make (in particular whether the appellants knew of the planning permissions when they purchased Fenland). 17. Particularly where there has been a relatively long and expensive hearing, it is important that the judge (i) clearly identifies for his own benefit as well as that of the parties, all the issues of fact and expert opinion that are in issue, and (ii) resolves in clear terms all such issues which are relevant on his view of the law, and, at least often, those issues which would be relevant if his view of the law turns out to be wrong. Otherwise, there is a real risk of a complete or partial rehearing being ordered, which would be very unfair on the parties, and would bring the administration of law into disrepute. 18. Reverting to Judge Seymours judgment, he began by summarising the relatively uncontroversial history, and then turned to the nature of the locality. He described the immediate locality which was generally rural, but included some houses and a small village, West End, and also a US Air Force base at RAF Mildenhall, which, at its nearest point, is about a mile to the east of the Stadium, the Track and Fenland, and is also about a mile to the north of West Row. The judge described the terms of the various planning permissions, and then turned to the question whether the planning permissions for the uses of the Stadium and the Track should have any bearing on the issue of whether those uses constituted a nuisance. He concluded in para 66 that they should not, because of the personal nature of the permissions, and the fact that they limited the permitted uses to a maximum number of days a year and to specified hours of the day. 19. Judge Seymour next discussed the extent to which the Stadium and the Track had been used over the years. He then set out (at paras 96 206) the oral and documentary evidence which he had read and heard in relation to the level of noise emanating from the Stadium and the Track. This evidence consisted of (i) letters, mostly of support, sent to the planning authorities in connection with the applications for, and renewals of, the planning permissions for the use of the Stadium and the Track for the activities described above, (ii) the advices given in connection with those applications and permissions by planning officers to planning committees, (iii) the planning permissions themselves, (iv) letters sent to the local authority between 1992 and 2010, complaining of the noise, (v) records kept, and letters sent, by the local Environmental Health Officers, (vi) the oral evidence of the appellants, four other residents in the locality on behalf of the appellants, and Mrs Relton and at least five other residents for the respondents, (vii) one expert acoustic witness for each side, (viii) reports on noise levels from various public bodies including the World Health Organisation, the Department of the Environment, the National Physical Laboratory, and the Institute of Sound and Vibration Research. 20. When considering the expert evidence, the judge (at para 158) raised the question whether it was appropriate, in assessing whether the noise generated by the activities [of the defendant] was capable of causing a nuisance, to take into account as one of the noise characteristics of the locality the noise generated by those very activities. As Jackson LJ said in the Court of Appeal [2012] 1 WLR 2127, para 72, the judge does not appear to have answered that question expressly, but he appears to have held that the answer was no. 21. The judge said that, when the Stadium was being used for speedway, stock car, and banger racing from 1984, and also when the Track was being used for motocross from 1992, the noise was sometimes sufficiently intrusive to generate complaints, and sometimes not. Accordingly, he concluded that it was possible so to organise activities at the Stadium or at the Track as not to produce intrusive noise affecting those residing nearby para 95. 22. The judge also concluded at para 207 that the operation of activities at the Stadium both before and after the [attenuation] works constituted a nuisance, by reason of the noise generated, to [the appellants], and he immediately went on to make the same finding about the activities at the Track. 23. The judge then considered and rejected the respondents contention that they had acquired a right to create what would otherwise have been a nuisance by noise, as a result of the use of the Stadium for speedway, stock car, and banger racing for more than 20 years. First, he held that no such right could be acquired as a matter of law; secondly, he held that, even if that was wrong, the interruption in use, especially in respect of stock car and banger racing in 1991 and 1992, would have been fatal to a prescriptive claim. 24. Finally, having concluded that the appellants had established a claim in nuisance, the judge turned to the question of remedies. He stated at paras 243 245 that he was minded to grant an injunction to restrain the respondents from carrying on activities at the Stadium or at the Track which emitted more than a specified level of noise, which he had in mind to fix at specific levels which he identified. He explained at para 243 that he had arrived at those levels by reference to the quantum of noise emitted from various motor racing circuits across the United Kingdom, a topic on which he had heard evidence from one of the expert witnesses, and also stated that there should be a lower level of noise permitted during the evening and at night. He recorded at para 244 that the respondents did not challenge the notion that he should grant an injunction if he concluded that their activities had caused continuing nuisance. At para 245, he provisionally indicated the decibel limits he had in mind, and added that, as Fenland was unoccupied, it may be appropriate to suspend any injunction. The judge then dealt with damages for past nuisance. 25. After he had handed down his judgment, a further hearing took place before the judge, pursuant to which he made an order which was a little more generous to the respondents than he had provisionally suggested, in that the injunction he granted permitted them to emit somewhat higher noise levels on up to 12 weekends each year. He gave the respondents time to reorganise their affairs by providing that the injunction would only take effect on 1 January 2012, or (if later) when Fenland was ready for residential occupation (which has not yet happened). The terms of the order also gave either party permission to apply to vary the terms of the injunction, but not earlier than 1 October 2011. 26. The respondents appealed against the decision. The Court of Appeal reversed Judge Seymours decision, holding that the appellants had failed to establish that the respondents activities at the stadium and the Track constituted a nuisance: [2012] 1 WLR 2127. Jackson LJ, who gave the main judgment, with which Mummery and Lewison LJJ agreed, held that the judge had gone wrong in holding that the actual use of the Stadium and the Track over a number of years, with planning permission, or a CLEUD, could not be taken into account when the assessing the character of the locality for the purpose of determining whether an activity is a nuisance paras 74 and 76. In those circumstances, it was unnecessary for the Court of Appeal to consider any other issue, although Lewison LJ expressed a provisional view that, contrary to the judges conclusion, it is possible to obtain by prescription a right to commit what would otherwise be a nuisance: paras 88 91. 27. The appellants now appeal to the Supreme Court. As indicated at the start of this judgment, the appeal raises a number of points relating to the law of nuisance, and it is convenient to consider them in principle before applying them to the facts and arguments in this appeal. Acquiring a right to commit what would otherwise be a nuisance by noise 28. There is no doubt that a defendant can have a right to carry on an activity which would otherwise be a nuisance. For instance, in common law, a claimant may have bindingly agreed to the activity being carried on and to the consequent nuisance, or a claimant may somehow be estopped from objecting to the activity on the ground that it constitutes a nuisance; and, under a statute, certain activities in certain circumstances may be accorded immunity from a claim in nuisance see eg section 76 of the Civil Aviation Act 1982 and section 158 of the Planning Act 2008. 29. It is well established that an easement (that is, a right in favour of the so called dominant land over the so called servient land, such as a right of way, a right to light, a right of support, or a right of drainage) can be acquired by prescription as well as by express grant. Prescription is a form of deemed grant and arises as a result of long use. 30. Prescription was initially introduced and developed by the judges. It has been complicated by the facts that (i) as originally developed, it was subject to some rather technical, and impractical, rules (and in particular a requirement of at least an inference of enjoyment since 1189), (ii) the courts have developed another prescriptive principle, that of lost modern grant (which is not subject to so much technicality), (iii) it has been the subject of a large number of judicial decisions, many of which are hard to understand or reconcile, (iv) Parliament enacted the ill drafted Prescription Act in 1832 (2 & 3 Will 4, c 71), so that (v) there are now two types of common law prescription, together with statutory prescription. 31. The essential feature of prescription for present purposes is that, in order to establish a right by prescription, a person must show at least 20 years uninterrupted enjoyment as of right, that is nec vi, nec clam, nec precario (not by force, nor stealth, nor with the licence of the owner), as Lord Walker put it in R (Lewis) v Redcar and Cleveland Borough Council [2010] 2 AC 70, para 20), of that which he now claims to be entitled to enjoy by right. 32. An issue in the present appeal is whether the right to commit a nuisance by noise can be acquired by prescription. For this purpose, I do not think that it strictly matters whether the right to make a noise which would otherwise be a nuisance can be an easement or not. As Lord Sumner said in Pwllbach Colliery Co Ltd v Woodman [1915] AC 634, 649, a right in favour of a property owner over neighbouring land (in that case, to spread coal dust emanating from the property owners land over adjoining land) may be too indeterminate to be an easement, but it can still be the subject of a perfectly valid grant. Accordingly, it seems to me that there is no inherent reason why a right to spread coal dust, or to make a noise which would otherwise be a nuisance, should not be established by prescription. 33. Having said that, I am of the view that the right to carry on an activity which results in noise, or the right to emit a noise, which would otherwise cause an actionable nuisance, is capable of being an easement. The fact that the noise from an activity may be heard in a large number of different properties can fairly be said to render it an unusual easement, but, as Mr McCracken QC for the respondents said, whether or not there is an easement is to be decided between the owner of the property from which the noise emanates and each neighbouring property owner. Equally, as Lewison LJ said at [2012] 1 WLR 2127, para 88, the fact that a right is only exercisable at specified times does not prevent it from being an easement. As he also pointed out at para 89, one can characterise a right to emit noise in relatively conventional terms in the context of easements, namely as the right to transmit sound waves over the servient land. Lord Parker of Waddington clearly assumed that the right to emit noise could be an easement in Pwllbach [1915] AC 634, 646, referring to Lyttleton Times Co Ltd v Warners Ltd [1907] AC 476. Furthermore, where there is an express grant, it should normally be reasonably easy to identify the level of permitted noise, the periods when it may be emitted, and the activities which may produce the noise. 34. Subject to questions of notice and registration, the benefit and burden of an easement run with the land, and, therefore, if a right to emit noise which would otherwise be a nuisance is an easement, it would bind successors of the grantor, whereas it is a little hard to see how that would be so if the right were not an easement. Given the property based nature of nuisance, and given the undesirable practical consequences if the benefit and burden of the right to emit a noise would not run with the relevant land, it appears to me that both principle and policy favour the conclusion that that a right to create what would otherwise be a nuisance by noise to land can be an easement. 35. Greater difficulties arise when one comes to consider whether, and if so how, a right to commit a nuisance has been obtained by prescription. It has been suggested that is not possible to obtain by prescription a right to commit what would otherwise be a nuisance by noise, vibration, smoke or smell see the discussion in Clerk and Lindsell on Torts 20th ed (2010), para 20 85. 36. As that discussion suggests, there appear to be three possible problems with the notion that such a right could be obtained by prescription. The first is that the 20 years can only run when the noise amounts to a nuisance. As Thesiger LJ giving the judgment of the Court of Appeal, agreeing with Sir George Jessel MR, put it in Sturges at 11 Ch D 852, 863 864, [c]onsent or acquiescence of the owner of the servient tenement lies at the root of prescription, and an enjoyment which a man cannot prevent raises no presumption of consent or acquiescence. So, during such time as the noise is at such a level that it does not amount to a nuisance, time will not run: while it is not a nuisance there can be no question of the claimant being able to stop it. Secondly, there could obviously be difficulties in identifying the extent of the easement obtained by prescription: even if the level of noise can be shown to have amounted to a nuisance for more than 20 years, it will often have varied in intensity and frequency (in the sense of both timing and pitch). Thirdly, there could also be a connected problem of deciding how much, if any, more noise could be emitted pursuant to the acquired right than had been emitted during the 20 years. 37. In my view, these problems should not stand in the way of a continuing nuisance by noise being able to give rise to a prescriptive right to transmit sound waves over servient land. The first two problems are, at least largely, practical in nature, and could often present the owner of the alleged dominant land with difficulties in making out his case, but that is not a good reason for holding that he should not be entitled to do so on appropriate facts. Further, the extent of the two problems is mitigated by the fact that, to justify a prescriptive right, the 20 years use does not have to be continuous: see Carr v Foster (1842) 3 QB 581, 586 588, per Lord Denman CJ, and Patteson and Williams JJ. It is worth noting that Patteson J was prepared to accept that an interruption of even seven years might not destroy the claim to have acquired a right by prescription over 20 years. 38. As for the third problem, it is not dissimilar from the question of the extent of some other easements obtained by prescription, such as a right of way or a right to discharge polluted water. The precise extent of a right to transmit sound waves obtained by prescription must be highly fact sensitive, and may often depend not only on the amount and frequency of the noise emitted, but also on other factors including the character of the neighbourhood and the give and take referred to by Lord Goff in Cambridge Water [1994] 2 AC 294, 299. 39. Given the potential effect on the enjoyment of the servient land of an increase in the level or frequency of noise, it seems to me that the dominant owner cannot, or at least could only very rarely, be accorded the degree of latitude available to someone with a right of way or a right of drainage obtained by prescription, as discussed in McAdams Homes Ltd v Robinson [2004] 3 EGLR 93, paras 24 47 and 79 84. The position is closer to a case where a right to pollute the servient owners watercourse is obtained by prescription. Thus, in Baxendale v McMurray (1867) 2 Ch App 790, 795, Lord Cairns LJ indicated that, albeit in a case where a change of materials had been involved in the business of the dominant owner, the servient owner had cause for complaint if he could show a greater amount of pollution and injury arising from the use of this new material in order to establish a breach of his rights. 40. So far as previous cases on noise and the like are concerned, as Lewison LJ said below at para 91, Tindal CJ clearly assumed that a right to emit noxious vapours and smells could be acquired by prescription in Bliss v Hall (1838) 4 Bing NC 183, 186, and in Sturges v Bridgman 11 Ch D 852, 863 865, it was also clearly assumed by the Court of Appeal that a right to emit noise and vibration which would otherwise be a nuisance can be acquired by prescription. So, too, in Crump v Lambert (1867) LR 3 Eq 409, 413, Lord Romilly MR said that the right of sending smoke or noise over a neighbours land could be obtained if the neighbour has not resisted for a period of 20 years. Finally in this connection, I note that in another well known nuisance case, St Helens Smelting Co v Tipping (1865) 11 HLCas 642, 652, Lord Westbury LC referred to cases where any prescriptive right has been acquired by a lengthened user of the place. 41. In these circumstances, I conclude that, in the light of the relevant principles, practical considerations and judicial dicta, it is possible to obtain by prescription a right to commit what would otherwise be a nuisance by noise, or, to put it another way, to transmit sound waves over neighbouring land. 42. Before leaving this topic, I should mention that, in the Court of Appeal, Lewison LJ at para 91 raised the possibility that all that the owner of the dominant land needed to establish in order to show a prescriptive right was that the sound waves (at a certain volume) have been passing over the servient land for a period of over 20 years irrespective of whether they constituted a nuisance during any part of that period. So far as practicalities are concerned, this approach would have the advantage of avoiding the first of the three problems identified in para 36 above, but the other two problems would remain. 43. However, this approach was not adopted by the respondents on this appeal, and I am inclined to think that they were right. The approach was considered and rejected both by Sir George Jessel and the Court of Appeal in Sturges 11 Ch D 852, as explained in para 36 above, on the ground that time does not run for the purposes of prescription unless the activities of the owner (or occupier) of the putative dominant land can be objected to by the owner of the putative servient land. The notion that an easement can only be acquired by prescription if the activity concerned is carried on as of right for 20 years, ie nec vi, nec clam, nec precario, would seem to carry with it the assumption that it would not assist the putative dominant owner if the activity was carried on of right for 20 years, as no question of force, stealth or permission could apply. 44. Lord Walker of Gestingthorpes observations in R (Lewis) v Redcar and Cleveland Borough Council (No 2) [2010] 2 AC 70, para 30 give some support for this view. He approved as a 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, so that the landowner has to choose between warning the trespassers off, or eventually finding that they have established the asserted right against him. 45. It is true that this would not apply to a right to receive light, but the right to light is an anomalous easement, as Lord Hoffmann pointed out in Hunter [1997] AC 655, 709. In a passage which supports the view expressed in the preceding two paragraphs, he said that [i]n the normal case of prescription, the dominant owner will have been doing something for the period of prescription (such as using a footpath) which the servient owner could have stopped. But one cannot stop a neighbour from erecting a building with windows. 46. In any event, the right to emit noise (or smoke or smells) over neighbouring land must be a positive easement, as opposed to a negative easement such as the right to receive light, support, air or water see Gale on Easements 19th ed (2012), para 1 01 and footnote 3. (It is suggested in the text that the right to emit noise etc represent a third category of easement, because they merely involve actions on the dominant land, but, as the footnote states, the easement is not to carry on the activity on the dominant land but to emit noise over or into the servient land, which is a positive easement). In every case that I can conceive, the acquisition of a positive easement can only arise from the owner or occupier of the putative dominant land doing something which would be a wrong against the owner or occupier of the putative servient land normally trespassing: see the list of positive easements in Gale, para 1 74. Coming to the nuisance 47. For some time now, it has been generally accepted that it is not a defence to a claim in nuisance to show that the claimant acquired, or started to occupy, her property after the nuisance had started ie that it is no defence that the claimant has come to the nuisance. This proposition was clearly stated in Bliss 4 Bing NC 183, 186 per Tindal CJ. Coming to the nuisance appears to have been assumed not to be a defence in Sturges v Bridgman 11 Ch D 852. And in London, Brighton and South Coast Railway Co v Truman (1885) LR 11 App Cas 45, 52, Lord Halsbury LC described the idea that it was a defence to nuisance as an old notion long since exploded and he also said that whether the man went to the nuisance or the nuisance came to the man, the rights are the same in Fleming v Hislop (1886) LR 11 App Cas 686, 697. 48. More recently, in Miller v Jackson [1977] 1 QB 966, 986 987, the majority of the Court of Appeal held that the principle was well established. However, Lord Denning MR, in the minority, considered that the proper approach was for court to balance the right of the cricket club to continue playing cricket on their cricket ground, as they had done for 70 years, as against the right of the householder, whom he described as a newcomer who had built a house on the edge of the cricket ground which four years ago was a field where cattle grazed: see pp 976 and 981. He held that there was no nuisance given that the cricket club had spent money, labour and love in the making of [the pitch]: and they have the right to play upon it as they have done for 70 years, and answered with a resounding no his own rhetorical (in both senses of the word) question whether this was all to be rendered useless to them by the thoughtless and selfish act of an estate developer in building right up to the edge of it?: see p 978. 49. Geoffrey Lane LJ (with whom Cumming Bruce LJ agreed) accepted, albeit with some regret, that it was not for the Court of Appeal to alter a rule which has stood for so long, namely that it is no answer to a claim in nuisance for the defendant to show that the plaintiff brought the trouble on his own head by building or coming to live in a house so close to the defendants premises that he would inevitably be affected by the defendants activities, where no one had been affected previously: p 987. Accordingly, he concluded that the claim in nuisance was made out. 50. The respondents suggest that there is authority prior to the decision in Bliss 4 Bing 183, which supports the contention that the law was somewhat different in earlier times. Leeds v Shakerley (1599) Cro Eliz 751 was cited as an authority for the proposition that coming to the nuisance was a defence, but it may well be explained on the ground that the wrong complained of was the single act of diverting a watercourse, as opposed to the continuing loss of the watercourse. In his Commentaries on the Laws of England 1st ed, (1765 1769), Vol II Chap 26, p 403, Blackstone, after explaining that a defendant can be liable in nuisance for setting up a tannery near my home, continues but if he is first in possession of the air and I fix my habitation near him, the nuisance is of my own seeking, and must continue. And in the criminal, public nuisance, case of R v Cross (1826) 2 Car & P 483, 484, Abbott CJ said that a defendant whose trade was said to be a nuisance to a householder or a user of a road would be entitled to continue his trade [if] his trade [had been] legal before the erection of the houses in the one case, and the making of the road in the other. 51. In my view, the law is clear, at least in a case such as the present, where the claimant in nuisance uses her property for essentially the same purpose as that for which it has been used by her predecessors since before the alleged nuisance started: in such a case, the defence of coming to the nuisance must fail. For over 180 years it has been assumed and authoritatively stated to be the law that it is no defence for a defendant to a nuisance claim to argue that the claimant came to the nuisance. With the dubious 16th century exception of Leeds Cro Eliz 751, there is no authority the other way, as the observations of Blackstone and Abbott CJ were concerned with cases where the defendants activities had originally not been a nuisance, and had only become an arguable nuisance as a result of a change of use (due to construction works) on the claimants property. 52. Furthermore, the notion that coming to the nuisance is no defence is consistent with the fact that nuisance is a property based tort, so that the right to allege a nuisance should, as it were, run with the land. It would also seem odd if a defendant was no longer liable for nuisance owing to the fact that the identity of his neighbour had changed, even though the use of his neighbours property remained unchanged. Quite apart from this, the concerns expressed by Lord Denning in Miller [1977] 1 QB 966 would not apply where a purchasing claimant has simply continued with the use of the property which had been started before the defendants alleged nuisance causing activities started. 53. There is much more room for argument that a claimant who builds on, or changes the use of, her property, after the defendant has started the activity alleged to cause a nuisance by noise, or any other emission offensive to the senses, should not have the same rights to complain about that activity as she would have had if her building work or change of use had occurred before the defendants activity had started. That raises a rather different point from the issue of coming to the nuisance, namely whether an alteration in the claimants property after the activity in question has started can give rise to a claim in nuisance if the activity would not have been a nuisance had the alteration not occurred. 54. The observations I have quoted from Blackstone and Abbot CJ were in the context of cases where the defendants activity only becomes a potential nuisance after a change of use or building work on the claimants property, and they therefore provide some support for the defendant in such a case. However, in both Sturges and Miller, it appears clear that the defendants activities pre dated the plaintiffs construction work, and it was only as a result of that work and the subsequent use of the new building that the activities became a nuisance. However, Miller was not concerned with damage to the senses, but with physical encroachment on, and potential physical damage to, the plaintiffs and their property (through cricket balls). In Sturges, the only issue raised by the unsuccessful defendant was prescription, the nuisance at least arguably involved more than offence to the senses, and the plaintiffs construction work merely involved an extension to an existing building (see at 11 Ch D 852 853, 854, 860 861). 55. It is unnecessary to decide this point on this appeal, but it may well be that it could and should normally be resolved by treating any pre existing activity on the defendants land, which was originally not a nuisance to the claimants land, as part of the character of the neighbourhood at least if it was otherwise lawful. After all, until the claimant built on her land or changed its use, the activity in question will, ex hypothesi, not have been a nuisance. This is consistent with the notion that nuisance claims should be considered by reference to what Lord Goff referred to as the give and take as between neighbouring occupiers of land quoted in para 5 above (and some indirect support for such a view may be found in Sturges, at pp 865 866). 56. On this basis, where a claimant builds on, or changes the use of, her land, I would suggest that it may well be wrong to hold that a defendants pre existing activity gives rise to a nuisance provided that (i) it can only be said to be a nuisance because it affects the senses of those on the claimants land, (ii) it was not a nuisance before the building or change of use of the claimants land, (iii) it is and has been, a reasonable and otherwise lawful use of the defendants land, (iv) it is carried out in a reasonable way, and (v) it causes no greater nuisance than when the claimant first carried out the building or changed the use. (This is not intended to imply that in any case where one or more of these requirements is not satisfied, a claim in nuisance would be bound to succeed.) 57. It would appear that the Court of Appeal adopted this approach in Kennaway v Thompson [1981] QB 88. In that case, Lawton LJ seems to have assumed that the noise made by the defendants motorboats on the neighbouring lake should not be treated as a nuisance in so far as it was at the same level as when the plaintiff built her house nearby, and was a reasonable use reasonably carried out. However, a subsequent and substantial increase in the level of noise (due to larger boats and increased proximity to the plaintiffs house) and in the frequency of activity did constitute a nuisance. 58. Accordingly, it appears clear to me that it is no defence for a defendant who is sued in nuisance to contend that the claimant came to the nuisance, although it may well be a defence, at least in some circumstances, for a defendant to contend that, as it is only because the claimant has changed the use of, or built on, her land that the defendants pre existing activity is claimed to have become a nuisance, the claim should fail. Reliance on the defendants own activities in defending a nuisance claim 59. The assessment of the character of the locality for the purpose of assessing whether a defendants activities constitute a nuisance is a classic issue of fact and judgment for the judge trying the case. Sometimes, it may be difficult to identify the precise extent of the locality for the purpose of the assessment, or the precise words to describe the character of the locality, but any attempt to give general guidance on such issues risks being unhelpful or worse. 60. However, such questions can give rise to points of principle on which an appellate court can give guidance. Thus, the concept of the character of the locality may be too monolithic in some cases, and a better description may often be something like the established pattern of uses in the locality. 61. In this case, the ground on which the Court of Appeal overturned the judges decision was that he had wrongly failed to take into account the respondents activities at the Stadium and the Track when considering the character of the locality. The appellants contend that the judge was right to disregard those activities. 62. The issue therefore is whether, and if so to what extent, the use to which the defendant actually puts his property can or should be relied on when assessing the character of the locality for the purpose of assessing whether the claimant has made out her case that those activities constitute a nuisance. 63. It seems clear that the character of the locality must be assessed by reference to the position as it is as a matter of fact, save to the extent that any departure from reality, or artificial assumption, should be made as a matter of logic or legal requirement (the presumption of reality). Accordingly, in a nuisance claim, I accept that one starts, as it were, with the proposition that the defendants activities are to be taken into account when assessing the character of the locality. 64. This approach accords with what was said by Lord Westbury in St Helens Smelting 11 HL Cas 642, 650, namely: [A]nything that discomposes or injuriously affects the senses or the nerves, whether that may or may not be denominated a nuisance, must undoubtedly depend greatly on the circumstances of the place where the thing complained of actually occurs. If a man lives in a town, it is necessary that he should subject himself to the consequences of those operations of trade which may be carried on in his immediate locality, which are actually necessary for trade and commerce, and also for the enjoyment of property, and for the benefit of the inhabitants of the town and of the public at large. If a man lives in a street where there are numerous shops, and a shop is opened next door to him, which is carried on in a fair and reasonable way, he has no ground for complaint, because to himself individually there may arise much discomfort from the trade carried on in that shop. 65. Where I part company with the Court of Appeal is on the issue of whether one ignores the fact that those activities may constitute a nuisance to the claimant. In my view, to the extent that those activities are a nuisance to the claimant, they should be left out of account when assessing the character of the locality, or, to put it another way, they should be notionally stripped out of the locality when assessing its character. Thus, in the present case, where the judge concluded that the activities at the Stadium and the Track were actually carried on in such a way as to constitute a nuisance, although they could be carried on so as not to cause a nuisance, the character of the locality should be assessed on the basis that (i) it includes the Stadium and the Track, and (ii) they could be used for speedway, stockcar, and banger racing and for motocross respectively, but (iii) only to an extent which would not cause a nuisance. 66. In so far as the respondents activities at the Stadium and the Track cause no nuisance, they are lawful. There is therefore no reason to disregard them when assessing the character of the neighbourhood. Indeed, it would be unrealistic, and indeed unfair on the respondents, if those activities were disregarded. However, in so far as the activities are unlawful, in particular in so far as they constitute a nuisance to the appellants, it would seem to me to be illogical, as well as unfair to the appellants, to take those activities into account. It would involve the respondents invoking their own wrong against the appellants in order to justify their continuing to commit that very wrong against the appellants. 67. The Court of Appeal appears to have accepted at para 75 of Jackson LJs judgment that, if the respondents had used the Stadium or the Track in breach of planning conditions, a claim in nuisance may well have been made out. But the reason for that must be that a use in breach of planning law is unlawful and should therefore not be taken into account when assessing the character of the locality (unless, perhaps, it was shown that planning permission was likely to be forthcoming). It appears to me that the same conclusion should, as a matter of logic, indeed perhaps a fortiori, apply to a use which constitutes the very nuisance of which the appellants are complaining. 68. The respondents rely on the fact that the activities carried on at the Stadium and the Track had been going on for many years before the judge made his assessment of the character of the neighbourhood. As Jackson LJ put it [2012] 1 WLR 2127, paras 69 and 72, these activities were an established feature, indeed a dominant feature, of the locality and one of the noise characteristics of the locality by the time that the appellants brought their claim. However, in so far as those activities were being carried on unlawfully, for instance because they give rise to a nuisance to the claimants making the nuisance claim, they should not be taken into account when assessing the character of the locality, whether they have been going on for a few days or many years. 69. Of course, once the nuisance has been going on for 20 years, the position may be different, as the respondents may well have obtained a right to cause what would otherwise be a nuisance. I should perhaps add that if a defendants actual activities have been held to be a nuisance by the court, but the court has then decided to refuse an injunction and award damages instead, then, whether or not the activities can be described as lawful, it would in my view be proper to take them into account as part of the character of the locality: they have effectively been sanctioned by the court. 70. I do not consider that this conclusion is inconsistent with the reasoning of the Court of Appeal in Rushmer v Polsue & Alfieri Ltd [1906] 1 Ch 234, affirmed [1907] AC 121. In my view, the brief opinion of Lord Loreburn LC at pp 122 123, encapsulates the effect of the judgments of Stirling and Cozens Hardy LJJ in the Court of Appeal, namely that (i) whether an activity gives rise to a nuisance may depend on the character of the particular locality, (ii) the trial judge rightly directed himself as to the law, and (iii) there was no reason to think that he had not applied his own directions to the facts of the case (and I think that the rather discursive judgment of Vaughan Williams LJ is to much the same effect). The only relevant point for present purposes which I can discern from the reasoning of the Court of Appeal is that an activity can be a nuisance even if it conforms to the character of the locality a point made by all three members of the court, perhaps most clearly by Cozens Hardy LJ at pp 250 251. But that is entirely consistent with the above analysis. 71. It must be acknowledged, however, that there appears to be an element of circularity in the notion that, when assessing the character of the locality, one has to ignore the defendants activities if, or to the extent that, they constitute a nuisance, given that the point one is ultimately seeking to decide is whether the defendants activities amount to a nuisance. However, it seems to me that there should be no real problem in this connection. In many cases, it is fairly clear whether or not a defendants activities constitute a nuisance once one has established the facts, and nice questions as to the precise identification of the locality or its character do not have to be addressed. In those cases where the precise character of the locality is of importance, the point should not cause much difficulty either. In this case, for example, the question for the judge was the extent to which the noise levels from the Stadium and the Track were or would be acceptable in what was a sparsely populated area, with a couple of small villages and a military airfield between a mile and two miles away, and he answered it by taking the noise levels at other well established racing circuits elsewhere in the country. 72. However, in some cases, there will be an element of circularity. In such cases, the court may have to go through an iterative process when considering what noise levels are acceptable when assessing the character of the locality and assessing what constitutes a nuisance. Nonetheless, the circularity involved in my conclusion does give cause for concern. 73. The concern is, however, allayed once one considers the two other possible approaches. Either one ignores the activity in question altogether when assessing the character of the locality. That may often be the simplest and fairest way of dealing with the issue but, at least in some cases, it could be unfair on a defendant in a nuisance case. Or one adopts a solution which is both even more circular than the one which I prefer, and surprising in its consequences, namely the approach taken by the Court of Appeal. If the activity which causes the alleged nuisance is taken into account, without modification, as part of the character of the locality, it would mean that there could rarely be a successful claim for nuisance, as I see it. If the matters complained of by the claimant are part of the character of the locality, then it is hard to see how they could be unacceptable by a standard which is to be assessed by reference to that very character. Furthermore, to the extent that the defendants activities constitute a nuisance, it seems wrong that he should be able to have them taken account when assessing the character of the locality: he would be relying on his own wrong against the claimant. 74. Accordingly, I conclude that a defendant, faced with a contention that his activities give rise to a nuisance, can rely on those activities as constituting part of the character of the locality, but only to the extent that those activities do not constitute a nuisance and to avoid any misunderstanding, if the activities couldnt be carried out without creating a nuisance, then they would have to be entirely discounted when assessing the character of the neighbourhood. 75. Similarly, any other activity in the neighbourhood can properly be taken into account when assessing the character of the neighbourhood, to the extent that it does not give rise to an actionable nuisance or is otherwise unlawful. There will, no doubt, frequently be many uses which may not have obtained a specific sanction (through being agreed to by the claimant, through a prescriptive right or through the court refusing an injunction), but which are unobjectionable as a matter of law, and may therefore properly be taken into account. In addition, as Lord Carnwath says at para 185 below, the fact that it is not open to a neighbouring claimant to object to the defendants activities simply because they emit noise does not mean that the defendant is free to carry on those activities in any way he wishes. The claimant is entitled to expect the defendant to take all reasonable steps to ensure that the noise is kept to a reasonable minimum, consistent with what was said by Bramwell B in Bamford 3 B & S 62 (see para 5 above). This is consistent with the approach taken by the court in relation to the noise temporarily caused by building works see eg Andreae v Selfridge & Co Ltd [1938] 1 Ch 1, 7. The effect of planning permission on an allegation of nuisance The interrelationship of planning permission and nuisance has been considered in a number of cases, and has been discussed in a number of articles and books. The grant of planning permission for a particular use is potentially relevant to a nuisance claim in two ways. First, the grant, or terms and conditions, of a planning permission may permit the very noise (or other disturbance) which is alleged by the claimant to constitute a nuisance. In such a case, the question is the extent, if any, to which the planning permission can be relied on as a defence to the nuisance claim. Secondly, the grant, or terms and conditions, of a planning permission may permit the defendants property or another property in the locality to be used for a certain purpose, so that the question is how far that planning permission can be relied on by the defendant as changing the character of the locality. As explained in para 18 above, the judge effectively by passed these issues by concluding that the grant of planning permission should not be taken into account when assessing whether the respondents activities at the Stadium or the Track constituted a nuisance, for two reasons. The first reason was that the permissions in question were personal, and the second was that they only permitted those activities at certain times. I find the first reason largely unconvincing and the second reason baffling. The fact that a planning permission for a particular use is personal does not alter the fact that it removes the bar which would otherwise exist on that use, and that the use is acceptable in planning terms at least if carried on by, or on behalf of, the very person who is carrying it on. However, there is something in the point that, by granting a permission which was both permanent and personal, the planning authority was, as it were, hedging its bets a view supported by the fact that the question whether to grant planning permission was controversial. Nonetheless, the fact remains that the use in question did have planning permission. I fail to understand why the restriction as to number of days and the time limitations contained in an otherwise relevant planning permission should invalidate its relevance to the issue of nuisance. Apart from the inherent illogicality of the judges conclusion, such restrictions and limitations were no doubt imposed, at least in part, in the interests of those in the neighbourhood of the Stadium and Track. Accordingly, I agree with the Court of Appeal that the judges reasons for refusing to take into account the fact that planning permissions had been granted for the activities carried on by the respondents are unsupportable. However, that leaves open the question as to what weight, if any, should be given to the fact that planning permission has been granted for the very activities which a claimant contends give rise to a nuisance by noise. More particularly, what weight, if any, should be given to the fact that there is a planning permission for a use which will inevitably give rise to the noise which is said to constitute a nuisance, and/or which contains terms or conditions which specifically allow the emission of the noise which is said by a claimant to constitute a nuisance? The implementation of a planning permission can give rise to a change in the character of the locality, but, subject to one possible point, it is no different from any other building work or change of use which does not require planning permission. Thus, if the implementation of a planning permission results in the creation of a nuisance to a claimant, then, subject to one possible point, it cannot be said that the implementation has led to a change in the character of the locality save, as explained above, (i) to the extent that the implementation could have been effected in a way which would not have created a nuisance, or (ii) if the defendant can show a prescriptive right to create the nuisance, or (iii) the court has decided to award the claimant damages rather than an injunction in respect of the nuisance. I have described the conclusions in the preceding paragraph as being subject to one possible point. That point is the extent, if any, to which a defendant, in seeking to rebut a claim in nuisance, can rely on the fact that the grant, or terms and conditions, of a planning permission permit the very noise (or other disturbance) which is alleged by the claimant to constitute the nuisance (or which is relied on by the defendant as forming part of the character of the locality). In the Court of Appeal, Jackson LJ discussed the cases in which the relationship between planning decisions and claims in nuisance had been considered. In Gillingham Borough Council v Medway (Chatham) Dock Co Ltd [1993] QB 343, 359, Buckley J accepted that planning permission is not a licence to commit a nuisance, but he went on to say that a planning authority can, through its development plans and decisions, alter the character of a neighbourhood. As Jackson LJ explained [2012] 1 WLR 2117, para 57, even though the implementation of the planning permission in Gillingham resulted in noise, vibration, dust and fumes [which] caused serious disturbance local residents, Buckley J dismissed the claim for public nuisance. In the following paragraph of his judgment, having described that as a [h]arsh outcome, Jackson LJ said it was nonetheless a correct outcome, as the planning authority had made a decision in the public interest and the consequences had to be accepted. Jackson LJ seems to have concluded that the same reasoning applied in Hirose Electrical UK Ltd v Peak Ingredients Ltd [2011] Env LR 680: see para 62. However, he also accepted in para 59 that it was not open to a defendant in a nuisance claim to be able to rely on a planning permission for a change of use of a very small piece of land, which was the basis of the decision of the Court of Appeal in Wheeler v JJ Saunders Ltd [1996] Ch 19. In that case, Staughton LJ suggested that only a strategic planning decision affected by considerations of public interest would assist a defendant in a nuisance claim, and Peter Gibson LJ, while plainly dubious about the reasoning in Gillingham, suggested that it could only apply in relation to a major development: see pp 30 and 35. Further, as I read the analysis of Jackson LJ at para 66, he also thought that that reason justified the decision of the Court of Appeal in Watson v Croft Promosport Ltd [2009] 3 All ER 249. It seems to me that the effect of Jackson LJs analysis is that, where the planning permission is granted for a use of the defendants property which inevitably results in, or specifically permits, what would otherwise be a nuisance to the claimant, that use is to be treated as part of the character of the locality, if the permission relates to a large area, but not if it relates to a small area. Further, as is apparent from the contrasting outcomes in Gillingham and Hirose, as against Wheeler and Watson, where the planning permission for the nuisance making activity is strategic in nature or relates to a major development, it would defeat the claim for nuisance, whereas where it is for a small area, it would have no effect on the nuisance claim. As mentioned in para 73 above, that is scarcely surprising, as once one accepts that the noise complained of forms part of the character of the locality for the purpose of considering what constitutes a nuisance, it is hard to see how that very noise could be held to be a nuisance. In my judgment, the conclusion reached by the Court of Appeal on this issue is unsatisfactory, both in principle and in practice, although it is only fair to add that they may understandably have considered that their hands were tied by the decisions mentioned in paras 84 86 above. Logically, the fact that the alleged nuisance arising from the defendants property is permitted by the planning authority should be a decisive factor, a relevant factor, or an irrelevant factor when assessing whether it is a nuisance. Which of those three possibilities applies should not depend on whether the permission relates to a large or small area of land. Furthermore, while Jackson LJ was at pains to emphasise that the grant of planning permission would not defeat a nuisance claim, it seems to me that that was precisely the effect of a planning permission for a large area, according to the reasoning of Buckley J in Gillingham, of the Court of Appeal in Watson, and of Jackson LJ in this case. It also would be somewhat paradoxical if the greater the likely disagreeable impact of a change of use permitted by the planning authorities, the harder it would be for a claimant to establish a claim in nuisance. Yet that seems to be the effect of Jackson LJs analysis, as the greater the area covered by the planning permission, (i) the more likely it is to provide a defence to a claim in nuisance, and (ii) the more intrusive any noise or other intrusion is likely to be. Quite apart from this, it is hard to know what is meant by a large area. The grant of planning permission for a particular development does not mean that that development is lawful. All it means is that a bar to the use imposed by planning law, in the public interest, has been removed. Logically, it might be argued, the grant of planning permission for a particular activity in 1985 or 2002 should have no more bearing on a claim that that activity causes a nuisance than the fact that the same activity could have occurred in the 19th century without any permission would have had on a nuisance claim in those days. Quite apart from this, it seems wrong in principle that, through the grant of a planning permission, a planning authority should be able to deprive a property owner of a right to object to what would otherwise be a nuisance, without providing her with compensation, when there is no provision in the planning legislation which suggests such a possibility. This point is reinforced when one turns to sections 152 and 158 of the Planning Act 2008: section 158 expressly excludes claims in nuisance by neighbours as a result of the use of a property consequent upon a ministerial order permitting that use, and section 152 provides for appropriate compensation where a neighbour would, but for section 158, have had a claim in nuisance. It is also to be noted that section 76 of the Civil Aviation Act 1982 expressly excludes an action for nuisance owing to aircraft, but section 1 of the Land Compensation Act 1973 provides for compensation for neighbours (including in respect of nuisance by noise attributable to aircraft) when land is developed as an aerodrome. As for practical considerations, I am not impressed by the suggested difference between a strategic planning decision affected by considerations of public interest (or a planning decision relating to a major development) and other planning decisions. No doubt all planning applications take into account the public interest, and the difference between a strategic planning permission (or a planning permission for a major development), and other planning permissions seems to me to be a recipe for uncertainty. Waste Services Ltd [2013] QB 455, para 46(ii), that In my view, therefore, Carnwath LJ was right when he said in Barr v Biffa The common law of nuisance has co existed with statutory controls, albeit less sophisticated, since the 19th century. There is no principle that the common law should march with a statutory scheme covering similar subject matter. Short of express or implied statutory authority to commit a nuisance, there is no basis, in principle or authority, for using such a statutory scheme to cut down private law rights. Peter Gibson LJ expressed much the same view in Wheeler at 35, where he suggested that [t]he court should be slow to acquiesce in the extinction of private rights without compensation as a result of administrative decisions which cannot be appealed and are difficult to challenge. In an observation that also relates to the final topic raised on this appeal, he added that, where a major development altering the character of a neighbourhood with wide consequential effects such as required a balancing of competing public and private interests before permission was granted, he could well see that in such a case the public interest must be allowed to prevail and that it would be inappropriate to grant an injunction (though whether that should preclude any award of damages in lieu is a question which may need further consideration). Accordingly, I consider that the mere fact that the activity which is said to give rise to the nuisance has the benefit of a planning permission is normally of no assistance to the defendant in a claim brought by a neighbour who contends that the activity cause a nuisance to her land in the form of noise or other loss of amenity. A planning authority has to consider the effect of a proposed development on occupiers of neighbouring land, but that is merely one of the factors which has to be taken into account. The planning authority can be expected to balance various competing interests, which will often be multifarious in nature, as best it can in the overall public interest, bearing in mind relevant planning guidelines. Some of those factors, such as many political and economic considerations which properly may play a part in the thinking of the members of a planning authority, would play no part in the assessment of whether a particular activity constitutes a nuisance unless the law of nuisance is to be changed fairly radically. Quite apart from this, when granting planning permission for a change of use, a planning authority would be entitled to assume that a neighbour whose private rights might be infringed by that use could enforce those rights in a nuisance action; it could not be expected to take on itself the role of deciding a neighbours common law rights. However, there will be occasions when the terms of a planning permission could be of some relevance in a nuisance case. Thus, the fact that the planning authority takes the view that noisy activity is acceptable after 8.30 am, or if it is limited to a certain decibel level, in a particular locality, may be of real value, at least as a starting point as Lord Carnwath says in para 218 below, in a case where the claimant is contending that the activity gives rise to a nuisance if it starts before 9.30 am, or is at or below the permitted decibel level. While the decision whether the activity causes a nuisance to the claimant is not for the planning authority but for the court, the existence and terms of the permission are not irrelevant as a matter of law, but in many cases they will be of little, or even no, evidential value, and in other cases rather more. The evidence before the planning authority when it was deciding to grant planning permission may also be before the court when deciding a nuisance claim. This evidence will often consist of letters or other submissions from neighbours (sometimes including the claimant), expert assessments, and advice from planning officers. The weight to be given to this sort of evidence obviously depends very much on the facts of the particular case, but, in a nuisance case with live witnesses, it will be likely to be of significantly less value if the people who produced the documents are not available to be cross examined. It should be added that I am very dubious about the notion that it would always be safe to assume that the reasons given by planning officers for recommending that planning permission be granted were the actual reasons which the planning authority had in mind when granting planning permission. While the planning officers reasons would normally feature large in the minds of members of the planning committee, it would be little short of nave to assume that even the majority of those members who were in favour of granting permission agreed with all those reasons, or had no other reasons. Where a planning authority is defending a public law attack on the grant of a planning permission, and the only positive evidence of its reasons for the grant of the permission are those contained in the planning officers advice, and the authority has adduced no evidence to suggest that it had not accepted those reasons (and there is no other evidence to suggest otherwise), I can see some ground for making the assumption. However, where the issue arises in private law proceedings in which the planning authority is not a party and the planning permission itself is not under attack, and in which there is normally oral evidence, I do not think it would be necessarily correct to make such an assumption. Whether it would be right to make the assumption in a particular case would depend on the evidence, including the contemporary documentation and possibly expert evidence, as well as on the arguments. It is right to add that I should not be taken as necessarily suggesting that the actual decision that there was no liability in nuisance in Gillingham [1993] QB 343 was wrong, although much of Buckley Js reasoning, despite the fact that it was approved in the dissenting judgment of Lord Cooke of Thorndon in Hunter [1997] AC 655, 722, cannot stand. As Lord Carnwath points out in para 203 below, the alternative basis for the decision in Gillingham, which was based on discretion, was probably right. The award of damages instead of an injunction As explained in paras 24 25 above, in addition to awarding the appellants damages for the nuisance by noise which they had suffered in the past, the judge granted them an injunction limiting the levels of noise which could be emitted from the Stadium and the Track, and he also gave liberty to apply. He was not invited to award the appellants damages instead of an injunction. On this appeal, however, the respondents contend that, if the judge was right in concluding that their activities at the Stadium and the Track constituted a nuisance, then this was a case where he ought to have awarded damages instead of an injunction. Where a claimant has established that the defendants activities constitute a nuisance, prima facie the remedy to which she is entitled (in addition to damages for past nuisance) is an injunction to restrain the defendant from committing such nuisance in the future; of course, the precise form of any injunction will depend very much on the facts of the particular case. However, ever since Lord Cairns Act (the Chancery Amendment Act 1858 (21 & 22 Vict c 27)), the court has had power to award damages instead of an injunction in any case, including a case of nuisance see now section 50 of the Senior Courts Act 1981. Where the court decides to refuse the claimant an injunction to restrain a nuisance, and instead awards her damages, such damages are conventionally based on the reduction in the value of the claimants property as a result of the continuation of the nuisance. Subject to what I say in paras 128 131 below, this is clearly the appropriate basis for assessing damages, given that nuisance is a property related tort and what constitutes a nuisance is judged by the standard of the ordinary reasonable person. The question which arises is what, if any, principles govern the exercise of the courts jurisdiction to award damages instead of an injunction. The case which is probably most frequently cited on the question is Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287, but there has been a substantial number of cases in which judges have considered the issue, some before, and many others since. For present purposes, it is necessary to consider Shelfer and some of the subsequent cases, which were more fully reviewed by Mummery LJ in Regan v Paul Properties DPF No 1 Ltd [2007] Ch 135, paras 35 59. In Shelfer, the Court of Appeal upheld the trial judges decision to grant an injunction to restrain noise and vibration. Lindley LJ said at pp 315 316: [E]ver since Lord Cairns Act was passed the Court of Chancery has repudiated the notion that the legislature intended to turn that court into a tribunal for legalising wrongful acts; or in other words, the court has always protested against the notion that it ought to allow a wrong to continue simply because the wrongdoer is able and willing to pay for the injury he may inflict. Neither has the circumstance that the wrongdoer is in some sense a public benefactor (eg, a gas or water company or a sewer authority) ever been considered a sufficient reason for refusing to protect by injunction an individual whose rights are being persistently infringed. A L Smith LJ said at 322 323, in a frequently cited passage: [A] person by committing a wrongful act (whether it be a public company for public purposes or a private individual) is not thereby entitled to ask the court to sanction his doing so by purchasing his neighbour's rights, by assessing damages in that behalf, leaving his neighbour with the nuisance, or his lights dimmed, as the case may be. In such cases the well known rule is not to accede to the application, but to grant the injunction sought, for the plaintiffs legal right has been invaded, and he is prima facie entitled to an injunction. There are, however, cases in which this rule may be relaxed, and in which damages may be awarded in substitution. In my opinion, it may be stated as a good working rule that (1) If the injury to the plaintiffs legal rights is small, (2) And is one which is capable of being estimated in money, (3) And is one which can be adequately compensated by a small money payment, (4) And the case is one in which it would be oppressive to the defendant to grant an injunction then damages in substitution for an injunction may be given. Significant obiter observations were subsequently made on the question in Colls v Home & Colonial Store Ltd [1904] AC 179, where the House of Lords reversed the courts below who had concluded that the defendant had infringed the plaintiffs right to light (and had awarded an injunction). Lord Macnaghten said at p 192 that he had some difficulty within following out [the] rule that an injunction ought to be granted when substantial damages would be given at law. He added at p 193 that if there is really a question as to whether the obstruction is legal or not, and if the defendant has acted fairly and not in an unneighbourly spirit, then he was disposed to think that the court ought to incline to damages rather than to an injunction. Lord Lindley (as he had by then become), at pp 212 213, after reviewing some of the previous cases on the topic, including Shelfer, described the result of the foregoing review of the authorities as not altogether satisfactory, and adding that there is the uncertainty as to whether the proper remedy is an injunction or damages, but that the good sense of judges and juries may be relied upon for adequately protecting rights to light on the one hand and freedom from unnecessary burdens on the other. In Kine v Jolly [1905] 1 Ch 480, the Court of Appeal discharged an injunction restraining an interference to a right to light. At p 504, Cozens Hardy LJ said he thought that the tendency of the speeches in the House of Lords in Colls was to go a little further than was done in Shelfer, and indicated that as a general rule the court ought to be less free in granting mandatory injunctions than it was in years gone by. Vaughan Williams LJ appears to have thought that the two cases involved different approaches, but concluded that each approach yielded the conclusion that there should be no injunction. Romer LJ, dissenting on the issue of liability, did not need to decide the point, and did not indicate which he preferred. In the subsequent decision of Slack v Leeds Industrial Co operative Society Ltd [1924] 2 Ch 475, which was also concerned with an interference with the plaintiffs right to light, all three members of the Court of Appeal (Sir Ernest Pollock MR, and Warrington and Sargant LJJ) considered that nothing in Colls served to undermine the good working rule of A L Smith LJ in Shelfer, although they discharged a quia timet injunction and ordered an inquiry as to damages. In Fishenden v Higgs & Hill Ltd (1935) 153 LT 128, another rights of light case, the Court of Appeal adopted a rather different approach, when allowing an appeal against Crossman Js refusal to award damages instead of an injunction. Lord Hanworth MR (as Sir Ernest Pollock had become) observed that his judgment in Slack should not be read as saying that A L Smith LJs four tests by themselves were now prescribed as the guiding tests for the court. Indeed, he observed at p 139 that we ought to incline against an injunction if possible. Romer LJ said at p 141 that A L Smith LJs four tests were not intended to be a fetter on the exercise of the courts discretion, and suggested that, while it was true that an injunction should be refused if those tests were satisfied, it by no means follow[ed] that an injunction should be granted if they were not. In deciding to overturn the injunction, Romer LJ was strongly influenced by the fact that the defendants had acted fairly [and] in a neighbourly spirit as well as by the conduct of the plaintiff. At p 144, Maugham LJ said that the working rule laid down by A L Smith LJ was not a universal or even a sound rule in all cases of injury to light, and said he preferred the approach of Lord Lindley in Shelfer and Colls. In more recent times, the Court of Appeal seems to have assumed that the approach of Lindley and A L Smith LJJ in Shelfer represents the law, and indeed that the four tests suggested by A L Smith LJ are normally to be applied, so that, unless all four tests are satisfied, there was no jurisdiction to refuse an injunction. That seems to have been the approach of Geoffrey Lane LJ in Miller [1977] 1 QB 966 (discussed in paras 48 49 above), and of Lawton LJ in Kennaway [1981] QB 88 (discussed in para 57 above). Jaggard v Sawyer [1995] 1 WLR 269, was a case where the Court of Appeal upheld the trial judges decision to award damages instead of an injunction restraining the defendant trespassing on the plaintiffs land. In so doing, the judge effectively gave the defendant a right of way to his house over the plaintiffs land, against the plaintiffs will, in return for a capital payment from the defendant to the plaintiff (see pp 286 287). At pp 282 283, Sir Thomas Bingham MR (with whom Kennedy LJ agreed), specifically tested the trial judges decision to award damages by reference to A L Smith LJs four tests, and emphasised that the test is one of oppression, and the court should not slide into application of a general balance of convenience test. He held that the judge had rightly concluded that the four tests were satisfied. Millett LJ said at p 287 that A L Smith LJs checklist has stood the test of time, but emphasised that it is only a working rule and does not purport to be an exhaustive statement of the circumstances in which damages may be awarded instead of an injunction. As he immediately went on to emphasise on the next page, the decision whether or not to award damages instead of an injunction is a discretion. Accordingly, he said, the cases where judges have awarded or refused to award damages can be no more than illustrations of circumstances in which particular judges have exercised their discretion. He also suggested that [t]he outcome of any particular case usually turns on the question: would it in all the circumstances be oppressive to the defendant to grant the injunction to which the plaintiff is prima facie entitled? He then went on to refer to the significance of the defendants state of mind, including openness, good faith, and understanding. Some seven years ago, in Regan [2007] Ch 135, the Court of Appeal rejected the trial judges view that, where the defendants building interfered with the claimants right to light, the onus was on the claimant to show that damages were not an adequate remedy. In his judgment, Mummery LJ then effectively decided that an injunction should be granted on the basis that three of A L Smith LJs tests were not satisfied: see paras 70 73. In Watson [2009] 3 All ER 249, the Court of Appeal reversed the trial judges decision to award damages instead of an injunction in a case where the nuisance was very similar in nature and cause to that alleged in this case. At para 44, Sir Andrew Morritt C described the appropriate test as having been clearly established by the decision of the Court of Appeal in Shelfer, namely that damages in lieu of an injunction should only be awarded under very exceptional circumstances. He also said that Shelfer established that the circumstance that the wrongdoer is in some sense a public benefactor is not a sufficient reason for refusing an injunction, although he accepted at para 51 that the effect on the public could properly be taken into account in a case where the damage to the claimant is minimal. It seems to me that there are two problems about the current state of the authorities on this question of the proper approach for a court to adopt on the question whether to award damages instead of an injunction. The first is what at best might be described as a tension, and at worst as an inconsistency, between two sets of judicial dicta since Shelfer. Observations in Slack, Miller, Kennaway, Regan, and Watson appear to support the notion that A L Smith LJs approach in Shelfer is generally to be adopted and that it requires an exceptional case before damages should be awarded in lieu of an injunction, whereas the approach adopted in Colls, Kine, and Fishenden seems to support a more open minded approach, taking into account the conduct of the parties. In Jaggard, the Court of Appeal did not need to address the question, as even on the stricter approach it upheld the trial judges award of damages in lieu, although Millett LJ seems to have tried to reconcile the two approaches. The second problem is the unsatisfactory way in which it seems that the public interest is to be taken into account when considering the issue whether to grant an injunction or award damages. The notion that it can be relevant where the damages are minimal, but not otherwise, as stated in Watson, seems very strange. Either the public interest is capable of being relevant to the issue or it is not. As part of this second problem, there is a question as to the extent to which it is relevant that the activity giving rise to the nuisance has the benefit of a planning permission. So far as the first problem is concerned, the approach to be adopted by a judge when being asked to award damages instead of an injunction should, in my view, be much more flexible than that suggested in the recent cases of Regan and Watson. It seems to me that (i) an almost mechanical application of A L Smith LJs four tests, and (ii) an approach which involves damages being awarded only in very exceptional circumstances, are each simply wrong in principle, and give rise to a serious risk of going wrong in practice. (Quite apart from this, exceptionality may be a questionable guide in any event see Manchester City Council v Pinnock (Secretary of State for Communities and Local Government intervening) [2011] 2 AC 104, para 51). The courts power to award damages in lieu of an injunction involves a classic exercise of discretion, which should not, as a matter of principle, be fettered, particularly in the very constrained way in which the Court of Appeal has suggested in Regan and Watson. And, as a matter of practical fairness, each case is likely to be so fact sensitive that any firm guidance is likely to do more harm than good. On this aspect, I would adopt the observation of Millett LJ in Jaggard [1995] 1 WLR 269, 288, where he said: Reported cases are merely illustrations of circumstances in which particular judges have exercised their discretion, in some cases by granting an injunction, and in others by awarding damages instead. Since they are all cases on the exercise of a discretion, none of them is a binding authority on how the discretion should be exercised. The most that any of them can demonstrate is that in similar circumstances it would not be wrong to exercise the discretion in the same way. But it does not follow that it would be wrong to exercise it differently. Having approved that statement, it is only right to acknowledge that this does not prevent the courts from laying down rules as to what factors can, and cannot, be taken into account by a judge when deciding whether to exercise his discretion to award damages in lieu. Indeed, it is appropriate to give as much guidance as possible so as to ensure that, while the discretion is not fettered, its manner of exercise is as predictable as possible. I would accept that the prima facie position is that an injunction should be granted, so the legal burden is on the defendant to show why it should not. And, subject to one possible point, I would cautiously (in the light of the fact that each case turns on its facts) approve the observations of Lord Macnaghten in Colls [1904] AC 179, 193, where he said: In some cases, of course, an injunction is necessary if, for instance, the injury cannot fairly be compensated by money if the defendant has acted in a high handed manner if he has endeavoured to steal a march upon the plaintiff or to evade the jurisdiction of the Court. In all these cases an injunction is necessary, in order to do justice to the plaintiff and as a warning to others. But if there is really a question as to whether the obstruction is legal or not, and if the defendant has acted fairly and not in an unneighbourly spirit, I am disposed to think that the Court ought to incline to damages rather than to an injunction. It is quite true that a man ought not to be compelled to part with his property against his will, or to have the value of his property diminished, without an Act of Parliament. On the other hand, the Court ought to be very careful not to allow an action for the protection of ancient lights to be used as a means of extorting money. The one possible doubt that I have about this observation relates to the suggestion in the antepenultimate sentence that the court ought to incline to damages in the event he describes. If, as I suspect, Lord Macnaghten was simply suggesting that, if there was no prejudice to a claimant other than the bare fact of an interference with her rights, and there was no other ground for granting an injunction, I agree with him. However, it is right to emphasise that, when a judge is called on to decide whether to award damages in lieu of an injunction, I do not think that there should be any inclination either way (subject to the legal burden discussed above): the outcome should depend on all the evidence and arguments. Further, the sentence should not be taken as suggesting that there could not be any other relevant factors: clearly there could be. (It is true that Colls, like a number of the cases on the issue of damages in lieu, was concerned with rights of light, but I do not see such cases as involving special rules when it comes to this issue. Shelfer itself was not a right to light case; nor were Jaggard and Watson. However, in many cases involving nuisance by noise, there may be more wide ranging issues and more possible forms of relief than in cases concerned with infringements of a right to light.) Where does that leave A L Smith LJs four tests? While the application of any such series of tests cannot be mechanical, I would adopt a modified version of the view expressed by Romer LJ in Fishenden 153 LT 128, 141. First, the application of the four tests must not be such as to be a fetter on the exercise of the courts discretion. Secondly, it would, in the absence of additional relevant circumstances pointing the other way, normally be right to refuse an injunction if those four tests were satisfied. Thirdly, the fact that those tests are not all satisfied does not mean that an injunction should be granted. As for the second problem, that of public interest, I find it hard to see how there could be any circumstances in which it arose and could not, as a matter of law, be a relevant factor. Of course, it is very easy to think of circumstances in which it might arise but did not begin to justify the court refusing, or, as the case may be, deciding, to award an injunction if it was otherwise minded to do so. But that is not the point. The fact that a defendants business may have to shut down if an injunction is granted should, it seems to me, obviously be a relevant fact, and it is hard to see why relevance should not extend to the fact that a number of the defendants employees would lose their livelihood, although in many cases that may well not be sufficient to justify the refusal of an injunction. Equally, I do not see why the court should not be entitled to have regard to the fact that many other neighbours in addition to the claimant are badly affected by the nuisance as a factor in favour of granting an injunction. It is also right to mention planning permission in this context. In some cases, the grant of planning permission for a particular activity (whether carried on at the claimants, or the defendants, premises) may provide strong support for the contention that the activity is of benefit to the public, which would be relevant to the question of whether or not to grant an injunction. Accordingly, the existence of a planning permission which expressly or inherently authorises carrying on an activity in such a way as to cause a nuisance by noise or the like, can be a factor in favour of refusing an injunction and compensating the claimant in damages. This factor would have real force in cases where it was clear that the planning authority had been reasonably and fairly influenced by the public benefit of the activity, and where the activity cannot be carried out without causing the nuisance complained of. However, even in such cases, the court would have to weigh up all the competing factors. In some such cases, the court may well be impressed by a defendants argument that an injunction would involve a loss to the public or a waste of resources on account of what may be a single claimant, or that the financial implications of an injunction for the defendant would be disproportionate to the damage done to the claimant if she was left to her claim in damages. In many such cases, particularly where an injunction would in practice stop the defendant from pursuing the activities, an injunction may well not be the appropriate remedy. Since writing this, I have read with interest Lord Sumptions suggestions as to how the law on the topic of damages instead of an injunction in nuisance cases might develop. At any rate on the face of it, I can see much merit in the proposals which he proffers. However, it would be inappropriate to go further than I have gone at this stage, in the light of the arguments which were raised on this appeal. There may well be objections, qualifications, and alternatives which could be made in relation to Lord Sumptions suggested approach, and they should be considered before the law on this topic is developed further. In that connection, I see real force in what Lord Mance says in para 168. A final point which it is right to mention on this issue is the measure of damages, where a judge decides to award damages instead of an injunction. It seems to me at least arguable that, where a claimant has a prima facie right to an injunction to restrain a nuisance, and the court decides to award damages instead, those damages should not always be limited to the value of the consequent reduction in the value of the claimants property. While double counting must be avoided, the damages might well, at least where it was appropriate, also include the loss of the claimants ability to enforce her rights, which may often be assessed by reference to the benefit to the defendant of not suffering an injunction. Support for such an approach may be found in the reasoning in Jaggard [1995] 1 WLR 269, which suggests that this is a proper approach to damages where an injunction is refused to restrain a trespass, and damages were awarded instead. Sir Thomas Bingham MR said this at pp 281 282, when explaining and approving an earlier case where a judge had assessed damages for breach of a restrictive building covenant, which he then applied to the claim in Jaggard: The defendants had committed a breach of covenant, the effects of which continued. The judge was not willing to order the defendants to undo the continuing effects of that breach. He had therefore to assess the damages necessary to compensate the plaintiffs for this continuing invasion of their right. He paid attention to the profits earned by the defendants, as it seems to me, not in order to strip the defendants of their unjust gains, but because of the obvious relationship between the profits earned by the defendants and the sum which the defendants would reasonably have been willing to pay to secure release from the covenant. To the same effect, Millett LJ said this at p 292 in Jaggard: In my view there is no reason why compensatory damages for future trespasses and continuing breaches of covenant should not reflect the value of the rights which she has lost, or why such damages should not be measured by the amount which she could reasonably have expected to receive for their release. However, there are factors which support the contention that damages in a nuisance case should never, or only rarely, be assessed by reference to the benefit to the defendant in no injunction being granted, as pointed out by Lord Carnwath in para 248 below. For that reason, as well as because we have not heard argument on the issue, it would be inappropriate for us to seek to decide on this appeal whether, and if so in what circumstances, damages could be recoverable on this basis in a nuisance claim. There are differences between the various members of the Court on this final issue. Most, probably all, of these differences are ones of emphasis and detail rather than of principle, but I nonetheless accept that we are at risk of introducing a degree of uncertainty into the law. The nature of the issue, whether to award damages in lieu of an injunction, is such that a degree of uncertainty is inevitable, but that does not alter the fact that it should be kept to a reasonable minimum. Given that we are changing the practice of the courts, it is inevitable that, in so far as there can be clearer or more precise principles, they will have to be worked out in the way familiar to the common law, namely on a case by case basis. The resolution of this appeal Having dealt with the points of principle raised on this appeal, I can now turn to the application of those principles to the facts of this appeal. First, there is no question of the respondents being able to rely on the fact that the appellants came to the nuisance, or any other similar argument. The appellants used their property, Fenland, as a residence, which was the same purpose to which it had been put ever since before the activities currently carried on at the Stadium and the Track had started. Secondly, there is the relevance of the planning situation in relation to the appellants nuisance claim. As already explained (paras 77 79 above) the judge was wrong to hold that (i) the planning permission granted in 1985 and the CLEUD issued in 1997 in relation to the use of the Stadium, and (ii) the planning permission granted in 2002 for the use of the Track, were irrelevant for the purposes of the appellants nuisance claim on the ground that the planning permissions were personal and they and the CLEUD were for discontinuous periods. Accordingly, the two permissions and the CLEUD were, at least in principle, evidence which could have been taken into account. However, I do not consider that the judges failure to take them into account can fairly be said to undermine his conclusion that the respondents activities at the Stadium and the Track constituted a nuisance. The CLEUD was of no relevance, other than as evidence which supported the argument that the activities to which it related had been going on for ten years before it had been applied for. The planning permissions showed that the planning authority considered that at least most of the uses of which the appellants complained were acceptable in planning terms, and turned their minds to some extent to noise pollution by limiting the frequency and the times of the activities. Further, the judges failure to give any weight to the planning permissions or the CLEUD on the issue of nuisance does not call into question his ultimate conclusion on that issue in favour of the appellants. It was not the appellants case, nor was it the judges conclusion, that the current use of the Stadium and the Track was by any means necessarily inappropriate: the concern was over the level of noise, which was not a matter specifically covered by the planning permissions or the CLEUD (save the 2002 permission for the motocross activities on the Track). This is best illustrated by the judges concern to make an order which enabled the business at the Stadium and the Track to continue. Quite apart from this, as already explained, the fact that a particular use has been granted planning permission is not normally a matter of much weight, and there was no reason to think that this was an exceptional case. On the contrary. The evidence showed that it was not an easy decision whether to grant the planning permissions, as was demonstrated by the initial temporary permissions, and the cautious nature of the planning officers recommendation. Further, the background documents to the planning permissions (including letters of support and opposition, and the planning officers reports) were available to the judge, and he took them into account, and there was a wealth of other evidence available to the judge at the trial, and that evidence was subject to cross examination, and he took it all into account. As I have already explained, the Court of Appeal took the view that the 1985 and 2002 planning permissions, given that they had been implemented, were highly relevant to, indeed effectively determinative of, the appellants claim in nuisance. For the reasons which I have given in paras 80 98 above, that was wrong (although understandable in the light of earlier decisions of the Court of Appeal), and, as I have just explained, although the Judge also went wrong on the issue of the relevance of the permissions, I do not think that his error justified interfering with his conclusion. The third question is whether the Judge went wrong in holding that the respondents had failed to establish a right by prescription to create what would otherwise be a nuisance of noise at the Stadium. On that topic, I consider that the judge was right for the wrong reason. I do not consider that he was entitled to hold that the interruption for two years prevented the respondents obtaining the right to create what would otherwise be a nuisance of noise if they had otherwise satisfied the requirements for establishing such a right. If a person regularly causes a nuisance by noise through holding motocross events more than 20 times a year for a period of 20 years, save that during two years of that period, there are no such events, I consider that the requirements of a prescriptive right would be satisfied (subject, of course, to there being any of the normal defences). In that connection, I have already referred in para 37 above to the judgments in Carr v Foster 3 QB 581. Mere non use, or inactivity, for two out of 20 years, at least in the absence of other evidence, would be insufficient to justify a court concluding that an action which has been carried out for the other 18 years fairly consistently and to a significant extent in each of those years failed to justify the conclusion that a prescriptive right had been established. It is a question of degree, and that is shown by contrasting the facts of the present case and of Carr with those of White v Taylor (No 2) [1969] 1 Ch 160, where non use for two periods, each more than five years, did defeat a prescription claim. The essential question in a prescription case has been said to be whether the nature and degree of the activity of the putative dominant owner over the period of 20 years, taken as a whole, should make a reasonable person in the position of the putative servient owner aware that a continuous right to enjoyment is being asserted and ought to be challenged if it is intended to be resisted (see Gale op cit, para 4.54, and per Lord Walker in Lewis [2010] 2 AC 70, para 30). This somewhat circular and hypothetical test appears to involve questions of degree and judgment. However, one must take as a starting point the somewhat arbitrary, but at least clear, proposition that, where the use or activity in question has been carried on as of right for 20 years or more, then, absent special facts, the dominant owner gets a right to carry on the use or activity. Accordingly, the answer to my mind on the facts of this case is plain: assuming that the activities at the stadium and the Track had caused a nuisance over a period of at least 20 years, the putative servient owner should have appreciated what was being claimed. Given the consistent and substantial activities at the Stadium for all but two of those 20 or more years the two years interruption should not be capable of being a problem for the respondents prescriptive claim. However, the reason why, in my view, the respondents fail to establish a prescriptive right to create what would otherwise be a nuisance in this case, is that, even allowing for the fact that gaps such as that discussed in the preceding two paragraphs would not be fatal to their claim, they did not show that their activities during a period of 20 years amounted to a nuisance. As explained in paras 35 37 above, in order to justify the establishment of a right to create a noise by prescription, it is not enough to show that the activity which now creates the noise has been carried on for 20 years. It is not even enough to show that the activity has created a noise for 20 years. What has to be established is that the activity has (or a combination of activities have) created a nuisance over 20 years. Otherwise, it could not be said that the putative servient owner had the opportunity to object to the nuisance, or could be said notionally to have agreed to it. As acknowledged in paras 35 39 above, this requirement will often present evidential problems for a person seeking to establish by prescription a right to commit what would otherwise be a nuisance. Of course, the strictness of this requirement is mitigated by the fact that the nuisance does not need to have occurred anything like every day during the 20 years, as just explained. In the present case, it seems to me that, on the findings made by the judge, and the evidence as explained by him, fell well short of establishing that the activities had caused a nuisance to Fenland for a continuous period of 20 years (even allowing for periods of no nuisance as in Carr) at any time between the commencement of the use of the Stadium in 1976 and the date on which these proceedings were issued in 2008. Mr Relton (the appellants predecessor in title) apparently first formally complained of noise to the council in 1992 (only 16 years before the proceedings were brought), and this resulted in the abatement notices referred to in para 11 above. At least as recorded in the judgment, no witness appears to have suggested, through either first hand or hearsay evidence, either expressly or inferentially, that there was nuisance by noise to Fenland much before 1994. The appellants witnesses seem to have come to the area after 1990, and (with the exception of Mrs Relton) the respondents witnesses seem to have been in a similar position, and Mrs Relton denied that there was a significant noise problem (and indeed described her husband as over sensitive to noise). There is also an argument that the judge did not properly approach the question whether the respondents caused a nuisance by noise on the right basis, as he decided that Fenland was to be treated as being in a purely agricultural environment, rather than in an environment which included the Stadium and the Track used for activities which did not create a nuisance (as explained in para 65 above). There are passages in his judgment which suggest that he may have approached the issue on this basis. However, it is clear that he did not do so, as, in para 243 of his decision, he fixed the acceptable level of noise from the Stadium and Track by reference to the levels of noise emitted from land used for similar activities (see para 24 above). The consequence of these conclusions is that, subject to a final point, the injunction granted by the judge should be restored (together with all the other terms, including the permission to apply). The final point is whether the judge should have awarded damages rather than an injunction. Given that he was not asked to do so, it is scarcely surprising that he did not address this issue. Further, it is not an issue which an appellate court should determine when the trial judge was not asked to do so, save in the most exceptional circumstances. The decision whether to award damages instead of an injunction can be dependent on a number of issues, including the behaviour and attitude of the parties. It is therefore a matter on which the trial judge is particularly well positioned to assess in a case such as this, where there was substantial oral evidence. Further, a defendant who wishes to argue that the court should award damages rather than an injunction should make it clear that he wishes to do so well in advance of the hearing, not least because the claimant may wish to adduce documentary or oral evidence on that issue which she would not otherwise consider relevant. The appellants were not afforded such an opportunity in this case. However, as Lord Clarke said in argument, it would be wrong to be very critical of the respondents for not raising the point at or before the trial as the decisions in Regan and Watson would have precluded the trial judge from awarding damages in lieu of an injunction, although it is right to add that the respondents should ideally have reserved their position on the point. In my judgment, the fairest way to deal with the point that the judge should have awarded damages instead of an injunction is to refuse the respondents permission to raise it, but to hold that they should be free to raise the argument that the injunction granted by the judge should be discharged, and damages awarded instead under the provision in the judges order giving the parties permission to apply. I should emphasise that, if such an application were made by the respondents, I am not in any way seeking to fetter the judges discretion when deciding whether to award damages instead, or seeking to suggest how that discretion might be exercised. No doubt the judge will carefully consider the effect of, and give such appropriate weight as he sees fit to, all the circumstances, including the evidence and arguments which he has already received, and any fresh evidence and argument which he sees fit to receive, in the light of the points made in paras 119 130 above. Conclusion As the first, second and fifth issues set out in para 6 above were raised by the respondents, and the third and fourth issues were raised by the appellants, the effect of this decision is that the appeal is allowed, and the order of Judge Seymour QC is restored. LORD SUMPTION I agree that this appeal should be allowed for the reasons given by Lord Neuberger. It is, I think, worth pointing out that the question what impact the grant of planning permission should have on liability in tort for private nuisance and the question what remedies should be available for a nuisance are closely related. They both raise a broader issue of legal policy of some importance, namely how is one to reconcile public and private law in the domain of land use where they occupy much the same space? I agree with Lord Neuberger that the existence of planning permission for a given use is of very limited relevance to the question whether that use constitutes a private nuisance. It may at best provide some evidence of the reasonableness of the particular use of land in question. But planning authorities are concerned with the public interest in development and land use, as that interest is defined in the planning legislation and any relevant development plans and policies. Planning powers do not exist to enforce or override private rights in respect of land use, whether arising from restrictive covenants, contracts, or the law of tort. Likewise, the question whether a neighbouring landowner has a right of action in nuisance in respect of some use of land has to be decided by the courts regardless of any public interest engaged. What saves, or could save the law from anomaly and incoherence is the courts discretion as to remedies. An injunction is a remedy with significant side effects beyond the parties and the issues in the proceedings. Most uses of land said to be objectionable cannot be restrained by injunction simply as between the owner of that land and his neighbour. If the use of a site for (say) motocross is restrained by injunction, that prevents the activity as between the defendant and the whole world. Yet it may be a use which is in the interest of very many other people who derive enjoyment or economic benefits from it of precisely the kind with which the planning system is concerned. An injunction prohibiting the activity entirely will operate in practice in exactly the same way as a refusal of planning permission, but without regard to the factors which a planning authority would be bound to take into account. The obvious solution to this problem is to allow the activity to continue but to compensate the claimant financially for the loss of amenity and the diminished value of his property. In a case where planning permission has actually been granted for the use in question, there are particularly strong reasons for adopting this solution. It is what the law normally provides for when a public interest conflicts with a proprietary right. The main question, as it seems to me, is not whether the judge in deciding on the appropriate remedy should take account of the public interest or, more generally, of interests which are not before the court. He will usually lack the information to do so effectively, and is in danger of stepping outside his main function of deciding the issue between the parties. The main question is whether the current principles of law governing the availability of injunctions are consistent with the public interest reflected in the successive and increasingly elaborate legislative schemes of development control which have existed in England since 1947. The ordinary principle is that the court does not grant an injunction in a case where there is an adequate legal remedy. In particular, it does not do so where damages would be an adequate remedy. Where an injunction is granted, it is usually because the injury to the Claimant is irreparable, in the sense that money cannot atone for it. However, this principle has never been consistently followed in cases of nuisance. The leading case is Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287 which created a strong presumption in favour of an injunction, to be displaced only in the four narrowly defined categories identified by AL Smith LJ at pp 322 323. The exceptions applied only to cases where the injury to the claimant was small and the grant of an injunction would be oppressive. In Colls v Home and Colonial Stores Ltd [1904] AC 179, 192, Lord Macnaghten wondered why an injunction should be granted when substantial damages would be given at law, and there were subsequent attempts to widen the discretion. But the courts have not taken the hint. In Regan v Paul Properties DPF No 1 Ltd [2007] Ch 135 and Watson v Croft Promosport Ltd [2009] 3 All ER 249 the Court of Appeal have reverted to substantially the same position as the Court of Appeal in Shelfer more than a century before. The courts might have defended the special treatment of nuisance by pointing to the traditional attitude of equity to land as being unique, an approach which is exemplified in its willingness to grant specific performance of contracts for the sale of land. From this, it might have been concluded that paying the claimant enough to buy a comparable property elsewhere where there was no nuisance was not equivalent to letting him use his existing land free of the nuisance. In fact the Shelfer principle was based mainly on the courts objection to sanctioning a wrong by allowing the defendant to pay for the right to go on doing it. This seems an unduly moralistic approach to disputes, and if taken at face value would justify the grant of an injunction in all cases, which is plainly not the law. In his dissenting judgment in the Court of Appeal in Co operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1996] Ch 286, 304 (subsequently upheld in the House of Lords [1998] AC 1), Millett LJ said: The competing arguments in the present case, and the difference in the views of the members of this court, reflect a controversy which has persisted since the dispute between Sir Edward Coke and Lord Ellesmere LC. Sir Edward Coke resented the existence of an equitable jurisdiction which deprived the defendant of what he regarded as a fundamental freedom to elect whether to carry out his promise or to pay damages for the breach. Modern economic theory supports Sir Edward Coke; an award of damages reflects normal commercial expectations and ensures a more efficient allocation of scarce economic resources. The defendant will break his contract only if it pays him to do so after taking the payment of damages into account; the plaintiff will be fully compensated in damages; and both parties will be free to allocate their resources elsewhere. Against this there is the repugnance felt by those who share the view of Fuller CJ in Union Pacific Railway Co v Chicago, Rock Island and Pacific Railway Co (1896) 163 US 564, 600 that it is an intolerable travesty of justice that a party should be allowed to break his contract at pleasure by electing to pay damages for the breach. English law has adopted a pragmatic approach in resolving this dispute. The leading principle is usually said to be that equitable relief is not available where damages are an adequate remedy. In my view, it would be more accurate to say that equitable relief will be granted where it is appropriate and not otherwise; and that where damages are an adequate remedy it is inappropriate to grant equitable relief. In my view, the decision in Shelfer is out of date, and it is unfortunate that it has been followed so recently and so slavishly. It was devised for a time in which England was much less crowded, when comparatively few people owned property, when conservation was only beginning to be a public issue, and when there was no general system of statutory development control. The whole jurisprudence in this area will need one day to be reviewed in this court. There is much to be said for the view that damages are ordinarily an adequate remedy for nuisance and that an injunction should not usually be granted in a case where it is likely that conflicting interests are engaged other than the parties interests. In particular, it may well be that an injunction should as a matter of principle not be granted in a case where a use of land to which objection is taken requires and has received planning permission. However, at this stage, in the absence of argument on these points, I can do no more than identify them as calling for consideration in a case in which they arise. LORD MANCE I agree that the appeal should be allowed for the reasons given by Lord Neuberger. In addition to their reasons for allowing this appeal, the judgments prepared by Lord Neuberger, Lord Sumption and Lord Carnwath address a number of wider issues which were argued before us. For the most part, I also agree with the way in which Lord Neuberger addresses these issues in his judgment. It is common ground that a change in the intensity of a previous activity may, just as much as the introduction of a new activity, give rise to a nuisance. The fact that the nuisance is already being committed cannot make it part of the character of the locality (see Lord Neubergers judgment paragraphs 65 to 76). But Lord Neuberger (paragraphs 72 and 74) and Lord Carnwath (paragraph 187) suggest, as I see it, that such a change or the introduction of a new activity may in some circumstances and to some degree be compatible with the existing character of the locality, and to that extent not involve the creation of a nuisance. With or without planning permission, the character of an area may be susceptible over time to gradual change and development. Each step in the process may be said by itself to fit with the existing character and be largely imperceptible, though, ultimately, the difference resulting from the totality of all the steps may be considerable. In the meantime, those occupying property, living or working, in the area, will have had time to adapt. That is a quite different process from one brought about by an activity increased in intensity or introduced for the first time and bringing about a radical change over a relatively short period. In the latter case and to the extent that the increased or new activity goes beyond anything which would fit with the existing character of the locality, an aggrieved occupier can have cause for complaint about a resulting nuisance, unless and until the increased or new activity is allowed to continue as a nuisance either for 20 years without proceedings being issued or by a court by refusal of an injunction. With regard to the significance of planning permission, I agree with what Lord Neuberger says in paragraphs 77 to 97 and 99. The reasoning in Gillingham Borough Council v Medway (Chatham) Dock Co Ltd [1993] QB 343 suggests that a development plan or a strategic planning decision adopted in the public interest can of itself bring about a corresponding major alteration in the character of a neighbourhood without any need to compensate for any private nuisance thereby caused. I regard that as unsustainable in principle and fairness. If the increase in an existing activity or the introduction of a new activity constitutes a nuisance in relation to the previously existing character of the locality, I see no basis for treating differently a decision to permit such an increase or new activity taken in the public interest by a development or planning authority. The general public interest may have led to a particular private interest being overlooked or overridden. If it is to be acceptable to permit this, then it should at least be permitted on a basis that affords compensation. That is not to suggest that the grant, terms and conditions of a planning permission may not have some relevance in some nuisance cases, as Lord Neuberger indicates in his paragraphs 96 to 97 and also (in relation to remedy) in paragraph 118. As to the reliance which might be placed on planning officers reports, on which Lord Neuberger touches in paragraph 98, it seems to me that it must all depend on the nature of the decision and of the debate before the planning committee and so on all the circumstances (as I understand Lord Neuberger also to say in the last sentence of paragraph 98), and I prefer myself to say no more without rather more information about these in a specific case. With regard to remedy, I am broadly in agreement with Lord Neuberger. However, I would adopt the qualifications made by Lord Carnwath in his paragraphs 246 and 247. I do not think that a grant of planning permission can give rise to any presumption that there should be no injunction, and, while I would, in a case where it was relevant, like to hear argument on this, I am not at present persuaded that cases on the right to light involve the same considerations as those arising, or are therefore necessarily helpful, where the question is the appropriate remedy in respect of a nuisance of the present different nature. I would only add in relation to remedy that the right to enjoy ones home without disturbance is one which I would believe that many, indeed most, people value for reasons largely if not entirely independent of money. With reference to Lord Sumptions concluding paragraph, I would not therefore presently be persuaded by a view that damages are ordinarily an adequate remedy for nuisance and that an injunction should not usually be granted in a case where it is likely that conflicting interests are engaged other than the parties interests a suggested example of the latter being given as a case where a use of land has received planning permission. I would see this as putting the significance of planning permission and public benefit too high, in the context of the remedy to be afforded for a private nuisance. As already indicated, I agree with Lord Neubergers nuanced approach. LORD CLARKE I agree with the conclusions and reasoning of Lord Neuberger subject to one or two points. First, I agree that the fact that planning permission has been granted is capable of being relevant to an action in nuisance in a number of respects but, as Lord Carnwath has shown, the facts of such cases are so varied that it is difficult to lay down hard and fast rules. As so often, all depends upon the circumstances. However, I agree with Lord Neuberger, Lord Sumption and Lord Carnwath that the existence of planning permission for the activity complained of may well be of particular relevance to the remedy to be granted. Secondly, I agree with Lord Neuberger at para 120 that the courts power to award damages in lieu of an injunction involves a classic exercise of discretion which should not as a matter of principle be fettered. In these circumstances, in the absence of submissions on the point, I would wish to reserve the question upon whom the burden of proof should be placed on the question how that discretion should be exercised. Thirdly, as I see it, the most important aspect of this case relates to the correct approach to remedies. In particular I agree with the views of Millett LJ in Co operative Insurance Society Ltd v Argyll Stores (Holdings) Limited [1996] Ch 286 at 305, which was a dissenting judgment but was subsequently upheld by the House of Lords at [1986] AC 1. He concluded that the general principle is or should be that equitable relief will be granted where it is appropriate and not otherwise and that, where damages are an adequate remedy, it is inappropriate to grant equitable relief. Lord Sumption set out Millett LJs views at his para 160, as I read it, with approval. I entirely agree with Lord Sumption (at para 161) that the decision in Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287 is out of date and that it is unfortunate that it has been followed so recently and so slavishly. Indeed, I would so hold now in this appeal, although (in the absence of submissions) I would not now lay down precise principles which should be followed in the future. They must be developed on a case by case basis and in each case all will depend upon the circumstances. I agree with Millett LJs general approach. Fourthly, I would leave open the question how damages should be assessed. The traditional approach had been to assess the loss of value of the property caused by the nuisance. There may also be scope for an award of general damages: see eg, in the context of noise, Farley v Skinner [2002] 2 AC 732. Although the claim was in contract, Lord Steyn, who gave the leading speech, would have reached the same conclusion if the claim had been in nuisance: see para 30. It may however be that, in the light of the views expressed by Lord Hoffmann in Hunter v Canary Wharf [1997] 1 AC 655 at 706, such damages could only be awarded in nuisance as loss of the amenity value of the land. This could be in the form of general damages if it is not possible to prove a specific loss of value, rather as in Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 244, which is referred to by Lord Hoffmann at page 706F. Finally, I would leave open the question whether it may in some circumstances be appropriate to award what have been called gain based damages in lieu of an injunction. I appreciate the possible problems identified by Lord Neuberger and Lord Carnwath but it does seem to me that, where a claimant is seeking an injunction to restrain the noise which has been held to amount to a nuisance, it is at least arguable that there is no reason in principle why a court considering whether or not to award damages in lieu of an injunction should not be able to award damages on a more generous basis than the diminution in value caused by the nuisance, including, for example, an award which represented a reasonable price for a licence to commit the nuisance. So, for example, as Lord Neuberger notes at para 111, in Jaggard v Sawyer [1995] 1 WLR 269 the Court of Appeal awarded damages for trespass in lieu of an injunction which in effect gave the defendant a right of way over the plaintiffs land in return for a capital sum. If that can be done in trespass I do not at present see why it should not in principle be done in nuisance in a case like this, where a similar payment would give the respondents the right to commit what would otherwise be a nuisance by noise. Moreover, as Lord Neuberger observes at para 128, there may be scope for assessing the claimants loss by reference to the benefit to the defendant of not suffering an injunction. However, these are all matters for the future and I recognise that before reaching final conclusions it would be necessary to consider the relevant authorities and to receive appropriate submissions. I agree with Lord Neubergers proposals as to the resolution of the appeal. In particular, as to the future, I agree with his paras 148 to 151, especially 150 and 151. Thus, while I naturally hope that issues of remedy can now be resolved by agreement, some of the questions raised by Lord Neuberger and the other judgments in this appeal may fall for decision in this very case. LORD CARNWATH Basic principles The present appeal raises important issues relating to an area of the law which has received little attention at the highest level, that is nuisance by interference with enjoyment (as distinct from nuisance by encroachment or damage: see Clerk & Lindsell on Torts 20th ed (2010), para 20 07, 09). Although many of the relevant principles are treated by the textbooks as long settled, the authorities are generally in the Court of Appeal and below. Particular aspects of the law of nuisance, notably the rule in Rylands v Fletcher (1868) LR 3 HL 330, have received recent attention in the House of Lords (Cambridge Water Co v Eastern Counties Leather plc [1994] 2 AC 264 and Transco plc v Stockport Metropolitan Borough Council [2004] 2 AC 1), and some of the speeches have commented on more general principles. But for authoritative statements at the highest level on this area of the law one has to go back almost 150 years, to the landmark case of St Helens Smelting Co v Tipping (1865) 11 HL Cas 642, long before the advent of modern planning control. Ben Pontin in his valuable recent book Nuisance Law and Environmental Protection (2013) shows how since the middle of the 19th Century common law nuisance has played an important complementary role to regulatory controls, on the one hand stimulating industry to find better technical solutions to environmental problems, and, on the other, stimulating the legislature to fill gaps in the regulatory system. He sees the present appeal as an important opportunity for the Supreme Court to review the proper role of this part of the law of nuisance in the modern world (p 184). Lord Neuberger has highlighted five particular issues raised by the appeal, in summary: i) ii) iii) The defendants activity as part of the character of the area iv) Relevance of planning permission v) Remedies Prescriptive right Coming to the nuisance On the first two issues I agree respectfully with Lord Neuberger and have nothing to add. On the others, although I agree with his overall conclusions, I prefer to explain my reasoning in my own words. Reasonable user It is important at the outset to identify the test to be applied in determining what amounts to a nuisance. In his introduction (para 5), Lord Neuberger quotes without comment a passage in Cambridge Water Company v Eastern Counties Leather plc [1994] 2 AC 264, 299, in which Lord Goff referred to the controlling principle of reasonable user the principle of give and take. As I explained in Barr v Biffa Waste Services Ltd [2013] QB 455, paras 60 72, Lord Goff was not seeking to lay down a general rule, and the concept is not without its problems. The criterion of reasonableness has also been strongly criticised by some academics. (See for example, Allan Beever The Law of Nuisance (2013) p 9ff: it is presented as an explanation of the operation of the law, but it does not, cannot, explain anything.) In Barr v Biffa Waste Services Ltd (para 72), I referred to Tony Weirs qualification of the reasonableness test: Reasonableness is a relevant consideration here, but the question is neither what is reasonable in the eyes of the defendant or even the claimant (for one cannot by being unduly sensitive, constrain one's neighbour's freedoms), but what objectively a normal person would find it reasonable to have to put up with. (Weir An Introduction to Tort Law, 2nd ed (2006), p 160) The character of the locality Another important question is the context in which the reasonableness test is to be applied. Traditionally the acceptability of the defendants activity is to be judged by reference to the character of the locality, a concept which dates back at least to Sturges v Bridgman (1879) 11 Ch D 852. At that time the mix of uses in an area would have been the result largely of unrestrained market forces, and the degree of regulatory control was very limited. Although the same principle has survived into the modern law, it is unrealistic to leave out of account the many factors which influence the character of an area in the modern world, including the impact of planning control. In Hunter v Canary Wharf Ltd [1997] AC 655, Lord Cooke (dissenting on this part of the case) highlighted these changes: the lineaments of the law of nuisance were established before the age of television and radio, motor transport and aviation, town and country planning, a crowded island, and a heightened public consciousness of the need to protect the environment. All these are now among the factors falling to be taken into account in evolving the law. (p 711 D E) Lord Hoffmann, in the majority, also commented on the significance of the introduction of modern planning control, which he saw as an argument against further extending the law of nuisance: In a case such as this, where the development is likely to have an impact upon many people over a large area, the planning system is, I think, a far more appropriate form of control, from the point of view of both the developer and the public, than enlarging the right to bring actions for nuisance at common law. (p 710B D) Against that background, in areas where conflicts may arise, the character of any locality may not conform to a single homogeneous identity, but rather may consist of a varied pattern of uses all of which need to coexist in a modern society. Due account also needs to be taken of the process by which the pattern of uses has developed. The impact of general planning control since 1948, which includes development plan allocations as well as decisions on individual planning applications, will have played a major part in ensuring, as Lord Hoffmann said, an appropriate balance between developers and the public. However planning control is only part of the story. The pattern of uses will include, not only uses approved under modern planning permissions, but also other lawful uses lawful either because they began before 1948, or because they have become established in law since then (such as stock car racing in this case). Potentially unneighbourly uses, even if not subject to specific planning permission, are likely to have been subject to other regulatory controls to ensure their acceptability within their particular environment. Other activities may have been encouraged to relocate, with or without threats of discontinuance orders, or financial incentives. After more than 60 years of modern planning and environmental controls, it is not unreasonable to start from the presumption that the established pattern of uses generally represents societys view of the appropriate balance of uses in a particular area, taking account both of the social needs of the area and of the maintenance of an acceptable environment for its occupants. The common law of nuisance is there to provide a residual control to ensure that new or intensified activities do not need lead to conditions which, within that pattern, go beyond what a normal person should be expected to put up with. This analysis seems to me consistent with that of the Lord Westbury LC in St Helens case in the different circumstances of the Victorian world. In the passage quoted by Lord Neuberger (para 64), Lord Westbury spoke of the need for a person living in a town to subject himself to consequence of trade operations in his locality which are necessary for trade and commerce and for the benefit of the inhabitants of the town and of the public at large: 11 HL Cas 642, 650. There is no reason why, in a modern context, the same analysis should not apply to activities other than trade which contribute to the ordinary life of a modern community, and which need to be accommodated within the urban fabric. An example mentioned in argument was a major football stadium. Significant disturbance on match days may be regarded as a necessary price for an activity regarded as socially important, provided it is subject to proper controls by the public authorities, including the police, to ensure that the disturbance is contained as far as reasonably practicable. In those circumstances, if someone buys a house next to such a stadium, he should not be able to sue for nuisance, even though the noise may be highly disturbing to ordinary home life on those days. This is not because he came to the nuisance, nor (necessarily) because it has continued for 20 years. Rather it is because it is part of the established pattern of uses in the area, and society attaches importance to having places for professional football within urban areas. He can however sue if there is something about the organisation, or lack of it, which takes the disturbance beyond what is acceptable under the reasonableness test. Nor is there any reason why this approach should be confined to urban areas. As the present case illustrates, similar patterns of potentially conflicting uses may arise in the country as much as in the town. Relevance of the defendants activity The above analysis seems to me to provide the answer to Lord Neubergers third issue, concerning the relevance of the actual use complained of by the claimant. An existing activity can in my view clearly be taken into account if it is part of the established pattern of use. That is clear from many of the reported cases which proceed on the basis that the defendants activity contributes to the character of the locality against which the new or intensified use is to be considered. So in Rushmer v Polsue & Alfieri Ltd [1906] 1 Ch 234 (approved by the House of Lords [1907] AC 121) the Court of Appeal specifically rejected an argument that because the defendants activities conformed to the character of the area, there could not be a nuisance when a new more intrusive element was introduced. Similarly, in Halsey v Esso Petroleum [1961] 1 WLR 683, Veale J started from the position of the ordinary man who may well like peace and quiet but will not complain, for instance, of the noise of traffic if he chooses to live on a main street in an urban centre, nor of the reasonable noises of industry, if he chooses to live alongside a factory (p 692). Thus the defendants activities, at their previous level, were accepted as part of the established pattern of uses in the area, also reflected in the development plan zoning (p 688), and thus as the starting point for consideration of the alleged nuisance. In Kennaway v Thompson [1981] QB 88 it was common ground that the plaintiff could not complain of noise of motor boats at the levels accepted by her as tolerable when she built her house (p 94B). The terms of the injunction were designed to protect the defendants activities at that level, with a limited number of days for noisier boats (p 94F 95A). Similarly in Watson v Croft Promosport Ltd [2009] 3 All ER 249 the injunction, even as modified by the Court of Appeal, did not stop the defendants activity altogether, but sought to define the level of acceptable use, by limiting numbers of days and defining noise limits (paras 53 54). In none of these cases did the court find it necessary to undertake an iterative process as proposed by Lord Neuberger (para 72). The judges proceeded on the basis that a change in the intensity or character of an existing activity may result in a nuisance, no less than the introduction of a new activity. It was a matter for the judge, as an issue of fact and degree, to establish the limits of the acceptable, and if appropriate to make an order by reference to the limits so defined. Planning control The problem The most difficult problem raised by the present appeal, in my view, is the fourth of Lord Neubergers issues, that is the relevance of the planning history of the defendants activity. Modern planning legislation dates from the coming into force in 1948 of the Town and Country Planning Act 1947. More limited regulatory controls of activities on land had existed since around the mid 19th century, but until the 1947 Act there was no attempt to provide a comprehensive system for the allocation of land use and development. Decisions made by local planning authorities and planning inspectors reflect, or should reflect, an attempt by the authorities consciously to balance the likely benefits of a proposed development against any potential adverse consequences. That process often involves consideration of the interests of neighbouring property owners, including the impact of noise. Thus, national planning advice encourages planning authorities to restrict new development which could give rise to significant adverse impacts from noise; but emphasises that planning is concerned with the acceptability of the use in principle, rather than control of processes or emissions which are subject to other regulatory controls (National Planning Policy Framework (2012), paras 122 123). The law of private nuisance, of far greater antiquity than modern planning legislation, also fulfils the function of protecting the interests of property owners. There is, however, a fundamental difference between planning law and the law of nuisance. The former exists to protect and promote the public interest, whereas the latter protects the rights of particular individuals. Planning decisions may require individuals to bear burdens for the benefit of others, the local community or the public as a whole. But, as the law stands, it is generally no defence to a claim of nuisance that the activity in question is of benefit to the public. Thus planning controls and the law of nuisance may pull in opposite directions. A development executed in accordance with planning permission may nevertheless cause a substantial interference with the enjoyment of neighbouring properties. Should a property owner be able in effect to undermine the planning process by bringing a claim of nuisance against the developer and securing not only damages but also an injunction prohibiting the activity in question, regardless of its public significance? This is not a problem which arises if the project is authorized by statute. In the 19th century, long before modern planning control, railways were built under private acts which not only conferred the necessary powers to acquire or interfere with private property interests, but also conferred effective immunity from actions for nuisance. The same principle has provided protection for more modern activities, such as oil refineries. But, as Lord Wilberforce explained in Allen v Gulf Oil Refining Ltd [1981] AC 1001 the defence applies only where Parliament has by express direction or by necessary implication authorised the activity in question and the alleged nuisance is the inevitable consequence of that activity (pp 1011F, 1013F). The Planning Act 2008 has adopted the same solution for nationally significant infrastructure projects, such as airports and power stations. The Act is designed to provide a more efficient method for securing planning and other approvals necessary for such projects, within the context of a policy framework approved by Parliament. Section 158 of the 2008 Act provides statutory immunity from liability for private or public nuisance for activities authorised by an order granting development consent under the Act, subject to any contrary provision contained in the order. By section 152 compensation is payable to any person whose land is injuriously affected by the carrying out of the works (within the relatively narrow limits defined by section 10 of the Compulsory Purchase Act 1965 and Part I of the Land Compensation Act 1973: section 152(5)(7)). There is no equivalent statutory protection for other forms of development authorised under ordinary planning procedures, whether by the local planning authority or the Secretary of State following a public inquiry. In Barr v Biffa Waste Services Ltd [2013] QB 455, para 46, a case relating to waste disposal under an environmental licence, in a passage quoted by Lord Neuberger (para 91), I pointed out that the common law of nuisance had co existed with statutory controls since the 19th century without the latter being treated as a reason for cutting down private law rights. However, the context is important. I was speaking about environmental regulation rather than planning control, which was not in issue. Further, while my statement was an accurate reflection of the historical position, it is open to the criticism that as a blueprint for the future development of the law it was unduly simplistic. In a perceptive article on the decisions of the Court of Appeal in the present case and in Barr v Biffa Waste Services Ltd, Maria Lee concludes: It is not realistic to look for a single, across the board response to the complicated relationship between tort and regulation, or even just nuisance and planning permission Courts are not generally in a position to assess the substantive quality of regulation (Nuisance and Regulation in the Court of Appeal [2013] JPEL 277, 284) She suggests that an examination of the process followed by the regulation could help the court to determine how much authority the external assessment of the public interest should have, but that no single process issue could be decisive (p 284). Gillingham Docks and subsequent cases The issue has attracted particular attention over the last 20 years, since the judgment of Buckley J in the Gillingham Docks case (Gillingham Borough Council v Medway (Chatham) Dock Co Ltd [1993] QB 343). That has been considered by the Court of Appeal in two cases before the present judgment (Wheeler v JJ Saunders Ltd [1996] Ch 19 and Watson v Croft Promosport [2009] 3 All ER 249) and once in the House of Lords (Hunter v Canary Wharf Ltd [1997] AC 655). The facts of the Gillingham Docks case were unusual. The council as local planning authority had granted planning permission to the defendant to develop part of the historic Chatham Royal Naval Dockyard as a commercial port. It had been clear to both the council and local residents at the time that the port would be operated on a 24 hour basis, and that the only access to the port for vehicles would be via two residential roads. In spite of strong objections by local residents the council decided that the promised economic benefits outweighed the inevitable disturbance of local residents. Several years later, the priorities of the council changed and they brought an action in public nuisance seeking to restrain the use of the residential roads by heavy goods vehicles at night. Modifying the planning permission to achieve the same effect would have involved the payment of compensation. The judge rejected the claim. Although he accepted that the principle of statutory immunity had no direct application, he attached weight to the fact that Parliament had delegated to the local planning authority the task of balancing the likely pros and cons of a proposed development, under a procedure which enabled local residents to object. He said: It has been said, no doubt correctly, that planning permission is not a licence to commit nuisance and that a planning authority has no jurisdiction to authorise nuisance. However, a planning authority can, through its development plans and decisions, alter the character of a neighbourhood. That may have the effect of rendering innocent activities which prior to the change would have been an actionable nuisance. (p 359) The grant of planning permission for the dock had authorised a change to the character of the neighbourhood, against which the reasonableness of the use was to be judged. The dock company was not operating the port other than as a normal commercial undertaking, and it could not operate a commercial port without disturbing nearby residents. It would not, he thought, be realistic to attempt to limit the amount of trade at the port: It would be a task for which a court would be ill equipped, involving as it would the need to consider the interests of the locality as a whole and the plaintiff's and county council's plans in respect of it. In some cases even the national interest would have to be considered. These are matters to be decided by the planning authority and, if necessary, the minister and should be subject only to judicial review. (pp 360 361) There was an alternative public law challenge based on the unreasonableness of the councils action in bringing public nuisance proceedings in respect of a project which it had itself authorised on public interest grounds, and where there was available the alternative of modification of the permission or discontinuance accompanied by compensation (see pp 350 351). The judge found it unnecessary to consider how those arguments would have been resolved in judicial review proceedings. However, he indicated that, even if he had held otherwise on liability, he would have refused an injunction as matter of discretion, having regard to the history and the damage to the dock undertaking, leaving it to the authority to resolve the planning problem using its statutory powers (p 364A C). That judgment was considered by the Court of Appeal, some three years later, in Wheeler v JJ Saunders Ltd [1996] Ch 19. Again the facts were unusual. Dr Wheeler was a veterinary surgeon specialising in pigs. He had earlier been involved in the management of a pig farm operated by the defendant company close to his home. But the relationship broke down and the business was subsequently conducted without his involvement. In 1988 and 1989, the company obtained planning permission to construct two new buildings to house their pigs (some 800 in total), one of which was only 11 metres from a holiday cottage owned by Dr Wheeler and his wife. Government guidelines recommended a normal separation distance of at least 100 metres from the nearest dwelling house. Dr Wheeler and his wife succeeded in their action for damages and an injunction restraining the use of the new pig sheds, notwithstanding that they had been erected and used in accordance with planning permission. Staughton LJ noted that the company had given the council the misleading impression that the planning applications were merely to continue an activity which had been tolerated in the past, and that nothing much would change as regards the number of pigs on the farm or the conditions in which they were to be kept. Also, the local planning authority had failed to consult the councils environmental health department. Peter Gibson LJ described the grant as incomprehensible (p 36). It was held that the reasoning in Gillingham Docks had no application to the facts of this case. The planning permission had not changed the character of the neighbourhood, which remained a pig farm but with an intensified use of part of it. In the words of Staughton LJ, the planning permission was not a strategic planning decision affected by considerations of public interest (p 30). Peter Gibson LJ said: Prior to the Gillingham case the general assumption appears to have been that private rights to claim in nuisance were unaffected by the permissive grant of planning permission, the developer going ahead with the development at his own risk if his activities were to cause a nuisance. The Gillingham case, if rightly decided, calls that assumption into question, at any rate in cases, like Gillingham itself, of a major development altering the character of a neighbourhood with wide consequential effects such as required a balancing of competing public and private interests before permission was granted. I can well see that in such a case the public interest must be allowed to prevail and that it would be inappropriate to grant an injunction (though whether that should preclude any award of damages in lieu is a question which may need further consideration). But I am not prepared to accept that the principle applied in the Gillingham case must be taken to apply to every planning decision. The Court should be slow to acquiesce in the extinction of private rights without compensation as a result of administrative decisions which cannot be appealed and are difficult to challenge. (p 35) In the meantime, the Gillingham Docks case had been considered by the House of Lords in Hunter v Canary Wharf [1997] AC 655. The case involved a claim for nuisance, brought by local residents in relation to interference with television signals due to the construction of a tower as part of the Canary Wharf development. The development had been carried out under planning permission granted under a special procedure by the London Docklands Development Corporation. There was no appeal from the Court of Appeals decision that the grant of planning permission could not itself provide immunity from liability for nuisance. In the House of Lords, Lord Cooke of Thorndon, who alone thought that there could be liability in principle, endorsed the Gillingham Docks judgment as directly relevant to the circumstances of Canary Wharf. He contrasted Wheeler in which there had been an injudicious grant of planning consent, procured apparently by the supply of inaccurate and incomplete information (p 722). By contrast, the Canary Wharf Tower had been built in an enterprise zone in an urban development area and authorised under the special procedure designed to encourage regeneration: The Canary Wharf project in general, and the tower at One Canada Square in particular, were obviously of a scale totally transforming the environment In these circumstances, to adopt the words of Staughton L.J. in Wheeler v J J Saunders Ltd, at p 30, the tower falls fairly within the scope of a strategic planning decision affected by considerations of public interest. (p 722E) Of the Gillingham Docks case itself he said: the judge held that, although a planning consent could not authorise a nuisance, it could change the character of the neighbourhood by which the standard of reasonable user fell to be judged. This principle appears to me to be sound and to apply to the present case as far at least as television reception is concerned. Although it did interfere with television reception the Canary Wharf Tower must, I think, be accepted as a reasonable development in all the circumstances. (p 722F G) More recently, the issue arose again, in circumstances much closer to those of the present case, in Watson v Croft Promosport Ltd (2009) 3 All ER 249. A World War II aerodrome had been turned into a motor racing circuit, pursuant to planning permission granted in 1963 after a public inquiry. Although there were no planning restrictions on the levels of activities, its use was relatively limited until 1994 (there were no more than 10 meetings a year between 1982 and 1994), and appears to have caused little disturbance to local residents. In that year, after the circuit had changed ownership, an application was made for more extensive use, involving 37 race days, 24 exclusive test days and 120 days when the track would be used for other purposes. Permission was granted by the local authority in July 1995. In 1998, following a period of disputes with local residents, and an adjourned planning inquiry, the owner made a further application for planning permission on the basis that he was prepared to enter into an enforceable planning obligation under section 106 of the Town and Country Planning Act 1990 to set limits to the amount of noise from racing on the circuit. The proposed agreement contained a detailed set of measurement criteria by which noise from the circuit would be assessed and monitored, and prescribed the racing activities which could be undertaken, and when quiet and rest days were to be held. The activities were divided into N1 to N5 activities, according to the noise levels which were generated. Permission was granted by the inspector on this basis. He accepted that the Development Plan policies weigh heavily against the project and that the noise had at times been of such character, duration and intensity and tone as to seriously harm the amenity to which residents reasonably feel they are entitled; but that had to be weighed against the existing planning permission which allowed uncontrolled use of the circuit. Bearing in mind the very wide planning use rights which the site now enjoys, he considered that the agreement would strengthen significantly the ability of the local planning authority to control noise at the circuit. Local residents brought an action claiming that, even within the constraints set by the agreement, the activities constituted a nuisance. Simon J [2008] EWHC 759 (QB) noted that their objections were not to the car and motor bicycle racing fixtures, amounting to about 20 (N1 and N2) events each year (over approximately 45 50 days), but to the noise from other activities, in particular Vehicle Testing Days and Track Days (when members of the public drive vehicles at speed all day) at noise levels which reach N2 N4 levels. He held that the character of the locality had been essentially rural, and that the circuit could be, and was, run in a way that was consistent with its essentially rural nature (para 55). He declined to accept the 1998 planning permission as an indication (in Lord Hoffmanns terms) of the appropriate balance between developer and public, since the limits had in effect been dictated by the owners (paras 55 56). He held that there was an actionable nuisance. The claimants had argued that the N1 N4 noise from the circuit should be confined to 20 days, as representing the the threshold of the nuisance, and that 40 days would be acceptable only upon the payment of compensation for the difference between 20 40 days. This, they submitted, would accommodate the core activities of the circuit. The judge regarded the proposed threshold as too low. Striking a proper balance between the respective legitimate interests of the parties, in the light of the past and present circumstances, he held that the threshold should be set at 40 N1 N4 days. However he declined to grant an injunction, awarding damages instead (based on the diminution in value of the claimants properties). He took account of the delay in bringing the proceedings, and the claimants willingness to accept damages for at least part of the nuisance. He also took account of his perception of the social value of the activity, and the limited number of sites on which it could take place (paras 87 88). The finding of nuisance was upheld by the Court of Appeal. The court accepted that the implementation (not the mere grant) of planning permission might so alter the character of a neighbourhood as to render innocent an activity which would otherwise have been a nuisance (paras 32 3). Whether it did so was a question of fact and degree. In this case the planning permissions had not changed the character of the local neighbourhood, which remained essentially rural, nor could they be regarded as strategic (para 34). Further, the Court of Appeal held that the judge had been wrong to refuse an injunction. Applying the principles established in Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287, the circumstances of the case were held not to be sufficiently exceptional to justify the refusal of an injunction. The court accepted that, in a marginal case where the damage to the claimant is minimal, the social value of the activity in question could be taken into account consistently with Shelfer. However, the existence of a public benefit could not alone negate the requirement of exceptional circumstances or oppression of the defendant (para 51). Relevance of planning history I have reviewed these cases is some detail, because they illustrate the wide variety of circumstances in which planning decisions may be made, and the danger of laying down any general propositions about their relevance to the application of the reasonableness test in any particular case. They suggest that a planning permission may be relevant in two distinct ways: i) It may provide evidence of the relative importance, in so far as it is relevant, of the permitted activity as part of the pattern of uses in the area; ii) Where a relevant planning permission (or a related section 106 agreement) includes a detailed, and carefully considered, framework of conditions governing the acceptable limits of a noise use, they may provide a useful starting point or benchmark for the courts consideration of the same issues. Before considering those alternatives, I should note my respectful disagreement with Lord Neubergers reservations (para 98) about the potential utility of planning officers reports as evidence of the reasoning of the planning authority itself. Judged by my own experience in practice and on the bench over some 40 years, I have found that a planning officers report, at least in cases where the officers recommendation is followed, is likely to be a very good indication of the councils consideration of the matter, particularly on such issues as public interest and the effect on the local environment. The fact that not all the members will have shared the same views on all the issues does not detract from the utility of the report as an indication of the general thrust of the councils thinking. That is illustrated by some of the planning reports in this case (as Lord Neuberger implicitly recognises, when relying on the cautious nature of the planning officers recommendations para 138). In any event, in so far as the focus is on the evidence before the planning authority (to which Lord Neuberger refers in para 138), rather than the decision itself, the planning officers report is likely to offer the most comprehensive summary of the relevant material. (i) Relative importance The first alternative begs the question whether the relative importance of an activity to the public is relevant at all. In Miller v Jackson [1977] QB 966 the Court of Appeal held by a majority that public benefit was not relevant to liability, but (by a different majority) that it may be relevant to remedies. In Kennaway v Thompson [1981] QB 88 the court declined to follow the latter view, holding that public benefit was not relevant at either stage. Clerk & Lindsell para 20 107 notes the position as apparently established by those cases, but adds that since a finding of nuisance necessarily involves the balancing of competing interests, public interest, while not itself a defence, should be a factor in assessing reasonableness of user. The only case cited Dennis v Ministry of Defence [2003] Env LR 741 (noise from military aircraft) does not directly support the proposition, since Buckley J held there to be a nuisance, but awarded damages in lieu of a declaration or injunction because of the public interest in the activity (paras 48, 80). In agreement with Peter Gibson LJ in Wheeler [1996] Ch 19, 35, I think there should be a strong presumption against allowing private rights to be overridden by administrative decisions without compensation. The public interest comes into play in the limited sense accepted by Lord Westbury 11 HL Cas 642, 650, as discussed above, that is in evaluating the pattern of uses necessary for the benefit of the inhabitants of the town and of the public at large, against which the acceptability of the defendants activity is to be judged. Otherwise its relevance generally in my view should be in the context of remedies rather than liability. I would accept however that in exceptional cases a planning permission may be the result of a considered policy decision by the competent authority leading to a fundamental change in the pattern of uses, which cannot sensibly be ignored in assessing the character of the area against which the acceptability of the defendants activity is to be judged. I read Staughton LJs use of the word strategic as equivalent to Peter Gibson LJs reference to a major development altering the character of a neighbourhood with wide consequential effects such as required a balancing of competing public and private interests before permission was granted. For this reason, in my view (differing respectfully from Lord Neuberger on this point) the reasoning of the judge in Gillingham Docks can be supported. Similarly, the Canary Wharf development was understandably regarded by Lord Cooke as strategic in the same sense. But those projects were exceptional both in scale and the nature of the planning judgements which led to their approval. By contrast, in neither Wheeler v Saunders and nor Watson v Croft Promosport Ltd did the relevant permissions result in a significant change in the pattern of uses in the area, let alone one which could be regarded as strategic; and for the reasons noted above neither decision could be regarded as reflecting a considered assessment by the authorities concerned of the appropriate balance between public and private interests. (ii) Benchmark Apart from such strategic cases, a planning permission may also be of some practical utility in a different way. As many of the cases show, a major problem when dealing with nuisance by noise is to establish any objective and verifiable criteria by which to judge either the existence of a nuisance or the limits of any injunction. In some cases there may have been a single planning permission which established, by condition or by a linked section 106 agreement, a framework of noise levels and time limits, which can be taken as representing the authoritys view, with the benefit of its expert advisers, of the acceptable limits. Lord Neuberger makes a similar point in paragraph 96. Watson v Croft Promosport Ltd offers one example of such a framework, in the form of a unilateral undertaking incorporating a relatively sophisticated set of noise criteria. As has been seen, that did not purport to be an assessment of what was seen by the planning inspector as objectively reasonable, but rather an attempt to control the uncontrolled. However, some of the noise criteria found in the agreement were used by the judge in setting the threshold of the acceptable, and by the Court of Appeal in framing the limits of their injunction. Where the evidence shows that a set of conditions has been carefully designed to represent the authoritys view of a fair balance, there may be much to be said for the parties and their experts adopting that as a starting point for their own consideration. It is not binding on the judge, of course, but it may help to bring some order to the debate. However, if the defendant seeks to rely on compliance with such criteria as evidence of the reasonableness of his operation, I would put the onus on him to show compliance (see by analogy Manchester Corpn v Farnworth [1930] AC 171, relating to the onus on the defendant to prove reasonable diligence under a private Act). By contrast, evidence of failure to comply with such conditions, while not determinative, may reinforce the case for a finding of nuisance under the reasonableness test. The present case is illustrative of the opposite case, where the conditions of the planning permissions, such as they were, were of little help to the judge. It is perhaps unfortunate that the authority did not at some stage attempt to secure an overall agreement relating to the operation of activities on the combined sites. The permission for the stadium contained no noise limits, other than some limits on days and hours of use. Three breach of condition notices served by the planning authority between 2007 and 2009 related to apparently isolated breaches of those limits. The established use certificate contained some limitation of hours, but it is unclear how if at all they could be enforced. In relation to the noise limit of 85dB LAeq over one hour at the boundary of the site, set by the 1997 permission for the motocross site, the most recent evidence we were shown of compliance was in a planning report of December 2001. With the help of its own expert advice, the council did attempt in 2008 to impose some overall control by use of their statutory nuisance powers ([2011] EWHC 360 (QB), paras 115 117). That may be an uncertain guide in the context of the common law, given the statutory defence of best practicable means. (Thus, as Lord Neuberger says, the 1995 noise abatement proceedings had been inconclusive, not because of their result which was in favour of the owners, but because it was not possible to say whether the justices held that there was no nuisance, or merely that the owners were using best practicable means.) In any event, although the authoritys experts report was available, he was not called as a witness, his approach was strongly criticised by the claimants expert, and the judge was unimpressed by the council officers evidence that the abatement works had solved the problem (para 207). In those circumstances, the judge was entitled to regard the conditions in the planning permissions and the terms of the abatement notices as of very little assistance in establishing the appropriate noise limits of the defendants activity. The judgment of the Court of Appeal Against that background, I turn to the reasoning of Jackson LJ in the present case. Dealing with what he called the planning permission issue, he reviewed the sequence of cases since Gillingham Docks and summarised their effect in the following propositions: (i) A planning authority by the grant of planning permission cannot authorise the commission of a nuisance. (ii) Nevertheless the grant of planning permission followed by the implementation of such permission may change the character of a locality. (iii) It is a question of fact in every case whether the grant of planning permission followed by steps to implement such permission do have the effect of changing the character of the locality. (iv) If the character of a locality is changed as a consequence of planning permission having been granted and implemented, then: (a) the question whether particular activities in that locality constitute a nuisance must be decided against the background of its changed character; (b) one consequence may be that otherwise offensive activities in that locality cease to constitute a nuisance. (para 65). He held that the appeal should be allowed. I should quote the relevant passage in full (paras 71 75): 71. The judge, at para 158, identified the following question as an important issue in the case: whether it was appropriate, in assessing whether the noise generated by the activities at the stadium and at the track was capable of causing a reasonable person annoyance to a degree amounting to a nuisance, to take into account as one of the noise characteristics of the locality the noise generated by those very activities. 72. The judge did not immediately state his answer to that question. It is clear, however, from the later passages, as Mr Peter Harrison for the claimants concedes, that the judge's answer to that question is no. In my view, that is the wrong answer. Throughout the period when the claimants were living at Fenland the noise generated from time to time by motor sports was one of the noise characteristics of the locality. 73. The judge, at para 203, stated his conclusion as follows: What was clear from Mr Sharpss measurements, and was borne out by the recordings of measurements annexed to the second report of Mr Stigwood, was that noise from the activities at the stadium and at the track, after the completion of the works undertaken in 2008 2009, was intermittently much louder, typically by 10 dB, than the ambient noise level leaving out of account those activities. It is, in my judgment, those dramatic increases in loudness which really constitute the nuisance in the present case, in other words the contrast between the loud levels and the noise levels prevailing when there was nothing going on at the stadium or at the track. 74. In my view that conclusion is flawed. The noise of motor sports emanating from the track and the stadium are an established part of the character of the locality. They cannot be left out of account when considering whether the matters of which the claimants complain constitute a nuisance. 75. I quite accept that if the second and third defendants had ignored the breach of condition notices and had conducted their business at noise levels above those permitted by the planning permissions, the claimants might have been able to make out a case in nuisance. It appears, however, that this was not the case. Abatement works were carried out in 2008 to the satisfaction of Forest Heath District Council. No breach of condition notices have been served since then, apart from one which did not relate to noise level. It will be apparent from my discussion of the Gillingham Docks case that I regard that case as of no relevance to the present. It has not been argued that the change resulting from the various permissions was strategic, and the Court of Appeal rightly did not so find. That, however, did not detract from the relevance of the permitted or established uses as part of the established pattern of uses in the area. The Court of Appeal were right to regard them as matters to be taken into account in judging the acceptability of the current use. However, like Lord Neuberger, and in respectful disagreement with the Court of Appeal, I do not consider that the judges essential reasoning is open to challenge on this basis. Admittedly, as Lord Neuberger has pointed out (paras 77 79), the judges reasons for discounting the particular permissions (his para 66) seem unconvincing. However, he was entitled in my view on the facts of this case to approach the matter on the basis (his para 67) that it was more relevant to look, not so much at the permissions as such, as at their practical effects on the locality. This led to his conclusion (para 95) that the activities at the stadium and track were part of the character of the area, but only intermittently, and even then not necessarily involving a noise amounting to a nuisance. I find that conclusion hard to criticise. Furthermore, para 158, on which the Court of Appeal relied, seems to me to have been taken by them out of context (albeit apparently with the acquiescence of counsel then appearing for the claimant). As I read it, the second part of para 158 was not raising an issue of law as to the relevance of the defendant's existing activities. The judge had already made clear his view on that issue in dealing with the character of the area (see above). Rather para 158, though perhaps not very clearly expressed, was his introduction to the discussion of the respective expert views on the appropriate methods of assessment of noise. It would serve no purpose in this judgment to review the noise evidence in any detail, particularly as the judges task was complicated by the failure of the experts to agree a common methodology. However, it is clear that there was a significant difference of approach. The defendants expert favoured comparison with what he called "fixed benchmark values", which he saw as appropriate for a situation where "the noise from the stadium and motocross track are part of the background noise level of the area" (see especially judgment paras 164, 188). By contrast, the claimants expert favoured comparison with the background noise levels in the absence of the relevant noise source, noting differences on occasion of at least 10dBA over those levels. The judge preferred the latter approach, because it was those "dramatic" differences which constituted the real nuisance (para 203, 243). The judge's treatment of the noise evidence cannot in my view be equated (as the Court of Appeal seemed to think) with "leaving out of account" the noise from the existing activities. It simply reflected his reasonable assessment, preferring on this point the expert evidence for the claimant, that the impact of the extreme events which were the real cause of the nuisance was not mitigated by the more acceptable noise levels experienced on other days or at other times. This was not a conclusion of law, but one of factual judgement properly based on the evidence before him. Finally, while I agree with Jackson LJ as to the potential relevance of evidence of a substantial failure to comply with planning conditions, there was nothing in the evidence in this case which should have led to any assumption in that respect in favour of the defendant. Regardless of any specific enforcement action by the authority, it was for the defendant, if he wished to rely on any planning conditions, to prove not only compliance with them but also their significance to the judges assessment of nuisance. On the facts of this case, as I have said, the judge was entitled to give very little weight to that factor. Remedies On the way the case has been argued in the lower courts, the final issue addressed by Lord Neuberger does not strictly arise. As the judge recorded, it was accepted that if a nuisance was established an injunction should follow, the only issue being its terms. The defendants have sought to open the issue in this court for the first time, on the basis that in the lower courts having regard to the authorities such an argument would have been doomed to failure. However, the result is that we have no relevant findings, either as to how the judge would have exercised his discretion if he been able to do so, or as to how he would have assessed future damages, had he decided on that course. In those circumstances, we should approach the issue with caution, conscious that anything we say can be no more than guidance. With that caveat, I agree with Lord Neuberger and the rest of the court that the opportunity should be taken to signal a move away from the strict criteria derived from Shelfer [1895] 1 Ch 287. This is particularly relevant to cases where an injunction would have serious consequences for third parties, such as employees of the defendants business, or, in this case, members of the public using or enjoying the stadium. In that respect, in my view, the Court of Appeal in Watson [2009] 3 All ER 249 was wrong to hold that the judge had no power to make the order he did, and to limit public interest considerations to cases where the damage to the claimant is minimal. As has been seen, Peter Gibson LJ in Wheeler [1996] Ch 19 saw more flexible remedial principles as a possible answer to the public interest aspect of cases such as Gillingham Docks, rather than creating an exception to the law of nuisance. Commenting on the restrictive view taken by the Court of Appeal in Watson, Maria Lee has said: The fact that something should go ahead in the public interest does not tell us where the costs should lie; we need not assume that injured parties should bear the burden associated with broader social benefits The continued strength of private nuisance in a regulatory state probably depends on a more flexible approach to remedies (Tort Law and Regulation: Planning and Nuisance (2011) 8 JPL 986, 989 990) I agree. The practice of other common law countries has varied. For example, the Australian courts have generally followed the Shelfer principles (see eg Munroe v Southern Dairies [1955] VLR 332. So also in New Zealand: see Bank of New Zealand v Greenwood [1984] 1 NZLR 525, where Hardie Boys J said (p 535): To the extent that this is an appeal to set the public interest ahead of the private interests of the plaintiffs, then I regret that authority requires me to close my ears to it. So also in Ireland, in the leading case of Bellew v Cement Ltd [1948] Ir R 61, the majority adopted a strict Shelfer approach. Maguire CJ said: I am of the opinion that the court is not entitled to take the public convenience into consideration when dealing with the rights of private parties. This matter is a dispute between private parties, and I think that the court should be concerned, only, to see that the rights of the parties are safeguarded. (p 64) In Canada by contrast the Supreme Court has allowed a more flexible approach. Thus in Canada Paper Co v Brown (1922) 63 SCR 243 the court adopted Shelfer principles, but Duff J added: An injunction will not be granted where, having regard to all the circumstances, to grant it would be unjust; and the disparity between the advantage to the plaintiff to be gained by the granting of that remedy and the inconvenience and disadvantage which the defendant and others would suffer in consequence thereof may be a sufficient ground for refusing it. (para 252) Similarly, in Bottom v Ontario Leaf Tobacco Co. [1935] 2 DLR 699, in refusing an injunction to close a factory, the court gave weight to the fact that closure would cause unemployment which would be disastrous to a small community. Riddell JA said (para 3): The public good can never be absent from the mind of the Court when dealing with a matter of discretion. A more flexible approach has also been adopted in the United States. A leading case is Boomer v Atlantic Cement Company (1970) 26 NY 2d 219, in the New York Court of Appeal. The case has been described as a staple of the [US] law school curriculum and a constant preoccupation of [US] legal scholars (Farber, D.A. The Story of Boomer Pollution and the Common Law (2005) 32 Ecology LQ 113). A nuisance had been caused to local residents by the operation of a cement factory but the court refused to grant an injunction requiring the closure of the plant, taking account of the facts that it had cost $45 m to construct and employed more than 300 local people. As Justice Bergan said at p 223, the total damage to the plaintiffs' properties was relatively small in comparison with the value of defendant's operation and with the consequences of the injunction which plaintiffs seek. The court accordingly permitted the defendant company to continue operating the factory on payment of damages in lieu of an injunction, to be assessed by the lower court. Further support for a more flexible approach can be found in a number of academic writings, most recently by Mark Wilde in Nuisance Law and Damages in Lieu of an Injunction: Challenging the Orthodoxy of the Shelfer Criteria (in Tort Law: Challenging Orthodoxy ed Stephen Pitel and others (2013) cap 12). While therefore I agree generally with the observations of Lord Neuberger and Lord Sumption on this aspect, I have three particular reservations. First, I would not regard the grant of planning permission for a particular use as in itself giving rise to a presumption against the grant of an injunction. As I have said, the circumstances in which permissions may be granted differ so much as to make it unwise to lay down any general propositions. I would accept however that the nature of, and background to, a relevant planning permission may be an important factor in the courts assessment. Secondly, I would be cautious of too direct a comparison with cases relating to rights of light, particularly where (as in Kine v Jolly [1905] 1 Ch 480) the court was asked to make a mandatory injunction to demolish a house built in good faith (see also Wilde op cit p 372, citing Sargant LJ in Slack v Leeds Industrial Co operative Society [1924] 2 Ch 475, 496). Cases such as the present are not concerned with such drastic alternatives. The judge is not asked to bring the defendants activity to an end altogether, but to set reasonable limits for its continuation. In so doing he should take into account not only the claimants environment but also the viability of the defendants business. In some cases it may be appropriate to combine an injunction with an award of damages (as happened at first instance in Watson v Croft Promosport). I also agree with Lord Mance that special importance should attach to the right to enjoy ones home without disturbance, independently of financial considerations. Thirdly, without much fuller argument than we have heard, I would be reluctant to open up the possibility of assessment of damages on the basis of a share of the benefit to the defendants. The issues are complex on any view (for a detailed academic discussion of the recent authorities, see Craig Rotherham Gain based relief in tort after A G v Blake (2010) 126 LQR 102). Jaggard v Sawyer [1995] 1 WLR 269, to which Lord Neuberger refers, gives Court of Appeal support for an award on that basis for trespass or breach of a restrictive covenant, but the same approach has not hitherto been extended to interference with rights of light (see Forsyth Grant v Allen [2008] Env LR 877). In cases relating to clearly defined interference with a specific property right, it is not difficult to envisage a hypothetical negotiation to establish an appropriate price. The same approach cannot in my view be readily transferred to claims for nuisance such as the present relating to interference with the enjoyment of land, where the injury is less specific, and the appropriate price much less easy to assess, particularly in a case where the nuisance affects a large number of people. Further, such an approach seems to represent a radical departure from the normal basis regarded by Parliament as fair and appropriate in relation to injurious affection arising from activities carried out under statutory authority. Conclusion For all these reasons, I agree with the disposal of the appeal proposed by Lord Neuberger. |
At issue in this case are the principles which should guide the exercise of the courts discretion in deciding whether to order a child to attend to give evidence in family proceedings. The current approach was stated by Smith LJ in LM v Medway Council, RM and YM [2007] EWCA Civ 9, [2007] 1 FLR 1698, at para 44: The correct starting point . is that it is undesirable that a child should have to give evidence in care proceedings and that particular justification will be required before that course is taken. There will be some cases in which it will be right to make an order. In my view they will be rare. She went on to explain the factors which should guide the judge in considering whether to make the order, at para 45: . the judge will have to balance the need for the evidence in the circumstances of the case against what he assesses to be the potential for harm to the child. In assessing the need for oral evidence . the judge should, in my view, take account of the importance of the evidence to the process of his decision about the childs future. It may be that the childs future cannot satisfactorily be determined without that evidence. In assessing the risk of harm or oppression, the judge should take heed of current research into the effect on children of giving evidence and should not rely only upon his impression of the child, although that will of course be relevant. That approach was based upon the earlier authority of Butler Sloss LJ in R v B County Council, ex parte P [1991] 1 WLR 221 and Wilson J in Re P (Witness Summons) [1997] 2 FLR 447. It was endorsed by Wilson LJ in the Medway case and by Wall and Thorpe LJJ in SW v Portsmouth City Council; Re W (children: concurrent care and criminal proceedings) [2009] EWCA 644, [2009] 3 FCR 1. And it was followed by Wall and Wilson LJJ in their joint judgment in the present case: [2010] EWCA Civ 57. Each had previously stated that in all their years of experience in the Family Division of the High Court he had never heard oral evidence from a child in care proceedings. That is also my own experience. The complaint, very moderately advanced by Mr Geekie QC, is that a starting point of undesirability, placing the burden upon the person wishing to cross examine a child to show some particular justification for doing so, gives insufficient weight to the Convention rights of all concerned. All the parties in care proceedings are entitled to a fair hearing in the determination of their civil rights and obligations the parents who stand to lose their children if allegations of abuse are made out, the children who stand to lose their parents if allegations of abuse are made out, but also stand to suffer abuse or further abuse if they are left at home because those allegations cannot be proved. And it is not only their article 6 rights which are in play. The civil rights in issue are also Convention rights in themselves the right to respect for the family lives of the parents and their children but also the right to respect for the private lives of the children, which include their rights to be protected from attacks upon their physical and psychological integrity: X and Y v The Netherlands (1985) 8 EHRR 235. Even a stranger child, whose future is not in issue in the proceedings but whose statements are relevant, has privacy interests which deserve respect. Hence, argues Mr Geekie, there should be no starting point or presumption that such cases will be rare. Instead, the court should adopt the approach explained by Lord Steyn in In re S (Identification: Restrictions on Publication) [2004] UKHL 47, [2005] 1 AC 593, at para 17, when balancing of the right to respect for private and family life in article 8 and the right to freedom of expression in article 10: First, neither article has as such precedence over the other. Secondly, where the values of the two articles are in conflict, an intense focus on the comparative importance of the specific rights being claimed in the individual case is necessary. Thirdly, the justifications for interfering with or restricting each right must be taken into account. Finally, the proportionality test must be applied to each. Mr Geekie understands that article 6 is not a qualified right in the same way that article 8 is a qualified right, but he accepts that what is entailed in a fair hearing in Childen Act proceedings will have to take account of the article 8 rights of all concerned. All he asks for is an intense focus upon their comparative importance rather than an assumption that the one will almost always trump the other. The background The starting point of English criminal and civil procedure has historically been that facts must be proved by oral evidence given on oath before the court which can then be tested by cross examination. Hearsay evidence was mostly inadmissible. But wardship proceedings in the High Court were an exception. The High Court was exercising a protective parental jurisdiction over its wards in which their welfare and not the rights of the parties was the paramount consideration: see In re K (Infants) [1965] AC 201; Re W (Minors) (Wardship: Evidence) [1990] 1 FLR 203. It was assumed that hearsay was also admissible in proceedings about the future of children in other courts. But the Court of Appeal held otherwise in H v H (Minor)(Child Abuse: Evidence) [1990] Fam 86 in relation to matrimonial and guardianship proceedings and Otton J held otherwise in Bradford City Metropolitan Council v K (Minors) [1990] Fam 140 in relation to care proceedings in juvenile courts. The result was an addition to the Children Bill then going through Parliament, which became section 96 of the Children Act 1989. Subsections (1) and (2) allow a child to give unsworn evidence in any civil proceedings, even if he does not understand the nature of an oath, provided that he understands that it is his duty to tell the truth and has sufficient understanding to justify his evidence being heard. Subsections (3) to (5) provide for the Lord Chancellor (with the concurrence of the Lord Chief Justice) to make provision by order for the admissibility in civil proceedings of hearsay evidence relating to the upbringing, maintenance or welfare of a child. The Children (Admissibility of Hearsay Evidence) Order 1993, SI 1993/621, simply provides that such evidence shall be admissible notwithstanding any rule of law relating to hearsay. It does not make the more detailed provision allowed for by section 96(5). Meanwhile, there had also been developments in the criminal courts, not in relation to the admissibility of hearsay, but in relation to the way in which a childs evidence might be given. In 1989, the Report of the Advisory Group on Video Evidence (the Pigot Report) recommended that both the evidence in chief and cross examination of child witnesses should be video recorded and the recording stand as their evidence at the trial. The Group received evidence that most children are disturbed to a greater or lesser extent by giving evidence in court which was a harmful, oppressive and often traumatic experience (para 2.10). They attached particular importance to the psychiatric opinion we received which suggests that not only do abused children who testify in court exhibit more signs of disturbed behaviour than those who do not, but that the effects of a court appearance are most severe and prolonged in those who have suffered the worst abuse and those without family support (para 2.12). The Criminal Justice Act 1991 implemented the Pigot Reports proposals for video recorded evidence in chief but not for cross examination. A Memorandum of Good Practice on Video Recorded Interviews with Child Witnesses for Criminal Proceedings, drawing on expert psychological advice, was published in 1992; replaced in 2002 by Achieving Best Evidence in Criminal Proceedings: Guidance for Vulnerable or Intimidated Witnesses, including Children; and again in 2007 by Achieving Best Evidence in Criminal Proceedings: Guidance on Interviewing Victims and Witnesses, and Using Special Measures. As its name implies, the aim is to enable witnesses who would not otherwise be able to give of their best in a criminal trial to do so. The Youth Justice and Criminal Evidence Act 1999 now provides for a variety of special measures to assist children (and other vulnerable witnesses) to give evidence in criminal cases. These include screens, live television links, using video recordings as evidence in chief, providing aids to communication and examining the witness through an approved intermediary. (There is also provision for cross examination and re examination to be video recorded but there are no plans to bring this into force.) The 1999 Act also allows witnesses of any age to give unsworn evidence in criminal proceedings unless it appears to the court that they are unable to understand the questions put or to give intelligible answers. On top of these measures designed to improve the ways in which the evidence of these witnesses is put before the court, the Criminal Justice Act 2003 now allows for hearsay evidence to be given in criminal trials in a much wider set of circumstances than used to be the case. Family proceedings are typically very different from criminal proceedings. There is often a mass of documentary evidence, much of it hearsay, from which a picture can be built up or inferences drawn. A child may reveal what has happened to her in many different ways. The dangers of over enthusiasm and leaping to conclusions were well illustrated in the Report of the Inquiry into Child Abuse in Cleveland 1987 (1988, Cm 412). One consequence has been that video recordings of Achieving Best Evidence (ABE) interviews are routinely used in care proceedings if they are available. The near contemporaneous account, given in response to open ended questioning, in relaxed and comfortable surroundings, is considered inherently more likely to be reliable than an account elicited by formal questioning in the stressful surroundings of a court room months if not years after the event. Unlike criminal proceedings, however, it is rare for the child to be called for cross examination in family proceedings. The facts of this case These are care proceedings relating to five children: a 14 year old girl whom we shall call Charlotte and her four half siblings, aged 8, 7, 3 and 18 months. The mother is expecting another child later this month. The appellant is father to the younger children but not to Charlotte and her 17 year old sister Nancy. The mother and father are not married to one another, but the appellant is de facto the step father of both Charlotte and Nancy and has been referred to as the father throughout the case. These proceedings began in June 2009 because Charlotte made allegations at school that the father had seriously sexually abused her, specifically on the previous day but also on a number of occasions before that. This was not the first time that she had made allegations against him to friends and other adults; the police have disclosed statements and interviews from these people. There were two previous investigations which came to nothing: in 2006 when she had failed to confirm what she was said to have told others and in 2008 when she retracted a serious allegation made in a text message to a friend. This time, however, she was immediately ABE interviewed and medically examined and there is also some relevant forensic evidence. The father has been charged with 13 criminal offences against her and is currently on bail awaiting trial. Charlotte has been in foster care since making her allegations. Her four younger half siblings were at first taken into foster care, then returned to their mother following an order excluding the father from the home, then taken back into foster care after the mother allowed them unauthorised contact with the father. They are having supervised contact with both their parents. Charlotte is having contact with the younger children, but the local authority do not think that contact with her mother is beneficial for her. At a case management hearing in September 2009, the parties had agreed that there should be a fact finding hearing in relation to the allegations of sexual abuse made by Charlotte, at which she would give live evidence over a video link. The judge, however, asked for further argument on the matter. The local authority, having by then had time to consider the material received from the police, decided that they no longer wished to call Charlotte as a witness but to rely upon her ABE interview. The father however applied for her to be called. On 30 November 2009 the judge refused this application. The fact finding hearing is currently listed to begin next Monday, 8 March 2010. On 9 February 2010, the Court of Appeal gave their reasons for dismissing the fathers appeal. In their joint judgment, Wall and Wilson LJJ adhered to the practice as laid down in the previous decisions of that court. They did, however, point out that the evidence upon which the Pigot Report had relied related to the criminal law as it stood in 1989. They wondered whether the time had now come for a wider consideration of the issue in relation to family proceedings than is possible in \the light of the doctrine of precedent (para 27). They therefore proposed to send the judgments to the President of the Family Division so that he could consider whether to take the issue further, perhaps by referring it to the Family Justice Council for a multi disciplinary committee to look into it (para 30). Rimer LJ drew back from the brink of dissent: he concluded that the judges decision was for all practical purposes, imposed on her by a mixture of jurisprudence and practice, being however a mixture whose underlying soundness I would respectfully question (para 69). He endorsed the proposal for reconsideration and we have since been told that the President of the Family Division has referred the question to a multi disciplinary committee chaired by Thorpe LJ. Wall and Wilson LJJ appeared to accept (at para 30) the observation of Wall LJ in Re W, above, at para 57, that this was not a matter for the judiciary to resolve. While this must be true of the criminal justice process, with the greatest of respect to them, it cannot be true of the family justice process. There is no problem with the admissibility of hearsay evidence. The problem is whether the current practice of rarely calling children to give live evidence even when they could be called can be reconciled with the Convention rights or even with the elementary principles of justice. That is a question of law for this Court, even if it is one on which we should very much prefer to have the up to date advice of an expert multi disciplinary committee. Preserving the status quo There are a great many reasons for not departing from the present practice. The principal reason, urged upon us by Ms Lucinda Davis for the local authority, is that the whole purpose of care proceedings is to protect the interests of children. It does not make sense to set up a process to protect them and then for the process itself to traumatise them by making them give evidence. This does, of course, depend upon the view that giving evidence is indeed harmful to children. But, she argues, the evidence we have is that which was before the Pigot committee in 1989 and it would be wrong to change the practice until there is fresh evidence which casts doubt upon that. As to whether such evidence might be forthcoming, we note the experience of Wall LJ, as related in Re W at para 55, which does not suggest that it would: throughout his time in the Family Division, he attended numerous conferences at which every child and adolescent psychiatrist to whom he spoke, or whom he heard speak, condemned as abusive the process in criminal law whereby a child was required to attend court to be cross examined, often many months and sometimes years after the event in order to have his or her credibility impugned over abuse allegations. He had never been persuaded that it was impracticable to implement the Pigot proposals in full. Recent research (Joyce Plotnikoff and Richard Woolfson, Measuring up? Evaluating implementation of Government commitments to young witnesses in criminal proceedings, 2009, Nuffield Foundation and NSPCC) has shown that, although special measures have made the experience better for children, many still find it difficult and stressful. There are other problems with changing the present practice. It might well be possible to do far more in family proceedings to make the process of giving evidence less traumatic for children. There is no reason in principle why the family courts should not adopt the Pigot proposals in full. Care proceedings are said to be inquisitorial. The parties are not permitted to keep their powder dry as they are for the full scale battle before the jury in criminal cases. They have to disclose what their answers are to any allegations made. They are compellable witnesses. If the child is ABE interviewed and they wish to put questions to her, the facilities could in theory be made available for them to do this in a further video recorded session soon afterwards. But what if those facilities are not made available? What if for some reason the ideal cannot happen? Is the judge to say that, because the best trial cannot happen, the proceedings must be abandoned? The childrens need for protection is just as strong and the childrens right to be given that protection is just as powerful. Say, for example, in a case like this, an older child went missing or died after having made her allegations. Is the evidence of those allegations to be ignored in deciding whether or not the younger children require to be protected against something similar happening to them in future? It is one thing for the State to abandon the prospect of punishing a person for his misdeeds. It is another for the State to abandon the children who may need its protection to their fate. There is a further fear. It is, of course, not unknown for children to make false allegations of abuse. But it is also not unknown, indeed it is believed to be more common, for children to conceal or deny the abuse which is happening to them. They may have been groomed to believe it normal and natural. They may have been threatened with dire consequences if they tell the secret. They may be perfectly capable of working out for themselves that making a complaint will lead to pain and distress for all concerned and probably to the break up of the whole family. These are powerful deterrents to coming forward or persisting in complaints. It is as much for this reason as for any other that the family justice system has sought to minimise the deterrent effect of its own processes. Were requests for children to give evidence to become routine, the uncertainties which this would generate would add to the deterrent effect both in individual cases and in general. These are all, it can be said, very real risks to the welfare of individual children, and to children as yet unknown, which this court must be careful to take into account in any reformulation of the present approach. Conclusions in principle However tempting it may be to leave the issue until it has received the expert scrutiny of a multi disciplinary committee, we are satisfied that we cannot do so. The existing law erects a presumption against a child giving evidence which requires to be rebutted by anyone seeking to put questions to the child. That cannot be reconciled with the approach of the European Court of Human Rights, which always aims to strike a fair balance between competing Convention rights. Article 6 requires that the proceedings overall be fair and this normally entails an opportunity to challenge the evidence presented by the other side. But even in criminal proceedings account must be taken of the article 8 rights of the perceived victim: see SN v Sweden, App no 34209/96, 2 July 2002. Striking that balance in care proceedings may well mean that the child should not be called to give evidence in the great majority of cases, but that is a result and not a presumption or even a starting point. The object of the proceedings is to achieve a fair trial in the determination of the rights of all the people involved. Children are harmed if they are taken away from their families for no good reason. Children are harmed if they are left in abusive families. This means that the court must admit all the evidence which bears upon the relevant questions: whether the threshold criteria justifying state intervention have been proved; if they have, what action if any will be in the best interests of the child? The court cannot ignore relevant evidence just because other evidence might have been better. It will have to do the best it can on what it has. When the court is considering whether a particular child should be called as a witness, the court will have to weigh two considerations: the advantages that that will bring to the determination of the truth and the damage it may do to the welfare of this or any other child. A fair trial is a trial which is fair in the light of the issues which have to be decided. Mr Geekie accepts that the welfare of the child is also a relevant consideration, albeit not the paramount consideration in this respect. He is right to do so, because the object of the proceedings is to promote the welfare of this and other children. The hearing cannot be fair to them unless their interests are given great weight. In weighing the advantages that calling the child to give evidence may bring to the fair and accurate determination of the case, the court will have to look at several factors. One will be the issues it has to decide in order properly to determine the case. Sometimes it may be possible to decide the case without making findings on particular allegations. Another will be the quality of the evidence it already has. Sometimes there may be enough evidence to make the findings needed whether or not the child is cross examined. Sometimes there will be nothing useful to be gained from the childs oral evidence. The case is built upon a web of behaviour, drawings, stray remarks, injuries and the like, and not upon concrete allegations voiced by the child. The quality of any ABE interview will also be an important factor, as will be the nature of any challenge which the party may wish to make. The court is unlikely to be helped by generalised accusations of lying, or by a fishing expedition in which the child is taken slowly through the story yet again in the hope that something will turn up, or by a cross examination which is designed to intimidate the child and pave the way for accusations of inconsistency in a future criminal trial. On the other hand, focussed questions which put forward a different explanation for certain events may help the court to do justice between the parties. Also relevant will be the age and maturity of the child and the length of time since the events in question, for these will have a bearing on whether an account now can be as reliable as a near contemporaneous account, especially if given in a well conducted ABE interview. The age and maturity of the child, along with the length of time since the events in question, will also be relevant to the second part of the inquiry, which is the risk of harm to the child. Further specific factors may be the support which the child has from family or other sources, or the lack of it, the childs own wishes and feelings about giving evidence, and the views of the childs guardian and, where appropriate, those with parental responsibility. We endorse the view that an unwilling child should rarely, if ever, be obliged to give evidence. The risk of further delay to the proceedings is also a factor: there is a general principle that delay in determining any question about a childs upbringing is likely to prejudice his welfare: see Children Act 1989, s 1(2). There may also be specific risks of harm to this particular child. Where there are parallel criminal proceedings, the likelihood of the child having to give evidence twice may increase the risk of harm. The parent may be seeking to put his child through this ordeal in order to strengthen his hand in the criminal proceedings rather than to enable the family court to get at the truth. On the other hand, as the family court has to give less weight to the evidence of a child because she has not been called, then that may be damaging too. However, the court is entitled to have regard to the general evidence of the harm which giving evidence may do to children, as well as to any features which are particular to this child and this case. That risk of harm is an ever present feature to which, on the present evidence, the court must give great weight. The risk, and therefore the weight, may vary from case to case, but the court must always take it into account and does not need expert evidence in order to do so. But on both sides of the equation, the court must factor in what steps can be taken to improve the quality of the childs evidence and at the same time to decrease the risk of harm to the child. These two aims are not in opposition to one another. The whole premise of Achieving Best Evidence and the special measures in criminal cases is that this will improve rather than diminish the quality of the evidence to the court. It does not assume that the most reliable account of any incident is one made from recollection months or years later in the stressful conditions of a courtroom. Nor does it assume that an Old Bailey style cross examination is the best way of testing that evidence. It may be the best way of casting doubt upon it in the eyes of a jury but that is another matter. A family court would have to be astute both to protect the child from the harmful and destructive effects of questioning and also to evaluate the answers in the light of the childs stage of development. The family court will have to be realistic in evaluating how effective it can be in maximising the advantage while minimising the harm. There are things that the court can do but they are not things that it is used to doing at present. It is not limited by the usual courtroom procedures or to applying the special measures by analogy. The important thing is that the questions which challenge the childs account are fairly put to the child so that she can answer them, not that counsel should be able to question her directly. One possibility is an early videod cross examination as proposed by Pigot. Another is cross examination via video link. But another is putting the required questions to her through an intermediary. This could be the court itself, as would be common in continental Europe and used to be much more common than it is now in the courts of this country. In principle, the approach in private family proceedings between parents should be the same as the approach in care proceedings. However, there are specific risks to which the court must be alive. Allegations of abuse are not being made by a neutral and expert local authority which has nothing to gain by making them, but by a parent who is seeking to gain an advantage in the battle against the other parent. This does not mean that they are false but it does increase the risk of misinterpretation, exaggeration or downright fabrication. On the other hand, the child will not routinely have the protection and support of a Cafcass guardian. There are also many more litigants in person in private proceedings. So if the court does reach the conclusion that justice cannot be done unless the child gives evidence, it will have to take very careful precautions to ensure that the child is not harmed by this. It will be seen that these considerations are simply an amplification of those outlined by Smith LJ in the Medway case, at para 45, but without the starting point, at para 44. The essential test is whether justice can be done to all the parties without further questioning of the child. Our prediction is that, if the court is called upon to do it, the consequence of the balancing exercise will usually be that the additional benefits to the courts task in calling the child do not outweigh the additional harm that it will do to the child. A wise parent with his childs interests truly at heart will understand that too. But rarity should be a consequence of the exercise rather than a threshold test (as in Huang v Secretary of State for the Home Department [2007] UKHL 11, [2007] 2 AC 167, para 20). Finally, we would endorse the suggestion made by Miss Branigan QC for the childs guardian, that the issue should be addressed at the case management conference in care proceedings or the earliest directions hearing in private law proceedings. It should not be left to the party to raise. This is not, however, an invitation to elaborate consideration of what will usually be a non issue. The Outcome in this Case We commend the care with which the judge approached the issue in this case. She considered the factors which we have outlined above most conscientiously. But she approached them, as she was required to do on the authorities as they stood, from the starting point that it is only in exceptional circumstances that a child should be required to give evidence. We cannot be confident that she would have reached the same conclusion had she approached them without that starting point, although she might well have done so. We have considered whether it would be appropriate for us to exercise the discretion afresh but have concluded that we should not do so. It would have the advantage of a speedy decision, one way or the other, in advance of the hearing which is due to start on Monday. But we are not confident that we have all the relevant material before us. In particular, although we have seen the transcripts, we have not seen the video of the first ABE interview. Nor have we seen the video of a second interview, conducted after the Court of Appeal decision, in which Charlotte made allegations of physical abuse of all the children and domestic violence between the adults. In the circumstances we see no alternative to remitting the question to be determined by the judge in the light of the judgment of this court. However, there must be no question of adjourning the hearing fixed for next week. That would undoubtedly be detrimental to all the children concerned. It has already been adjourned twice. Charlotte is understandably anxious that matters be resolved as soon as possible for the sake of the younger children. They have been away from their home since June last year. Even more important is the fate of the baby who is expected later this month. The courts findings will be crucial in deciding what steps, if any, are required to protect the baby. This means that the parties will have to consider their positions and make written submissions to the judge in time for her to decide the question on Monday morning. There is, of course, still time for the father to change his stance. For these reasons, the appeal will be allowed and the question of whether the child should give evidence at the hearing which is to begin on Monday 8 March is remitted to the judge for her to determine in the light of this judgment. |
The issue raised by this appeal is the extent of an exclusive prescriptive right (ie an exclusive right obtained through a long period of use) to take cockles and mussels from a stretch of the foreshore on the east side of the Wash, on the west coast of Norfolk. The factual and procedural background An outline of the basic facts The proprietor of the exclusive right in question is the second respondent, Mr Michael Le Strange Meakin, who is Lord of the Manors of Snettisham and Heacham (the Manors) and the owner of a substantial amount of land adjoining the east side of the foreshore. The land, the right to fish and the Lordships have been in the ownership of the Le Strange family for many generations, and we shall refer to Mr Le Strange Meakin and his predecessors as the Estate. In 1970, the Estate granted a lease of the exclusive right to the first respondent, Mr John Loose, who is still holding over under that lease. The appellants are individuals and companies who operate fishing boats out of Kings Lynn in Norfolk. During the summer of 2007, 13 of the appellants boats fished for cockles in locations claimed by the respondents to be within the area of the exclusive fishery vested in the Estate. Some of the appellants fishing activities took place at or near an area known as Stubborn Sand, and some at or near an area known as Ferrier Sand. Both Stubborn Sand and Ferrier Sand are now attached to the foreshore, but they had not been so attached in the past. Although we were provided with a large number of detailed plans, the following summary of the position on the ground should suffice for present purposes. The stretch of foreshore between Wolferton Creek to the south and Thornham Creek to the north (the Foreshore) is irregular in shape, but it can be treated as going from north to south, with the Wash to the west, and land (owned by the Estate) to the east. There are a number of sandbanks which are separated from the Foreshore at low tide. The evidence establishes that some sandbanks which are currently attached to the Foreshore at any rate at low tide had previously been separated from it. The shifting nature of sandbanks is a feature of the shore on the eastern side of the Wash, and, at least in that part of the Wash with which this appeal is concerned, the trend over the past 400 years or more appears to have been for previously separated sandbanks to become joined to the Foreshore with the passage of time. Examples include Stubborn Sand, which is now attached to the Foreshore but which was separated from it until sometime in the 18th century; Ferrier Sand, which only became attached to the Foreshore around 50 years ago; and Blackguard Sand, which only became attached within the past 20 years or so. The attachment to the Foreshore of previously separated sandbanks appears to have occurred as a result of the gradual silting up of channels which had separated the sandbanks from the Foreshore. It is also clear that the low water marks (ie the lines showing the edge of the sea at low water) of the Foreshore have moved significantly with the passage of time. At least in recent periods the low water marks have, in very general terms, moved further west ie seaward, further away from the shore. We refer to low watermarks in the plural because, of course, the extent of low water varies from time to time. For present purposes, four different types of low water measurement should be mentioned. (i) Mean low tide, the average of neap and spring low waters, (ii) mean spring low tide, the average of spring low waters, (iii) mean neap low tide, the average of neap low waters, and (iv) the lowest astronomical tide, the most extreme neap low water, which occurs every 18.6 years. (Extreme low water was also referred to in oral argument, when it was said to be the same as lowest astronomical tide, but that was corrected subsequent to the hearing. However, it did not feature in argument as a separate relevant measurement, save by way of explanation of a line on a chart). There are, unsurprisingly, high water equivalents of these four low water measurements. The breeding and other habits of cockles and mussels differ to some extent, but it is common ground that there is no need for present purposes to make any distinction between the two types of shellfish (and any reference to shellfish hereafter is to cockles and mussels). Shellfish are to be found on the foreshore, but they are also to be found in the shallow seas. At least in the past, shellfish were taken entirely from the foreshore at low tide by individuals coming by foot from the shore and gathering them by hand. In recent times, however, with the development of more sophisticated and aggressive fishing techniques, in particular suction dredging, shellfish are increasingly gathered from vessels at a time when the foreshore is not exposed by the tide as was done recently by the appellants as referred to in para 3 above. The issues between the parties As mentioned above, it is accepted that the Estate is the owner by prescription of the exclusive right to take shellfish over part of the Foreshore (the Right), but what divides the parties is the extent of the area over which it can claim the Right (the Area). The southern and northern boundaries of the Area are not in dispute: they are Wolferton Creek and Thornham Creek respectively. The disputes involve (i) the location of the western, seaward, boundary and (ii) issues relating to former sandbanks near the eastern, landward, boundary. The dispute over the western, seaward, boundary is whether the Estates Right extends to mean low tide, mean low water spring tide, lowest astronomical tide, or some other mark. At first instance, Sir William Blackburne held that it was the mean spring low water, whereas the Court of Appeal concluded that it was the lowest astronomical tide mark. The appellants primarily contend that the western boundary should be that shown in the Lynn Deeps Fishery Order 1872 (the 1872 Order), or alternatively mean low water, whereas the respondents support the conclusion reached by the Court of Appeal. As to the issue relating to sandbanks, the appellants contend that, unless the respondents can establish that the Estates prescriptive Right extended to a sandbank before it became attached to the Foreshore, the Right cannot extend to such a sandbank simply because it becomes attached to the Foreshore. The respondents contend that the Right can and does so extend, and in that connection they rely on two arguments. The first is that the Right is a prescriptive right which applies to the Foreshore as it is constituted from time to time. The second argument is that, if this first argument is wrong, the respondents are entitled to invoke the doctrine of accretion, so that a sandbank becomes, as it were, added to the Area the subject of the Right by operation of law, when it becomes attached to the Foreshore. Sir William Blackburne and the Court of Appeal accepted both the respondents arguments. The factual evidence and previous litigation The evidence included a number of charts and maps going back to 1588, which, as mentioned, clearly establish that (i) the location of the low and high water marks moved significantly over time, and (ii) various sandbanks, which were initially separated therefrom, became attached to the Foreshore as channels became silted up. The evidence also included a number of witness statements, which concentrated on both relatively recent events and analyses of the effect of earlier proceedings or deductions made from historic documents, some private and some public. The private documents include a number of leases of exclusive fishing rights granted by the Estate between 1857 and 1970. These leases describe the extent of the exclusive fishery in different terms. For instance, the 1857 lease referred to the extreme low water mark of the sea, and the 1970 lease described the boundary as so far as may be worked without boats at extreme low water. A 1903 lease identified the seaward boundary as the ordinary low water mark. Other leases were less precise as to the boundary, some simply referring to the foreshore and another to the foreshore and so much of the seabed that belongs to [the lessor]. The 1857 lease was for a term of ten years, and, during its currency, a successful action for trespass at the Norfolk Summer Assize was brought, for some reason in the name of the Estate rather than the lessee, against a Mr Rowe who had taken mussels from the Foreshore between high and low water Le Strange v Rowe (1866) 4 F & F 1048. In his direction to the jury in that case, Erle CJ said at p 1056 that there is evidence of what to my mind was a very strong act of ownership in respect to the taking of mussels. The 1872 Order was the first of a number of orders regulating fishing in the eastern side of the Wash. It applied for 60 years. The boundary of the exclusive fishery in the 1872 Order was described as the line of ordinary low water mark, by the western side of the Stubborn Sand. The chart attached to the 1872 Order indicated that the seaward extent of the exclusive fishery vested in the Estate was at least as far seaward as mean spring low water (at least according to Bridge LJ in the judgment referred to in paras 22 and 23 below), and that that fishery included Stubborn Sand (which was by then joined to the Foreshore) but not Ferrier Sand (which was still separate from the Foreshore at that time). The Estate was involved in the drafting of the 1872 Order (including the attached chart), which also established the Lynn Fisheries Committee. The 1872 Order was made under the Sea Fisheries Act 1868 (31 & 32 Vict C45), which was enacted following a national review of fisheries, and was intended to bring some clarity to the existence and extent of coastal private fishing rights. Section 48 of the 1868 Act specifically provided that that no order made under that Act shall take away or abridge any Right of Several [ie exclusive] Fishery enjoyed by any Person under Prescription or Immemorial Usage, without the consent of such Person. In 1885, proceedings were brought by the Estate against the local authority, Lynn Corporation, with a view to establishing the southern boundary of the fishery Le Strange v Lynn Corporation. The decision of Lord Coleridge CJ, in favour of the Estate, was only reported in a local newspaper, but we were shown a fairly full note of the judgments of the Divisional Court, who refused Lynn Corporations application for a new trial. The propositions which this case supports for the purpose of the instant proceedings are limited, but may be summarised as follows: (i) the Estate claimed its exclusive Right extended over Stubborn Sand but not over Ferrier Sand or other unconnected sandbanks, (ii) the decision effectively established the northern and southern boundaries of the Area the subject of the Right, and (iii) the proceedings illustrate how the Estate has taken steps to protect the Right over the Area. The most recent lease was granted in 1970 for a term of three years to Mr Loose, who continues to hold over 45 years later. In 1971, a Mr Castleton took mussels from a location near Stubborn Sand, seaward of the mean low water mark, but landward of the mean low water springs mark. This led to proceedings against him by Mr Loose for declaratory, injunctive and financial relief. The proceedings were heard in the Kings Lynn County Court by His Honour Judge Moylan, who, in a judgment given in January 1977, found for Mr Loose. He decided that the Estate, as the Lords of the Manors, had acquired the ownership of an exclusive fishery over the Foreshore by prescription, and that the western, seaward, boundary of the area concerned was at least as far from the shore as the mean spring low water mark (as Mr Loose claimed). Judge Moylans decision was subsequently upheld by the Court of Appeal see Loose v Castleton (1978) 41 P & CR 19. Judge Moylans judgment is only available in draft form, but it is clear and coherent, and shows that he had little hesitation in reaching his conclusion, saying that the evidence builds up to a very strong case that for nearly the last four centuries the Lords of the Manors have acted as the owners and possessors of the soil of the Foreshore and of a several fishery in the waters over that soil. Some of the documents of title relating to each of the Manors included specific references to fisheries in the case of one of the Manors as long ago as the early 12th century and in the case of the other in the 16th century; and, while other documents of title did not specifically refer to fisheries, they included rights in general terms which could have extended to fisheries. Judge Moylan also referred to acts of ownership, possession and user supporting the existence of the Right, on the part of the Lords of the Manors going back to the early 17th century, including acts against third parties who were fishing on the Foreshore, leases granted of the fishing rights claimed, and records of expenditure on preserving those fishing rights. Judge Moylan went on to accept that, as the most successful mussel beds are found between mean low water and low water mean springs, the seaward boundary of the fishery is and always has been at least as far out as the line of low water mean springs wherever that may be from time to time, which is what the Estate had claimed. The Court of Appeal upheld Judge Moylans decision for reasons given by Bridge LJ, with whom Megaw and Ormrod LJJ (both of whom gave short judgments) agreed. The main issue on the appeal was whether the evidence of title relating to the two Manors was such as to undermine Judge Moylans conclusion. In that connection, Bridge LJ said at p 30 that the evidence was sufficient to raise the presumption of a lost grant dating from some period before the end of the reign of Henry II. At p 32, Bridge LJ rejected the contention that there was a rule of law that the seaward boundary was limited to the mean low water mark. On the evidence, he agreed with Judge Moylan that the boundary was mean spring low water, but, as Judge Moylan made clear, Mr Looses case was that it was at least mean spring low water. In concluding where the seaward boundary of the Area lay, Bridge LJs reasoning was controversial. Having given two reasons which were each based on evidence of fact which had not been referred to, let alone specifically accepted, by Judge Moylan, Bridge LJ said this at p 33: perhaps most importantly of all, there was clear evidence that the best mussel grounds lay between the low water mark of ordinary tides and the low water mark of spring tides. In the light of that evidence, one is entitled to ask oneself the question: is it really to be supposed that, when the Crown was granting to favoured subjects a valuable right such as a several fishery relating to shellfish , it was doing so by reference to an artificial line on a map mean low water at ordinary tides , and doing so in order to deny to the favoured subjects the primary benefit that one would suppose was intended to be conferred on them, namely the benefit of exploiting the fishery where it could best be exploited? The answer to this question is, obviously: no . Successive Fishery Orders were made after the 1872 Order expired. The most recent is the Wash Fishery Order 1992 (SI 1992/3038) (the 1992 Order), which was made pursuant to the Sea Fisheries (Shellfish) Act 1967. So far as the legal effect of the 1992 Order is concerned for present purposes, it included in article 16 a statement that [n]othing in this Order shall affect prejudicially any right of [the Estate] and it also stated that nothing herein contained shall be deemed to be a consent to or be construed to recognise the existence of any right, power or privilege of the [Estate]. However, during the currency of the negotiations leading up to the 1992 Order, and relying on Loose v Castleton, the Estate successfully persuaded the relevant Fisheries Committee and the Crown Estate that certain sandbanks which were part of the foreshore but had previously been detached from it, including Ferrier Sand, should be excluded from their respective jurisdictions. This caused resentment among the fishing community in the location, and this then led to the testing of this outcome by the appellants fishing in the areas described in para 3 above, and this in turn resulted in the instant proceedings. The proceedings below At the hearing before Sir William Blackburne, the appellants (unsurprisingly) accepted Judge Moylans finding that there was an exclusive, or several, fishery vested in the Estate, which had been let to Mr Loose. However, they concentrated on (i) an aspect which was not conclusively determined in Loose v Castleton, namely the seaward boundary, and (ii) another aspect which appears to have been barely touched on in Loose v Castleton, namely the sandbanks which had formerly been separated from the Foreshore, but which had become attached thereto. In relation to the formerly detached sandbanks, there was no suggestion by the respondents that the Estate had exercised an exclusive right to take shellfish over any of the sandbanks which, at least on the evidence currently available, had previously been separated from the Foreshore, with the sole exception of Stubborn Sand. Thus, with the exception of Stubborn Sand, it was common ground that former sandbanks (such as Ferrier Sand and Blackguard Sand), so long as they were separated from the Foreshore, had not been treated as part of the exclusive fishery claimed by the respondents. It was also accepted that they had been available to members of the public for fishing as of right, and, at least in the case of some of those sandbanks, that members of the public had actually taken shellfish from them within living memory. The appellants contended at trial (i) that the seaward boundary of the Area was the mean low water mark, and (ii) that none of the formerly separated sandbanks (including Stubborn Sand) was subject to the Right. In an instructive judgment, Sir William concluded that (i) mean spring low water marked the boundary of the Area, on pragmatic grounds but also following Loose v Castleton, and (ii) sandbanks, which were formally separated from the Foreshore, became part of the Area when they became joined to the Foreshore, on the alternative grounds that (a) the prescriptive right extended to the Foreshore as it was physically constituted from time to time, or (b) if the prescriptive right was limited to the foreshore in its original state, it nonetheless extended to previously separated sandbanks as they joined to the foreshore, pursuant to the doctrine of accretion [2013] EWHC 901 (Ch). On the appellants appeal and the respondents cross appeal, the Court of Appeal held, for reasons given in a clear judgment by Moore Bick LJ, that (i) allowing the cross appeal, the seaward boundary of the Area was the lowest astronomical tide mark, and (ii) dismissing the appeal, Sir William was right about the former sandbanks being included in the Area for the reasons which he gave [2015] Ch 547. On this appeal, the respondents adhere to their position below and contend that the Court of Appeal was right on both aspects, essentially for the reasons given by Moore Bick LJ. The appellants, on the other hand, have changed their position, albeit only slightly. As to the seaward boundary, the appellants contend that it should be as marked on the chart attached to the 1872 Order, or alternatively that it should be mean low water. So far as the formerly separated sandbanks are concerned, while the appellants basic case remains as it was (namely that neither ground for accepting the respondents case is sustainable), they now accept that Stubborn Sand is included in the Area the subject of the Estates exclusive fishery, although they maintain their contention that Ferrier Sand, Blackguard Sand and any other sandbanks which have become joined to the foreshore within living memory, are not. The Crown Estate Commissioners have since 1961 been responsible for managing the Crown Estate, and therefore have an obvious interest in the outcome of this case. They intervene in this appeal, and support the appellants case on the issue of whether previously separated sandbanks, which have now attached to the foreshore, should be treated as subject to the Estates right, contending that they should not be so treated. Prescription: the applicable legal principles The right to fish on the foreshore Piscary is the legal name of a right to catch and take away fish, and it is an example of a right over land known as a profit prendre (or, more simply, a profit), which is a right to go on to the land of another to remove items (eg gravel, timber, game). Profits, like easements (a different category of rights over land, which include rights of way, rights of light and rights of water), are recognised in common law and statute as legal rights known as incorporeal hereditaments. A right of piscary which does not limit the quantity of fish which can be taken to the requirements or benefit of neighbouring land, is in law known as a profit in gross, and, unlike a right of piscary which is so limited (or a right of way or a right to light), it is capable of surviving independently of any land owned by the grantee see Harris v Earl of Chesterfield [1911] AC 623. Historically, it has long been accepted that the Crown is prima facie the owner of the bed of the sea, and of the foreshore so far as the tide flows and reflows. Prima facie because there is nothing to prevent the Crown from alienating (ie transferring away its ownership of) any part of the foreshore or seabed, and it has done so in respect of much of the coast of England and Wales. However, as Sir Matthew Hale wrote in De Jure Maris et brachiorum ejusdem (1888 ed), p 11, the common people of England have regularly a liberty of fishing in the sea or creeks or arms thereof, as a public common of piscary. This is because, since time immemorial, the public has fished for fish and shellfish by right in those areas, but not in non tidal waters. Nonetheless, as Hale went on to explain, the Crown could, by its prerogative, exclude the public from exercising that right, and grant the right of fishery to an individual or individuals exclusive of that common liberty. It has been said on a number of occasions that this prerogative power was irrevocably lost in 1215 following the sealing of Magna Carta see per Blackstone, 2 Bl (Comm), p 59, and, more recently, per Willes J giving the unanimous advice of the judges in Malcolmson v ODea (1863) 10 HL Cas 593, 618, where he added that this did not affect rights which were made by Act of the Crown not later than the reign of Henry II, ie not later than 1189, when Richard I succeeded him. This advice was held by Lord Blackburn in Neill v Duke of Devonshire (1882) 8 App Cas 135, 178 to settle the law, and it was described as unquestioned law by Viscount Haldane LC in Attorney General for the Province of British Columbia v Attorney General for the Dominion of Canada [1914] AC 153, 170. It should also be mentioned that, while it is accepted that the Crown cannot create an exclusive fishery, there is no reason why Parliament cannot do so or authorise the executive to do so, and, as Sir William Blackburne explained at [2013] EWHC 901 (Ch), paras 15 26, it has done so in relation to many areas round the United Kingdom, including the Wash. The grant of an exclusive fishery (whose technical description is, as already explained, somewhat confusingly, a several fishery) over a tidal area is not really a grant of the right to take fish from that area, as the grantee would presumably have that right in his capacity as a member of the public. Rather, it is the grant of a right to exclude anyone else from fishing over that area. Classically, such a right would be granted by deed, but, as with many rights over property, it can be acquired by long use ie by prescription. Obtaining rights by prescription As Lord Hoffmann said in R v Oxfordshire County Council, Ex p Sunningwell Parish Council [2000] 1 AC 335, 349, [a]ny legal system must have rules of prescription which prevent the disturbance of long established de facto enjoyment. Given that a prescriptive right is based on long use, the nature and extent of a prescriptive right depends on the nature and extent of the long established use. As Bovill CJ put it in Williams v James (1867) LR 2 CP 577, 580, [i]n all cases of this kind which depend upon user the right acquired must be measured by the extent of the enjoyment which is proved. The quality of the use required in order to establish a prescriptive right to a profit or an easement is embodied in the expressions, which have been held to be synonymous in their meaning and effect, namely as of right and nec vi, nec clam, nec precario (ie not secretly, not by force, and not with permission). As Lord Walker put it in R (Lewis) v Redcar and Cleveland Borough Council (No 2) [2010] 2 AC 70, para 30, persons claiming to have acquired a right by prescription must by their conduct bring home to the landowner that a right is being asserted against him, so that the landowner has to choose between warning the trespassers off, or eventually finding that they have established the asserted right against him. The period for which use must be enjoyed to establish a prescriptive right to a profit or an easement depends on the nature of the right claimed. The law in that connection is a mixture of inconsistent and archaic legal fictions, practical if sometimes haphazard judge made rules, and (in the case of easements and some profits but not profits in gross) well meaning but ineptly drafted statutory provisions. The common law originally fixed the requisite prescription period as being from time immemorial. In due course, this came to mean from before 1189, as discussed by Cockburn CJ in Bryant v Foot (1867) LR 2 QB 161, 179 182, and as explained by Lord Hoffmann in Sunningwell at pp 349 350. Because of the impracticality of requiring evidence of use going back to the end of the 12th century, the judges developed the rule that use which can be shown to have been enjoyed as of right for 20 years continuously or else since before the time of living memory (ie there is no living witness who can speak to a period when it was not enjoyed) would suffice to establish a prescriptive right see eg Aynsley v Glover (1875) 10 Ch App 1023 and RCP Holdings Ltd v Rogers [1953] 1 All ER 1029. However, such a claim could be defeated where it could be proved that the origin of the enjoyment must have been more recent than 1189 see Bury v Pope (1586) Cro Eliz 118 and Bowring Services Ltd v Scottish Widows Fund and Life Assurance Society [1995] 1 EGLR 158, 160. Because even this somewhat more relaxed approach to common law prescription was regarded as imposing too rigid a test in some cases, the judges then developed the more flexible doctrine of lost modern grant, which can be relied on where there has been upward of 20 years uninterrupted enjoyment even if there is direct evidence that no such grant was in fact made per Buckley LJ in Tehidy Minerals Ltd v Norman [1971] 2 QB 528, 552. However, as he also explained, the doctrine cannot be relied on if for some reason, such as incapacity on the part of [the putative grantor], the existence of the grant is impossible. Meanwhile, after the judiciary had developed common law prescription and lost modern grant, the legislature intervened and enacted the notoriously poorly drafted Prescription Act 1832 (2 & 3 Will 4 c71). The 1832 Act has not replaced the common law, but has added a further basis for claiming a right by prescription. The Right in this case is based on the uncontested fact that the Estate (and their lessees and agents) have excluded the public from at least part of the area over which they claim to have established a right back to a period before the time of living memory, and there is no evidence to suggest that the Right could not have been granted before 1215. No specific reliance has been placed by the respondents on the 1832 Act. This may be because it is assumed that the present case involves a profit in gross (as, by virtue of the words the occupiers of the tenement in respect whereof the same is claimed in section 5, it appears that that statute does not extend to a profit in gross). Or it may be because it is assumed that the 1832 Act does not take matters further than common law prescription, in the light of the effect of Magna Carta, as described in paras 33 and 34 above. Lost modern grant was not relied on, presumably for this latter reason. Accordingly, it is contended by the respondents (and not challenged by the appellants) that the Right is founded on common law prescription. In the light of the arguments in this case, it is worth quoting another passage in the advice of Willes J in Malcolmson. At p 618, he said that once a prescriptive right is established the result is, not that you say, this is a usurpation, for it is not traced back to the time of Henry II, but that you presume that the fishery being reasonably shown to have been dealt with as property, must have become such in due course of law, and therefore must have been created before legal memory. In other words, because the several fishery is treated today as having been the subject of a valid grant at some point before living memory, the legal fiction that the right is treated as granted before 1189 should not be treated as more than a metaphor. As Lord Mansfield said in Jones v Randall (1774) Lofft 384, 385, [t]he law would be a strange science if we must go to the time of Richard I and see what is law. The extent of a prescriptive right When considering the arguments relating to both the seaward boundary and the formerly separated sandbanks, it is vital to bear in mind that the basis upon which the Estate claims to have obtained its right of exclusive fishing is by prescription. It is therefore appropriate to consider the precise nature of the inquiry involved in an exercise of establishing the nature and extent of a prescriptive right. It is true that a prescriptive right can be said to be based on a notional grant, but that grant is not merely notional: it is fictional. The essential point is that such a right is based not on an imagined document, but on actual use as of right, namely use which is such as to bring home to the landowner that a right is being asserted against him, as Lord Walker said in the Redcar and Cleveland Borough Council case at para 30. In other words, in order to identify the nature and extent of the right obtained by prescription, one has to examine the actual use as of right upon which it is said to be based. The correct question is therefore not what the notional grant would have been likely to be, let alone what would have been the intention of the notional grantor; it is what is the extent of the user as of right for the requisite period. (In many cases, of course, these questions will produce the same answer). Thus, as is reflected by what was said by Bovill CJ in Williams v James, the general rule is accurately set out in Gale on Easements (19th ed (2012), para 9 03, discussing rights of way, but it is applicable to any right), namely where a right of way is acquired by user, the extent of the right must be measured by the extent of the user. Having said that, the extent of the right obtained by prescription has to be established bearing in mind practical reality. This is exemplified by the unum quid rule which was explained by Lord Blackburn (who said that it was as much the law in a Scotch as in an English Court) in Lord Advocate and the Trustees of the Clyde Navigation v Lord Blantyre (1879) 4 App Cas 770, 791 792 in these terms: [A]ll that tends to prove possession as owners of parts of the tract tends to prove ownership of the whole tract; provided that there is such common character of locality as would raise a reasonable inference that if the barons possessed one part as owners they possessed the whole, the weight depending on the nature of the tract, what kind of possession could be had of it, and what kind of possession was proved. This was said in connection with possession and ownership of land, but it applies equally to rights over land. Thus, the rule was specifically applied to a prescriptive claim for a several fishery in Neill v Duke of Devonshire, where at p 151, Lord Selborne LC said that [i]f the fishery of the whole river was what has sometimes been called a unum quid, there can be no doubt that evidence of acts of ownership and enjoyment in any part of it would be applicable to the whole. As Lord OHagan emphasised at p 165, reflecting what Lord Blackburn had said in Blantyre, whether evidence of long enjoyment of fishing over one part of a river will extend to another part, or to other parts, must of course vary according to circumstances, and [w]hat may demonstrate it, in one case, may be quite inadequate for that purpose, in another. A shifting prescriptive right Another issue which should be mentioned in relation to both the seaward boundary and the sandbanks in the present case is whether the property over which a prescriptive right is established can change. The concept of a conveyance of, or a grant of a right over, a shifting, or fluctuating, area of land is not offensive to any principle of property law, provided that the land in question can be ascertained at any time with reasonable precision. As Sir Robert Megarry V C pointed out in Baxendale v Instow Parish Council [1982] Ch 14, 22, the contention that there cannot be such a thing as a shifting freehold is undermined by what is stated in no less an authority than Coke on Littleton see Co Litt 48b, p 494 which plainly supports the argument that what was conveyed by a particular deed was the foreshore as it existed from time to time. As Sir Robert went on to hold, and as seems supported by at least the majority of the court in Scratton v Brown (1825) 4 B & C 485, when it comes to construing a conveyance of (or indeed a deed of grant over) the foreshore, it is a matter of interpretation whether what is conveyed (or granted) is the foreshore (or a right over the foreshore) at the time of the document or the foreshore as it exists from time to time. If a right over land, the identity of which shifts, can be the subject of an express grant, then it appears to us to follow that, as has been assumed on all sides below, there is no reason why that should not apply equally to a right over land obtained by prescription. Presumptions in the case of prescriptive rights against the Crown It is well established that, unlike other instruments, grants by the Crown are not construed against the grantor (contra proferentem). Crown grants are construed most strictly against the grantee and most beneficially for the Crown, so that nothing will pass to the grantee but by clear and express words per Lord Birkenhead LC in Viscountess Rhonddas Claim [1922] 2 AC 339, 353. The reason for this is that the prerogatives of the Crown being conferred upon it for great purposes, and for the public use, it shall not be intended that such prerogatives are diminished by any grant, beyond what such grant by necessary and unavoidable construction shall take away per Sir William Scott in The Rebeckah (1799) 1 Ch Rob 227, 230. This principle has been more recently recognised by Lewison J in Crown Estate Comrs v Roberts [2008] 2 P & CR 255, paras 78 80. As the Court of Appeal rightly said, this rule has no part to play in a case such as this, where the right concerned was not granted by a document, but arises as a result of long use. However, in our view, the principle upon which the rule is based can, for what it is worth, properly be prayed in aid by the Crown in relation to a claim based on prescription, and therefore by the appellants in this case. It appears to us that that basic principle is that a court should not be too easily persuaded that the Crown has been deprived of a property or a right, given that the property or right is held for the public good. Therefore, in cases where it would otherwise be quite unclear whether a prescriptive right obtained against the Crown extended to certain property or certain rights, the principle may properly be invoked to justify the conclusion that it does not so extend. In the great majority of cases of prescription, as in most cases of express grant, this principle will take matters no further, as it is only where the extent of the right would otherwise be really unclear that the principle can come into play. There is, we would add, some force in the point that this principle should be given particular weight in relation to a prescriptive several fishery, given the importance accorded to the public right to fish as long ago as 1215. As Lewison J said in Roberts at para 115, [g]iven the importance of the fishing industry both in ancient times and also today several fisheries were not popular. Conclusions on the issues in this appeal Introductory The appellants have been realistic in accepting that the Estate has a several fishery on the Foreshore, in the light of the findings and judgments in the earlier cases, as well as the leases and the oral evidence before Sir William Blackburne. Both parties have been realistic in accepting that the location of the seaward boundary of the Area subject to the fishery has not been determined in previous proceedings (in Loose v Castleton, Mr Loose contended that it was at least as far out as the line of low water mean springs, which Judge Moylan accepted). Equally, they have been realistic in accepting that the issue whether the fishery extended to previously unattached sandbanks was not decided in previous proceedings. So far as the two issues on this appeal, the seaward boundary and the previously unattached sandbanks, are concerned, most of the relevant evidence had already been agreed before, or found by, Judge Moylan in Loose v Castleton. However, there was further and more detailed evidence adduced before Sir William Blackburne, particularly relating to the location of the Estates fishery at different times, fishing methods and tidal movements. The leases granted between 1857 and 1970 obviously support the Estates contention that it owned a several fishery, but, when it comes to identifying its eastern and western boundaries, they are imprecise and inconsistent. The Fishery Orders are expressly not intended to determine private rights. The maps and charts established facts described in paras 5 to 7 above, but are not of much further help. As to the more recent factual evidence, there were occasions when the appellants or other fishermen negotiated with representatives of the Estate or Mr Loose to take cockles from Ferrier Sand. However, the negotiations were quite insufficient in terms of frequency, period of time, and express terms to give rise to any arguable inference of a public acceptance of the existence of a several fishery over Ferrier Sand (and we doubt whether they could give rise to a several fishery in any event). The seaward boundary: a fluctuating boundary? As mentioned above, it is rightly common ground that the Estate has a prescriptive exclusive Right to take cockles and mussels within an Area of the foreshore between Wolferton Creek to the south and Thornham Creek to the north. It is clear that the seaward, western, extent of the boundary of that Area must be a low water mark. The first question is, logically, whether that boundary is a fixed boundary, or whether it is one which fluctuates with the relevant low mark. The second question is which of the various suggested low water marks is the appropriate boundary. So far as the first question is concerned, we consider that the assumption which was made below was correct, and that the seaward boundary of the Area the subject of the exclusive Right to take shellfish fluctuates with the passage of time as the low water mark moves. The Estate has exercised a prescriptive exclusive Right to take shellfish from the foreshore for a substantial period, during which the low water mark fluctuated to a significant extent over time, in circumstances where the evidence clearly establishes that the only way in which the shellfish were gathered was by individuals walking from the land when the tide was out. It is in those circumstances inherently very likely, indeed inevitable in terms of practical reality, that the putative Right would have been exercised over an area which was defined, or limited, by a shifting low tide mark. Thus, based on the inherently probable nature and extent of the actual exercise of the putative Right to fish by or on behalf of the Estate, we conclude that the boundary of the Area would have been low water as it was from time to time. This is not an application of the unum quid rule, but it involves an approach roughly akin to it. The natural unit of property so far as the exercise of the Right is concerned is the stretch of foreshore between high water and low water, and, as the land comprised within that unit moves with the shifting tides, one would expect, at least in the absence of good reason to the contrary, the exercise of the putative right to move correspondingly. As Sir Robert Megarry put it in Baxendale at p 25, one would expect sea grounds, oyster layings, shores and fisheries to follow the sea as it advances or retreats. Further, and importantly, it is not as if the existence of such a fluctuating right would have detrimentally affected any other interests, and in particular any public interests, of any significant value. We accept that the public would have enjoyed the right to take shellfish seaward of a low water mark boundary, and that right would be lost as, and to the extent that, the boundary shifted seaward. However, such a right would have been of no value, as nobody could have got access to the shellfish below the low water mark on foot, and, as explained in para 8 above, access from the sea for that purpose is of comparatively recent origin. In these circumstances, we cannot accept the appellants primary contention that the boundary of the Area is the low tidemark shown on the chart attached to 1872 Order, as this would mean a fixed seaward boundary to the Area. In any event, as already mentioned, the 1872 Order was made under legislation which provided in terms that it was not intended to delimit the extent of private fisheries (even though it is fair to say that there is some evidence which could be said to suggest that the tidemark shown on the chart was understood by some people at the time to identify the boundary of the Right). The seaward boundary: which low water mark? As to the second issue, namely the identity of the low water boundary of the Area, it is well established that the landward limit of the foreshore is the mean high water mark. In Attorney General v Chambers (1854) 4 De G M & G 206, 218, Lord Cranworth LC (who was assisted by Alderson B and Maule J) said that Lord Hale gives as his reason for thinking that lands only covered by high spring tides do not belong to the Crown, that such lands are for the most part dry and maniorable. Lord Cranworth then said that the reasonable conclusion is, that the Crowns right is limited to land which is for the most part not dry or maniorable. However, as is common ground between all parties to this appeal, there is no equivalent consensus as to where the seaward limit of the foreshore is located. Further, the reasoning of Lord Cranworth in the passage just cited does not cast much, if any, light so far as the seaward limit of the foreshore is concerned. Accordingly, the selection of the relevant low water mark which provides the boundary of the Area is a relatively open question. Not without some hesitation, we have come to the conclusion that the most satisfactory low water mark to select as the appropriate seaward boundary of the Area the subject of the Right is the lowest astronomical tide. That conclusion appears to us to produce the least arbitrary result and to be consistent with the unum quid principle (discussed in paras 46 and 47 above). Selecting the most extreme low water mark means that all parts of the Foreshore which are at any time uncovered by the sea are included in the Area, whereas any other selection involves some of those parts being excluded from the Area. And, as we see it, the unum quid principle would at least tend to suggest that one should assume, at least in the absence of good reasons to the contrary, that the Right was being exercised in respect of the whole of the Foreshore, as it was from time to time uncovered by the sea. Further, the alternative marks proposed (whether mean spring low water, as the Judge selected, or mean low water as the appellants suggested) are mean low water marks. As Moore Bick LJ said, unlike lowest astronomical tide, which is an actual (if rare) tide mark, they would therefore involve taking an artificial mark, although it is fair to say that it could be seen from a chart. In addition, it seems to us that the lowest astronomical tide is consistent with the approach of Popham CJ in Sir John Constables Case and Sir Henry Constables Case as translated and discussed by Moore in A History of the Foreshore and the Law Relating Thereto (1888), pp 233 237. The passage in the judgment, quoted at pp 235 237, suggests that the correct mark is where the sea does not ever ebb or the lowest ebb. The two cases were respectively concerned with the extent of a manor and the right to take a wreck, so we would accept that they are only of indirect assistance. We were initially impressed with the appellants point that lowest astronomical tide was an unattractive boundary to select, as it occurs only once in every 18.6 years, which significantly exceeds the average life of a cockle or mussel. At first sight, at any rate, that renders the lowest astronomical tide a rather unrealistic mark to take. However, it is important to bear in mind that, until recently, cockles and mussels could only be gathered from the shore when the tide was out, and could not be gathered from a ship. Accordingly, nobody would have been able to take the cockles and mussels which were just on the shore side of lowest astronomical tide, except once every 18.6 years. It is only with the advent of suction dredging and other similar techniques that anyone could gather such cockles and mussels. We do not agree with the reasoning of Moore Bick LJ (which was understandably based on the likely notional grant, following the wrong approach in Loose v Castleton at p 33, rather than the probable actual use), but we agree with his conclusion that the seaward boundary of the Area subject to the Right is the lowest astronomical tide mark from time to time. The previously separated sandbanks: prescription We turn to the respondents contention that sandbanks, previously separated from the foreshore, and thus not forming part of the Area subject to the Right, nonetheless become part of the Area as a matter of prescription when they become attached to the foreshore. In this connection, the respondents first argument is that, although the Estate did not gather cockles or mussels from sandbanks such as Ferrier Sand and Blackguard Sand, when they were separated from the Foreshore, the nature of the Estates prescriptive right is such that it automatically extended to those sandbanks as soon as they became attached to the Foreshore around 50 and 20 years ago respectively. Given that the Estate is claiming a prescriptive Right, this argument must be based on the proposition that, over a long period, sandbanks which have been close to, but detached from, the Foreshore have from time to time become joined to the Foreshore as channels have become silted up, and, as and when this happened, the Estate effectively extended the collecting of shellfish to that former sandbank. The Court of Appeal accepted this argument, on the basis of assessing the likely terms of the hypothetical grant which would have been made (applying Bridge LJs faulty analysis in Loose v Castleton at p 33) see para 26 of Moore Bick LJs judgment. However, as already explained the proper basis for establishing the nature or extent of a prescriptive right is not by assessing the likely terms of a fictional notional grant, but by assessing the extent of the actual use of the putative right established by the evidence. The respondents maintain that the Court of Appeals conclusion was nonetheless correct and, at any rate at first sight, they can derive substantial support for their argument from the reasoning in paras 58 60 above, which justifies the conclusion that the seaward boundary of the Area fluctuates. Although we acknowledge that that argument has some force in the present context, we have reached the conclusion that the evidence does not establish that the Estates prescriptive exclusive Right extends to sandbanks which were not previously joined to the Foreshore, as and when they become so attached. For present purposes, there are two distinctions of significance between the notion that the low tide mark boundary of the Foreshore fluctuates and the notion that attaching sandbanks become part of the Foreshore. First, the low tide mark will, presumably, at least normally, shift relatively gradually, whereas, although the silting up of the channel concerned will be gradual, the attachment of the whole of a previously detached sandbank to the Foreshore will happen at one moment. It is true that a channel between a sandbank and the foreshore will silt up gradually, but the question whether a sandbank has become joined to the foreshore must surely be tested by reference to a particular point in time, and we would have thought that it would be when the tide has receded past the point where the sandbank has or could become joined to the foreshore ie low tide. In that connection, it was implicitly accepted by the respondents that there would be a specific point at which a former sandbank would become joined to the foreshore: they did not suggest, for instance, that the prescriptive right would attach to a sandbank at low tide but not at high tide. Secondly, and particularly importantly in this context, the public will have had the right to take fish (including shellfish) from such a sandbank, at least until the moment when it becomes attached to the Foreshore. In those circumstances, at least in the absence of any specific evidence that the Estate in fact took shellfish and excluded the public from doing so, as of right from sandbanks as they became attached to the Foreshore, we do not think that it would be right to assume that the Estate did in fact behave in this way. Unlike the position in relation to the fluctuating low tide mark, it is by no means plain or obvious that, once a sandbank became attached to the Foreshore, the Estate would have exercised an exclusive Right to take shellfish from that former sandbank. After all, up to that moment, the public had had a right, and, at least in some cases, had exercised the right, to take shellfish from that sandbank. In the absence of any evidence that such a thing had ever happened, it appears to us wrong in principle to assume that what the Estate contends might have happened would have happened, let alone that it did happen. Indeed, given that, over at least the past 150 years or so, members of the public took shellfish from the Area which was subject to the Right (at least on the occasions giving rise to these and the earlier proceedings), it appears to us unlikely that local fishermen would have been prepared to accept the Estate maintaining (or, as they would have seen it, extending) its exclusive Right to fish over former sandbanks which were previously subject to a public right to fish just because they had become attached to the Foreshore. It is also relevant to mention that in his case in Loose v Castleton Mr Loose did not contend that Ferrier Sand was included within the Area. The respondents argue that the fact that it is common ground that the Estates several fishery extends to Stubborn Sand is inconsistent with this conclusion. We do not agree. For instance, it may be that, throughout the period during which the Estate has been taking shellfish from the Area, that activity extended to Stubborn Sand, even before it became attached to the Foreshore. Over and above this, if, as seems to have been the case, Stubborn Sand has been joined to the Foreshore since before the time of living memory, it would, as we see it, appear to follow that the Estate would have acquired the right to take cockles and mussels from Stubborn Sand by prescription in any event. Thus, in summary, we consider that the courts below were wrong on this point. We accept that there is force in the respondents contention that, as a sandbank becomes attached to the Foreshore, it should be treated as part of the Area subject to the Right in accordance with the notion that the foreshore is a shifting piece of property in effect a unum quid. However, it appears to us that the existence of a public right to fish over that sandbank, a highly relevant circumstance, serves to negative the respondents contention, at least in the absence of further supportive evidence and there is none. The previously separated sandbanks: accretion The alternative basis upon which the respondents rest their contention that previously unattached sandbanks become incorporated within the Area the subject of the Estates prescriptive exclusive Right is through the process of accretion. Thus, given (as we have just indicated) that the nature of the prescriptive Right is not such as to extend automatically to those sandbanks, the argument is that they are, as a matter of law, nonetheless added to the Area as a result of the doctrine of accretion. Whether one is concerned with the ownership of, or rights over, land, the principle that land can increase (or indeed decrease) as a result of accretion is well established. In the Privy Council, Lord Wilberforce described accretion in Southern Centre of Theosophy Inc v State of South Australia [1982] AC 706, 716 as: a doctrine which gives recognition to the fact that where land is bounded by water, the forces of nature are likely to cause changes in the boundary between the land and the water. Where these changes are gradual and imperceptible (a phrase considered further below), the law considers the title to the land as applicable to the land as it may be so changed from time to time. This may be said to be based on grounds of convenience and fairness. Except in cases where a substantial and recognisable change in boundary has suddenly taken place (to which the doctrine of accretion does not apply), it is manifestly convenient to continue to regard the boundary between land and water as being where it is from day to day or year to year. To do so is also fair. If part of an owners land is taken from him by erosion, or diluvion (ie advance of the water) it would be most inconvenient to regard the boundary as extending into the water: the landowner is treated as losing a portion of his land. So, if an addition is made to the land from what was previously water, it is only fair that the landowners title should extend to it. The doctrine of accretion, in other words, is one which arises from the nature of land ownership from, in fact, the long term ownership of property inherently subject to gradual processes of change. The respondents argue that accretion applies to the former sandbanks in this case, because the channels formerly separating those sandbanks from the Foreshore only gradually and imperceptibly became silted up, and it was as a result of such gradual silting up that they became attached to the Foreshore. Although that argument was accepted by Sir William Blackburne and the Court of Appeal, we consider that it is wrong. In a nutshell, the argument relies on the gradual and imperceptible process pursuant to which the boundary of the further land allegedly changes, whereas the doctrine of accretion only applies where the actual change to the boundary is gradual and imperceptible. As explained in para 71 above, it seems to us clear that there is a specific moment in time when the whole of a sandbank becomes attached to the foreshore, and therefore the addition of the sandbank is not gradual and imperceptible as that expression was used by Lord Wilberforce. We believe that this follows from what he said in the passage quoted above, especially in his reference to changes in the boundary which are gradual and imperceptible, and his specific exclusion of cases where a substantial and recognisable change in boundary has suddenly taken place. The issue was specifically addressed in the judgment of Griffith CJ in the High Court of Australia in a passage in his judgment in Williams v Booth (1910) 10 CLR 341, 350, with which we agree: I do not think that any case of accretion is made out. The law as stated by Blackstone (2 Bl Com, p 262), is that if this gain be by little and little, by small and imperceptible degrees, it shall go to the owner of the land adjoining. For de minimis non curat lex. But, if the alluvion or dereliction be sudden or considerable, in this case it belongs to the King; for, as the King is Lord of the sea, and so owner of the soil while it is covered with water, it is but reasonable he should have the soil, when the water has left it dry. The word imperceptible refers to the slowness of the additions to the soil. Assuming, then, that a moment has arrived at which the mouth of the lagoon became permanently closed, the suggested accretion is not an addition of an imperceptible quantity of soil to the plaintiffs land, but of an area of many acres occurring at the moment of permanent closure, so that, according to the plaintiffs contention, on one day the land belonged to the King as Lord of the sea and on the next to the plaintiff. This is a sudden and considerable alluvion or dereliction, and does not operate to confer a title by accretion. In other words, there is a difference in kind between the gradual extension of one recognised bank and the joining up of two formerly distinct banks. It is true that the two cases just referred to were concerned with ownership of land rather than prescriptive rights over land, but we can see no reason in principle or practice why the rules relating to accretion should not apply equally to rights over land as they do to ownership of land: one would expect them to march together. Such a view derives support from Mercer v Denne [1905] 2 Ch 538, especially per Sterling LJ at p 582. We were pressed by the respondents with the argument that, if we held that accretion did not apply to Ferrier Sand and other formerly separated sandbanks, the corollary must be that land forming part of the original Foreshore which becomes detached as a separate sandbank would nonetheless remain part of the Area subject to the Estates Right of several fishery. We accept that is indeed the corollary, but we see nothing surprising about it. As Ladd J pithily said in an Iowan case Holman v Hodges 84 NW (1901) 950, 952 (a decision cited with approval in the Iowan Supreme Court in State v Sorensen 436 NW 2d 358 (1989) and albeit on a different point by Brennan J in the US Supreme Court decision in Nebraska v Iowa 406 US 117 (1972)): There is no more reason for saying the state loses title to an island when connected by accretions to the shore than to say title to an islet formed at one side of the thread in an unnavigable stream is lost when connected with anothers land on the opposite side. Conclusion In these circumstances, we would dismiss the appellants appeal in so far as it relates to the seaward, western, boundary of the Area, but we would allow their appeal in relation to previously detached sandbanks. It would be helpful if we were able to define the precise extent of the Area over which the Estates several fishery should be enjoyed. However, we suspect that that would only be possible if the parties were able to agree it following receipt of this judgment. In the absence of agreement, there may be issues such as the precise identification of the boundary between Stubborn Sand and Ferrier Sand. Accordingly, if agreement cannot be reached, it appears to us, at least as at present advised, that we should remit the proceedings to Sir William Blackburne, or another judge of the Chancery Division, to enable the precise extent of the Area to be identified. |
The Scottish Parliament has determined to address health and social consequences which can arise from the consumption of cheap alcohol. The mechanism chosen is minimum pricing. The Alcohol (Minimum Pricing) (Scotland) Act 2012 (the 2012 Act) will, when in effect, amend Schedule 3 of the Licensing (Scotland) Act 2005 by inserting in the licence which any retail seller of alcohol in Scotland must hold, an additional condition, to the effect that an alcohol product must not be sold at a price below a statutorily determined minimum price per unit of alcohol. The minimum price is to be set by the Scottish Ministers by secondary legislation. The current proposal is that it should be 50 pence per unit of alcohol. The Scottish Ministers have undertaken not to bring the 2012 Act into force or to make any order setting a minimum price until final determination of the present proceedings. The 2012 Act contains a requirement for the Scottish Ministers to evaluate and report to the Scottish Parliament on the operation and effect of the minimum pricing provisions after five years, and a provision terminating the operation of those provisions automatically after six years, unless the Scottish Ministers by order affirmed by the Scottish Parliament determine that the minimum pricing rgime should continue. The proceedings are brought by three petitioners: The Scotch Whisky Association and two Belgian organisations which I can for economy call the European Spirits Organisation and the Comit Europen des Entreprises Vins. Their case has been presented by Mr Aidan ONeill QC. The respondents are the Lord Advocate representing the Scottish Ministers and the Advocate General for Scotland representing the United Kingdom government. In the petitioners submission, the 2012 Act and the proposed system of minimum pricing are contrary to European Union law, and so outside the competence of the Scottish Parliament and the Scottish Ministers by virtue of sections 29(2)(d) and 57(2) of the Scotland Act 1998. This (with other objections not now pursued) was rejected by Lord Doherty in the Outer House: [2013] CSOH 70; 2013 SLT 776. On appeal to the Inner House, the Extra Division on 3 July 2014 referred six questions to the Court of Justice. In response, Advocate General Bot delivered his opinion on 3 September 2015, and the Court of Justice gave its judgment on 23 December 2015: (Case C- 333/14) [2016] 1 WLR 2283. On the matter returning to the First Division for determination, the appeal was on 21 October 2016 dismissed for reasons given in a single judgment of the court given by the Lord President, Lord Carloway: [2016] CSIH 77; [2017] 1 CMLR 41. The matter now comes to the Supreme Court with permission granted by the First Division. There are two limbs to the petitioners challenge under EU law to the 2012 Act and to the principle of minimum pricing. First, it is submitted that they conflict with article 34 of the Treaty on the Functioning of the European Union (TFEU), providing that: Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between member states. It is accepted that the proposed minimum pricing is a measure which would have equivalent effect to a quantitative restriction on imports, in that it will have an effect on, for example, actual or potential wine or beer imports from a number of other EU States. The respondents response is reliance on article 36 TFEU, providing: The provisions of articles 34 and 35 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of the protection of health and life of humans Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between member states. The second limb concerns wine only, and arises from Regulation (EU) No 1308/2013 (the Single CMO Regulation) establishing a common organisation of markets in agricultural products including wine. The objectives of the common agricultural policy (CAP) as set out in article 39 TFEU, include increasing agricultural productivity, stabilising markets, assuring the availability of supplies and ensuring that supplies reach consumers at reasonable prices. Common market organisations (CMOs) are based on the concept of an open market to which every producer has free access under conditions of effective competition: so the Court of Justice said in its judgment in this case at para 22. The Advocate General and Court of Justice both also accepted that a member state may adopt measures pursuing the objective of protection of human life and health, although they undermine the system, on which the Single CMO Regulation is founded, of free formation of prices in conditions of effective competition: paras 25-27 of the Court of Justices judgment. But the petitioners submit that this involves a different exercise to that arising under articles 34 and 36, in particular a different and potentially more onerous weighing of the proportionality of the measure. The Court of Justices judgment Both limbs have to be examined on the basis of the guidance given by the Court of Justice. The Advocate General was clear in his advice. He took first the position under the Single CMO Regulation. He said: 44. I consider that the existence of a CMO covering the wine sector does not prevent the national authorities from taking action in the exercise of their competence in order to adopt measures to protect health and, in particular, to combat alcohol abuse. However, where the national measure constitutes a breach of the principle of the free formation of selling prices that constitutes a component of the single CMO Regulation, the principle of proportionality requires that the national measure must actually meet the objective of the protection of human health and must not go beyond what is necessary in order to attain that objective. 45. As the commission suggests, I consider that the examination of the proportionality of the measure must be undertaken in the context of the analysis that must be carried out by reference to article 36 TFEU. 46. Consequently, I propose that the answer to the first question should be that the single CMO Regulation must be interpreted as meaning that it does not preclude national rules, such as those at issue, which prescribe a minimum retail price for wines according to the quantity of alcohol in the product sold, provided that those rules are justified by the objectives of the protection of human health, and in particular the objective of combating alcohol abuse, and do not go beyond what is necessary in order to achieve that objective. Turning to articles 34 and 36, he noted that the proposed minimum pricing appeared to be contrary to article 34, on which basis the next step was to consider whether this was justified under article 36. As to this, he said: 71. A barrier to the free movement of goods may be justified on one of the public interest grounds set out in article 36 TFEU or in order to meet overriding requirements. In either case, the restrictions imposed by the member states must none the less satisfy the conditions laid down in the courts case law as regards their proportionality. 72. In that regard, in order for national rules to comply with the principle of proportionality, it is necessary to ascertain not only whether the means which they implement are appropriate to ensure attainment of the objective pursued, but also that those means do not go beyond what is necessary to attain that objective: Berlington Hungary Tancsad s Szolgltat kft v Magyar llam (Case C-98/14) [2015] 3 CMLR 45, para 64. 73. Although the words generally used by the court seem most frequently to result in only two different stages of the control of proportionality being distinguished, the intellectual exercise followed in order to determine whether a national measure is proportionate is generally broken down into three successive stages. 74. The first stage, corresponding to the test of suitability or appropriateness, consists in ascertaining that the act adopted is suitable for attaining the aim sought. 75. The second stage, relating to the test of necessity, sometimes also known as the minimum interference test, entails a comparison between the national measure at issue and the alternative solutions that would allow the same objective as that pursued by the national measure to be attained but would impose fewer restrictions on trade. 76. The third stage, corresponding to the test of proportionality in the strict sense, assumes the balancing of the interests involved. More precisely, it consists in comparing the extent of the interference which the national measure causes to the freedom under consideration and the contribution which that measure could secure for the protection of the objective pursued. He went on to make the important point that judicial review of the proportionality of the measure should be marked by a certain degree of restraint (para 82). This was for two reasons: 83. First, account should be taken of the fact that it is for the member states to decide on the degree of protection which they wish to afford to public health and on the way in which that degree of protection is to be achieved. Since the level of protection may vary from one member state to another, member states must be allowed discretion in that area That discretion is necessarily represented by a certain relaxation of control, representing the national courts concern not to substitute its own assessment for that of the national authorities. 84. Second, it is necessary to take into account the complexity of the assessments to be carried out and the degree of uncertainty which exists as to the effects of measures such as those at issue. He added that a third relevant consideration in the present case was the provision for a re-evaluation and report by the Scottish Ministers after five years, coupled with the provision for automatic termination after six years unless otherwise ordered and affirmed by the Scottish Parliament (para 85). However, he added this caution: 86. [T]he discretion left to the member states cannot have the effect of allowing them to render the principle of free movement of goods devoid of substance. In so far as article 36 TFEU includes an exception to that principle, it is for the national authorities, even where they have a discretion, to show that the measure satisfies the principle of proportionality. 87. Furthermore, whatever the extent of that discretion, the fact none the less remains that the reasons that may be invoked by a member state by way of justification must be accompanied by an analysis of the suitability and proportionality of the restrictive measure adopted by that state and of the precise evidence on which its argument is based ... The Court of Justice did not either repeat or endorse the Advocate Generals above advice, but spoke in terms which give some room for argument, both as to the relationship between the principles applicable to the two limbs of the petitioners case, and as to the nature of any proportionality exercise which it envisaged fell to be performed under either or both of these limbs. Addressing the significance of the Single CMO Regulation, the Court (in its paras 28 and 29) adhered firmly to what Advocate General Bot had described (in his para 73: see para 6 above) as its previous general usage, distinguishing only two different stages of the proportionality test. The difficulty this raises is to know what, if any, scope there is for a more general third stage proportionality question, of the nature described by Advocate General Bot in his paras 76 and 82 to 84: see paras 6 and 7 above). The Courts guidance in this respect is oblique, as appears from the last sentence of para 28 and from the summary in para 29 of its judgment. No doubt deliberately, the Court there suggests that the third stage, rather than involving any independent balancing of interests, can be subsumed within the second stage, that is consideration of what is necessary to achieve the desired protection of human life and health. The material parts of paras 28 and 29 of the Courts judgment read as follows: 28. A restrictive measure such as that provided for by the national legislation at issue must, however, satisfy the conditions set out in the courts case law with respect to proportionality, that is, the measure must be appropriate for attaining the objective pursued, and must not go beyond what is necessary to attain that objective (see, by analogy, Berlington Hungary (Case C-98/14) [2015] 3 CMLR 45, para 64), which the Court will consider in its examination of the second to sixth questions, which specifically concern the analysis of the proportionality of that legislation. It must be observed that, in any event, the issue of proportionality must be examined by taking into consideration, in particular, the objectives of the CAP and the proper functioning of the CMO, which necessitates that those objectives be weighed against the objective pursued by that legislation, namely the protection of public health. 29. Consequently, the answer to the first question is that the Single CMO Regulation must be interpreted as not precluding a national measure, such as that at issue, which imposes an MUP for the retail selling of wines, provided that that measure is in fact an appropriate means of securing the objective of the protection of human life and health and that, taking into consideration the objectives of the CAP and the proper functioning of the CMO, it does not go beyond what is necessary to attain that objective of the protection of human life and health. Turning to articles 34 and 36 TFEU, the Court was satisfied that the proposed minimum pricing regime appeared to be an appropriate means of attaining the objective it pursued (identified as increasing the price of cheap alcoholic drinks, so reducing the consumption of alcohol, in general, and the hazardous and harmful consumption, of alcohol, in particular): paras 36 and 39. It went on (para 40): As regards whether that national legislation does not go beyond what is necessary in order effectively to protect human life and health, it must be borne in mind that, in this case, that analysis must be undertaken, as stated in para 28 of this judgment, with regard to the objectives of the CAP and the proper functioning of the CMO. However, given the issue to be examined in this case, that analysis will have to be undertaken with reference to proportionality in the context of article 36 TFEU and will therefore not have to be carried out separately. Again, this appears to subsume any third stage within the context of the second stage enquiry relating to necessity. It also indicates that the requirement, in that context, to refer to the objectives of the CAP and the proper functioning of the CMO adds nothing to the criteria which fall to be taken into account when deciding whether article 36 is satisfied. The petitioners case, that there is some important difference between the exercise to be undertaken under articles 34 and 36 and the exercise to be undertaken in relation to wine in the light of the Single CMO Regulation does not appear consistent with the Court of Justices guidance. The remaining paragraphs of the Court of Justices judgment are also noticeable for their focus on the issue now before the Supreme Court in terms of the first and second stages of the proportionality test which Advocate General Bot described. The Court thus stated: 53. [I]t is for the national authorities to demonstrate that that legislation is consistent with the principle of proportionality, that is to say, that it is necessary in order to achieve the declared objective, and that that objective could not be achieved by prohibitions or restrictions that are less extensive, or that are less disruptive of trade within the European Union: Criminal proceedings against Franzn (Case C-189/95) [1997] ECR I-5909, paras 75 and 76 and Rosengren v Riksklagaren, para 50. 54. In that regard, the reasons which may be invoked by a member state by way of justification must be accompanied by appropriate evidence or by an analysis of the appropriateness and proportionality of the restrictive measure adopted by that state, and specific evidence substantiating its arguments 55. It must however be stated that that burden of proof cannot extend to creating the requirement that, where the competent national authorities adopt national legislation imposing a measure such as the MUP, they must prove, positively, that no other conceivable measure could enable the legitimate objective pursued to be attained under the same conditions: Commission v Italian Republic [2009] All ER (EC) 796, para 66. 56. In that context, it is for the national court called on to review the legality of the national legislation concerned to determine the relevance of the evidence adduced by the competent national authorities in order to determine whether that legislation is compatible with the principle of proportionality. On the basis of that evidence, that court must, in particular, examine objectively whether it may reasonably be concluded from the evidence submitted by the member state concerned that the means chosen are appropriate for the attainment of the objectives pursued and whether it is possible to attain those objectives by measures that are less restrictive of the free movement of goods. 57. In this case, in the course of such a review, the referring court may take into consideration the possible existence of scientific uncertainty as to the actual and specific effects on the consumption of alcohol of a measure such as the MUP for the purposes of attaining the objective pursued. As Advocate General Bot stated in point 85 of his opinion, the fact that the national legislation provides that the setting of an MUP will expire six years after the entry into force of the 2013 Order, unless the Scottish Parliament decides that it is to continue, is a factor that the referring court may also take into consideration. 58. That court must also assess the nature and scale of the restriction on the free movement of goods resulting from a measure such as the MUP, by comparison with other possible measures which are less disruptive of trade within the European Union, and the effect of such a measure on the proper functioning of the CMO, that assessment being intrinsic to the examination of proportionality. 59. It follows from the foregoing that article 36 TFEU must be interpreted as meaning that, where a national court examines national legislation in the light of the justification relating to the protection of the health and life of humans, under that article, it is bound to examine objectively whether it may reasonably be concluded from the evidence submitted by the member state concerned that the means chosen are appropriate for the attainment of the objectives pursued and whether it is possible to attain those objectives by measures that are less restrictive of the free movement of goods and of the CMO. Paragraph 59 was in substance repeated as para 3 of the Courts ruling. Paragraph 59 echoes the two-stage approach to proportionality stated in para 56. The explanation that the court is bound to or must examine objectively whether it may reasonably be concluded from the evidence submitted that the means are appropriate and cannot be attained by less restrictive measures can be seen as recognising the fact that the national court is a reviewing body, not the primary decision-maker. Paragraph 57, with its reference back to para 85 of the Advocate Generals opinion, enables the reviewing court to bear in mind the uncertainties and experimental nature of the proposed minimum pricing system. Paragraph 58 might be read as suggesting a third stage proportionality issue. But the injunction to assess the nature and scale of the restriction is in terms only in order to compare them with the effects of other possible measures, and so to determine whether there are other measures less destructive of EU trade. Once it is accepted, as found here by the Lord Ordinary, that an approach based on increased taxation would be less destructive of EU trade, para 58 is on the face of it exhausted. The Court of Justices approach to exceptions (such as article 36) to a general principle (such as article 34) gives rise, in these circumstances, to some difficulty. The first two stages of the proportionality exercise address, respectively, the legitimacy of the aim which the legislature had in mind, and the necessity for the measures adopted if such aim is to be achieved (or, putting the latter aspect the other way round, the question whether the aim could be achieved by less extensive or restrictive measures). Neither in terms nor in logic is either stage concerned with the further question whether, on an overall balance, it is worthwhile to achieve the aim, bearing in mind the detriment that achieving it would necessarily cause to the general principle. By suppressing Advocate General Bots third stage, one may surmise that the Court of Justice intended at the very least to signal the appropriateness of an even greater level of restraint and respect for national authorities choice of measures to protect health than that which Advocate General Bot himself recognised under the third stage test which he identified (see paras 7 and 8 above). Yet one may also infer from the Court of Justices references in paras 28, 29 and 40 that it intended more general objectives (in particular, those of the CAP and the CMO) to play some role, at least in relation to wine, and perhaps also other commodities. What is unclear is quite what that role might be, and how it really fits within the second stage enquiry into which the Court of Justice has inserted it. As it happens, the Supreme Court touched on the Court of Justices reticence about any third stage enquiry in a judgment given some six months prior to the Court of Justices present judgment: R (Lumsdon) v Legal Services Board [2015] UKSC 41; [2016] AC 697. In a joint judgment by Lord Reed and Lord Toulson, it said (para 33): 33. Proportionality as a general principle of EU law involves a consideration of two questions: first, whether the measure in question is suitable or appropriate to achieve the objective pursued; and secondly, whether the measure is necessary to achieve that objective, or whether it could be attained by a less onerous method. There is some debate as to whether there is a third question, sometimes referred to as proportionality stricto sensu: namely, whether the burden imposed by the measure is disproportionate to the benefits secured. In practice, the court usually omits this question from its formulation of the proportionality principle. Where the question has been argued, however, the court has often included it in its formulation and addressed it separately, as in R v Minister for Agriculture, Fisheries and Food, Ex p Fedesa (Case C-331/88) [1990] ECR I-4023. The Supreme Courts approach thus corresponded closely with Advocate General Bots approach. But this does not help now to explain the Court of Justices evidently deliberate suppression of the third stage in the present case, coupled with the insertion of one aspect of it in the limited context of the second stage test of necessity. I will have to consider how far this is significant on this appeal at a later stage in this judgment. The issues in more detail It is common ground on this appeal that the role of a domestic court, evaluating the consistency with European law of a measure such as the 2012 Act, is not to examine or adjudicate upon the legislative process and reasoning which led to the measure, but to examine the legislation itself in its context (see per Lord Thomas of Cwmgiedd in In re Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] UKSC 3; [2015] AC 1016, para 126). The Court of Justice held (paras 63 to 65) that this examination fell to be carried out in the light of all the material available on the date when the court gives its ruling. That was the position when the matter came before the Outer House. The position on an appeal depends, as the First Division held (para 109), upon the domestic rules applicable upon appeals. In the present context of judicial review, the First Division went on to hold, and this is not now controversial, that an appellate court is entitled to have regard to new material where it considers, in its discretion, that the interests of justice require that it be taken into account (para 109). On this basis, a considerable amount of new material was considered by the First Division and is before the Supreme Court. The issues The actual issues have narrowed. There is no suggestion that the proposed minimum pricing system will constitute a means of arbitrary discrimination or a disguised restriction on trade between member states within the last sentence of article 36 FTEU. But the respondents accept that it will affect the market in alcohol generally, including wine, and (although they maintain that the greater effect will be domestic) they also accept that imports and trade between EU member states will be impacted. The position is, therefore, that it is for the respondents to justify the EU market interference under article 36 TFEU and under the parallel principles governing wine under the CAP and Single CMO Regulation. There is also common ground, reflected in the agreed statement of facts and issues, that the 2012 Act had and has a two-fold objective. The petitioners accept the legitimacy of this objective, and they accept that minimum pricing at a rate of 50 pence per unit is an appropriate means of attaining that legitimate objective. However, the precise implications or qualifications of the agreed objective are important and, are not necessarily matters on which the parties are ad idem, and they still require examination. The objective(s) pursued by minimum pricing The two-fold objective was, as put to the Court of Justice, reducing, in a targeted way, both the consumption of alcohol by consumers whose consumption is hazardous or harmful, and also, generally, the populations consumption of alcohol: Court of Justice, para 34. Hazardous drinkers are in this context defined as males consuming more than 21 units and women consuming more than 14 units of alcohol a week, while harmful drinkers are defined as males drinking more than 50 units and women drinking more than 35 units a week. Both the Lord Ordinary (para 53) and the First Division (paras 171 to 172) proceeded on the basis of this agreed aim. However, the petitioners suggested to the First Division and suggest before the Supreme Court that the respondents justification for minimum pricing has deviated from this agreed aim, and, in particular, that they have in reality advanced a more limited aim, relating to extreme drinkers and/or the elimination of health inequality, in order to justify the 2012 Act. Even if one confines attention to the initiation of the 2012 Act, the agreed two-fold objective is more refined than might at first sight appear. The key word in the Court of Justices description is in this context the word targeted. The Scottish Government had since 2009 been aiming to address alcohol-related harm by a whole variety of measures set out in Changing Scotlands Relationship with Alcohol (2009). The 2012 Act aimed at the particular problems created by low price alcohol. It followed a study entitled Final Business and Regulatory Impact Assessment for Minimum Price per Unit of Alcohol as contained in Alcohol (Minimum Pricing) (Scotland) Bill (the BRIA). The BRIA drew on a very wide range of other expert studies, including work commissioned by the Scottish Government from the University of Sheffield, Model-based Appraisal of Alcohol Minimum Pricing and Off-Licensed Trade Discount Bans in Scotland (2009, version 2: April 2010 and second update: January 2012), analysing (amongst many other aspects) the price elasticities of alcohol demand and the impact of minimum pricing as against increased taxation. The BRIA noted that Scottish per capita alcohol sales were almost a quarter higher than in England (para 2.14) and that the average consumption of alcohol in a population was directly linked to the amount of harm, in terms of illness, violence and injury and other forms of social harm (paras 2.18 to 2.29). Alcohol-related general hospital discharges and mortality rates have risen substantially over thirty years, and chronic liver disease and cirrhosis mortality rates in Scotland are way above those in England and Wales or other European countries (figures 3, 4 and 5). Paragraph 2.18 of the BRIA put the general point simply, with footnote references to prior studies: The average consumption of alcohol in a population is directly linked to the amount of harm as evidenced in a number of systematic reviews. The more we drink, the greater the risk of harm. As overall consumption has increased in Scotland so have the resultant harms. However, the BRIA also recognised that the true relationship between consumption and harm was more complex, and involved other factors (particularly poverty and deprivation) of potential relevance to minimum pricing. It said, significantly, in this connection (para 2.29) that: Whilst alcohol-related issues impact on all socio-economic groups, it is important to recognise the greatest harm is experienced by those who live in the most deprived areas. The reasons why alcohol has a more harmful effect on people living in deprived communities are complex and not fully understood. Risky and harmful alcohol use is likely to be both a cause and effect of social deprivation. What is clear is that the level of alcohol-related harm in deprived communities is substantial, with alcohol-related general hospital discharge rates in the 20% most deprived communities (as measured by the Scottish Index of Multiple Deprivation, SIMD) around 7.5 times higher than in the most affluent fifth. Similarly, alcohol-related mortality rates are 6 times higher in the most deprived areas. Tackling alcohol-related harm has the potential to help address Scotlands wider health inequalities. Paragraph 2.29 of the study was taken up in a later section of the study identifying various benefits envisaged from minimum pricing. Under the heading Health Benefits for those on low incomes, para 5.24 noted that there were (at that time) insufficient data to enable the reduction in health harms across different income groups to be modelled, but that a NHS Health Scotland report (Monitoring and Evaluating Scotlands Alcohol Strategy. Setting the Scene: Theory of change and baseline picture by Beeston, Robinson, Craig and Graham) had confirmed strong income/deprivation patterns to alcohol-related health harm. Para 5.24 went on to repeat the ratios quoted in para 2.29 for alcohol-related hospital discharges and mortality rates in the most deprived and most affluent communities (7.5 times and 6 times respectively). It added that: significantly, average weekly consumption among low income harmful drinkers was much higher than among other harmful drinkers (93 units for men and 69 for women compared to 69 and 52 units respectively for harmful drinkers in the highest income group). This helps to explain the differential harm patterns described above. In addition those on low incomes are likely to be more responsive to minimum pricing. Given this, it is therefore likely that those in lower income/more deprived groups will benefit from the greatest reduction in health harms. The 2012 Bill, leading to the 2012 Act, was accompanied by Explanatory Notes and a Policy Memorandum, both of which identified a range of health and social and economic benefits envisaged as resulting from minimum pricing. The Policy Memorandum specifically picked up the alcohol-related hospital discharge and mortality ratios referred to in the BRIA, noting that the Scottish Government believes alcohol plays a significant part in these inequalities (para 10). It is therefore clear that, from the outset, concern about the health and social harms resulting from extremely heavy drinking in deprived communities was an element of targeted thinking behind the 2012 Act. The Policy Memorandum also discounted a straightforward increase in excise tax as it would impact on high price products as well as cheap ones and so would have a proportionately greater effect on moderate drinkers than a minimum price (para 29). The 2012 Act was, in this respect, envisaged as a balanced measure which would not target the cost of drinking generally without regard for the extra costs which this would impose on drinkers. Its aims were, as Lord Doherty found, directed principally towards the protection of health and life, though other consequential (largely public order and economic) benefits [were] also anticipated (para 53), and it was clear that it was not an aim that alcohol consumption be either eradicated or that its costs should be made prohibitive for all drinkers (para 54). It was intended to strike at alcohol misuse and overconsumption, in which connection the major problem was excessive consumption of cheap alcohol, which the proposed measures sought to address by increasing the price of such alcohol (para 54). Even in 2013, Lord Doherty was also able to find (para 59) that: the harmful drinkers in the lowest income quintile consume far more alcohol per head, and are the source of much greater health related and other harm, than harmful drinkers in the higher income quintiles. There is also clear evidence that the greatest alcohol-related harm is experienced by those who live in the most deprived areas (see the evidence summarised in para 2.29 of the Final BRIA). And he went on to conclude, at para 60, that there was objective evidence that the proposed minimum pricing measures are appropriate to achieve their aims. Since the BRIA study, more work has been done to fill the lacuna to which para 5.24 referred. This consists in a University of Sheffield report Model-based appraisal of the comparative impact of Minimum Unit Pricing and taxation policies in Scotland of April 2016. This identified a number of facts not previously evident. One was that, applying the definitions mentioned above, the great majority of both hazardous and harmful drinkers were not in poverty - 20% and 6% respectively of the whole drinker population as opposed to 2% and 1% of the whole drinker population who were in poverty: table 4.3. But another side of this coin is that hazardous and harmful drinkers in poverty drink more than those not in poverty: 1,456 as against 1,396 units per annum on average in the case of hazardous drinkers and 4,499 as against 3,348 units in the case of harmful drinkers; and the link between those in poverty and cheap alcohol is clear from the fact that, although they drink noticeably more, hazardous drinkers in poverty spend less, and harmful drinkers in poverty spend only very slightly more, than those not in poverty. This corresponds with the evident likelihood, which had been accepted by Lord Doherty in the Outer House (para 57), that poorer drinkers tend to drink cheaper alcoholic drinks than better off drinkers. A further study by the University of Sheffield shortly after the passing of the 2012 Act revealed (as recorded by the Extra Division in its reference to the Court of Justice, para17) a marked difference in the average number of cheaper priced alcoholic drinks purchased by lowest and highest income quintile drinkers. The study revealed that harmful and hazardous drinkers in the lowest income quintile purchased respectively 30.8 and 7.8 units of such alcohol weekly, an average decreasing with each quintile, with harmful and hazardous drinkers in the highest quintile only purchasing respectively 13.6 and 2.7 of such units weekly. Although directed to drinks priced at less than 45 pence, rather than 50 pence, per unit of alcohol, the position in relation to drinks priced at less than 50 pence is unlikely to differ fundamentally. Still more strikingly and sadly, hazardous and harmful drinkers in poverty are involved in far more alcohol-related deaths and hospital admissions than those not in poverty. Relevant deaths and hospital admissions were for hazardous drinkers in poverty 206 and 4,563 per 100,000 drinkers as against only 83 and 1,539 respectively for hazardous drinkers not in poverty. Relevant deaths and hospital admissions for harmful drinkers in poverty were 781 and 11,555 per 100,000 drinkers as against only 371 and 6,454 respectively for harmful drinkers not in poverty. The University of Sheffield study went on to model the effect of a 50 pence per unit of alcohol minimum price on drinkers in poverty and not in poverty. It concluded that annual consumption by harmful drinkers in poverty would experience a fall of 681 units (as compared with nearly 181 units for such drinkers not in poverty), while consumption by hazardous drinkers in poverty would experience a fall of just under 88 units (as compared with a fall of only 30 units for such drinkers not in poverty). There would be 2,036 fewer deaths and 38,859 fewer hospitalisations during the first 20 years of the policy, after which when the policy had achieved its full impact, there would be an estimated 121 fewer deaths and 2,042 fewer hospital admissions each year. The 2012 Act is not yet in force, but is the subject of the present on-going proceedings in which the petitioners challenge, while the respondents seek to establish the validity of its introduction under European law. All the above material is now before the court, and is admissible on the issue of justification and proportionality. Under these conditions, it would seem artificial, and even unfair, to allow the petitioners to rely on the new material to try to undermine the justification for any aims originally advanced, but not to allow the respondents to refine the aims advanced and to demonstrate that, on the material now available, the proposed measure is justified, even if it only meets an aim which is narrower than, but still falls within the scope of those originally advanced. Accordingly, even if it is right that some of the broader assumptions about correlations between hazardous and harmful drinking and health and other social problems are not sustainable, it seems to me open to the respondents to rely on the new material as reinforcing an entirely valid correlation, developed from the outset, between the health and social problems arising from extreme drinking by those in poverty in deprived communities. The respondents are in this respect doing no more than explaining how the 2012 Act will target the particular health and social problems arising from such drinking which the new material has demonstrated. Less restrictive measures to achieve the same aim? The focus of submissions on this appeal has been directed not to the question whether a system of minimum pricing per unit of alcohol is capable of meeting the agreed aims, including that relating to social deprivation which I have been discussing. The submissions have rather focused on the issue whether such aims could be attained by less restrictive measures. As I have indicated, but contrary to the petitioners case, this appears in the light of the Court of Justices judgment to be the same issue as whether, taking into account the objectives of the CAP and Single CMO Regulation, the proposed system is necessary to attain such aims. The petitioners object that the respondents have failed to produce appropriate and/or specific evidence or analysis to satisfy the onus on them to justify the prima facie infringement of the European legal prohibition on measures with equivalent effect to quantitative restrictions on imports and measures inhibiting free trade and effective competition. They also submit that, even on the material available, the respondents cannot show the proposed minimum pricing to be necessary to achieve the intended aims and cannot, in particular, show that there are no other ways of achieving those aims without infringing the above European legal prohibition. The core comparison here is between minimum pricing and some form of excise or tax. The comparison falls to be made on the basis that an excise or tax charge would involve less of an obstacle to free movement of goods between EU member states and competition. This is because Lord Doherty held that the respondents had not made out any case to the contrary. It is worth noting that, although it is for the domestic court to form its own conclusions as to the existence of any alternative measure(s) which would achieve the same objective(s) as minimum pricing, this is a question which was from the outset at the forefront of the Scottish Governments mind when determining to adopt a system of minimum pricing. It is a question which was addressed in detail in para 4.3 of the BRIA and in paras 28 to 35 of the Policy Memorandum which accompanied the Bill leading to the 2012 Act. Those paragraphs are still very largely relevant to the current issues. The petitioners basic proposition is that an increased excise duty could achieve a similar improvement in mortality and hospital admission statistics to that envisaged by the minimum pricing system currently proposed, as set out in para 27 above. Mr ONeill referred to a February 2016 paper by the same authors as the University of Sheffields later April 2016 study. That paper reported the results of a study based on an econometric epidemiological model constructed by reference to English conditions in 2014/2015. The study was to assess the differential effects of four policies on population sub-groups defined by drinking level and income or socioeconomic group. In this context, it equated the effects on health of a 13.4% increase in excise duty with those of a 50 pence per unit minimum pricing approach. Bearing in mind acknowledged differences between the scale and pattern of drinking in England and Scotland, the comparison and equation are, as the Lord Advocate submitted, not illuminating. What is worth noting is the authors observation that, although the predicted outcomes were overall similar, they were achieved in different ways: While all policies were estimated to reduce health inequalities because drinking is associated with substantially higher absolute health risks in lower socioeconomic groups than in higher socioeconomic groups, the scale of the inequality reduction varied across the policies. A 0.50 minimum unit price and a 0.22 per unit volumetric tax were estimated to reduce inequalities the most because heavy drinkers in lower socioeconomic groups buy proportionately more of the cheap alcohol most affected by these policies. Estimated impacts on health inequalities were smaller for a 4.0% alcohol ad valorem tax and a 13.4% current duty increase as price increases were more evenly distributed across the alcohol consumed by different socioeconomic groups. The relevant study for present purposes is the University of Sheffields April 2016 study. It was designed with specific reference to Scottish conditions, and the conclusions it reached on the modelled effect of alcohol tax increases were as follows: M14 At full effect, a 50p MUP is estimated to lead to 117 fewer alcohol-related deaths per year among hazardous and harmful drinkers. To achieve the same reduction in deaths among hazardous and harmful drinkers, an estimated 28% increase in alcohol taxes is required. M15 If reductions in alcohol-related harm in specific population groups are sought, then larger tax increases would be required; for example, a 36% tax increase would be required to achieve the same reductions in deaths among harmful drinkers as a 50p MUP. This is because MUP targets large price increases on those at greatest risk from their drinking while tax increases affect all drinkers. M16 Although achieving the same reduction in deaths among hazardous and harmful drinkers as a 50p MUP, a 28% tax increase would lead to slightly larger reductions in alcohol consumption among moderate and hazardous drinkers but smaller reductions in alcohol consumption among harmful drinkers and, particularly, harmful drinkers in poverty. M17 Similarly, at full effect, the reductions in deaths under a 28% tax increase would be larger among hazardous drinkers and smaller among harmful drinkers, particularly harmful drinkers in poverty, than under a 50p MUP price. M18 These differences in how death reductions are distributed across the population mean a 50p MUP is more effective than a 28% tax increase in reducing alcohol-related health inequalities. This is because a 50p MUP better targets the alcohol consumed by harmful drinkers on low incomes who are the group at greatest risk from their drinking. M19 Increases in consumer spending on alcohol are estimated to be substantially greater under a 28% tax increase than a 50p MUP. For example, among moderate drinkers annual per capita spending would increase by 2 or 0.5% under a 50p MUP and by 17 or 4.7% under a 28% tax increase. For harmful drinkers the annual increases in spending per capita are 6 or 0.2% for a 50p MUP and 152 or 6.4% under a 28% tax increase. On the basis of all the material before him, the Lord Ordinary considered (in paras 67 to 81 of his judgment) whether a minimum pricing system was necessary to achieve the agreed aims, or whether alternative means involving increased excise or tax would be just as effective. The whole of the Lord Ordinarys discussion of the point is valuable, but I shall highlight three principal themes. First, he noted (para 67) that minimum pricing targets cheap alcohol products by reference to their alcohol content, whereas the effect of an increased excise or VAT charge is felt across the board on the whole category of goods to which it applies. In this connection, he rejected the argument that an effective price rise across the board would reduce consumption generally in accordance with the agreed aims (para 77), because the legitimate aims of the measure had not been to reduce consumption, including consumption by hazardous and harmful drinkers, to the maximum extent possible regardless of possible economic or social consequences. Rather, they were those he had identified in paras 53 to 54 of his judgment, set out in para 24 above. There was a relevant judgment as to which it was for the Scottish legislature and Ministers to make, what level of protection for health and life to achieve, by striking a balance between health and other interests: para 79. Second, the relevant EU directives meant that excise duty could not be used to achieve the same outcomes as minimum pricing: paras 68 and 71. Third, he said that minimum pricing was easier to understand and simpler to enforce: see para 68. It was not open to absorption, eg by off-trade outlets such as supermarkets selling alcohol drinks below cost in order to attract other business onto or on their premises. The petitioners challenge these propositions. As the Lord Ordinary noted, the petitioners seek to make a virtue out of the first proposition, by arguing that higher retail prices across the board can only promote the stated aim of the 2012 to reduce alcohol consumption generally. The Reference made by the Inner House to the Court of Justice was framed in terms which give some encouragement to such an argument, asking as question 5 whether it is a legitimate ground for discarding an alternative measure (in casu, an excise duty increase) that its effects may not be precisely equivalent to the measure impugned under article 34 TFEU but may bring further, additional benefits and respond to a wider, general aim. Not perhaps surprisingly in the light of this formulation, Advocate General Bot, in response, saw the fact that the alternative measure entailing increased taxation is capable of procuring additional advantages by contributing to the general objective of combating alcohol abuse as no justification for discarding that measure: para 152. However, it is right to add that he had also recognised, at paras 149 and 150, that the Lord Advocates case was that the additional advantages could only be achieved at a cost, in terms of the across the board rises in prices (for the whole market of suppliers and consumers), which it was the respondents case that they considered disproportionate and inappropriate to impose. Advocate General Bot expressed himself as unable to see how that collateral effect might be seen as negative in the context of combating hazardous or harmful consumption. The Court of Justice endorsed Advocate General Bots approach to the fifth question (paras 47 and 58), whilst emphasising that the ultimate decision whether increased taxation would be capable of protecting human life and health as effectively as minimum pricing is for the United Kingdom courts (paras 49 and 50). Its answer to question 5 (at the end of para 50 and in para 2 of its ultimate ruling) was simply that The fact that the latter measure may bring additional benefits and be a broader response to the objective of combating alcohol misuse cannot, in itself, justify the rejection of the measure. The words in itself are here significant, because it leaves open the respondents case that their general objective of combating alcohol abuse was not one which they intended to pursue at all costs. The Lord Ordinary accepted the respondents case on this point (in para 77 of his judgment, cited in para 34 above). The First Division also accepted it, saying (para 200) that: Furthermore, assuming that any practical tax increase within the EU setting would involve across the board increases, albeit perhaps on different types of product, such increases would have a disproportionate, undesirable and unnecessary effect on moderate drinkers, who do not generally represent a significant problem in societal terms, at least of the type requiring to be addressed. The First Division also said (at para 181) that: The fact that minimum pricing may not, to the same extent, affect those who are more affluent, is of peripheral significance. These richer persons tend not to suffer to the same extent as harmful and hazardous drinkers in the lower quintile of affluence, whose health and life is at greatest risk. Mr ONeill submits that a desire not to impose a tax burden on moderate or other drinkers not at serious health risk cannot itself constitute or justify a measure taken for the protection of health or human life within article 36. That can readily be accepted. But it misses the point, which is that it was never, and is not now, the aim or target of the Scottish Parliament and Ministers to reduce consumption, even by hazardous and harmful drinkers, and still less by moderate drinkers, to the maximum extent possible regardless of possible economic or social consequences: see para 34 above. The more recently available information from the University of Sheffield study of April 2016 merely underlines the appropriateness of a more targeted approach in this connection. It follows that it is legitimate to balance any possible health advantages across the board against the unwanted burden which increased taxation across the board would impose on drinkers falling within the hazardous and harmful categories who are not (for reasons of affluence or whatever) at extreme risk and on moderate drinkers who are at no risk at all. Further, the April 2016 study makes clear that even the level of tax increases which would achieve similar overall reductions in mortality and hospitalisations would not have the same effect in targeting those in poverty, who, as the statistics tellingly show, are the group by far the most heavily affected by extreme drinking and consequent health and social problems. I consider therefore that there is no basis on which the Supreme Court should depart from the Lord Ordinarys conclusions on this point. The second point raises for consideration how far the framework of the EU Directives allows a member state, if it wishes, to assimilate by reference to alcoholic content the excise rates applicable to different categories of alcoholic beverage. In Commission of the European Communities v French Republic (Case C-434/97) [2000] ECR I-1129, para 244, the Court of Justice summarised the difference between VAT and excise as being that the former is levied on price, whereas excise duty is primarily calculated on the volume of the product. The position under Council Directive 92/83/EEC on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages (also known as the structures Directive) is, on examination, more nuanced. This Directive identifies five categories of alcoholic beverage to which member states must apply an excise duty in accordance with the Directive. These are beer (article 2); i) ii) wine, still and sparkling with an alcoholic strength between either 1.2% and 15% or 15% and 18% (still wine) or 1.2% and 15% (sparkling wine) (article 8); iii) other fermented beverages, still and sparkling (article 12); iv) with an alcoholic strength between 1.2% and 22% (article 17); and v) ethyl alcohol, defined to cover (a) products falling within CN codes 2207 and 2208 or (b) products within CN codes 2204, 2205 and 2206 which have an actual alcoholic strength by volume exceeding 22% or (c) potable spirits containing products, whether in solution or not (article 20). intermediate products (other products not within articles 2, 8 or 12) Subject to Directive 92/84/EEC (which sets minimum rates for beer and intermediate products but effectively no minimum rate for wine, since the rate stated is ECU 0 per hectolitre), Directive 92/83/EEC allows different categories to carry different rates. In the case of beer and ethyl alcohol products, the rate stated is, broadly, chargeable according to alcoholic content (articles 3(1) and 21). In the case of fermented beverages and intermediate products, it is to be fixed by reference to the number of hectolitres of finished product (articles 13(1) and 18(1)). Within each category, there are requirements to fix the same rate in respect of the whole category, or in respect of each of certain defined sub-categories. Thus, in relation to wine, article 9(2) requires member states, first, to levy the same rate of excise duty on all products chargeable with the duty on still wine, and, second, to levy the same rate of excise duty on products chargeable with the duty on sparkling wine (article 9(2)), with the member state being free to decide whether or not the rates for still and sparkling wines should be equated with each other. There are however exceptions to the requirement to have a single rate for each category or sub-category, in the case of lower alcoholic strength beverages; that is: beer with an alcoholic strength not exceeding 2.8% by volume (article 5(1); wine or fermented beverages not exceeding 8.5% (articles 9(3) and 13(3)); intermediate products not exceeding 15%, subject to certain conditions (article 18(3)); and ethyl alcohol products within code 2208 with an alcohol strength not exceeding 10% (article 22(5)). Hence, the low rates applied in the United Kingdom (under article 9(3)) to various defined categories of cider with alcohol content not exceeding 8.5%. There are also exceptions allowing reduced rates under certain conditions for beer brewed by independent small breweries (article 4(1)) and for ethyl alcohol products produced by small distilleries (article 22(1)). However, it is clear that this framework precludes any complete assimilation by reference to alcoholic strength. A single rate must be levied on all still or sparkling wines with an alcohol content between 8.5% and 15%. Further, a single rate must be levied on each category or sub-category of alcoholic beverage, whatever its retail price. To ensure that the cheapest drinks were sold at a price, inclusive of excise duty and VAT, equivalent of 50 pence per unit of alcohol, the excise rate would have to be set high. But this would mean a correspondingly high excise rate for more expensive drinks which were already being priced at more than 50 pence per unit of alcohol. Before the Lord Ordinary and the Inner House, the fact that the Scottish Parliament and Ministers had no power to raise taxation on alcoholic drinks was (although referred to at one point as the elephant in the room: Inner House, para 192) disregarded on the basis that it arose from the internal division of powers within the United Kingdom. But two assumptions were evidently made, first, that legislation could (by cooperation between the relevant United Kingdom and Scottish Parliaments and/or Governments) be enacted to impose additional excise duty in Scotland alone, but, second, that any such legislation would have to fit within the framework of Directive 92/83/EEC. The Lord Advocate, for the first time, sought in his written case to challenge the first assumption, by arguing that any increase in excise duty could not be restricted to Scotland, under either United Kingdom or EU law. During his oral submissions, he, however, conceded, in the light of article 1(2) of Directive 2008/118/EC and Court of Justice caselaw, that this particular challenge must fail. Article 1(2) of Directive 2008/118/EC provides: Member states may levy other indirect taxes on excise goods for specific purposes, provided that those taxes comply with the Community tax rules applicable for excise duty or value added tax as far as determination of the tax base, calculation of the tax, chargeability and monitoring of the tax are concerned, but not including the provisions on exemptions. Article 1(2) was in materially the same terms and has materially the same effect as article 3(2) of the predecessor Directive 92/12/EEC: Tallinna Ettevtlusamet v Statoil Fuel & Retail Eeesti AS (Case C-553/13) EU:C:2015:149. In that case, as in the previous case Transportes Jordi Besora SL v Generalitat de Catalunya (Case C- 82/12) EU:C:2014:108, the Court of Justice proceeded on the basis that article 3(2) or 1(2) was available for use by a city or region. The Court also considered more generally the preconditions for use of the article. It stated both that, where alternative interpretations of the meaning of the article are possible, preference must be given to that interpretation which ensures that the provision retains its effectiveness: Commission of the European Communities v French Republic (Case C-434/97), para 21; and that a derogating provision such as article 1(2) must be interpreted strictly: Tallinna, para 39. The basic, and cumulative, preconditions are that, first, the tax must be levied for one or more specific purposes and, second, it must comply with the EU tax rules applicable to excise duty and VAT as far as determination of the tax base, calculation of the tax, chargeability and monitoring of the tax are concerned, not including the provisions on exemptions: Tallinna, para 35.The purpose must be a purpose which is not merely budgetary: Commission of the European Communities v French Republic (Case C-434/97), para 19, Transportes, para 23 and Tallinna, para 37. It is not therefore sufficient that the tax will be used, or is hypothecated, to promote an activity which the taxing authority is anyway obliged to undertake and to fund: Tallinna, paras 38-40. What article 1(2) does permit is a tax with the specific purpose to guide the behaviour of taxpayers in a direction which facilitates the achievement of the stated specific purpose, for example by way of taxing the goods in question heavily in order to discourage their consumption: Tallinna, para 42. That is precisely the basis on which the petitioners submit that an additional excise tax or VAT could be imposed by the Scottish Parliament and Ministers under article 1(2). The tax would still however have to satisfy the second precondition. What that means, and whether and how far any such tax would have to reflect or respect the categorisation or banding provided by Directive 92/83/EEC, is, as Mr ONeill accepts, much less clear. Commission of the European Communities v French Republic, on which he relies in this context, stands for the proposition (para 27) that article 3(2) (or now article 1(2)) does not require member states to comply with all rules applicable for excise duty or VAT purposes as far as determination of the tax base, calculation of the tax, and chargeability and monitoring of the tax are concerned. It is sufficient that the indirect taxes pursuing specific objectives should, on these points, accord with the general scheme of one or other of these taxation techniques as structured by the Community legislation. The Court observed that, bearing in mind the different bases on which excise tax and VAT are imposed (see inter alia para 31 above), it would commonly be impossible to comply with the tax rules relating to both simultaneously (para 24) and said that the general aim was to prevent additional indirect taxes from improperly obstructing trade: para 26). The tax in issue in the case itself was imposed on beverages with an alcoholic strength exceeding 25% alcohol by volume. The Commission challenged this tax on the basis that the threshold of 25% did not correspond with the threshold of 22% provided in Directive 92/83/EEC (see para 38(v) above). That complaint was summarily rejected by the Court, on the basis that it related to the substantive scope of that Directive, and that article 3(2) of Directive 92/12/EEC (or now article 1(2) of Directive 2008/118/EC) does not, on this point, demand compliance with the tax rules applicable for excise duty or VAT purposes: para 30. Mr ONeill relies on this decision in submitting that an excise tax or VAT could, under article 1(2), be levied by reference to bands of alcoholic strength quite different from and much more refined than those specified in Directive 92/83/EEC. Each band of alcoholic strength could, for example, attract a different rate - the greater the strength, the higher the rate. Since the Lord Advocate did not address any detailed submissions to this point, as discussed in Commission of the European Communities v French Republic, or submit that the second precondition would preclude additional excise duties or VAT rates by reference to narrowly defined bands alcoholic strength, I am prepared for present purposes to accept the correctness of Mr ONeills analysis of the likely effect of the case law. Had the point been critical, it might have been necessary to make a further reference to the Court of Justice, for clarification of the second precondition. But, as will appear, I do not consider it is critical. It follows that, for present purposes, the second point on which Lord Ordinary relied (paras 34 and 38 above) is no longer available to the respondents. The third point made by the Lord Ordinary (para 68) is that minimum pricing is easier to understand and simpler to enforce. It would not be open to absorption, eg by off-trade outlets such as supermarkets selling alcohol drinks below cost in order to attract other business onto their premises. That remains a valid point, if one considers an excise duty or VAT charge by itself and without more. However, Mr ONeill counters it by submitting that a combination of measures could achieve the same result as a minimum price. Retailers could be prohibited from making sales below cost, with excise duty or VAT being levied at a rate which would be bound, on that basis, to ensure the desired minimum retail sales price. A prohibition on sales at a loss, or giving rise to an artificially low profit margin, applying to all traders within a particular member state, is consistent with European law: Criminal Proceedings against Bernard Keck and Daniel Mithouard (Joined Cases C-267/91 and C-268/91) [1993] ECR I-6097 and Groupement National des Ngociants en Pommes de Terre de Belgique (Belgapom) v ITM Belgium SA and Vocarex SA (Case C-63/94) [1995] ECR I-2467. The practical difficulties of operating and enforcing any such system are however evident. Alternatively, an excise duty or VAT charge could be levied at a rate which would, by itself, ensure that, even the cheapest, or at least the great majority of the cheapest, drinks were sold at whatever minimum price per unit of alcohol was intended, and retailers could be prohibited from themselves carrying or subsidising all or any part of an excise duty or VAT charge. Both these suggestions are however open to the fundamental objection that they would in practice be bound to lead to a generalised increase in prices across the board, which brings one back to the Lord Ordinarys first and basic point. The lack of market impact analysis and proportionality stricto sensu As I have indicated in para 14, it is not easy to know or to understand the conceptual framework within which to address these topics. It is in particular unclear how the EU market impact of the proposed minimum pricing fits into the exercise which a domestic court must undertake. Assuming (as the Court of Justices judgment indicates) that it is to be considered as an aspect of the issue of necessity arising at the second stage identified by both Advocate General Bot and the Court of Justice, it is unclear how it bears on necessity. It is clear that the Court of Justice refrained deliberately from endorsing the Advocate Generals analysis of a three- stage approach. While that is so, and whether or wherever it fits into the legal analysis, it is nonetheless appropriate to address the basic point, that an appreciation of the likely EU market impact seems on the face of it a sensible precondition to action interfering with EU cross-border trade and competition. Put rhetorically, can it be that, provided an objective is reasonable and can only be achieved in one way, it is irrelevant how much damage results to the ordinary operation of the EU market? The first response that can be made to this rhetorical question is that the proposed comparison is, in the present case, between two essentially incomparable values. One is the value of health, in terms of mortality and hospitalisation, coupled moreover with the evident desirability of reducing socioeconomic inequalities in their incidence. The other is the market and economic impact on producers, wholesalers and retailers of alcoholic drinks across the European Union. A second observation is that this comparison is yet further complicated by the fact that it is not for any court to second-guess the value which a domestic legislator may decide to put on health. It is for the member states, within the limits imposed by the Treaty, to decide what degree of protection they wish to assure: as the Court of Justice reiterated in the present case, para 35, with reference to prior case law. The circularity deriving from the qualification within the limits imposed by the Treaty does not help resolve the question what limits there may be on the value that may be placed on life. Would or should a court intervene because it formed the view that the number of deaths or hospitalisations which the member state sought to avoid did not merit or was not proportionate to the degree of EU market interference which would be involved? I very much doubt it. Any individual life or well-being is invaluable, and I strongly suspect that this is why the Court of Justice did not endorse the Advocate Generals third stage enquiry, and treated the issue very lightly indeed. But it follows that I see very limited scope for the sort of criticism that the petitioners make about the absence of EU market evidence. As a matter of fact, it appears that the petitioners case on this aspect was not prominent before the Lord Ordinary. It was however clearly raised before the First Division (paras 165 and 201-205). The First Division approached this case on two bases. First, it concluded on the material before it (para 203) that In EU market terms the effect [of minimum pricing at 50 pence per unit] might be described as relatively minor. The on- trade is unlikely to be adversely affected at all. No doubt some wine from Bulgaria, Romania and Portugal may lose a competitive edge. Their share of the market too is very small, but there will be an effect on the competitive nature of some wines and beers from other EU states. Cheap French brandy may be affected, even if, so far as spirits are concerned, the greater impact will be on domestically produced vodka, whisky and cider. As a broad conclusion on the information available, this does not appear to be challenged. Second, the First Division went on to reject the petitioners case that the information on which it was based was inadequate, taking the view that the detailed exercise of market prediction based on the production of models, for which the petitioners were contending, was neither necessary nor practicable. This leads to a third observation. Whatever the position as to the first two observations, there are also strong reasons for thinking that any attempt to assess the EU market impact in the present area would itself have involved incalculables, which cannot presently be further or more precisely assessed in any way which would be relevant. That conclusion is foreshadowed both in material available at the outset and further material produced to date. At the outset, prior to the 2012 Act, the Scottish Government did not attempt itself or commission any analysis focusing specifically on the EU market. But the BRIA noted under the heading Effect on Market (para 5.114) that: There is no consensus from industry on what will happen to pricing of products and hence the effect on the market in relation to the introduction of a minimum price per unit of alcohol. Some consider all prices will be affected ie those above a minimum price will also be adjusted, others believe it will only be those below the minimum price that will be affected, and others consider it will be somewhere in between. The BRIA continued by recording various possibilities, including switching between categories of alcoholic drink, switching to premium brands once the price differential became small, decimation of own label brands and concentration by retailers on particular products, though which these might be was unknown (paras 5.114-118). Similarly after noting that minimum alcohol pricing would apply to all products, irrespective of which country produces them (para 5.119), the BRIA said that: It has proved extremely difficult to access the level of data required to analyse which individual products are likely to be most affected, and the country of origin of such products. Again, at para 6.7 the BRIA recorded that the Scottish Government is not able to predict how individual companies and retailers will react to the introduction of a minimum price per unit. A survey had shown no consensus. As regards the effect on producers, again, there was no consistent view among (it appears, Scottish) industry representatives. The BRIA did summarise material indicating that spirits were predominantly, though not exclusively, of domestic origin (paras 5.120-123) and that beer, cider and other alcoholic drinks were both domestically produced and imported. The vast majority of wine was, in contrast, imported from a large number of countries retailing across the range of prices (para 5.124), with the top ten countries of origin of wines selling on the UK market being (in descending order of market share) Australia (21.5% of the market), the USA (14.3%), Italy (14.2%), France (13.9%), South Africa (9.1%), Chile (8.6%), Spain (7.5%), New Zealand (5.3%), Germany (2.3%) and Argentina (1.2%). The BRIA observed that a 50 pence per unit minimum price regime would require an uplift in the average bottle price of wines from each of these countries, except France and New Zealand (the average uplift being 49p for Australia, 60p for the USA, 58p for Italy, 85p for South Africa, 69p for Chile, 60p for Spain, 45p for Germany and 24p for Argentina). Annex A to the BRIA was a Competition Assessment, which identified markets and sectors potentially affected by minimum pricing, including indirectly affected sectors upstream, in the form of drinks manufacturers and distributors/wholesalers (para 4). Under the heading International Competition, it noted (para 30) that: The legislation would apply equally to international producers, wholesalers and retailers trying to enter the Scottish market. Any firms wanting to import high strength, low price products would have to raise their retail prices to comply with the minimum price per unit legislation. This could impact on a foreign companys ability to compete in the domestic market if the company was currently selling at very low margins in order to be competitive with domestic products. The Competition Assessment noted that the initial change effected by minimum pricing would be a reduction in the quantities sold of products whose original price lay below the minimum, though the extent would depend on the elasticity of demand (para 36). Retailers would however benefit by the higher prices of the quantities actually sold and might, as in British Columbian experience, benefit by a general raising of the price of higher value products to maintain a differential with those now affected by minimum pricing (paras 36 and 38). The likely distribution of the increased revenues across the supply chain was not known (para 42). In August 2013 and in an updated version in December 2014, NHS Scotland produced for the Scottish Government, and the Court of Justice had before it, a table analysing the price distribution of wine from various countries of origin sold in Scotlands off-trade (where the great bulk of cheap wine is sold). This demonstrates that the majority of the impact of minimum pricing will fall on wine imported from outside the EU, though Italy (with 14.6% of off-trade wine sales), Spain (with 11.5%) and France (with 10.6%) would be affected, selling respectively 31%, 56% and 25% of their wine in Scotland at below 50 pence per unit of alcohol. Germany, Portugal, Bulgaria and Romania had respectively 1.3%, 0.7%, 0.3% and 0.1% of the market, with respectively 2%, 39%, 97% and 84% of their wines being sold at below 50 pence per unit. Another table, which was before the First Division on the reference back from the Court of Justice, showed that none of the 15 wines with the largest off-trade sales values was produced in an EU country. In response to the Court of Justices request, the Scottish Government also produced a table stating in general terms which other alcoholic drinks imported into Scotland would be, or be likely to be, affected. Those thought likely to be affected were all brandy and cognac, about 15% of the branded lager sales market in Scotland, part of the stout market, 87% of which was produced in Ireland, but most of which sold at below 50 pence per unit, part of the cider market, 36% of which comes from EU countries and part of the fortified wine market (sherry and port), though most of this sells at more than 50 pence per unit. Some effect on other products was thought possible, but unlikely. The petitioners have referred to general statements by the Commission about the wine market and the balance of supply and demand and increased competitiveness reached after many years of structural surpluses. They have also referred to statistical information on wine production within the EU and intra- and extra-EU trade. It is not, however, suggested that this material gives answers to the questions which the petitioners submit that the respondents must answer if they are to satisfy the evidential onus on them. The petitioners suggest that it was incumbent on the respondents to analyse the structure of the wine industries in, say, Romania, Spain, Portugal and Italy, and/or assess how much of the total wine exports of each member state are sold in Scotland, and therefore get some idea of how much MUP [minimum unit pricing] in Scotland might impact upon the wine producers in those countries (written case, para 4.65). Bearing in mind the impossibility of obtaining information about or analysing even the effect on the Scottish retail market and on the relationship between retailers and their suppliers, this appears an unrealistic counsel of perfection. This is to my mind confirmed by reports received in October 2012 and May 2016 by the petitioners from Professor George Yarrow and Dr Christopher Decker entitled Economic Analysis of the impact of minimum pricing on alcoholic beverages in Scotland. These set out in broad economic terms various possible outcomes of a minimum pricing regime, and they advance some firm views about the desirability of a taxation, rather than a minimum pricing, approach. But the reports also suggest that the petitioners criticisms about lack of specificity are misguided. To my mind, they confirm that lack of specificity is essentially inherent in the present situation. Paragraph 2 of the first report states: The detailed analysis is necessarily non-exhaustive, not only because of the time constraints for delivery of this opinion but also because, for reasons to be explained, regulatory policies with the types of characteristics possessed by the MUP scheme are liable to lead to chains of unintended consequences. Whilst it is possible to identify and analyse the tendencies involved in these chains of consequences, they are impossible to pin down with anything approximating total precision, because in part they are governed by future adaptations and innovations to changed incentive structures, knowledge of which is today necessarily limited. I note that, even when examining differences between studies by HMRC in 2010 and 2014 of price elasticities in the alcohol market, the authors in their second report identified a problem of uncertainty, arising from lack of sufficient evidence to make it possible to know on what assumptions the available data should be analysed (underdetermination) (para 13). The authors also stated in their first report (para 6) that, because taxation is, in their view, an obvious and more effective alternative to minimum pricing: [T]here is no need in this case to consider balancing trade-offs between health policy goals and other aspects of economic policy, such as the promotion of unimpeded trade flows and the promotion of competition. Paragraph 6 of this report means that the authors did not attempt an exercise in comparison of opposing considerations. Those considerations are not only incommensurate on their face; their comparison would, in the light of para 2 of the report, involve weighing inherently unknowable uncertainties regarding the nature and impact of minimum pricing on EU trade against the value which it is for national legislatures and governments to place on health policy goals: see para 48 above. The Yarrow and Decker reports explain as a matter of general economic theory why and how minimum pricing will be likely to distort the market, by, in effect, suppressing competition or cartelising a part of the market, formerly occupied by lower priced alcoholic drinks, and precluding new entrants into it. This can also be expected to reduce imports. The economic results to this effect are almost self- evident, as the first report states (para 51). But the first report also contains material checking the general theory by reference to a First Brand Ltd survey using retail prices in Scotland, Italy and Spain, with a lesser contribution from Portugal and some limited imports from Bulgaria and Cyprus. That distortion of this nature is likely to occur is not however in issue. What is notable throughout the reports is the repeated caveat that the precise nature and effects of minimum pricing on the market cannot at this stage be assessed. It remains uncertain whether it will lead to destocking or, because of the greater retail profit margin, to retailer concentration on the brands whose price has to be increased to the minimum price. As to this paras 63 and 65 of the first report contain the following passages: 63. [T]he purpose of this analysis [by reference to the First Brands Ltd survey] was principally to capture a more general point that, whilst the MUP will, by definition, lead to a change in prices for those products which are currently priced below the relevant threshold, it is also possible that products currently priced above the MUP may also be affected by such a policy in the longer term 65. Indeed, although predicting retailer strategies is a somewhat speculative exercise, we think economic logic points to the de-stocking of higher-priced products as a likely outcome. Section 4 of the report entitled The Economic Impacts of MUP in more detail starts with two introductory paragraphs, which include the following: 96. The general conclusion to which economic analysis leads in this case is that it is possible to be very confident that distortionary/discriminatory effects will eventuate, but that it is not possible to evaluate those effects in a comprehensive and precise way. The second report examines new evidence available from a Cardinal Research survey of off-trade prices, and concludes that this does not materially affect the general conclusions reached in the first report, regarding the distorting or discriminating effects of minimum pricing on the market and EU trade. While accepting that the benefits of adherence to Single Market principles (alternatively the costs of setting them aside) are manifestly unquantifiable in any precise way (para 65) and that it would be for the courts, not economists or other experts, to determine what relative weight should be attached to such principles (paras 53 and 67), the authors repeat their view (see para 6 of their first report, above) that the present case is not one where there is any trade-off to resolve (para 68). Among the factors to which the authors refer is the fact that taxation would increase the Scottish Governments general revenues, enabling it to devote more funding to promote health, while minimum pricing will increase retailers and, it may be others, profit margins. It is however essentially for the Scottish Government to decide what burden by way of taxation it wishes to impose or, looking at the matter another way, what taxation it requires to raise. It was well aware of the difference in this respect between increased excise or VAT and minimum pricing. Both the BRIA (para 4.3) and the Policy Memorandum (para 29) mentioned it. The BRIA noted that the Scottish Government already had power in other legislation to impose a social responsibility levy on retailers of alcohol on social and health grounds, the proceeds of which would then be available to tackle health issues. In any assessment which is appropriate of the general proportionality of the proposed system of minimum pricing, due weight must be given to the requirement under the 2012 Act that the system be reviewed after five years, and the sunset provision that it will expire after six years unless renewed by a ministerial decision receiving the positive approval of the Scottish Parliament. The proposed system was therefore explicitly provisional, requiring the authorities to take stock of its effectiveness after a period of years and placing the onus of justifying its continuation in the light of experience firmly on the Scottish Parliament at the end of that period. Both the Advocate General (para 85) and the Court (para 57: para 13 above) regarded these provisions as relevant on the issue of proportionality. The Advocate General, at para 85, described the proposed system as somewhat experimental. The Court referred, at para 57, to the possible existence of scientific uncertainty as to the actual and specific effects on the consumption of alcohol of a measure such as the MUP for the purposes of attaining the objectives pursued. When using the word scientific, it cannot have been referring to chemistry or physics. It was clearly referring to the uncertainties experienced even by experts in predicting the precise reactions of markets and consumers to minimum pricing. As the examination above of the available material shows, this applies as much to the effect on EU trade as to any other aspect. The logic of paras 85 and 57 applies as much to the issue presently under discussion as to any other aspect of the proposed system. Conclusion The Lord Ordinary and First Division decided that it could reasonably be concluded, on an objective examination of the differing material put before them and now before the Supreme Court, that the proposed system of minimum pricing was proportionate in the sense required by European Union law and now explained by the Court of Justice. It is for the Supreme Court to determine whether this was a judgment that they were entitled to reach. Despite the forceful and very well presented submissions of Mr ONeill, I consider that they were. A critical issue is, as the Lord Ordinary indicated, whether taxation would achieve the same objectives as minimum pricing. Although not all of the points on which he relied for his conclusion on this issue can still stand, the main point stands, that taxation would impose an unintended and unacceptable burden on sectors of the drinking population, whose drinking habits and health do not represent a significant problem in societal terms in the same way as the drinking habits and health of in particular the deprived, whose use and abuse of cheap alcohol the Scottish Parliament and Government wish to target. In contrast, minimum alcohol pricing will much better target the really problematic drinking to which the Governments objectives were always directed and the nature of which has become even more clearly identified by the material more recently available, particularly the University of Sheffields April 2016 study. As to the general advantages and values of minimum pricing for health in relation to the benefits of free EU trade and competition, the Scottish Parliament and Government have as a matter of general policy decided to put very great weight on combatting alcohol-related mortality and hospitalisation and other forms of alcohol-related harm. That was a judgment which it was for them to make, and their right to make it militates strongly against intrusive review by a domestic court. That minimum pricing will involve a market distortion, including of EU trade and competition, is accepted. However, I find it impossible, even if it is appropriate to undertake the exercise at all in this context, to conclude that this can or should be regarded as outweighing the health benefits which are intended by minimum pricing. In the overall context of the Scottish or, on the face of it, any other market, it appears that it will be minor, though it will hit some producers and exporters to the Scottish market more than others. Beyond that, the position is essentially unpredictable. Submissions that the Scottish Government should have gone further to predict the unpredictable are not realistic. The system will be experimental, but that is a factor catered for by its provisions for review and sunset clause. It is a significant factor in favour of upholding the proposed minimum pricing rgime. For these reasons, I consider that the appeal should be dismissed. |
The principle of open justice is one of the most precious in our law. It is there to reassure the public and the parties that our courts are indeed doing justice according to law. In fact, there are two aspects to this principle. The first is that justice should be done in open court, so that the people interested in the case, the wider public and the media can know what is going on. The court should not hear and take into account evidence and arguments that they have not heard or seen. The second is that the names of the people whose cases are being decided, and others involved in the hearing, should be public knowledge. The rationale for the second rule is not quite the same as the rationale for the first, as we shall see. This case is about the second rule. There is a long standing practice that certain classes of people, principally children and mental patients, should not be named in proceedings about their care, treatment and property. The first issue before us is whether there should be a presumption of anonymity in civil proceedings, or certain kinds of civil proceedings, in the High Court relating to a patient detained in a psychiatric hospital, or otherwise subject to compulsory powers, under the Mental Health Act 1983 (the 1983 Act). The second issue is whether there should be an anonymity order on the facts of this particular case. The facts The appellant is now 46 years old. He has had mental health problems for much of his life and in his twenties these became so severe that he was compulsorily admitted to a psychiatric hospital under section 2 of the 1983 Act. There he met and formed a relationship with another patient but it did not last. Shortly after his release from a second period in hospital he murdered her and her new boyfriend. It was a particularly savage killing which must have caused untold suffering to the victims and has continued to cause great grief to their families. In January 1997 he was convicted of murdering them both, the jury rejecting his defence of diminished responsibility, a verdict at which the trial judge expressed himself astonished. His first conviction was set aside on appeal, in the light of fresh evidence as to his mental condition; but when he was retried in November 1998 he was again convicted of murder, the jury again rejecting his defence of diminished responsibility. He was sentenced to life imprisonment, with a tariff originally set at 15 years but reduced on review to 11 years. The reviewing judge commented that the outstanding feature of the case is the obvious sub normality or mental abnormality of the defendant. This tariff expired in May 2007. But in August 2000 the appellant had been transferred to a high security psychiatric hospital, pursuant to a direction of the Secretary of State under section 47 of the 1983 Act. This permits the Secretary of State to transfer a person serving a sentence of imprisonment to be detained in hospital for psychiatric treatment if the grounds for doing so exist. The effect of an ordinary transfer is the same as the effect of an ordinary hospital order made in criminal proceedings under section 37 of the 1983 Act (section 47(3)). However, the Secretary of State may couple a transfer direction with a restriction direction under section 49 of the 1983 Act and did so in this case. This means that if the grounds for detaining the patient in hospital no longer exist, the Secretary of State may return the patient to prison to serve the remainder of his sentence (section 50(1)(a)). While the patient is in hospital, however, a transfer with restrictions has the same effect as a restriction order imposed by a court under section 41 of the 1983 Act (section 49(2)). This means, among other things, that the usual power of the patients responsible clinician to grant him leave of absence from the hospital under section 17 of the 1983 Act, and the power of the hospital managers to transfer him to another hospital under section 19 of the Act or the regulations made thereunder, and the power of the responsible clinician or the hospital managers to discharge him from hospital under section 23 of the Act, can only be exercised with the consent of the Secretary of State (section 41(3)(c)). The Secretary of State also has his own powers, to lift the restrictions if they are no longer required to protect the public from serious harm (section 42(1)), or to discharge the patient, either absolutely or conditionally (section 42(2)), and to recall a conditionally discharged patient to hospital (section 42(3)). But if a transferred prisoner is no longer suitable for hospital treatment, the Secretary of State may, instead of returning him to prison, exercise the same powers of releasing him on licence or subject to supervisions as he could have exercised had the patient been remitted to prison (section 50(1)(b)). In August 2007, the appellant was transferred from the high security hospital to a private sector medium secure psychiatric hospital, where he remained until October this year. From 2008, he had unescorted leave within the hospital grounds (which does not require the consent of the Secretary of State). From 2009, he also had escorted leave in the community, where he did voluntary work. In July 2012, his responsible clinician applied to the Secretary of State for consent for the appellant to have unescorted leave in the community. It is uncontroversial that unescorted leave in the community is usually an important component in assessing a patients suitability for discharge from hospital. That consent was refused by letter dated 13 December 2012. Patients subject to restriction orders or directions may apply annually to the First tier Tribunal under section 70 of the 1983 Act. The Tribunal has a duty, under section 73 of the Act, to discharge a patient who is subject to a restriction order, either absolutely or conditionally, if the grounds for detaining him in hospital no longer exist. But if the patient is subject to a restriction direction, the Tribunal has no power to discharge him. Instead, under section 74(1), the tribunal must: (a) notify the Secretary of State whether in its opinion, the patient would, if subject to a restriction order, be entitled to be absolutely or conditionally discharged under section 73; and (b) if the tribunal notifies him that the patient would be entitled to be conditionally discharged, may recommend that in the event of his not being discharged under this section he should continue to be detained in hospital. Where (a) applies, the Tribunal shall direct the absolute or conditional discharge of the patient if, within 90 days of the notification, the Secretary of State informs the Tribunal that it may do so (section 74(2)). On 25 April 2013, the First tier Tribunal, having heard the appellants case, notified the Secretary of State that he would have been entitled to a conditional discharge. In their view, he was not then suffering from mental disorder of a nature or degree which made it appropriate for him to be detained in hospital for medical treatment; it was not necessary for his own health or safety or for the protection of other persons that he should receive such treatment, provided that his discharge was conditional; and appropriate medical treatment was available for him, provided that the discharge was conditional and subject to the conditions they proposed, which included supervision, supported accommodation and further treatment. The Tribunal also recommended, pursuant to section 74(1)(b), that if he were not discharged he should remain in hospital. The Secretary of State could have sought to appeal that decision but did not do so. Instead, he followed his policy that the release of persons sentenced to life imprisonment should be determined by the Parole Board. Accordingly he referred the case to the Parole Board. Section 74(5A) of the 1983 Act provides that applications and references to the Parole Board may be made in respect of a patient subject to a restriction direction where the Tribunal has recommended that a patient who would otherwise be entitled to a conditional discharge should remain in hospital if not discharged. Following the Tribunals decision, the appellants responsible clinician again applied for the Secretary of States consent for him to have unescorted community leave. Consent was again refused in a letter dated 11 July 2013. In October the Secretary of State agreed to retake that decision, but in a letter dated 18 October 2013, consent was again refused. The claimant applied for judicial review of that decision in November 2013; in December 2013, the High Court ordered that the appellant be anonymised in the proceedings; this was continued at the end of December when permission to apply for judicial review was granted. The claim was heard by Cranston J in January 2014: [2014] EWHC 167 (Admin). He rejected the appellants challenge to the lawfulness of the Secretary of States decision. He had earlier invited the parties submissions on whether the appellant should remain anonymous. In response, the responsible clinician wrote to the judge to request that the anonymity order remain in force for the following reasons: 1. The hospital is a secure mental health hospital which provides care and treatment for a large number of patients with various offences and who continue to pose risks to staff and others. 2. Naming the hospital would lead to enhanced procedural, physical and relational security having to be put in place. 3. The hospital staff would need to be vigilant to monitor the safety of the individual in terms of the media interests and the impact this may have on [the patient] and on other patients who are detained in hospital with him and their attitude to him. 4. High profile nature of the case which would attract media interest leading to contact with the hospital and consequences of managing this interest on a daily basis. 5. Distress caused to relatives of the victims in this case. Impact of media interest on [the patients] care, 6. treatment and progress at the hospital. 7. patient] if his whereabouts were made public. Previous concerns in relation to the safety of [the Cranston J dealt with the issue in a single paragraph (para 35): previous proceedings about this claimant are publicly available and I cannot see the justification for anonymity: the public have a right to know what I have decided about his claim for judicial review: R (M) v Parole Board [2013] EWHC 1360 (Admin), [2013] EMLR 23, paras 47 49. However, Dr H has written requesting that the hospitals identity and that of the staff be concealed, to protect both the claimant and the other patients from potential intrusion. That is a reasonable request and there be an order of anonymity to that extent. The claimant was refused permission to appeal in relation to the dismissal of his claim but granted it in relation to the refusal of anonymity. The Court of Appeal dismissed his appeal. The original anonymity order has, however, remained in force pending the determination of his appeal to this court. To bring the history up to date, in September 2015, the Parole Board directed the release of the appellant on life licence. It explained that the Risk Management Plan which is put forward is robust, that your risks of causing serious harm in the community are now minimal and that any increase in risk is highly likely to be detected before any danger arises, that your risks can be safely managed in the appropriate community setting which is now proposed and that the point has been reached at which it is no longer necessary for the protection of the public that you should continue to be detained. Hence his release was conditional upon a place being available at a particular care home which specialises in rehabilitation services. The Parole Board also imposed a number of conditions in addition to the standard conditions contained in all life licences. These included a requirement to comply with the conditions in a protocol governing his residence in the care home. Both the Parole Board and the care home required him to continue to undertake psychiatric treatment under a psychiatrist, a psychologist and a community psychiatric nurse. He also agreed to change his name: I understand that my case has received a high level of media attention, and in order to facilitate my successful reintegration into the community, changing my name may protect me and those around me from unwanted media attention which could undermine the effectiveness of my placement and its aims. I agree to arrive at [the care home] using my intended new name and change my name by deed poll in the first week of arrival. I will then manage all my affairs under this name from the point of discharge. The appellant was in fact released from hospital in October 2015. The Civil Procedure Rules These are civil proceedings in the High Court, governed by the Civil Procedure Rules, rule 39.2. Rule 39.2(1) to (3) deal with the publicity of the hearing. It is worth quoting these in full, although the publicity of the hearing is not the issue in this case: (1) The general rule is that a hearing is to be in public. (2) The requirement for a hearing to be in public does not require the court to make special arrangements for accommodating members of the public. (3) A hearing, or any part of it, may be in private if (a) publicity would defeat the object of the hearing; it involves matters relating to national security; (b) (c) it involves confidential information (including information relating to personal financial matters) and publicity would damage that confidentiality; (d) interests of any child or protected party; it is a hearing of an application made without (e) notice and it would be unjust to any respondent for there to be a public hearing; a private hearing is necessary to protect the (f) it involves uncontentious matters arising in the administration of trusts or in the administration of a deceased persons estate; (g) interests of justice. the court considers this to be necessary, in the A protected party is a party, or intended party, who lacks capacity, within the meaning of the Mental Capacity Act 2005, to conduct the proceedings (CPR rule 21.1(c) and (d)). Some compulsory patients lack this capacity and some do not. Rule 39.2(4) deals with anonymity: (4) The court may order that the identity of any party or witness must not be disclosed if it considers non disclosure necessary in order to protect the interests of that party or witness. The rationale for a general rule that hearings should be held in public was trenchantly stated by Lord Shaw of Dunfermline in the leading case of Scott v Scott [1913] AC 417, at 477. He quoted first from Jeremy Bentham: In the darkness of secrecy, sinister interest and evil in every shape have full swing. Only in proportion as publicity has place can any of the checks applicable to judicial injustice operate. Where there is no publicity there is no justice. Publicity is the very soul of justice. It is the keenest spur to exertion and the surest of all guards against improbity. It keeps the judge himself while trying under trial. The security of securities is publicity. He also quoted the historian Henry Hallam: Civil liberty in this kingdom has two direct guarantees; the open administration of justice according to known laws truly interpreted, and fair constructions of evidence; and the right of Parliament, without let or interruption, to inquire into, and obtain redress of, public grievances. Of these, the first is by far the most indispensable; nor can the subjects of any state be reckoned to enjoy a real freedom, where this condition is not found both in its judicial institutions and in their constant exercise. This longstanding principle of the common law is reflected in article 6(1) of the European Convention on Human Rights: 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. Judgment shall be pronounced publicly but the press and public may be excluded from all or part of the trial in the interest of morals, public order or national security in a democratic society, where the interests of juveniles or the protection of the private life of the parties so require, or to the extent strictly necessary in the opinion of the court in special circumstances where publicity would prejudice the interests of justice. It has been held acceptable to provide that a whole class of hearings, such as those relating to children, should normally be held in private: B v United Kingdom (2002) 34 EHRR 19. As the right is that of the litigant, this provision has normally become relevant in cases where the court proposes, in pursuance of one the exceptions to the normal rule, to sit in private, but the litigant wishes the case to be heard in public. However, in many, perhaps most cases, the important safeguards secured by a public hearing can be secured without the press publishing or the public knowing the identities of the people involved. The interest protected by publishing names is rather different, and vividly expressed by Lord Rodger in In re Guardian News and Media Ltd [2010] UKSC 1; [2010] 2 AC 697, para 63: Whats in a name? A lot, the press would answer. This is because stories about particular individuals are simply more attractive to readers than stories about unidentified people. It is just human nature. And this is why, of course, even when reporting major disasters, journalists usually look for a story about how particular individuals are affected. The judges [have recognised] 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. Of course, there are now many more ways of disseminating information, through the electronic media, to which that last comment does not apply. However, Lord Rodger also pointed out that the identities of claimants may not matter particularly to the judges. But the legitimate interest of the public is wider than the interests of judges qua judges or lawyers qua lawyers (para 38). Furthermore, the fact that the parties have agreed to anonymity cannot absolve the court from balancing the interests at stake for itself. Indeed that is when there is the greatest need for vigilance (para 2). It is now trite law that restrictions on publicity involve striking a balance between the right to respect for the private life of the individuals concerned, protected by article 8 of the European Convention on Human Rights, and the right to freedom of expression, protected by article 10 of the Convention: In re S (A Child) (Identification: Restrictions on Publication) [2004] UKHL 47, [2005] 1 AC 593; In re British Broadcasting Corp [2009] UKHL 34; [2010] 1 AC 145; In re Guardian News and Media Ltd, above. There are even cases where anonymity is required because of the risk of death or really serious ill treatment, in violation of the rights protected by articles 2 and 3 of the Convention: A v British Broadcasting Corp (Secretary of State for the Home Department intervening) [2014] UKSC 25; [2015] AC 588. The arguments It is necessary to draw a distinction between ordinary civil proceedings in which a mental patient may be involved, whether as claimant or defendant, and proceedings which are about the compulsory powers of detention, care and treatment under the 1983 Act. It is a striking fact that none of the experienced counsel in this case could remember a case of this nature in which the patient had not been granted anonymity, except where the patient himself wished his name to be published (as, for example, in R (Von Brandenburg) v East London and The City Mental Health NHS Trust [2003] UKHL 58; [2004] 2 AC 280). If this be so, it is not difficult to understand why. Patients detained in hospital, or otherwise subject to compulsory powers, under the 1983 Act have the right to make periodical applications to the First tier Tribunal (Health, Education and Social Care Chamber) for their release. Section 78(1)(e) of the 1983 Act, in its original form, permitted the Lord Chancellor, when making procedural rules for Mental Health Review Tribunals, to make provision for enabling a tribunal to exclude members of the public, or any specified class of members of the public, from any proceedings of the tribunal, or to prohibit the publication of reports of any such proceedings or the names of any persons concerned in such proceedings. When the First tier Tribunal took over the jurisdiction of Mental Health Review Tribunals in England (but not in Wales) under the Tribunals, Courts and Enforcement Act 2007, that Act permitted the Tribunal Rules Committee to make rules about whether hearings should be in private or in public and imposing reporting restrictions (section 22 and Schedule 5, paragraphs 7(b) and 11(2)). Accordingly, rule 38(1) of the Tribunal Procedure (First tier Tribunal) (Health, Education and Social Care Chamber) Rules 2008 (SI 2008/2699) provides that all hearings in mental health cases must be held in private unless the Tribunal considers that it is in the interests of justice for the hearing to be held in public. Rule 14(7) provides that Unless the Tribunal gives a direction to the contrary, information about mental health cases and the names of any persons concerned in such cases must not be made public. When the 1983 Act was passed, the only way of challenging the decision of a Mental Health Review Tribunal was either by asking the Tribunal to state a case for the determination of the High Court of any question of law arising before them (under section 78(8) of that Act) or by way of judicial review (which became the more common practice). After the 2007 Act, an appeal lies on a point of law to the Upper Tribunal. Rule 37(1) of The Tribunal Procedure (Upper Tribunal) Rules 2008 (SI 2008/2698) provides that all hearings must be in public, with some exceptions, which include the Tribunals power, in rule 37(2), to direct that a hearing, or part of it, is to be held in private. However, rule 14(7) repeats the rule in the First tier Tribunal that Unless the Upper Tribunal gives a direction to the contrary, information about mental health cases and the names of any persons concerned in such cases must not be made public. There is thus a presumption of anonymity in both tiers of the tribunal system. The issue for them, therefore, is whether to make an exception if the patient wants to waive his anonymity: see the principles helpfully discussed in AH v West London Mental Health Trust [2010] UKUT 264 (AAC) and [2011] UKUT 74 (AAC). The other specialist jurisdiction dealing with people with mental disorders or disabilities is the Court of Protection. This decides whether or not, because of mental disorder, a person lacks the capacity to make certain kinds of decision for himself and if so, how such decisions are to be taken on his behalf. These include decisions about his care and treatment. Rule 90(1) of the Court of Protection Rules 2007 (SI 2007/1744) lays down the general rule that hearings are to be held in private. If the hearing is in private, the court may authorise the publication of information about the proceedings (rule 91(1)). The court may also direct that the whole or part of any hearing be in public (rule 92(1)). But in either case the court may impose restrictions on publishing the identity of the person concerned or anyone else or any information which might lead to their identification (rules 91(3) and 92(2)). The starting point in the Rules, therefore, is both privacy and anonymity. However, from January 2016, there will be a six month transparency pilot, in which the court will generally make an order that any attended hearing will be in public; but at the same time it will impose restrictions on reporting to ensure the anonymity of the person concerned and, where appropriate, other persons. Thus, in all the other jurisdictions dealing with the detention, care and treatment of people with mental disorders and disabilities, the starting point is usually privacy and always anonymity, although either or both may be relaxed. This reflects the long standing practice of the High Court in what were then called lunacy proceedings. In the leading case of Scott v Scott [1913] AC 417, it was acknowledged that proceedings relating to wards of court and to lunatics were different from ordinary civil and criminal proceedings. Viscount Haldane LC explained the position thus (p 437): The case of wards of court and lunatics stands on a different footing. There the judge who is administering their affairs, in the exercise of what has been called a paternal jurisdiction delegated to him from the Crown through the Lord Chancellor is not sitting merely to decide a contested question. His position as an administrator as well as a judge may require the application of another and overriding principle to regulate his procedure in the interest of those whose affairs are in his charge. In the two cases of wards of court and of lunatics the court is really sitting primarily to guard the interests of the ward or the lunatic. It may often be necessary, in order to attain its primary object, that the court should exclude the public. The broad principle which ordinarily governs it therefore yields to the paramount duty, which is the care of the ward or the lunatic. The Earl of Halsbury did not consider these two acknowledged cases as true exceptions to the general rule, for neither of these, for a reason that hardly requires to be stated, forms part of the public administration of justice at all (p 441 2). Earl Loreburn referred to the parental jurisdiction regarding lunatics or wards of court (p 445). Lord Atkinson similarly referred to the judges as representatives of the Sovereign as parens patriae exercising on his behalf a paternal and quasi domestic jurisdiction over the person and property of the wards for the benefit of the latter (p 462). Lord Shaw of Dunfermline, the most vehement exponent of the principle of open justice, added (p 483) that, in this parens patriae jurisdiction, The affairs are truly private affairs; the transactions are transactions truly intra familiam; and it has long been recognised that an appeal for the protection of the court in the case of such persons does not involve the consequence of placing in the light of publicity their truly domestic affairs. Maurice Kay LJ cited these passages in his judgment in the Court of Appeal, but dismissed them on the ground that they were not dealing with the same sort of decisions as this: The sort of statutory powers with which we are concerned did not exist at the time and public law litigation of this kind was virtually unknown. ([2014] EWCA Civ 1009, para 7). It is correct that the Judge and Masters in Lunacy, when dealing with the affairs of a person found lunatic by inquisition, were usually concerned with the protection and administration of his property. But the parens patriae jurisdiction extended to both the person and the property of the lunatic, until the Mental Health Act 1959 came into force. By that Act, the jurisdiction of the Court of Protection over the property and affairs of a person who lacked the capacity to manage them for himself was placed on a statutory footing. The procedure for finding a person lunatic by inquisition was no longer thought necessary and the royal warrant under the sign manual delegating the parens patriae powers of the Crown to the judges was revoked (see B Hoggett, The Royal Prerogative in relation to the Mentally Disordered: Resurrection, Resuscitation or Rejection?, in MDA Freeman (ed), Medicine, Ethics and the Law (1988)). However, the Mental Capacity Act 2005 has now extended the jurisdiction of the Court of Protection to cover the care and welfare of persons who lack capacity, including whether they should be deprived of their liberty in their own best interests. Nor is it correct that there were no statutory powers of the sort with which we are now concerned at the time of Scott v Scott. The Secretary of States power to transfer a prisoner to hospital is clearly descended from similar powers in the Criminal Lunatics Act 1884, while the contemporary predecessors to other compulsory powers in the 1983 Act can be discerned in the Lunacy Act 1890 and the Mental Deficiency Act 1913. The judicial safeguards for patients in those Acts were conducted in private. However, it is correct that there is a difference between cases where a court or tribunal is administering the property, care or treatment of a patient in his own best interests and cases which are concerned with the proper management of a patient who has in the past been dangerous. In R (M) v Parole Board (Associated Newspaper Ltd intervening) [2013] EWHC 1360 (Admin); [2013] EMLR 23, the Divisional Court discharged an anonymity order made in favour of a prisoner convicted of murder who had brought judicial review proceedings challenging the decision of the Parole Board not to recommend his transfer to open conditions. There was a public interest in knowing how such decisions were made. However, the court accepted that there might well come a time when the claimants identity and whereabouts would have to be protected in order to secure his safety and to facilitate his re entry into society (para 49). That case concerned a prisoner, not a psychiatric patient, and there was no significant interference with his article 8 rights (para 53). The closer analogy in this case, therefore, is with the position in the First tier and Upper Tribunals, but Maurice Kay LJ also dismissed this on the basis that they will often be deciding essentially medical issues (para 10) whereas the issues in judicial review cases of this type are quite different and involve the assessment of risk. With respect, that too is not correct. The Tribunal is concerned with essentially three questions: is the patient suffering from mental disorder or mental disorder of a nature or degree which makes it appropriate for him to be liable to be detained in a hospital for treatment; is it necessary for the health and safety of the patient or for the protection of other persons that he should receive such treatment; and is appropriate treatment available for him (section 72(1)(b)(i), (ii), (iia))? In the case of restricted patients there is a fourth question: is it appropriate for the patient to remain liable to be recalled to hospital for further treatment (section 73(1)(b))? In the case of transferred prisoners such as the appellant, there is a fifth question: if the patient would otherwise be entitled to be conditionally discharged, should he continue to be detained in hospital if he is not discharged (section 74(1)(b))? Thus the Tribunals are very much concerned with risk as well as with diagnosis. In R (Mersey Care NHS Trust) v Mental Health Review Tribunal [2004] EWHC 1749 (Admin); [2005] 1 WLR 2469, para 14, Beatson J quoted with approval the Tribunals reasons for finding that their privacy rules were a proper and proportionate departure from the principle of open justice and thus compatible with article 6 of the European Convention on Human Rights: By definition the issues which the mental health review tribunal has to deal with involve personal and clinical confidential information affecting individuals who are often very vulnerable and not always in a position to make an informed decision as to what may or may not be in their best interests. Questions of capacity may frequently arise and clinical progress may be affected by the consequences of publicity. Decisions on whether a restricted patient should be allowed leave of absence or transferred to another hospital also involve a mixture of clinical and risk factors. The two are often inseparable. Both community leave and transfer to a less secure hospital serve a mixture of therapeutic and risk assessment aims. They obviously aim to improve the patients mental health, overall well being and level of functioning. But they are also important components in assessing how well the patient has progressed, whether he can safely be managed in the community, and how close he is to being fit for discharge. They inevitably involve examination of confidential medical information about the patient. Judicial review of the Secretary of States decisions is no different, as is amply demonstrated by the substantive judgment of Cranston J in this case. There is a further factor, which could be called the chilling effect of a risk of future disclosure. This has at least two aspects. First, it is important in all medical treatment, but perhaps particularly in the treatment of mental disorder, that a relationship of trust is established between the patient and the doctors, therapists and nurses who are looking after him. If a patient fears that his confidence may have to be breached in the course of legal proceedings about his future care and treatment, he may be less inclined to be as open and frank as he should be in his dealings with them. Openness is an important component, not only in his treatment, but also in the assessment of risk. Second, it may inhibit him from bringing proceedings with a view to relaxing the very significant deprivation of liberty involved in compulsory admission to hospital for medical treatment, which brings with it, not only the power to detain potentially indefinitely, but also the power to impose medical treatment without consent. As such it is only compatible with the right to liberty, protected by article 5 of the Convention (and much treasured by the common law), if subject to regular independent review. There is, as already explained, no real risk that the patients confidence will be breached against his will in the course of proceedings either in the First tier and Upper Tribunals or in the Court of Protection. The real risk arises if a case reaches the High Court or Court of Appeal. This risk will apply to compulsory patients of all kinds, whether detained under the civil compulsory powers in Part II of the 1983 Act or under the criminal powers in Part III, should a case concerning them reach the Court of Appeal on appeal from the Upper Tribunal by either side. It will also apply to all restricted patients, whether detained under restriction orders or restriction directions, whose cases reach the Administrative Court by way of challenge to the Secretary of States decisions. Conclusion in principle The question in all these cases is that set out in CPR 39.2(4): is anonymity necessary in the interests of the patient? It would be wrong to have a presumption that an order should be made in every case. There is a balance to be struck. The public has a right to know, not only what is going on in our courts, but also who the principal actors are. This is particularly so where notorious criminals are involved. They need to be reassured that sensible decisions are being made about them. On the other hand, the purpose of detention in hospital for treatment is to make the patient better, so that he is no longer a risk either to himself or to others. That whole therapeutic enterprise may be put in jeopardy if confidential information is disclosed in a way which enables the public to identify the patient. It may also be put in jeopardy unless patients have a reasonable expectation in advance that their identities will not be disclosed without their consent. In some cases, that disclosure may put the patient himself, and perhaps also the hospital, those treating him and the other patients there, at risk. The publics right to know has to be balanced against the potential harm, not only to this patient, but to all the others whose treatment could be affected by the risk of exposure. Application in this case This was a horrendous crime which caused incalculable distress to the families of the victims. All victims have certain rights under the Domestic Violence, Crime and Victims Act 2004, mediated through the providers of probation services. When a transfer direction is given in relation to an offender sentenced for a sexual or violent offence, the provider must take all reasonable steps to find out whether the victims wish to make representations about the conditions to which the offender should be subject if discharged and to be provided with information about the conditions to be imposed if he is discharged (section 42). If they do, the Secretary of State must inform the probation provider if he is considering lifting the restriction, discharging the patient or varying the conditions of a conditional discharge. The Tribunal must inform the provider if an application or reference is made to it. The probation provider must forward any representations made by the victims to the Secretary of State or Tribunal (section 43). The Secretary of State or the Tribunal have to inform the provider of the outcome. If a victim has expressed a wish to be informed, the provider must take all reasonable steps to inform him (a) whether or not the offender is to be subject to any conditions in the event of his discharge, (b) if he is, of the details of any condition relating to contact with the victim or his family, (c) the date on which any restriction direction is to cease to have effect, and (d) such other information as the provider considers appropriate in all the circumstances of the case (section 44). These rights, though limited, should enable the providers to reassure the victims families in this case that the arrangements made for the discharge of the patient will not put them at risk in any way. The public too have an interest is knowing how difficult and sensitive cases of this sort are decided, both by the Secretary of State and by the court. But that public oversight is protected by holding the hearing in public, so that the kinds of evidence and arguments considered are known, even if the identity of the patient concerned is not. Understandably, the Secretary of State has adopted a neutral stance on this appeal. It is the media interest, so vividly described by Lord Rodger in In re Guardian News and Media, with which we are principally concerned. In favour of anonymity are all the general considerations about harm to the patients health and well being, the chilling effect of a risk of disclosure, both upon his willingness to be open with his doctors and other carers, and upon his willingness to avail himself of the remedies available to challenge his continued deprivation of liberty, long after the period deemed appropriate punishment for his crimes has expired. Added to those are the specific risk elements in this case identified in the letter from his responsible clinician (see para 9 above). The existence of a risk to the appellant from members of the public is also acknowledged in the letters of the Secretary of State and reflected in the Parole Boards requirement that he change his name. He is much more likely to be able to lead a successful life in the community if his identity is not generally known. The risk of jigsaw identification, of people putting two and two together, will remain despite the change of name. Putting all these factors into the balance, I conclude that an anonymity order is necessary in the interests of this particular patient. His regime before he left hospital, involving escorted leave in the community, demonstrated the need for anonymity and the case is even stronger now (as foreseen in R (M) v Parole Board). Without it there is a very real risk that the progress he has made during his long years of treatment in hospital will be put in jeopardy and his re integration in the community, which was an important purpose of his transfer to hospital, will not succeed. I would therefore allow this appeal and maintain the anonymity order in place. |
The appellant Mark Golds was convicted by a jury of the murder of his partner. He had admitted in court that he had killed her, and the sole issue at his trial had been whether he had made out the partial defence of diminished responsibility, and so fell to be convicted of manslaughter rather than of murder. The law to be applied was section 2 of the Homicide Act 1957 after its recent revision by the Coroners and Justice Act 2009. The issue is the correct approach to the statutory test of whether his abilities were in specified respects substantially impaired: see section 2(1)(b). The appellant had attacked his partner with a knife at their home in front of her young children after a running argument which had taken place on and off throughout much of the day. He had inflicted some 22 knife wounds together with blunt impact internal injuries. He had a history of mental disorder leading to outpatient treatment and medication. Two consultant forensic psychiatrists gave evidence that there was an abnormality of mental functioning arising from a recognised medical condition, although they disagreed what that condition was. There was no contradictory psychiatric evidence. The judge correctly identified the questions which the jury needed to address (see para 8 below) and helpfully provided a written summary of the ingredients of diminished responsibility. He also provided a crystal clear written route to verdict document. On the issue of substantial impairment of ability he told the jury: Mr Rose [counsel for the defence] did suggest to you in his closing address that you would get some further help from me when giving you directions in law as to what the word substantially means, where it says substantially impaired his ability to exercise those qualities. I am not going to give you any help on the meaning of the word substantially, because unless it creates real difficulty and you require further elucidation, the general principle of English law is that where an everyday word is used, dont tell juries what it means. They are bright enough and sensible enough to work it out for themselves, so I am not going to paraphrase substantially. Substantially is the word that is in the Act of Parliament and thats the word that you have to work with. If it becomes a stumbling block in some way, well at the end of the day, you can send me a note and in those circumstances, I am permitted to offer you a little more help, but not at this stage of proceedings. The jury did not ask for further help. In the Court of Appeal (Criminal Division), amongst other grounds of appeal which have not survived, the appellant contended (a) that the judge had been wrong not to direct the jury as to what substantially impaired meant and (b) that the jury might in the absence of such direction have applied a more stringent test than it ought to have done. It was contended on his behalf that so long as the impairment was more than merely trivial, the test of substantially impaired was met. The Court of Appeal dismissed the appellants appeal ([2015] 1 WLR 1030) but certified in relation to this ground that the following two questions of law of general public importance were involved: 1. Where a defendant, being tried for murder, seeks to establish that he is not guilty of murder by reason of diminished responsibility, is the Court required to direct the jury as to the definition of the word substantial as in the phrase substantially impaired found in section 2(1)(b) of the Homicide Act 1957 as amended by section 52 of the Coroners and Justice Act 2009? 2. If the answer to the first question is in the affirmative, or if for some other reason the judge chooses to direct the jury on the meaning of the word substantial, is it to be defined as something more than merely trivial, or alternatively in a way that connotes more than this, such as something whilst short of total impairment that is nevertheless significant and appreciable? The Court of Appeals answers to these questions were (1) that the judge was not, on authority, required to give greater definition than he did and (2) that if he had done so the appropriate formulation would have been that it was not enough that there was some impairment; the jury had to ask if it was substantial. It would, the court held, be wrong to direct the jury that it sufficed that the impairment was more than merely trivial. The statute As now amended, section 2 Homicide Act 1957 provides a complete definition of diminished responsibility. The material parts of it are as follows: Persons suffering from diminished responsibility 2(1) A person (D) who kills or is a party to the killing of another is not to be convicted of murder if D was suffering from an abnormality of mental functioning which (a) arose from a recognised medical condition, (b) substantially impaired Ds ability to do one or more of the things mentioned in subsection (1A), and (c) provides an explanation for Ds acts and omissions in doing or being a party to the killing. (1A) Those things are (a) (b) (c) to understand the nature of Ds conduct; to form a rational judgment; to exercise self control. (1B) For the purposes of subsection (1)(c), an abnormality of mental functioning provides an explanation for Ds conduct if it causes, or is a significant contributory factor in causing, D to carry out that conduct. (2) On a charge of murder, it shall be for the defence to prove that the person charged is by virtue of this section not liable to be convicted of murder. (3) A person who but for this section would be liable, whether as principal or as accessory, to be convicted of murder shall be liable instead to be convicted of manslaughter. This differs from the previous formulation of the partial defence. As originally enacted, section 2(1) provided: (1) Where a person kills or is a party to the killing of another, he shall not be convicted of murder if he was suffering from such abnormality of mind (whether arising from a condition of arrested or retarded development of mind or any inherent causes or induced by disease or injury) as substantially impaired his mental responsibility for his acts and omissions in doing or being a party to the killing. It follows that the expression substantially impaired has been carried forward from the old Act into its new form. But whereas previously it governed a single question of mental responsibility, now it governs the ability to do one or more of three specific things, to understand the nature of ones acts, to form a rational judgment and to exercise self control. Those abilities were frequently the focus of trials before the re formulation of the law. But previously, the question for the jury as to mental responsibility was a global one, partly a matter of capacity and partly a matter of moral culpability, both including, additionally, consideration of the extent of any causal link between the condition and the killing. Now, although there is a single verdict, the process is more explicitly structured. The jury needs to address successive specific questions about (1) impairment of particular abilities and (2) cause of behaviour in killing. Both are of course relevant to moral culpability, but the jury is not left the same general mental responsibility question that previously it was. The word used to describe the level of impairment is, however, the same. The effect of the new statutory formulation is that the following four questions will normally arise in a case where diminished responsibility is advanced. (1) Did the accused suffer from an abnormality of mental functioning? (2) (3) abilities listed in section 1A? (4) killing the deceased? If so, did it arise from a recognised medical condition? If yes to (1) and (2), did it substantially impair one or more of the If yes to (1), (2) and (3), did it cause or significantly contribute to his Of course, in some cases one or more of these may be common ground. The function of the judge is to focus the jurys attention on what is at issue and to explain why the issue(s) are relevant, as the judge did in the present case. It is not to read the jury a general statement of the law. Authority: substantially impaired The concept of diminished responsibility was developed (with, at first, varying terminology) by the common law in Scotland in the late 19th and early 20th centuries as a means of mitigating, in an appropriate case, the mandatory sentence of death attendant on murder: see Lord Justice General Rodgers helpful historical survey in Galbraith v HM Advocate 2002 JC 1 (paras 23 to 27), together with the report of the Scottish Law Commission SLC 195 (2004) at para 3.1. It operates by reducing the offence of murder to that of culpable homicide. It was adopted by English law via the Homicide Act 1957 for the same reason, and using the same mechanism of partial defence, at a time when the abolition of capital punishment was under debate but there was no Parliamentary majority for that greater step. Soon after its introduction, the new partial defence was considered by the Court of Criminal Appeal in R v Matheson [1958] 1 WLR 474, R v Spriggs [1958] 1 QB 270 and R v Byrne [1960] 2 QB 396. In the first case there was no occasion for discussion of the meaning of substantially impaired; the defendant was agreed to be certifiable. In Spriggs, however, the court considered the then conventional formulations employed in Scotland in relation to the level of impairment, which included (but were not confined to) references to the borderline of insanity (see HM Advocate v Savage 1923 JC 49). The court (Lord Goddard CJ, Hilbery and Salmon JJ) concluded that the correct course for the trial judge was not to attempt synonyms or re definition but simply to direct the jury in the terms of section 2. In Byrne the defendant was a sexual psychopath who had strangled and mutilated a young woman resident of the YWCA. The case on his behalf was that he was unable to resist his impulse to gross and sadistic sexual violence. The judges directions had amounted to excluding from abnormality of mind an inability to control his urges, and this was held to have been wrong. The court further took the view that on the medical evidence the defendant was so disturbed that there was no room for doubt that diminished responsibility was made out. Giving the judgment of the court, however, Lord Parker CJ addressed the question of substantial impairment. He said this at 403 404: Assuming that the jury are satisfied on the balance of probabilities that the accused was suffering from abnormality of mind from one of the causes specified in the parenthesis of the subsection, the crucial question nevertheless arises: was the abnormality such as substantially impaired his mental responsibility for his acts in doing or being a party to the killing? This is a question of degree and essentially one for the jury. Medical evidence is, of course, relevant, but the question involves a decision not merely as to whether there was some impairment of the mental responsibility of the accused for his acts but whether such impairment can properly be called substantial, a matter upon which juries may quite legitimately differ from doctors. This court has repeatedly approved directions to the jury which have followed directions given in Scots cases where the doctrine of diminished responsibility forms part of the common law. We need not repeat them. They are quoted in Reg v Spriggs. They indicate that such abnormality as substantially impairs his mental responsibility involves a mental state which in popular language (not that of the MNaughten Rules) a jury would regard as amounting to partial insanity or being on the border line of insanity. Both in England and in Scotland it has subsequently been held that it is not usually helpful to direct juries in terms of the borderline of insanity. That is demonstrated by considering the case where the mental impairment is depression, to which (however severe) such a description is inapt. Such a formulation was later disapproved in R v Seers (1984) 79 Cr App R 261 (a depression case) and is now more often and wisely avoided even in a case of florid psychosis. Despite its use in Byrne, it cannot have been the intention of the court in that case to require any such direction, given the approval of Spriggs which had commended abstention from elaboration of the words of the section. Giving the judgment in Seers Griffiths LJ reached the same conclusion. At 264 he said this: It is to be remembered that in Byrne all the doctors agreed that Byrne could be described as partially insane; he was a sexual psychopath who had hideously mutilated a young woman he had killed. In such a case the evidence justifies inviting a jury to determine the degree of impairment of mental responsibility by a test of partial insanity. But it is not a legitimate method of construing an Act of Parliament to substitute for the words of the Act an entirely different phrase and to say that it is to apply in all circumstances. We are sure that this was not the intention of the court in Byrne , and the phrase was used as one way of assisting the jury to determine the degree of impairment of mental responsibility in an appropriate case, and no doubt to point out that Parliament by the use of the word substantial was indicating a serious degree of impairment of mental responsibility. But what is clear is that whilst the question whether the impairment was or was not substantial was to be left to the jury in the unimproved words of the statute, the underlying assumption was that substantially in this context meant impairment which was of some importance or, as it was put in Seers, a serious degree of impairment. The court cannot have contemplated in any of these cases that it was sufficient that the impairment merely passed triviality. R v Simcox The Times 25 February 1964; [1964] Crim LR 402 concerned a man who had previously murdered his second wife and had now sought out his third wife, with whom he was in dispute, taking with him a rifle with which he shot her sister when it was her whom he encountered. Some four psychiatrists agreed that he had an abnormality of mind, namely a paranoid personality. Each said that it impaired his self control, but none was prepared to say that the impairment was substantial; they spoke of moderate impairment, or of his finding it harder than others to control himself. The judge left the question to the jury in the terms of the section, adding only that they should ask: do we think, looking at it broadly as commonsense people, there was a substantial impairment of his mental responsibility in what he did? If the answer to that is yes then you find him not guilty of murder but guilty of manslaughter. If the answer to that is no, there may be some impairment but we do not think it was substantial. We do not think it was something which really made any great difference although it may have made it harder to control himself to refrain from crime, then you would find him guilty as charged. The Court of Appeal, whilst observing that the final sentence needed the previous focus on the word substantial in order that it should not be thought that the absence of self control had to be total, approved this direction. It is to be seen that it was essentially in accordance with Spriggs, since it repeated and emphasised, but did not attempt to re define, the statutory expression substantially impaired. Three years later the Court of Criminal Appeal considered the case of R v Lloyd [1967] 1 QB 175, which would appear to be the indirect origin of the submission made in the present case that substantially impaired means any impairment greater than the merely trivial. The defendant had killed his wife. There was evidence that from time to time he had suffered recurrent episodes of reactive depression. Two psychiatrists gave evidence that this was a mental abnormality which to some extent impaired his mental responsibility. Neither was prepared to say that the impairment was substantial. The first said that the depression impaired his responsibility to some extent. The second said that there was some effect; he could not say to what degree, but although it was not as low as minimal it was not substantial. The medical evidence was thus to similar effect as in Simcox. At trial, Ashworth J had directed the jury in the terms of the statute, but he had then added: Fourthly, this word substantial, members of the jury. I am not going to try to find a parallel for the word substantial. You are the judges, but your own common sense will tell you what it means. This far I will go. Substantial does not mean total, that is to say, the mental responsibility need not be totally impaired, so to speak destroyed altogether. At the other end of the scale substantial does not mean trivial or minimal. It is something in between and Parliament has left it to you and other juries to say on the evidence, was the mental responsibility impaired, and, if so, was it substantially impaired? (p 178) Counsel for the defendant, on appeal, contended that the judge had erred in not directing the jury that substantially meant really present or not trivial. That was a submission that it meant no more than that there was some operating impairment, and thus that any such sufficed, so long as it was not trivial, and was exactly the same submission which is now made in the present case. Since the doctors had agreed that the depression was not trivial in its effect, the defendant was, it was submitted, entitled to be acquitted of murder. That contention was firmly rejected by the court. Edmund Davies J, giving the judgment of the court, said this at 180B This court is wholly unable to accept that submission. The word substantially obviously is inserted in the Act with a view to carrying some meaning. It does carry a meaning. This court is quite unable to see that the direction given to the jury on the meaning of this word, can validly be criticised, and finds itself in a difficulty of saying that any distinction can be validly drawn between the direction given in the instant case and that approved of by this court in Reg v Simcox. It is the decision of the Court of Appeal which is the authority. But it is equally clear that Ashworth J, in saying what he did, had no intention of telling the jury that any impairment beyond the trivial sufficed. Firstly, if that had been his intention, it would have followed that the evidence in the case satisfied the test and a verdict of diminished responsibility ought to have followed unless the jury disagreed; this the judge would surely have told the jury. Secondly, such an intention is inconsistent with the judge telling the jury that he was not going to find a synonym for the word substantially. Thirdly, the judges summing up makes clear that he had before him Bryne, with its references to the borderline of insanity, although (anticipating Seers) he sensibly did not adopt that expression in a case concerning depression. In referring to the spectrum of impairment as he did, he may have had in mind the warning in Simcox (see para 13 above) that it should be made clear that the impairment did not need to be total. What he was clearly saying was that before an impairment could be substantial it must of course be greater than the merely trivial, but that, beyond that, what amounted to substantial impairment was a matter of degree for the jury. Over the years since, a reference of this kind to the extremities of possible impairment has sometimes been thought not simply to be helpful to juries but also to provide a possible definition of the meaning of substantially. R v Egan [1992] 4 All ER 470 concerned the case where there is both abnormality of mind and voluntary intoxication. Its principal decision largely anticipated the test for such a case which was later adumbrated by the House of Lords in R v Dietschmann [2003] UKHL 10; [2003] 1 AC 1209, but the court was held by the House to have erred in its treatment of other prior decisions. No real issue arose in relation to the meaning of substantially impaired except as to how drink was to be accommodated within it. But one of those prior decisions on drink, R v Gittens [1984] QB 698, 703, had contained the conclusion of Lord Lane CJ that the jury should ignore the effect of drink, as later held to be the law in Dietschmann. Lord Lane had pointed out that voluntary intoxication could not constitute a mental abnormality arising from disease or inherent cause, so the jury should ignore it and then go on to consider whether the combined effect of the other matters which do fall within the section amounted to such abnormality of mind as substantially impaired the defendants mental responsibility within the meaning of substantial set out in R v Lloyd. In Egan, having cited that passage, Watkins LJ added in passing: In R v Lloyd directions as to the word substantial, to the effect that (1) the jury should approach the word in a broad commonsense way or (2) the word meant more than some trivial degree of impairment which does not make any appreciable difference to a persons ability to control himself, but it means less than total impairment were both approved. There was no occasion for analysis of Lloyd in Egan. But although it was correct that Ashworth Js direction had been approved, it would be quite inaccurate to imply that the effect of the case was that substantially meant the same as more than some trivial degree of impairment. It may well be that Watkins LJ meant to say no such thing, rather than simply to refer to Ashworth Js formulation as convenient, but if he did, it was a misreading of Lloyd. The decision in Lloyd, to which no doubt Lord Lane CJ was referring in Gittens, was precisely the opposite, viz: that substantially was not the same as more than trivial see para 13 above. The difficulty for later readers was compounded by the closing words of the judgment in Egan at 480h: Finally, for the avoidance of doubt, we advise judges that guidance as to the meaning of substantial should be explicitly provided for the jury by using one or other of the two meanings in R v Lloyd. This proposition that Lloyd authorised two meanings of substantially may have achieved some currency since. If it has, it too is based on a misunderstanding. The most that Lloyd ever said was that two methods of summing up were unexceptional: the first to tell the jury simply to use its common sense without further elaboration and the second to allude to the spectrum between just beyond trivial impairment and total impairment. The decision of the court was explicitly that impairment beyond more than merely trivial is required; it follows that if the second approach, referring to the spectrum, is adopted in summing up, this must be made clear. But the court in Lloyd was not attempting in its (extempore) judgment to ordain a template for future summings up. It was dealing with the submission that the defendant in that case was entitled to have his conviction for murder set aside because any impairment beyond the merely trivial sufficed, and this submission it rejected. All that mattered in that case, as in most cases before an appellate criminal court, was whether the judge had misdirected the jury to the disadvantage of the defendant. With or without any implication of two meanings, Ashworth Js additional spectrum illustration has gained currency. It has figured in successive Crown Court Benchbooks. For example, the first (2010) edition, published before the new statutory formula came into operation, carefully avoided dictating the terms of summing up to judges. However, it cited at p 340 what Ashworth J had said, and added that the direction was approved by the Court of Criminal Appeal. A little later it gave one illustration of the kind of summing up which might be employed. It did so in the context of the more difficult case where diminished responsibility is complicated by drink and/or by alcohol dependence, but the example was equally relevant also to non alcohol cases. One suggested form of words (at p 347) was: This requires you to consider to what extent the defendants state of mind differed from that of the ordinary person. Was it so abnormal that the defendants mental responsibility was substantially reduced? Substantially is an ordinary English word to which you will bring your own experience. It means less than total and more than trivial. Where you draw the line is for your own good judgment. Subsequent editions, before and after the 2009 Act amendments, contained similar passages until the decision of the Court of Appeal in the present case. It will be seen that this formulation does not tell the jury that any impairment beyond the merely trivial suffices, but with hindsight it is possible that if one does not go back to the decision in Lloyd, it might be taken by some to carry that implication. In R v Ramchurn [2010] EWCA Crim 194; [2010] 2 Cr App R 18 (an unamended 1957 Act case) the trial judge had understandably adopted these suggestions. His written direction to the jury was: Substantially impaired means just that. You must conclude that his abnormality of mind was a real cause of the defendants conduct. The defendant need not prove that his condition was the sole cause of it, but he must show that it was more than a merely trivial one which did not make any real or appreciable difference to his ability to control himself. In retirement, the jury asked a specific question: what was the difference between trivial and substantial? The judge responded with the Ashworth formula. He told them: The following direction has been approved at a senior level and it is this; the direction on the words substantially impaired. Your own common sense will tell you what it means. Substantial does not mean total. That is to say the mental responsibility need not be totally impaired, so to speak, destroyed altogether. The other end of the scale, substantial does not mean trivial or minimal. It is something in between and Parliament has left it to you to say on the evidence was the mental responsibility impaired and if so, was it substantially impaired? The defendant in Ramchurn had planned and executed the killing of his wifes lover, a cousin to whom he had originally given a home. He had threatened previously that he would kill him, and had made a number of preparations to do so, such as trying to get keys to gain access to the victims home, and when that failed arranging a meeting to carry out his plan, equipping himself with a rope ligature for the purpose. He disposed of the body some distance away and set up a false alibi. The evidence was that he was depressed. One doctor described his state as an emotional turmoil and a tortured frame of mind, and expressed the opinion that in the tumultuous final moments which resulted in the death the impairment of mental responsibility would have been substantial. The other agreed that there was an element of depression, and accepted that it had played some part in the killing. Carefully cross examined, he agreed that the impact of the depression on the defendants mental responsibility was more than trivial, but he disagreed that it was substantial. The jury convicted of murder. The argument for the defendant on appeal in Ramchurn was that there were two inconsistent meanings of substantially to be derived from Lloyd, that the judge had in consequence failed to give the jury a clear direction and moreover that the law was in too uncertain a state to satisfy the requirements of article 7 of the ECHR. Accordingly, it was contended, the conviction for murder was unsafe. The Court of Appeal rejected those arguments. At para 23, Lord Judge CJ addressed specifically the two meanings argument, founded then as now on a combination of Lloyd with Egan. The argument was rejected: It is, however, clear on analysis that in Lloyd the court rejected the submission that there were two meanings for the word substantially. In the judgment in Lloyd the word substantially carried some meaning or a meaning. It was accepted in Lloyd that there were different ways of illustrating the same concept and, if necessary, explaining its relevance to the jury. If the court in Egan had intended to convey that the words substantially impaired embraced two different concepts or levels of impairment, it would have said so not by citing Lloyd as authority in support, but by distinguishing Lloyd. In the result, just as the court in Lloyd could see no effective difference between the directions in Simcox and Lloyd, the Court of Appeal in Egan could see no difficulty in the deployment of either of the two methods of explanation found in Lloyd. The court recorded that section 2 had been in force for 50 years and applied in countless murder trials, and observed that in its experience the test of substantial impairment was probably, in practice, the least difficult aspect of what can be a difficult defence to convey to a jury. It went on specifically to endorse the general starting point that the test was in ordinary English and should be left to the judgment of the jury. In so doing, it said this at para 15: Substantially is an ordinary English word which appears in the context of a statutory provision creating a special defence which, to reflect reduced mental responsibility for what otherwise would be murderous actions, reduces the crime from murder to manslaughter. Its presence in the statute is deliberate. It is designed to ensure that the murderous activity of a defendant should not result in a conviction for manslaughter rather than murder on account of any impairment of mental responsibility, however trivial and insignificant; but equally that the defence should be available without the defendant having to show that his mental responsibility for his actions was so grossly impaired as to be extinguished. That is the purpose of this defence and this language. The Concise Oxford Dictionary offers of real importance and having substance as suggested meanings for substantially. But, in reality, even the Concise Oxford Dictionary tells us very little more about the ordinary meaning and understanding to be attached to the word substantially. The jury must decide for itself whether the defendants mental responsibility for his actions was impaired and, assuming that they find that it was, whether the impairment was substantial. Thus the appeal failed in Ramchurn. The court was plainly not adopting the submission that substantially means any impairment beyond the merely trivial, for if it had done so, the evidence of both psychiatrists would have met the test. It is right to remember that the focus on the meaning of that word in the half dozen cases here reviewed, and in the present case, does not mean that it is often the occasion of difficulty. But the fact that the present submission is now made for the third time, despite its failure in both Lloyd and Ramchurn, does demonstrate that the use of the Ashworth spectrum formula may encourage semantic debate, at least in some cases. Moreover it is known that in at least one case which reached the Court of Appeal on sentence, the trial judge had directed the jury that the test of substantially impaired was met by an impairment which was more than minimal: R v Brown (Robert) [2011] EWCA Crim 2796; [2012] 2 Cr App R(S) 156. Since the appeal was limited to sentence in that case, the correctness of that direction did not call for adjudication. But that case is a further illustration of difficulty. When the defendant was, on that direction, convicted of manslaughter, the judge concluded when it came to sentence that in fact his responsibility had nevertheless been substantial, and the Court of Appeal decided that he was indeed entitled so to do, and to impose a very long determinate sentence (24 years) in consequence. Scotland The rejection in the foregoing cases of the contention that any impairment beyond the merely trivial will suffice is consistent with the way in which the law of diminished responsibility has evolved in Scotland, where it originated. The law was reviewed in some depth by a specially convened court of five in Galbraith v HM Advocate 2002 JC 1. The court held that the partial defence was not confined to mental illness, strictly so called, and that other mental abnormalities might also be capable of diminishing the responsibility of the accused, including in that case a combination of learned helplessness and post traumatic stress disorder following alleged persistent abuse. The decision anticipated the new English section 2(1)(a) by requiring that there be some recognised mental abnormality (paras 53 and 54). As to the level of impairment, the court held, for reasons essentially the same as had been given by the English court in Seers, that previous references to the borderline of insanity were simply examples of what would plainly qualify rather than a test for inclusion. Lord Justice General Rodger summarised the rule in this way at para 54: In every case, in colloquial terms, there must, unfortunately, have been something far wrong with the accused, which affected the way he acted While the plea of diminished responsibility will be available only where the accuseds abnormality of mind had substantial effects in relation to his act, there is no requirement that his state of mind should have bordered on insanity. In essence, the jury should be told that they must be satisfied that, by reason of the abnormality of mind in question, the ability of the accused, as compared with a normal person, to determine or control his actings was substantially impaired. Thus substantially impaired was adopted as the test, and used in the sense of something far wrong with the accused. There was, then, one difference between Scottish and English law, because in Scotland Galbraith held that psychopathic personality disorder was not capable of being a basis for diminished responsibility in the same way as in both jurisdictions voluntary intoxication cannot by itself found the plea: see Galbraith at para 54 and, in England, R v Dowds [2012] EWCA (Crim) 281; [2012] 1 WLR 2576. Now, however, that distinction has gone. Following scrutiny by the Scottish Law Commission the law has been put into statutory form by section 51B of the Criminal Procedure (Scotland) Act 1995, inserted by section 168 of the Criminal Justice and Licensing (Scotland) Act 2010, (asp 13). Provision is made by subsection (3) to exclude voluntary intoxication but, on the Commissions recommendation, not for a similar exclusion for psychopathic personality disorder. The new Scottish definition of diminished responsibility in subsection (1) provides: A person who would otherwise be convicted of murder is instead to be convicted of culpable homicide on grounds of diminished responsibility if the persons ability to determine or control conduct for which the person would otherwise be convicted of murder was, at the time of the conduct, substantially impaired by reason of abnormality of mind. Thus, the Scottish law now expresses, like the English, the essential feature of abnormality of mind such as impairs the ability to determine or control conduct, and, like English law, adopts as the test for the level of impairment the same expression, namely substantially. Plainly in Scotland this expression was used in the knowledge of the meaning authoritatively given to it by Galbraith, which the Scottish Law Commission had endorsed: SLC 195, July 2004, paras 3.15 3.17. Usage of language The admirably concise submissions of Mr Etherington QC for the appellant correctly point out that as a matter simply of dictionary definition, substantial is capable of meaning either (1) present rather than illusory or fanciful, thus having some substance or (2) important or weighty, as in a substantial meal or a substantial salary. The first meaning could fairly be paraphrased as having any effect more than the merely trivial, whereas the second meaning cannot. It is also clear that either sense may be used in law making. In the context of disability discrimination, the Equality Act 2010 defines disability in section 6 as an impairment which has a substantial and long term effect on day to day activities, and by the interpretation section, section 212, provides that Substantial means more than minor or trivial. It thus uses the word in the first sense. Conversely, the expression significant and substantial when used to identify which breaches by the police of the Codes of Practice under the Police and Criminal Evidence Act 1984 will lead to the exclusion of evidence (see for example R v Absolam (1988) 88 Cr App R 332 and R v Keenan [1990] 2 QB 54) is undoubtedly used in the second sense. It is to be accepted that the word may take its meaning from its context. It is not surprising that in the context of triggering a duty to make reasonable adjustments to assist the disabled, the first sense should be used by the Equality Act; the extent of adjustments required varies with the level of disability and a wide spectrum of both is to be expected. Mr Etherington additionally submits that this usage shows that the first sense does not entirely strip the word substantially of meaning. Conclusions: substantially The foregoing review of the authorities clearly shows that in the context of diminished responsibility the expression substantially has always been held, when the issue has been confronted, to be used in the second of the senses identified above. True it is that in Lloyd Edmund Davies J observed that that word had been put into the 1957 Homicide Act with a view to it carrying some meaning. If by that he meant that it could have no purpose at all unless it was used in the second sense above, the Equality Act usage may suggest otherwise, although even without the word substantially it is perhaps open to doubt that a merely trivial effect would be taken to be included either in impairment or in disability. But this does not alter the central thrust of the decision in Lloyd, which was that in the context of diminished responsibility an impairment of consequence or weight is what is required to reduce murder to manslaughter, and not any impairment which is greater than merely trivial. There is no basis for thinking that when the same expression was carried forward into the new formulation of diminished responsibility any change of sense was intended. The adverb substantially is applied now, as before, to the verb impaired. In the absence of any indication to the contrary, Parliament is to be taken to have adopted the established sense in which this word has been used for 50 years. The reformulation of the law followed the recommendation of the Law Commission, except to the irrelevant extent that it did not incorporate developmental immaturity as an extension beyond recognised medical conditions. The Commission had addressed diminished responsibility in two reports, each preceded by a detailed consultation paper: Partial Defences to Murder Law Com 290 (2004) and Murder, Manslaughter and Infanticide Law Com 304 (2006). Prior to the earlier report, it had consulted upon a number of possible formulations of the test for diminished responsibility see Partial Defences at 5.52 et seq. Most employed the adverb substantially. The Commission was concerned to ensure that a requirement for causation was explicitly incorporated into the proposed statutory test, as it now has been, and had consulted on the question whether this test would suffice without any threshold of substantial impairment see possible version (6) at 5.52. It is no doubt true that in many cases the question whether the impairment is sufficient to establish the partial defence will march alongside the question whether it was a significant contributory factor in causing the killing. But this will not always be so. Where, for example, the recognised medical condition is an emotionally unstable personality disorder leading to histrionic and impulsive behaviour, or where it is depression leading to distorted thinking, the medical evidence may make it clear that it has had some impact on behaviour and thus was a significant cause. The jury may be satisfied that if the defendants personality had been different, or if there had not been some depression, he would not have killed as he did. The real question thus may very well be whether the condition passes the threshold of substantial impairment, or does not. An illustration is afforded by the facts of R v Brown. The defendants marriage had broken down. He was living elsewhere with his girlfriend. There were acrimonious negotiations over the division of property between himself and his wife. He felt that she was dishonestly concealing her assets and cheating him, and that she had unfairly manipulated him into signing what he saw as a disadvantageous pre nuptial agreement. He planned to kill her. He prepared a grave in Windsor Great Park and, when returning the children to her after a weekend, took with him a hammer hidden in his daughters bag and beat her to death, before dismantling the CCTV equipment which would have recorded his movements, and disposing of the body in the grave. There was psychiatric evidence that he had developed an adjustment disorder, a recognised medical condition, arising from the severe stress of life events. The jury must have accepted the diagnosis, and that the adjustment disorder was a significant cause of his killing his wife. On the judges direction, that impairment beyond the merely trivial sufficed, the conviction for manslaughter followed. Whether or not the jury would have concluded, but for that direction, that the impairment was substantial, can never be known. But it is clear that such a conclusion would not follow necessarily from the finding of significant causation. After consultation, the Commissions final conclusion, in the second report at 1.17, was that although there were some infelicities in the wording it was not persuaded that any of the alternative formulations canvassed would sufficiently improve the law to justify interfering with a workable form of words. It had pointed out in the earlier report at 7.91 that the approach to the concept was essentially pragmatic, that the leading authority remained Byrne and that this partial defence had, unlike provocation, troubled the House of Lords only once in 50 years. The formula now incorporated into the statute was recommended. The specific requirement for causation was added, but the threshold of substantial impairment was maintained. It follows that there is nothing in the change of the formulation of the test for diminished responsibility to cause a different view to be taken now of the sense in which the word substantially is used in conjunction with impairment. This use of the expression accords with principle. Diminished responsibility effects a radical alteration in the offence of which a defendant is convicted. The context is a homicide. By definition, before any question of diminished responsibility can arise, the homicide must have been done with murderous intent, to kill or to do grievous bodily harm, and without either provocation or self defence. Whilst it is true that at one end of the scale of responsibility the sentence in a case of diminished responsibility may be severe, or indeed an indefinite life sentence owing to the risk which the defendant presents to the public, the difference between a conviction for murder and a conviction for manslaughter is of considerable importance both for the public and for those connected with the deceased. It is just that where a substantial impairment is demonstrated, the defendant is convicted of the lesser offence and not of murder. But it is appropriate, as it always has been, for the reduction to the lesser offence to be occasioned where there is a weighty reason for it and not merely a reason which just passes the trivial. Directing juries: good practice As Mr Perry QC for the Crown rightly submitted, there are many examples of ordinary English words incorporating questions of degree, which are left to juries to apply without attempts at further definition. No one attempts to define reasonable in the many contexts in which it appears. Nor should there be any further sophistication applied to the standard of proof required, that the jury be sure, at least beyond the comparable expression leaving no reasonable doubt. The same principle of leaving an ordinary word alone was applied by the House of Lords in Brutus v Cozens [1973] AC 854 to the expression insulting, and would apply equally, no doubt, to its sister expressions abusive and threatening. In all these cases the understandable itch of the lawyer to re define needs to be resisted. Any attempt to find synonyms for such ordinary English expressions, although they involve questions of degree, simply complicates the jurys exercise, and leads to further semantic debate about the boundaries of meaning of the synonym. Where, however, as here, there are two identifiable and different senses in which the expression in question may be used, the potential for inconsistent usage may need to be reduced. The existence of the two senses of the word substantially identified above means that the law should, in relation to diminished responsibility, be clear which sense is being employed. If it is not, there is, first, a risk of trials being distracted into semantic arguments between the two. Secondly, there is a risk that different juries may apply different senses. Thirdly, medical evidence (nearly always forensic psychiatric evidence) has always been a practical necessity where the issue is diminished responsibility. If anything, the 2009 changes to the law have emphasised this necessity by tying the partial defence more clearly to a recognised medical condition, although in practice this was always required. Although it is for the jury, and not for the doctors, to determine whether the partial defence is made out, and this important difference of function is well recognised by responsible forensic psychiatrists, it is inevitable that they may express an opinion as to whether the impairment was or was not substantial, and if they do not do so in their reports, as commonly many do, they may be asked about it in oral evidence. It is therefore important that if they use the expression, they do so in the sense in which it is used by the courts. If there is doubt about the sense in which they have used it, their reports may be misunderstood and decisions made upon them falsified, and much time at trials is likely to be taken up unnecessarily by cross examination on the semantic question. The experience of R v Brown (supra at paras 24 and 33) underlines the need for clarification. The sense in which substantially impaired is used in relation to diminished responsibility is, for the reasons set out above, the second of the two senses. It is not synonymous with anything more than merely trivial impairment. It does not follow that it is either necessary or wise to attempt a re definition of substantially for the jury. First, in many cases the debate here addressed will simply not arise. There will be many cases where the suggested condition is such that, if the defendant was affected by it at the time, the impairment could only be substantial, and the issue is whether he was or was not so affected. Second, if the occasion for elucidation does arise, the judges first task is to convey to the jury, by whatever form of words suits the case before it, that the statute uses an ordinary English word and that they must avoid substituting a different one for it. Third, however, various phrases have been used in the cases to convey the sense in which substantially is understood in this context. The words used by the Court of Appeal in the second certified question in the present case (significant and appreciable) are one way of putting it, providing that the word appreciable is treated not as being synonymous with merely recognisable but rather with the connotation of being considerable. Other phrases used have been a serious degree of impairment (Seers), not total impairment but substantial (Ramchurn) or something far wrong (Galbraith). These are acceptable ways of elucidating the sense of the statutory requirement but it is neither necessary nor appropriate for this court to mandate a particular form of words in substitution for the language used by Parliament. The jury must understand that substantially involves a matter of degree, and that it is for it to use the collective good sense of its members to say whether the condition in the case it is trying reaches that level or not. It seems likely that the Ashworth spectrum illustration will have been of assistance to juries in some cases, for it helps to explain (a) that the impairment need not be total to suffice and (b) that substantially is a question of degree. But, as the experience of Lloyd, Ramchurn and the present case teaches, if it is to be used it needs to be combined with making it clear that it is not the law that any impairment beyond the merely trivial will suffice. The impairment must of course pass the merely trivial to be considered, just as it need not reach the total, but whether, when it has passed the trivial, it can properly be regarded as substantial, is a matter for the jury in the individual case, aided as it will be by the experts exposition of the kind of impairment which the condition under consideration may have generated in the accused. Unless the spectrum illustration has been used by someone in the case, it is preferable for the judge not to introduce it. If it has been used, or if, on mature consideration the judge considers that it may help the jury in the particular case on trial, it needs to be coupled with a clear statement that it is not enough that the impairment be merely more than trivial; it must be such as is judged by the jury to be substantial. For the same reason, if an expert witness, or indeed counsel, should introduce into the case the expression more than merely trivial, the same clear statement should be made to assist the jury. Once this usage is understood by all concerned with the trial, there ought to be no occasion for the jury to be distracted by debate about the meaning of the word. What matters is what kind of effect the medical condition was likely to have had on the three relevant capacities of the accused. So long as the experts understand the sense in which substantially is used in the statute (which should henceforth be clear), and that the decision whether the threshold is met is for the jury rather than for them, it is a matter for individual judgment whether they offer their own opinion on whether the impairment will have been substantial or confine themselves to the kind of practical effect it would have had. If they do the former, they will be understood to be using the word in the second sense set out in para 27 above. It follows that the questions certified by the Court of Appeal should be answered as follows: (1) Ordinarily in a murder trial where diminished responsibility is in issue the judge need not direct the jury beyond the terms of the statute and should not attempt to define the meaning of substantially. Experience has shown that the issue of its correct interpretation is unlikely to arise in many cases. The jury should normally be given to understand that the expression is an ordinary English word, that it imports a question of degree, and that whether in the case before it the impairment can properly be described as substantial is for it to resolve. (2) If, however, the jury has been introduced to the question of whether any impairment beyond the merely trivial will suffice, or if it has been introduced to the concept of a spectrum between the greater than trivial and the total, the judge should explain that whilst the impairment must indeed pass the merely trivial before it need be considered, it is not the law that any impairment beyond the trivial will suffice. The judge should likewise make this clear if a risk arises that the jury might misunderstand the import of the expression; whether this risk arises or not is a judgment to be arrived at by the trial judge who is charged with overseeing the dynamics of the trial. Diminished responsibility involves an impairment of one or more of the abilities listed in the statute to an extent which the jury judges to be substantial, and which it is satisfied significantly contributed to his committing the offence. Illustrative expressions of the sense of the word may be employed so long as the jury is given clearly to understand that no single synonym is to be substituted for the statutory word: see para 40 above. R v Brennan Counsel drew attention to the Court of Appeal decision in R v Brennan [2014] EWCA Crim 2387; [2015] 1 WLR 2060, decided after both trial and appeal in the present case. The defendant in that case (aged 22 at the time of the offence) had a nine year history of disturbed childhood, sexual abuse and outpatient mental health treatment together with one instance when he was sectioned following a suicide attempt. On the undisputed psychiatric evidence he suffered from a schizotypal disorder as well as an emotionally unstable personality disorder. He was obsessed with witchcraft and Satanist killings. He was also depressed. He had planned and executed the ritualistic killing of a client whom he had served as a male prostitute. He left notes of what he planned to do, and after killing the man with one or more knives, had scored his back and painted or written on the walls symbols such as a pentagram and references to Satan and to Krishna, before cleaning himself up and going to the police station to report what he had done. He was treated by the police as needing an appropriate adult to attend his interviews, and told that person that he had been having thoughts of killing somebody (apparently anybody) for several weeks. At trial the only issue was diminished responsibility. The Court of Appeal held that in that case there was only one possible outcome. There was simply no basis for a verdict of murder and moreover this was so clear that the judge ought not to have left it open to the jury. The court regarded that decision as a straightforward application of R v Galbraith [1981] 1 WLR 1039; 73 Cr App R 124. It went on to offer some general observations about the circumstances in which a judge ought to withdraw murder from the jury where the issue is diminished responsibility and uncontradicted psychiatric evidence supports the defence case on that topic. The report suggests that Brennan was a case in which the Crown expressly did not challenge the diagnosis of the single consultant psychiatrist called and barely challenged her opinion that the defendants condition substantially impaired his ability to form rational judgments. (There was perhaps greater challenge to the opinion that his ability to control himself was also substantially impaired). That was a reasoned decision. The Crown had a second psychiatric report, disclosed in ordinary course to the defence, which agreed those conclusions. Counsel for the Crown had then, legitimately, tested the evidence of the psychiatrist, in particular by drawing attention to the defendants consumption of drink and drugs, and to the clear evidence of pre planning. As to the first, the psychiatrists answer had, however, been that the underlying mental condition effected sufficient impairment independently of any additional disinhibition attributable to intoxication. As to the second, she had said that a disordered and impaired mind may well be no less capable of premeditation and detailed planning than a rational one, and that that was what had happened. Those answers had not been challenged, presumably because they were not, on the facts, capable of dispute. It is an important part of the Crowns function, where the charge is murder and a case of diminished responsibility is advanced, to assess the expert evidence almost invariably obtained on both sides and its relationship to any dispute of fact. If it is clear that the defendant was indeed suffering from a recognised medical condition which substantially impaired him in one of the material respects, and that this condition was a significant cause of the killing, the Crown is entitled to, and conventionally frequently does, accept that the correct verdict is guilty of manslaughter on the grounds of diminished responsibility and no trial need ensue. In practice quite a large proportion of verdicts of manslaughter on this ground arise from the Crown taking this responsible course: see the research undertaken for the Law Commission by Professor Mackay cited in Partial Defences to Murder Law Com 290 (2004) at Appendix B, especially paras 6, 20 and 21. Acceptance of a plea to manslaughter may properly be given either before trial, thus making it unnecessary, or after testing the evidence if that is required. Given the answers of the psychiatrist in Brennan and the state of the evidence, it is clear that the Crown could not properly ask the jury to convict of murder unless it was to reject one or more parts of the expert evidence. Certainly a jury is not bound by the expert. In some cases, pre planning, especially involving meticulous preparations, may indicate self control which gives grounds for rejecting an opinion that self control was substantially impaired. In others, there may be legitimate grounds for asking the jury to disagree about the level of impairment. In yet further cases, it may be perfectly proper to ask the jury to conclude that it was the drink or drugs which led to the killing, whilst the underlying mental condition was in the background. That is not by any means an exhaustive catalogue of questions which a jury may properly be invited to decide. However, as the Court of Appeal rightly held, if the jury is to be invited to reject the expert opinion, some rational basis for doing so must at least be suggested, and none had been at trial nor was on appeal. It is not open to the Crown in this kind of situation simply to invite the jury to convict of murder without suggesting why the expert evidence ought not to be accepted. In particular, it would not have been a proper basis for rejecting diminished responsibility that the circumstances of the killing had been particularly violent or sadistic. It is a well known factor in such cases that such brutality may (understandably) be taken by a jury to point away from the partial defence; sometimes it may truly do so, but not infrequently it is the product of the mental disorder. It may be agreed that the ordinary principles of R v Galbraith are capable of being applied in a trial where the sole issue is diminished responsibility. A court ought, however, to be cautious about doing so, and for several reasons. First, a murder trial is a particularly sensitive event. If the issue is diminished responsibility, a killing with murderous intent must, ex hypothesi, have been carried out. If a trial is contested, it is of considerable importance that the verdict be that of the jury. Second, the onus of proof in relation to diminished responsibility lies on the defendant, albeit on the balance of probabilities rather than to the ordinary criminal standard. The Galbraith process is generally a conclusion that no jury, properly directed, could be satisfied that the Crown has proved the relevant offence so that it is sure. In the context of diminished responsibility, murder can only be withdrawn from the jury if the judge is satisfied that no jury could fail to find that the defendant has proved it. Thirdly, a finding of diminished responsibility is not a single issue matter; it requires the defendant to prove that the answer to each of the four questions set out in para 8 above is yes. Whilst the effect of the changes in the law has certainly been to emphasise the importance of medical evidence, causation (question 4) is essentially a jury question. So, for the reasons explained above, is question 3: whether the impairment of relevant ability(ies) was substantial. That the judge may entertain little doubt about what he thinks the right verdict ought to be is not sufficient reason in this context, any more than in any other, for withdrawing from the jury issues which are properly theirs to decide. Where, however, in a diminished responsibility trial the medical evidence supports the plea and is uncontradicted, the judge needs to ensure that the Crown explains the basis on which it is inviting the jury to reject that evidence. He needs to ensure that the basis advanced is one which the jury can properly adopt. If the facts of the case give rise to it, he needs to warn the jury that brutal killings may be the product of disordered minds and that planning, whilst it may be relevant to self control, may well be consistent with disordered thinking. While he needs to make it clear to the jury that, if there is a proper basis for rejecting the expert evidence, the decision is theirs that trial is by jury and not by expert it will also ordinarily be wise to advise the jury against attempting to make themselves amateur psychiatrists, and that if there is undisputed expert evidence the jury will probably wish to accept it, unless there is some identified reason for not doing so. To this extent, the approach of the court in Brennan is to be endorsed. The present case In the present case the appellant and the deceased had lived together for around three years before she was killed on a Sunday in July 2012. On that day she and he, and her two sons aged 13 and eight, had been to a family barbecue. The couple had rowed at the party, in part because she said that he had hit her in the past, in part because he demanded that she give him a bank card which she refused to do, and in part because he wanted to go home and she did not. After they had returned home, separately, and after her mother had visited the house, the argument was renewed later in the evening. Outside the house, the appellant seized the deceased by her face, held her by her hair and slapped her across the cheek. She insisted that he leave the home. He packed a bag but refused to leave. Some time later that evening he attacked her. By then the deceased had a large lump on her face. The several stages of this attack were witnessed by one or both of her two sons. The older son intervened in the argument. He stood between them and said that he would not leave them alone. The appellant then fetched a knife from the kitchen, but the older son took it from his pocket. The boy told his mother about the knife and the appellant said Its self defence. She went and sat on the bed but the appellant went after her and punched her in the head, whereupon she hit him back. He had a small cut on his eyebrow which the boys said he squeezed to increase the blood flow. Then he attacked the deceased with a second knife which he produced, kneeling on her arms as he did so and shouting that he was going to kill her. She was afterwards found to have some 22 knife wounds, plus internal bleeding injuries to her abdomen and liver, apparently from a kick or similar blow(s) or contact with a hard object, which latter injuries were the fatal ones. When the police arrived the appellant became extremely violent. He was described as snarling like an animal and appearing as if deranged. At some stage he said to the police that She is evil . The demons gone She had Satan in her eyes. The appellant was 46 years old. Since he was about 23 he had been referred by his GP for out patient psychiatric consultations from time to time. He had never been admitted to hospital but had complained of depression, paranoid fears and, at times, of hearing voices in his head. He had been prescribed anti depressant and anti psychotic drugs and was still under such prescription at the time of the offence, although he had told the doctors that he was not taking his medicine. One consultant psychiatrist diagnosed his condition as a mixed personality disorder with paranoid, emotionally unstable, anxious and dependent traits. On the basis largely of what he had said to the police, the doctor concluded that at the time of the killing he was additionally in the grip of an acute psychotic episode and was driven by persecutory beliefs. The second psychiatrist disagreed that there was a personality disorder, but concluded that the appellant was at the time of the offence suffering from a paranoid psychotic illness, most likely schizophrenia. Both expressed the opinion that the different conditions they identified substantially impaired the relevant statutory abilities, although they were not at one as to which. The first psychiatrist thought that the ability to form a rational judgment and to exercise self control were impaired, but that the defendant knew what he was doing; the second agreed on the first two counts but additionally thought that the ability to understand the nature of his conduct was impaired. The Crown case was that he was simply very angry with his partner, and had been on and off all day, for unremarkable domestic reasons. There was some evidence of an ability to control himself on previous occasions when there had been assaults on her which had not been uncontrolled. The truthfulness of his assertion that he had seen Satan was in issue, and may or may not have been consistent with asserting self defence at the time. The renewal of the attack despite the warning presence of the children and the removal of the first knife might perhaps be some indicator of self control and give some support to the contention that the cause was simple anger rather than distorted thinking. That being the state of the evidence, the debate between the two possible meanings of the expression substantially barely arose. If the appellant was indeed in the grip of a psychotic episode involving persecutory delusions when he killed his partner, that would, by any ordinary standard, involve substantial impairment of one or more of the statutory abilities. The real question appears to have been whether, on the balance of probabilities, he had been. The judge left the issues squarely to the jury, correctly reminding them more than once that the doctors were agreed that there was a medical condition substantially impairing his abilities. Conclusion It follows that for the several reasons set out above, this appeal must be dismissed. |
Percy McDonald was diagnosed as suffering from mesothelioma in July 2012. Sadly, at the beginning of February 2014, just before the appeal in his case was due to be heard by this court, Mr McDonald died. His widow, Edna McDonald, has been substituted as respondent in the appeal. The period between diagnosis and death in Mr McDonalds case is entirely consistent with experience of this insidious disease. Survival for no more than a period of months after diagnosis is the almost invariable outcome. Mesothelioma is a form of cancer that develops from cells of the mesothelium, the protective lining that covers many of the internal organs of the body. It usually affects the pleura, the outer lining of the lungs and the internal chest wall. It is most commonly caused by exposure to asbestos. Symptoms or signs of mesothelioma may not appear until 50 years (or more) after exposure. Mr McDonald was employed by a firm known as Building Research Establishment, operated by the government. Between 1954 and March 1959 he attended Battersea power station in the course of his employment. This was for the purpose of collecting pulverised fuel ash. Between 1954 and January 1957 he was at the power station approximately twice a month. Between January 1957 and March 1959 he was there about twice every three months. The plant where the ash was collected did not contain asbestos. But Mr McDonald, while visiting the power station, went into other areas where asbestos dust was generated by lagging work. This happened particularly in the boiler house. It is suggested by the appellant that his visits to these areas took place because of curiosity on his part or because he was on friendly terms with workers employed there. At the times he was exposed to asbestos, Mr McDonald was, the appellants counsel, Mr Nolan QC, suggested, a sightseer or an interested visitor. The lagging work involved mixing asbestos powder with water in large drums in order to make a paste. It also included the sawing of preformed asbestos sections and the stripping off of old asbestos lagging. On occasions Mr McDonald walked through dried asbestos paste. The trial judge found that his exposure to asbestos was of a modest level on a limited number of occasions over a relatively short period of time [and] was not greater 7. than those levels thought of in the 1950s and 1960s as being unlikely to pose any real risk to health. The appellant is the successor body to the occupiers of the power station and, at trial, Mr McDonald alleged that those occupiers were negligent and in breach of their statutory obligations under regulation 2(a) of the Asbestos Industry Regulations 1931 and section 47 of the Factories Act 1937. He also claimed against his employers that they had been guilty of negligence. The trial judge, His Honour Judge Denyer QC, dismissed all the claims against both defendants. On appeal, the Court of Appeal allowed Mr McDonalds appeal under the 1931 Regulations but dismissed his appeal under the 1937 Act and in negligence. The appellant appeals to this court against the judgment under the 1931 Regulations and Mrs McDonald cross appeals against the dismissal of her husbands claim under section 47 of the 1937 Act. Negligence is no longer in issue. The Asbestos Industry Regulations 1931 These Regulations were made pursuant to the provisions of the Factory and Workshop Act 1901, section 79 of which provided: Where the Secretary of State is satisfied that any manufacture, machinery, plant, process or description of manual labour, used in factories or workshops, is dangerous or injurious to health or dangerous to life or limb, either generally or in the case of women, children or any other class of persons, he may certify that manufacture, machinery, plant, process or description of manual labour to be dangerous; and thereupon the Secretary of State may, subject to the provisions of this Act, make such regulations as appear to him to be reasonably practicable and to meet the necessity of the case. In a letter of 15 September 1931 the Secretary of State indicated that he would use his powers under this section and he enclosed a draft of the Regulations that he proposed to make for the protection of the workers employed in certain processes involving exposure to asbestos dust. He gave notice in the letter that he had formally certified as dangerous the manipulation of asbestos and the manufacture or repair of articles composed wholly or partly of asbestos and processes incidental thereto The letter further intimated that the Secretary of State had decided to give effect to recommendations contained in two reports, Effects of Asbestos Dust on the Lungs and Dust Suppression in the Asbestos Industry by Merewether and Price published in March 1930 and the Report of Conferences between Employers and Inspectors concerning Methods for Suppressing Dust in Asbestos Textile Factories, which had been published shortly before the Secretary of States letter was sent. That letter continued: The draft Regulations follow generally the provisions recommended in the two Reports already mentioned, with certain additions and modifications which have been made after taking into consideration observations submitted by the General Council of the Trades Union Congress. 8. Section 82(1) of the 1901 Act provided: The regulations made under the foregoing provisions of this Act may apply to all the factories and workshops in which the manufacture, machinery, plant, process or description of manual labour, certified to be dangerous, is used (whether existing at the time when the regulations are made or afterwards established) or to any specified class of such factories or workshops. They may provide for the exemption of any specified class of factories or workshops either absolutely or subject to conditions. 9. The breadth of the anticipated application of the Regulations should be noted. This subsection foreshadowed their application to a wide range of processes. It also presaged that processes etc which did not exist at the time the Regulations were made could come within their embrace when later established. The potentially wide scope of the Regulations was also reflected in section 83 of the Act which provided: . Regulations made under the foregoing provisions of this Act may, among other things . (b) prohibit, limit or control the use of any material or process; 10. This broadly based theme was continued in the text of the Regulations themselves. In the preamble it was directed that they were to apply to all factories and workshops or parts thereof in which the following processes or any of them are carried on: (i) breaking, crushing, disintegrating, opening and grinding of asbestos, and the mixing or sieving of asbestos, and all processes involving manipulation of asbestos incidental thereto; (ii) all processes in the manufacture of asbestos textiles, including preparatory and finishing processes; (iii) the making of insulation slabs or sections, composed wholly or partly of asbestos, and processes incidental thereto; (iv) the making or repairing of insulating mattresses, composed wholly or partly of asbestos, and processes incidental thereto; (v) sawing, grinding, turning, abrading and polishing, in the dry state, of articles composed wholly or partly of asbestos in the manufacture of such articles; (vi) the cleaning of any chambers, fixtures and appliances for the collection of asbestos dust produced in any of the foregoing processes. 11. The extent of the potential application of the Regulations was mitigated by a proviso to the preamble which was in the following terms: Provided that nothing in these Regulations shall apply to any factory or workshop or part thereof in which the process of mixing of asbestos or repair of insulating mattresses or any process specified in (v) or any cleaning of machinery or other plant used in connection with any process, is carried on, so long as (a) such process or work is carried on occasionally only and no person is employed therein for more than eight hours in any week; and (b) no other process specified in the foregoing paragraphs is carried on. 12. Although this proviso cut down the scope of the Regulations, it gives some insight into the width of their intended ambit. It carried the clear implication that the Regulations applied even if the main business of the factory or workshop was not the manufacture of asbestos goods. Moreover, the processes identified in the preamble, other than those listed in the proviso, were to come within the Regulations even if the work involved in them took place only occasionally or for limited periods. Also, in relation to those processes listed in the proviso, including mixing, the Regulations were to apply unless the work was carried out occasionally and no person undertook it for more than 8 hours a week. A further proviso, not directly relevant for present purposes, permitted the chief inspector of factories to suspend or relax the Regulations, if satisfied that, by reason of the restricted use of asbestos or the methods of working, they could be suspended or relaxed without danger to those employed. I say that this is not directly relevant but it is pertinent to note that one of the circumstances in which the suspension or relaxation might be authorised was that the use of asbestos was restricted. If, as the appellant claims, the Regulations applied only to the industry engaged in the manufacture of asbestos, it is difficult to see how circumstances could arise in which asbestos use within such an industry would be restricted. 13. The preamble stipulated that it was the duty of the occupier of factory or workshop premises to observe Part I of the Regulations. Regulation 2 (which was in Part I) provided: 2. (a) Mixing or blending by hand of asbestos shall not be carried on except with an exhaust draught effected by mechanical means so designed and maintained as to ensure as far as practicable the suppression of dust during the processes. (b) If premises which are constructed or re constructed after the date of these Regulations the mixing or blending by hand of asbestos shall not be done except in a special room or place in which no other work is ordinarily carried on. 14. Asbestos was defined in the Regulations as meaning any fibrous silicate mineral, and any admixture containing any such mineral, whether crude, crushed or opened. Crude asbestos was the raw mineral as shipped in containers after it had been mined. Crushed or opened material referred to its condition after it had undergone processes preparatory to its use. The Regulations defined preparing as meaning crushing, disintegrating, and any other process in or incidental to the opening of asbestos. The background to the1931 Regulations 15. The parties are agreed that the Merewether and Price Report forms part of the background against which the 1931 Regulations were made and is therefore indispensable to any examination of their ambit. The respondent claims that further material considerations include (i) the relevant provisions of the 1901 Act; (ii) the Secretary of States certification pursuant to section 79; (iii) the processes listed in the preamble; and (iv) the definition of asbestos in the Regulations. The appellant contends that the Report on Conferences and the discussions which led to it also played a significant part in the shaping of the terms of the 1931 Regulations and that these must also be considered. It has not been suggested by the respondent that this report should not be taken into account. 16. The appellant points to two other sources which, it claims, provide material germane to a consideration of the intended scope of the Regulations. The first of these is a report entitled Problems arising from the use of Asbestos Ministry of Labour HM Factory Inspectorate November 1967 (36 316). This suggested that the 1931 Regulations [did] not apply to lagging and insulation operations using asbestos. The respondent objects to any reference to this document on the ground that it did not feature in the case until the hearing before this court. The second source identified by the appellant consists of material relating to the Parliamentary history of the Regulations. This material demonstrates, the appellant argues, that Parliaments perspective was that the 1931 Regulations applied only to the asbestos industry. The respondent contends that it is not permissible to refer to this material because the conditions prescribed by Pepper v Hart [1993] AC 593 as to the admissibility of statements made in Parliament are not satisfied. It is also submitted that the references in Hansard do not, in any event, assist in determining the scope of the Regulations. Section 47(1) of the Factories Act 1937 17. Section 47(1) of the 1937 Act provided: In every factory in which, in connection with any process carried on, there is given off any dust or fume or other impurity of such a character and to such extent as to be likely to be injurious or offensive to the persons employed, or any substantial quantity of dust of any kind, all practicable measures shall be taken to protect the persons employed against inhalation of the dust or fume or other impurity and to prevent its accumulation in any workroom, and in particular, where the nature of the process makes it practicable, exhaust appliances shall be provided and maintained, as near as possible to the point of origin of the dust or fume or other impurity, so as to prevent it entering the air of any workroom. 18. A number of elements is required to establish liability under the subsection. Firstly, there must be a process which generates dust or fume or other impurity. Secondly, the dust or fume etc must be of a character or extent as to be likely to be injurious or offensive. Thirdly, the dust, fume or other impurity must be injurious or offensive to those employed. But by way of alternative to the requirement that it be injurious or offensive, if the dust given off is substantial this will be sufficient to ground liability. Finally, the measures to be taken in order to protect against inhalation of the dust, fume or other impurity must be practicable. 19. Mr McDonald had relied on the second limb of the subsection, ie that the amount of asbestos dust that was given off in the areas of the power station where he had been exposed to it was substantial. The first issue between the parties on this aspect of the case was whether it was sufficient that the volume of the dust at the time that it was initially generated was substantial, irrespective of its concentration at the time that Mr McDonald inhaled it or whether it had to be shown that at the time he was exposed to and inhaled it, there was a substantial quantity of dust. The appellant argued that the concentration of dust had to be substantial at the moment of exposure and inhalation. The respondent submitted that, if the quantity of dust that was initially liberated was substantial, it was not required under section 47(1) to show that, at the time Mr McDonald was exposed to it, the amount of the dust was substantial; it was enough that, at the point of its being given off, it could be so described. 20. The appellant also argued that no duty was owed to Mr McDonald because he was not a person employed for the purposes of the subsection. On this issue the respondent claimed that, during the time that he was exposed to the dust, Mr McDonald was a person employed. It was submitted that to interpret section 47(1) so as to limit its application to workers actually engaged in the process of producing the dust or fume would greatly restrict the scope of the provision and would exclude from protection many who would be affected by the process. Moreover, it would have been a simple matter to confine the application specifically to those actually engaged in the production of the dust or fume by an express provision to that effect. An example of such an explicit provision was to be found in section 49 of the 1937 Act dealing with protection for eyes. The application of the 1931 Regulations 21. The principal argument of the appellant was that the 1931 Regulations, in their original conception and subsequent application, were focused on the asbestos industry and those working in it. The purport of the appellants submission on this point was that section 79 of the 1901 Act envisaged the designation of a dangerous industry rather than proscription of the use in industry generally of dangerous material. Only when a trade or industry was formally nominated as dangerous was it to be subject to the Regulations. That submission, it was claimed, derived support from the terms of section 82 which focused on factories and workshops where the dangerous industry was carried on. It was also sustained, Mr Nolan argued, by the title of the Regulations, The Asbestos Industry Regulations and the definition of asbestos. That definition referred to asbestos in its unprocessed ie its raw, mineral condition. It did not comprehend processed asbestos products such as asbestos insulation. It was claimed that the exclusive focus of the Regulations on the asbestos industry was also indicated by subparagraph (v) of the preamble relating to sawing, grinding, turning, abrading and polishing in the dry state, of articles composed wholly or partly of asbestos in the manufacture of such articles. The express inclusion of the qualification that these processes were confined to the manufacture of asbestos products made clear, it was said, that the subject of the 1931 Regulations was the asbestos industry and the production of materials within that industry, rather than the use of asbestos products in the work of other industries. 22. 23. For the respondent it was argued that the terms of section 79 and the certification by the Secretary of State indicated that the Regulations were to apply whenever and wherever a defined process was carried on in a factory or workshop. This was in keeping with the mischief which Merewether and Price had identified and the remedy they had proposed. There was no reason to adopt a narrow definition of asbestos industry and on that basis restrict the application of the Regulations. The term asbestos industry in the title was used in the wide sense of any industry where one or more processes referred to in the preamble was carried on. 24. The breadth of the terms of the preamble was considered by the Court of Appeal in Cherry Tree Machine Co Ltd v Dawson sub nom Jeromson v Shell Tankers (UK) Ltd [2001] EWCA Civ 101, [2001] ICR 1223. Hale LJ, delivering the only substantive judgment with which Mantell LJ and Cresswell J agreed, pointed out in para 7 that the preamble had made it clear that the Regulations applied to all factories and workshops in which the listed processes took place. She also adverted to the import of the proviso in the preamble. She held (at para 12) that the trial judge was plainly right to conclude that, for the exemption in the proviso to apply, it was required both that the work was carried on only occasionally and that no person was employed at that work for eight hours or more in any week. That conclusion made it distinctly difficult for the application of the Regulations to be confined to factories and workshops where asbestos was manufactured. Sporadic or occasional work involving the manufacture of asbestos was inherently unlikely to be a feature of factories where that activity was the sole or primary undertaking. On this account Hale LJ declined to follow the decision in the Scottish case of Watt v Fairfield Shipbuilding & Engineering Co Ltd 1999 SLT 1084. In that case, Lord Gill had felt that it was possible to give the proviso a satisfactory meaning, notwithstanding his conclusion that the 1931 Regulations applied only to the asbestos industry. Hale LJ was not persuaded that this was possible, saying at para 21: It is however very difficult to imagine a factory or workshop whose main business was producing asbestos or asbestos products to which the exemption could possibly apply, given that only certain processes, infrequently carried on, are exempted and only then if none of the other defined processes is carried on in the same factory. 25. The argument that the Regulations only applied to the asbestos industry and to the manufacture of asbestos had also been accepted in the earlier case of Banks v Woodhall Duckham Ltd, an unreported decision of the Court of Appeal which had been delivered on 30 November 1995. The Court of Appeal in Cherry Tree distinguished that case, Hale LJ commenting (at para 25) that the observations of the court in Banks were not essential to the determination of the case because the trial judge had been unable to make findings of fact as to the extent to which any of the defendants had exposed the claimant to asbestos and what if any damage flowed from any such exposure. 26. The appellant challenged the correctness of the decision in Cherry Tree. It was submitted that too great an emphasis had been placed on the preambles description of the processes and insufficient regard had been had to the underlying theme of the 1901 Act and the 1931 Regulations. This was that an industry was to be regulated rather than processes involving the use of asbestos. In particular, the preventive measures suggested in the Merewether and Price Report were directed specifically towards the suppression and control of the dust involved in manufacturing processes, and steps to be taken in relation to those employed in the industry (p 17 of the Report). 27. The central thesis of the appellants case rests on the notion that there was, at the time the 1931 Regulations were made, a clearly identifiable asbestos industry; that this industry was engaged solely in the manufacture of asbestos; and that it was the intention of the Secretary of State, in making the Regulations to confine their application to that closely defined industry. Several reasons can be given for rejecting that argument, the first and most prosaic being that, if that had indeed been the Secretary of States aim, it could have been easily achieved by an unequivocal statement to the effect that the Regulations only applied to the asbestos manufacturing industry. So far from stating that, the Regulations made it prominently clear that all factories and workshops in which certain specified processes are carried out are covered by the Regulations. The emphasis immediately falls on the processes rather than the nature of the industry. And this is entirely logical. If processes other than those involved in the manufacture of asbestos were known to give rise to the risk of developing fibrosis (as they were at the time the Regulations were made) why should they be excluded from their ambit? 28. Secondly, the Merewether and Price Report, on which the appellant places such weight, did not focus exclusively, in my view, on the asbestos manufacturing industry. The first (and more important) part of the Report is devoted to an investigation of whether workers exposed to asbestos were at risk of developing pulmonary fibrosis. That investigation had been commissioned by the Home Office following the discovery, in February1928, of a case of non tubercular fibrosis of the lungs in an asbestos worker, of sufficient severity to necessitate treatment in hospital (Seilers case). As the covering letter enclosing the Report to the Home Secretary makes clear, the investigation established that the inhalation of asbestos dust over a period of years results in the development of a serious type of fibrosis of the lungs. It was not suggested (nor could it have been) that inhalation of asbestos dust sufficient to cause fibrosis could only occur in the course of asbestos manufacture. 29. The first part of the Report was not focused on the asbestos industry as such, therefore, but on the propensity of exposure to asbestos to cause fibrosis. As it happens, workers in the textile branch of the asbestos industry were chosen for study because their exposure was to pure, or nearly pure, asbestos. Workers in other parts of industry had exposure to a mixture of dusts, of which asbestos was one. It was considered necessary to choose those whose exposure was to asbestos alone in order to evaluate the effect of asbestos dust. At p 7 of the Report, however, the authors highlighted the considerable number of workers exposed to the influence of mixed dusts of which asbestos was but one. As Judge LJ said, speaking of the Merewether and Price Report in Maguire v Harland & Wolff plc [2005] EWCA Civ 1, the research was confined to asbestos textile workers, but [the Report] explained that workers in other industries, exposed to asbestos dust, were also at risk (para 23). 30. The choice of workers in the asbestos textile industry for investigation does not betoken a view on the part of the authors of the Report that protection for that category of workers was alone required. They were chosen because they were known to be exposed to asbestos dust and, since the purpose of the investigation was to examine whether there was a connection between asbestos dust and fibrosis, it was logical to focus on them. But the critical finding was that exposure to asbestos dust gave rise to the serious risk of grave illness. Confronted by that finding and by the statement that workers in other areas of industry were exposed to asbestos, there is no obvious reason that the Secretary of State should decide to confine the application of the Regulations to the manufacturing arm of the asbestos industry and to leave unprotected the considerable number of other workers exposed to a mixture of dusts including asbestos. 31. While the second part of the Report dealt with the suppression of dust in the asbestos industry, it did not suggest that precautionary measures need only be taken in relation to the manufacture of asbestos. It would be illogical if it had done so in light of the central finding of the first part that prolonged exposure to asbestos, in whatever circumstances that occurred, carried a grave risk of serious illness. Moreover, the second section of the Report looked separately at textile and non textile processes involving use of asbestos materials. The latter included electrodes with an asbestos covering and miscellaneous goods containing a proportion of asbestos. These processes were recognised by the authors of the Report to create significant exposure to asbestos and thereby a risk to health. At p 19 the authors stated: Apart from manufacture, certain work is carried on in premises subject to the Factory and Workshops Acts, as well as in other premises, which involves use or manipulation of asbestos or products containing it. The insulating of boilers, pipes, engines and parts of ships is the most important. Much of this work is done on board ship by contractors who employ a considerable outdoor staff. It is therefore unwise to dwell too heavily on some of the wording of the Regulations themselves in order to try to construct an exclusive emphasis on the manufacture of asbestos. It is quite clear that the risks of ill health through exposure to asbestos other than in the course of its manufacture had been recognised. Moreover, it is unsurprising that the Regulations should refer to many aspects of manufacture because the Merewether and Price Report had 32. dealt with asbestos textile workers. But that circumstance alone does not justify the view that it was intended that the Regulations should apply only to the manufacture of asbestos and that the risks arising from other forms of exposure should be ignored. 33. The Report on Conferences between Employers and Inspectors concerning Methods for Suppressing Dust in Asbestos Textile Factories obviously was concerned with that area of the industry. While the Secretary of State had regard to that report, there is no reason to suppose that, simply because it dealt only with that side of the industry, the risks arising from exposure in other circumstances would be overlooked. 34. A third reason for rejecting the appellants claim that the Regulations were designed to apply to the manufacturing processes of the asbestos industry is that it is at least questionable whether a selfcontained asbestos industry concerned exclusively with manufacturing could be said to exist in isolation from the use of asbestos in other factory settings. As Merewether and Price themselves observed (at p 18 of their Report), the asbestos industry had developed greatly in the years before the report was issued and it continued to expand rapidly mainly because of the demands of the motor, electrical, engineering and building industries and of the increasing attention now paid to the insulation of steam plant to promote fuel economy. 35. Unlike many other manufactured products, asbestos frequently required to be worked, manipulated, mixed and transformed after the supply of the raw material to the customer. Merewether and Price referred to this at p 19 in the passage quoted at para 31 above. It appears to me highly doubtful that the Secretary of State would have concluded that insulation companies which were not engaged in the manufacture of asbestos but whose workers were daily exposed to asbestos while manipulating it for application in various premises should not be regarded as part of the asbestos industry. And, indeed, in his certification letter, the Secretary of State expressly stated that he had formally certified as dangerous the manipulation of asbestos as well as the manufacture or repair of articles composed wholly or partly of asbestos and processes incidental thereto. In this context, it is appropriate to consider the Parliamentary material relied on by Mr Nolan as indicating the governments intention that the 1931 Regulations should apply only to the asbestos manufacturing industry. The first of these was a reply given on behalf of the Ministry of Labour on 13 March 1930 to a question concerning the number of men and women employed in the asbestos industry and insured for unemployment. The reply given was as follows: 36. Separate statistics of the number of insured persons in the asbestos industry are not available, as that industry is included with others in the group Textile industries not separately specified. At the population Census of 1921, the number of occupied persons classified as belonging to the asbestos industry in Great Britain included 2,550 males and 1,327 females, aged 12 and over. (Hansard (HC Debs) Col 1520 W) 37. On 15 November 1934, in answer to a question about the number of deaths from asbestosis, the Home Secretary said: About 60 deaths have been brought to the notice of the Department and after investigation are all attributed by the Senior Medical Inspector of Factories to exposure incurred previous to the Asbestos Industry Regulations of 1931 which required elaborate precautions. Special inquiry in 1932 as to other risks in warehouses and certain other processes revealed no need for any extension of the regulations, but their effectiveness will continue to be closely watched. (Hansard (HC Debs) Col 2122) 38. Finally, Mr Nolan drew our attention to a statement made on 5 December 1966 by the Minister for Labour to the effect that he was revising the Asbestos Industry Regulations 1931, and intended to extend their application to all industries and processes in which asbestos is used. (Hansard (HC Debs) Col 197 W). In the well known passage of his speech in Pepper v Hart [1993] AC 593, 634 Lord Browne Wilkinson set out the circumstances in which Parliamentary material could be used as an aid to construction of legislation in the following terms: 39. reference to Parliamentary material should be permitted as an aid to the construction of legislation which is ambiguous or obscure or the literal meaning of which leads to an absurdity. Even in such cases references in court to Parliamentary material should only be permitted where such material clearly discloses the mischief aimed at or the legislative intention lying behind the ambiguous or obscure words. In the case of statements made in Parliament, as at present advised I cannot foresee that any statement other than the statement of the Minister or other promoter of the Bill is likely to meet these criteria. 40. Leaving aside the question of whether the Regulations are ambiguous, it is quite clear that none of the statements to which the appellant referred partakes of the quality required. Quite apart from the fact that none bore directly on the issue of the application of the Regulations to an asbestos manufacturing industry only, none could be said to disclose the mischief aimed at or the legislative intention underlying them. And, of course, two of the statements post dated the making of the Regulations and are, therefore, at most, an expression of view as to how they should be construed rather than a true guide to legislative intent. The respondent is undoubtedly correct, therefore, in the claim that the conditions for the admissibility of the Parliamentary material are not present in this instance and is also correct in the assertion that, in any event, the statements do not assist in giving any real insight into the legislative intention in making the Regulations. 41. For essentially the same reasons the 1967 report (referred to in para 16 above) cannot be regarded as an authoritative guide to the proper construction of the Regulations. This represents, at best, one possible view as to the extent of their application. The statement that the Regulations do not apply to lagging and insulation operations using asbestos is not elaborated upon nor is any reasoned support for it provided. It also contrasts with the memorandum dated 6 September 1949 from the chief safety officer of the appellants predecessors to regional safety officers, in relation to the lagging of steam pipes in generating stations. In it the view of the Deputy Chief Inspector of Factories is recorded as being that the 1931 Regulations applied to the mixing of asbestos in power stations but did not apply to the removal of old lagging or the application of insulation. 42. The next reason for rejecting the appellants principal argument is that given by Hale LJ in the Cherry Tree case, namely, that the first proviso in the preamble is not only otiose but impossible to explain if the application of the Regulations is confined to the manufacture of asbestos. An industry devoted exclusively to making this product simply could not avail of the proviso. It could have no relevance if the appellants contended for interpretation of the Regulations is correct. The fact that it was included points unmistakably to the conclusion that it was envisaged that the Regulations would apply to processes other than the manufacture of asbestos. Allowing an exemption for work with asbestos which was occasional and carried on for no more than 8 hours per week simply does not make sense if the Regulations were only to apply to the asbestos industry as the appellant has defined it. This proviso flatly contradicts the appellants claims as to the scope of application of the Regulations. 43. 44. It is, of course, true that, if the Regulations are held to apply to all factories at which any of the processes is carried on, regulation 2(b) may appear somewhat anomalous. To require mixing or blending by hand of asbestos to be carried on in a special room or place in which no other work is ordinarily carried on might appear to cast a considerable burden on employers engaged in lagging operations. The respondent confronts this seeming incongruity head on by saying that since mixing work, in its wide sense, gave rise to dust to which workers were exposed other than those carrying out the work, it was a sensible and practical measure to stipulate that mixing should be undertaken in a separate room or place and, pursuant to regulation 2(a), provided with a suitable exhaust draught. I am not convinced that this provides a complete answer to the claim that regulation 2(b), if applied to lagging operations and those working in their vicinity, imposes a duty that would in practical terms be very difficult to fulfil. Be that as it may, I am of the firm view that regulation 2(b), if applied to all processes listed in the preamble, is more readily explicable than would be the exemption in the proviso if the regulation is confined to asbestos manufacture only. While, therefore, I acknowledge that the terms of regulation 2(b) lend some support to the notion that the Regulations were designed to be more restrictive in their application, I do not consider that this is of sufficient moment to displace the plain meaning to be given to the preamble in applying the Regulations to all of the processes listed or to counteract the more obvious anomaly of the existence of an exemption for the asbestos manufacturing industry which plainly had no relevance to it. Mixing 45. Active dispute arose as to whether the term mixing in the Regulations should be given a specialised, technical, or its ordinary, meaning. In support of its argument that it should be given a restricted, technical meaning, the appellant conducted a close textual analysis of the Merewether and Price Report, citing instances of where the term had been used in conjunction with other processes of manufacture. Reliance was also placed on the Report on Conferences where it was clear, the appellant claimed, that the expression mixing was used in the technical sense of mixing raw asbestos as a preparatory step to its use in the manufacture of asbestos products. In the Merewether and Price Report at p 11, mixing is first in a list of processes which includes crushing, opening and disintegrating. And at p 21 the process of mixing is identified in the same context as the breaking, crushing, disintegrating, opening and grinding of asbestos and before reference to the sieving of asbestos. This, the appellant claims, is a reference 46. to the preparatory steps for use of asbestos mineral in product manufacture, rather than mixing asbestos to create a paste. This claim is fortified, the appellant says, by the reference on p 31 of the Report to the dusty process of hand mixing incidental to opening (ie manufacturing) processes. 47. The appellant argues that the recommendations contained in the Merewether and Price Report correlate directly to the classification of processes in the preamble to the 1931 Regulations. Thus the first recommendation (relating to exhaust ventilation at dust producing points) was the foundation for regulation 1. The reference in this recommendation to the fact that such measures have not been applied to hand work and that special difficulties remain to be overcome in some cases eg . mixing . clearly referred back to mixing identified on pp 21 and 31 of the Report. The recommendation that, unless the problem was surmounted, there should be general ventilation of a high standard applied so as to draw the dust laden air away from the worker became regulation 2(a), the appellant claimed, and therefore applied specifically to mixing or blending by hand with this clear technical meaning. 48. These arguments are founded on the premise that the Merewether and Price Report and the Report on Conferences were translated directly to the provisions in the Regulations. This is a false premise for two reasons. First, the letter of 15 September 1931 indicated that, while the Regulations would follow generally the recommendations made in the two reports, certain additions and modifications had also been made. Secondly and more importantly, the Merewether and Price Report and the Report on Conferences were based on the investigation of the specific conditions which had been addressed by both reports. As earlier explained, Merewether and Price had isolated a particular group of asbestos workers for the precise reason that they wished to evaluate the effect of exposure to asbestos dust alone rather than the effect of exposure to mixed dusts including asbestos. The Report on Conferences was concerned with methods for suppressing dust in asbestos textile factories. But the consideration of the Secretary of State could not be constrained by the restricted basis on which the reports were prepared. He should not have and must be presumed not to have ignored the risk to those who worked with asbestos, other than in the manufacturing process, that the Merewether and Price Report had clearly identified. 49. Although Merewether and Price had, for understandable reasons, chosen workers whose activities were confined to the manufacture of asbestos, the significance of their findings went well beyond the impact on that restricted category of employees. In particular, it was well known, at the time that the Regulations were made, that mixing of asbestos to create a paste was a regular feature of lagging. And Merewether and Prices findings, properly understood, pointed clearly to the risk that chronic exposure to asbestos would entail, whatever the circumstances in which it occurred. If it had been intended to exclude from the ambit of the Regulations mixing for the purpose of creating a paste for lagging, this would have been, in light of contemporaneous knowledge, a surprising outcome. In any event, it would have had to be made explicitly clear and it was not. I am satisfied, therefore, that the term mixing in the Regulations should not be given the restricted, technical meaning for which the appellant contends and that it should be taken to cover mixing asbestos powder with water such as occurred in this case. The appellants secondary argument 50. The appellant argued alternatively that, even if the Regulations covered mixing of asbestos to prepare a paste for lagging, they did not apply to someone such as Mr McDonald because he was not employed in the dangerous trade which had been certified by the Secretary of State under section 79 of the 1901 Act. The appellant submitted that the Regulations could not have application wider than the statutory power under which they had been made and that a side note to section 79 stated that the power was to make regulations for the safety of persons employed in dangerous trades. 51. Mr Nolan acknowledged, however, that the House of Lords had held in Canadian Pacific Steamships Ltd v Bryers [1958] AC 485 that the section 79 power was a wide one and entitled the Secretary of State to make regulations which could create a statutory duty to protect persons not employed in the process regulated (in that case a regular crew member of a ship undergoing repair in dry dock). The nature and extent of any duty under regulations made pursuant to the section 79 power therefore depended on the terms of the particular regulations. 52. Although there was no express provision in the Regulations which restricted their application to persons employed in the process of mixing asbestos for lagging, the appellant argued that it was implicit that the duty was so limited, firstly because that was in accord with the structure of the Regulations, which was to prescribe precautions to be taken in relation to each of the processes stipulated and, secondly because the mixing process was one of those referred to in the first proviso of the preamble. Alternatively, if the protection extended beyond those who were actually involved in the processes, it did not cover someone who, like Mr McDonald, was not actually employed in the areas where the processes were taking place but was merely a casual visitor to those areas. 53. I do not accept either of these arguments. The fact that precautions are prescribed in relation to each of the processes involved says nothing to the question of whether someone has to be involved in the actual process or may be incidentally exposed to the dust or fume which the process generates. It would be remarkable if the group to be protected was confined to those who were carrying out the process but those who were at risk from exposure because of their proximity to it should remain unprotected. Given that the Canadian Pacific case had established that section 79 empowered the Secretary of State to make regulations which afforded protection to workers not involved in the process, the essential question is whether the 1931 Regulations, as made, had availed of that opportunity. Where the risk of injury arises from inhalation of dust or fumes (and, of their nature, processes which generate these do not discriminate as to who inhales them), there does not appear to me to be any logical reason to exclude those employees who are liable to be affected by exposure solely because they do not actively work on the processes. 54. Merewether and Price had adverted directly to this issue at p 20 et seq of their Report, stating that within the same workroom there could be several different processes carried on, each producing dust containing asbestos. The Report recognised that a worker might be exposed to harmful dust created by a process he was not engaged in: In many works several processes are carried on in the same room. In the absence of effective means of preventing escape of dust into the air, many workers are subjected to a risk from which they would otherwise be immune, or to a greater risk than that arising from their own work. 55. As Mr Allan QC for the respondent pointed out in his submissions on section 47 of the 1937 Act, many processes within a factory are fully automated. It could not have been Parliament's intention, he argued, that, where a fully automated process was producing dust or fume, no workers exposed to that dust or fume were protected by the section. For reasons that I will give in the next section of the judgment, I accept that submission. Using the same basis of reasoning I consider that the Secretary of State should be taken to have been principally concerned with protecting workers who were liable to be exposed to asbestos, rather than with confining protection to those whose job it was to carry out the processes which generated the risk of exposure. 56. The fact that the mixing process was referred to in the first proviso of the preamble does not sound directly on whether the Regulations should extend to employed persons who are not actively involved in that process. The 57. exemption available is perfectly understandable and workable if the Regulations apply to workers involved in that process and others who, by reason of their proximity to it, are liable to inhale the dust or fume that it generates. I shall deal with the appellants argument in relation to the claim that Mr McDonald was not a person employed but merely a casual visitor or sightseer in the part of the judgment dealing with section 47 of the 1937 Act, to which I now turn. The possible application of section 47 58. The respondent has accepted that, in order to establish that there has been a breach of statutory duty based on the second limb of section 47(1), it must be shown that: (1) the dust was given off in connection with a process carried on in the power station; (2) Mr McDonald was a person employed within the meaning of the section; (3) the quantity of dust when given off was substantial; and (4) Mr McDonald inhaled dust given off by the relevant process. The appellant agrees with this formulation except in relation to the third condition. Mr Nolan contends that it must be shown that not only was the quantity of dust substantial at the point that it was generated by the process, it must be substantial at the point of inhalation. I shall consider each of these in turn. Was the dust given off in connection with a process? 59. The appellant submitted that lagging operations were not part of the process carried on at Battersea power station. That process was, the appellant claimed, the generation of electricity. Mr Nolan relied on the judgment of Stuart Smith LJ in Banks where he accepted an argument that the lagging of pipes that may have given rise to dust was not a process being carried on in the factory, which was the manufacture of steel. In Nurse v Morganite Crucible Ltd [1989] AC 692 the House of Lords considered the meaning of process in section 76(1) of the Factories Act 1961 and the Asbestos Regulations 1969. Lord Griffiths stated at 704: The Divisional Court in giving leave to appeal to your Lordships House certified the following point of law of general public importance: 60. Whether for the purposes of the Factories Act 1961 and Regulations thereunder process carried on in a factory means a manufacturing process or other continuous and regular activity carried on as a normal part of the operation of the factory. My Lords, I am not prepared to answer the question in this form because the word process is scattered throughout many sections of the 1961 Act, and it appears in many regulations made thereunder. Your Lordships have not had the opportunity to consider the meaning to be attached to process wherever it appears and it is possible that it has different meanings in different contexts. I would confine my opinion to the meaning of the word process where it is used in the 1969 Regulations and I would answer the certified question by saying that where the word process is used in the Regulations it means any operation or series of operations being an activity of more than a minimal duration. 61. Although Lord Griffiths specifically confined his opinion as to the meaning of process to its use in the 1969 Regulations, it is clear that he rejected (at least implicitly) any notion that, to be a process in a factory, an activity had to be integral to the principal output of the enterprise. In the Nurse case the business of the factory was the manufacture of crucibles. Asbestos was not used for any purpose directly associated with that product. If an argument akin to that presented by the appellant in the present case had been accepted in Nurse that would have disposed of the appeal. It did not. And it did not because it was not necessary that, in order to be an activity in connection with a process, it had to be shown that it was directly involved with the manufacture of the end product of the factory. In Brophy v J C Bradfield & Co Ltd [1955] 1 WLR 1148 the plaintiffs husband had been overcome by fumes from a boiler used to heat the factory. It was claimed that the lack of ventilation in the boiler room constituted a breach of sections 4 and 47 of the Factories Act 1937. The Court of Appeal held that this was not a process within the meaning of those sections. At p 1153, Singleton LJ dealt with the point pithily when he said: 62. upon the facts it does not appear to me that the boiler room was a workroom within the meaning of section 4 (1) of the Act or that the fumes were generated in the course of any process or work carried on in the factory. This was a boiler used for 63. heating the factory and I do not think that that section applies to the facts of the present case. In Owen v IMI Yorkshire Copper Tube, an unreported decision of Buxton J delivered on 15 June 1995, the judge felt that the decision in Brophy could be explained on the basis that when the fumes came from the factory heating supply and not from any part of the manufacturing process it was not a part of the process carried on in the factory. For my part, I would not distinguish Brophy on that basis. I consider that it was, on this point, wrongly decided. A process in a factory should not be confused with the product that is manufactured. In factories all manner of processes are carried on which contribute to the ultimate manufactured product in varying degrees of closeness. Thus, for instance, the heating system in Brophy was not required, in the sense of making a direct contribution to the manufacture of tents and canvas goods (which was the business of the factory). But a heating system was doubtless required in order that the manufacture of those goods could take place. 64. The words in section 47(1), a process carried on in any factory should be given their plain and natural meaning. To suggest that they import some intimate connection with the manufacture of a product introduces an unnecessary and unwarranted gloss on the subsection. If it is a process that is a normal feature of the factorys activity, it is a process for the purposes of the legislation. I would therefore hold that the lagging work which Mr McDonald encountered in the power station constituted a process for the purposes of section 47 and that the first condition necessary to show breach of subsection (1) of that section has been met. Was Mr McDonald a person employed? 65. On the question of whether Mr McDonald was a person employed, the Court of Appeal decided that he was not, either in the sense of being employed at the factory or in the process of handling asbestos McCombe LJ at para 59 and the Lord Dyson MR at para 107. 66. As Mr Allan pointed out, an interpretation of the section which restricts its application to workers engaged in the process producing the dust or fume would greatly curb the scope of the provision and would exclude from protection many workers affected by exposure to the substances. And, as he also submitted, where the purpose of a provision is to protect the health of workers, a restrictive interpretation should not be adopted unless the wording compels it Harrison v National Coal Board [1951] AC 639 per Lord Porter at 650. The wording of the section does not compel a restrictive application. For the reasons given in paras 27 and 53 55 above, I consider that, in approaching the interpretation of this subsection, the emphasis should be on the need for protection rather than on involvement in the process. One could perhaps understand a more restricted approach where the danger was inherent to the process or where there was a special risk to those actively involved in the process but that is not the case here. 68. 67. Section 49 of the 1937 Act provides an example of such a special risk. That section empowered the Secretary of State to make regulations in relation to a process which involved a special risk of injury to the eyes from particles or fragments thrown off in the course of the process, and to require that suitable goggles or effective screens should be provided to protect the eyes of the persons employed in the process. The rider that the regulations should be targeted at those employed in the process in that instance is logical, given that the risk can be expected to arise only for those who are actually involved in the process but the same cannot be said for dust or fumes which are liable to be inhaled by any who encounter them. The absence from section 47 of a similar rider to that found in section 49 is significant. It reflects the recognition that the risk of exposure extends beyond those who are involved in the process of generating the dust or fume which can cause injury. In Morrison v CEGB, an unreported decision of 16 March 1986, Rose J held that section 63(1) of the Factories Act 1961 (the equivalent of section 47(1) of the 1937 Act) only extended protection to those engaged in the process. He held that if it had been intended to extend the protection to those working in the factory generally, then the section could have been so worded. It does not appear that Rose J was referred to section 65 of the 1961 Act (the equivalent of section 49 of the 1937 Act). In the later case of Owen v IMI Yorkshire Copper Tube Buxton J considered both sections and reached the opposite conclusion to that of Rose J. He gave five reasons for arriving at that conclusion, four of which I agree with and find compelling. They are these: (i) the phrase in connection with any process carried on refers to the dust and fume produced, not to the person operating that process; (ii) the effect of section 63 was to prohibit accumulation of dust or fume in any workroom at all, and not merely in the workroom where the process producing them was carried out; (iii) comparison with section 4 of the 1961 Act showed that section 63 provided the same ambit of protection as section 4 which, in material part, provided that adequate ventilation of each workroom, and the rendering harmless, so far as practicable, of all fumes, dust etc generated in the course of any process or work carried on in the factory as may be injurious to health; (iv) since the duty imposed by section 63 was to prevent accumulation of dust or fume, the protection which it was designed to achieve 69. must extend to all employed in the workroom, not just those engaged in the process. In the Court of Appeal, the decision of Buxton J in Owen is referred to only en passant at para 49 and in a footnote to para 56 of McCombe LJs judgment. The learned Lord Justice and the Master of the Rolls preferred to follow the decision in Banks on this question. Stuart Smith LJ in Banks had adopted the line of reasoning of Rose J in Morrison. Although he was aware that Buxton J had disagreed with Morrison in his judgment in Owen, Stuart Smith LJ indicated that he had not seen the judgment in the latter case. He concluded that the words persons employed in section 47 of the 1937 Act related back to the earlier words, in connection with any process. This he found to be the natural reading of the words. I do not agree. There is no reason to import, in effect, the earlier words as a qualification to the plain and simple expression, the persons employed. As Buxton J pointed out, this would have the effect of creating a significant gap in the cover of protection for workers who might, in the course of their employment, inhale dangerous substances and be at risk of grave illness in consequence. Quite why the creation of such a significant gap should represent the intention of the legislature was not addressed or explained by Stuart Smith LJ nor, with respect, by the Court of Appeal in the present case. 70. Nor did Stuart Smith LJ explain, although he adverted to it, why the contrast between sections 47 and 49 of the 1937 Act did not point clearly to the former section being interpreted more widely. For the reasons given in para 67 above, I consider that this divergence is significant and clearly betokened an intention that the application of section 47 should extend to those employed persons liable to be affected by the dust or fume, not merely to those employees who were responsible for producing those substances. 71. But if the section applied to persons employed generally, did it apply to Mr McDonald who was not employed by the occupiers of the power station and who did not require to go to the areas where he was exposed to asbestos in order to fulfil the requirements of his own employment? In Massey Harris Ferguson (Manufacturing) Ltd v Piper [1956] 2 QB 396 the Divisional Court held that persons employed where that expression was used in section 60 of the 1937 Act included not only servants of the occupier, but any other person who might be called on to do work in the factory, including a painter employed by an independent contractor. At p 401, Lord Goddard CJ said, The test is whether a person is employed in the factory, not whether he is employed by the occupier. This approach was approved by the House of Lords in the Canadian Pacific case see Viscount Kilmuir at 504. On this basis, it was unnecessary for Mr McDonald to show that he was employed by the occupiers of the factory. The fact that he was employed by a different organisation is irrelevant to the application of the subsection to his case. Casual visitor 72. What of the circumstance that Mr McDonald was not required to go to that part of the factory where he inhaled the dust which led to the development of mesothelioma? The answer is supplied, I believe, by the decision of the Court of Appeal in Uddin v Associated Portland Cement Manufacturers Ltd [1965] 2 QB 582. In that case it was held that section 14 of the 1937 Act applied where a workman in the factory went to a part of the premises where he had no authority to go and his arm was caught in a revolving shaft. At 593E Lord Pearce said, there is nothing to justify the gloss that an employed person is to be protected only so long as he is acting within the scope of his employment. The suggestion that Mr McDonald was acting within the scope of his employment while in the areas where pulverised fuel ash was collected and stepped outside that scope as soon as he crossed the threshold of another room in the factory is fanciful. I consider that the second condition to establish breach of section 47(1) has also been met. Substantial quantity at time of giving off or inhalation? 73. The third condition of the subsection that arises in the present case is that a substantial quantity of dust be present, on the appellants case at the time of inhalation, and, on the respondents, at the time that it was given off. Resolution of the conflict between these two positions must begin with a close examination of how the requirement is framed in the subsection itself. The duty to take all practicable measures is triggered when there is given off any injurious or offensive dust or fume or any substantial quantity of dust of any kind. The subsection does not stipulate that the quantity of dust must be substantial at the point of inhalation. The text of the provision therefore favours the respondents claim as to its proper interpretation. It is to be presumed that the greater the quantity of dust given off, the greater the chance that it will be inhaled before it is dissipated. It is therefore not at all surprising that practicable measures should be required to be taken at the point at which the dusts or fumes are given off. On that account also, the respondents position is to be preferred. That interpretation as to the effect of the subsection also appears to have been accepted by Widgery J in Nash v Parkinson Cowan Ltd (1961) 105 S J 323 although the judge in that case does not appear to have been asked to consider the two possible interpretations advanced on the present appeal. 74. 75. Mr Nolan argued that his interpretation was supported by certain statements made by Singleton LJ in Gregson v Hick Hargreaves & Co Ltd [1955] 1 WLR 1252 where at 1263 he said, No one could successfully contend that if there was given off a considerable quantity of dust at one end of this 100 yards long shop, everyone down to the other end of the shop should be provided with a mask. It appears to me, however, these remarks were made in the context of an examination whether it was practicable to supply masks rather than on the question of whether the obligation to take practicable measures arose if the amount of dust was considerable at the time that it was given off. In a later passage Singleton LJ said: On the latter part of section 47(1) on which [counsel for the plaintiff] relies, he is entitled to say there was given off a substantial quantity of dust, and thus the employers were under a duty to take all practicable measures to protect the plaintiff and others employed against inhalation of the dust. 76. I consider therefore that the duty to take practicable measures arises whenever a considerable quantity of dust is given off and that the activation of the duty is not dependent on its being shown that the quantity of dust was considerable at the moment of inhalation. In my view, therefore, the third condition would be satisfied in Mr McDonalds case if the evidence established that, at the time the asbestos dust was given off, it was of substantial quantity. The evidence about the amount of dust at the time that it was given off 77. The Court of Appeal in the present case held that the trial judge had failed to make a finding on whether the amount of dust given off was substantial. At para 62 McCombe LJ said that the judge made no finding on this point because although he had begun to address the question at the beginning of para13 of his judgment, by the end of the paragraph he had strayed off into the question of whether Mr McDonald had been exposed to dust likely to be injurious or offensive. At para 109 Lord Dyson MR said, It is unfortunate that the judge did not make any finding on this issue of fact and it is difficult for this court to make good this omission. 78. McCombe LJ analysed the evidence in relation to the giving off of a quantity of dust in paras 63 and 64 and the Lord Dyson MR expressed agreement with that analysis. For reasons that will appear, it is necessary to set out both paras: 63. Mr Allans submission in this area is that the evidence showed that there were substantial quantities of asbestos dust discharged in the activities at the power station and that it matters not that such dust may not have been substantial at the point of inhalation. He submitted that it was common ground between the experts that the processes at the power station would have produced a substantial quantity of dust. He referred to the reports of Mr Raper for Mr McDonald and Mr Glenn for the first respondent The first of those references includes a table of Mr Rapers compilation referring to the concentrations of asbestos dust to which Mr McDonald was likely to have been exposed. Each is based upon Mr McDonald's proximity to the location of various operations. The table is introduced by the following: 4.31 On the basis of the claimant's account and in view of the foregoing [in which Mr Raper had stated his own understanding of substantial quantities of dust], I would estimate the concentrations of asbestos dust to which the claimant is likely to have been exposed as shown in the following table. The second passage, from the report of Mr Glenn, was in these terms: If there was work with asbestos insulation in the power station then there was the potential for anyone close to that work to be exposed to a high concentration of asbestos dust, but the dust would disperse as it moved away from the work area and those in neighbouring areas would have been subjected to a lower concentration of dust than those directly involved in the work. 64. In my judgment, these passages are slender evidence of the giving off of a substantial quantity of dust. The first is based upon Mr McDonalds account which, as the judge found, had its deficiencies. The second only alludes to a potential for exposure to high quantities of dust based upon proximity of the person in question to the operation in question. I consider that that material is not adequate to demonstrate that there was the giving off of any substantial quantity of dust relevant to the injury said to have been caused to Mr McDonald at these premises. There simply was not the necessary evidence to establish in this case what quantities of dust were discharged by work at this power station and in what circumstances so as to constitute a substantial quantity for the purposes of the section. (Emphasis added). 80. He pointed out that the consultant engineers, Mr Raper and Mr Glenn, in their joint statement agreed that asbestos would have been present in the lagging materials within the power station at the material time. Mr McDonald in his witness statements had described asbestos powder being mixed in oil drums, the cutting of pre formed sections and the removal of old lagging. Mr Raper had stated that these activities would have given rise to high concentrations of asbestos dust. This opinion did not rest solely on Mr Rapers assessment of Mr McDonalds evidence. He referred to published work by PG Harries who had measured dust levels in naval dockyards and supported his opinion by references to the relevant literature. 81. When Mr Raper gave oral evidence these sections of his report were not challenged, Mr Allan claimed. What was put in issue was the extent of Mr McDonalds exposure. It was not surprising, said Mr Allan, that Mr Rapers oral evidence about high concentrations of dust was not challenged since what he had said on the subject was entirely uncontroversial. Moreover, Mr Glenn, in his report, acknowledged that some types of work with asbestos insulation can release large amounts of asbestos dust unless appropriate precautions are taken and he gave a similar opinion in his report to that of Mr Raper regarding the fact that mixing of asbestos would give rise to high concentrations of asbestos dust. 82. At the trial, according to Mr Allan, neither the appellant nor the first defendant disputed that within the power station work was carried out involving asbestos insulation and this work would cause substantial amounts of dust to be given off. What was in dispute was the extent and frequency of Mr McDonalds exposure. Finally, Mr Allan pointed out that in the Cherry Tree case it was not controversial that the type of lagging activities described by Mr McDonald gave rise to high concentrations of visible dust (Hale LJ para 39). 83. For the appellant, Mr Nolan argued that the requirement that there be a substantial quantity of dust introduced either a qualitative or a quantitative dimension and suggested that in Anderson v RWE NPower plc (unreported 22 March 2010) Irwin J had inclined to the view that the substantial element of the requirement involved a qualitative component. At para 43 of his judgment in that case Irwin J had said, the phrase substantial dust itself may add little, since in context it almost certainly meant so substantial as to be likely to be injurious. On this approach some foreseeable risk of injury was imported into the test and its application would have to take account of prevailing knowledge (or lack of knowledge) of the risk. If this was the correct approach, Mr Nolan submitted that the test could not have been satisfied since an unequivocal finding had been made by the trial judge that the level of Mr McDonalds exposure was not greater than that thought of at the material time as being unlikely to pose any real risk to health see para 4 above. If the substantial element connoted merely a quantitative element, Mr Nolan claimed that this must mean more than a significant quantity. He referred to the case of Richards v Highway Ironfounders (West Bromwich) Ltd [1955] 1 WLR 1049 when the plaintiff was found to have had to work in clouds of silica dust. (It is to be noted, however, that there was no examination by Sir Raymond Evershed MR of the extent of dust that had to be present for the requirement of substantial to be met, presumably because it was beyond dispute that the quantity was indeed substantial. It should also be noted that, in contrast with the approach of Irwin J in Anderson, the Master of the Rolls considered that the question of foreseeability of injury was relevant only to the issue of practicable measures). 84. 85. Mr Nolan submitted that any evidence of the quantity of dust which depended on Mr McDonalds account of the working conditions which he encountered was of limited value since his evidence about his exposure had been rejected by Judge Denyer QC as unreal and this finding had not been disturbed by the Court of Appeal. It is important to note precisely what the judge said about this. At para 11 he said: I reject the notion that he was constantly standing in clouds of asbestos dust when he was there this is an unreal scenario. I accept the defendant's analysis that as you move away from the centre of activity, levels of harmful dust decline. I accept that his likely exposure when exposed was not greater than those levels thought of in the 50s and 60s as being unlikely to pose any real risk to health. Two points need to be made about this passage. First the rejection of Mr McDonalds account related to his claim that he was standing in clouds of asbestos dust when, of course, Mr McDonalds case on section 47 was being advanced on the basis of the giving off of substantial quantity of dust of any kind. As the Court of Appeal held, the judge failed to address that question. The second and related point is that the judge appears to have made his judgment on the question of the levels of dust on the basis of whether they gave rise to known risks. He did not address what has been described, for instance by Sir Raymond Evershed MR in Richards, as the dichotomy in section 47. What does substantial mean? 86. The relevant phrase in section 47 is any substantial dust of any kind. I should start my discussion on this part by saying what this does not mean. It does not mean a substantial quantity of injurious dust. The so called dichotomy in section 47 points clearly away from such an approach. Whether the second limb of the subsection is triggered calls for a purely quantitative assessment. It may well be, as suggested in cases such as Richards and Gregson, that the possibly injurious propensity of the dust has a part to play in deciding what are practicable measures. But that has nothing to say on the question whether, in the first instance, there is any substantial quantity of dust of any kind. 87. The question whether the dust is asbestos or other injurious dust should therefore not obtrude into the initial assessment of whether the second limb of section 47(1) is engaged. To do this conflates consideration of the second limb with considerations that are relevant to the first limb. Proper application of the subsection requires a staged approach: (i) is the dust, fume or other impurity which is given off of such a character and given off to such an extent as to be likely to be injurious or offensive to the persons employed? (ii) if not, has any substantial quantity of dust of any kind been given off in the workroom where the claimant was a person employed? (iii) if the answer to (i) or (ii) is yes are there practicable measures which can be taken to protect the persons employed against inhalation of the dust or fume or other impurity and to prevent its accumulation in any workroom? And (iv) if the answer to (iii) is yes have they been taken? 88. This staged approach was not followed by the trial judge nor, I am afraid, by the Court of Appeal, although, in fairness, it does not seem to have been presented to either in quite the stark way that I have expressed it. Indeed, by the time that the matter came before the Court of Appeal, it may not have been feasible for counsel to present it in quite that way, given the flow of the evidence before Judge Denyer QC. Be that as it may, it is clear that the sharp distinction that should have been drawn between matters required to establish liability under the first limb and those required to sustain a case under the second was not maintained. The opening words of para 63 of McCombe LJs judgment and his observation that there was no evidence that any substantial quantity of dust relevant to Mr McDonalds injury had been given off disclose that that clear division between the two limbs was not preserved. Of course, the question of whether any substantial quantity of any dust caused or contributed to Mr McDonalds condition would always be relevant but not at the stage where what was being decided was if there was a substantial quantity of dust of any kind. 89. Mr Allan submits that the failure of the trial judge and the Court of Appeal to approach the application of the second limb properly is not fatal to the respondents case on the cross appeal. In particular, he points to the fact that, at the time of Mr McDonalds exposure, no reliable scientific means existed for measuring the concentrations of dust in the atmosphere. In these circumstances, he suggests, the assessment of dust levels had to be by reference to a visible dust cloud, even though the hazardous proportion of the dust would be invisible to the naked eye. There was enough evidence, he claimed, to allow this court to conclude that such a visible dust cloud was present and that, therefore, the proposition that there was a substantial quantity of dust was made out. 90. The problem with this submission is that there was no examination before the trial judge or the Court of Appeal of the issue whether the only means of assessing whether dust levels amounted to substantial was by visible assessment. Or, at least, if there was, it does not feature in the judgment of either court. Nor was evidence given of how dense the cloud would have to appear to be. These, and doubtless many other issues, would have been canvassed before Judge Denyer QC if there had been a clear confrontation of the question whether, merely on its appearance, the quantity of dust which was generated at the time Mr McDonald was in the workroom satisfied the statutory requirement of being substantial. It is not possible for this court to conduct retrospectively the type of investigation that would be required to provide a confident outcome to that debate. I have concluded, therefore, that the third condition has not been, and cannot now be, satisfied. The fourth condition has it been shown that Mr McDonald inhaled asbestos dust which caused his mesothelioma? 91. The undisputed evidence was that anyone who was present in the workroom where lagging operations were carried out would be exposed to asbestos dust. It was not disputed that Mr McDonald was so present. While the extent of his exposure was a matter of controversy, the fact that he was exposed to some extent was not. Therefore, as Lord Dyson MR pointed out in para 119 of his judgment, in the absence of any suggestion that he was exposed to asbestos in any other employment or in the general atmosphere, causation will have been established in the conventional way. I consider that causation has been established and that Mr McDonalds estate is entitled to recover appropriate compensation. Disposal 92. I would dismiss the appeal and the cross appeal. LADY HALE: 93. A just and sensible judge is always prepared to admit that she has been wrong. But it would not have been comfortable to be the swing vote between two Justices who thought that Cherry Tree Machine Company Ltd v Dawson (sub nom Jeromson v Shell Tankers (UK) Ltd) [2001] EWCA Civ 101, [2001] ICR 1223 was rightly decided and two who thought that it was wrong. I am therefore mightily relieved that the unanimous view is that it was rightly decided. The claimants husband in Cherry Tree was employed as an apprentice fitter in a factory which manufactured dry cleaners presses. For two years, it was part of his job to mix asbestos flock with water in a bucket and then apply it to the plattens of a press in order to seal them to stop the steam escaping. He was therefore mixing the asbestos as part of the process of manufacturing a product containing asbestos. That sort of mixing, as Lord Reed explains, was covered by the Asbestos Industry Regulations 1931. He was also engaged in the manufacture of such products and thus undoubtedly within the class of persons whom the Regulations were designed to protect. 94. The first question in this case is whether the mixing of asbestos with water in order to form a paste with which to lag pipes and boilers in a power station was also covered by the Regulations. The second question is whether the Regulations were designed to protect a person such as Mr McDonald, who was not employed by the power station but was there in the course of his employment with another employer. Neither question is without difficulty, as the difference of opinion in this court demonstrates. But it is common ground that if Mr McDonalds exposure to asbestos was in breach of a statutory duty owed to him, the power station will be liable on the basis of having materially increased the risk of his suffering injury from that exposure. 95. The Regulations in question were made under section 79 of the Factory and Workshop Act 1901 (see para 6 above). This gave the Secretary of State power to do two things: first, to certify that any manufacture, machinery, plant, process or description of manual labour, used in factories or workshops was dangerous, if he was satisfied that it was dangerous or injurious to health or dangerous to life or limb, either generally or in the case of women, children or any other class of persons; and second, having so certified, to make such regulations as appeared to him reasonably practicable and to meet the necessity of the case. Section 82 made it clear that the regulations could cover any factory or workshop where the certified manufacture or process took place. 96. The Secretary of State certified as dangerous the manipulation of asbestos and the manufacture or repair of articles composed wholly or partly of asbestos and processes incidental thereto. The focus was upon the processes of manipulation and manufacture and not on any particular setting where this might happen. This focus is carried through into the Preamble to the Regulations, which directs that they shall apply to all factories and workshops or parts thereof in which the following processes or any of them are carried on. The only indication in the Regulations that they might not apply to all such factories or workshops is in the title The Asbestos Industry Regulations coupled with what that might have been understood to mean at the time. 97. But that understanding is not crystal clear from the Merewether and Price Report on whose findings and recommendations the Regulations were based. We can all read that Report, and the Report on Conferences between Employers and Inspectors concerning Methods for Suppressing Dust in Asbestos Textile Factories which followed it, and find some words which appear to support the view which we have taken of the Regulations and some which point the other way. Part I of the Merewether and Price Report is devoted to establishing that there is a dose related risk to health from exposure to asbestos dust. Part II is devoted to an explanation of the processes in which asbestos dust might be generated and the methods of suppressing that dust. The introduction to Part II lists seven main groups of asbestos products, including at (c) insulation materials. But it also points out that apart from manufacture, certain work is carried on in premises subject to the Factory and Workshops Acts, as well as in other premises, which involves use or manipulation of asbestos or products containing it (p 19). It cannot therefore be assumed that the authors were only concerned with the factories and workshops in which the particular seven products listed as (a) to (g) were produced. The concluding summary and recommendations include the comment that Dust is produced at many kinds of machines, in hand process work, and in simple incidental operations, particularly in emptying settling chambers, and in all handling of fiberized asbestos (p 31). The overall message is clear: asbestos dust is potentially harmful; it is produced when handling asbestos and in various other manufacturing processes; and steps should be taken to suppress it. In my view, the title to the Regulations, and the preceding Report, are by no means clear and unequivocal enough to dispel the plain meaning of the words of the Preamble to the Regulations, which direct that they shall apply to all factories and workshops in which the listed processes are carried out. This is reinforced by the exclusion of places where only some of those processes are carried on and then only occasionally. The Regulations do only apply to factories and workshops, and not, therefore, to places such as ships where processes producing asbestos dust were also known to be carried on. But the power station with which we are concerned was a factory or workshop to which the Factories Acts applied. 98. 99. The next question, therefore, is whether mixing asbestos containing insulation material in large drums to create insulating paste was a process covered by the Regulations. Mr Nolan QC, for the defendant, mounted a vigorous argument that mixing in paragraph (i) of the list of processes in the Preamble had a narrow technical meaning which could not include mixing such as this. He pointed to the uses of the term mixing, in both the Merewether and Price Report and the Report on Conferences, in the context of the work of preparing raw asbestos for use. He also pointed to the context, at the beginning of the list of processes in the Regulations, before the references to the processes involved in the manufacture of various products. 100. Mr Nolans meaning would not have included the mixing of asbestos flock with water in order to make the paste used to seal the plattens in Cherry Tree, a process which is also described in the Merewether and Price Report. His meaning is difficult to reconcile with the Regulations definition of asbestos as any fibrous silicate mineral, and any admixture containing any such mineral, whether crude, crushed or opened. As Lord Reed points out (para 155(v)), mixing of asbestos can take place at three stages within the asbestos industry: mixing the contents of sacks before crushing; mixing the crushed material before it is opened; and mixing the opened or fiberized asbestos with other materials in order to produce asbestos products. But once the meaning is taken beyond the narrow technical meaning for which Mr Nolan argued, it is difficult to see why mixing asbestos (as defined in the Regulations) with water to make a paste to seal the plattens in a dry cleaning press is covered but mixing the same asbestos with water to make lagging paste is not, provided that both processes are carried on in a place covered by the Factories Acts. The question comes back, therefore, to whether the Regulations are confined to the industry of making asbestos products, on which I respectfully differ from Lord Reed for the reasons given earlier. 101. The next question, therefore, is whether Mr McDonald was a person for whose protection the Regulations were made. The 1901 Act itself made no mention of civil liability towards anyone. Under section 85(1), breach of the Regulations was a criminal offence punishable only with a fine. But it was long ago established that, if statutory duties were created for the protection of a particular class of persons, who might be injured if those duties were not observed, then Parliament might not have intended that criminal liability were the only remedy: see, for example, the classic statement in Groves v Lord Wimborne [1898] 2 QB 402. Civil liability therefore depends upon whether the claimant belongs to such a class. But logic suggests that there must be some limit: the class may be very wide but it is less likely that legislation creating a criminal offence also intended to impose what is often a strict civil liability, independent of negligence or the foreseeability of harm, towards anyone at all who might suffer injury as a result of a breach. 102. Sometimes the statute itself suggests the limit, as with the provisions of sections 47 and 49 of the Factories Act 1937, which protect respectively persons employed and persons employed in the process (see paras 17 and 67 above). Sections 79 and 82 of the 1901 Act do not contain even those limits. There is the complication, as pointed out in Canadian Pacific Steamships Ltd v Bryers [1958] AC 485, that the 1901 Act was repealed by the 1937 Act and Regulations made under it were deemed to have been made under the corresponding provisions of the 1937 Act; section 60 of the 1937 Act was originally limited to the protection of persons employed in the regulated processes; but this was amended in 1948 to cover all persons employed. However, as Viscount Kilmuir pointed out, while Regulations which were ultra vires when made could not be rendered intra vires if the scope of the later Act were wider, it did not follow that Regulations which were intra vires when made could become ultra vires if the scope of the later Act were narrower. 103. Is there anything, therefore, to suggest that the duties imposed in the 1931 Regulations are owed only to persons employed by the factory or workshop in question, as opposed to persons employed elsewhere who come to the factory in the course of their employment and may be exposed to asbestos dust as a result? Part II of the Regulations imposes certain duties (breach of which is also punishable by a fine) upon persons employed, but some refer simply to persons employed, others to persons employed at [specified] work, and one provides that no person shall misuse or wrongfully interfere with appliances provided in pursuance of the Regulations. This certainly suggests a link with employment, but not with any particular employment. 104. Although liability under the Factories Acts is often considered a type of employers liability, it is in fact a species of occupiers liability, the duties being placed upon the occupiers of the factories and workshops to which they applied. The object of those duties was to protect people from the harm which they might suffer as a result of the processes being carried on there. As was pointed out by both Lord Goddard LC and Streatfeild J in Massey Harris Ferguson (Manufacturing) Ltd v Piper [1956] 2 QB 396, it is often the people who are not regularly employed in the factory in question who are most in need of the protection offered by duties of this sort. The test which they adopted was whether a person was employed in the factory, not whether he was employed by the occupier. This test was approved by the House of Lords in the Canadian Pacific Steamships case. 105. The court in both those cases clearly regarded the decision in Hartley v Mayoh & Co [1954] 1 QB 383 as something of an exception to the general principle. There it was held that there was no liability under the Electricity Supply Regulations towards a fireman attending a factory fire who was electrocuted because of faulty wiring. It is noteworthy that, first, the occupier was only held responsible for 10% of the damages, the remainder being the responsibility of the electricity company; second, that the occupier was held liable in common law negligence anyway; and third, that no authorities, other than the general principle in Groves v Lord Wimborne, are cited for the proposition in any of the judgments in the Court of Appeal. 106. Mr Allan QC, for the respondent claimant, suggested that the test of a person employed is a person who attends the factory in the course of his employment, with the possible proviso that he does so in connection with the processes carried on there, rather than solely in connection with his employers business. Mr McDonald met that test. He was there on a regular, although not frequent, basis in order to collect the pulverised fuel ash generated by the power stations processes. I accept, of course, that at the time the Regulations were made, it was not known that a fatal disease might be caused by exposure to a single fibre of asbestos. The Merewether and Price Report was concerned with what was then seen as a dose related risk of developing asbestosis. But the Report also acknowledged that the appropriate methods for suppression of dust may only be fully determined when the harmful effects of comparatively low concentrations of asbestos dust are duly appreciated (p 31). The message was clear: asbestos dust is harmful and the then known methods must be employed to protect workers from it. I see no difficulty in regarding Mr McDonald as a person employed in the power station, albeit not by the power station, who was entitled to such protection as the Regulations then required. 107. It follows that I agree with Lord Kerr and Lord Clarke that the appeal should be dismissed. 108. In those circumstances, it is not strictly necessary to express a view on the cross appeal, but in my view it should be allowed. As I am in a minority of one on this issue, I will explain my reasons very briefly. All the conditions required by the substantial quantity limb of section 47 of the Factories Act 1937 (see para 109) are made out. I agree, for the reasons given by Lord Kerr, that the lagging operations were a process carried on at the power station. I also agree with him that Brophy v JC Bradfield & Co Ltd [1955] 1 WLR 1148 was wrong to hold that a factorys heating system was not a process carried on in the factory for this purpose. I agree with both Lord Kerr and Lord Reed that the persons protected are not limited to those employed on the process in question. For the reasons given earlier, I agree with Lord Kerr that the claimant was a person employed and thus protected by section 47. And I agree with both Lord Kerr and Lord Reed that the quantity of dust must be substantial at the time when it is given off and not necessarily at the time when it is inhaled. I remind myself that causation is not in issue in this case. 109. Where I respectfully disagree is in their conclusion that there was no evidence that the quantity of dust given off at the relevant time was substantial. I agree with Lord Kerr that this limb of section 47 requires only a quantitative assessment of the amount of dust of any kind being given off at the relevant time. The relevant time is not when Mr McDonald was exposed to the dust or in the room where the lagging work was being done. It is when the dust was given off. This issue was not addressed by the trial judge, who was side tracked into issues of foreseeability and whether the dust was likely to be injurious, which are relevant to negligence and to the first limb of section 47, but not to the second. Nor, with respect, was it addressed by the Court of Appeal in the passages quoted by Lord Kerr (at para 78). They were concentrating on the evidence of Mr McDonalds exposure and not on the evidence of the quantity of dust given off when it was given off. The evidence of both experts as to the amount of dust likely to have been given off by the various lagging activities carried on at the power station (summarised by Lord Kerr at paras 79 to 81) was entirely uncontroversial. In my view it shows that the amount of dust given off was substantial. The question then is whether practicable measures could have been taken to protect persons employed from inhaling the dust. But that issue has not been raised by the appellant defendant, who has throughout argued that the section does not apply, rather than that there was nothing the appellant defendant could reasonably have done about it. The burden was upon the appellant defendant to make such a case and the appellant defendant has not. 110. Hence I would have allowed the claimant/respondents cross appeal in addition to dismissing the defendant/appellants appeal. LORD CLARKE: 111. Lord Kerr and Lord Reed have reached different conclusions on the question whether the appellant was in breach of regulation 2(a) of the Asbestos Industry Regulations 1931 (the Regulations). Lord Kerr concludes that it was, whereas Lord Reed concludes that it was not. I prefer the reasoning and conclusion of Lord Kerr on this question, which is the critical question in this appeal. 112. Lord Kerr concludes that the Regulations should be given a broad construction. He refers in paras 6 to 14 to the statutory basis for and to the provenance of the Regulations. He refers to sections 79 and 82 of the Factory and Workshop Act 1901 and to a letter from the relevant Secretary of State dated 15 September 1931 enclosing a draft of the Regulations. He notes the breadth of the anticipated application of the Regulations and the express provision in section 82(1) that processes which did not exist at the time could come within the Regulations in the future. Thus section 83 provided that regulations made under the Act might, among other things, (b) prohibit, limit or control the use of any material or process. At para 10 Lord Kerr quotes from the preamble to the Regulations, of which para (i) is of particular relevance here. It provided that the Regulations were to apply to all factories and workshops or parts thereof in which the following processes or any of them are carried on: (i) breaking, crushing, disintegrating, opening and grinding of asbestos, and the mixing or sieving of asbestos, and all processes involving manipulation of asbestos incidental thereto; The remaining sub paragraphs are set out by Lord Kerr in para 10 above. 113. Then in paras 11 and 12 Lord Kerr refers to one of the provisos to those provisions: Provided that nothing in these Regulations shall apply to any factory or workshop or part thereof in which the process of mixing of asbestos or repair of insulating mattresses or any process specified in (v) or any cleaning of machinery or other plant used in connection with any such process, is carried on, so long as (a) such process or work is carried on occasionally only and no person is employed therein, for more than eight hours in any week, and (b) no other process specified in the foregoing paragraphs is carried on. I agree with Lord Kerr that, although the proviso cut down the scope of the Regulations, it also gave some insight into their intended ambit. In particular, it carried the clear implication that the processes identified in the preamble, other than those listed in the proviso, were to come within the Regulations even if the work involved in them took place only occasionally or for limited periods. Also, as Lord Kerr observes, in relation to the processes listed in the proviso, including mixing, the Regulations were to apply unless the work was carried out occasionally and no person undertook it for more than eight hours a week. 114. The preamble provided that it was the duty of the occupier of relevant premises to observe Part I of the Regulations, which included regulation 2. Regulation 2(a) and (b) provided: 2. (a) Mixing or blending by hand of asbestos shall not be carried on except with an exhaust draught effected by mechanical means so designed and maintained as to ensure as far as practicable the suppression of dust during the processes. (b) In premises which are constructed or reconstructed after the date of these Regulations the mixing or blending by hand of asbestos shall not be done except in a special room or place in which no other work is ordinarily carried on. 115. The essential issue between the parties is whether the regulation 2(a) covered only the asbestos industry and was concerned with asbestos in its raw unprocessed condition, as submitted on behalf of the appellant, or whether it extended to processed asbestos products, as contended on behalf of the respondent. In powerful judgments, Lord Reed espouses the former view, whereas Lord Kerr espouses the latter. 116. Both Lord Kerr and Lord Reed refer extensively to the Merewether and Price Report and other relevant pointers. I entirely accept that a critical part of the Regulations was concerned with processes in the manufacture and repair of items containing asbestos. This is plain from paras (i) to (vi) of the preamble quoted by Lord Kerr at para 10 and, indeed, can be seen from the title to the Regulations, namely the Asbestos Industry Regulations. However, the question is whether that expression should be given a wider or narrower meaning. It seems to me that the better view is that it should be given a wider meaning. 117. The purpose of the Regulations was surely to protect workers from the consequences of asbestos dust. I do not myself see why that protection should be limited to those affected by asbestos dust in the process of manufacture and repair and not those affected whenever a defined process was carried on in a factory or workshop. 118. All depends upon whether the process carried on in the present case was within para (i) of the preamble to the Regulations quoted above. In short, was it within the expression mixing or sieving of asbestos, and all processes involving manipulation of asbestos incidental thereto? Asbestos was defined as meaning any fibrous silicate mineral, and any admixture containing any such mineral, whether crude, crushed or opened. As I read his judgment, Lord Kerr accepted these submissions made on behalf of the respondent (summarised at his para 23). (1) Consistently with the mischief identified by Merewether and Price and the remedy they proposed, the terms of section 79 and the certification of the Secretary of State indicated that the Regulations were to apply whenever and wherever a defined process was carried on in a factory or workshop. (2) There was no need to adopt a narrow definition of asbestos industry and on that basis restrict the application of the Regulations. The title was used in the wide sense of any industry where one or more of the processes referred to in the preamble was carried on. 119. I agree. As I see it, the specific question which must be answered is that identified by Lord Reed in paras 151 and 152. As he says in para 151, the expert evidence given at the trial indicated that insulation material containing opened or fiberized asbestos were widely used until the 1960s for lagging boilers and pipework. Such material commonly contained fiberized asbestos, mixed with other substances such as calcium silicate or cement. The insulation material could either be pre formed or mixed with water and applied in the form of a paste. Pre formed sections were sawed by hand in order to profile them for fitting. The mixing of the paste involved bags of powdered insulation material being emptied into open topped containers for mixing with water. Lord Reed concludes in para 152 that, having regard to that evidence, it appears likely, on the balance of probabilities, that the insulating material used by the laggers was an admixture containing fiberized asbestos and was therefore asbestos as defined in the Regulations. The question posed by Lord Reed is whether the activities of the laggers fell within the Regulations. 120. I agree with Lord Reed that that is indeed the question. It appears to me, at any rate on the face of it and if the language is given its ordinary and natural meaning, that the conclusion that the material was an admixture amounts to a conclusion that there had been a mixing of asbestos within the meaning of para (i) of the preamble. Equally, as I see it, there was a process of mixing of asbestos within the meaning of the proviso quoted above, although the proviso would not apply on the facts because the conditions were not both satisfied. For my part, I do not think that the principle noscitur a sociis leads to the conclusion that the word mixing should be given other than its ordinary and natural meaning. 121. I turn briefly to the authorities. I agree with Lord Reed that in Watt v Fairfield Shipbuilding & Engineering Co Ltd 1999 SLT 1084 Lord Gill confined the scope of the Regulations too narrowly. I also agree with him that the first case in which a detailed consideration of the background to the Regulations was Cherry Tree Machine Co Ltd v Dawson (sub nom, Jeromson v Shell Tankers (UK) Ltd) [2001] EWCA Civ 101; [2001] ICR 1223, which has been discussed in some detail by both Lord Kerr and Lord Reed and in which Hale LJ gave the only reasoned judgment, with which Mantell LJ and Cresswell J agreed. Both Lord Kerr and Lord Reed accept that it was correctly decided, although Lord Reed expresses disagreement with some of the dicta in Hale LJs judgment. 122. As I read that judgment, Hale LJ approached the construction of the Regulations in the way that I have sought to do. I refer to only two aspects of her judgment in addition to those referred to by Lord Kerr. First, she said at para 24 on p 1232 that none of the arguments in Banks v Woodhall Duckham Ltd (which was an unreported decision of the Court of Appeal dated 30 November 1995) or Watt was sufficiently persuasive to combat the natural and ordinary meaning of the words used. Hale LJ approached the issue of construction by reference to the natural and ordinary meaning of the words used and was not persuaded that the title to the Regulations, namely the Asbestos Industry Regulations, led to any different conclusion. At para 20 she described the most powerful of the submissions to the contrary as being the title to the Regulations but said that there were two even more powerful points in reply. The first was that the Regulations were expressed to apply to any factory or workshop where the defined processes took place and the second was a point on the proviso much as referred to above. Secondly, at para 25, Hale LJ expressed some doubt as to whether the Regulations applied to the work of knocking off old lagging but that they were more likely to have applied to the laggers work in mixing asbestos to form new insulation. I respectfully share those views of Hale LJ (for the reasons she gives) and the views of Lord Kerr on mixing at paras 45 to 49 and prefer them to the different views of Lord Reed. 123. I would only add that I also share the views of Lord Kerr expressed at paras 27 to 35 of his judgment. In particular, if the Secretary of State had intended to limit the Regulations to a narrow view of the asbestos industry, he could easily have done so, whereas, as Hale LJ observed, the Regulations made it clear that all factories and workshops in which certain specified processes were carried out were covered. If the purpose of the Regulations was to protect workers from asbestosis dust, why exclude these workers? I adopt Lord Kerrs approach to the Merewether and Price Report at his paras 28 to 35 without repeating it here. I would only underline the statement of Judge LJ quoted by Lord Kerr at his para 29, that the research was confined to asbestos textile workers, but [the report] explained that workers in other industries, exposed to asbestos dust, were also at risk. The critical finding was that exposure to asbestos dust gave rise to grave illness. 124. For these reasons, like Lord Kerr, I would hold that the Regulations applied to the work being done by the laggers. I agree with Lord Kerr and Lord Reed that it is not necessary for a person in the position of Mr McDonald to show that he was employed by the occupier or in the process in connection with which the dust or fume is given off. The question remains, however, whether he was employed at the factory. As Lord Kerr explains at paras 72 and 73, it is not necessary that the employee should be acting in the course of his employment: Uddin v Associated Portland Cement Manufacturers Ltd [1965] QB 582, per Lord Pearce at 593E. 125. Lord Kerr notes at para 71 that, at any rate for the purposes of section 60 of the 1937 Act, persons employed included any person who might be called on to do work at the factory, including a painter employed by an independent contractor: see for example Massey Harris Ferguson (Manufacturing) Ltd v Piper [1956] 2 QB 396. On the other hand, after referring to those cases, Lord Reed observes at para 217 that the expression does not extend to a fireman who enters a factory in order to put a fire out (Hartley v Mayoh & Co [1954] 1 QB 383), or to a police constable who enters a factory in pursuit of a felon (Wigley v British Vinegars Ltd [1964] AC 307, 324 per Viscount Kilmuir), although he is a person and he is employed. Lord Reed adds that in Canadian Pacific Steamships Ltd v Bryers [1958] AC 485, 504 Viscount Kilmuir considered that the phrase applied to any person who is employed in the factory whether the direct servant of the occupier or a servant of an independent contractor so long as he is employed upon work in that factory. He adds that in the later case of Wigley v British Vinegars Ltd, concerned with a window cleaner employed by an independent contractor, Viscount Kilmuir said, at p 324: In my view, the true distinction is between those who are to work for the purposes of the factory and those who are not. Clearly, maintenance of the factory is work for the purpose of the factory, while the arrest of a felon or the putting out of a fire is not, though it may benefit the factory indirectly. Window cleaning is part of the maintenance of the factory and in my view the deceased was within the protection afforded. 126. Lord Reed recognises that these principles tend to give rise to the drawing of fine distinctions without any compelling rationale. The present case might be regarded as an example. As he puts it at para 218, it could perhaps be argued that Mr McDonald was employed for the purposes of the power station, either on the basis that one of those purposes was the sale of the ash, and he was employed collecting ash which had been sold, or on the basis that the ash was a by product which the power station had to dispose of, and he was employed removing it. However, Lord Reed prefers the contrary view as being more persuasive on this basis. Mr McDonald was not in reality working for the purposes of the power station. He was working solely for the purposes of his employer, the Building Research Establishment. It was the purchaser of the ash which was a by product of the power station, and it employed Mr McDonald to collect the ash in his lorry. A customer of a factory can hardly be regarded as working for the purposes of the factory. 127. I am bound to say that I prefer the former view. It appears to me that a lorry driver who goes to a factory to collect its produce is in a real sense working for the purposes of the factory, albeit as the employee of someone else. The collection of goods is essential to the operations of the factory. The driver is much closer to the painter or the window cleaner than the fireman or the policeman. I therefore prefer the view of Lord Kerr. I would hold that, in the relevant sense and at the material time, Mr McDonald was employed in the factory. 128. For these reasons I would hold that the appellant was in breach of the duty contained in regulation 2(a) and that, provided that the relevant causal link was established, the respondents estate is entitled to recover appropriate compensation. As to causation, the position is summarised by Lord Dyson MR in para 119 of his judgment as follows: As I understand it, the only evidence of Mr McDonalds exposure to asbestos dust is of exposure from the activities at the National Grids factory. There is no suggestion that he was exposed to asbestos dust in the course of any other employment during his working life. It follows that, unless he was exposed to asbestos dust in the general atmosphere, the mesothelioma must have been caused by the dust to which he was exposed at the National Grids factory. If he was not exposed to asbestos dust in the general atmosphere, causation will have been established in the conventional way. If he was exposed to asbestos dust in the atmosphere, then he will succeed on the basis that the National Grid materially increased the risk of Mr McDonald contracting mesothelioma: see Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10, [2011]2 AC 229. 129. For these reasons I would dismiss the appeal. I do not wish to say anything about the cross appeal. LORD REED (with whom Lord Neuberger agrees) Introduction 130. Mr McDonald was diagnosed with mesothelioma in 2012, and died from the disease in 2014. His only known exposure to asbestos occurred when he was employed by the Building Research Establishment between 1954 and 1959 as a driver and, in the course of that employment, drove a lorry to Battersea Power Station from time to time in order to collect pulverised fuel ash for use in the experimental production of building materials. In order to collect the ash, Mr McDonald had to drive his lorry beneath a chute outside the power station from which the ash was released. He was not exposed to asbestos during that process. 131. The evidence that he was exposed to asbestos during his visits to the power station comes from two written statements made by him, on which he was not well enough to be cross examined. In his first statement, he said that there was generally a queue of vehicles waiting for deliveries, and that it was his habit to park his lorry and go into the power station for about an hour. He had to deal with paperwork and talk to the manager about his delivery. He got to know the workers in the power station, and they would show him around. He would also have lunch in the power station. He generally waited in the power station until it was time for him to collect the ash and leave. 132. In his second statement, he said that once inside the power station it took him five minutes to walk to the managers office. There were usually other people waiting to speak to the manager. Once his paperwork was completed he would speak to the workers who were dealing with his delivery about any delays. He also used the lavatories in the power station. 133. In both statements, he described being present when thermal lagging was applied to boilers and pipework, and seeing the laggers mixing asbestos powder with water in order to make the lagging paste which they then applied to the boilers or pipes being insulated. He also saw laggers cutting pre formed sections of asbestos to fit to pipes and boilers, and removing old asbestos insulation from pipework. He claimed to have been in close proximity to such work, with visible clouds of asbestos in the air. 134. Aspects of this account were challenged by the appellants, who are the successors of the former occupiers of the power station, and their co defendant at the trial, the Department for Communities and Local Government, which is the successor of Mr McDonalds employer. It was common ground that the ash plant was separate from the power station, and did not have any lagged pipes or boilers. If Mr McDonald had to enter the power station at all, it would only be to go to the offices. The offices, lavatories and canteen would not be dusty environments. There was no need for Mr McDonald to go inside the boiler house or the turbine house, where there would be lagging of boilers and pipes. If he did so, he went there as a casual visitor. It was very unlikely that Mr McDonald would have been standing in close proximity to clouds of asbestos. 135. The trial judge, HH Judge Denyer QC, accepted the defendants analysis of the real extent and duration of Mr McDonalds visits to the power station. He concluded that any exposure was at a modest level on a limited number of occasions over a relatively short period of time, and that his likely exposure when exposed was not greater than those levels thought of in the 50s and 60s as being unlikely to pose any real risk to health. 136. The question which arises on this appeal is whether the appellants are liable in damages for breaches by their predecessors of regulation 2(a) of the Asbestos Industry Regulations 1931 (the 1931 Regulations) and section 47(1) of the Factories Act 1937 (the 1937 Act). The judge rejected Mr McDonalds claims under both heads, and also a claim in negligence. The Court of Appeal allowed the appeal in so far as the claim was advanced under the 1931 Regulations. The appellants appeal against that decision. There is a cross appeal against the dismissal of Mr McDonalds claim under the 1937 Act. The claim in negligence is no longer pursued. 137. I approach the questions raised in the following three parts, before concluding that the appeal should be allowed and the cross appeal dismissed: 1. The historical background to the making of the 1931 Regulations and the enactment of the 1937 Act. 2. An analysis of the Regulations against the backdrop of certain earlier documents and the relevant authorities, as well as subsequent legislation made on the basis of the understanding of the Regulations which I favour. I conclude this part by considering whether Mr McDonald was within the scope of the Regulations in any event. 3. An analysis of section 47(1) of the 1937 Act and its application to Mr McDonalds case. 138. Although the legislation in question was repealed long ago, the questions raised as to its interpretation are of continuing practical significance. As the facts of this case demonstrate, the consequences of exposure to asbestos may not become apparent for many years. When they emerge, the resultant claims are often of substantial value and of considerable importance to the individuals affected, to the insurance industry and to the Government (which has succeeded to potential liabilities, particularly as a result of the nationalisation of industries in which asbestos was used). The ambit of the legislation is therefore a matter of general public importance. Part I: the Historical Background 139. It is important to understand at the outset that the connection between asbestos and mesothelioma was unknown when the 1931 Regulations and the 1937 Act were conceived and introduced (and, for that matter, during the period when Mr McDonald visited the power station). The legislation was not designed to protect against the risk of mesothelioma: a risk consequent upon exposure to any quantity of asbestos dust, however infrequent the exposure may be, and however insubstantial the quantity of dust to which the person is exposed. The legislation has to be interpreted in the same way as any other legislation, and not distorted in order to provide compensation to those who were not intended to fall within its protection. It should also be interpreted without any preconception that it must have been intended to maximise the protection afforded to workers: then as now, legislation concerned with health and safety reflected a compromise between competing interests and objectives. The Factory and Workshop Act 1901 140. The 1931 Regulations were made under section 79 of the Factory and Workshop Act 1901 (the 1901 Act). Part IV of the 1901 Act was headed Dangerous and Unhealthy Industries. It contained two groups of provisions. The group relevant for present purposes was headed Regulations for Dangerous Trades. It included section 79, which provided that where the Secretary of State was satisfied that any manufacture, machinery, plant, process or description of manual labour used in factories or workshops is dangerous or injurious to health or dangerous to life and limb, he might certify that manufacture, machinery, plant, process or description of manual labour to be dangerous. On such certification, the Secretary of State might make such regulations as appeared to him to be reasonably practicable and to meet the necessity of the case. The certification 141. In accordance with section 80 of the 1901 Act, notice was given of a proposal to make the 1931 Regulations in a letter issued by the Home Office dated 15 September 1931. The letter narrated that, as required by section 79, the Secretary of State had formally certified as dangerous: the manipulation of asbestos and the manufacture or repair of articles composed wholly or partly of asbestos and processes incidental thereto. 142. It will be necessary at a later point to return to that letter. For the present, it is to be noted that the certification, which was critical to the scope of the power to make regulations, concerned the manipulation of asbestos a term which, as I shall explain, is descriptive of fibrous silicate minerals and the manufacture or repair of articles composed wholly or partly of those minerals. Part 2: the 1931 Regulations 143. The 1931 Regulations, which were subsequently revoked and replaced by the Asbestos Regulations 1969 (SI 1969/690, the 1969 Regulations), are entitled The Asbestos Industry Regulations. That title suggests that the Regulations are concerned with something identifiable as the asbestos industry, rather than with the use of the products of that industry in the work of other industries. That is as one might expect from the terms of the certification, which as I have explained concerned the manipulation of asbestos, and the manufacture and repair of articles composed wholly or partly of asbestos, rather than the use of asbestos products. 144. The Regulations begin with a preamble in which the Secretary of State directs that they are to apply to all factories and workshops or parts thereof in which the following processes or any of them are carried on: (i) breaking, crushing, disintegrating, opening and grinding of asbestos, and the mixing or sieving of asbestos, and all processes involving manipulation of asbestos incidental thereto; (ii) all processes in the manufacture of asbestos textiles, including preparatory and finishing processes; (iii) the making of insulation slabs or sections, composed wholly or partly of asbestos, and processes incidental thereto; (iv) the making or repairing of insulating mattresses, composed wholly or partly of asbestos, and processes incidental thereto; (v) sawing, grinding, turning, abrading and polishing, in the dry state, of articles composed wholly or partly of asbestos in the manufacture of such articles; (vi) the cleaning of any chambers, fixtures and appliances for the collection of asbestos dust produced in any of the foregoing processes. 145. A proviso to the preamble excludes the application of the 1931 Regulations to: any factory or workshop or part thereof in which the process of mixing of asbestos or repair of insulating mattresses or any process specified in (v) or any cleaning of machinery or other plant used in connection with any such process, is carried on, so long as (a) such process or work is carried on occasionally only and no person is employed therein for more than eight hours in any week, and (b) no other process specified in the foregoing paragraphs is carried on. As the proviso indicates, occasional exposure to asbestos dust was not thought at that time, unlike the present, to involve a significant risk to health. A further proviso permits the Chief Inspector of Factories to suspend or relax the Regulations, if satisfied that, by reason of the restricted use of asbestos or the methods of working, they could be suspended or relaxed without danger to those employed. 146. A number of terms used in the Regulations are defined. In particular, asbestos is defined as meaning: any fibrous silicate mineral, and any admixture containing any such mineral, whether crude, crushed or opened. 147. In relation to the obligations imposed by the 1931 Regulations, it is necessary in particular to note regulations 1(a) and 2. 148. Regulation 1(a) requires an exhaust draught, preventing the escape of asbestos dust into the air, to be provided for manufacturing and conveying machinery, namely: (i) preparing, grinding or dry mixing machines; (ii) carding, card waste end, ring spinning machines, and looms; (iii) machines or other plant fed with asbestos ; (iv) machines used for the sawing, grinding, turning, abrading or polishing, in the dry state, of articles composed wholly or partly of asbestos. "Preparing is defined as meaning: crushing, disintegrating, and any other process in or incidental to the opening of asbestos. A proviso states that regulation 1 does not apply inter alia to mixing or blending by hand of asbestos. 149. Regulation 2 provides: (a) Mixing or blending by hand of asbestos shall not be carried on except with an exhaust draught effected by mechanical means so designed and maintained as to ensure as far as practicable the suppression of dust during the processes. (b) In premises which are constructed or reconstructed after the date of these Regulations the mixing or blending by hand of asbestos shall not be done except in a special room or place in which no other work is ordinarily carried on. The interpretation and application of the 1931 Regulations 150. Questions are raised in this appeal as to the scope of the 1931 Regulations: in particular, whether they applied to the power station by virtue of the activities carried on there by the laggers, and whether they imposed a duty which was owed to Mr McDonald. 151. In order to decide whether the Regulations applied to the power station, it is necessary in the first place to consider whether asbestos, as defined, was used by the laggers working there. There is no direct evidence (other than that of Mr McDonald) as to the composition of the material that they used. It appears however from expert evidence given at the trial that insulation materials containing opened or fiberized asbestos were widely used until the 1960s for lagging boilers and pipework. Such materials commonly contained 15% fiberized asbestos, mixed with other substances such as calcium silicate or cement. The insulation material could be either pre formed, or mixed with water and applied in the form of a paste. Pre formed sections were sawed by hand in order to profile them for fitting. The mixing of the paste involved bags of powdered insulation material being emptied into open topped containers for mixing with water. 152. Having regard to that evidence, it appears likely, on a balance of probabilities, that the insulating material used by the laggers was an admixture containing fiberized asbestos, and was therefore asbestos as defined by the Regulations. The question then arises whether the activities of the laggers fell within the ambit of the Regulations. 153. Considering the preamble defining the scope of the Regulations, paragraphs (ii), (iii), (iv) and (v) do not apply: each of them is concerned with the manufacture or repair of products composed wholly or partly of asbestos. Paragraph (vi) is also inapplicable: it is concerned with the cleaning of appliances used for the collection of dust produced in the processes described in paragraphs (i) to (v). The only remaining possibility is paragraph (i), and in particular the mixing of asbestos. Do those words include the mixing in a power station of insulation material, containing fiberized asbestos, with water? 154. As noted earlier, paragraph (i) of the preamble concerns breaking, crushing, disintegrating, opening and grinding of asbestos, and the mixing or sieving of asbestos, and all processes involving manipulation of asbestos incidental thereto. That provision uses a number of ordinary English words, such as opening and mixing, but it is apparent that some of them, at least, are being used in a technical sense embedded in the industrial practice of that period. Opening asbestos, for example, is evidently different from opening a window, or opening an account. Some guidance as to the meaning of paragraph (i) can be obtained from the Regulations themselves, and other assistance from the reports which preceded their introduction. 155. I shall discuss the reports at a later point, but it may be helpful to anticipate that discussion to the extent of summarising what is said in the reports about some of the terms found in the Regulations. In summary: i) Opening asbestos means splitting the raw mineral into fibres. ii) The first stage in the opening or fiberizing of asbestos is for the mineral to be crushed. This flattens out and breaks up the mineral. iii) After crushing, the mineral is sieved, for the purpose of grading it, prior to its being opened. iv) Waste asbestos products are fiberized by being disintegrated or broken up. v) Mixing can take place at three stages within the asbestos industry (an expression which I shall define in the next paragraph). Before crushing, the contents of several sacks of the raw mineral may be mixed on the floor beside the crushing machine. This is described as rough mixing. After crushing, the crushed material may be mixed prior to being opened. This is referred to as mixing or blending. After opening, the fiberized asbestos may be mixed with other materials in order to produce a variety of asbestos products, including insulation materials. At all these stages, the mixing may be done by hand or mechanically, although in 1931 mixing or blending in the asbestos textile industry was normally carried out by hand. vi) Grinding can refer to a method of cleaning machinery used for the carding of opened asbestos, or to a process used to trim and smooth asbestos products which have been cut or sawn. 156. It appears from this summary that the terms used in paragraph (i) are related, in that they all describe processes employed in the early stages of producing products composed wholly or partly of asbestos. I shall refer to factories and workshops where such products are made as the asbestos industry, reflecting the title of the 1931 Regulations. It is important to bear in mind, first, that that description encompassed in 1931 the production of a very wide range of products of which asbestos formed a component, as I shall later explain in greater detail, and secondly, that factories where such products were made were not necessarily devoted wholly or mainly to their manufacture. 157. The Regulations themselves also suggest a relationship between the processes grouped together in paragraph (i) of the preamble. That is consistent with regulation 1(a)(i), which groups together preparing (defined as meaning crushing, disintegrating, and any other process in or incidental to the opening of asbestos), grinding and dry mixing. In each of these contexts, the principle of interpretation, noscitur a sociis, suggests that mixing was a process related to other processes carried on by the asbestos industry, in the wide sense in which I have used that expression, rather than a process carried on in any premises where use was made of insulation materials containing asbestos that required to be mixed with water. 158. In my view, seven other considerations support this interpretation of the term mixing as used in paragraph (i) of the preamble and regulations 1 and 2: i) Extending the noscitur a sociis principle beyond paragraph (i), all the other processes contemplated by paragraphs (ii) to (vi) are undoubtedly processes carried on in the course of manufacturing or repairing asbestos products of different kinds. It follows that if paragraph (i) applied to any factory or workshop, of any kind, where insulating materials containing asbestos were mixed with water to form lagging paste, it would have a far wider scope than the other paragraphs. Indeed, given the expert evidence that insulating materials containing asbestos were in common use when the first part of the power station was built, between 1929 and 1935, paragraph (i) of the preamble would on that basis extend the scope of the Regulations to a substantial proportion, if not the majority, of the factories and workshops in the United Kingdom. ii) If paragraph (i) of the preamble was intended to encompass the mixing of insulation materials containing asbestos with water in any factory or workshop, so that the 1931 Regulations would not be confined to the asbestos industry as I have described it, it would defy logic that paragraph (v) should apply only when the specified processes are carried out in the manufacture of asbestos articles. Since the processes listed in that paragraph would give rise to asbestos dust whether they were carried out in the manufacture of such articles or not, it would be nonsensical to restrict the scope of paragraph (v) unless paragraph (i) were similarly restricted. To give a concrete example, Mr McDonald described being in the proximity of asbestos dust generated by the sawing of pre formed sections of insulation containing asbestos. That activity does not fall within the scope of the 1931 Regulations, because the articles are not being sawed in the manufacture of such articles, and paragraph (v) therefore does not apply. That being so, what logic would there be in the mixing of the lagging paste falling within paragraph (i)? iii) The interpretation of paragraph (i) of the preamble which I have suggested is consistent with the title of the Regulations: the Asbestos Industry Regulations. That title makes sense if the Regulations apply to factories and workshops producing products composed wholly or partly of asbestos. If on the other hand paragraph (i) were construed as applying to any factory or workshop where asbestos based lagging materials were used, that title would be inappropriate and misleading. iv) When regulation 1(a)(i) refers to mixing machines, it is clear that it is concerned with mixing in the context of manufacturing: regulation 1(a) expressly applies to manufacturing and conveying machinery. That is also consistent with the other types of machinery described in regulation 1(a), which are all employed in the asbestos industry as I have described it. If regulation 2 is understood as being concerned with mixing or blending by hand in the asbestos industry, paragraph (b), which requires the provision of a dedicated room for mixing or blending by hand of asbestos, can be seen to be related to a number of other regulations which make similar provision in relation to particular processes, or particular plant, employed in that industry: for example, the making or repairing of insulating mattresses composed wholly or partly of asbestos (regulation 3(i)), storage chambers or bins for loose asbestos (regulation 4(a)), and chambers or apparatus for dust settling and filtering (regulation 4(b)). v) vi) To give regulation 2(b) a wider interpretation would have consequences for industry generally which would be so inconvenient that it is difficult to imagine that they were intended. In particular, if the mixing of insulation materials containing asbestos with water, in order to form the paste widely used to insulate pipework and boilers, constituted mixing or blending of asbestos, it follows that any factory or workshop where lagging of that kind was used, constructed after 1931, would have to have a room dedicated to the exclusive use of laggers. It seems unlikely that the Secretary of State can have intended to impose that burden upon industry, and there is no indication that anyone ever supposed that the Regulations had that effect. vii) Finally, it is important to bear in mind that non compliance with the Regulations was a criminal offence, by virtue of section 85 of the 1901 Act. In dubio, penal legislation should normally be construed narrowly rather than widely. 159. If the mixing of lagging paste is not mixing within the meaning of paragraph (i) of the preamble, is it nevertheless one of the processes involving manipulation of asbestos incidental to the processes mentioned in that paragraph? Clearly not. Although the mixing of lagging paste might involve the manipulation of asbestos, that manipulation would not be incidental to one of the processes mentioned in paragraph (i). 160. As against the analysis set out above, it has been argued that the first proviso to the preamble to the Regulations implies that their application cannot be restricted to the asbestos industry. It is said to be very difficult to imagine a factory or workshop whose main business was producing products composed wholly or partly of asbestos to which the exemption could possibly apply, given that only certain processes, occasionally carried on, are exempted, and only then if none of the other defined processes is carried on in the same factory. I shall consider this argument at a later point. The letter dated 15 September 1931 161. Further assistance in the interpretation of the 1931 Regulations can be obtained from two reports which preceded them. The relationship between the Regulations and the reports was explained in the Home Office letter dated 15 September 1931, to which I referred earlier. 162. The letter explained that the proposed regulations followed upon an inquiry conducted by the Factory Department of the Home Office, whose report, Effects of Asbestos Dust on the Lungs and Dust Suppression in the Asbestos Industry was published in 1930 (34 206, HMSO). That report has been referred to in these proceedings as the Merewether and Price Report. The letter stated that Part II of the Report had recommended a number of precautionary measures for the prevention of inhalation of asbestos dust by workmen employed in the industry, the most important of which was the use of exhaust ventilation in both the textile and non textile sections of the industry. 163. The letter went on to state that it was evident from the Report that further inquiry would be necessary before a decision could be reached as to the best methods to be applied to the various machines in use. A conference was therefore arranged with representatives of the asbestos textile industry and, as a result, a committee consisting of representatives of the manufacturers and of the Factory Inspectorate was set up to consider the best methods for the suppression of dust in this section of the industry. That committee made a series of recommendations in its report, Report on Conferences between Employers and Inspectors concerning Methods for Suppressing Dust in Asbestos Textile Factories, published in 1931 (35 214, HMSO). I shall refer to that report as the Conferences Report. 164. The letter explained that the Secretary of State had decided to give effect to the recommendations contained in these two reports, and that the draft regulations generally followed the provisions recommended, with some additions and modifications. The Merewether and Price Report 165. The Merewether and Price Report is of great assistance in understanding the processes to which the Regulations referred, the terminology used in the Regulations, and the mischief which the Regulations were intended to address. For these reasons, I shall consider the Report, and the subsequent Conferences Report, in greater detail than would otherwise be appropriate. 166. As its title indicates, the Merewether and Price Report was concerned with the asbestos industry. It reported the results of an investigation which was instituted, following the discovery in 1928 of fibrosis of the lungs in an asbestos worker named Seiler, in order to determine whether the supervention of this disease in an asbestos worker was an exceptional occurrence, or evidence of a grave health risk in the industry. (p 5). 167. While the object of the investigation concerned the asbestos industry generally, the nature of the investigation necessitated a focus upon workers as nearly as possible exposed to pure asbestos dust: that is to say, those employed in the textile branch of the industry, those employed in the branch manufacturing insulating materials from practically pure asbestos, and those employed in some preliminary processes in other branches. The results were analysed on a number of bases, including the processes in which the workers were employed. For that purpose, a number of different processes within the asbestos industry were identified, and similar processes were grouped together. The first group of similar processes was crushing, opening, disintegrating and mixing (p 11). The implication is that mixing was a process within the asbestos industry, related in a relevant way to crushing, opening and disintegrating. That is consistent, as I have explained, with the grouping of these processes together in paragraph (i) of the 1931 Regulations and in regulation 1(a). 168. Processes were also grouped together for the purpose of determining the levels of dust which they generated. For that purpose, one group was opening and handling fibre, without local exhaust ventilation. This group was described as including opening, sieving, shovelling or otherwise handling asbestos fibre, and sack filling by hand in a settling chamber (p 12). Opening and sieving both fall within the ambit of paragraph (i) of the Regulations, as I have explained, and shovelling or otherwise handling asbestos fibre, and sack filling by hand, would also appear to fall within paragraph (i) as processes involving manipulation of asbestos incidental thereto. Manipulation of asbestos by hand and the filling or emptying of sacks also fall within the ambit of regulation 1(d) and (e) respectively. 169. Analysing the statistics in this way, it was concluded: i) ii) that there was a correlation between the dustiness of processes, and the length of time during which workers were employed in those processes, and the incidence of fibrosis; and that it seems necessary for the production of generalised fibrosis of the lungs that a definite minimal quantity of dust must be inhaled, with the important implication that the reduction of the concentration of dust in the air in the neighbourhood of dusty asbestos processes will cause the almost total disappearance of the disease (p 15). The outcome of the investigation was thus to establish the existence of a definite occupational risk in the asbestos industry (p 16). The risk took the form of a distinct type of fibrosis of the lungs (p 16). It was found that the incidence rate is highest in the most dusty processes and amongst those longest employed (p 17). 170. Part II of the report contained the recommendations to which the letter of 15 September 1931 referred. It began by noting the recent development and rapid expansion of the asbestos industry, mainly because of the demands of other industries, and the increasing attention paid to the insulation of steam plant to promote fuel economy (p 18). Asbestos products were divided for convenience into seven main groups: Textiles (a) Yarn and cloth. Non Textiles (b) Millboard, paper, asbestos cement sheets, tiles, and other building materials, sheet material of rubber or bituminous mixtures containing asbestos. (c) Insulation materials and articles. (d) Brake and clutch linings. (e) Packing and jointings. (f) Asbestos covered electric conductors electrodes, cables and wiring, coils for electric machinery. (g) Miscellaneous, including moulded electrical and other goods, etc. (p 18) 171. In relation to group (a), the Report noted that some asbestos textile products were produced for use in the manufacture of other products, including products in groups (c), (d), (e), (f) and (g) (p 19). In relation to group (c), the Report stated: Insulation materials include fiberized asbestos; magnesia, so called containing about 15% of fiberized asbestos and 85% of magnesia, and other finely divided mixtures composed partly of fiberized asbestos, used as insulating cements or plasters; fiberized asbestos stiffened into thick sheets, like mats, for lining bulkheads of ships; shaped sections and slabs, moulded from fiberized asbestos or mixtures containing it, or built up of corrugated asbestos paper so as to enclose air cells; mattresses, made of asbestos cloth and filled with fiberized asbestos, magnesia, or other filling. (p 19) 172. The Report noted that work involving the use of asbestos products was carried on in other premises besides factories, the most important being insulation work, much of which was carried on by contractors (p 19). The Report did not discuss any risks which might be associated with such work, which could only have been fully addressed by legislation of wider scope than regulations made under the Factories Acts. 173. Some conclusions can be drawn from this discussion about the sense in which the Report referred to the asbestos industry. As the groups of products indicate, it comprised factories and workshops which manufactured products (or repaired insulating mattresses) composed wholly or partly of asbestos. The manufacturing process employed at the factory did not however necessarily involve the use of the raw mineral. It might, as at factories producing articles in group (a), or it might not, as at factories producing articles in group (e). Nor did the manufacturing process necessarily involve the use of fiberized asbestos: as the Report stated, fiberized asbestos was used in large quantities in the manufacture of groups (a) to (c), but to a much smaller extent in some of the other factories and workshops (p 19). As I shall explain, the factory might therefore be one where substantial quantities of asbestos dust were produced, or it might not. 174. In relation to the processes and preventive measures required, the Report focused on the dust producing processes. In relation to group (a), the Report stated: Asbestos, suitable for yarn, has usually to be crushed, and in all cases opened (fiberized) before it is ready for carding. These preparatory processes are effected by machinery, but entail much handwork. Separating (to remove iron) and grading or sieving follow crushing, but precede opening. Material for yarn is not usually treated in disintegrators, but in most factories these machines are used for fiberizing waste asbestos yarn, etc. Crushing flattens out and breaks up the mineral without damaging the fibres. It is accomplished either in a large edge runner, or in a small pan mill of the mortar mixing type. The material is emptied upon the floor close to the machine, the contents of several sacks sometimes being spread on the floor to obtain a rough mixing. (pp 20 21) This description of the preparatory processes encompasses crushing, disintegrating, opening, sieving and rough mixing. 175. Mixing or blending of the crushed asbestos was a further process, preparatory to carding: Crighton openers, enclosed centrifugal machines, are used for opening crushed asbestos, preparatory to carding. Careful mixing or blending of crushed material is effected by spreading it evenly in layers on the floor over a considerable area cotton may be added at this stage if required and when feeding, taking a vertical cut through the mass Mixing is a great hindrance to elimination of hand work; it is asserted that poor yarn results if it is not done and that machine mixing has been tried and gave less satisfactory results. If retained, it should be done at a higher level than the opener, under a large exhausted canopy and the mixture fed at a series of chutes. (p 21). One sees here the alternatives addressed in the Regulations mixing machines, dealt with in regulation 1(a), and mixing or blending by hand, dealt with in regulation 2 and the background to the requirement that they should each be carried on with an exhaust draught. 176. In relation to the non textile sector, the Report noted that fiberized asbestos was not used in some of the factories, and that exposure to dust might be slight or even negligible (p 26). Fiberizing was almost exclusively confined to works in groups (b) and (c), ie works manufacturing millboard and similar products, and works manufacturing insulation materials. Dust was evolved in factories or departments where fiberized asbestos was prepared for subsequent use or for sale, and also in departments where fiberized material, or dry mixtures containing it, were manipulated in preliminary manufacturing processes. Finishing processes involving abrading or cutting could also be a source of dust, but such dust might contain only a small percentage of asbestos. 177. In relation to group (c), the Report explained that fiberized asbestos was a component of many insulating materials which might also contain other materials. It stated: In many small works the materials are mixed dry, by hand, in an open manner, involving sack emptying and filling, shovelling and weighing. Enclosed rotary mixers could apparently be used for such work with exhaust applied at feeding points and the material discharged and bagged under enclosed conditions. If hand work is retained, exhaust should be applied. (p 27) 178. The mixing of fiberized asbestos with other materials was also an aspect of the manufacture of some products in groups (f) and (g). In particular, the production of moulded goods could involve the mixing of asbestos paste using dry materials. The mixing of asbestos putty also involved the handling of dry materials (p 30). 179. Relating this discussion to the preamble to the Regulations, it will be recalled that the first proviso excludes the application of the Regulations to any factory or workshop, or it is important to note any part of a factory or workshop, where any of the following processes is carried on: (1) the process of mixing asbestos; (2) the repair of insulating mattresses; (3) sawing, grinding, turning, abrading and polishing, in the dry state, of articles composed wholly or partly of asbestos in the manufacture of such articles; and (4) any cleaning of machinery or other plant used in connection with any such process. The exclusion is subject to two conditions. First, the process or work must be carried on occasionally only, and no person must be employed in it for more than eight hours a week. Secondly, no other process specified in the preamble to the Regulations must be carried on in the place in question. 180. It is difficult to envisage circumstances in which the proviso would apply to factories or workshops producing goods in groups (a), (b) or (c), since, even if there were parts of such factories where only the activities mentioned in the proviso were carried on, it seems unlikely that those activities would be carried on only occasionally. In some factories producing goods in groups (e), (f) and (g), on the other hand, the position might be different. Given the variety of products which such factories might produce, and the variety of processes involved, it is possible to envisage situations where the first or second proviso might apply. Such factories might for example produce a range of goods, most of which did not include asbestos, but which required the occasional mixing of asbestos, or some other process, such as grinding, or the repair of insulating mattresses, which was mentioned in the proviso. The report contains little discussion of factories of that kind, since for obvious reasons it focused upon factories where the risk to health from asbestos dust was greatest. The point is however illustrated by the discussion of factories producing cable and wiring, of which the report stated: Asbestos covered cable and wiring constitutes a small percentage of the output of the cable factories The amount of dust evolved is small, and special precautionary measures are apparently not required. (p 30) 181. Returning to the Report, the section headed Summary and Recommendations began by noting that asbestos factories and workshops cover a great variety of processes (p 31). It observed that the asbestos manufacturers were confronted with the necessity of attaining conditions in their industry which would ensure much less dust in the atmosphere than could be tolerated in many comparable trades not using asbestos (p 31). As in the remainder of the Report, the focus of the recommendations was entirely on the asbestos industry, using that expression in the sense that I have explained. 182. The specific recommendations foreshadow the provisions of the Regulations. In particular, regulation 1(a) reflected recommendation 1(a), which was that exhaust ventilation should be provided for: Dust producing machines, eg (i) Crushing, disintegrating, teasing and other opening machines; sieving machines; fibre grinding machines; dry mixing machines; rolls fed with dry mixings. Regulation 2(a) was one of a number of regulations that reflected recommendation 1(e), which was that exhaust ventilation should be provided for: Various hand operations, eg sack emptying and filling, weighing, mixing Regulation 2(b) was one of a number of regulations that reflected recommendation 7, which was that new factories should be laid out so as to avoid exposing workers to risk from processes upon which they were not engaged. The Conferences Report 183. The Conferences Report was prefaced by a letter from the Chief Inspector of Factories to the Home Secretary dated 10 April 1931, which explained that the recommendations reflected an important assumption, namely the existence of a critical limit of dust concentration below which workers may be employed without injury to health. As I have explained, that assumption is contradicted by more recent knowledge. 184. In the introductory section of the Report, it was noted that successful experiments had been carried out involving the application of exhaust to various processes, including mixing and blending (in opening processes) (p 6). It was also noted that the safe concentration of dust in workrooms had been taken, on the basis of the Merewether and Price Report, to be the conditions arising from flyer spinning of asbestos fibres. That criterion was said to be simple to apply to processes such as mixing, blending which are obviously more dusty than flyer spinning (p 6). The recommendations focused upon the application of exhaust ventilation at dust producing points, so as to meet that criterion. 185. The body of the Report set out the agreements arrived at. They were listed under headings, mostly descriptive of particular processes. The first heading was Crushing, including preliminary Sack Emptying, Rough Mixing on Floor near Crushers, Feeding and Discharging. Rough mixing of raw asbestos prior to crushing was therefore included within crushing. It was agreed that a mechanical exhaust draught should be applied. This is reflected in regulation 1(a), which requires mechanical exhaust ventilation which prevents the escape of asbestos dust to be applied to preparing, defined as meaning crushing, disintegrating and any other process in or incidental to the opening of asbestos. 186. The second heading was Mixing and Blending of Crushed Asbestos. It was agreed that this process, which was at the time carried on by hand in the textile industry, should also be subject to mechanical exhaust ventilation. Such ventilation had recently been applied by using an exhaust pipe above the mixing area. Although much dust was removed, it was unclear whether this arrangement would fully meet the case. That is reflected in regulation 2(a), which requires mixing or blending by hand of asbestos not to be carried on except with an exhaust draught so designed and maintained as to ensure as far as practicable the suppression of dust. Although it is not discussed in the Report, one might infer that it was because of the limited efficacy of exhaust ventilation of mixing or blending by hand that regulation 2(b) requires the provision of a dedicated room for that activity in premises constructed after the date of the 1931 Regulations. It was also noted in the Report that enclosed mixing machines might be developed in the future. That possibility was addressed by regulation 1(a), in so far as it applies to dry mixing machines. Further agreements dealt with other specific processes used in the asbestos textile industry. In each case, a relationship can be seen between the agreement and a corresponding provision of the Regulations. 187. The Report did not deal with the mixing of opened asbestos with other materials: as I have explained (and as was noted in the Report, in its discussion of mattress making), mixtures of asbestos and other materials were not normally used in the textile branch of the asbestos industry. The mixing process involved would however fall within the ambit of either regulation 1(a) or regulation 2, depending on whether the mixing was carried out mechanically or by hand. Did the 1931 Regulations in general, and regulation 2(a) in particular, apply? 188. In summary therefore, it could hardly be clearer, when regard is had to (1) the Reports which preceded the certification under section 79 of the 1901 Act, (2) the terms of that certification, (3) the recommendations which the 1931 Regulations were intended to implement, and (4) the terms of the Regulations themselves, that the Regulations in general did not apply to the power station by virtue of the work being carried on there by the laggers, and that regulation 2(a) in particular did not apply to that work. In the first place, the Regulations applied only to factories and workshops in which one or more of the processes listed in the preamble was carried on: the term mixing, as employed in paragraph (i) of the preamble, had a technical meaning, and described particular processes carried on in the asbestos industry. Those processes were, first, mixing or blending of crushed asbestos preparatory to its being opened, and secondly, mixing of opened asbestos with other materials as part of the process of manufacturing asbestos products such as the insulation material used by laggers. Those processes were not carried on at the power station. The Regulations therefore did not apply to it: it was not a place where mixing, within the meaning of paragraph (i), was carried on. Secondly, for the same reason, regulation 2(a) did not apply to the work carried on by the laggers, as it did not involve mixing or blending by hand of asbestos within the meaning of the Regulations. The authorities 189. That conclusion is consistent with the authorities in which the scope of the 1931 Regulations has been considered. It appears to have been only in relatively recent years that any suggestion was made that the Regulations might apply in circumstances such as those of the present case. The point was however argued in the case of Banks v Woodhall Duckham Ltd, Court of Appeal (unreported), 30 November 1995, which concerned a pipe fitter who suffered injury after being exposed to asbestos dust while working in various premises. They included a steel works where he was exposed to dust created by laggers using insulation materials containing asbestos, which they mixed with water to create a paste. A claim under the 1931 Regulations failed, in the first place, because the claimants evidence was rejected. The court also accepted submissions to the effect that the Regulations were concerned with processes carried on in the asbestos industry, understood as meaning processes in the manufacture of asbestos products, and processes preliminary to such manufacture, and did not apply to the lagging of pipes in the steel industry. 190. The same conclusion was reached by Lord Gill in the Outer House of the Court of Session in Watt v Fairfield Shipbuilding & Engineering Co Ltd 1999 SLT 1084, in which the pursuer had been exposed to asbestos dust while working on board ships under construction in shipyards. As in the present case, the source of the dust was insulation material. Lord Gill considered that the Regulations related to those processes by which the raw material was treated in the course of its being manufactured into asbestos products of various kinds. That was also the interpretation for which the appellants argued in the present appeal. Although I agree with Lord Gills decision on the facts of the case, I would not define the scope of the Regulations as narrowly as that: as I have explained, the asbestos industry is not confined, for these purposes, to factories or workshops where the raw mineral is treated, but includes, for example, those which manufacture products classified in the Merewether and Price Report as falling into groups (d), (e) and (f). 191. The first case in which a detailed consideration of the background to the Regulations was undertaken was Cherry Tree Machine Co Ltd v Dawson (sub nom, Jeromson v Shell Tankers (UK) Ltd) [2001] EWCA Civ 101; [2001] ICR 1223. So far as relevant, the case concerned a claim under the 1931 Regulations arising from a persons employment in a factory which manufactured dry cleaners presses. The manufacturing process involved the use of fiberized asbestos, mixed with water, to form a seal around the platens of the presses: the asbestos sealant was designed to prevent steam from escaping when the presses were used. An appeal by the employer against a finding of liability under regulation 2 was dismissed. 192. That conclusion is consistent with my interpretation of the Regulations. The presses were, in the language of the Regulations, articles composed partly of asbestos. The mixing of asbestos in the factory formed part of the process of manufacturing the presses. As Hale LJ observed at para 11, the process was similar to the asbestos putty mixing which had been mentioned in the Merewether and Price Report. 193. Hale LJ also observed at para 20 that the scope of the Regulations is not confined to factories and workshops whose only or main business is the processing of raw asbestos or the manufacture of products made out of raw asbestos, as Lord Gill had considered in the case of Watt. She accordingly rejected a submission that the Regulations applied only to the asbestos industry, understood in the sense which Lord Gill had favoured. As she observed at para 20, nowhere in the Regulations was it said that they applied only to factories and workshops whose only or main business was the processing of raw asbestos or the manufacture of products made out of raw asbestos. Furthermore, as she observed at para 22, the Merewether and Price Report clearly contemplated the mixing of asbestos in the manufacture of a wide variety of products, not just asbestos products in the narrow sense that had been argued for. 194. I respectfully agree with that interpretation of the Regulations. As I have explained, the construction favoured by Lord Gill would be inconsistent with the intention to implement the recommendations of the Merewether and Price Report, since it would effectively confine the scope of the Regulations to groups (a) to (c) of the factories and workshops mentioned in the Report, and leave groups (d) to (g) out of account. The broader understanding of the asbestos industry which I have explained is also important in understanding the provisos to the preamble to the Regulations: since the Regulations applied to all factories or workshops any part of whose business was the making of asbestos products (or the repair of insulating mattresses), the enactment of a proviso exempting factories or workshops, or parts of them, which carried out certain types of work only occasionally is not difficult to understand. 195. Hale LJ was also critical of the observations made in Banks, and followed in Watt, to the effect that the Regulations did not apply to the mixing of lagging paste by laggers. As I have indicated, her criticisms of the reasoning in those cases were well made, and were necessary to her decision: in particular, her rejection of the argument that the Regulations were confined to processes involving the use of raw asbestos. In so far as her observations went beyond what was necessary for the decision of the appeal, and suggested that it was more likely (para 25) that the Regulations applied to the mixing of lagging paste by laggers, they were obiter, and I would respectfully take a different view, for the reasons I have explained. 196. In the present case, it was argued before the Court of Appeal, as before this court, that mixing, within the meaning of the 1931 Regulations, meant mixing prior to opening (ie what I have described as rough mixing and mixing or blending), but did not include the mixing of fiberized asbestos with other substances. On that basis, it was argued that the case of Cherry Tree had been wrongly decided. McCombe LJ, with whose reasoning on this matter the other members of the court agreed, saw force in the submission, but considered that the court was bound by the decision in Cherry Tree. 197. As I have explained, I construe the term mixing, in the light of the Merewether and Price Report and its recommendations, as including mixing prior to opening, but also as including the mixing of fiberized asbestos with other substances, provided it is carried out by the asbestos industry: that is to say, provided it forms part of the process of producing a product composed wholly or partly of asbestos. On that basis, the case of Cherry Tree appears to me to have been correctly decided, as I have explained. The decision (as distinct from some observations which were strictly obiter) does not however entail that the work of laggers falls within the scope of the Regulations. Consistently with the decisions (as distinct from some of the reasoning) in Banks and Watt, I consider that such work is beyond the scope of the Regulations. Subsequent legislation 198. It is noteworthy that subsequent legislation was made on the basis of the understanding of the 1931 Regulations which I have explained. In 1967 the Ministry of Labour and HM Factory Inspectorate published a memorandum, Problems arising from the use of Asbestos (36 316), which noted that the Regulations applied to around 300 factories. In the majority of those factories, only a very small proportion of employees were employed on asbestos processes. The principal forms of employment subject to the Regulations were said to be the production of asbestos cement products, asbestos textiles and brake linings for motor vehicles (para 10). 199. A table listed factories and warehouses handling asbestos where the Regulations did not apply. These included electricity generating, where the relevant activity was identified as lagging and de lagging (Table 4). The same table also listed generating stations amongst the places where contractors carrying out work involving the use of asbestos could be found. The memorandum stated in terms that the Asbestos Industry Regulations do not apply to lagging and insulation operations using asbestos (para 13). It noted that other employees working in the neighbourhood of lagging and insulation operations must also undergo considerable exposure to asbestos (para 13). The memorandum referred to evidence of an increasing incidence of asbestosis, particularly amongst laggers, who tended to be excluded from the scope of the Regulations (para 18). It also referred to evidence linking exposure to asbestos to various types of cancer, including mesothelioma. 200. The Government responded by informing Parliament that it intended to introduce regulations to cover all the industries and processes in which asbestos is used, including occupations such as lagging and de lagging, thermal and sound insulation (Hansard, 10 July 1967, col 88). The 1969 Regulations were subsequently made. They applied specifically to electrical stations (regulation 3(1)) as well as to a wide range of other premises. They applied to every process involving asbestos or any article composed wholly or partly of asbestos, except a process in connection with which asbestos dust cannot be given off (regulation 3(2)), and imposed obligations on employers as well as occupiers (regulation 5(1)). 201. This material cannot be used as an aid to the interpretation of the 1931 Regulations. It is nevertheless a matter of legitimate comment that the interpretation of the Regulations which is favoured by Lord Kerr is inconsistent with the basis on which the 1969 Regulations were made. Was Mr McDonald within the scope of the 1931 Regulations in any event? 202. The parties addressed the question whether, even assuming that the 1931 Regulations applied to the activities of the laggers at the power station, any duty was owed to Mr McDonald, since he was not employed in the process which generated asbestos dust. 203. The Regulations were made under section 79 of the 1901 Act, the terms of which have been quoted. That Act was repealed by the 1937 Act, which however contained a saving proviso in section 159(1), the effect of which was that the 1931 Regulations were deemed to have been made under section 60(1) of the 1937 Act. The 1937 Act was in turn repealed by the Factories Act 1961 (the 1961 Act), which contained a similar proviso in paragraph 1 of Schedule 6. The result was to deem the 1931 Regulations to have been made under section 76(1) of the 1961 Act, which provides: Where the Minister is satisfied that any manufacture, machinery, plant, equipment, appliance, process or description of manual labour is of such a nature as to cause risk of bodily injury to the persons employed or any class of those persons, he may, subject to the provisions of this Act, make such special regulations as appear to him to be reasonably practicable and to meet the necessity of the case. 204. In Canadian Pacific Steamships Ltd v Bryers [1958] AC 485, the House of Lords took as its starting point, in deciding whether the plaintiff fell within the scope of regulations made in 1931 under section 79 of the 1901 Act, the terms of section 79 itself, on the basis that the 1937 and 1948 Acts could not give a wider meaning to the regulations than they had borne when they were made (it was assumed that the power conferred by section 60(1) of the 1937 Act as amended was no narrower than the power conferred by section 79 of the 1901 Act). Section 79 of the 1901 Act was construed as empowering the Secretary of State to make regulations which enured for the benefit of persons employed in the factory, even if they were not employed in the process which caused the danger or injury to health or the danger to life and limb and thus brought about the certificate. As Viscount Kilmuir LC observed at p 501, it was obvious that such a process, unless regulated, might be dangerous to others whose ordinary work in the factory brought them into regular proximity to the danger. 205. Bearing in mind that the Regulations are now deemed to have been made under section 76(1) of the 1961 Act, the position is equally clear: that section refers generally to the persons employed, a form of words which was considered in the Canadian Pacific Steamships case to enable regulations to be made which protected persons who were employed in the factory but not in the relevant processes. There is nothing in the Regulations themselves that indicates an intention to restrict the scope of the duty to those directly engaged in the specified processes. Such an intention appears unlikely, since the Merewether and Price Report had made it clear that the risk to health caused by asbestos dust was not confined to those directly employed in the relevant process, but also affected other workers in the same workroom. 206. It was also argued in the present appeal that no duty was owed to Mr McDonald in any event, since he was not a person employed in the power station. It will be necessary to return to that question in the context of the duty imposed by section 47(1) of the 1937 Act. Part 3: Section 47(1) of the 1937 Act 207. It is necessary next to consider the cross appeal, which concerns the effect of section 47(1) of the 1937 Act. It provides: In every factory in which, in connection with any process carried on, there is given off any dust or fume or other impurity of such a character and to such extent as to be likely to be injurious or offensive to the persons employed, or any substantial quantity of dust of any kind, all practicable measures shall be taken to protect the persons employed against inhalation of the dust or fume or other impurity and to prevent its accumulating in any workroom, and in particular, where the nature of the process makes it practicable, exhaust appliances shall be provided and maintained, as near as possible to the point of origin of the dust or fume or other impurity, so as to prevent it entering the air of any workroom. 208. Section 47(1) applies in two situations. The first is where there is given off any dust or fume or other impurity of such a character and to such extent as to be likely to be injurious or offensive to the persons employed. Mr McDonald did not pursue any case based upon that branch of the provision. The second situation is where there is given off any substantial quantity of dust of any kind. Mr McDonald relied upon that branch of the provision. Was there any substantial quantity of dust? 209. The first issue which arises is whether, on the evidence, it has been established that there was any substantial quantity of dust given off in the power station at any relevant time. In that regard, a difficulty arises for Mr McDonald from the absence of reliable evidence as to the quantity of dust given off during his visits to the power station. The trial judge made no finding on the point. The Court of Appeal concluded that, on the evidence, Mr McDonald had failed to establish that a substantial quantity of dust had been given off. This court does not in my view have a proper basis for reaching a different conclusion. It follows that the claim under section 47(1) must be rejected. Was Mr McDonald a person employed? 210. A further question which was argued was whether in any event any duty was owed under section 47(1) to Mr McDonald. Was he one of the persons employed, within the meaning of the section? It was argued on behalf of the appellants that he was not. Reliance was placed on the decisions of Rose J in Morrison v Central Electricity Generating Board (unreported), 15 March 1986, and of the Court of Appeal in Banks v Woodhall Duckham Ltd (unreported), 30 November 1995, where the view was taken, as a matter of grammatical analysis, that the words the persons employed, in section 47(1), referred back to the phrase in connection with any process carried on. That decision was followed by the Court of Appeal in the present case. 211. I am unable to agree with that construction. The verb which governs the preposition in, in the phrase in connection with any process carried on, is not employed but given off (in connection with any process there is given off). It is therefore the dust that must be connected to the process, rather than the persons employed. An alternative possibility, that the words the persons employed might refer back to the phrase in the factory, must also be rejected: the verb which governs the preposition in, in the phrase in every factory, is not employed but taken (in every factory all practicable measures shall be taken). 212. Greater assistance can be obtained from considering section 47(1) in the context of the 1937 Act as a whole. In the Morrison case, Rose J contrasted section 63 of the 1961 Act (the successor provision of section 47 of the 1937 Act) with section 14(1) (the obligation to fence dangerous machinery), which imposed a duty with regard to every person employed or working on the premises. The same contrast could also be drawn between sections 14(1) and 47(1) of the 1937 Act. On the other hand, as Buxton J observed in Owen v IMI Yorkshire Copper Tube (unreported), 15 June 1995, the difference between those provisions is less striking than the difference between section 47(1) of the 1937 Act and section 49. The latter provision, which is concerned with the protection of the eyes, imposes a duty in respect of the persons employed in the process. Given that sections 47 and 49 appear in the same group of sections, the use of that limiting phrase in one section but not in the other is a strong reason for believing that the scope of section 47(1) was not intended to be limited, by implication, in the same way as section 49 was limited by express provision. 213. Apart from these textual pointers, it is also necessary to consider what Parliament is likely to have intended. The phrase the persons employed identifies the persons to whom the statutory duty is owed. The duty is to take specified precautions in every factory in which, in connection with any process carried on, there is given off any dust or fume (or other impurity) of a particular description: either the dust or fume must be of such a character and extent as to be likely to be injurious or offensive to the persons employed, or the quantity of dust must be substantial. In such circumstances, there is a duty to take all practicable measures to protect the persons employed against inhalation of the dust or fume, and to prevent its accumulating in any workroom. 214. Considering first the situation where injurious or offensive dust or fumes are given off, it would not make sense for the duty to be confined by law to the persons employed in the process in question. Although those persons would be most directly exposed to the dust or fumes, and would therefore be at the greatest risk of harm, it is perfectly possible that other persons might also be liable to inhale the dust or fumes and would also be at risk. There might, for example, be other persons working in the workroom where the dust or fumes were generated a problem which had been highlighted by the Merewether and Price Report or persons who passed through the workroom in the course of their employment. If they inhaled the dust or fumes and suffered injury, why should they not fall within the scope of the statutory duty? To confine the duty in such a way as to exclude a priori a category of persons who were liable to suffer the injury sought to be guarded against would be inconsistent with the apparent intention to protect those at risk. 215. In the light of that consideration, and also the contrast between sections 47(1) and 49, the phrase the persons employed should not therefore be construed as being restricted to the persons employed in the process in connection with which the dust or fume is given off. The only feasible alternative is that the phrase is intended to refer to the persons employed in the factory. 216. If that is the correct construction of the phrase in its application to the first situation addressed by section 47(1), it seems to me that it must also be the correct construction in relation to the second situation, where a substantial quantity of dust is given off. There is nothing in the section to suggest that the phrase has two different meanings, depending upon which of the alternative situations exists. 217. The question then arises whether Mr McDonald was one of the persons employed in the power station. There are numerous authorities on the meaning of the phrase the persons employed, where used in the Factories Acts. It is clear that the phrase is not confined to the employees of the occupier of the factory: see, for example, Massey Harris Ferguson (Manufacturing) Ltd v Piper [1956] 2 QB 396, where it was held to extend to a painter, employed by an independent contractor, carrying out painting work in a factory. It does not however extend to a fireman who enters a factory in order to put a fire out (Hartley v Mayoh & Co [1954] 1 QB 383), or to a police constable who enters a factory in pursuit of a felon (Wigley v British Vinegars Ltd [1964] AC 307, 324 per Viscount Kilmuir), although he is a person and he is employed. In Canadian Pacific Steamships Ltd v Bryers [1958] AC 485, 504 Viscount Kilmuir considered that the phrase applied to any person who is employed in the factory whether the direct servant of the occupier or a servant of an independent contractor so long as he is employed upon work in that factory. Those words are however themselves little clearer than the statutory phrase. In the later case of Wigley v British Vinegars Ltd, concerned with a window cleaner employed by an independent contractor, Viscount Kilmuir said at p 324: In my view, the true distinction is between those who are to work for the purposes of the factory and those who are not. Clearly, maintenance of the factory is work for the purpose of the factory, while the arrest of a felon or the putting out of a fire is not, though it may benefit the factory indirectly. Window cleaning is part of the maintenance of the factory and in my view the deceased was within the protection afforded. The other members of the House agreed. 218. It can fairly be said that the test laid down in Wigley, like the differently expressed test laid down in the Canadian Pacific Steamships case, can result in the drawing of fine distinctions without any compelling rationale beyond the need to draw a line somewhere. The present case might be regarded as an example. It could be argued that Mr McDonald was employed for the purposes of the power station, either on the basis that one of those purposes was the sale of the ash, and he was employed collecting ash which had been sold, or on the basis that the ash was a by product which the power station had to dispose of, and he was employed removing it. The contrary view appears to me however to be more persuasive. Mr McDonald was not in reality working for the purposes of the power station. He was working solely for the purposes of his employer, the Building Research Establishment. It was the purchaser of the ash which was a by product of the power station, and it employed Mr McDonald to collect the ash in his lorry. A customer of a factory can hardly be regarded as working for the purposes of the factory, even if he goes there in person to collect the article purchased; and a person whom he employs to collect the article from the factory can hardly be in a different position. Although the sale of such articles would no doubt be one of the purposes of the factory, and the sales staff would therefore fall within the scope of the legislation, the collection of the articles by or on behalf of purchasers is not in the same position. 219. On that ground, as well as on the basis that it had not been proved that any substantial quantity of dust was given off, the Court of Appeal was correct to reject the claim under the 1937 Act. It also follows that the claim under the 1931 Regulations would have to be rejected for the same reason, even if, contrary to my conclusion, the Regulations had applied to the work being carried on by the laggers. Does a claim lie only if a substantial quantity of dust was inhaled? 220. A further issue which was argued is whether, as was maintained on behalf of Mr McDonald, a claim lies under section 47(1) whenever (a) a substantial quantity of dust is given off in connection with a process carried on in a factory, (b) there has been a failure to take all practicable measures to protect the persons employed against inhalation of the dust, and (c) a person employed has suffered injury caused by inhalation of dust given off by the relevant process. It was argued on behalf of the appellants that it was not enough that the injury should have been caused by the inhalation of any of the dust: in order to have a claim under the section, the dust must have been substantial in quantity at the point when it was inhaled by the claimant. 221. It was argued on behalf of the appellants that, as a matter of textual analysis, when section 47(1) imposed a duty to take all practicable measures to protect the persons employed against inhalation of the dust, those words could only mean the substantial quantity of dust said to give rise to the duty, with the implication that the duty was only to protect against inhalation of a substantial quantity of dust. 222. That argument appears to me to be fallacious. It is plainly correct that the words the dust refer to the substantial quantity of dust given off. There is therefore a duty to protect the persons employed against the inhalation of that dust. It does not however follow that the duty applies in respect of a particular person only if that person is individually liable to inhale a substantial quantity of the dust. One might as well argue that, if a manufacturer sold a substantial quantity of ginger beer which was contaminated with snails, and was under a duty to take precautions to prevent customers from consuming the ginger beer, it followed that the duty was only to protect against the consumption of a substantial quantity of the ginger beer. 223. It might alternatively be argued that the duty imposed by section 47(1) in respect of any substantial quantity of dust is in reality unlikely to have been intended to confer a right of action upon an employee who suffered injury as a result of inhaling an insubstantial quantity of dust. In support of that view, it might be said that Part IV of the 1937 Act, and section 47(1) in particular, are intended to protect the health of employees. Section 47(1) begins by addressing the situation where dust is given off of such a character and to such an extent as to be likely to be injurious to health. The part of section 47(1) concerned with any substantial quantity of dust cannot therefore be concerned with dust which is known to be inherently harmful to health, since that danger has already been addressed. Its concern must be the risk to health which exists where any dust is given off in substantial quantity. That risk derives from the high concentration of dust in the air which is inhaled. Once the dust has become dispersed in the atmosphere, that risk disappears. 224. This argument can be analysed: (1) as restricting the category of person to whom a duty is owed under the relevant limb of section 47(1) to persons employed who inhale dust which is substantial in quantity, or (2) as restricting the type of injury for which a claim can be brought under the relevant limb of section 47(1) to injury which is caused by the inhalation of dust which is substantial in quantity. The first is an argument about the scope of the statutory duty. The second is an argument about remoteness of damage. Each is in my opinion fallacious. 225. Considering first the scope of the duty, this has already been discussed. It depends on the meaning of the persons employed. For the reasons explained earlier, those words must refer to all the persons employed in the factory. 226. So far as remoteness is concerned, when Parliament enacted section 47(1) it imposed on employers a duty to take all practicable measures to protect the persons employed against inhalation of the dust, whenever any substantial quantity of dust was given off in connection with any process carried on in a factory, and imposed civil liability for a breach of the duty which caused injury. It did not impose liability only if the breach caused injury in a particular way. As Lord Reid said in Grant v National Coal Board [1956] AC 649, 661: I cannot see why it should matter just how the accident was caused provided that it was in fact caused by a breach of the section. I see no ground for imputing to Parliament an intention to make the mineowner liable for some of the consequences of breach but to relieve him of liability for others. 227. If therefore there was a breach of the duty imposed by section 47(1), in that a substantial quantity of asbestos dust was given off in connection with a process carried on in the power station and all practicable measures were not taken to protect the persons employed against inhalation of the dust, and if a person employed suffered physical injury caused by the inhalation of the dust, it cannot matter that the precise illness, or the way in which it was caused by the inhalation of the dust, was not foreseeable at the time when the statute was enacted: Hughes v Lord Advocate [1963] AC 837. 228. The point is illustrated by the case of Gregson v Hick Hargreaves & Co Ltd [1955] 1 WLR 1252, where the plaintiff had suffered illness as a result of inhaling noxious particles of silica which formed part of a substantial quantity of dust given off by a process. The presence of the silica, and its harmfulness, had not been known at the time. The defendants argument that they should not be held liable was rejected. Jenkins LJ observed at p 1266 that the duty of employers was to take all practicable measures to protect their workpeople from the inhalation of dust, and their duty to do that did not depend on the question whether the dust was known or believed to be noxious or not. 229. Finally, in relation to this branch of the appeal, I should record that no issue was raised as to whether the dust generated by the work carried out by the laggers in the power station was given off in connection with any process carried on there, within the meaning of section 47(1). Conclusion 230. For the reasons I have explained, I would allow the appeal and dismiss the cross appeal. 79. Mr Allan criticises these passages on a number of grounds. He submits that there was in fact clear and undisputed evidence that: (1) the insulation at this power station would have contained asbestos; (2) insulation work was undertaken at the power station which included mixing asbestos powder in oil drums, sawing pre formed sections and removing old lagging by ripping it off pipework; and (3) the activities of mixing asbestos powder, sawing asbestos sections and removing old lagging would generate high concentrations of asbestos dust which, on any view, would amount to substantial quantities of dust. |
The issue that arises on this appeal is whether the court has the power to order a closed material procedure as described in the preliminary issue that was tried by Silber J for the whole or part of the trial of a civil claim for damages and, if so, in what circumstances it is appropriate to exercise the power. The preliminary issue was in these terms: (i) (ii) Could it be lawful and proper for a court to order that a closed material procedure (as defined below) be adopted in a civil claim for damages? Definition of closed material procedure A closed material procedure means a procedure in which (a) a party is permitted to comply with his obligations for disclosure of documents, and rely on pleadings and/or written evidence and/or oral evidence without disclosing such material to other parties if and to the extent that disclosure to them would be contrary to the public interest (such withheld material being known as closed material), and (b) disclosure of such closed material is made to special advocates and, where appropriate, the court; and (c) the court must ensure that such closed material is not disclosed to any other parties or to any other person, save where it is satisfied that such disclosure would not be contrary to the public interest. For the purposes of this definition, disclosure is contrary to the public interest if it is made contrary to the interests of national security, the international relations of the United Kingdom, the detection and prevention of crime, or in any other circumstances where disclosure is likely to harm the public interest. Silber J answered the question raised by the preliminary issue in the affirmative: [2009] EWHC 2959 (QB). The Court of Appeal (Lord Neuberger of Abbotsbury MR, Maurice Kay and Sullivan LJJ) [2010] EWCA Civ 482, [2010] 3 WLR 1069 allowed the claimants appeal and held that the court has no such power in an ordinary civil claim for damages. The defendants appeal with the permission of the Supreme Court. The proceedings The preliminary issue was raised in proceedings in which the claimants alleged that the Security Service and other organs of the state (the appellants) had been complicit in the detention and ill treatment of them by foreign authorities at various locations including Guantanamo Bay. The pleaded causes of action included false imprisonment, trespass to the person, conspiracy to injure, torture and breach of the Human Rights Act 1998. A more detailed exposition of the factual background is set out in paras 5 6 of the judgment of Lord Neuberger. The appellants filed an open defence in which they admitted that the claimants had been transferred and detained, but they put in issue the alleged mistreatment and denied any liability for the claimants detention or alleged mistreatment. At a case management hearing, the appellants said that they were in possession of material which they wished the court to consider, but which they would be obliged in the public interest to withhold from disclosure. This material was contained in a closed defence. The course contended for by the appellants would require parallel open and closed proceedings and parallel open and closed judgments. Special advocates would represent the interests of the claimants in the closed hearings. The claimants objected to this course. They argued that a conventional public interest immunity (PII) exercise should be conducted ex parte by a judge in relation to the closed material. Lord Clarke describes the PII procedure in detail at para 145 below. In response, the appellants emphasised the difficulties that would be caused by the vast amount of sensitive material in their possession and the enormous scale of any PII exercise. The evidence filed on behalf of the appellants suggested that there might be as many as 250,000 potentially relevant documents, and that PII might have to be considered in respect of as many as 140,000 of them. It might take three years to complete the exercise of deciding in respect of which documents PII could properly be claimed. Against this background, directions were sought from the court for the determination of four preliminary issues. On 24 September 2009, Burnett J ordered that the first of these issues should be tried first. This was the issue which, in its final form, is the subject of the present appeal. After the decision of the Court of Appeal, but before the appeal came on for hearing before the Supreme Court, the claims were settled on confidential terms. A question therefore arose as to whether the court should permit the appeal to continue. It raises an important point of principle which was the subject of a full and carefully reasoned decision of the Court of Appeal. In my view, it was right to entertain the appeal. Having had the benefit of full legal argument over a period of two days, I am in no doubt that the Supreme Court should decide the issue raised by the preliminary issue so far as it is able to do so. The positions of the parties in outline The appellants submit that the right to a fair trial is absolute, but the means of satisfying that right vary according to the circumstances of the case. The procedures of the court are the means of achieving real justice between the parties. As a general rule, real justice and a fair trial can only be achieved by open hearings, open disclosure, each side confronting the others witnesses and open judgments. But in certain circumstances, a closed procedure may be necessary in order to achieve real justice and a fair trial. Such procedures are adopted in certain classes of case (for example, cases involving children and confidential information). There is no reason in principle why in the exercise of its inherent jurisdiction the court should not be able to order such a procedure in other classes of case, such as cases where a defendant cannot deploy its defence fully (or sometimes not at all) if it is required to follow an open procedure. The appellants primary case is that a court has the power to substitute, at least in exceptional cases, a closed material procedure for a conventional PII exercise. The respondent says that open procedures are fundamental to our system of justice. His case is that a closed material procedure would be such a fundamental change to the way in which ordinary civil litigation (including judicial review) is conducted that it should not be introduced by the courts. Any such change can only be made by Parliament. The essential features of a common law trial There are certain features of a common law trial which are fundamental to our system of justice (both criminal and civil). First, subject to certain established and limited exceptions, trials should be conducted and judgments given in public. The importance of the open justice principle has been emphasised many times: see, for example, R v Sussex Justices, Ex p McCarthy [1924] 1 KB 256, at p 259, per Lord Hewart CJ, Attorney General v Leveller Magazine Ltd [1979] AC 440, at pp 449H 450B, per Lord Diplock, and recently R (Mohamed) v Secretary of State for Foreign and Commonwealth Affairs (No 2) (Guardian News and Media Ltd intervening) [2011] QB 218, paras 38 39, per Lord Judge CJ. The open justice principle is not a mere procedural rule. It is a fundamental common law principle. In Scott v Scott [1913] AC 417, Lord Shaw of Dunfermline (p 476) criticised the decision of the lower court to hold a hearing in camera as constituting a violation of that publicity in the administration of justice which is one of the surest guarantees of our liberties, and an attack upon the very foundations of public and private security. Lord Haldane LC (p 438) said that any judge faced with a demand to depart from the general rule must treat the question as one of principle, and as turning, not on convenience, but on necessity. Secondly, trials are conducted on the basis of the principle of natural justice. There are a number of strands to this. A party has a right to know the case against him and the evidence on which it is based. He is entitled to have the opportunity to respond to any such evidence and to any submissions made by the other side. The other side may not advance contentions or adduce evidence of which he is kept in ignorance. The Privy Council said in the civil case of Kanda v Government of Malaya [1962] AC 322, 337: If the right to be heard is to be a real right which is worth anything, it must carry with it a right in the accused man to know the case which is made against him. He must know what evidence has been given and what statements have been made affecting him: and then he must be given a fair opportunity to correct or contradict them. Another aspect of the principle of natural justice is that the parties should be given an opportunity to call their own witnesses and to cross examine the opposing witnesses. As was said by the High Court of Australia in Lee v The Queen (1998) 195 CLR 594, at para 32: Confrontation and the opportunity for cross examination is of central significance to the common law adversarial system of trial. I do not believe that any of this is controversial, but it needs to be emphasised because, unlike the law relating to PII, a closed material procedure involves a departure from both the open justice and the natural justice principles. In recent years, both the courts and Parliament have been exercised by the problem of how to balance (i) the interest that we all have in maintaining a fair system of justice which, so far as possible, respects the essential elements of these principles and (ii) the interest that we also all have in the protection of national security, the international relations of the United Kingdom and the prevention, detection and prosecution of crime. Thus, Parliament has reacted to the threat of terrorism to our national security interests by introducing a form of closed material procedure (with the use of special advocates) for use in certain categories of case, for example, by enacting the Prevention of Terrorism Act 2005 and the Counter Terrorism Act 2008. A striking example of a case where the court had to balance these two competing interests is Carnduff v Rock [2001] EWCA Civ 680, [2001] 1 WLR 1786. A registered police informer brought an action against the police to recover payment for information and assistance provided to the police. The defendants denied any contractual liability to make such payments or that any information or assistance provided by the plaintiff had led to the arrests or the prosecutions alleged. The claim was struck out by the Court of Appeal on the grounds that a fair trial of the issues raised by the pleadings 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. Laws LJ (with whom Jonathan Parker LJ agreed) said at para 36: it is to my mind inevitable that the courts duty would be to hold that the public interest in withholding the evidence about it outweighed the countervailing public interest in having the claim litigated on the available relevant evidence. In reality such a position could only be avoided if the police made comprehensive admissions which absolved the court from the duty to enter into any of these issues. But a case which can only be justly tried if one side holds up its hands cannot, in truth, be justly tried at all. This is the only case that was cited to us in which the court has decided that the public interest in maintaining confidential information trumps the public interest in the administration of justice to the extent that on that ground a trial has been denied altogether. This is the background against which the important issues raised by this appeal fall to be considered. The inherent power of the court to regulate its own procedure A distinction should be made at the outset between the court (i) exercising its inherent power to control its own procedure and (ii) exercising its general power to develop the substantive common law incrementally. We are not here concerned with (ii), a paradigm example of which would be the incremental development by the courts of the law of negligence. We are concerned with (i). In his seminal article The Inherent Jurisdiction of the Court, Current Legal Problems 1970, Sir Jack Jacob said: the source of the inherent jurisdiction of the court is derived from its nature as a court of law, so that the limits of such jurisdiction are not easy to define, and indeed appear to elude definition. But there is no doubt that the courts inherent power to regulate its own procedures is not unlimited. For example, the power may not be exercised in contravention of legislation or rules of court. In the words of Sir Jack Jacob, loc cit at p 24: the court may exercise its inherent jurisdiction even in respect of matters which are regulated by statute or by rule of court, so long as it can do so without contravening any statutory provision. In such a case, its power has been removed by statute and cannot be exercised. In proceedings which are not regulated by statute or statutory rules, it might be thought that there are no limits to the inherent power of the court to regulate its own procedure and that it has an untrammelled power to manage litigation in whatever way it considers necessary or expedient in the interests of justice. There are many examples of the court in the exercise of its inherent power introducing procedural innovations in the interests of justice. Thus it invented the power to grant Mareva injunctions and make Anton Piller orders. These orders were devised to prevent misuse of the courts procedure and to ensure that its procedure is effective. The PII procedure was also a creature of the common law devised by the court in the exercise of its inherent power to regulate its own procedures. The remedy of discovery (now known as disclosure) was developed by the courts of equity in order to aid the administration of justice. Upon the amalgamation of the Court of Chancery and the common law courts into the High Court by the Judicature Acts, that remedy came to be governed by the Rules of Court. It is now contained in CPR Part 31. The rules governing disclosure recognised that conflict may arise between the public interest in the administration of justice and other public interests which preclude the disclosure of all relevant materials. The law of PII was developed to deal with such situations. The court was exercising its inherent power in controlling its own procedures by deciding the scope of disclosure in cases involving confidential material. The scope of disclosure has long been seen as a matter on which the court has jurisdiction to decide. But even in an area which is not the subject of statute or statutory procedural rules, there are limits to the courts inherent jurisdiction to regulate how civil and criminal proceedings should be conducted. In my view, there is considerable force in what Professor Martin Dockray said in The Inherent Jurisdiction to Regulate Civil Proceedings (1997) 113 LQR 120, 131: .a matter which is procedural from the position of an applicant may be constitutional in the eyes of the respondent. The fact that procedural law can be described as subordinate or adjectival because it aims to give effect to substantive rules should not conceal the truth that procedures can and do interfere with important human rights, while the means by which a decision is reached may be just as important as the decision which is made in the end. Where procedure is as important as substance, procedural change requires the same degree of political accountability and economic and social foresight as reform of an equivalent rule of substantive law. Major innovations in procedural law should therefore be recognised as an institutional responsibility, not a matter on which individual judges should respond to the pleas of particular litigants. Procedural revolutions should appear first in statutes or in the Rules of Court, not in the law reports. For example, it is surely not in doubt that a court cannot conduct a trial inquisitorially rather than by means of an adversarial process (at any rate, not without the consent of the parties) or hold a hearing from which one of the parties is excluded. These (admittedly extreme) examples show that the courts power to regulate its own procedures is subject to certain limitations. The basic rule is that (subject to certain established and limited exceptions) the court cannot exercise its power to regulate its own procedures in such a way as will deny parties their fundamental common law right to participate in the proceedings in accordance with the common law principles of natural justice and open justice. To put the same point in a different way, the court must exercise the power to regulate its procedure in a way which respects these two important principles which are integral to the common law right to a fair trial. Discussion Is there a common law power to require a closed material procedure? Mr Crow QC submits that the PII system suffers from five serious defects. These are that (i) the balancing exercise is inherently difficult to perform, because the two public interests are fundamentally different (it involves, as he put it, a comparison of apples and pears); (ii) if the balance is struck against disclosure, relevant evidence is excluded from the trial (thereby reducing the chances that the court will reach the right result); (iii) the party holding the sensitive undisclosed material knows its contents which may inform its preparation and/or conduct of the trial, thereby putting it at an unfair advantage over the other party; (iv) if the balance is struck in favour of disclosure, the party holding the material that is ordered to be disclosed is faced with the invidious choice of disclosing the material, despite the harm that this would or might cause to the public interest, or refusing disclosure and facing the possibility of having to concede the whole of the other sides case. As Carnduff demonstrates, the court may be faced with the stark choice between depriving a defendant of the means to defend himself and striking out the claim on the grounds that it is untriable; and (v) the scale of the PII exercise is sometimes so vast that it can take years to complete. As regards (v), as already pointed out, it is said that in the present case as many as 140,000 documents may have to be the subject of the PII process: a massive and expensive task which will inevitably mean that it will not be possible for the trial to take place for a very long time. Mr Crow submits that the closed material procedure does not suffer from these defects. If such a procedure is adopted, the court is able to see and take into account at trial relevant material (written and oral) whose disclosure would, applying the PII principles, be excluded from the trial process altogether, regardless of whether the material is of assistance to the claimant or the defendant. If the balancing exercise favours non disclosure, the defendant may have no adequate basis to defend itself in reliance on the open material when, if the truth were known and the sensitive material were referred to, it had a complete answer to the claim. The court would be able to review relevant material in the overall interests of justice and to do so with the assistance of special advocates who would be able to make submissions on behalf of the party from whom open disclosure was being withheld. In short, in an appropriate case, a closed procedure is more likely than PII to achieve justice through a fair trial. Since the shortcomings in the PII process to which Mr Crow draws attention are inherent in the process and are of general application, the logic of his arguments ought to lead to the conclusion that the court should exercise its power in most if not all cases to adopt a closed material procedure rather than PII. But his submission is more modest. He seeks to secure from the court no more than an acknowledgement that, in principle, the court has the power to adopt the closed material procedure and that it should exercise that power in exceptional cases where this is necessary in the interests of justice. He derives the necessity test from Scott v Scott per Lord Haldane LC at p 436. Scott v Scott was addressing the very important principle that justice should be administered in public and recognised that there may be a departure from that principle where that is necessary in the interests of justice. It is one thing to say that the open justice principle may be abrogated if justice cannot otherwise be achieved. As Lord Bingham of Cornhill said in R v Davis [2008] UKHL 36, [2008] AC 1128 at para 28, the rights of a litigating party are the same whether a trial is conducted in camera or in open court and whether or not the course of the proceedings may be reported in the media. It is quite a different matter to say that the court may sanction a departure from the natural justice principle (including the right to be present at and participate in the whole or part of a trial). Scott v Scott is no authority for such a proposition. How can such a step ever satisfy the requirements of justice? And if the court does have the power to deny a litigant this fundamental common law right, in what circumstances is it appropriate to exercise it? These are the questions that lie at the heart of this appeal. Before attempting to answer these questions, I think that it is instructive to consider Davis in more detail. It concerned the question whether the judge at a criminal trial could permit witnesses to give evidence for the prosecution under conditions of anonymity. The perceived need for anonymity arose because, owing to threats of intimidation, the witnesses would not be willing to give their evidence without it. In the Court of Appeal [2006] 1 WLR 3130, para 13, Sir Igor Judge P said that the court possesses an inherent jurisdiction at common law to control its own proceedings, if necessary by adapting and developing its existing processes to defeat any attempted thwarting of its process: see per Lord Morris of Borth y Gest in Connelly v Director of Public Prosecutions [1964] AC 1254, 1301. The court concluded that the anonymity ruling did not prevent proper investigation with the witnesses in open court of the essential elements of the defence. The House of Lords disagreed. Lord Bingham referred at para 5 to the long established principle of the English common law that, subject to certain exceptions and statutory qualifications, the defendant in a criminal trial should be confronted by his accusers in order that he may cross examine them and challenge their evidence. The authorities to which Lord Bingham referred at para 5 in support of this proposition were in the field of both criminal and civil law. Thus, for example, in 1720 in a civil case the court declared in Duke of Dorset v Girdler (1720) Prec Ch 531, 532 that the other side ought not to be deprived of the opportunity of confronting the witnesses, and examining them publicly, which has always been found the most effectual method for discovering of the truth. In rejecting the conclusion of the Court of Appeal, Lord Bingham said at para 34 that at no point in its judgment did the Court of Appeal acknowledge that the right to be confronted by ones accusers is a right recognised by the common law for centuries, and it is not enough if counsel sees the accusers if they are unknown to and unseen by the defendant. It is worthy of note that the House of Lords reached its decision in the face of arguments advanced on behalf of the Crown which included (i) the problem of witness intimidation is real and prevalent and, unless witnesses are allowed to give evidence under conditions of anonymity, dangerous criminals will walk free and society and the administration of justice will suffer; (ii) as Lord Haldane LC said in Scott v Scott, the paramount object must always be to do justice and if, in order to do justice, some adaptation of ordinary procedure is called for, it should be made, so long as the overall fairness of the trial is not compromised; and (iii) the Strasbourg jurisprudence does not condemn the use of measures to protect witnesses. These arguments did not prevail. The common law right to be confronted by ones accusers (an essential element of a fair trial) could not be abrogated by the courts. Any such abrogation was a matter for Parliament. Lord Bingham said at para 28 that it was pertinent to recall the observations of Lord Shaw in Scott at pp 477 478: There is no greater danger of usurpation than that which proceeds little by little, under cover of rules of procedure, and at the instance of judges themselves. Lord Rodger of Earlsferry said at para 45 that Parliament was the proper body to decide whether a change in the law on the way that witnesses gave their evidence where intimidation is a problem was required, and, if so, to devise an appropriate system which still ensures a fair trial. Lord Brown of Eaton under Heywood said at para 66 that it was for the government to decide whether to legislate in the field. Meanwhile, the emasculation of the common law principle must not only be halted but reversed. And Lord Mance made similar observations at para 98. Lord Brown at para 78 of his judgment in the present case suggests that there is a real difference between this case and Davis in that legislation to meet the problem was envisaged in Davis, whereas it is highly doubtful whether Parliament will legislate speedily to introduce a closed procedure. But I do not think that the House of Lords principled refusal to abrogate the common law right to be confronted by ones accusers can be explained by reference to a belief that Parliament would speedily intervene to resolve the problem. The House did not state whether the protective measures imposed by the trial judge were ones which the court had no power to impose, or whether, although the power existed, it was inappropriate to exercise it. That is no doubt because it makes no practical difference. Lord Bingham was content to say at para 35 that the protective measures hampered the conduct of the defence in a manner and to an extent which was unlawful and rendered the trial unfair. It is not difficult to see the similarities between the arguments that were rejected by the House of Lords in Davis and those advanced by Mr Crow. The problem here is not that dangerous criminals will walk free. It is that in sensitive material cases, parties will not be able to develop their true case on the basis of all the relevant material with the result that parties will sometimes lose cases that they should win. A defendant who is ordered to disclose sensitive material on a PII hearing has the invidious choice of disclosing material that will damage some important public interest or making admissions and, in an extreme case, conceding the claim. I return to the questions that lie at the heart of this appeal. In my view, the analogy with Davis is compelling. As I have said, the fact that Davis was a criminal case is not material. The issues considered were of application to trials generally. It decided that, subject to certain exceptions and statutory qualifications, the right to be confronted by ones accusers is such a fundamental element of the common law right to a fair trial that the court cannot abrogate it in the exercise of its inherent power. Only Parliament can do that. The closed material procedure excludes a party from the closed part of the trial. He cannot see the witnesses who speak in that part of the trial; nor can he see closed documents; he cannot hear or read the closed evidence or the submissions made in the closed hearing; and finally he cannot see the judge delivering the closed judgment nor can he read it. Can all of these flaws be cured by a special advocate system? No doubt, special advocates can mitigate these weaknesses to some extent and in some cases the litigant may be able to add little or nothing to what the special advocate can do. For example, this will be the case where the litigant has no knowledge of the matters to which the closed material relates and can give no instructions which will enable the special advocate to perform his function more effectively. But in many cases, the special advocate will be hampered by not being able to take instructions from his client on the closed material. A further problem is that it may not always be possible for the judge (even with the benefit of assistance from the special advocate) to decide whether the special advocate will be hampered in this way. The limitations of the special advocate system, even in the context of the statutory contexts for which they were devised, were highlighted by the Joint Committee on Human Rights in their report on Counter Terrorism Policy and Human Rights (Sixteenth report): Annual Renewal of Control Orders Legislation 2010 (HL Paper 64/HC 395) (dated 26 February 2010) in the context of the Prevention of Terrorism Act 2005 and cases heard by the Special Immigration Appeals Commission. This report was based on the first hand experience of those who have acted as special advocates. As the Court of Appeal noted at para 57, it is the Committees view after five years of operation that the closed material procedure (with special advocates) operated under the statutory regimes is not capable of ensuring the substantial measure of procedural justice that is required. At para 210 of its earlier report, HL Paper 157, HC 394, (published on 30 July 2007), the Committee had concluded: After listening to the evidence of the Special Advocates, we found it hard not to reach for well worn descriptions of it as Kafkaesque or like the Star Chamber. The Special Advocates agreed when it was put to them that, in the light of the concerns they had raised, the public should be left in absolutely no doubt that what is happeninghas absolutely nothing to do with the traditions of adversarial justice as we have come to understand them in the British legal system. Indeed, we were left with the very strong feeling that this is a process which is not just offensive to the basic principles of adversarial justice in which lawyers are steeped, but it is very much against the basic notions of fair play as the lay public would understand them. These views may not sufficiently take account of specific statutory protections, (such as those set out in rule 54 of the Employment Tribunals Rules of Procedure contained in Schedule 1 to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 (SI 2004/1861)) to which Lord Mance refers at para 10 of his judgment in Tariq v Home Office [2011] UKSC 35 but they do throw light on the limitations of the special advocate system. In my view, Mr Crow provided no satisfactory answer to the questions (i) why it is necessary to introduce a procedure which would deprive a litigant of his fundamental common law rights or (ii) in what circumstances the power to order a closed material procedure should be exercised. Since he disavows the wholesale replacement of PII with the closed procedure, it is difficult to see the relevance of the defects alleged by him in the one and the advantages he claims for the other. As regards the problem of the time consuming exercise that has to be performed in a PII process, I agree with what Lord Clarke says at para 152 of his judgment: a closed procedure would not achieve any saving. Mr Crows answer to the two questions that I have posed is that the court has the power to order a closed material procedure in exceptional cases where this is necessary in the interests of justice. But this simply prompts the further question: in what circumstances can it ever be in the interests of justice to deny a litigant in ordinary civil claims (including claims for judicial review) the rights which are entrenched in our common law system as being fundamental requirements of justice itself? I deal with special cases at paras 63 to 65 below. Mr Crow did not give a concrete example of a case where the court would or might exercise this exceptional power. This amply demonstrates that the test that he proposes is vague. It is likely to cause uncertainty in the minds of litigants and their advisers and to lead to unwelcome satellite litigation. Lord Clarke agrees that the court has the power to order a closed procedure where this is necessary in the interests of justice, and at paras 159 to 164 and 178 to 181 he suggests circumstances in which it may be appropriate to exercise the power. He says that, in the exercise of its inherent jurisdiction, the court has the power after the PII process has been completed to order some form of closed procedure involving special advocates. Thus the claimants might seek a closed procedure if they thought that there were advantages in such a procedure, especially if their case was thought to depend to any significant extent on documents in the possession of the defendants. The defendants might also wish to have such a procedure depending on the circumstances. Lord Clarke says that the court has adopted novel procedures in not dissimilar situations by way of development of the common law and pursuant to its obligation under CPR Part 1 to deal with cases justly. There is no reason why the common law should not be able to develop along these lines. It would be a development of the common law of PII. I respectfully disagree with this approach. First, no form of closed material procedure can properly be described as a development of the common law of PII, although there is no objection to the use of special advocates to enhance the PII process (see para 49 below). In many ways, a closed procedure is the very antithesis of a PII procedure. They are fundamentally different from each other. The PII procedure respects the common law principles to which I have referred. If documents are disclosed as a result of the process, they are available to both parties and to the court. If they are not disclosed, they are available neither to the other parties nor to the court. Both parties are entitled to full participation in all aspects of the litigation. There is no unfairness or inequality of arms. The effect of a closed material procedure is that closed documents are only available to the party which possesses them, the other sides special advocate and the court. I have already referred to the limits of the special advocate system. Secondly, it is obviously true that party A who is in possession of the closed material will know whether there is material on which it may wish to rely and will therefore be in a position to decide whether to ask the court to order a closed procedure in relation to that material. But it is difficult to see how opposing party B will know whether his case will be assisted by, or even depend to a significant extent on, the closed material held by A without knowing what the material is and what it contains. If a special advocate is appointed, he might be able to assess the importance of some of the documents, but the scope for doing so without being able to take instructions from B is bound to be limited. It follows that, if the power to order a closed material procedure turns on such considerations, it is likely to operate in favour of A and to the disadvantage of B. In my view, this is an approach which is inherently unfair. It is certainly not necessary in the interests of justice. Thirdly, it is difficult to see how on the suggested approach the court would be able to judge whether to order a closed procedure in any particular case. Would the court be called upon to decide whether the closed documents are likely to advance the case of one or other of the parties and, if so, how would it do this and what test would it apply? Would the material have to be crucial to the case of the party seeking the closed procedure or would it be sufficient that it provides some support for it? This is not an exercise that the court should be required to perform. It would be likely to give rise to argument about whether the closed material is or is not likely to help the cause of the party seeking to invoke the procedure. It would be a recipe for satellite litigation. It would merely add to the complexity and expense of the whole process. Fourthly, to allow a closed procedure in circumstances which are not clearly defined could easily be the thin end of the wedge. This is the point that was made by Lord Shaw in his celebrated speech in Scott v Scott (see para 31 above). Mr Crows undefined exceptional circumstances in the interest of justice could develop into something more defined and exorbitant. So too could Lord Clarkes suggested approach. This would be a big step for the law to take in view of the fundamental principles at stake. In my view, this is a matter for Parliament and not the courts. Fifthly, like Lord Clarke (subject to the one qualification that he mentions as to which I express my views at paras 60 and 61 below), I accept the fundamental principles stated by the Court of Appeal at para 70 of its judgment which he has quoted at para 167 below. But in my view these principles do not sit happily with what he proposes. A closed procedure in the circumstances that he suggests would cut across the fundamental principles of the right to a fair trial and the right to know the reasons for the outcome. It would complicate a well established procedure for dealing with the problem, namely the PII procedure. And for the reasons that I have given would be likely to add to the uncertainty, cost, complexity and delay of all stages of the litigation. As I understand it, Lord Mance (with whom Lady Hale agrees) adopts the view of Lord Clarke that the closed material procedure should not be an alternative to PII, but that it may be ordered in addition to PII in certain circumstances. They differ, however, over the circumstances in which a closed procedure may be ordered. Lord Mance limits himself to cases where closed material is in the defendants possession and the claimant, in order to avoid his or her claim being struck out, consents to a closed material procedure. The differences between them show that different views may be held as to how the test of necessity should be applied in this context. These differences lend further support to the view that, if a closed material procedure is to be available in ordinary civil claims, the decision as to when it might be necessary for such a procedure to be used should be left to Parliament. I should make it clear that, like the Court of Appeal (para 71), I leave open the question whether a closed material procedure can properly be adopted where the parties agree. We heard no argument on this point. Closed material procedures and the use of special advocates continue to be controversial. In my view, it is not for the courts to extend such a controversial procedure beyond the boundaries which Parliament has chosen to draw for its use thus far. It is controversial precisely because it involves an invasion of the fundamental common law principles to which I have referred. I would echo what Lord Phillips said in Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28, [2010] 2 AC 269. It is true that this was a case concerning the requirements of a fair trial under article 6 of the European Convention on Human Rights, but in my view it is equally applicable in relation to the common law requirements of a fair trial. At para 64, he said that the best way of producing a fair trial is to ensure that a party has the fullest information of the allegations against him and the evidence (both oral and documentary) that is relied on in support of those allegations. Both our criminal and civil procedures set out to achieve those aims. In some circumstances, however, they run into conflict with other aspects of the public interest. He then said: How that conflict is to be resolved is a matter for Parliament and for government, subject to the law laid down by Parliament. The common law principles to which I have referred are extremely important and should not be eroded unless there is a compelling case for doing so. If this is to be done at all, it is better done by Parliament after full consultation and proper consideration of the sensitive issues involved. It is not surprising that Parliament has seen fit to make provision for a closed material procedure in certain carefully defined situations and has required the making of detailed procedural rules to give effect to the legislation. There is no compelling reason for taking the course that is urged by Mr Crow or that which is suggested by Lord Clarke. The PII process is not perfect. Perfection cannot be achieved in any system. It has been improved over time as the history of its development shows. One particular development to note is the use of special advocates to enhance the PII process. There can be no objection to the use of special advocates for that purpose, since the PII process fully respects the principles of open justice and natural justice. There is nothing objectionable about excluding a party from the PII process. There can, therefore, be no objection to improving the position of that party in the process by the use of a special advocate. It is true that, if a closed material procedure were introduced, it might not be necessary to strike out a claim such as Carnduff. Looked at in isolation, that would be a good thing. But the problem cannot be looked at so narrowly and in any event it seems that cases such as Carnduff are a rarity. They do not pose a problem on a scale which provides any justification (let alone any compelling justification) for making a fundamental change to the way in which litigation is conducted in our jurisdiction with all the attendant uncertainties and difficulties that I have mentioned. Previous authority As in the Court of Appeal, so here Mr Crow relies on a number of previous authorities where the use of special advocates in a closed material procedure was approved. These were discussed by the Court of Appeal at paras 58 to 66 of their judgment. Lord Clarke suggests at para 166 below that the Court of Appeal distinguished these cases on the basis that they were not ordinary civil claims. But that was not the only reason given by the Court of Appeal for refusing to follow those decisions. In none of the cases was proper consideration given to the question whether a closed material procedure was a permissible development of the common law. Thus, in Secretary of State for the Home Department v Rehman [2001] UKHL 47, [2003] 1 AC 153, para 31 Lord Woolf MR stated (obiter) that, albeit only in the most extreme circumstances, the Court of Appeal could hear submissions in the absence of a party and his counsel under the inherent jurisdiction of the court on the basis that the partys interests could be protected by a special advocate. But there is no suggestion that the contrary was argued. R v Shayler [2002] UKHL 11, [2003] 1 AC 247 was concerned with a preparatory hearing in relation to a defendant who was charged with unauthorised disclosure of material under the Official Secrets Act 1989. A question arose as to whether the defendant could disclose the material to his lawyers. At para 34, Lord Bingham said that, following what Lord Woolf said in Rehman, in the unlikely event of the court having to consider the material which could not be disclosed to the defendants lawyers, a special advocate could be appointed. As the Court of Appeal said at para 61, there would have been no question of the defendant himself being in ignorance of the material or of his being excluded from the hearing where it was considered. It was, therefore, not a closed material procedure at all. In any event, what Lord Bingham said was based on para 31 of Rehman and does not appear to have been the subject of contrary argument. In R v H [2004] UKHL 3, [2004] 2 AC 134 at para 22, Lord Bingham made some observations about the use of a special advocate in a PII procedure. But as discussed at para 49 above, that is not the kind of closed material procedure with which we are concerned. In R (Roberts) v Parole Board [2005] UKHL 45, [2005] 2 AC 738, the Parole Board decided that evidence on which the Home Secretary intended to rely should be heard in the absence of, and not disclosed to, the claimant or his legal representatives, since to do so would put an informant at risk. Instead they directed that the evidence should be disclosed only to a special advocate. The Board had express power under the relevant rules to withhold material which otherwise had to be served on a prisoner. In other words, there was express statutory power to adopt a closed material procedure. One of the issues was whether there was power to require a special advocate. The Board had power under paragraph 1(2)(b) of Schedule 5 to the Criminal Justice Act 1991 to do anything incidental or conducive to the discharge of its functions. It was held that appointing a special advocate to mitigate the adverse effects of the closed procedure would be an exercise of that power. Roberts, therefore, provides no basis for concluding that a court may determine a civil claim on its merits using a closed material procedure in the absence of a specific enactment authorising it to do so. In R (Malik) v Manchester Crown Court [2008] EWHC 1362 (Admin), [2008] 4 All ER 403, when giving the judgment of the Divisional Court, I reviewed a number of the authorities about the use of special advocates. But as the Court of Appeal said at para 64, no argument was advanced that the Crown Court had no power to order a closed material procedure in the absence of an enactment enabling it to do so. The sole question was whether the court should have appointed a special advocate of its own motion. In A v HM Treasury [2008] EWCA Civ 1187, [2009] 3 WLR 25, when giving the majority judgment of the Court of Appeal, Sir Anthony Clarke MR said at paras 58 and 60 that in an appropriate case the court would have power to authorise or request the use of a special advocate even where this was not sanctioned by Parliament. But here too there does not appear to have been any argument as to whether the court had power to order a closed material procedure in the first place. Finally, in R (AHK) v Secretary of State for the Home Department (Practice Note) [2009] EWCA Civ 287, [2009] 1 WLR 2049 at paras 37 38, Sir Anthony Clarke MR giving the judgment of the Court of Appeal gave guidance as to the circumstances in which a special advocate could be appointed. Here too, there was no debate as to whether the court could order a closed material procedure. It seems to have been assumed that it could. None of these authorities is binding on this court. In none of them was there any consideration of the issues which have been considered in detail over two days of argument by this court. They do not amount to a secure and established line of authority to support the proposition that the court has power to order a closed material procedure in the absence of statutory authority. The Civil Procedure Rules At para 43, the Court of Appeal said that they considered that the defendants faced very serious difficulties in their contention that the closed material procedure is compatible with the CPR. They explained why this was the case at paras 41 to 48. I see the force of the points made by the Court of Appeal and they are supported by Ms Rose QC and Mr Howell QC. In short, there are detailed rules for the filing and service of a defence (CPR r 15.2 and CPR r 16.5); disclosure (CPR r 31.5); giving of evidence orally (CPR r 32.2) and the provision of witness statements (CPR r 32.4 and 32.5). There is no provision for the filing and service of a closed defence or for closed disclosure or the giving of evidence in a closed hearing or the provision of closed witness statements. By contrast, CPR Parts 76 and 79 explicitly modify or disapply those Parts of the CPR for the purpose of the particular proceedings in which Parliament has decided that a closed material procedure may be used. These points based on the CPR provide some further support for the conclusion which I have reached for other reasons. The rules make no provision for a closed procedure except in circumstances where it is authorised by statute. On the face of it, the general rules are inconsistent with a closed material procedure. But I do not consider that, if the argument based on the CPR stood alone, it would have been sufficient to carry the day for the respondent. It is not sufficiently clear that a closed material procedure would contravene the CPR to say that on that account the court has no power to order such a procedure. Ordinary civil claims I agree with Lord Clarke, for the reasons that he gives, that there can be no principled basis for distinguishing between ordinary civil claims and claims for judicial review. I would accept the submission of Mr Howell that the mere fact that there may be a public interest involved in the determination of a case does not mean that the court may disregard the duty imposed on it by the law relating to PII or may override the fundamental rights of a party to civil litigation recognised at common law. But I agree that there are certain classes of case where a departure from the normal rule may be justified for special reasons in the interests of justice. Thus as Baroness Hale of Richmond said in Secretary of State for the Home Department v MB [2007] UKHL 46, [2008] AC 440 at para 58: If.the whole object of the proceedings is to protect and promote the best interests of a child, there may be exceptional circumstances in which disclosure of some of the evidence would be so detrimental to the childs welfare as to defeat the object of the exercise. Wardship proceedings are an obvious example of such a case: see In re K (Infants) [1965] AC 201, per Lord Devlin at p 241A. Cases involving children raise different considerations from those which arise in ordinary civil litigation. That is because the interests of children are paramount. It follows that where the interests of the child are served, so too are the interests of justice. Similarly, where the whole object of the proceedings is to protect a commercial interest, full disclosure may not be possible if it would render the proceedings futile. This problem occurs in intellectual property proceedings. It is commonplace to deal with the issue of disclosure by establishing confidentiality rings of persons who may see certain confidential material which is withheld from one or more of the parties to the litigation at least in its initial stages. Such claims by their very nature raise special problems which require exceptional solutions. I am not aware of a case in which a court has approved a trial of such a case proceeding in circumstances where one party was denied access to evidence which was being relied on at the trial by the other party. In my view, the children and confidentiality cases cannot be relied on to justify creating a rule of general application in ordinary civil litigation. These are two narrowly defined categories of case where a departure from the usual rules of procedure has been held to be justified. So far as I am aware, the procedures adopted in these cases are not regarded as controversial and work satisfactorily. By contrast, the closed material procedure is controversial and, in some quarters at least, is regarded as unsatisfactory. Reference was also made by Mr Crow to proceedings before the Competition Appeal Tribunal (CAT) and, for example, the case of Carphone Warehouse Group v Office of Communications [2009] CAT 37 where the tribunal refused disclosure for the purpose of the substantive hearing. But the CAT emphasised the distinction between the inquisitorial procedure that is adopted in statutory appeals before it and the adversarial procedure adopted in civil trials. Conclusion As Lord Clarke has emphasised, the common law is flexible. It develops over time in response to changing circumstances. Sometimes, it takes giant steps forward. More often, it evolves gradually and cautiously. But any change must be justified, otherwise the law becomes unstable. This is particularly important where a change involves an inroad into a fundamental common law right. The introduction of a closed material procedure in ordinary civil claims (including claims for judicial review) would do just that. Mr Crow suggests that the court should have the power to replace the PII process with a closed material procedure in exceptional circumstances where this is in the interests of justice. Lord Clarke suggests that the court should be able to supplement the PII process with such a procedure in exceptional circumstances. For the reasons that I have given, there is no compelling reason for change. The PII process is not perfect, but it works well enough. In some cases, it is cumbersome and costly to operate, but a closed material procedure would be no less so. It is true that, by a majority, this court has decided in Tariq v Home Office [2011] UKSC 35 that the use of a statutory closed material procedure before the Employment Tribunal is lawful under article 6 of the European Convention on Human Rights (the Convention) and EU law. But the lawfulness of a closed material procedure under article 6 and under the common law are distinct questions. As Lord Bingham said in R (Ullah) v Special Adjudicator [2004] UKHL 26, [2004] 2 AC 323 at para 20 [i]t is of course open to member states to provide for rights more generous than those guaranteed by the Convention. It is, therefore, open to our courts to provide greater protection through the common law than that which is guaranteed by the Convention. As the Court of Appeal said at para 69 of their judgment, never say never is often an appropriate catchphrase to use in the context of the common law. Nobody can predict how the law will develop in the future. We are concerned with the position as it is now. But for the reasons that I have given, I agree with the Court of Appeal that the issues of principle raised by the closed material procedure are so fundamental that a closed material procedure should only be introduced in ordinary civil litigation (including judicial review) if Parliament sees fit to do so. No doubt, if Parliament did decide on such a course, it would do so in a carefully defined way and would require detailed procedural rules to be made (such as CPR Parts 76 and 79) to regulate the procedure. LORD HOPE The issues in this case have been set out so clearly and so comprehensively by Lord Clarke and Lord Dyson that I can go directly to the heart of the question that is before us. The word never is such a blunt and uncompromising expression that one has a natural reluctance to lean against it, especially in a case such as this where, as Lord Clarke points out in para 125, we are being asked to decide the issue without reference to the facts of any particular case. But the issue is essentially one of principle. I can see the attractions of the approach that Lord Phillips takes, which is to deal only with the preliminary issue which was before the Court of Appeal and not to engage in a consideration of the wider question as to whether it would ever be right for the closed material procedure to be introduced for ordinary civil litigation without the authority of Parliament: see paras 192 and 197. I would like him give a negative answer, for the reasons that Lord Clarke has explained, to the question whether the established PII procedure should be replaced by some sort of closed procedure at common law. I agree that such a fundamental change to that long established procedure cannot properly be seen as a development of the common law and that it could only be brought about by Parliament. But the argument both in the Court of Appeal and before this court was addressed to the wider issue too. I do not think that it would be right for us to leave the wider issue in a state of uncertainty. I have always believed that a court of unlimited jurisdiction is the master of its own procedure. But that does not mean that the court can do what it likes. Everything that it does must have regard to the fundamental principles of open justice and of fairness. The principle of legality demands nothing less than that. There is, of course, a very wide area of procedure where these issues of principle are not engaged at all. There comes a point, however, where the line must be drawn between procedural choices which are regulatory only and procedural choices that affect the very substance of the notion of a fair trial. Choices as to how the conduct of the courts business may be simplified, made less expensive or made easier to understand are one thing. Choices that cut across absolutely fundamental principles such as the right to a fair trial, the right to be confronted by ones accusers and the right to know the reasons for the outcome are entirely different. The court has for centuries held the line as the guardian of these fundamental principles. I can see the force of the argument that there are circumstances where justice cannot be done unless a closed procedure is adopted. It is advanced, as Lord Brown puts it in para 81, as the least bad solution to a difficult problem. But I think that the court must resist the temptation to go down that road. It would, at best, be an uncertain journey, beset by problems of the kind that Lord Dyson refers to in para 43. It would also run the risk of opening the door to something else. As the Court of Appeal said, it is a melancholy truth that a procedure or approach which is sanctioned by the court expressly on the basis that it is applicable only in exceptional circumstances none the less often becomes common practice: [2010] 3 WLR 1069, para 69. Lord Shaw of Dunfermlines warning in Scott v Scott [1913] AC 417, 477 478, against the usurpation of fundamental rights that proceeds little by little under the cover of rules of procedure remains just as true today as it was then. This is not the time to weaken the laws defences. On the contrary, any weakening in the face of advances in the methods and use of secret intelligence in a case such as this would be bound to lead to attempts to widen the scope for an exception to be made to the principle of open justice. That would create a state of uncertainty in an area of our law which would be inimical to the concept of a fundamental right. The proposition that a closed material procedure should only be introduced in ordinary civil litigation if Parliament sees fit to do so should not be seen as surrendering to Parliament something which lies within the area of the courts responsibility. Instead it is a recognition that the basic question raises such fundamental issues as to where the balance lies between the principles of open justice and of fairness and the demands of national security that it is best left for determination through the democratic process conducted by Parliament, following a process of consultation and the gathering of evidence. The detailed working out of any change to the procedure that Parliament may sanction would no doubt be left to the court in the exercise of its rule making powers. The court will, of course, be conscious of its responsibility to see that, so far as it is possible to do so, anything that Parliament enacts is read and given effect in a way that is compatible with the Convention rights. The question whether it would be open to the court to adopt a closed material procedure if the parties agreed to this raises difficult issues on which we did not hear any argument, not the least of which is the pressure that might be brought to bear on a claimant to agree. Like Lord Kerr, I very much doubt whether this would ever be appropriate. But, as we do not need to decide it in this case, the proper course is to leave the question open for the time being. I would dismiss the appeal for the reasons given by Lord Dyson. LORD BROWN I have had the advantage (a very real advantage in this particular case) of reading in draft the judgments of Lord Clarke and Lord Dyson. Lord Clarke envisages circumstances in which the courts could properly order a closed material procedure (with a special advocate) in ordinary civil litigation and so would allow the appeal. Lord Dyson agrees with the Court of Appeal that this would be impermissible without express parliamentary authorisation. I find it difficult to suppose that either viewpoint could be more persuasively expressed. Yet neither conclusion do I find entirely satisfactory. Let me try to explain. If and in so far as the real issue before us is whether Parliament alone could provide for so fundamental an inroad into the principle of open justice as is proposed here whether, in other words, such a step is beyond the permissible development of the common law I am in Lord Dysons camp. There seems to me at least as good a reason for saying that Parliament alone could sanction this development as for saying, as the House of Lords did in R v Davis [2008] UKHL 36; [2008] AC 1128, that Parliament alone could sanction the use of anonymous evidence in a criminal trial an invasion of the common law principle that the defendant has the right to be confronted by (or, as I preferred to put it, the right to know the identity of) his accusers. But there is to my mind a real difference between this case and Davis. This is not, as Lord Clarke suggests (at para 187), because Davis was a criminal case. Rather it is because, whereas the majority in Davis envisaged early legislation to meet the problem legislation did indeed follow within days although whether it meets the problem remains to be decided by the long awaited judgment of the Grand Chamber in Strasbourg in Al Khawaja v United Kingdom it seems to me highly doubtful whether Parliament will legislate speedily here and even more doubtful whether the introduction of a closed procedure, certainly along the lines both Lord Clarke and Lord Dyson appear to envisage, would indeed meet the very real problems that arise in cases like this. I speak of cases like this because it seems to me quite impossible to discuss the issue raised here on an entirely abstract basis and really only useful to do so in a specific context the very context, I would suggest, in which the question here was raised: a claim against the Intelligence Services and their sponsoring departments of the nature summarised by Lord Clarke (at para 132 of his judgment), essentially alleging complicity in the claimants extraordinary rendition, false imprisonment, torture and other ill treatment, involving (as Lord Clarke notes at para 135) up to 250,000 potentially relevant documents of which up to 140,000 may involve considerations of national security so that a conventional public interest immunity process, notwithstanding the employment of 60 lawyers specifically for the purpose, would be likely to take upwards of three years. Both Lord Clarke and Lord Dyson envisage that, before any question could arise of introducing a closed procedure into the proceedings (save in so far as necessary to improve the PII process itself, as recognised by the House of Lords in R v H [2004] UKHL 3, [2004] 2 AC 134 see Lord Clarke at para 150 and Lord Dyson at paras 49 and 54) the conventional PII process would have to be completed with first the Minister (see R v Chief Constable of West Midlands Police, Ex p Wiley [1995] 1 AC 274) and then the court striking the relevant balances. Lord Clarke makes this plain at paras 152 and 153, Lord Dyson at para 38. Both, in short, appear to envisage that the only real object of the closed procedure proposed here would be to enable a party, wishing to rely on documents held to be undisclosable, and thus inadmissible, in the public interest, to rely on them in closed proceedings. In all likelihood, of course, such a procedure would be invoked by the Crown in just such a case as this where many of the relevant documents would almost inevitably be undisclosable in the interests of national security. (Although theoretically it would be open to claimants to seek this procedure in order, first, through their special advocate, to examine the undisclosed documents and then, if thought favourable to their case, to deploy them in closed proceedings, frankly this appears a somewhat unrealistic prospect.) The advantage of this approach, suggests Lord Clarke (at para 159), is that it avoids both the unpalatable alternative outcomes: either the trial proceeding without the undisclosable documents (generally, it must be supposed, to the Crowns considerable disadvantage) or the action being struck out on the basis that without the disclosed documents a fair trial is not possible (as in Carnduff v Rock [2001] EWCA Civ 680, [2001] 1 WLR 1786). In short, contend its proponents, it is the least bad solution to a difficult problem. For my part, however, I am unpersuaded of this. In the first place, it offers no solution at all to the very real problems of having to conduct a conventional PII process in a case like this. To my mind there need to be compelling reasons to justify the enormous expense, effort and delay involved in such a process here. Secondly, the problem is surely not confined to the disclosure, and thus admissibility, of documents. What about oral evidence? Presumably in a case like this the Crown would wish, indeed need, to call witnesses from the Security Service and the Secret Intelligence Service. Documentation aside, how is it suggested that such evidence could satisfactorily be adduced at a public hearing (indeed, any hearing attended by the claimants themselves)? Thirdly, any closed material procedure with special advocates raises problems all its own, considerations of open justice apart. As the Court of Appeal observed at para 70(e) of its judgment an observation expressly concurred in by both Lord Clarke (para 168) and Lord Dyson (para 45) the envisaged closed material procedure is likely to add to the uncertainty, cost, complication and delay in the initial and interlocutory stages of proceedings, the trial, the judgment, and any appeal. Further, as Lord Dyson observes at para 43, it would be a recipe for satellite litigation. And on top of all this, and by no means least in importance, is the whole question of open justice. One need not take so extreme a view as that expressed by the Joint Committee on Human Rights last year (see Lord Dysons judgment at para 37) to recognise the grave inroads into our fundamental principles of open justice and fair trials that are made by closed procedures. Without A type disclosure (see my judgment in Tariq v Home Office [2011] UKSC 35, at para 86), the claimants may not learn sufficient of the case against them to enable them to give effective instructions to the special advocate to meet it. With such disclosure, however, national security may still be put at risk. Whatever the extent of disclosure, moreover, it will be difficult for the claimants lawyers to advise on the merits (and difficult for the same reason to secure public funding), difficult similarly to advise on settlement offers, and difficult too to advise on any appeal. But beyond all these considerations would be the damage done by a closed procedure to the integrity of the judicial process and the reputation of English justice. As Lord Atkin, invoking Miltons Areopagitica, famously said in Ambard v Attorney General for Trinidad and Tobago [1936] AC 322, 335: Justice is not a cloistered virtue: she must be allowed to suffer the scrutiny and respectful, even though outspoken, comments of ordinary men. A closed procedure in the present context would mean that claims concerning allegations of complicity, torture and the like by UK Intelligence Services abroad would be heard in proceedings from which the claimants were excluded, with secret defences they could not see, secret evidence they could not challenge, and secret judgments withheld from them and from the public for all time. As the Court of Appeal observed below (at para 56): If the court was to conclude after a hearing, much of which had been in closed session attended by the defendants but not the claimants or the public, that for reasons, some of which were to be found in a closed judgment that was available to the defendants but not the claimants or the public, that the claim should be dismissed, there is a substantial risk that the defendants would not be vindicated and that justice would not be seen to have been done. The outcome would be likely to be a pyrrhic victory for the defendants whose reputation would be damaged by such a process, but the damage to the reputation of the court would in all probability be even greater. Lord Clarke (para 161) understands it to be common ground that there could be no objection to a closed procedure were the parties to agree to it (as claimants might, were the only alternative to be the striking out of their claims). For my part I respectfully disagree. The rule of law and the administration of justice concern more, much more, than just the interests of the parties to litigation. The public too has a vital interest in the conduct of proceedings. Open justice is a constitutional principle of the highest importance. It cannot be sacrificed merely on the say so of the parties. In Scott v Scott [1913] AC 417 itself, after all, there had been no objection at first instance to the proceedings being conducted in camera. That did not prevent the process thereafter being roundly and resoundingly condemned by the House of Lords. What, then, of the several exceptions to the open justice principle that have been recognised by the courts? In so far as these exceptions have a statutory basis, of course, no problem arises. Tariq v Home Office [2011] UKSC 35 is, obviously, a case in point. So, too, the control order cases. And R (Roberts) v Parole Board [2005] UKHL 45, [2005] 2 AC 738 seems to me similarly explicable on essentially the same basis: given that the Parole Board was expressly empowered to withhold evidence from the prisoner and exclude him from hearings devoted to its consideration, the House of Lords understandably (although still only by the narrowest of majorities) sanctioned the use of special advocates specifically so as to provide additional protection for the prisoner. No problem arises either in certain well established classes of case of which the most obvious (perhaps the only) examples are wardship/children proceedings (see Lord Dysons judgment at para 63) and, yet more narrowly circumscribed, certain intellectual property proceedings to protect commercial interests (see Lord Dysons judgment at para 64). In so far, however, as the appellants seek to rely on other recent decisions or dicta of the Divisional Court or the Court of Appeal most notably in R (Malik) v Manchester Crown Court [2008] EWHC 1362 (Admin), [2008] 4 All ER 403, A v HM Treasury [2008] EWCA Civ 1187, [2009] 3 WLR 25 and R (AHK) v Secretary of State for the Home Department (Practice Note) [2009] EWCA Civ 287, [2009] 1 WLR 2049 (albeit in none of these cases does it appear that the propriety of a closed procedure was ever actually argued) I would simply repeat what I said in Davis (at para 66): If . the government now think it right to legislate in this field, so be it. Meantime, however, the creeping emasculation of the common law principle must be not only halted but reversed. I come then, finally, to the way ahead. If, as I believe, it would be quite wrong for the common law to be developed to provide for a closed procedure in cases like this, and if, as I have suggested, not even the introduction of such a procedure by Parliament would really solve the problems arising, what should instead be done? For my part I have reached the reluctant conclusion that, by their very nature, claims of the sort advanced here, targeted as they are principally against the Intelligence Services, are quite simply untriable by any remotely conventional open court process. The problems they raise, of oral no less than documentary evidence, are just too deep seated to be capable of solution within such a process. Far too little would be gained, and far too much lost, by the appellants proposed development of the common law. In short, some altogether more radical solution is, I believe, required. Realistically there seem to be only two possible solutions. Either cases of this kind, necessarily involving highly sensitive security issues, should go for determination by some body akin to the Investigatory Powers Tribunal which does not pretend to be deciding such claims on a remotely conventional basis (see my judgment in Tariq v Home Office). Or they must simply be regarded as untriable and struck out on the basis that, as Laws LJ put it in Carnduff at para 36: [They] cannot, in truth, be justly tried at all. Obviously, I need hardly add, claims of the sort made here of the complicity of the Intelligence Services in torture ought not simply to be swept under the carpet. That, of course, explains why, these particular claims having been settled without admission of liability, they are to be the subject of an inquiry under the chairmanship of Sir Peter Gibson. It is to be hoped that, in the light of that inquirys findings, together with the responses to the Governments proposed Green Paper, an acceptable way ahead may be found for the resolution of this type of case. Meanwhile, whatever else is to be done, it is certainly not the development of the common law in the way proposed. This is one of those cases where the court should indeed say never. The appeal should be dismissed. LORD KERR For the reasons given by Lord Dyson, with which I fully agree, I too would dismiss this appeal. As I have observed in the associated case of Tariq v Home Office [2011] UKSC 35, the right to know and effectively challenge the opposing case has long been recognised by the common law as a fundamental feature of the judicial process. I referred in my judgment in that case to various celebrated expressions of that principle and I need not repeat them here. The right to be informed of the case made against you is not merely a feature of the adversarial system of trial, it is an elementary and essential prerequisite of fairness. Without it, as Upjohn LJ put it in In re K (Infants) [1963] Ch 381, a trial between opposing parties cannot lay claim to the marque of judicial proceedings. And so the key nature of this right and its utter indispensability to the fairness of proceedings must occupy centre stage in the debate as to whether it may be compromised to serve the interests which the appellants claim require to be served and which are said to justify a departure from it. The appellants have advanced two principal arguments in support of the claim that a closed procedure is required in this case. The first of these is pragmatic; the second purportedly a matter of principle. It is first asserted that the exercise involved in conducting a conventional public interest immunity exercise would be so daunting that some means should be found to avoid it. The second argument is that the adoption of a closed procedure will actually conduce to a fairer trial than would otherwise be possible. The first of these arguments can easily be and, in the judgments of Lord Clarke and Lord Dyson, has been disposed of and I need say little more about it. As has been observed, unless there is to be complete abandonment of public interest immunity procedure as a means of catering for the tension between disclosure of relevant material and protection of the public interest, the exercise cannot be avoided. For the reasons given by Lord Clarke, to desert that procedure, so deeply embedded in our system of law, for reasons of expediency simply cannot be contemplated. The seemingly innocuous scheme proposed by the appellants would bring to an end any balancing of, on the one hand, the litigants right to be apprised of evidence relevant to his case against, on the other, the claimed public interest. This would not be a development of the common law, as the appellants would have it. It would be, at a stroke, the deliberate forfeiture of a fundamental right which, as the Court of Appeal has said in para 70 of its judgment [2010] 3 WLR 1069, has been established for more than three centuries. The appellants second argument proceeds on the premise that placing before a judge all relevant material is, in every instance, preferable to having to withhold potentially pivotal evidence. This proposition is deceptively attractive for what, the appellants imply, could be fairer than an independent arbiter having access to all the evidence germane to the dispute between the parties? The central fallacy of the argument, however, lies in the unspoken assumption that, because the judge sees everything, he is bound to be in a better position to reach a fair result. That assumption is misplaced. To be truly valuable, evidence must be capable of withstanding challenge. I go further. Evidence which has been insulated from challenge may positively mislead. It is precisely because of this that the right to know the case that ones opponent makes and to have the opportunity to challenge it occupies such a central place in the concept of a fair trial. However astute and assiduous the judge, the proposed procedure hands over to one party considerable control over the production of relevant material and the manner in which it is to be presented. The peril that such a procedure presents to the fair trial of contentious litigation is both obvious and undeniable. In the solution offered by the appellants a state party can supply evidence to the judge with only (at best) the inquiring confrontation of the special advocate. Quite apart from the reasons so clearly stated by Lord Dyson about the necessary, inevitable but ultimately inherent frailties of the special advocate system, the challenge that the special advocate can present is, in the final analysis, of a theoretical, abstract nature only. It is, self evidently and admittedly, a distinctly second best attempt to secure a just outcome to proceedings. It should always be a measure of last resort; one to which recourse is had only when no possible alternative is available. It should never be regarded as an acceptable substitute for the compromise of a fundamental right such as is at stake in this case. At a somewhat more prosaic level, the arguments against the case made by the appellants appear to me to be overwhelming. If one starts, as I believe we must, with the position that there is a constitutional, common law right to be informed of the case made against you in civil litigation, it becomes clear that what we are here being asked to do is to create an entirely new, hitherto unrecognised exception which has no statutory underpinning. The proposal for the radical change in the law which the appellants seek is openly policy driven. On that account alone, one should be very wary of it. Moreover, the claims that the present system creates impossible logistical burdens or that it produces unfair results on a massive scale are not backed up by any evidence. To accept that claim we would simply be acting on the ipse dixit of counsel. At the moment with PII, the state faces what might be described as a healthy dilemma. It will want to produce as much material as it can in order to defend the claim and therefore will not be too quick to have resort to PII. Under the closed material procedure, all the material goes before the judge and a claim that all of it involves national security or some other vital public interest will be very tempting to make. In this connection, one should not lose sight of the public interest in maintaining confidence in the administration of justice referred to so pertinently by Lord Neuberger MR in para 56 of his judgment in the Court of Appeal in the present case. For the reasons that he has given, I consider that this is an extremely important consideration and one which ought not to be overlooked. On the question whether closed material might be provided to a judge where the claimant consents, I confess to grave misgivings as to how this might operate in practice. Consent to the submission of closed material under threat of a Carnduff application would not be the most propitious basis on which to found a jurisdiction which would not otherwise exist. I also entertain considerable doubt as to whether it is possible as a matter of principle to invest the court with jurisdiction in this way and tend to agree with what Lord Brown has had to say on the subject. Since, however, this matter was not argued on the appeal, I consider that it is unnecessary to express any final view on it. LORD MANCE, with whom Lady Hale agrees A conventional PII exercise at common law involves comparing the public interest in the administration of justice secured by availability of the material with the public interest identified by the certificate and court favouring its suppression; and in striking a balance between these two competing interests: see Lord Reids speech in Conway v Rimmer [1968] AC 910, pp 940 and 951 952, quoted by Lord Clarke in paras 142 143. The balance is struck somewhat differently in criminal and civil law contexts (see eg Balfour v Foreign and Commonwealth Office [1994] 1 WLR 681, at pp 688H 689A). In a criminal context, the general rule is that, if material is necessary to prove the defendants innocence or avoid a miscarriage of justice, then the balance comes down resoundingly in favour of disclosing it: R v Keane [1994] 1 WLR 746, 751 752, per Lord Taylor of Gosforth CJ. If the Crown still does not wish to disclose the material, it can and must forgo further prosecution. In a civil law context, the liberty of the subject is not at stake. Where a prima facie case of public interest immunity is made out, a party who wishes to invite the court to inspect material before determining whether it should after all be deployed must show that it is likely to give substantial support to his or her case: Air Canada v Secretary of State for Trade [1983] 2 AC 394. When the court is balancing the competing interests, Cross & Tapper on Evidence, 12th ed (2010), p 484 suggests, with reference to case law from various common law jurisdictions, that the court will take into account factors such as the seriousness of the claim for which disclosure is sought, whether or not the government is itself a party or alleged to have acted unconscionably, the relevance of the particular evidence to the dispute, taking into account other possible sources of evidence, and on the other side, the nature of the states interest, and the length of time that has elapsed since the relevant discussion took place. Thus, in both a criminal and a civil context, a judge dealing with an issue of PII has necessarily to form a view as to the relevance of the material for which PII is claimed. This is a fortiori the position if a judge, having concluded that, in the public interest, material cannot be disclosed, goes on to consider whether, as a result, the case has become untriable: see Carnduff v Rock [2001] EWCA Civ 680, [2001]1 WLR 1786, below. Mr Jonathan Crow QC representing the Crown identifies various problems about a conventional PII exercise. Lord Dyson has set them out in para 23. They include the obvious difficulty in some cases of comparing two such different interests as the administration of justice between parties and the general public interest in withholding from outside eyes sensitive state material, the fact that a successful claim to PII can leave a party with relevant knowledge that neither the other party nor the decision maker will have and may even make a case untriable and the dilemma (whether or not to pursue its case) in which an unsuccessful claim to PII can leave the state. They also include essentially pragmatic concerns such as the cost and time burden imposed by a conventional PII exercise. In their light, the Crowns primary case is that a court can decide to replace a conventional PII exercise by a closed material procedure, even without statutory authorisation such as arises for consideration in the linked appeal in Tariq v Home Office [2011] UKSC 35. The court should be able, at least in exceptional cases, to order a closed procedure under which a special advocate would first ascertain the case being advanced by the litigant whose interests he or she was to serve; the material which the Crown seeks to withhold would then be made available to the judge and a special advocate, for the latter to make such forensic use of it as was possible. A balancing of the competing interests in disclosure would become unnecessary, since the judge and the special advocate would have access to everything. Whether or not it might, after a conventional PII exercise, have been excluded or made available would become irrelevant. As a secondary and alternative case, the Crown suggests the possibility that a closed material procedure might be ordered after or at the end of a conventional PII exercise. Ms Dinah Rose QCs submission on behalf of the respondent is that there are inalienable features of a civil trial which no English court can or should abandon or qualify, at least without Parliamentary authority, even though this would involve no infringement of the Convention rights domesticated by the Human Rights Act 1998 (cf Tariq v Home Office [2011] UKSC 35). Lord Dyson has discussed them under the heads of open and natural justice in paras 10 to 13 and Lord Clarke has identified the principal features in para 126. Ms Rose also noted a number of practical consequences which could flow from their abandonment, including difficulty on the part of the party without access to the material withheld to assess, take proper legal advice on the merits of or fund a case. Taking the Crowns primary submission, I see no basis for the complete substitution of a conventional PII exercise by a closed material procedure, even if this were a possibility limited to exceptional circumstances. The line between cases where a traditional PII exercise was undertaken and others would be unprincipled and uncertain. It is inherent in a conventional PII exercise that there may be difficulty in comparing the interests of the administration of justice and the general public interest, that a successful claim to PII can leave one party with relevant knowledge, or may even make a case untriable and may place the Crown in a dilemma whether or not to pursue its case after an unsuccessful claim to PII. It would be entirely unclear when these features might justify a judge in abandoning any attempt at a conventional PII exercise. Further, the special advocate would often be likely to become engaged in a modified form of PII exercise, involving arguments as to whether material should after all be disclosed to the litigant, bearing in mind the potential disadvantages for the litigant of a closed material procedure; nothing would then be gained, except to shift the whole burden of conducting that form of PII exercise onto the special advocate. The Crowns alternative submission, that a closed material procedure might be recognised after or as supplementary to a conventional PII exercise, merits close scrutiny. As I understand it, no member of the Supreme Court doubts the approach in Carnduff v Rock [2001] 1 WLR 1786 as a possibility: see Lord Dyson at para 15, Lord Brown at para 86 and Lord Clarke at para 157. In other words, a successful claim for PII can make an issue untriable, so that the court will simply refuse to adjudicate upon the case. In some circumstances, therefore, the court is faced not with a binary choice, between trial with or without the material for which PII has been claimed, but with a trinary choice: the third possibility is no trial at all whoever happens to be the claimant then has no access to the court at all. Logically, this third possibility may be capable of feeding back into the decision whether a claim for PII should be allowed. If the effect of a successful claim to PII is that the case will not be tried at all, that introduces a different dimension, which may affect the striking of the balance of competing interests (para 103 above). Lord Brown assumes (para 81) that a trial without the judge having any access to the PII material would be likely to be to the Crowns considerable disadvantage. But it is not right to assume that the executive never errs or that material for which it claims PII is necessarily in its favour. In any event, issues regarding PII can arise between non state parties, as for example in Asiatic Petroleum Co Ltd v Anglo Persian Oil Co Ltd [1916] 1 KB 822. And it must certainly be regarded as being to a claimants considerable disadvantage, if as a result of the withholding of PII material, the court concludes, as in Carnduff, that the case is not triable at all. Like a number of other members of the court, I believe that the issue upon which the Court of Appeal and now this Court has embarked is fraught with danger and in principle undesirable; and that any answer that we give should at least be confined to situations such as the present where the defendant is the state and has the material withheld in its possession. If the court never has jurisdiction (in the strict sense) to order a closed material procedure, that means that, even where a court concluded that a claimant must be denied access to material and the case must otherwise be struck out as untriable, it would be impossible for the court to order, with the consent of the claimant, a closed material procedure. There would be no way in which the material could be put before a judge, with the claimants interests being represented to the best extent possible by a special advocate. I would be surprised if the courts inherent jurisdiction (in the strict sense) were inhibited to this extent. I note that the judgment of the Court of Appeal, whose decision the respondent has invited the Supreme Court to uphold as correct for the reasons given by it, expressly leaves open the question of whether a closed material procedure can properly be adopted, in an ordinary civil case such as the present, where all parties agree, or in a civil claim involving a substantial public interest dimension, and adds that, although this is an issue to be considered as and when it arises, principle and the authorities relied upon [in the courts] below suggest that a different conclusion may well be justified in such cases, albeit only in exceptional circumstances (para 71). Ms Rose did not challenge this qualification in her submissions. On the contrary, she went even further than the Court of Appeal. Her case (para 133) states: There is similarly no need for this court to reach a decision on whether a closed material procedure would be permissible if the parties consented to it, or in different sorts of proceedings, where the task of the judge was not simply to adjudicate on a private law claim for damages. However, insofar as necessary, the respondent would submit: (1) A party may consent to absent himself from all or part of a hearing, and to allow the judge to see material which is not shown to him: there may be cases where it is in his interest to do so, and these are likely to include the public law contexts in which such consent has been given in the recent past. (2) The fundamental principles identified above, and the requirements of the CPR, apply with equal force to claims for judicial review, as to civil claims for damages. In the absence of consent, a court hearing such claims has no power to adopt a closed procedure Cases of consent are also outside the basic rule which Lord Dyson identifies in para 22, that the court cannot exercise its power to deny parties their fundamental common law right to participate in proceedings in accordance with the common law principles of natural justice and open justice. An inability to allow a voluntarily accepted closed material procedure, as an alternative to striking a claim out as untriable, would be to deny something even more basic, that is any access to justice at all. Lord Dyson in the first sentence of para 22 uses the phrase at any rate, not without the consent of the parties and may therefore also accept this. Further, once it is accepted, as Lord Dyson does (para 63), that there are certain classes of case where a departure from the normal rule may be justified for special reasons in the interests of justice, for example wardship and other cases where the interests of children are paramount, that to my mind also makes it difficult to suggest that the court lacks jurisdiction in a strict sense to vary the basic principles of open and natural justice mentioned in para 107 above. There is however a real distinction between having jurisdiction and exercising it. Principles as important as open and natural justice ought to be regarded as sacrosanct, as long as they themselves do not lead to a denial of justice. Absent statutory authorisation, any significant deviation from the ordinary process and consequences of a conventional PII exercise can and should only be under the compulsion of necessity, in order to avoid such a denial. Mr Crow acknowledged this as a possible approach. He cited Viscount Haldane LCs well known statements in Scott v Scott [1913] AC 417, 437 438, that exceptions to the principle that justice be administered in public may arise from considerations of necessity (not convenience) as the outcome of a yet more fundamental principle that the chief object of Courts of justice must be to secure that justice is done. In this connection, Viscount Haldane referred to two cases: (a) wards of court and of lunatics, where the court is really sitting primarily to guard [their] interests and the broad principle which ordinarily governs it therefore yields to the paramount duty, which is the care of the ward or the lunatic the courts role here, now regulated statutorily under the Mental Health Act 1983 and Mental Capacity Act 2005, has a parallel in that which it has in relation in children and (b) litigation as to a secret process, where the effect of publicity would be to destroy the subject matter and justice could not be done at all if it had to be done in public, in which case As the paramount object must always be to do justice, the general rule as to publicity, after all only the means to an end, must accordingly yield. Thus, while it is true, as Lord Brown observes (para 84), that in Scott v Scott the House deprecated the hearing in camera of a matrimonial issue in the interests of decency or delicacy, the House there expressly recognised the possibility that such a hearing might be ordered if the alternative was a defeat of the ends of justice (p 439). Subsequent authorities discussing the principle of public justice and the circumstances in which it may be qualified include Department of Economics, Policy and Development of the City of Moscow v Bankers Trust Co [2004] EWCA Civ 314; [2005] QB 207, where the Court of Appeal recognised that the principle might require modification to respect the confidentiality inherent under English law in their choice of arbitration. Party agreement can therefore have relevance to the modification in the interests of justice of what would otherwise be basic principles. Viscount Haldane was speaking in Scott v Scott in the context of publicity, where the inroad into ordinary process is of a different order to that involved in any closed material procedure. But a claimant who is told that, because of the defendants possession of material which cannot be disclosed, the claim is and must be struck out as untriable is just as effectively told, in Viscount Haldanes words, that justice cannot be done. The inference may or may not be that the material favours the defendant state which has the documents and could rely on them for what they were worth in any closed material procedure. The claimant must by definition have a properly arguable case without the documents, since otherwise his or her case would be susceptible to being struck out. I myself see no reason why the court should not in such circumstances be able and prepared to offer the claimant the chance, if he or she wished, to pursue the claim by a closed material procedure, during which his or her interests would be represented by a special advocate. Lord Brown suggests (paras 86 87) that such cases must go off to some specially constituted tribunal, which does not pretend to be deciding such claims on a remotely conventional basis. I find this difficult to square with the fact that courts and judges can and do operate closed material procedures where there is statutory authorisation, and can and do also depart from otherwise basic common law principles in the special classes of case which Lord Dyson mentions in para 63. Further, if one assumes that cases such as Carnduff are a rarity (Lord Dyson, para 50), that does not make it any more palatable, to my mind or to the individual claimant, to be denied any access to justice at all, in circumstances when he or she wishes to accept a closed material procedure. I do not see why a court should, instead of permitting a closed material procedure, insist on washing its hands of the case in such circumstances. In a public law context, statutory schemes, e.g. governing suspected terrorism, have given rise to repeated issues about the legitimacy in terms of the Convention rights of closed material procedures: see eg Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28; [2010] 2 AC 269 and Tariq v Home Office [2011] UKSC 35. It is also possible, at least in theory, to conceive of ordinary civil cases where the material withheld is in the hands of the claimant. A claim to PII is a duty, not an option, on the part of the state. A claimant (who might in some circumstances not be the state itself: see the Asiatic Petroleum case, cited in para 110 above) might find itself, at one and the same time, wishing to pursue a claim, but bound to raise (or, in the case of a non state claimant, faced with) a claim for PII in respect of material in its possession. Again, it must be assumed that the claimant could, without the material, show an arguable case. If the court concluded that the material favoured the claimant, then the interests of justice would be unlikely to require its disclosure. The problem arises if the court concluded that it favoured the defendant but that the public interest in its confidentiality outweighed any particular interest of the defendant and that as a result the case could not fairly be tried. Would it then be open to the court, as an alternative, to avoid denying any access to the court to the claimant, to order that the defendant should accept a closed material procedure? In the case of a state claimant, the public interest which required the claim to PII might perhaps also be said to require the state to accept that it could not pursue certain claims which it would otherwise wish to pursue in the public interest. In the case of a non state claimant, seeking to pursue an ordinary civil claim in his, her or its private interest, that consideration could not be deployed. Nevertheless, it is far from clear that the court could go to the length of ordering a defendant to undergo a closed material procedure, in order to enable a non state actor to pursue an otherwise untriable civil claim. But I shall express no opinion upon any such case since it lies far outside the realm of the present, and should be considered on its own merits were it ever to arise. I should however address two further possibilities raised by Lord Clarkes judgment in relation to cases like the present where the relevant material is in the defendants possession. One is the possibility, which I understand to be left open in paras 160 165, that, a judge might be able to order a closed material procedure at the claimants instance, even though the judge concluded that the case was triable without the disclosure of the material withheld. The other is the suggestion in para 179 that the judge, if he or she declined to strike the claim out, might none the less accede to an application by the defendant for a closed material procedure based on necessity, namely that such a procedure would be necessary in order to permit a fair trial. Both, it seems to me, involve an inconsistency. If a judge declines both to order disclosure and to strike the claim out, that means that he or she is satisfied that a fair trial, albeit on incomplete or imperfect material, is possible. There cannot in such a case be any necessity, in the strict sense emphasised in Scott v Scott, for any departure from basic principles of open and natural justice. Both suggestions would in reality involve modifying the conventional PII exercise to introduce a fourth possibility, additional to the existing three (trial with or without disclosure, or no trial at all). As I have already indicated, I see no principled basis for such a modification. For these reasons, and confining myself to cases such as the present where the material withheld is in the defendants and not the claimants possession, I consider that the Court can safely decide that there is no general basis for modifying the well established rules governing the nature of a conventional PII exercise. There is no scope for introducing a closed material procedure as an alternative to such an exercise. I would not rule out a closed material procedure as outside the courts jurisdiction in a strict sense. But, statutory permission aside, the only exception that I would presently accept is where, after a conventional PII exercise, the judge concludes that there should be no disclosure, and that the case is as a result untriable. Then I think that the court could adopt some form of closed material procedure, if the claimant consented, in order to avoid denying the claimant any form of access to the court. As regards consent, there is, as I see it, nothing between my conclusion and that of the Court of Appeal. If the preliminary issue is treated as raising a question of jurisdiction in the strict sense, where there is no consent, then my view differs on the issue of jurisdiction in the strict sense from that of the Court of Appeals. As to the exercise of any such jurisdiction, I am in full agreement with the Court of Appeal that it cannot be appropriate to contemplate a closed material procedure in lieu of a conventional PII exercise. I can only envisage the jurisdiction ever being exercised after a conventional PII exercise in circumstances where a claimant would otherwise be denied any access to justice at all. As to what those circumstances might be, I would express an opinion only in relation to cases like the present, where closed material is in the defendants possession. If the claimant, in order to avoid his or her claim being struck out, consents to engage in a closed material procedure, it would and should be permissible in my opinion for a court to allow a closed material procedure. The contrary, as I have pointed out (para 113), was not argued by the respondent. LORD CLARKE Introduction The appellants in this appeal are the Security Service and various other organs of the state. It is an appeal from a declaration made by the Court of Appeal (Lord Neuberger of Abbotsbury MR, Maurice Kay and Sullivan LJJ) [2010] EWCA Civ 482, [2010] 3 WLR 1069 on 4 May 2010 allowing an appeal from an order made by Silber J (the judge) on 18 November 2009 [2009] EWHC 2959 (QB). That order was made after the hearing of a preliminary issue, which had been ordered on 24 September 2009 but was varied by agreement in the course of the hearing. The preliminary issue as so varied was in these terms: Could it be lawful and proper for a court to order that a closed material procedure (as defined below) be adopted in a civil claim for damages? Definition of closed material procedure A closed material procedure means a procedure in which (a) a party is permitted to comply with his obligations for disclosure of (i) documents, and (iii) rely on pleadings and/or written evidence and/or oral evidence without disclosing such material to other parties if and to the extent that disclosure to them would be contrary to the public interest (such withheld material being known as closed material), and (b) disclosure of such closed material is made to special advocates and, where appropriate, the court; and (c) the court must ensure that such closed material is not disclosed to any other parties or to any other person, save where it is satisfied that such disclosure would not be contrary to the public interest. For the purposes of this definition, disclosure is contrary to the public interest if it is made contrary to the interests of national security, the international relations of the United Kingdom, the detection and prevention of crime, or in any other circumstances where disclosure is likely to harm the public interest. It is interesting to note that, as the judge said at para 2 of his judgment, in its original form the preliminary issue contained the words if satisfied that such a procedure is necessary for the just disposal of the case after the word damages in the third line, but those words were deleted by agreement as their meaning was not clear and they did not appear to add anything to the preceding words. The judge granted the application for the declaration. He declared that it could be lawful and proper for a court to order that a closed material procedure (as defined above) be adopted in a civil claim for damages. He granted permission to appeal to the Court of Appeal, which allowed the appeal. It made a declaration that the court does not have power to order that a closed material procedure (as so defined) be adopted in an ordinary civil claim for damages. The appellants were granted permission to appeal by this Court. The underlying claims for damages were then settled and the question arose whether the Court should allow the appeal to continue. In very many cases the court would refuse to proceed in such a case but it decided to proceed with this appeal because the point of principle raised by the question whether the court has no power to make a declaration in the terms sought is of general public importance. Moreover, given the fact that the Court of Appeal made the declaration in the bald terms which it did, it seemed appropriate for the court to consider it and not leave the matter to a future leapfrog appeal. One of the problems raised by the appeal is that the declaration is stated in absolute terms, without reference to the facts of a particular case. I am firmly of the view that it is in general undesirable to determine bare questions of law in this way. I would expect the court ordinarily to require the relevant legal question to be decided in a particular factual context. The parties cases in summary The respondents case is that the judges have no power, by developing the common law on an ad hoc case by case basis, to abrogate a number of the most fundamental features of the trial of a civil claim for damages. Ms Dinah Rose QC identifies a number of such features as follows: i) the requirement that each party must plead its case, identifying to all other parties the issues which are in dispute; ii) the requirement that all written or oral evidence on which a party wishes to rely in support of its case must be disclosed to the other parties to proceedings; iii) the requirement that each party must be permitted to test the disputed oral evidence of other parties by cross examination; iv) the rules which apply to the disclosure of relevant documents in the possession of a party to proceedings, including the principles that govern claims of public interest immunity (PII); and v) the requirement that a court must give a fully reasoned judgment, to be made available to all parties, so that each party knows why it has won or lost and can decide whether or not to appeal. Ms Rose submits that these are requirements which have been developed and maintained over centuries in order to secure basic constitutional rights of fairness, open justice and equality of arms, as well as to maintain confidence in the integrity of the judicial system, and in order to balance those rights and interests against competing considerations, including the interests of national security. Ms Rose cites many cases which support these fundamental principles, which, subject to what follows, are not disputed by Mr Jonathan Crow QC. Those principles have been endorsed in ringing tones by Lord Kerr in his judgment in Tariq v Home Office [2011] UKSC 35, which was heard at the same time as this appeal by the same court and in which judgment has been handed down at the same time. They have also been clearly and accurately set out by Lord Dyson at paras 10 to 17 above. The appellants case was summarised by Mr Crow in a short document as follows. The courts objective is to achieve real justice between the parties. Everyone is entitled to a fair trial. That right is absolute, but the means of achieving it are infinitely variable. The practice and procedure of the court are the means of achieving that objective. They should be the servants, not the masters, of justice. As a general rule, real justice and a fair trial can only be achieved by a process which allows open hearings, open disclosure, each side confronting the others witnesses and open judgments. There are, however, no absolute, inflexible rules as to how real justice or a fair trial can be achieved. The requirements of fairness must always be responsive to the particular circumstances of the case. In particular, the courts have adopted procedures for hearings in private, restricted disclosure, the exclusion of one party from part of the proceedings and closed judgments, with and without the assistance of special advocates. The adoption of such unusual procedures is not confined to any limited class or category of case, whether involving children, wards of court, confidential information, patent actions, insolvency or anything else. While the adoption of such procedures may be more likely in such categories of case, the common law proceeds by reference to principle and not by a tick box system. If a particular procedure is necessary by reference to the circumstances of the particular case, it should be adopted whether or not it falls into a category in which such a procedure has been adopted in the past. In the agreed statement of facts and issues, the issue is said to be whether, in the absence of a specific statutory power, a closed material procedure can ever be adopted in a civil claim for damages. Defects in the order sought for the use of a closed material procedure I will return below to the question whether the court would have power to make an order of the kind sought. However, I should state at the outset that I cannot conceive of circumstances in which the court could in fact properly make an order for use of a closed material procedure as defined. It contains no procedure setting out how the claim that disclosure of a particular document or class of document is contrary to the public interest should be made or determined. Is it a matter for the judge and, if so, on what material, with whose assistance and in accordance with what principles? These are critical questions, especially the last. As formulated it seems implicit in the procedure that there is to be no question of any balance between the public interests referred to and interests of the parties. Yet the various public interests sought to be protected are very different. They extend from national security to any other circumstances where disclosure is likely to harm the public interest, which is very broad indeed. As I see it, very different considerations are likely to apply to each class of case. In these circumstances, it seems to me to be clear that it would never be appropriate to make an order in the bald terms apparently sought. It does not, however, follow that it would never be appropriate to make an order suitably tailored to the circumstances of the particular case which has the effect of limiting some of the common law rights identified by Ms Rose. The appellants case was that there were circumstances in which it would or might have been appropriate to do so on the facts of this case. The factual and procedural background Although the issues between the parties have now been settled, it is appropriate to summarise the facts very briefly because it is rarely sensible to consider any legal principle in the abstract and because the facts here demonstrate some of the problems that can arise. I can take them, albeit in less detail, from paras 5 to 10 of the judgment of the Court of Appeal, which was delivered by Lord Neuberger MR. The claimants were individuals some of whom were detained at Guantanamo Bay. They said that as a result of their detention and mistreatment while detained they had valid claims under at least some of the following heads, namely false imprisonment, trespass to the person, conspiracy to injure, torture, breach of contract, negligence, misfeasance in public office and breach of the Human Rights Act 1998. The claims were based on the contention that, to put it in broad terms, each of the appellants caused or contributed towards the alleged detention, rendition and ill treatment of each of the claimants. The appellants then filed an open defence in which, while admitting that each of the claimants was detained and transferred, they put in issue any mistreatment which the claimants alleged and, in any event, denied any liability in respect of any of the claimants detention or alleged mistreatment. It was said that there was material not pleaded in the open defence which the appellants wished to contend that the court should consider but which could not be included without causing real harm to the public interest. That material was said to be contained in a closed defence. The open defence made it clear that the appellants wished the case to proceed throughout on the basis that it included what may be characterised as a closed element. Thus, at least on the face of it, during the period prior to trial, there would be parallel open and closed pleadings, parallel open and closed disclosure and inspection, parallel open and closed witness statements and parallel open and closed directions hearings. Similarly, at the trial, the hearing would be in part open and in part closed, no doubt with some documents and witnesses being seen and heard in the open hearing and others in the closed hearing (with some witnesses conceivably giving evidence at both hearings). After trial, there would be a closed judgment and an open judgment, which would be in substantially the same terms save that those passages in the closed judgment which referred to or relied on closed material would be excluded from the open judgment. In relation to the open elements of the proceedings, the claimants would be represented by their solicitors and counsel in the normal way, whereas, in relation to the closed elements, their interests would in effect be protected by special advocates. The claimants objected to the course proposed by the appellants, contending for the normal approach in cases where the Crown or government emanations are parties and consider that they have relevant documents in respect of which PII might be claimed, and where the defendants could call relevant oral evidence which might not be able to be given on public interest grounds. The appellants accepted that the PII procedure was well established, but contended that a closed material procedure was permissible in any civil case, at least before a judge sitting without a jury, and that it might well be appropriate in this case, where there was a very substantial amount of potentially relevant material which would be subject to PII. The evidence filed on behalf of the appellants suggested that there might be as many as 250,000 potentially relevant documents, and that PII might have to be considered in respect of as many as 140,000 of them. It was also said by the appellants that the PII exercise might take three years before the relevant ministers could conscientiously decide in respect of which documents PII could properly be claimed. The appellants argued that the effort, cost and delay involved in such an exercise might well justify a different approach, such as that presaged by the open defence. It was said in a witness statement served on the appellants behalf in support of the application to use a closed material procedure in this case that the principal motivation for it was the enormous scale of the disclosure exercise and the impracticability of carrying it out. The appellants had initially sought directions from the High Court for the determination of preliminary issues as to whether a court has the power to order that a closed material procedure be adopted in a civil claim for damages if satisfied that such a procedure is necessary for the just disposal of the case; and, if so, whether and what arrangements for a closed material procedure should be adopted in relation to the claims brought by the respondent (and others). The High Court accepted the respondents (and his then fellow claimants) submission that the first issue should be considered alone because the question whether the power to hold a closed material procedure should be exercised in this particular case could itself only be answered by looking at closed material. The preliminary issue described above was subsequently ordered and, as varied, determined by the judge. The common law It is important to note that the issue between the parties is concerned only with the position at common law. There are now a number of circumstances in which powers have been conferred on the courts to make similar orders by statute. Tariq v Home Office is an example of such a case. It concerns the permissibility and in particular compatibility with European Union law and with rights under the European Convention on Human Rights (the Convention) of a similar closed material procedure authorised by certain statutory provisions. The issues there focus on the lawfulness and effect of those provisions and their compatibility, for example, with article 6 of the Convention, whereas in the instant appeal the court is concerned with the position at common law. Mr Crow submits that the common law is in a permanent state of development and should not be allowed to stultify. Ms Rose submits, by contrast, that the fundamental common law rights summarised in para 126 above lie at the heart of the right to fair treatment before the law and should not be limited or abrogated in any way. She recognises that the common law has developed the principles of PII in order to cater for problems of the kind which concern the state, especially national security. She submits that the state is sufficiently protected by those principles and that there is no warrant for permitting any kind of closed material procedure. In these circumstances it is appropriate to consider how PII works and, to do so in the context of a case like this. PII the principles The principles of PII are a construct of the common law which were developed because it was appreciated that conflict may arise between the public interest and established rules of discovery and disclosure. They were developed having regard to the public interest in the administration of justice and other public interests which precluded or were said to preclude disclosure of materials which would otherwise be disclosable. As to disclosure, the general principle is that if the court is satisfied that it is necessary to order certain documents to be disclosed and inspected in order fairly to dispose of the proceedings, then the law requires that such an order should be made: see eg Science Research Council v Nass [1980] AC 1028, 1071E F. The principles of PII have developed significantly over the years in a way which to my mind shows the flexibility of the common law. In Duncan v Cammell Laird & Co Ltd [1942] AC 624 Viscount Simon LC (with whom the other six members of the House agreed) made it clear at p 629 that the question whether documents were subject to Crown privilege, which was the forerunner of PII, could arise, as in that case, in an action between private parties or, as here, in an action in which the Crown is a party. Crown privilege could be relied upon in respect of an individual document or a class of documents. The House of Lords held that it was for the minister personally to consider the question whether it or they should not be disclosed on grounds of public interest. Viscount Simon made it clear at p 642 that disclosure must not be withheld in order to avoid criticism or embarrassment or to avoid paying compensation. He said at pp 642 643: In a word, it is not enough that the minister of the department does not want to have the documents produced. The minister, in deciding whether it is his duty to object, should bear these considerations in mind, for he ought not to take the responsibility of withholding production except in cases where the public interest would otherwise be damnified, for example, where disclosure would be injurious to national defence, or to good diplomatic relations, or where the practice of keeping a class of documents secret is necessary for the proper functioning of the public service. When these conditions are satisfied and the minister feels it is his duty to deny access to material which would otherwise be available, there is no question but that the public interest must be preferred to any private consideration. Viscount Simon had said a little earlier that an objection properly taken by the minister was conclusive. Although he stressed that the ruling was to be made by the judge, not the executive, the proper ruling was to accept the ministers objection. The House thus held that, although the decision excluding such documents was for the court, it had no discretion in the matter. In short, Viscount Simon made it clear that a court could never question a claim to Crown privilege if the claim was made in the proper form. However, in Conway v Rimmer [1968] AC 910 a five member appellate committee of the House of Lords disapproved the approach taken in Duncan v Cammell Laird. It held, not only that it was for the court to decide whether Crown privilege should apply, but also that it was for the court, not the minister, to balance the competing public interests. Lord Reid said this at p 940: It is universally recognised that here there are two kinds of public interest which may clash. There is the public interest that harm shall not be done to the nation or the public service by disclosure of certain documents, and there is the public interest that the administration of justice shall not be frustrated by the withholding of documents which must be produced if justice is to be done. There are many cases where the nature of the injury which would or might be done to the nation or the public service is of so grave a character that no other interest, public or private, can be allowed to prevail over it. With regard to such cases it would be proper to say, as Lord Simon did, that to order production of the document in question would put the interest of the state in jeopardy. But there are many other cases where the possible injury to the public service is much less and there one would think that it would be proper to balance the public interests involved. I do not believe that Lord Simon really meant that the smallest probability of injury to the public service must always outweigh the gravest frustration of the administration of justice. A little later, at pp 951 952, after quoting the reference in Duncan v Cammell Laird to the proper ruling referred to above, namely to accept the ministers view in every case, Lord Reid said: In considering what it is proper for a court to do we must have regard to the need shown by 25 years experience since Duncans case, that the courts should balance the public interest in the proper administration of justice against the public interest in withholding any evidence which a minister considers ought to be withheld. I would therefore propose that the House ought now to decide that courts have and are entitled to exercise a power and duty to hold a balance between the public interest, as expressed by a minister, to withhold certain documents or other evidence, and the public interest in ensuring the proper administration of justice. Lord Reid then gave a number of practical examples of how the balance might be struck in different classes of case. He also said at p 953 that he could see nothing wrong with the judge seeing the documents without their being shown to the parties. In the event the House of Lords (or at any rate Lord Reid) inspected the documents and, the House having found (at pp 996 997) that there was nothing in them which was in any way prejudicial to the proper administration of the relevant police force or to the general public interest, directed that they be disclosed for use in the litigation. It is common ground that the current state of the law on what is now called PII is set out in R v Chief Constable of West Midlands Police, Ex p Wiley [1995] 1 AC 274. In that case, the House of Lords held that there was no justification for a claim for immunity for the entire class of documents generated by an investigation into a complaint against the police. I would accept the submission made by Ms Rose that the following principles correctly state the approach to PII as it has stood until now: i) A claim for PII must ordinarily be supported by a certificate signed by the appropriate minister relating to the individual documents in question: Duncan v Cammell Laird per Viscount Simon at p 638. ii) Disclosure of documents which ought otherwise to be disclosed under CPR Part 31 may only be refused if the court concludes that the public interest which demands that the evidence be withheld outweighs the public interest in the administration of justice. iii) In making that decision, the court may inspect the documents: Science Research Council v Nass at pp 1089 1090. This must necessarily be done in an ex parte process from which the party seeking disclosure may properly be excluded. Otherwise the very purpose of the application for PII would be defeated: see the Court of Appeal judgment at para 40. iv) In making its decision, the court should consider what safeguards may be imposed to permit the disclosure of the material. These might include, for example, holding all or part of the hearing in camera; requiring express undertakings of confidentiality from those to whom documents are disclosed; restricting the number of copies of a document that could be taken, or the circumstances in which documents could be inspected (eg requiring the claimant and his legal team to attend at a particular location to read sensitive material); or requiring the unique numbering of any copy of a sensitive document. v) Even where a complete document cannot be disclosed it may be possible to produce relevant extracts, or to summarise the relevant effect of the material: Wiley at pp 306H 307B. vi) If the public interest in withholding the evidence does not outweigh the public interest in the administration of justice, the document must be disclosed unless the party who has possession of the document concedes the issue to which it relates: see Secretary of State for the Home Department v MB [2007] UKHL 46, [2008] AC 440 per Lord Hoffmann at para 51. The question then arises, what, if any, use can be made of material which the court has held cannot be disclosed because of PII. Ms Rose submits that, if the court concludes that the public interest in withholding the evidence outweighs the public interest in the administration of justice, then the evidence cannot in any circumstances be admitted, or relied on by either party. She relies upon R v Lewes Justices, Ex p Secretary of State for the Home Department [1973] AC 388, per Lord Simon of Glaisdale at p 407. He said there that Crown privilege is a misleading expression because it is not in truth a privilege. It refers to the rule that certain evidence is inadmissible on the ground that to adduce it would be contrary to the public interest. He recognised that PII has to be weighed against the public interest in the administration of justice in accordance with Conway v Rimmer. He then said that, once the former privilege is held to outweigh the latter, the evidence cannot in any circumstances be admitted. He added at p 407B C: It is not a privilege which may be waived by the Crown (see Marks v Beyfus (1890) 25 QBD 494 at p 500) or by anyone else. The Crown has prerogatives, not privilege. The right to procure that admissible evidence be withheld from, or inadmissible evidence adduced to, the courts is not one of the prerogatives of the Crown. I will return to this point below. PII the facts In the course of the argument, Mr Crow referred the Court to the description of the PII certification process contained in the Attorney Generals statement made to the House of Commons on 18 December 1996 following the Matrix Churchill affair (Hansard (HC Debates) cols 949 58) and the decision in Wiley. In it the Attorney General noted that PII is subject to the ruling of the court and that, in a criminal case, when government documents are in issue, the judge examines the documents and makes the actual decision on disclosure in the light of the facts of the case. The statement also said that in what it described as the new approach, ministers would focus directly on the damage that disclosure would cause, the former division into class and contents claims would no longer be applied and they would only claim PII when it was believed that disclosure of a document would cause real damage or harm to the public interest. The statement further said that the new approach was subject to the supervision of the courts and that it accorded with the view expressed by the then Lord Chief Justice that PII should only be claimed for the bare minimum of documents for which the claim of serious harm can be seen to be clearly justified. Finally, the statement referred to the kinds of serious harm which might be involved. Mr Crow described the certification process in a little more detail in this way. Lawyers consider material to see if it passes the threshold test for disclosure under CPR Part 31. In so far as it is prima facie disclosable, officials review material for potential to cause harm to the public interest. If harm to the public interest is identified, the department carries out a balance between harm caused by the disclosure on the one hand and injustice in the litigation on the other. It also considers whether it is possible to redact or gist the information or to make admissions of fact. Officials consider whether and to what extent the balance falls against disclosure in order to give advice to the minister as to whether to certify. If the minister, having considered the advice, decides that a certificate should be given, a PII certificate is prepared which includes a disclosable certificate or schedule describing the types of harm that might be caused to the public interest and a sensitive schedule as to why it is believed that disclosure of documents would cause real damage or harm to the public interest. After the minister has signed a PII certificate, the balance between the relevant public interests must be made by the judge. In a simple case he will hear argument on both sides and reach a conclusion, often having looked at the documents. There will be no need for special advocates. The position may be very different in a case of complexity, especially a case of great complexity such as this was or would have been but for the settlement. The judge may need assistance in order carry out the balance. Such assistance will not of course be available from counsel for the non state parties because they will not have seen the documents. PII special advocates It is common ground between the parties that it is in principle permissible for the court to approve the appointment of one or more special advocates to peruse the documents at an appropriate stage in order to assist the judge to decide how the balance should be struck between the public interest in disclosure and the public interest in non disclosure. It is thus common ground that the court has the power to give such approval and, no doubt, to make other ancillary orders as to what the special advocate should do. In my opinion the court does have such a power at common law. Just as the House of Lords recognised in R v H [2004] UKHL 3, [2004] 2 AC 134, that the court had power at common law to give such approval in the context of criminal proceedings, so I would accept that there is such a power in this context. This is to my mind a classic example of the measured development of the common law in confronting and solving new problems. As Lord Bingham put it extra judicially in The Business of Judging, 2000, p 29, the last quarter century has seen fundamental, Judge made changes in the law relating to [PII]. The most obvious role for a special advocate would be to look at the documents which are the subject of a certificate and consider how the balance should be struck. In a complex case like this the exercise would be close to impossible for the judge to do on his own without assistance. One or more special advocates would to my mind be essential. It may be that in such a case it would be sensible for the special advocates to be allowed to see the documents at an early stage in order to avoid or minimise delay, but that would depend upon the facts of the case. However that may be, as I see it the use of special advocates would be (or would have been) necessary here in order to enable the judge to carry out the balancing exercise. Should the PII exercise be abandoned? The appellants proposed that there should be a closed material procedure instead of the well recognised and accepted PII procedure, partly if not largely because of the enormous scale of the PII disclosure exercise and the impracticability of carrying it out. I am quite unable to accept that, at any rate in the absence of Parliamentary intervention, that was a sufficient reason for abandoning the established PII procedure and replacing it with some form of closed procedure at common law. As I see it, whatever procedure was adopted, it would have been necessary for the appellants to identify what documents were relevant and in principle disclosable under CPR Part 31. In addition it would have been necessary for the minister to decide which of those documents should not be disclosed in the public interest. That in turn would have required officials to identify which documents potentially came into that category in order to enable the minister to carry out the appropriate balance. A detailed review of the documents would have had to be carried out whether the procedure adopted was the PII procedure described above or the proposed closed procedure. In both cases it would have been necessary for the relevant documents to be identified and the balance struck. The critical difference between the two approaches is not that part of the exercise but what happens thereafter. Since the first part of the exercise has to be carried out in any event, I can see no reason for abandoning the PII exercise. Procedure after the balance is struck In the ordinary case, where PII proceeds as outlined above and there is no closed procedure of the type sought, if the judge rules that some of the documents should not be disclosed because they attract PII, the position to date has been that identified by Lord Simon of Glaisdale in the Lewes Justices case, namely that they are not disclosed or produced to the non state parties and are not admissible in evidence. In a criminal case, as explained in R v H [2004] 2 AC 134 and other cases, where the judge rules that they are necessary for the defence case, the prosecution must either disclose them or abandon the prosecution. In a civil case of this kind Ms Rose submits that the effect of the PII rules is that (1) the court strikes the balance between the competing public interests, while duly acknowledging the opinion and expertise of the Secretary of State and those advising him; (2) the public interest in the administration of justice is given full weight; and (3) whatever the outcome of the exercise, the principles of natural justice and equality of arms are always preserved; both parties are equally treated in relation to the use which may be made of the sensitive material. Mr Crow submits that that is far from a satisfactory result because in a case of this kind it may well be the position that the claimants are able to deploy their evidence in support of their claims, whereas, by reason of the inadmissibility of evidence which, but for the necessity to certify PII, would be admissible and upon which the appellants would wish to rely at the trial, the appellants are unable to defend the action, either at all or sufficiently. He submits that both parties have the right to a fair trial and that in such circumstances the trial would not be fair to both parties. He submits that it is in these circumstances that justice requires some form of closed procedure and that the court must have power at common law to permit it. There is to my mind considerable force in that submission. In Tariq v Home Office [2011] UKSC 35, Lord Brown describes at para 84 the suggestion that, where the defendants cannot defend themselves at all, it matters not because they can simply pay up as preposterous. Another possibility canvassed in the course of the argument is for the court to decide that it would not be appropriate for a closed procedure to be introduced for the reasons given by Ms Rose but that the correct course would be to stay or strike out the action because, by reason of circumstances beyond the control of both parties, it was not possible for there to be a fair trial and that the just course was not to have a trial. It was in this connection that the court was referred to Carnduff v Rock [2001] EWCA Civ 680, [2001] 1 WLR 1786. In that case a registered police informer brought an action against a police inspector and his chief constable to recover payment for information and assistance provided to the police. The Court of Appeal struck out the action on the basis that a fair trial of the issues arising from the pleadings would require the police to disclose sensitive information which it would be contrary to the public interest to force the police to disclose. Laws LJ said at para 36 that a case which can only be justly tried if one side holds up its hands cannot, in truth, be justly tried at all. It is perhaps noteworthy that the claimant complained to the European Court of Human Rights in Strasbourg on the basis that his right of access to the court under Article 6 of the Convention had been infringed. His complaint was rejected as unfounded: Carnduff v United Kingdom (Application No 18905/02) (unreported) 10 February 2004. I note in this regard that in Tariq v Home Office [2011] UKSC 35 Lord Mance says (at para 40) that the striking out of the action for these reasons is not an option that the law should readily contemplate. By contrast, Lord Kerr says at para 110 that it is a more palatable course than to adopt a closed procedure. There is plainly a tension between these two approaches, which in my opinion should be resolved on the facts of a particular case. It is not quite clear to me what approach Lord Dyson would take to the question whether the action should be struck out on what may be called Carnduff principles in a case of this kind. A possible solution It appears to me that the way forward is or should be along these lines. After the PII process described above it should be for the parties to consider their respective positions and then to make representations to the judge as to the appropriate way forward. Depending upon the submissions advanced, the judge may wish to consider the three possibilities to which I have referred. They are (1) that the matter should proceed in the traditional way with the PII material simply being treated as both undisclosable and inadmissible and the trial proceeding on the basis of the disclosed and admissible evidence; (2) that the action should be stayed or struck out on the basis that through neither partys fault a fair trial is not possible; and (3) that there should be some form of closed procedure, involving special advocates, along the lines suggested by the appellants, but subject to the exigencies of the particular case. The stance taken by the protagonists at that stage would no doubt depend very much upon the circumstances at the time. Thus the claimants might adopt the stance now taken by Ms Rose. On the other hand, they might conclude that there were advantages in some form of closed procedure, especially if their case was thought to depend to any significant extent upon documents in the possession of the defendants. The defendants might also adopt a different position depending upon the circumstances. However, as things stand at present, they might be expected to contend in every such case that the action should be struck out on the ground that, without the documents and/or evidence to which PII attached or would attach, a trial which was fair to both parties including the defendants would not be possible. In that event, the claimants might well perceive it to be in their interest to consent to agree to a closed procedure of some kind as an alternative to their claims being struck out. I understood it to be common ground between the parties that there would be no objection in principle to such consent being given. It was not contended on behalf of the appellants that, if consent was given, such a procedure was contrary to principle. Indeed, it follows from Mr Crows submission that it would be appropriate even without consent that, a fortiori, it would be appropriate with consent. If a closed procedure were in principle a possibility, the precise nature of it would no doubt depend upon the circumstances of the particular case. It is only at the conclusion of the PII process that the question whether to direct some form of closed material procedure would arise. That will not of course happen in this case because it has settled. By the time the question comes to be decided in a specific case, Parliament may have intervened. It was suggested in the course of the argument that the common law should not consider inventing some form of closed material procedure but should leave it to Parliament. I agree that it would be better for the problems which arise in this class of case to be dealt with by Parliament. I understand that a green paper is in prospect and that thought is being given to possible Parliamentary intervention. The approach of Parliament would plainly be potentially critical to the appropriate way forward at the conclusion of the PII procedure. However, it may be that the question what directions should be given may arise in a case in circumstances (as occurred for example in A v HM Treasury (Nos 1 and 2), as explained in the Court of Appeal: see [2008] EWCA Civ 1187, [2010] 2 AC 534 at paras 59 and 64 65), where for one reason or another there has been delay and where Parliament has not decided whether or not to intervene or, perhaps, where it has decided not to intervene. In such circumstances the court would have to decide what, if any, novel procedure to adopt. As appears below the court has adopted novel procedures in not dissimilar situations, no doubt by way of development of the common law and pursuant to its obligation under the CPR Part 1 to act justly. In considering the relationship between the role of Parliament and the role of the common law, Lord Bingham said in The Business of Judging at pp 386 387 that regard should be had to any relevantly analogous statute and that he saw no reason why statute and the common law should not feed and refresh each other. I see no reason in principle why the common law should not be able to develop along these lines. There are many statements in the books of the flexibility of the common law. As Lord Slynn of Hadley memorably put it in Kuddus v Chief Constable of Leicestershire Constabulary [2001] UKHL 29, [2002] 2 AC 122, at para 33, the genius of the common law is its capacity to develop. See also, for example, Sir Frederick Pollock in The Genius of the Common Law (1912) at p 45 and Lord Denning MR in Comet Products UK Ltd v Hawkex Plastics Ltd [1971] 2 QB 67. In so far as such a development would be a development of the common law of PII, it would be no more than a further development of a process which, as Lord Bingham put it in 2000, has been taking place over the last quarter of a century. In these circumstances I would not grant a declaration such as that granted by the Court of Appeal. The common law should in my opinion very rarely, if ever, say never. Moreover, the argument in this appeal has persuaded me that it is not appropriate to make a declaration such as that granted by the Court of Appeal in a vacuum. The court should consider what orders to make in the context of a specific case. I turn to consider the terms of the declaration which was granted. In it the Court of Appeal distinguishes between ordinary or normal civil claims and those which involve a substantial public interest dimension. I note in this context that in the declaration granted by the judge he referred to a civil claim for damages, whereas the Court of Appeal added the word ordinary. In its judgment at paras 59, 61, 63 67 and 71, it distinguished the various cases relied upon by the appellants on the ground that they were not ordinary civil claims for damages. Some were criminal cases: see R v Shayler [2002] UKHL 11, [2003] 1 AC 247 and R v H. Others were civil cases of various kinds. They include Secretary for State for the Home Department v Rehman [2001] UKHL 47, [2003] 1 AC 153; R (Roberts) v Parole Board [2005] UKHL 45, [2005] 2 AC 738, R (Malik) v Manchester Crown Court [2008] EWHC 1362 (Admin), [2008] 4 All ER 403; A v HM Treasury and R (AHK) Secretary of State for the Home Department (Practice Note) [2009] EWCA Civ 287, [2009] 1 WLR 3049. It is true that none of those cases involved an ordinary civil claim for damages, by which it appears from paras 59 and 71 that the Court of Appeal meant a case in which the court was simply an arbiter. The reasons for the Courts view can be seen from its concluding remarks at paras 68 to 71. It expressed concern at para 69 that a procedure which is said to apply only in exceptional circumstances often becomes common practice. It then expressed these conclusions at paras 70 and 71: 70. The importance of civil trials being fair, the procedures of the court being simple, and the rules of court being clear are all of cardinal importance. It would, in our view, be wrong for judges to introduce into ordinary civil trials a procedure which (a) cuts across absolutely fundamental principles (the right to a fair trial and the right to know the reasons for the outcome), initially hard fought for and now well established for over three centuries, (b) is hard, indeed impossible, to reconcile satisfactorily with the current procedural rules, the CPR, (c) is for the legislature to consider and introduce, as it has done in certain specific classes of case, where it considers it appropriate to do so, (d) complicates a well established procedure for dealing with the problem in question, namely the PII procedure, and (e) is likely to add to the uncertainty, cost, complication and delay in the initial and interlocutory stages of proceedings, the trial, the judgment, and any appeal. 71. We leave open the question of whether a closed material procedure can properly be adopted, in the absence of statutory sanction in an ordinary civil claim such as the present, where all the parties agree, or in a civil claim involving a substantial public interest dimension (ie where the judge is not simply sitting as an arbiter as between the parties). Both principle and the authorities relied on below seem to us to suggest that a different conclusion may well be justified in such cases, albeit only in exceptional circumstances, but that is an issue which should be considered as and when it arises. Save that I am not persuaded that an appropriate procedure could not be devised which is consistent with the CPR, I entirely accept the fundamental principles summarised in para 70. However, I do not think that there is any principled distinction between an ordinary civil claim and any other civil claim for these purposes. In any event, if there is potentially such a distinction, this is surely a case in which there is a public interest in the issue involved, at any rate on the approach I have identified. The issue which has given rise to the question in this appeal is what is the correct approach to the fact that the appellants have what may be a valid claim to PII. The question is what to do when such a claim is made and, in particular, what to do when the minister issues a PII certificate. The public interest self evidently plays a central part in the resolution of those questions. So, if there is a distinction between ordinary civil actions and those involving a substantial public interest dimension, this case falls on the latter side of the line. On the question whether there is a principled difference between ordinary civil actions and others I would accept Mr Crows submissions on behalf of the appellants, which were shortly to this effect. First, no such distinction has been drawn in the past. Secondly, the question in this appeal is whether a closed material procedure can ever be adopted in the case of a civil claim for damages. Distinctions between different claims for damages are irrelevant for the purposes of answering that bald question. The distinction may be relevant to the answer to the question whether an order should be made in a particular case. Thirdly none of the cases in which an exception has been made to the principle that all the material must be shown to both parties in every case depends upon this distinction. They all depend upon what the interests of justice demand. None of them depends upon a classification of the kind adopted by the Court of Appeal: see eg the wardship and children cases, including In re T (Wardship: Impact of Police Intelligence [2009] EWHC 2440 (Fam), [2010] 1 FLR 1048, Chief Constable v YK [2010] EWHC 2438 Fam and In re D (Minors) (Adoption Reports: Confidentiality) [1996] AC 593, 615, per Lord Mustill. There have been other examples in the field of commercial confidentiality; see for example British Sky Broadcasting Group plc v Competition Commission [2010] EWCA Civ 2, [2010] 2 All ER 907. Fourthly, there is no principled basis for accepting that the court can properly adopt a closed material procedure (subject to appropriate safeguards) when government action is subject to judicial review but not when the same action is subject to a claim in tort for damages. The differences between the two procedures are irrelevant to this question. Both may involve identical questions of law and fact. Both may involve the examination of the same evidence and examination and cross examination of witnesses: see eg R (Al Sweady) v Secretary of State for Defence [2009] EWHC 2387 (Admin), [2010] HRLR 12. Fifthly, the boundaries of the two classes of case are often blurred. I note, for example that in R (Mohamed) v Secretary of State for Foreign and Commonwealth Affairs (No 1) [2008] EWHC 2048 (Admin), [2009] 1 WLR 2579, the claims were in part for judicial review and in part for Norwich Pharmacal relief: see Norwich Pharmacal Co v Customs and Excise Comrs [1974] AC 133. The natural process for the latter would be by ordinary action. It is of interest to note in passing that there were there both open and closed hearings and cross examination by a special advocate, no doubt by consent between the parties. In these circumstances, I would not accept the jurisdictional distinction that the Court of Appeal draws between ordinary civil claims and other civil claims. It appears from para 71 of the judgment quoted above that, subject to that distinction, the Court of Appeal accepted that both principle and the authorities relied on before the judge suggested that a different conclusion may well be justified in such cases, albeit only in exceptional circumstances, but said that was an issue which should be considered as and when it arose. I appreciate that, as both Lord Dyson and the Court of Appeal have pointed out, the issues of jurisdiction were not argued in those cases. That was certainly true in the two cases referred to in which I played a part, namely A v HM Treasury and the AHK case. It is also true that, as the Court of Appeal pointed out, the decision in Ahmed was reversed by this court. The principles relevant to this case were not however commented upon adversely. They are summarised at para 58 of A and at para 17 et seq of AHK. Both cases involved the appointment of special advocates without express statutory authority. They are to much the same effect. So I refer only to para 58 of A, where I said this: There is so far no statutory power to appoint a special advocate in proceedings arising out of a [Terrorism Order]. However, as I see it, there is no reason in principle why a special advocate should not be appointed in a particular case. The authorities show that in an appropriate case the court would have power to authorise or request the use of a special advocate: see in particular the decision of the House of Lords in R (Roberts) v Parole Board [2005] 2 AC 738, where it was held that the court had power to do so even where it was not sanctioned by Parliament. Whether it should do so or not would depend on the particular circumstances of the case. It has very recently been held by the Divisional Court in Malik that the court has power to ask the Attorney General to appoint a special advocate, but that it should only do so in an exceptional case and as a last resort: per Dyson LJ, giving the judgment of the court, at paras 93 102, especially, at para 99. In these circumstances the court would have power to procure the appointment of a special advocate through the Attorney General. I am not persuaded by Ms Roses submissions that the principles do not remain sound and applicable in an appropriate case. However, all depends upon the circumstances of the particular case and I agree with the view expressed in the Court of Appeal in para 71 (quoted above) that the issue of their correctness and application to the circumstances should be decided when they arise in a particular case. If they ever arise in a context like this, it will be in very different circumstances from any of the other cases. If they arise in a case of this kind it will be necessary to examine in detail the relationship between (a) PII and its application in this type of case, (b) the principle in Carnduff v Rock, including its correctness and its application and relationship to PII and (c) the prospect of fashioning a procedure which will on the one hand retain the principles of PII and on the other hand enable the action to proceed in a way which will provide a fair trial to both parties, while respecting their fundamental rights, including the fundamental rights of the claimants relied upon by Ms Rose. In reaching these conclusions I do not wish to understate the fundamental nature of those rights. It follows that any new procedure which affected them should only be adopted by the common law in most exceptional circumstances. Whether those circumstances exist will depend upon the facts of the particular case and should only be determined in that context. Since writing the above, I have had the opportunity of reading Lord Dysons judgment in draft. I entirely understand his concern (and that of the Court of Appeal) that a principle that a closed procedure could be used only in exceptional circumstances may become the thin end of the wedge. However, in my opinion the judges can be relied upon to ensure that that will not happen. The test would be one of necessity: see Scott v Scott [1913] AC 417, per Viscount Haldane LC at pp 436 439. As Lord Dyson himself recognises at paras 63 and 64, various exceptions to the fundamental principles he describes have been recognised by the common law. These show that, although fundamental, the principles are not absolute and must yield where it is necessary in the interests of justice that they do so. As Lord Dyson puts it at para 64 in the context of confidentiality, such claims by their very nature raise special problems which require exceptional solutions (his emphasis). If the judge concludes after carrying out the PII balancing exercise that it is necessary to have some form of closed process, that same principle would permit such a process at common law. Thus, at the conclusion of the PII process it will be necessary for the judge to decide how to proceed. If he is persuaded that it is necessary in the interests of justice that some form of closed process should take place, I can see no reason why such a process should not be followed. If, as is common ground, it was open to the courts to develop the common law in children or wardship cases or in confidentiality cases on the ground that it was necessary to do so in the interests of justice, the same principle should apply here. I appreciate that this is at the end of what has hitherto been described as the PII process. However, what to do at that point can to my mind fairly be regarded as part of that process. It is certainly very closely related to it. As stated above, at that stage the whole process and the way forward will have to be reviewed by the judge in the light of the submissions of the parties. Much will depend upon those submissions. In this regard it is important to note that those submissions will depend upon the facts of the particular case. Thus in a case of this kind, where the state organs are the defendants in a civil claim, the position may be very different from a case in which the state has asserted or is asserting rights against a non state party and it is the latter which needs information in order to enable it to defend its position. In the former case, as explained above, if the judge concludes that, absent some closed procedure the claim should be struck out because a fair trial to both parties is not possible, the claimant may consent to a closed procedure in order to allow his claim to proceed. In that event the action will proceed on the basis of some appropriate closed procedure. No question of necessity will arise. On the other hand, if the judge declines to strike the claim out, the defendants might seek an order for such a procedure based on necessity, namely that such a procedure would be necessary in order to permit a fair trial. Whether this is a realistic possibility should in my opinion be left for decision in a concrete case. A closed procedure might also be necessary in a case in which it is the non state party which wishes to rely upon the material which would otherwise be subject to PII in order to defend itself in some way against the state. In such a case either party might seek an order for such a procedure based on necessity, namely that such a procedure would be necessary in order to permit a fair trial. These considerations to my mind demonstrate the importance of leaving the question of what, if any, procedure is permissible, to be determined in the context of a specific case. The court should not in my judgment now rule out the possibility of some form of closed procedure in any case in circumstances in which it is not possible to predict what may happen in the future. All should depend upon the particular circumstances after the judge has struck what may be called the PII balance. In this regard the decision in R (Mohamed) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2009] EWHC 152 (Admin), [2009] 1 WLR 2653 is instructive. At para 34 Thomas LJ set out four questions that arise when carrying out the balancing test: (i) Is there a public interest in bringing the redacted paragraphs into the public domain? (ii) Will disclosure bring about a real risk of serious harm to an important public interest, and if so, which interest? (iii) Can the real risk of serious harm to national security and international relations be protected by other methods or more limited disclosure? (iv) If the alternatives are sufficient, where does the balance of the public interest lie? Thomas LJ then identified factors relevant to determining where the balance of public interest lies. He did so under four headings: (i) the public hearing; (ii) making decisions and reasons public; (iii) public justice, the rule of law, free speech and democratic accountability; and (iv) the role of the media. In discussing the need to uphold the rule of law, he said, at para 41 that the more serious the alleged infringement of the rule of law, the more strongly that principle applies and at para 46 he emphasised that the provision of information which enables public debate to take place and democratic accountability to be made more effective is one of the bases on which democracy rests. Although the Court of Appeal expressed some disagreement with the Divisional Court on the facts, while they do not say so expressly, as I read their judgments, they agreed with its general approach in principle: see [2010] EWCA Civ 65, [2011] QB 218, per Lord Judge CJ at para 51, Lord Neuberger MR at para 187 and Sir Anthony May P at para 290. At para 295 Sir Anthony emphasised that the balance is not to be struck by the Foreign Secretary but by the court. As I read the judgments in Mohamed in both courts, in addition to that principle, they support these further propositions. First, the rule of law and the democratic requirement that governments be held to account mean that the case for disclosure will always be very strong in cases involving alleged misconduct on the part of the state and, secondly, that the more serious the alleged misconduct on the part of the state, the more compelling the national security reasons must be to tip the balance against disclosure. As I see it, the special advocates will have a significant role at that time because under the present system they will have played a substantial part in the consideration of which documents are relevant and which are (and which are not ) subject to PII. In doing so, they will have learned a good deal about the issues between the parties and will have been able to make submissions to the judge on the question how the balance should be struck by the judge as between disclosure and non disclosure. This might include inviting the judge to consider the balance between the public interest in non disclosure on the one hand and the public interest in disclosure having regard to the importance of each in the particular context, which would or might include the importance of ensuring that the state does not abuse its power or the rights of the citizen. Equally special advocates would be likely to be valuable in the future, not only in the context of striking that balance, but also both in a consideration of the question which may arise at the end of the PII process as to whether a non state claimant should consent to some form of closed procedure or, in the case of a non state defendant, whether the circumstances meet the requirement of necessity such as to justify a closed evidence procedure. In order to carry out these functions effectively and to provide a substantial measure of procedural justice to the party, it may well be that in the future special advocates will need to be permitted to communicate with the party and the parties representative. The Joint Committee on Human Rights has long advocated relaxation of the rule against communication between special advocates and non state parties, most recently in its report Counter Terrorism Policy and Human Rights (Sixteenth Report): Annual Renewal of Control Orders Legislation (2010) HL Paper 64, HC 395. This is essentially an issue for Parliament but it may also be an issue which, in the absence of Parliamentary intervention, a judge considering whether to order a closed procedure will wish to address, although proper safeguards would of course have to be put in place to protect the public interest. As ever, all would depend upon the circumstances. Finally, I should add that I am not persuaded that there is anything in the CPR which prevents an appropriate process being developed. I respectfully doubt that the CPR require an adversarial process at every point. In the pursuit of the overriding principle of dealing with cases justly it may well be necessary to introduce inquisitorial elements, as for example where the judge looks at some evidence which both parties do not. Further, for my part, I would not accept the argument that there is no significant difference in this context between a criminal case and a civil case. The decision in R v Davis [2008] UKHL 36, [2008] AC 1128 is of importance but it was a criminal case, where I well understand that the importance of the defendant being able to confront his accusers may be critical. The same may be much less important in a civil case, especially where the state is the defendant and not the accuser. Conclusion In all the circumstances I would allow the appeal and set aside the declaration granted by the Court of Appeal. I would do so because I can envisage circumstances in which it might be appropriate to develop the common law by directing that some form of closed material procedure take place. Such a development would, as I see it, be a further step in the courts approach to PII which has already changed step by step without statutory assistance since Duncan v Cammell Laird. For my part I would not replace the declaration granted by the Court of Appeal with the declaration granted by the judge. I would simply leave these issues to be further considered in the light of the facts of a specific case. LORD PHILLIPS I have considered the judgments of Lord Clarke and Lord Dyson. I agree with Lord Brown that each makes a compelling case. That case relates, however, to a general issue which did not arise on the facts of this case. Could the common law ever permit a closed material procedure to be used in litigation involving a civil claim? That issue is now doubly academic as this litigation has now been settled. The preliminary issue with which the Court of Appeal was concerned was a narrower one. Lord Clarke has set out that issue at para 123 of his judgment. It is important to appreciate the full import of the issue. What was proposed was an alternative to the manner in which public interest immunity (PII) is dealt with under the conventional process of discovery. What the conventional exercise involves is summarised by Lord Clarke at para 145 of his judgment. What that conventional exercise was likely to involve on the facts of the case is set out by Lord Clarke at para 135. The proposed scheme, as set out in the preliminary issue, was a procedure which was intended to replace the conventional exercise. It would not be necessary, in the case of each document, for the minister and the court to balance the damage that would be done to the public interest if the document were disclosed against the damage to the administration of justice if it were not. Instead, any documents disclosure of which would be contrary to the public interest, as broadly defined in the preliminary issue, would be dealt with by the closed material procedure as defined. Lord Clarke comments at para 130 that he cannot conceive of circumstances in which the court could properly make an order for the use of closed material procedure as defined. And at para 152 he states that such a course would require Parliamentary intervention. I agree. The common law develops incrementally. The change envisaged by the preliminary issue would be fundamental. Only Parliament could bring about such a change. This reasoning would have sufficed to enable the Court of Appeal to give a negative answer to the preliminary issue, and I consider that it would have been more satisfactory had the Court taken this course. In the event the Court of Appeal gave the following reasons of principle for giving a negative answer to the preliminary issue [2010] 3 WLR 1069: 30. In our view, the principle that a litigant should be able to see and hear all the evidence which is seen and heard by a court determining his case is so fundamental, so embedded in the common law, that, in the absence of parliamentary authority, no judge should override it, at any rate in relation to an ordinary civil claim, unless (perhaps) all parties to the claim agree otherwise. At least so far as the common law is concerned, we would accept the submission that this principle represents an irreducible minimum requirement of an ordinary civil trial. Unlike principles such as open justice, or the right to disclosure of relevant documents, a litigant's right to know the case against him and to know the reasons why he has lost or won is fundamental to the notion of a fair trial. Later in its judgment the Court of Appeal ranged more widely. It considered at para 51 the use of a closed material procedure after the conclusion of a conventional PII exercise, observing at para 53 that this was not the closed material procedure as defined in the preliminary issue. It is not always easy to determine in some parts of the judgment of the Court of Appeal whether it was addressing the closed material procedure as defined in the preliminary issue, or a closed material procedure of some other description. This is particularly true of the last paragraph of its judgment: We leave open the question of whether a closed material procedure can properly be adopted, in the absence of statutory sanction in an ordinary civil claim such as the present, where all the parties agree, or in a civil claim involving a substantial public interest dimension (ie where the judge is not simply sitting as an arbiter as between the parties). Both principle and the authorities relied on below seem to us to suggest that a different conclusion may well be justified in such cases, albeit only in exceptional circumstances, but that is an issue which should be considered as and when it arises. I consider that the judgment of the Court of Appeal should be treated as applying only to the preliminary issue with which it was concerned. Whether the general principles applied by the Court of Appeal would necessarily preclude the use of a different closed material procedure, not as a substitute for the conventional PII exercise, but to mitigate the injustice that can occur when relevant evidence is excluded from disclosure because of PII, is a question that should be left open until it actually arises, just like the question left open by the last paragraph of the Court of Appeals judgment. It follows that I do not propose to go down the hypothetical road followed by Lord Clarke in that part of his judgment that begins at para 154. Nor do I propose to consider the merits of Lord Dysons dissent from that part of Lord Clarkes judgment. I would dismiss this appeal on the narrow ground set out in para 192 above. LORD RODGER Lord Rodger, who died before judgment was given in this case, had indicated that he would have dismissed the appeal. |
The issue in this appeal is when time starts to run for a claim by a part time judge to a pension under the Part time Workers Directive (Directive 97/81) (PTWD), as applied by the Parttime Workers (Prevention of Less Favourable Treatment) Regulations 2000 (SI 2000/1551) (PTWR). The directive was required to be transposed into domestic law by 7 April 2000. The appellants are four judges, each of whom has held one or more appointments as fee paid part time judges, in some cases moving between such part time and full time salaried appointments. They are illustrative of the different ways in which such part time (PT) and full time (FT) appointments may be combined in a single career, as Mr Allen QC (for the appellants) explains in his printed case: The careers of Mr Haworth and Mr Sprack illustrate the common situation of a judge moving from PT to FT in the same jurisdictions: Mr Haworth as a Costs Judge, and Mr Sprack as an Employment Judge. Mr Sprack also reverted to working PT before finally retiring. The careers of Mr Fox and Mr Wain illustrate the kinds of judicial careers that are based on a portfolio of PT judicial appointments which can change over time prior to retirement. Additionally, Mr Wain also held a FT appointment as a District Judge between May 2004 and January 2011, though even then he also held a PT appointment as a Mental Health Tribunal judge. Each appellant lodged a claim with the Employment Tribunal more than three months after the end of a part time appointment, and therefore out of time if that is the relevant date; but within time, if the relevant date is the date of retirement. In a decision given on 2 January 2014 EJ Macmillan held that the period of three months started to run from the end of any part time appointment, and that the claims were accordingly out of time. He declined to exercise the discretion (under PTWR para 8(3)) to extend time as being just and equitable; that part of his decision is no longer in issue. Since then there has been no substantive judicial consideration of these issues at higher levels, the issues being treated as in substance turning on decisions, domestic and European, in the related case of OBrien v Ministry of Justice (see below). The statutory framework In Ministry of Justice v OBrien (No 2) [2017] UKSC 46; [2017] ICR 1101, para 10, Lord Reed summarised the domestic legislation governing judicial pensions: Domestic legislation provides for the payment of judicial pensions under two statutes, the Judicial Pensions Act 1981 and the Judicial Pensions and Retirement Act 1993. The 1981 Act applies to persons appointed prior to 31 March 1995, unless they elect to have their pension paid under the 1993 Act. The 1993 Act applies to persons appointed on or after 31 March 1995. Under the Acts, a pension is payable to any person retiring from qualifying judicial office, subject to their having attained the age of 65 and, under the 1993 Act, subject also to their having completed at least five years service in such office. At the material time, full time judges and salaried part time judges held a qualifying judicial office, but fee paid part time judges, such as recorders, did not. Under both schemes, the amount of pension payable to a full time judge is based on his or her final years salary and on his or her number of years service in a qualifying judicial office by the date of retirement. Under the 1981 Act, circuit judges must have served for 15 years in order to qualify for a full pension of one half of their last annual salary. The corresponding period under the 1993 Act is 20 years. Under both schemes, judges who have served for shorter periods receive a proportion of the full pension corresponding to the length of their service. There is also a lump sum payable on retirement, the sum being based on the amount of the annual pension. Judicial pensions were at the material time non contributory. Since 2012, judges have had to pay a contribution. For present purposes it is sufficient to refer to the provisions of the 1993 Act, which applied to those appointed on or after 31 March 1995. The basic concept in the 1993 Act is qualifying judicial office (1993 Act section 1(1)). By section 1(6): (6) For the purposes of this Act, a person shall be regarded as holding, or serving in, qualifying judicial office at any time when he holds, on a salaried basis, any one or more of the offices specified in Schedule 1 to this Act; Schedule 1 is a list of offices ranging from court judges at different levels, through court officers (such as Queen Bench Masters), to members of tribunals in a range of specified jurisdictions. It is to be noted that the focus (under section 1(6)) is not on individual offices or appointments, but on qualifying judicial office a composite term which may comprise any one or more of the listed offices. By section 2(1): Any person to whom this Part applies (a) who retires from qualifying judicial office on or after the day on which he attains the age of 65, and (b) who has, at the time of that retirement, completed, in the aggregate, at least five years service in qualifying judicial office, shall be entitled during his life to a pension at the appropriate annual rate. Later subsections deal with the variation of the pension entitlement in special cases: for early retirement on medical grounds (section 2(3)); early removal from office (section 2(4)); and resumption of qualifying office after beginning to take a pension (section 2(5)). Section 3 fixes the appropriate annual rate by reference to the aggregate length of service in qualifying judicial office at the point of retirement. The appellants, so long as not being paid on a salaried basis, were excluded from the definition of qualifying judicial office, and therefore also excluded from rights to pensions under the Act. The PTWR, which came into force on 1 July 2000, and gave effect to the PTWD, were designed to put part time workers on the same footing as their full time equivalents. Regulation 5 provided: 5(1) A part time worker has the right not to be treated by his employer less favourably than the employer treats a comparable full time worker as regards the terms of his contract; or (a) (b) by being subjected to any other detriment by any act, or deliberate failure to act, of his employer Initially this did not assist the appellants, since regulation 17 provided: These Regulations do not apply to any individual in his capacity as the holder of a judicial office if he is remunerated on a daily fee paid basis. However, the Supreme Court later made clear (in the first OBrien judgment see below) that regulation 17 must be disapplied so as to bring the meaning of worker in the PTWR into line with the PTWD. This opened the way to claims by fee paid judges, such as the appellants, under the PTWR. The relevant time limit for a complaint to the Employment Tribunal is set by regulation 8 of the PTWR which provides: (2) Subject to paragraph (3), an employment tribunal shall not consider a complaint under this regulation unless it is presented before the end of the period of three months beginning with the date of the less favourable treatment or detriment to which the complaint relates or, where an act or failure to act is part of a series of similar acts or failures comprising the less favourable treatment or detriment, the last of them, (4) For the purposes of calculating the date of the less favourable treatment or detriment under paragraph (2) (a) where a term in a contract is less favourable, that treatment shall be treated, , as taking place on each day of the period during which the term is less favourable; OBrien v Ministry of Justice Dermod OBrien QC was appointed as a Recorder of the Crown Court from March 1978, initially for three years, but extended periodically until his retirement on 31 March 2005. Although his terms of service gave no right to a pension, he claimed to be entitled under the PTWR to a pension on terms equivalent to those applying to a circuit judge. Following a reference to the CJEU, in February 2013 his claim in principle was upheld by the Supreme Court (OBrien v Ministry of Justice [2013] UKSC 6; [2013] 1 WLR 522; [2013] ICR 499). The claim was remitted to the Employment Tribunal for determination of other matters in dispute, including a dispute as to the period to be taken into account in calculating his pension. The question was whether, in calculating the amount of his pension, account should be taken of the whole of his service since the beginning of his appointment on 1 March 1978 (a period of 27 years), or only his service since the deadline for transposing the directive expired (a period of less than five years). Following conflicting decisions of the Employment Tribunal and the Employment Appeal Tribunal, on 6 October 2015 the Court of Appeal held that only the shorter period should be taken into account (OBrien v Ministry of Justice [2015] EWCA Civ 1000; [2016] ICR 182). On 9 November 2015, the Court of Appeal dismissed the appellants appeals in the Miller cases without further analysis, treating them as governed by its judgment in OBrien. Following an appeal to the Supreme Court, the court decided on 12 July 2017 to refer a further question to the CJEU (OBrien v Ministry of Justice (No 2) [2017] UKSC 46; [2017] ICR 1101). In his judgment explaining the reference, Lord Reed (paras 15 20) cited Ten Oever v Stichting Bedrijfspensioenfonds voor het Glazenwassers en Schoonmaakbedrijf (Case C 109/91) [1995] ICR 74; [1993] ECR I 4879) (Ten Oever), as showing that the CJEU had treated occupational pensions as a form of pay, the entitlement to which accrues over the length of the employees service. Mr OBrien had argued that, consistently with the future effects principle, earlier periods of employment were to be taken into account when applying the directive in situations which arose after it should have been transposed. In contrast the Ministry had argued that, since (under Ten Oever) the entitlement to an occupational pension accrued at the time of the work, his non entitlement to pension in respect of his first 22 years of service must, in line with the non retroactivity principle, be left out of account having been definitively established before the directive entered into force. While accepting that the resolution of these conflicting arguments was not acte clair so that a reference was necessary, Lord Reed indicated the provisional view of the majority of the court in favour of Mr OBriens contention: The majority of the court are inclined to think that the effect of Directive 97/81 is that it is unlawful to discriminate against part time workers when a retirement pension falls due for payment. The directive applies ratione temporis where the pension falls due for payment after the directive has entered into force. In so far as part of the period of service took place prior to the directives entry into force, the directive applies to the future effects of that situation. On 7 November 2018, the CJEU handed down judgment in OBrien v Ministry of Justice (No 2) (Case C 432/17) [2019] ICR 505 (OBrien 2). The CJEU, in effect upholding the majority view, held that periods of service prior to the deadline for transposing the directive must be taken into account for the purpose of calculating the retirement pension entitlement. As the court explained, while a new legal rule does not apply to legal situations that arose and became definitive prior to its entry into force, it does apply to the future effects of a situation which arose under the old law (para 27). It was accordingly necessary to examine whether the gradual acquisition of pension entitlements over the period preceding the deadline [for transposition of the directive] has the effect that the legal situation of the claimant must be considered to have become definitive at that date. (para 29) It noted the argument for the government that at the end of each period of service the corresponding pension entitlement exhausts its effects, and therefore should be left out of account (para 30). However, (in a passage relied on by both parties in the present appeal) the court observed: with regard to the argument of the United Kingdom Government that the calculation of the period of service required to qualify for a retirement pension should be distinguished from the rights to a pension, it must be noted that it cannot be concluded from the fact that a right to a pension is definitively acquired at the end of a corresponding period of service that the legal situation of the worker must be considered definitive. It should be noted in this respect that it is only subsequently and by taking into account relevant periods of service that the worker can effectively avail himself of that right with a view to payment of his retirement pension. (para 35) The Ministry has accepted that judgment as determinative of the OBrien appeal in his favour. Innospec Ltd v Walker (Walker) Before returning to the present appeals, it is necessary to refer to another case which was heard by the Supreme Court at the same time as the OBrien but in which the court gave a final ruling rather than making a reference ([2017] UKSC 47; [2017] ICR 1077). The issue in Walker in short was whether the civil partner of Mr Walker (under a partnership registered in January 2006) was entitled to be paid a survivors pension calculated by reference to Mr Walkers service, both before and after the transposition date of Directive 2000/78/EC (the Framework Equality Directive), which outlawed discrimination on grounds of sexual orientation. Consistently with its view in OBrien, applying the Ten Oever principle, the Court of Appeal had held that only Mr Walkers service after the transposition date (2 December 2003) should be taken into account in calculating the survivors pension to which his partner would be entitled. This court rejected that approach. No issue arose as to the time limit for bringing the claim under regulation 8. However, Mr Allen relies on a paragraph in the majority judgment of Lord Kerr dealing with the Ten Oever argument: Mr Chamberlain [counsel for Mr Walker] submitted that the appeal tribunal wrongly took Advocate General Van Gervens description of pension benefits in the Ten Oever case as deferred pay as equating the time at which a pension right accrues with the time at which any discrimination in the provision of resulting benefits is to be judged. I agree that the appeal tribunal was wrong to do so. The point of unequal treatment occurs at the time that the pension falls to be paid. If Mr Walker married a woman long after his retirement, she would be entitled to a spouses pension, notwithstanding the fact that they were not married during the time that he was paying contributions to his pension fund. Whether benefits referable to those contributions are to be regarded as deferred pay is neither here nor there, so far as entitlement to pension is concerned. Mr Walker was entitled to have for his married partner a spouses pension at the time he contracted a legal marriage. The period during which he acquired that entitlement had nothing whatever to do with its fulfilment. (para 56, emphasis added) The Miller appeals Judge Macmillans reasoning It is right to pay tribute to Judge Macmillans commendably thorough and insightful treatment of the issues in the Employment Tribunal. He summarised his conclusion on the time limit issue at the outset of his judgment: 1. For the purposes of bringing a claim under the Part time Workers (Prevention of Less Favourable Treatment) Regulations 2000 in respect of denial of access to the judicial pension scheme, time runs from the ending of each fee paid appointment about which complaint is made, irrespective of whether the claimant then transfers into a salaried appointment or has other fee paid appointments which continue (paras 15 26) The paragraphs there referred to contain a careful analysis of the respective submissions before him, including discussion of the House of Lords decision in Barclays Bank plc v Kapur [1991] 2 AC 355. It is sufficient to quote the most relevant part of his conclusion: 25. I therefore reach the same conclusion as the tribunal in OBrien, namely that the act of discrimination complained of, denial of access to the scheme while a fee paid judge, must be distinguished from the consequences of that act, the failure to pay a pension reflecting fee paid service, a passage expressly approved by the Court of Appeal in OBrien. Barclays Bank plc v Kapur, in my judgment, far from being a trump card is in fact irrelevant. In a simple transfer case time therefore runs from the date on which the fee paid office about which complaint is made, ended. If that is true of the simple transfer cases it must, in my 26. judgment be true of the so called portfolio cases, that is those cases where at some point in their career a fee paid judge has held other fee paid offices which they no longer hold at the time the claim was presented. Time runs in those cases from the date on which each office was relinquished. The variants of the simple transfer case, where the salaried judge returns to fee paid office on retirement from the salaried post and where the fee paid judge continues to hold a fee paid office in addition to their salaried office, produce the same result although for different reasons. In the former case Mr Allen has failed to explain how, if the first period of fee paid service is out of time, the second period somehow resurrects the corpse. He has failed to explain it because no explanation is available. In the latter case the answer lies in regulations 5(1) and 8(4)(a). Any term in the parallel fee paid contract cannot be less favourable in the sense of the pension it fails to generate as the salaried terms and conditions are generating the maximum pension entitlement possible As already noted, there was no substantive consideration of this reasoning in the Employment Appeal Tribunal or the Court of Appeal, in view of the perceived link with the issues in OBrien. As Lewison LJ explained in the Court of Appeal: 1. The issue on these appeals is whether the appellants were in time in submitting their claims to the Employment Tribunal complaining of unlawful discrimination under the Part Time Workers Directive. That, in turn, depends on whether their pension rights are definitively acquired at the time of their service or only when they retired; which is a question of EU law. 2. In OBrien v Ministry of Justice [2015] EWCA Civ 1000, decided on 6 October 2015, this court held that a worker definitively requires pension rights attributable to a particular period of days during that period of service and does so by reference to the law applicable during that period of service. The decision in OBrien is equally applicable to these appeals with the consequence that the appellants applications were out of time. ([2015] EWCA Civ 1368, paras 1 2) The competing arguments in this court Ministry of Justice For the Ministry Mr Cavanagh QC accepts that, before the CJEU judgment in OBrien 2, the expectation was that the OBrien and Miller appeals would stand or fall together. However, that view was no longer tenable in the light of the reasoning of the court. He starts from the key issue in Miller as identified in the Statement of Facts and Issues, agreed by the parties in October 2016 (at para 22): The answer to the question whether [the Miller appellants] claims are in time depends on the point in time at which pension rights are definitively acquired and time for bringing a claim starts to run. In OBrien 2 (para 35) the CJEU confirmed that the right to a pension is definitively acquired at the end of the corresponding period of service. That would appear to give a clear answer to the issue identified in the Miller appeals, which is unaffected by the CJEUs disposal of OBrien itself by reference to its application of the future effects principle. He notes that, following the first judgment of this court in OBrien [2013] 1 WLR 522, para 42, it is clear that the claims are domestic claims, arising under the PTWR, but subject to the disapplication of regulation 17 so as to bring the meaning of worker in the PTWR in line with its meaning in the PTWD. The procedural rules and limitations applicable to such claims are matters for domestic law (subject to the requirements of effectiveness and equivalence, which are not in issue). Applying regulation 8, the question for the purpose of the primary time limit is when the less favourable treatment took place. Under domestic legal principles, pensions are treated as deferred pay (Parry v Cleaver [1970] AC 1 at 16C D), the entitlement to which accrues at the time of service. The fact that the pay is received some time after employment has ended, so that the consequences may not be felt for some time afterwards, does not detract from the position that the less favourable treatment or detriment took place during the service. A distinction is to be drawn between the less favourable treatment or detriment and its consequences (Barclays Bank plc v Kapur [1989] ICR 753, 770 per Mann LJ). This is illustrated by Sougrin v Haringey Health Authority [1992] ICR 650, in which it was held that time ran from the alleged act of discrimination (the refusal to promote the claimant), not from the subsequent period during which she received a lower salary in consequence. This approach is, he submits, consistent with the decision of the House of Lords in Barclays Bank plc v Kapur [1991] 2 AC 355. This was a claim under the Race Relations Act 1976, brought by Asian Barclays employees whose service in Kenya (before their expulsion and further employment by Barclays in the UK) had not been treated as counting towards their pension entitlement with Barclays Bank Ltd. The time limit for bringing a claim was set by section 68, which provided: (1) An industrial tribunal shall not consider a complaint [of race discrimination] unless it is presented to the tribunal before the end of the period of three months beginning when the act complained of was done. (7) For the purposes of this section (a) when the inclusion of any term in a contract renders the making of the contract an unlawful act, that act shall be treated as extending throughout the duration of the contract; and (b) as done at the end of that period; and (c) when the person in question decided upon it a deliberate omission shall be treated as done any act extending over a period shall be treated Under section 68 the House of Lords held that the less favourable treatment took place throughout the period of employment, so that the three month primary limitation period commenced at the end of the employment. Lord Griffiths, with whom the other members of the House agreed, said (at p 369): In the present case the Court of Appeal were in my view right to approve these two decisions and to classify the pension provisions as a continuing act lasting throughout the period of employment and so governed by subsection (7)(b). A man works not only for his current wage but also for his pension and to require him to work on less favourable terms as to pension is as much a continuing act as to require him to work for lower current wages. As Mr Cavanagh submits, it is clear from this that less favourable treatment or detriment in relation to pensions takes place at the same time as in relation to any other aspect of a workers terms and conditions, that is during service. Lord Griffiths did not say that it occurred at the time the claimants took their pensions. He submits further that to hold that the relevant date does not arise until the pension is taken would lead to absurd consequences: It would mean that a claimant in a pensions case would have no right to take proceedings under the PTWR until they had reached pension age which may be very many years after the period of service and which may well be too late to obtain a genuine remedy. It would also mean that the very many claims that have been brought by claimants in the judicial pensions litigation who are below retirement age would have to be struck out on the basis that there has been as yet no breach of the PTWR. The appellants Mr Allen for the appellants reads regulation 8 as posing the question: when did the less favourable treatment allegedly unlawful contrary to regulation 5 finally occur? (his emphasis). The Ministrys arguments fail to give weight to the true nature of their claims. The treatment which is less favourable, compared to that afforded to a full time judge, is the non payment of a pension pro rata temporis on retirement at or above 65. The detriment finally occurs at the point at which, had they only ever worked full time in qualifying judicial office, they would have been actually entitled to a pension: Until then the pension entitlement of the comparator is, prospective, contingent and inchoate in the sense of not being fully formed. Until then their right to equal treatment is similarly prospective, contingent and inchoate. This approach is, he submits, entirely consistent with para 35 of the CJEUs judgment in OBrien 2 (see above). Although the court spoke of the right being definitively acquired at the end of a period of service, it recognised that this was not definitive of the workers legal situation, since it was only subsequently and by taking into account relevant periods of service that he could effectively avail himself of that right with a view to payment of his retirement pension. The passage of Lord Griffiths speech in Kapur does not assist Mr Cavanagh, both because the wording of the relevant provision was different, but also because the House was not asked to consider whether or not there was relevant unfavourable treatment also at the time of retirement. Conversely, his argument disregards the clear and specific treatment of this issue by Lord Kerr in Walker. Nor is there any basis for the suggested absurdity arising from the appellants argument. The fact that there is relevant detriment at the time of retirement does not mean that there is no detriment at an earlier period, nor that there is anything to prevent proceedings in that respect at an earlier stage. Discussion As I understand it, it is now common ground that the issue in this appeal is one of domestic law, turning on the construction and application of regulation 8 of the PTWR, and that the determinative question is: when did the less favourable treatment occur, or (in Mr Allens words) when did it finally occur? Although perhaps understandable at the time, the former assumption (apparent in the judgment of the Court of Appeal) that the issue was one of European Law, and that the present claims would stand or fall with OBrien, seems to have proved something of an impediment to a clear analysis of the relevant issues of domestic law. At the same time it must be borne in mind that that the regulations have to be construed in a highly artificial context. That results not only from the need to conform to the requirements of European law, but also from the special characteristics of judicial appointments and judicial pensions under domestic law. In the first place, while the regulations assume the existence of a contract of employment (see regulation 5, 8(4)), a judicial officer is not employed under a contract (see Gilham v Ministry of Justice (Protect intervening) [2019] UKSC 44; [2019] 1 WLR 5905), so that references to the terms of a contract can at best be applied by analogy. Secondly, as has been seen, the judicial pension scheme is not based on individual appointments, but on qualifying judicial office, which may include a number of different appointments within those specified in Schedule 1 of the 1993 Act. That special feature of the scheme needs to be taken into account in making a comparison for the purposes of the regulations. It may be misleading and unfair to direct attention to the nature and timing of individual part time appointments, without regard to the broader concept of qualifying judicial office, which would have applied had they been brought within the statutory scheme. This as I understand it was a point made by Mr Allen in the Employment Tribunal, as recorded by Judge Macmillan (ET para 12): The Judicial Pensions and Retirement Act 1993 permits the payment of pension only on retirement from judicial office, not from a judicial office and requires the judges pension to be calculated on their aggregated service in judicial office, meaning that the judge who changes roles has her total service counted for pension purposes, not just her service in the latest role. The European cases relied upon by Mr Cavanagh are simply not in point as they do not deal with time limit issues at all. As has been seen (para 19 above), the judge took a narrower view. He proceeded on the basis that, in what he called a simple transfer case time therefore runs from the date on which the fee paid office about which complaint is made, ended. He applied the same approach to more complex portfolio cases where a fee paid judge has held other fee paid offices, or has moved between salaried and fee paid offices: time runs from the date on which each office was relinquished. I understand the logic of that approach. But, as Mr Allen submitted, it does not fit well with the aggregate approach required by the 1993 Act. The varied combinations of fee paid or salaried offices undertaken by different individuals were a desirable feature of a flexible judicial system, but there is no reason why they should govern the entitlement to pension, under the PTWR any more than under the 1993 Act itself. I also agree with Mr Allen that the speech of Lord Griffiths in Kapur is not determinative. The issue was whether the unfavourable treatment continued throughout the period of employment. The House was not required to consider whether there was an unfavourable treatment also at the point when the pension was or would be taken. For the same reason, I would reject Mr Cavanaghs submission as to the absurd consequences which would follow from denying complainants a remedy at an earlier stage. As regulation 5 makes clear, the unfavourable treatment may relate to the terms of the contract, or any other detriment resulting from an act or failure to act by the employer. By analogy, in the context of judicial pensions, the part time judge may properly complain both during his period of service, that his terms of office did not include provision for a future pension; and, at the point of retirement, that there has been a failure at that point to make a pension available. The former does not exclude the latter. Finally, I agree with Mr Allen that Lord Kerrs judgment in Walker is helpful in that respect. Although he was not concerned with the application of a comparable time limit, that does not detract from the generality of his statement that the point of unequal treatment occurs at the time that the pension falls to be paid. It is consistent also with Lord Reeds statement in OBrien that it is unlawful to discriminate against part time workers when a retirement pension falls due for payment. In my view, that also accords with the common sense of the matter. It may be that the appellants could have complained of less favourable treatment, as compared to their full time colleagues, by reference to the lack of any equivalent provision for a pension in their terms of office. But that does not detract in any way from the less favourable treatment they undoubtedly suffered, or would suffer, at the point of retirement. Conclusion For these reasons I would allow the appeals, and make declarations accordingly. |
This case concerns the jurisdiction of a court in England to make a maintenance order in favour of a party to a marriage (here, the wife) pursuant to section 27 of the Matrimonial Causes Act 1973 (as amended section 27) in circumstances in which for most of the marriage the parties lived in Scotland and where the relevant divorce proceedings (those issued by the husband) were conducted in Scotland. After marriage in England in 1994, the parties lived together in Scotland between 1995 and 2012, when they separated. The wife returned to England in 2012 and has lived in England since then. On 13 January 2015 she issued her application under section 27 in England for an order requiring the husband to make maintenance payments. Under section 27, an order can be made for periodic payments or payment of a lump sum directed to satisfying an obligation in the nature of provision of maintenance. The wife issued a divorce petition in England in July 2013, which included a prayer for financial orders. The husband issued a writ for divorce in Scotland in October 2014. The writ sought relief only in the form of an order to dissolve the marriage and included no prayer for orders in relation to financial matters. The effect of the relevant statutory provision (paragraph 8 of Schedule 1 to the Domicile and Matrimonial Proceedings Act 1973) was that the application for divorce had to be assigned to the court in Scotland, since the parties had last lived together there. The wife accepted this and on 13 January 2015 she consented to an order dismissing her petition in England, which order was made on 16 January 2015. The husbands writ for divorce could then proceed in Scotland. Relief in the form of an order for maintenance under section 27 is not tied to the grant of a decree of divorce and such an order can be sought in separate proceedings. Therefore, subject to questions of jurisdiction, the wife was free to issue her application under section 27 in England, as she did on the same day on which she consented to the dismissal of her petition for divorce. By her application, she seeks an order for payment of periodical payments and a lump sum. She has also applied for interim periodical payments under section 27(5). Issuing proceedings for maintenance in England was both more convenient for her, since she lives in England, and offered the prospect of more generous maintenance provision than would be available to her if she sought orders in Scotland. The husband applied for an order to stay or dismiss the wifes application under section 27 on the basis that the court in England either did not have or should not exercise jurisdiction to hear the application, alternatively on the basis that her application should be rejected on the merits. These matters were considered at a hearing before Parker J in the High Court. She rejected the husbands challenge to the jurisdiction of the English court and made an order for, among other things, interim periodical payments of maintenance by the husband: [2016] EWHC 668 (Fam); [2017] 1 FLR 1083. The husband appealed to the Court of Appeal. The Court of Appeal (King, David Richards and Moylan LJJ) dismissed the appeal: [2018] EWCA Civ 1120; [2019] Fam 138. King LJ gave the sole substantive judgment, with which the other members of the court agreed. The husband now appeals to this court, with permission granted by this court, in relation to the jurisdictional issues. These are concerned with the interpretation and effect of Schedule 6 to the Civil Jurisdiction and Judgments (Maintenance) Regulations 2011 (SI 2011/1484) (Schedule 6 and the 2011 Regulations, respectively) and the interpretation and effect of Council Regulation (EC) No 4/2009 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations (the Maintenance Regulation). The 2011 Regulations were promulgated by the Secretary of State for Justice pursuant to section 2(2) of the European Communities Act 1972 (the ECA 1972), and on the appeal to this court the husband has been given permission to raise a new point as to whether Schedule 6 to those Regulations, or any part of it, is ultra vires the Secretary of States powers under section 2(2). The final determination of the wifes application for financial orders under section 27 was adjourned pending the appeal to the Court of Appeal and then adjourned again pending the appeal to this court. The order by Parker J for payment of interim periodical payments has not been stayed, but the husband has failed to comply with it. presented by Mr Horton, counsel for the appellant): Four issues arise on the appeal, as follows (in the order in which they were (1) On the proper interpretation of section 27(2), does an English court have jurisdiction to make any order for maintenance in a case with no international dimension at all? (2) If the answer to (1) is yes, does the English court have a discretion which has survived the promulgation of Schedule 6, to stay maintenance proceedings before it on the general ground of forum non conveniens (and if so, should it exercise that discretion so as to give priority to the Scottish courts to deal with financial issues between the parties)? (3) If the answer to (2) is no, was the purported removal by Schedule 6 of a general discretion to stay proceedings on the ground of forum non conveniens ultra vires the Secretary of States powers in section 2(2) of the ECA 1972? and (4) If the answer to (3) is no, with the result that the jurisdictional position is governed by the express terms of the Maintenance Regulation, as adopted into domestic law by Schedule 6, is the husbands divorce proceeding in Scotland a related action for the purposes of article 13 of the Maintenance Regulation (as so adopted) and, pursuant to that provision, should the English court decline jurisdiction in respect of the wifes claim for a maintenance order under section 27? Legislative background The national legislation governing jurisdiction in cross border cases is primarily contained in the Civil Jurisdiction and Judgments Act 1982 (the CJJA 1982). That Act gave effect in domestic law to the Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters of 1968 (the Brussels Convention). The Brussels Convention was amended on the association of Denmark, Ireland and the United Kingdom in 1978. It was replaced as the principal instrument governing jurisdiction in cross border cases between member states of the European Union by 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 Brussels Regulation or, as it is sometimes called, the Judgments Regulation), which in large part replicated the provisions of the Brussels Convention. The CJJA 1982 was amended to refer to and give effect in domestic law to the Brussels Regulation. The Brussels Regulation has been replaced by Regulation (EU) No 1215/2012 (the Brussels Recast Regulation). The Brussels Convention did not apply to issues of the status of natural persons, including marriage, nor to rights in property arising out of a matrimonial relationship (article 1(1)), but it did apply in respect of claims for maintenance. The Convention set out a general principle that a person should be sued in his state of domicile (article 2), but this was subject to certain special rules of jurisdiction. One such rule was that in matters relating to maintenance, the person owing an obligation to pay maintenance (the maintenance debtor) could be sued by the person to whom that obligation was owed (the maintenance creditor) in the courts for the place where the maintenance creditor was domiciled or habitually resident (article 5(2)). This was specifically designed to make it easier for a maintenance creditor to enforce his or her rights, by giving them the right to choose where to sue the maintenance debtor. The rationale for this was explained by Mr Jenard in his report on the Brussels Convention (OJ 1979 C59, pp 24 25, excluding footnotes): The Convention is in a sense an extension of the Hague Convention of 15 April 1958 concerning the recognition and enforcement of decisions relating to maintenance obligations in respect of children, since it ensures the recognition and enforcement of judgments granting maintenance to creditors other than children, and also of the New York Convention of 20 June 1956 on the recovery abroad of maintenance. The Committee decided that jurisdiction should be conferred on the forum of the creditor, for the same reasons as the draftsmen of the Hague Convention. For one thing, a convention which did not recognize the forum of the maintenance creditor would be of only limited value, since the creditor would be obliged to bring the claim before the court having jurisdiction over the defendant. If the Convention did not confer jurisdiction on the forum of the maintenance creditor, it would apply only in those situations where the defendant against whom an order had been made subsequently changed residence, or where the defendant possessed property in a country other than that in which the order was made. Moreover the court for the place of domicile of the maintenance creditor is in the best position to know whether the creditor is in need and to determine the extent of such need. However, in order to align the Convention with the Hague Convention, article 5(2) also confers jurisdiction on the courts for the place of habitual residence of the maintenance creditor. This alternative is justified in relation to maintenance obligations since it enables in particular a wife deserted by her husband to sue him for payment of maintenance in the courts for the place where she herself is habitually resident, rather than the place of her legal domicile. Article 5(2) of the Brussels Convention was amended in 1978 so as to expand this special rule of jurisdiction, so that in matters relating to maintenance the maintenance debtor could be sued in the courts for the place where the maintenance creditor is domiciled or habitually resident or, if the matter is ancillary to proceedings concerning the status of a person, in the court which, according to its own law, has jurisdiction to entertain those proceedings, unless that jurisdiction is based solely on the nationality of one of the parties. The object of this provision remained the protection of the maintenance creditor, who was regarded as the weaker party: see the judgments of the European Court of Justice (the ECJ) in Farrell v Long (Case C 295/95) EU:C:1997:168, [1997] QB 842, para 19, and Freistaat Bayern v Blijdenstein (Case C 433/01) EU:C:2004:21, [2004] All ER (EC) 591, paras 29 and 30. The Brussels Convention set out rules governing cases of lis pendens and related actions at articles 21 and 22, respectively, in terms closely similar to what later became articles 27 and 28 of the Brussels Regulation, articles 12 and 13 of the Maintenance Regulation and articles 29 and 30 of the Brussels Recast Regulation. The effect of articles 12 and 13 of the Maintenance Regulation is discussed below. Section 16(1) of the CJJA 1982 stated that the provisions in Schedule 4 to the Act (which contained a modified version of Title II of the Brussels Convention) should have effect for determining, in each part of the United Kingdom, whether the courts of that part had jurisdiction in proceedings where the subject matter of the proceedings was within the scope of the Brussels Convention as determined by article 1 (therefore, maintenance proceedings were covered) and the defendant was domiciled in the United Kingdom. As Lord Wilson explains, the Brussels Convention had nothing to say about determination of jurisdiction of courts in different parts of a single state and the CJJA 1982 did not adopt articles 21 and 22 of the Brussels Convention as part of the scheme for allocation of jurisdiction as between different jurisdictions in the United Kingdom (ie in an intra state case with a cross jurisdiction dimension). The position in such cases remained governed by ordinary domestic discretionary rules, according to the principles relating to the forum non conveniens doctrine. Section 49 of the CJJA 1982 provided: Nothing in this Act shall prevent any court in the United Kingdom from staying, sisting, striking out or dismissing any proceedings before it, on the ground of forum non conveniens or otherwise, where to do so is not inconsistent with the [Brussels Convention]. The Brussels Regulation followed the structure of the Brussels Convention. Like the Convention, the Regulation did not apply to issues of status of natural persons, nor to rights in property arising out of a matrimonial relationship (article 1.2(a)). Like the Convention, the Regulation included provisions governing jurisdiction in respect of claims for maintenance payments. Article 2 repeated the general rule that a defendant should be sued in the courts of his domicile. Article 5(2) of the Brussels Convention (as amended) was repeated. The object remained, as before, that the maintenance creditor, who is regarded as the weaker party, should have options regarding where to sue, so that he or she could proceed in the place most convenient or advantageous for him or her. As with the Brussels Convention before it, the Brussels Regulation did not harmonise the law of maintenance. The substantive law to be applied was therefore a matter for the national law of the forum in which the maintenance claim was brought. This meant that by giving the maintenance creditor a choice regarding the forum in which to bring their claim, the maintenance creditor was also afforded a choice regarding the substantive law to be applied. The CJJA 1982 was amended so as to refer to the Brussels Regulation in relevant provisions. As explained below, the domestic doctrine of forum non conveniens is excluded by the Brussels Regulation, as it was by the Brussels Convention before it. However, as the Brussels Regulation was (unlike the Convention) directly applicable in the United Kingdom as a matter of EU law, it was not necessary for section 49 of the CJJA 1982 to be amended to refer to it in order for the Regulation to have effect to govern the allocation of jurisdiction in inter state cases. As regards the effect of the Brussels Regulation, it is not the CJJA 1982 which prevents a court in the United Kingdom from staying proceedings before it on the ground of forum non conveniens, but the directly applicable Regulation itself. The final clause of section 49 now refers to inconsistency with the Brussels Convention (as this still has application in a small number of cases), or, as the case may be, the Lugano Convention or the 2005 Hague Convention. The reason for these references is that, since these instruments only have the status of treaties, they do not have direct effect in domestic law and so have to be given effect by a legislative provision in order to achieve the intended result that they, too, should exclude the operation of the forum non conveniens doctrine. Council Regulation (EC) No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition of and enforcement of judgments in matrimonial matters and matters of parental responsibility (the Matrimonial Regulation, or the Brussels II Revised Regulation as it is often called) excluded maintenance obligations from its scope. In due course, maintenance obligations were covered by their own jurisdictional regime as set out in the Maintenance Regulation. Accordingly, EU legislation has continued the original scheme of the Brussels Convention, by treating maintenance obligations and questions of marital status, including divorce, as separate matters for the purposes of jurisdiction. Recital (9) to the Maintenance Regulation states that a maintenance creditor should be able to obtain easily, in a member state, a decision which will automatically be enforceable in another member state. Recital (11) makes it clear that the Maintenance Regulation covers all maintenance obligations arising from, among other things, marriage. Recitals (21) and (25) make it clear that the Maintenance Regulation is not concerned with questions affecting the existence of family relationships, such as marriage. Recitals (15) and (45) (in material part) are as follows: (15) In order to preserve the interests of maintenance creditors and to promote the proper administration of justice within the European Union, the rules on jurisdiction as they result from [the Brussels Regulation] should be adapted. The circumstance that the defendant is habitually resident in a third State should no longer entail the non application of Community rules on jurisdiction, and there should no longer be any referral to national law. This Regulation should therefore determine the cases in which a court in a member state may exercise subsidiary jurisdiction. (45) Since the objectives of this Regulation, namely the introduction of a series of measures to ensure the effective recovery of maintenance claims in cross border situations and thus to facilitate the free movement of persons within the European Union, cannot be sufficiently achieved by the member states and can therefore, by reason of the scale and effects of this Regulation, be better achieved at Community level, the Community may adopt measures Article 3 of the Maintenance Regulation provides: In matters relating to maintenance obligations in member states, jurisdiction shall lie with: the court for the place where the defendant is the court for the place where the creditor is (a) habitually resident, or (b) habitually resident, or (c) the court which, according to its own law, has jurisdiction to entertain proceedings concerning the Articles 12 and 13 of the Maintenance Regulation provide as follows: status of a person if the matter relating to maintenance is ancillary to those proceedings, unless that jurisdiction is based solely on the nationality of one of the parties, or (d) the court which, according to its own law, has jurisdiction to entertain proceedings concerning parental responsibility if the matter relating to maintenance is ancillary to those proceedings, unless that jurisdiction is based solely on the nationality of one of the parties. Article 12 Lis pendens 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 13 Related actions 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. For the purposes of this article, actions are deemed to be 3. 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. As is made clear by recital (15), the Maintenance Regulation is intended to preserve and enhance the rights of maintenance creditors as they had been set out previously in the Brussels Convention and the Brussels Regulation. Therefore, article 3 of the Maintenance Regulation is concerned with defining the set of jurisdictions where the maintenance creditor has the right to bring her claim. This is in line with the fundamental object of the Maintenance Regulation to protect the interests of the maintenance creditor as the weaker party and is also indicated by the text of the article itself. The contrast between sub paragraphs (a) and (b) is between the place of habitual residence of the creditor (a term defined in article 2(10) to mean any individual to whom maintenance is owed or is alleged to be owed) and the place of habitual residence of the defendant (which is not a defined term; in context, it means the person against whom a claim is asserted that he owes maintenance). This language reflects the fact that the jurisdiction provisions in relation to maintenance claims have been removed from the Brussels Regulation (where the special rule of jurisdiction set out in article 5(2) was in addition to the general right under article 2 to sue a defendant in the state of his domicile) and placed in a separate Regulation dedicated to maintenance claims. The text of article 3 does not use the word debtor, which is a term defined in article 2(11) of the Maintenance Regulation to mean any individual who owes or who is alleged to owe maintenance. Thus article 3 does not create a right for a maintenance debtor to pick a jurisdiction from those set out in that provision and commence proceedings seeking declaratory relief regarding the extent of any maintenance obligation he might have. Although, as an EU Regulation, the Maintenance Regulation is directly applicable in domestic law as regards inter state cases, it required some degree of implementation in national law as at the date it came into effect in 2011 in relation to matters such as the designation of relevant central authorities and relevant courts for particular applications. Such implementation and other associated legal changes were effected by the 2011 Regulations. First, jurisdiction in relation to maintenance claims was removed from the CJJA 1982 by the amendments to that Act effected by regulation 6 of and Schedule 4 to the 2011 Regulations. Therefore, section 49 of the CJJA 1982 has no application in relation to maintenance claims. Secondly, regulation 3 of the 2011 Regulations gives effect to Schedule 1 to the 2011 Regulations which contains provisions relating to the enforcement of maintenance decisions pursuant to the Maintenance Regulation to the extent that national law is required to specify certain matters for the purposes of the Maintenance Regulation. Thirdly, regulation 8 of and Schedule 6 to the 2011 Regulations provide the relevant rules for the allocation of jurisdiction for intra state cases within the United Kingdom in relation to maintenance. Schedule 6 to the 2011 Regulations includes the following provisions, so far as material: 1. The provisions of this Schedule have effect for determining, as between the parts of the United Kingdom, whether the courts of a particular part of the United Kingdom, or any particular court in that part, have or has jurisdiction in proceedings where the subject matter of the proceedings is within the scope of the Maintenance Regulation as determined by article 1 of that Regulation. In this Schedule, a reference to an article by number 2. alone is a reference to the article so numbered in the Maintenance Regulation. 3. The provisions of Chapter II of the Maintenance Regulation apply to the determination of jurisdiction in the circumstances mentioned in paragraph 1, subject to the modifications specified in the following provisions of this Schedule. 4. Article 3 applies as if (a) the references in article 3(a) and (b) to the court for the place where the defendant or the creditor is habitually resident were references to the court for the part of the United Kingdom in which the defendant, or the creditor, as the case may be, is habitually resident; (b) the references to a persons nationality were references to a persons domicile. 12. Article 12 applies as if after different member states there were inserted or different parts of the United Kingdom. 13. Article 13 applies as if after different member states there were inserted or different parts of the United Kingdom. As part of the suite of legislative amendments made by the 2011 Regulations to give effect to the Maintenance Regulation to govern allocation of jurisdiction relating to maintenance between member states and in parallel with the promulgation of the jurisdiction code in Schedule 6 governing allocation of jurisdiction relating to maintenance between jurisdictions within the United Kingdom, section 27 was amended (by paragraph 6 of Schedule 7 to the 2011 Regulations) by the insertion of a new subsection (2). This provides: The court may not entertain an application under this section unless it has jurisdiction to do so by virtue of the Maintenance Regulation and Schedule 6 to [the 2011 Regulations]. Analysis Although Lord Wilson says that the resolution of the question of jurisdiction in this case is absurdly complicated, in my respectful opinion it is not. Schedule 6 was intended to introduce for intra state cases the same clear and certain jurisdictional rules which have been adopted for inter state cases in the Maintenance Regulation, and it has achieved that result. This means that on proper analysis the resolution of the question of jurisdiction is straightforward, as it is intended to be. (1) Does an English court have jurisdiction under section 27(2) to make any order for maintenance in a case with no international dimension at all? The submission of Mr Horton for the appellant on this issue is that section 27(2) can only apply if a case falls to be governed both by the Maintenance Regulation and by Schedule 6, so that it only applies in inter state cases. On this issue I agree with Lord Wilson that Mr Hortons submission must be rejected. Section 27(2) is intended to cover two classes of case: (i) inter state proceedings, in relation to which jurisdiction is governed by the Maintenance Regulation, and (ii) intra state proceedings, in relation to which jurisdiction is governed by Schedule 6. In this context, it might perhaps be said that the use of the word and is infelicitous; but the meaning is abundantly clear. There is no scope for the Maintenance Regulation and Schedule 6 both to apply, because they deal with different types of case. Therefore, Mr Hortons proposed construction of section 27(2) would deprive it of any practical effect. Rather, the drafter has used the formula referring to the Maintenance Regulation and Schedule 6 to indicate that the jurisdiction of an English court to make an order under section 27 is to be determined by application of the Maintenance Regulation and Schedule 6 taken together, in the sense that together they cover the whole possible field of inter state cases and intra state cases. This interpretation is also borne out by the elaborate provisions in Schedule 6 which provide for the provisions of the Maintenance Regulation to apply with appropriate modifications to give them equivalent effect in intra state cases. The intended effect of those provisions, as modified, would be defeated in a significant class of maintenance proceedings if section 27(2) were given the construction for which Mr Horton contends. There is no rational basis for thinking that they were to be deprived of effect in this way. (2) Does the English court have a discretion which has survived the promulgation of Schedule 6, to stay maintenance proceedings before it on the general ground of forum non conveniens? Appeal was right so to hold. The jurisdictional scheme of the Maintenance Regulation is modelled on the similar schemes in the Brussels Convention and the Brussels Regulation (and is in line with the scheme of what is now the Brussels Recast Regulation). The basic scheme of all these jurisdiction governing instruments is to provide clear guidance where proceedings may or must be brought. The Grand Chamber of the ECJ authoritatively ruled in Owusu v Jackson (Case C 281/02) [2005] QB 801, a case concerning the interpretation of the Brussels Convention, that the scheme of this form of EU legislation is inconsistent with courts in a Member State retaining any discretionary power to stay proceedings on the grounds of forum non conveniens. The case concerned an accident which occurred in Jamaica, but involving a defendant who was domiciled in England. As the ECJ pointed out, a national court cannot retain a power to refuse to accept jurisdiction on forum non conveniens grounds, since to do so would allow it to defeat the mandatory provision in article 2 of the Brussels Convention which required that a defendant be sued in the courts of his state of domicile. The relevant part of the judgment is at paras 37 46, as follows: In my judgment, the answer to this question is clearly no. The Court of 37. It must be observed, first, that article 2 of the Brussels Convention is mandatory in nature and that, according to its terms, there can be no derogation from the principle it lays down except in the cases expressly provided for by the Convention: see, as regards the compulsory system of jurisdiction set up by the Convention, Erich Gasser GmbH v MISAT Srl (Case C 116/02) [2005] 1 QB 1, 35, para 72, and Turner v Grovit (Case C 159/02) [2005] 1 AC 101, 113, para 24. It is common ground that no exception on the basis of the forum non conveniens doctrine was provided for by the authors of the Convention, although the question was discussed when the Convention of 9 October 1978 on the Accession of Denmark, Ireland and the United Kingdom was drawn up, as is apparent from the report on that Convention by Professor Schlosser, OJ 1979 C59, p 71, at pp 97 98, paras 77 and 78. 38. Respect for the principle of legal certainty, which is one of the objectives of the Brussels Convention (see, inter alia, GIE Groupe Concorde v Master of the vessel Suhadiwarno Panjan (Case C 440/97) [1999] ECR I 6307, 6350, para 23, and Besix SA v Wasserreinigungsbau Alfred Kretzschmar GmbH & Co KG (Wabag) (Case C 256/00) [2003] 1 WLR 1113, 1130, para 24), would not be fully guaranteed if the court having jurisdiction under the Convention had to be allowed to apply the forum non conveniens doctrine. 39. According to its Preamble, the Brussels Convention is intended to strengthen in the Community the legal protection of persons established therein, by laying down common rules on jurisdiction to guarantee certainty as to the allocation of jurisdiction among the various national courts before which proceedings in a particular case may be brought: Besix, para 25. 40. The court has thus held that the principle of legal certainty requires, in particular, that the jurisdictional rules which derogate from the general rule laid down in article 2 should be interpreted in such a way as to enable a normally well informed defendant reasonably to foresee before which courts, other than those of the state in which he is domiciled, he may be sued: the GIE Groupe Concorde case [1999] ECR I 6307, 6350 6351, para 24, and the Besix case [2003] 1 WLR 1113, 1130, para 26. 41. Application of the forum non conveniens doctrine, which allows the court seised a wide discretion as regards the question whether a foreign court would be a more appropriate forum for the trial of an action, is liable to undermine the predictability of the rules of jurisdiction laid down by the Brussels Convention, in particular that of article 2, and consequently to undermine the principle of legal certainty, which is the basis of the Convention. 42. The legal protection of persons established in the Community would also be undermined. First, a defendant, who is generally better placed to conduct his defence before the courts of his domicile, would not be able, in circumstances such as those of the main proceedings, reasonably to foresee before which other court he could be sued. Second, where a plea is raised on the basis that a foreign court is a more appropriate forum to try the action, it is for the claimant to establish that he will not be able to obtain justice before that foreign court or, if the court seised decides to allow the plea, that the foreign court has in fact no jurisdiction to try the action or that the claimant does not, in practice, have access to effective justice before that court, irrespective of the cost entailed by the bringing of a fresh action before a court of another state and the prolongation of the procedural time limits. 43. Moreover, allowing forum non conveniens in the context of the Brussels Convention would be likely to affect the uniform application of the rules of jurisdiction contained therein in so far as that doctrine is recognised only in a limited number of contracting states, whereas the objective of the Brussels Convention is precisely to lay down common rules to the exclusion of derogating national rules. 44. The defendants in the main proceedings emphasise the negative consequences which would result in practice from the obligation the English courts would then be under to try this case, inter alia as regards the expense of the proceedings, the possibility of recovering their costs in England if the claimants action is dismissed, the logistical difficulties resulting from the geographical distance, the need to assess the merits of the case according to Jamaican standards, the enforceability in Jamaica of a default judgment and the impossibility of enforcing cross claims against the other defendants. 45. In that regard, genuine as those difficulties may be, suffice it to observe that such considerations, which are precisely those which may be taken into account when forum non conveniens is considered, are not such as to call into question the mandatory nature of the fundamental rule of jurisdiction contained in article 2 of the Brussels Convention, for the reasons set out above. 46. In the light of all the foregoing considerations, the answer to the first question must be that the Brussels Convention precludes a court of a contracting state from declining the jurisdiction conferred on it by article 2 of that Convention on the ground that a court of a non contracting state would be a more appropriate forum for the trial of the action, even if the jurisdiction of no other contracting state is in issue or the proceedings have no connecting factors to any other contracting state. In this respect there is no material difference between the Brussels Convention, as interpreted in Owusu, and the Maintenance Regulation. Article 3 of the Maintenance Regulation establishes a mandatory rule regarding jurisdiction ( jurisdiction shall lie with ) of the same force as that in article 2 of the Brussels Convention. Like the Brussels Convention, the Maintenance Regulation is intended to lay down clear and predictable common rules of jurisdiction and the principle of legal certainty applies with equal force. In the context of the Maintenance Regulation, the objective of protection of the rights of the maintenance creditor has special force, as appears from the derivation of the Regulation from the special rule of jurisdiction in the Brussels Convention (as explained in the Jenard report), via the Brussels Regulation and as explained in recitals (9), (15) and (45) to the Maintenance Regulation. The object of the mandatory rule of jurisdiction in article 3 of the Maintenance Regulation is to afford special protection for a maintenance creditor by giving him or her the right to choose the jurisdiction most beneficial for them out of the range of options specified in that article. This has been confirmed by the caselaw of the Court of Justice of the European Union (the CJEU) on the Maintenance Regulation, most recently in R v P (Case C 468/18) ECLI:EU:C:2019:666; [2020] 4 WLR 8. That case concerned a wife and husband who were both Romanian nationals, who lived in the United Kingdom and had a child there before separating. The husband returned to Romania; the wife and child remained in the United Kingdom. The wife issued proceedings in Romania seeking the dissolution of the marriage, an order that the child should reside with her and that she should have sole parental responsibility and an order that the husband pay maintenance for the child. The husband contested the jurisdiction of the Romanian court. The court held that it had jurisdiction under the Matrimonial Regulation to hear the divorce petition, but that by virtue of that Regulation it had no jurisdiction in relation to the issues of residence and parental responsibility, as the child was habitually resident in the United Kingdom and it was the courts there which had jurisdiction in relation to those matters. The court was unsure whether it had jurisdiction under article 3 of the Maintenance Regulation in respect of the claim for maintenance, on the basis that the husband was habitually resident in Romania, or whether jurisdiction for such a claim lay with the courts of the United Kingdom; accordingly, it referred that question to the CJEU. The CJEU ruled that article 3 of the Maintenance Regulation established a right for the maintenance creditor to choose the jurisdiction in which to sue the maintenance debtor, out of the range of options set out in that article, so that the Romanian court had jurisdiction in respect of the maintenance claim brought by the wife. At paras 28 31 of its judgment, the CJEU said: 28. By its three questions, which must be examined together, the referring court asks, in essence, whether article 3(a) and (d) and article 5 of [the Maintenance Regulation] must be interpreted as meaning that where there are three joined claims before a court of a member state concerning, respectively, the divorce of the parents of a minor child, parental responsibility in respect of that child and the maintenance obligation with regard to that child, the court ruling on the divorce, which has declared that it has no jurisdiction to rule on the claim concerning parental responsibility, nevertheless has jurisdiction to rule on the claim concerning the maintenance obligation with regard to that child since it is also the court for the place where the defendant is habitually resident and the court before which the defendant has entered an appearance, or if solely the court with jurisdiction to hear the claim concerning parental responsibility in respect of the child may rule on the claim concerning the maintenance obligation with regard to that child. 29. It is apparent from the wording of article 3 of [the Maintenance Regulation], entitled General provisions, that that article lays down general criteria for attributing jurisdiction for the purposes of the courts of the member states ruling on maintenance obligations. Those criteria are alternative, as is attested to by the use of the co ordinating conjunction or after each of them: see A v B [(Case C 184/14) EU:C:2015:479], para 34). 30. In this connection, since the objective of [the Maintenance Regulation], as is apparent from recital (15) thereof, consists in preserving the interest of the maintenance creditor, who is regarded as the weaker party in an action relating to maintenance obligations, article 3 of that regulation offers that party, when he acts as the applicant, the possibility of bringing his claim under bases of jurisdiction other than that provided for in article 3(a) of that regulation: see Freistaat Bayern v Blijdenstein (Case C 433/01) EU:C:2004:21; [2004] ECR I 981; [2004] All ER (EC) 591, para 29 and Sanders v Verhaegen (Joined Cases C 400/13 and C 408/13) EU:C:2014:2461; [2015] 2 FLR 1229, paras 27 28). 31. The maintenance creditor can thus bring his application either before the court for the place where the defendant is habitually resident, in accordance with point (a) of article 3, or before the court for the place where the creditor is habitually resident, in accordance with point (b) of that article, or further, in accordance with points (c) and (d) of that article, if the maintenance application is ancillary to a main action, relating to the status of a person, such as a divorce petition (under point (c)), or to an action concerning parental responsibility (under point (d)), before the court with jurisdiction to entertain either the former or the latter proceedings respectively. The CJEU held that the fact that the Romanian court had declared that it had no jurisdiction to rule on an action in relation to the exercise of parental responsibility for a child made no difference to the availability of jurisdiction under the Maintenance Regulation, which set out mandatory rules of jurisdiction for maintenance claims. This was so even though the courts in the United Kingdom might be better placed to assess the claim for maintenance for the child. The maintenance creditor had a right to choose the jurisdiction for her claim from the list of options in article 3. The CJEU said this at paras 41 51: 41. That finding is supported by the scheme and the objectives of [the Maintenance Regulation]. 42. So far as the scheme of [the Maintenance Regulation] is concerned, that regulation sets out, in Chapter II thereof, entitled Jurisdiction, all of the applicable rules to designate the court having jurisdiction with respect to maintenance obligations. Recital (15) of that regulation stipulates in that regard that there should no longer be any referral to the rules on jurisdiction in national law, since the rules resulting from that regulation must be considered to be exhaustive. 43. Thus, if a court seised of an application concerning maintenance obligations with regard to a child does not have jurisdiction to entertain proceedings in relation to an action concerning the parental responsibility for that child, it is first of all necessary to ascertain whether that court has jurisdiction to entertain proceedings on another basis under that regulation: orders of 16 January 2018, PM v AH (Case C 604/17) EU:C:2018:10, para 33, and of 10 April 2018, CV v DU (Case C 85/18PPU) EU:C:2018:220; [2018] IL Pr 21, para 55. It must also be noted that [the Maintenance Regulation] 44. does not provide for the option, for a court with jurisdiction under one of the provisions of that regulation before which an application has legitimately been brought, to decline jurisdiction with regard to that application in favour of a court which, in its view, would be better placed to hear the case, as article 15 of Regulation No 2201/2003 permits in the matter of parental responsibility. 45. Such an interpretation also corresponds to the objective of [the Maintenance Regulation] recalled in para 30 above. As Advocate General Szpunar observed in his opinion EU:C:2019:649, points 59 and 61, that regulation provides for alternative and non hierarchised criteria for jurisdiction which give priority to the applicants choice. 46. The importance of that choice given the aim of protecting the maintenance creditor reflects the Hague Protocol of 23 November 2007 on the law applicable to maintenance obligations, approved on behalf of the European Community by Council Decision 2009/941/EC of 30 November 2009 (OJ 2009 L331, p 17), the Court having observed that that protocol has close links with [the Maintenance Regulation]: KP v LO (Case C 83/17) EU:C:2018:408, para 49. The court has thus ruled that that protocol enables the maintenance creditor, de facto, to choose the law applicable to his application concerning maintenance obligations by providing that the law of the forum, rather than the law of the State of the habitual residence of the creditor, may be applied as a matter of priority when the creditor introduces his application before the competent authority of the State where the debtor has his habitual residence: see Mlk v Mlk (Case C 214/17) EU:C:2018:744; [2019] IL Pr 2, paras 31 and 32. 47. An interpretation of Regulation No 4/2009 according to which only the court with jurisdiction in respect of parental responsibility has jurisdiction to rule on an application concerning maintenance obligations is liable to limit that option for the maintenance creditor applicant to choose not only the court with jurisdiction, but also, as a result, the law applicable to his application. 48. In a situation such as that at issue in the main proceedings, the initial choice of the parent representing the minor maintenance creditor child to regroup all his heads of claim before the same court is rendered inadmissible by the plea raised by the defendant alleging lack of jurisdiction of that court and a decision of that court declaring that it has no jurisdiction, under article 12 of Regulation No 2201/2003, in respect of the head of claim in relation to parental responsibility. 49. In the light of the risk of having to bring his applications concerning maintenance obligations and concerning parental responsibility before two separate courts, that parent may wish, in the childs best interests, to withdraw his initial application concerning maintenance obligations brought before the court ruling on the divorce petition so that the court with jurisdiction in matters of parental responsibility also has jurisdiction to rule on that application concerning maintenance obligations. 50. Nevertheless, that parent may also wish, in the childs best interests, to retain his initial application concerning maintenance obligations with respect to the child before the court ruling on the divorce petition, where that court is also the court of the place in which the defendant has his habitual residence. 51. Many reasons, like those mentioned by Advocate General Szpunar in his opinion EU:C:2019:649, points 65 to 71, may be behind such a choice by the maintenance creditor, in particular the possibility of ensuring that the law of the forum is applied, that being Romanian law in the present case, the ability to express himself in his native language, the possibility of lower costs in the proceedings, the knowledge by the court seised of the defendants ability to pay and exemption from the requirement to seek leave to enforce decisions. The importance of the object of the Maintenance Regulation of protecting the interests of the maintenance creditor was also emphasised by the CJEU in its judgment in Sanders v Verhaegan; Huber v Huber (Joined Cases C 400/13 and C 408/13) EU:C:2014: 2461; [2015] 2 FLR 1229. The issue in that case was whether Germanys system of providing centralised courts with jurisdiction for cases involving maintenance claims against debtors resident outside the country was compatible with article 3(b) of the Maintenance Regulation. The centralised courts were at a greater distance from where the maintenance creditors in these cases lived than their local courts. Article 3(b) sets out a right for the maintenance creditor to sue in the court for the place where she is habitually resident, not the courts of the member state where she is habitually resident. The CJEU held that article 3(b) would be incompatible with the German system, unless it could be shown that it sufficiently protected the interests of maintenance creditors while assisting in the effective recovery of their claims a matter which the referring courts were required to verify. At paras 23 25 of the judgment the CJEU said: 23. A preliminary point to note is that, as the Advocate General has observed at point 33 of his opinion, insofar as the provisions of the Maintenance Regulation relating to the rules on jurisdiction replaced those in [the Brussels Regulation], the courts case law concerning the provisions on jurisdiction in matters relating to maintenance obligations in the [Brussels Convention] and in [the Brussels Regulation], which follows on from the Brussels Convention, remains relevant for the purposes of analysing the corresponding provisions of the Maintenance Regulation. 24. It should also be recalled that it is settled case law that the provisions relating to the rules on jurisdiction must be interpreted independently, by reference, first, to the objectives and scheme of the regulation under consideration and, secondly, to the general principles which stem from the corpus of the national legal systems (see, by analogy, judgments in CartierParfums Lunettes SAS and Axa Corporate Solutions Assurances SA v Ziegler France SA and Others (Case C 1/13) EU:C:2014:109, [2014] 1 LPR 25, at para 32 and the case law cited, and flyLAL Lithuanian Airlines AS, in Liquidation v Starptantiska lidosta Riga VAS and Another Company (Case C 302/13) EU:C:2014:2319, [2014] All ER (D) 324 (Oct), at para 24 and the case law cited). 25. Against that background, article 3(b) of the Maintenance Regulation must be interpreted in the light of its aims, wording and the scheme of which it forms part. At paras 26 27 the CJEU referred to recitals (9), (15) and (45) to the Maintenance Regulation. At paras 28 30 and 32 the CJEU continued as follows: 28. As regards the rules on jurisdiction in cross border disputes concerning maintenance obligations, the court has stated, in the context of article 5(2) of the Brussels Convention, that the derogation relating to the rules on jurisdiction in matters relating to maintenance obligations is intended to offer special protection to the maintenance creditor, who is regarded as the weaker party in such proceedings (see, to that effect, judgments in Farrell v Long (Case C 295/95) EU:C:1997:168, [1997] All ER (EC) 449, at para 19, and Freistaat Bayern v Blijdenstein (Case C 433/01) EU:C:2004:21, [2004] All ER (EC) 591, at paras 29 and 30). The rules on jurisdiction provided for in the Maintenance Regulation, like the rule set out in article 5(2) of the Brussels Convention, are intended to ensure proximity between the creditor and the competent court, as indeed the Advocate General has observed at point 49 of his Opinion. 29. It should also be pointed out that the objective of the proper administration of justice must be seen not only from the point of view of optimising the organisation of courts, but also, as the Advocate General has observed at point 69 of his Opinion, from that of the interests of the litigant, whether claimant or defendant, who must be able to benefit, inter alia, from easier access to justice and predictable rules on jurisdiction. 30. Article 3(b) of the Maintenance Regulation specifies the criterion for identifying the court which has jurisdiction to rule on cross border disputes concerning maintenance obligations, namely, the place where the creditor is habitually resident. That provision, which determines both international and territorial jurisdiction, seeks to unify the rules of conflict of jurisdiction (see, to that effect, judgment in Color Drack GmbH v Lexx International Vertriebs GmbH (Case C 386/05) EU:C:2007:262, [2007] ECR 1 3699, [2010] 1 WLR 1909, at para 30). 32. In this connection, it should be stated that, although the rules of conflict of jurisdiction have been harmonised by the determination of common connecting factors, the identification of the competent court remains a matter for the member states (see, to that effect, judgments in Mulox IBC v Geels (Case C 125/92) EU:C:1993:306, [1993] ECR 1 4075, at para 25, and GIE Groupe Concorde and Others v Master of the Vessel Suhadiwarno Panjan and Others (Case C 440/97) EU:C:1999:456, [2000] All ER (EC) 865, at para 31), provided that the national legislation does not undermine the objectives of the Maintenance Regulation or render it ineffective (see, inter alia, to that effect, judgment in Zuid Chemie BV v Phillipos Mineralenfabriek NV/SA (Case C 189/08) EU:C:2009:475, [2010] 2 All ER (Comm) 265, at para 30, and, by analogy, judgment in Health Service Executive v SC and AC (Case C 92/12PPU) EU:C:2012:255, [2012] 2 FLR 1040, at para 79). For intra state maintenance claims within the United Kingdom, Schedule 6 to the 2011 Regulations applies the provisions of the Maintenance Regulation with relevant modifications (to take account of the fact that the Schedule is concerned to set out the jurisdiction of courts in different parts of the United Kingdom rather than courts in different member states): see, in particular, paragraphs 1, 3 and 4 of Schedule 6, set out above. The scheme of the Maintenance Regulation is replicated in domestic law for the purposes of intra state cases. The mandatory rule regarding jurisdiction in article 3 of the Maintenance Regulation is repeated in the intra state context, adapted only so far as necessary to take account of that context: paragraph 4 of Schedule 6. The effect of this transposition of the Maintenance Regulation into domestic law is that, for the same reasons as have been explained by the ECJ in Owusu and by the CJEU in R v P, a maintenance creditor has the right to choose from the menu of options in article 3 (as adapted by paragraph 4 of Schedule 6) the jurisdiction in which to bring her maintenance claim and the doctrine of forum non conveniens is excluded. In saying this, I should also make it clear that I agree with what Lady Black says at para 73 of her judgment about case management powers. Mr Horton submitted that section 49 of the CJJA 1982 preserves the jurisdiction of the English Court to stay proceedings on forum non conveniens grounds. I cannot accept this submission. As explained above, Schedule 6 is part of a legislative regime which has been established outside and separate from the CJJA 1982. Therefore section 49 has no application. Put another way, it is not anything in the CJJA 1982 which purports to prevent the English court in this case from staying the proceedings before it on forum non conveniens grounds; it is the separate legislative regime in Schedule 6, as promulgated by the 2011 Regulations, which does that. The position in relation to section 49 is basically the same as for the operation of the Brussels Regulation (see para 16 above) and other current EU Regulations governing jurisdiction, such as the Brussels Recast Regulation and the Maintenance Regulation itself: where a legal instrument separate from the CJJA 1982 governs jurisdiction and excludes the operation of the forum non conveniens doctrine, section 49 has nothing to say about that. In my view, it is clear that Schedule 6 is intended to be a comprehensive code to govern questions of jurisdiction in relation to maintenance claims with a cross jurisdictional dimension within the United Kingdom, just as the Maintenance Regulation provides such a code in relation to such claims with an inter state cross jurisdictional dimension. As with the statutory code at issue in R (Child Poverty Action Group) v Secretary of State for Work and Pensions [2010] UKSC 54; [2011] 2 AC 15, there is no basis for reading down or modifying the plain terms of Schedule 6 by reference to fundamental human rights or the principle of legality: see para 31 per Sir John Dyson JSC. There is no scope whatever for the operation of a forum non conveniens discretion in the context of the legislative scheme in Schedule 6. (3) Was the purported removal by Schedule 6 of a general discretion to stay proceedings on the ground of forum non conveniens ultra vires the Secretary of States powers in section 2(2) of the ECA 1972? Section 2(1) and (2) of the ECA 1972 provide in relevant part as follows: (1) All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the [EU] 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 (2) Subject to Schedule 2 to this Act, at any time after its passing Her Majesty may by Order in Council, and any designated Minister or department may by order, rules, regulations or scheme, make provision (a) for the purpose of implementing any EU obligation of the United Kingdom, or enabling any such obligation to be implemented, or of enabling any rights enjoyed or to be enjoyed by the United Kingdom under or by virtue of the Treaties to be exercised; or (b) for the purpose of dealing with matters arising out of or related to any such obligation or rights or the coming into force, or the operation from time to time, of subsection (1) above; In my view, the answer to the question posed above is no. The Secretary of State submits that the making of the 2011 Regulations, including in particular Schedule 6 thereto, was authorised by section 2(2)(b) of the ECA 1972. This submission is clearly correct for the reasons given by Lord Wilson at paras 141 145. Section 2(2)(b) confers a wide power to make subordinate legislation for the purpose of dealing with matters (i) arising out of or (ii) related to the obligations of the United Kingdom under the Maintenance Regulation, or for dealing with matters (iii) arising out of the operation of section 2(1) of the ECA 1972 (relevant here, because the Maintenance Regulation creates rights and obligations under the EU Treaties which are recognised and available in law in the United Kingdom without further enactment) or (iv) related to such operation. In my view, the promulgation of Schedule 6 was authorised under each of limbs (i) to (iv) of section 2(2)(b). The purpose and effect of Schedule 6 is to ensure that there is one coherent, certain and predictable set of rules which apply to all maintenance claims with a cross jurisdictional dimension, whether the crossing of jurisdictions occurs on an inter state basis or on an intra state basis. To have one set of rules which applies in both types of case makes obvious sense in a world where people are highly mobile, and liable to move between jurisdictions internationally and within the United Kingdom. It enables everyone to know clearly where they stand and what their rights are, without having to worry about (and obtain expensive legal advice regarding) possible differences in the position which might apply if the applicable intra state jurisdictional rules are different from the applicable inter state rules. Further, by reason of the different grounds of jurisdiction allowed for in article 3 of the Maintenance Regulation it is readily possible to envisage a case where, say, maintenance proceedings are commenced in each of Spain, England and Scotland. Schedule 6 ensures that there is a single set of clear and coherent rules which the domestic courts can apply in order to resolve the jurisdictional issues which would arise in such a situation. (4) Is the husbands divorce proceeding in Scotland a related action for the purposes of article 13 of the Maintenance Regulation (as applied by Schedule 6) and, pursuant to that provision, should the English court decline jurisdiction in respect of the wifes maintenance claim under section 27? As stated by the CJEU in its judgment in the Sanders/Huber case at paras 23 25 (see para 33 above), the proper interpretation of the Maintenance Regulation requires consideration of its specific objects and adjustment of the more general rules applicable under the Brussels Convention in the light of those objects. In my judgment, the husbands divorce proceeding in Scotland is not a related action within article 13 of the Maintenance Regulation. Therefore, neither article 13(1) nor article 13(2) has any application in this case to permit the English court to decline jurisdiction in relation to the wifes maintenance claim based on section 27. As regards the claim under section 27, the wife is the maintenance creditor. As explained above, the Maintenance Regulation and Schedule 6 give her the right to choose in which jurisdiction, within those listed in article 3 (as adapted by paragraph 4 of Schedule 6), she wishes to bring her maintenance claim. She has an unfettered choice in that regard, and is entitled to choose to bring her claim in an English court on grounds of its convenience for her or because she believes that the law it will apply is more advantageous for her. It is a fundamental object of the Maintenance Regulation to confer that right on a maintenance creditor, and the scheme of that Regulation is replicated for intra state cases by Schedule 6. Articles 12 and 13 of the Maintenance Regulation (including as they are replicated for intra state cases by Schedule 6) have to be interpreted in the light of this object. Article 3 of the Maintenance Regulation is concerned with defining the set of jurisdictions in which the maintenance creditor has the right to bring her claim. This is in line with the fundamental object of the Maintenance Regulation to protect the interests of the maintenance creditor as the weaker party and is also indicated by the text of the article itself, read in the light of the legislative history: see para 21 above. Article 12 is directed to dealing with the position which could arise if a maintenance creditor brought maintenance proceedings in more than one court. The phrase the same cause of action in article 12(1) has to be read in the light of the objects of the Maintenance Regulation referred to in the case law cited above. Since article 3 allows a choice of jurisdiction and the substantive law to be applied in relation to a maintenance claim differs as between member states, I consider that the phrase refers to the nature of the claims being brought, ie as claims for maintenance of a specific person, rather than to the precise cause of action in law. It is possible that, by cross maintenance claims, each of a husband and wife might seek to claim that the other owes maintenance. Then, each of them would be the maintenance creditor in respect of his or her claim and would be entitled to exercise the choice of jurisdiction allowed for by article 3. In the context of the Maintenance Regulation, a core object of article 13 is to deal with this situation. In article 13, read in the context of the Maintenance Regulation, I consider that the word actions refers primarily to maintenance claims of the kind to which the special regime in the Regulation applies. If the position were otherwise, and the word actions meant legal proceedings of any kind whatever, that would undermine the fundamental object of the Maintenance Regulation that a maintenance creditor has the right to choose in which jurisdiction to claim maintenance. On such a reading, there would be a substantial risk that this object of the Maintenance Regulation would be undermined by the commencement of proceedings by the maintenance debtor according to the jurisdictional provisions of instruments other than the Maintenance Regulation, laid down in pursuance of entirely different jurisdictional policies than that reflected in the Maintenance Regulation. By contrast, by reading actions as referring primarily to maintenance claims, such claims will be brought in exercise of the rights conferred by the Maintenance Regulation and hence in accordance with its objects and policy. Since it is the case that the Maintenance Regulation may have the effect of authorising more than one person to bring a maintenance claim, it needs to make provision for how a potential jurisdictional clash arising within the objects of the Regulation should be resolved. Any extension of the concept of related action beyond this in the context of the Maintenance Regulation has to be tested against the objects and policy of that Regulation, and accordingly will be narrowly confined to cases in which the risk of conflicting judgments is very clearly made out (an example would be if an obligation to provide maintenance were conditional on a marriage relationship actually continuing, and a court in another member state had been asked to dissolve the marriage, thereby bringing the relationship on which the obligation depends to an end: cf Hoffman v Krieg (Case C 145/86) EU:C:1988:61, [1988] ECR 645, a decision on article 27(3) of the Brussels Convention, which was concerned with irreconcilable judgments). The risk should be direct, real and present, not a speculative possibility. By contrast with the situations in para 44 above, there is no relevant connection in the present case between the wifes maintenance claim under section 27 and proceedings concerned with determining marriage status, which is the subject of the Scottish proceedings brought by the husband. That these are distinct subject matters is underlined by their separation for jurisdictional purposes under the successive EU jurisdictional regimes. Article 3(c) of the Maintenance Regulation does not establish that proceedings concerning the marital status of a person must be regarded as related proceedings for the purposes of article 13. It merely adds a jurisdictional option which the maintenance creditor is entitled to choose, if she wants to. To give it wider significance than that would undermine the fundamental object of the Maintenance Regulation to protect the interests of the maintenance creditor by giving her the choice of where to litigate her claim for maintenance, since it would enable the opposing spouse, who is the maintenance debtor, to choose where to sue in relation to the question of marital status and then to argue, by reference to article 13, that the maintenance creditors maintenance claim must be brought in the same place. In my opinion, interpreting article 13 of the Maintenance Regulation in light of the objects of that Regulation is an entirely conventional approach to interpretation of an EU legislative instrument. Contrary to the view of Lord Wilson, I do not regard this as being in any way at odds with the interpretation given to article 22 of the Brussels Convention by the House of Lords in a different context in Sarrio SA v Kuwait Investment Authority [1999] 1 AC 32. As Lord Saville of Newdigate said in that case ([1999] 1 AC 32, 41F), the interpretation had to be arrived at bearing in mind the objective of the article, and the objective of article 13 of the Maintenance Regulation has to be assessed in light of the fundamental object of the Regulation itself. I should mention that in Moore v Moore [2007] EWCA Civ 361; [2007] 2 FLR 339, it seems (albeit it is not entirely clear) that the Court of Appeal may have assumed but without deciding and with no critical examination of the issue that a maintenance debtor might be able to bring a claim in a jurisdiction of his choice which included an adjustment of family property rights to take account of the maintenance requirements of his wife and that this might be a related action for the purposes of what is now article 13 of the Maintenance Regulation (previously article 28 of the Brussels Regulation). If they really meant to say this, I respectfully doubt that it is correct. It would mean that the maintenance debtor rather than the maintenance creditor could in practice choose the jurisdiction for the maintenance claim, which would have been directly contrary to the fundamental object of article 5(2) of the Brussels Regulation (and the fundamental object of what is now the Maintenance Regulation: see para 21 above). Whatever might have been the view of the Court of Appeal in relation to this point, it does not assist the husband in this appeal. His proceeding in Scotland does not involve any claim for distribution of family property, let alone distribution of family property with allowance to take account of the wifes maintenance needs. In other respects, the decision in Moore v Moore supports the wifes case on this appeal that the husbands divorce proceeding in Scotland is not a related action for the purposes of article 13. So far as relevant for present purposes, the case concerned an English husband and wife who had relocated to Spain. Their relationship broke down and the wife returned to England. The husband filed a petition for divorce in Spain. On 24 April 2006 he made an application in Spain in the context of the divorce procedure for a judgment regarding financial aspects arising from the divorce. In conjunction with this, he made a financial offer to the wife to divide up the familys capital assets in a way which he maintained would allow her to meet her reasonable needs and maintain her standard of living. On 24 May 2006, the wife commenced a maintenance claim in England. The husband objected to the jurisdiction of the English court, arguing that it should stay its proceedings in accordance with articles 27 or 28 of the Brussels Regulation (now articles 12 and 13 of the Maintenance Regulation). The wife, on the other hand, argued that her claim was the only claim relating to maintenance and therefore that articles 27 and 28 were not engaged and the English court had no power to stay her claim. At first instance, McFarlane J decided that the husbands application was not a claim for maintenance: its essential object was to seek a division of the familys capital assets and it was not a claim by the wife for maintenance; so article 5(2) of the Brussels Regulation was not engaged by the Spanish proceedings (see [2007] EWCA Civ 361; [2007] 2 FLR 339, paras 30 31). The Court of Appeal held that the essential object of the husbands application was to achieve sharing of the family property on his terms rather than an order based on financial needs, and consequently that it was not a matter relating to maintenance for the purposes of article 5(2), and therefore there would be no basis for the application of articles 27 or 28 of the Brussels Regulation (paras 94 95). According to the Court of Appeal in Moore v Moore, the husbands petition for divorce and his application for financial relief in the divorce proceedings was not a related action in respect of the wifes claim for maintenance. I consider that this conclusion was correct. It reflects the different nature of the claims and the different jurisdictional regimes which govern issues of marital status and division of family property, on the one hand, and issues of maintenance on the other. A fortiori in the present case, where the only application the husband has made in the Scottish court is for a decree of divorce, the Scottish proceedings do not constitute a related action in respect of the wifes claim for maintenance in the English court. In the present case, as in Moore v Moore, there has only ever been one maintenance claim, ie claim in a matter relating to maintenance obligations (in the language used in article 3 of the Maintenance Regulation). It is the section 27 claim brought by the wife in the English court in reliance on article 3(b) (as adapted by paragraph 4 of Schedule 6), on the grounds that she is habitually resident in England. Article 3 (as so adapted) provides that jurisdiction shall lie with that court. The English court is the court first seised of the maintenance claim, so if there were any question of the Scottish court considering a maintenance claim by the wife it would be obliged to refuse jurisdiction under article 12 of the Maintenance Regulation (as adapted by paragraph 12 of Schedule 6). As explained in R v P, if the wife wished to proceed with her maintenance claim in Scotland rather than in England, it would be open to her to withdraw her claim in England and issue a claim in Scotland. Even if, contrary to my view above, a maintenance debtor might in principle be able to bring a claim of his own which in some sense comprehends a maintenance claim by the maintenance creditor against him and then argue that, as regards a maintenance claim brought by the maintenance creditor herself, either his claim involved the same cause of action between the same parties for the purposes of article 12 or was a related action for the purposes of article 13 of the Maintenance Regulation, that would not assist the husband on this appeal. The interpretation of the definition of related action in article 13(3) has to reflect the policy and objects of the Regulation. The definition in article 13(3) must be strictly applied, since if the husband sought to maintain such an argument he would be seeking to rely on article 13 to derogate from the fundamental object of the Maintenance Regulation (as replicated in Schedule 6 for intra state cases) to provide a right for the wife, as maintenance creditor, to choose where to bring her maintenance claim; and he would be seeking to do so by reference to an action brought by himself which relates to marital status or the division of matrimonial property rather than maintenance. The special jurisdictional regime for maintenance claims is not lightly to be regarded as supplanted by the operation of a distinct jurisdictional regime designed for different types of case. Still more clearly, on application of this approach to article 13(3), the divorce proceeding brought by the husband in the present case is not related to the wifes maintenance claim, within the meaning of article 13(3). The subject matters of the two sets of proceedings are not connected at all. The husband seeks a divorce, to end the marital status. The wife claims maintenance. It is only her claim which falls within the scope of the Maintenance Regulation. Similarly, as regards the possibility suggested by Hoffman v Krieg that in some circumstances a proceeding to dissolve a marriage might be regarded as related for the purposes of article 13, that does not assist the husband in this case. The wifes claim is not predicated on the result of the proceeding in Scotland, so there is no requirement that the two proceedings be heard and determined together to avoid the risk of irreconcilable judgments. An award of maintenance to the wife is in no way incapable of being reconciled with an order for divorce issued by the Scottish court. With respect to Lord Wilson, I consider that the decision of Moor J in N v N (Stay of Maintenance Proceedings) [2012] EWHC 4282 (Fam); [2014] 1 FLR 1399 was wrong and that the Court of Appeal in the present case was right to overrule it. In N v N the husband issued divorce proceedings in Sweden. The wife, who was habitually resident in England, then brought a maintenance claim in England under section 27. She could have brought a maintenance claim in the course of the divorce proceedings in Sweden, but preferred to claim in England. Moor J held that the divorce proceedings and the maintenance claim were related actions for the purposes of article 13 of the Maintenance Regulation, on the basis of very summary and flawed reasoning (para 25): The application here arises out of the marriage. There would be no jurisdiction to make an order if the parties were not married. The proceedings in Sweden relate to the dissolution of that very same marriage. They are undoubtedly related. Indeed, if article 13 of the Maintenance Regulation only applied to applications in each jurisdiction for maintenance, there would be no need for the article at all. The position would be covered by article 12. The two applications would be the same cause of action and would be automatically stayed without the need for the discretion given by article 13. In so far as this reasoning does not simply rest on assertion, in my opinion it is wrong. Article 13 clearly does have a role in circumstances which Moor J had overlooked: see paras 43 44 above. On the basis that the divorce proceeding in Sweden and the maintenance claim in England were, in his view, related actions, Moor J held that the wifes maintenance claim in England should not proceed. His decision was, in my view, directly contrary to the intended effect of the Maintenance Regulation, which was to give the wife (as maintenance creditor) the right to choose the jurisdiction in which to bring her maintenance claim which was most convenient and advantageous for her. She was entitled to claim maintenance under section 27 whether or not the court in Sweden dissolved the marriage for the future, so it was not a case where there was a direct risk of irreconcilable judgments such as would justify application of article 13 by way of qualification of or departure from the fundamental object and policy of the Maintenance Regulation. I find the reasons Moor J gave for his decision in para 28 revealing, as underlining the error which he made in his approach to the interpretation of the Maintenance Regulation. He took himself to be following the spirit of the jurisdictional rules in the Matrimonial Regulation (para 28(a) (c) and (g)); but the jurisdictional regime in that Regulation is very different from the jurisdictional regime in the Maintenance Regulation, which was the relevant regime to be applied. Absent a clearly established risk of directly irreconcilable judgments (of the kind illustrated by Hoffman v Krieg), jurisdiction established under the Matrimonial Regulation in respect of a divorce procedure brought by a maintenance debtor should not be allowed to undermine the right of a maintenance creditor under the Maintenance Regulation to choose the jurisdiction for her maintenance claim. The judge relied on the fact that the husbands finances were based in Sweden (para 28(d)); but that ignores the importance under the Maintenance Regulation of the position of the wife (the maintenance creditor) and the identification of her needs in the place of her habitual residence, as explained in the Jenard report (para 10 above). The judge said, [t]here is no prejudice to the wife as she can make her application in Sweden I am quite satisfied that the only reason she has not done so to date is tactical (para 28(e)). However, there was prejudice to the wife, because by his ruling the judge deprived her of her rights under the Maintenance Regulation and her ability to rely upon section 27 as a matter of substantive law. He clearly thought that the wife had engaged in illegitimate forum shopping; but the Maintenance Regulation laid down a right for her to choose the forum in which to sue. She was entitled to do so by reference to tactical reasons. In the context of the Maintenance Regulation, there was nothing illegitimate in her deciding to bring her maintenance claim in England. At para 28(f) the judge said that it was undoubtedly expedient to hear and determine the issues between these parties together in the same jurisdiction; but the EU jurisdictional regimes expressly contemplate that different claims arising out of the marriage of the parties might well have to be determined in different jurisdictions. The judge also speculated in para 28(f) that the husband might be able to apply for a maintenance order against himself in Sweden; but it would be contrary to the Maintenance Regulation to allow him, as the maintenance debtor, by such a stratagem to determine the jurisdiction in which his wifes maintenance claim should be heard. Conclusion For the reasons given above, I would dismiss this appeal. LADY BLACK: I am grateful to Lord Sales and to Lord Wilson for their thorough description of the legal provisions with which we are concerned, and of the history of those provisions. I need not go over this material again and can proceed directly to deal with the issues that require determination. For the most part, in what follows, I will refer to the various legal instruments using the same shorthand as Lord Sales. Lord Sales identifies four issues as arising in the appeal, which he lists at para 7, whereas Lord Wilson identifies five. The additional issue is whether the Maintenance Regulation (Council Regulation (EC) No 4/2009) (the Maintenance Regulation) itself regulates the allocation of jurisdiction to hear maintenance applications as between the various parts of the UK. Lord Wilson deals with this as his first issue, and I take it first below. The remaining four issues are: i) Can an application for financial provision be made under section 27 of the MCA in a purely domestic case, or, given the terms of section 27(2) as amended, is section 27 now only concerned with cases where another jurisdiction outside the UK is also involved? (Lord Sales Issue (1); Lord Wilsons Second Point) ii) Can a UK court stay maintenance proceedings which are before it, in favour of proceedings in another part of the UK, on the basis that it is a less appropriate forum than the court in the other part of the UK? (Lord Sales Issue (2); Lord Wilsons Fifth Point) iii) If Schedule 6 to the 2011 Regulations (Civil Jurisdiction and Judgments (Maintenance) Regulations 2011) should be construed as preventing a stay of maintenance proceedings in one part of the UK in favour of proceedings in another part of it on a forum non conveniens basis, was it within the powers of the Secretary of State under section 2(2) of the 1972 Act to make regulations to that effect? (the third issue/point for both Lord Sales and Lord Wilson) iv) Are the Scottish proceedings and the English proceedings in this case related actions within article 13 of the Maintenance Regulation as applied by Schedule 6 to the 2011 Regulations, and if so, should the English court stay/dismiss its proceedings on that basis? (the fourth issue/point for both Lord Sales and Lord Wilson) Does the Maintenance Regulation determine intra UK jurisdiction? At paras 128 134 of his judgment, Lord Wilson rejects the Secretary of States argument that the Maintenance Regulation itself determines questions of jurisdiction as between the various parts of the UK. I infer that Lord Sales is of the same view (see his para 22 where he refers to the implementation of the Maintenance Regulation by the 2011 Regulations). I too would reject this argument, for the reasons Lord Wilson gives. Is section 27 confined to cases with an international element? Turning to Lord Sales Issue 1 (Lord Wilsons Point 2), both Lord Sales (para 26) and Lord Wilson (paras 135 140) would reject the husbands argument that section 27 relief is no longer available in purely domestic cases. I share their view that the argument is wrong. Lord Sales considers that the use of the word and, in the section 27(2) provision that the court may not entertain an application under this section unless it has jurisdiction to do so by virtue of the Maintenance Regulation and Schedule 6, might be said to be infelicitous. For the reasons given by Lord Wilson, I do not think that it is in fact inappropriate. Even though there is no need to have recourse to the Maintenance Regulation where there is no competing jurisdiction outside the UK, both parties naturally having gravitated to the courts of the member state entrusted with jurisdiction by Chapter II of the Maintenance Regulation, the Maintenance Regulation is still the foundation for the jurisdiction of the UK courts. In such circumstances, a court might be said to have jurisdiction by virtue of both the Maintenance Regulation and Schedule 6, even in a purely domestic case. In the alternative, should it be wrong to view things this way, I would agree with Lord Sales interpretation of section 27(2), namely that the drafter referred to the Maintenance Regulation and Schedule 6 in order to encompass the whole field of inter state and intra state cases. Either way, the condition in section 27(2) can be satisfied in a purely domestic case. Forum non conveniens discretion? I now turn to Lord Sales Issue 2 (Lord Wilsons Point 5), namely the question of whether there is a discretion to stay on the forum non conveniens basis. Lord Sales deals with the issue at paras 27 to 36. He concludes that there is no scope for the operation of a forum non conveniens discretion in the context of the legislative scheme in Schedule 6. I share Lord Sales view, and I will attempt to explain, as shortly as I can, why that is. Lord Wilson reaches the same conclusion, but does so, as he explains in para 173, on a contingent basis, dependent on the reach of article 13. Although my conclusion is not contingent, I have still found myself much assisted by Lord Wilsons discussion of the arguments for and against the continuing availability of a discretion, as also by Lord Sales analysis of the position. My starting point is that ever since the Brussels Convention, it has been clear that there is no room for a forum non conveniens discretion in cases which are not purely domestic. That appears from Owusu v Jackson (Case C 281/02) [2005] QB 801, from which Lord Sales quotes extensively at para 28. It can be seen from the passages quoted that the decision to reject the doctrine was influenced significantly by the view that it would undermine the uniformity, and predictability, of the rules of jurisdiction, and thus legal certainty. The position was unchanged when the Brussels Convention was replaced with the Brussels Regulation (Council Regulation (EC) No 44/2001). And when the Maintenance Regulation came in, dealing separately with maintenance for the first time, the same approach applied, see R v P (Case C 468/18) [2020] 4 WLR 8, with which Lord Sales deals at paras 30 32. In this context, emphasis was placed on the objective of the Maintenance Regulation, which the CJEU said consists in preserving the interest of the maintenance creditor, who is regarded as the weaker party in an action relating to maintenance obligations (para 30 of the CJEU judgment), and on the importance of the right that the maintenance creditor has to choose from the range of courts featured in article 3. The Maintenance Regulation must be considered exhaustive, said the CJEU (para 42 ibid), and it does not permit a court which has jurisdiction under one of the provisions of the Maintenance Regulation to decline jurisdiction on the basis that another court would be better placed to hear the case (para 44 ibid). Schedule 6 to the 2011 Regulations, in seeking to regulate allocation of jurisdiction within the UK, kept the Maintenance Regulation centre stage. It will be recalled that Schedule 6 provides: 3. The provisions of Chapter II of the Maintenance Regulation apply to the determination of jurisdiction in the circumstances mentioned in paragraph 1, subject to the modifications specified in the following provisions of this Schedule. The circumstances mentioned in paragraph 1 are that there is (i) a jurisdiction clash between parts of the UK, and (ii) the subject matter of the proceedings is within the scope of the Maintenance Regulation. The modifications specified were, of course, set out in the rest of Schedule 6, many of them concerned with replacing references to member state with references to part of the United Kingdom, although there were changes of other types too. As to these other changes, it is relevant for present purposes to note particularly that they included the disapplication of article 9 (which sets out when a court is deemed seised). In contrast, articles 12 and 13 (lis pendens and related actions) were not disapplied. Having chosen to regulate the domestic allocation of jurisdiction by adopting (to a large extent) a model which, operating in its natural habitat, did not permit recourse to the forum non conveniens doctrine, did the drafters of the provisions nonetheless intend to leave the doctrine in place? As Lord Wilson observes at para 168, until the advent of the 2011 Regulations, UK courts could have recourse to the doctrine in maintenance proceedings when determining jurisdiction issues between the courts of different parts of the UK. But the pre 2011 law was significantly different. First, the version of the European regulation that was applied by Schedule 4 of the CJJA 1982 did not include the articles dealing with lis pendens and related actions. Secondly, the effect of section 49 of the CJJA 1982 (the saving for powers to stay, sist, strike out or dismiss proceedings) was clear. It provided that [n]othing in this Act was to prevent a court in the UK staying proceedings. Schedule 4 regulated allocation of jurisdiction around the UK, and Schedule 4 was plainly something in this Act. It followed that nothing in Schedule 4 could prevent a stay on the basis of forum non conveniens, as indeed the Court of Appeal held in the Cook and McNeil cases (see Lord Wilson para 130). If I put to one side for a moment the question of whether section 49 has a continuing role to play in relation to maintenance jurisdiction, it seems to me that Schedule 6 to the 2011 Regulations imports into domestic law a scheme which excludes stays on the basis of forum non conveniens. The principal jurisdiction provisions closely follow those of the Maintenance Regulation which firmly shut out the doctrine. And it can safely be assumed that those who drafted the 2011 Regulations shared, with the creators of the Maintenance Regulation, the objective of protecting the interests of the maintenance creditor, which objective was served by him or her having the choice of the available jurisdictions, a choice which could not be overridden by the selected court declining to entertain the proceedings. Furthermore, there is the inclusion in Schedule 6 (for the first time) of the lis pendens and related actions articles (articles 12 and 13). I cannot persuade myself that articles 12 and 13 and a forum non conveniens discretion can sensibly co exist. The first point to make is that the discretion to stay on forum non conveniens grounds is not confined within the conditions set out in articles 12 and 13, as Lord Wilson points out at para 166. If it continues to be available, it would be quite sufficient to enable the court to take action in the circumstances regulated by the articles. The articles are not therefore required as facilitative provisions. It might be suggested, however, that rather than intending to provide the court with power to stay proceedings or to decline jurisdiction, the purpose of the articles was to confine the courts discretion, in certain cases, by stipulating the conditions for its exercise. I do not find that a convincing explanation for the inclusion of the articles, however. My view can be tested by reference to article 13 (related actions). By article 13(1), any court other than the court first seised may stay its proceedings. It does not have to do so; it is given a discretion, with no restriction on how it is to be exercised. So far, therefore, the article adds nothing to the forum non conveniens discretion. But, it may be said, article 13(1) does limit the discretion to any court other than the court first seised, whereas there is no such limitation with forum non conveniens which would permit even the court first seised to stay its proceedings if the circumstances justified it. True, but what purpose is served by article 13 limiting stays to courts other than the court first seised, if it can be circumvented by the first seised court, exercising a forum non conveniens discretion instead of acting under article 13? Subject always to section 49, to which I will come shortly, it seems to me that what was intended was that the Schedule 6 scheme would follow the Maintenance Regulation model, relying exclusively on articles 12 and 13 to deal with cases where concurrent proceedings existed, ousting reliance on the forum non conveniens doctrine, and thus aligning the intra UK position in this respect with the inter state position, and protecting the interests of the maintenance creditor. Alignment was indeed what the Explanatory Memorandum to the 2011 Regulations said, at para 7.3, was intended: Schedule 6, however, embodies a policy decision to align the rules of jurisdiction between the different parts of the UK on the provisions of the Maintenance Regulation However, I reach my view without placing weight on the Memorandum, particularly given that, as Lord Wilson says at para 171, para 7.3 goes on to make the erroneous observation that when the Brussels Regulation (No 44/2001) came in, the law for domestic maintenance cases between UK jurisdictions was aligned with the requirements of the EU legislation. This was inaccurate because the articles of the Brussels Regulation (No 44/2001) which dealt with lis pendens and related actions were not adopted, and forum non conveniens intervention remained possible in domestic cases until the 2011 Regulations. The final question then, is whether section 49 operates to preserve the forum non conveniens discretion, as Mr Horton submits that it does. Like Lord Sales, and for the reasons he sets out in para 35, I cannot accept this submission. It follows that, in my view, as Lord Sales says at para 36, there is no scope for the operation of a forum non conveniens discretion in the context of the legislative scheme in Schedule 6. I should make plain that in ruling out the exercise of a forum non conveniens discretion in this context, I do not intend to suggest that normal case management powers are unavailable to the court. A stay/dismissal on the ground of forum non conveniens is the practical incarnation of a decision that another forum is the appropriate forum. It is a specialised order and must be distinguished from, for example, an order adjourning a case for a period in order that the court should be better able to decide it. To take an example unrelated to this case, if one court were to be determining issues between spouses as to residence of their children, the court determining the parties financial issues might wish to await the first courts determination on residence, because it would potentially affect the needs and resources of the spouses. The same might apply if one court were determining maintenance and another determining property issues. Was the removal of the forum non conveniens discretion ultra vires? The third issue/point logically falls next for determination ie whether the removal of the forum non conveniens discretion was ultra vires the Secretary of States powers in section 2(2) of the ECA 1972. Both Lord Wilson and Lord Sales would hold that it was not. I agree with them for the reasons that they give. Were the proceedings related actions within article 13? That leaves the question of whether the proceedings in this case fall within article 13 on the basis that they are related actions, and if so whether there should be a stay. For convenience, I will again set out article 13, in the amended form applicable to intra UK cases: 1. Where related actions are pending in the courts of different member states or different parts of the United Kingdom, 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. For the purposes of this article, actions are deemed to be 3. 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. Lord Wilson and Lord Sales differ on the application of article 13 to the present case. Lord Wilson would hold that there are related actions pending in England and Scotland, so that the English court, not being the court first seised, has power under article 13 to stay, and indeed to decline to entertain, the wifes application under section 27. Lord Sales considers article 13 inapplicable, and, given his conclusion that there is no power to stay proceedings on a forum non conveniens basis, this means that the English court proceedings would continue. Lord Wilson reasons that, in contrast to article 12, article 13 applies to proceedings which do not involve the same cause of action. Although he considers that article 13(3) was probably intended to provide an exclusive definition of which actions are deemed to be related, he considers that too literal an interpretation of it would exclude situations to which article 13(2) appears to extend. He considers that the definition of related actions in article 13(3) must be driving at the situation where it is expedient to hear and determine together the issues raised in the two actions, and possible to do so because the actions can be consolidated in the court first seised and heard together there. So, he concludes, in light of the pending Scottish proceedings, the English court has power to stay/decline jurisdiction and the husbands application to this end should be remitted to a judge of the Family Division to determine whether it should be exercised. Lord Sales reasoning revolves around the wifes status as maintenance creditor. It has, in essence, the following steps: therefore Schedule 6 has to be interpreted in the light of the objective i) it was a fundamental object of the Maintenance Regulation to give the maintenance creditor the right to choose the jurisdiction in which to bring her claim; ii) Schedule 6 to the 2011 Regulations replicates the Maintenance Regulation scheme; iii) of giving the maintenance creditor the right to choose her jurisdiction; iv) interpreting article 13 in that light, it should be narrowly confined so that actions refers primarily to maintenance claims of the kind to which the Maintenance Regulation regime applies; v) any extension of the concept of related action beyond this needs to be confined to cases in which the risk of conflicting judgments is very clearly made out; it is not made out here because there is no relevant connection between vi) the wifes section 27 maintenance claim in England and the proceedings concerning marital status in Scotland; vii) be undermined. I have found the interpretation of article 13 extremely difficult. The natural response of a family lawyer might be to say that obviously one court should resolve all the financial issues that arise upon the ending of a marriage. Indeed, an initial response might be to go further and say that one court should resolve all the issues, of whatever sort, arising upon the ending of a marriage. Further thought would remind the family lawyer that that sort of consolidation is by no means universal, however. Two examples will demonstrate the point. First, jurisdiction in relation to parental responsibility issues is often dictated by the habitual residence of the child if it were otherwise, the protection of the maintenance creditor would (see domestic law and the Brussels II Revised Regulation (Council Regulation (EC) No 2201/2003)). Secondly, financial relief can be available in the courts of England and Wales, following the granting of an overseas divorce, under the Matrimonial and Family Proceedings Act 1984, including in situations where there has already been an order elsewhere for a payment, or transfer of property, to be made in favour of the applicant or a child of the family. Nevertheless, the idea of two courts within the United Kingdom both making orders which will regulate the finances of the parties to a marriage following divorce is not very palatable. And yet that is what the position might be if, as the Court of Appeal decided in a very clearly reasoned judgment, article 13 does not permit the court to intervene. The husbands argument is that the Court of Appeal erred in its construction of article 13 for one of two alternative reasons. First, there was no need to construe the 2011 Regulations strictly in accordance with EU law, and the Court of Appeal should have construed the domestic incarnation of article 13 so as to allow for a stay in the present circumstances. But secondly, if it was right to construe the 2011 Regulations in accordance with EU law, it was wrong to proceed upon the basis that, as it is put in the husbands written case, actions could only be related if they both had maintenance as their cause of action. The Court of Appeal was wrong, in the husbands submission, to be guided towards this view by Moore v Moore [2007] 2 FLR 339 (see para 48 of Lord Sales judgment and para 157 of Lord Wilsons judgment). Amongst other things, the judgments in Moore did not consider the lis pendens and related actions articles separately. If both actions had to have maintenance as their cause of action, article 13 would have a very limited scope indeed. On the contrary, in the husbands submission, proceedings for divorce and proceedings for maintenance, arising out of the same marriage, can be sufficiently closely connected to be related. If his appeal is not allowed, the husband says, the law will serve to encourage forum shopping, by maintenance creditors within the UK, in favour of England and Wales. The wife argues that the Court of Appeals analysis is unimpeachable. She submits that Moore v Moore is a complete answer to the husbands case, and there is an even stronger argument against the application of article 13 in the present case than there was in the Moore case, because in Moore there were ancillary financial proceedings in Spain, whereas in the present case there are merely divorce proceedings with no financial aspects in Scotland. As for the husbands proposal that there should be a more permissive interpretation of article 13 for domestic proceedings, the wifes submission is that there is no warrant for that, given the importation of articles 12 and 13 from the Maintenance Regulation into domestic law. And in any event, no matter how broad the interpretation, article 13 could not encompass the two sets of proceedings in this case. I have already explained that in my view, the 2011 Regulations were intended to follow the scheme of the Maintenance Regulation, and that those who drafted the 2011 Regulations shared the objective of protecting the maintenance creditor by conferring on him or her a choice from whatever jurisdictions were available on the facts of a particular case. The provisions of article 13 must, I think, be interpreted in light of that choice and the protection it is intended to confer. If article 13 is interpreted as widely as the husband submits it should be, the protection of the maintenance creditor would be diluted. The facts of the present case demonstrate that the maintenance creditors habitual residence will not necessarily be in the part of the United Kingdom which has jurisdiction over the divorce suit. If the wife has to pursue her maintenance claim in Scotland, alongside the divorce there, she will have been deprived of the possibility of litigating in her place of habitual residence. I can see the attraction of Lord Wilsons approach of looking to see whether it is expedient to hear and determine the issues raised in the two actions together. However, even giving heed to the helpful observations of Lord Saville of Newdigate in Sarrio SA v Kuwait Investment Authority [1999] 1 AC 32, 41, to the effect that a broad common sense approach should be taken to whether actions are related (see Lord Wilsons judgment at para 155), I cannot reconcile Lord Wilsons rather wide interpretation with the wording of article 13 or the objective of the Maintenance Regulation or of the 2011 Regulations. In explaining why I say this, and what my interpretation of article 13 would be, I would start by noting that article 12 and article 13 must be dealing with different situations, otherwise there would be no point in having both of them. If the two sets of proceedings in question were maintenance claims by the wife against the husband, one could expect the situation to fall within article 12 (same cause of action, same parties), so article 13 must be intended to extend further than that. In contrast to article 12, it does not require that the proceedings involve the same cause of action between the same parties. It is focused instead on related actions. The ambit of this category is to be ascertained from article 13(3), which, like Lord Wilson, I think is intended to be a complete definition. Related actions are, accordingly, actions which 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. Articles 13(1) and 13(2) concern only related actions which come within this definition, article 13(1) referring to the situation [w]here related actions are pending and article 13(2) referring back to this in its opening words [w]here these actions are pending . It is plain from article 13(3) that the actions have to be closely connected. But that is insufficient to define a related action for the purposes of the article. Actions could be said to be closely connected if they were both brought by the same litigant, but if one action was against a retailer in respect of a defective domestic appliance and the other was a petition for divorce, no one would suggest that they were related actions for article 13 purposes. The reference to avoiding the risk of irreconcilable judgments is vital, therefore, in fixing the boundaries of the category. We are asked to draw from Moore v Moore the principle that to be related, both actions must relate to maintenance. It will be recalled that in Moore, they did not, because, whether or not the wifes application in England, under Part III of the Matrimonial and Family Proceedings Act 1984, involved maintenance, the husbands application in Spain did not, being concerned with a division of matrimonial property. The Court of Appeal in the present case relied on Moore as providing the answer (see paras 89 to 92 of King LJs judgment), concluding that separate applications, one concerning status alone (Scotland) and the other for maintenance (England), could not be related, when in the Moore case the Court of Appeal held that a general application for financial relief and a discrete application for maintenance were not. The husband argues that no reliance should be placed on Moore v Moore because the Court of Appeal in that case did not, in fact, address the issues that arise in relation to article 13, not having given any specific attention to its precursor, article 28 of the Brussels Regulation (No 44/2001). For my part, I do not consider that there is much to be gained from arguing over the detail of Moore v Moore, although it is important to have regard to the fact that the court there, on stronger facts than those of the present case, found no basis to stay the English proceedings. The decision is also useful in pointing up the firm distinction made in what is there called the Brussels regime (for present purposes, the Brussels Convention of 1968, the Brussels Regulation, Brussels II (Council Regulation (EC) 1347/2000), and in due course Brussels II Revised, and the Maintenance Regulation) between maintenance on the one hand, and rights in property arising out of a matrimonial relationship on the other. As Lord Sales says at paras 17 and 46 of his judgment, maintenance obligations and questions of marital status are also treated as separate matters for jurisdiction purposes. Similarly, I would not linger too much over the case of N v N (Stay of Maintenance Proceedings) [2014] 1 FLR 1399 (see para 54 of Lord Sales judgment and para 156 of Lord Wilsons judgment), which is relied upon by the husband, who commends the analysis of Moor J, but which the Court of Appeal in the present case concluded was wrongly decided (para 87 of King LJs judgment). In my view, what is important is to go back to the wording of article 13 and to interpret it in the light of the objectives of the regulatory scheme which the 2011 Regulations have adopted to cater for intra UK cases. So what sort of proceedings are likely to be closely connected in a way which would give rise to a risk of irreconcilable judgments within the meaning of article 13(3)? I do not intend to offer a definitive answer to this question all that is required is to determine whether the two sets of proceedings in this case were related actions, and further mapping out of the territory of article 13 ought to wait until it is required to cater for other facts. But examples of the sorts of situations that might fall within article 13(3) can still be helpful in ascertaining its meaning. Two such useful examples can be found in the husbands written case. They are: (1) where a spouse is being pursued for maintenance by his or her first and second spouse at the same time, and (2) where there are child maintenance proceedings in one court, and spousal maintenance proceedings in another (assuming of course that these are considered to be two separate causes of action). Lord Sales suggests the situation where there are cross applications for maintenance, by the wife against the husband in one part of the UK and by the husband against the wife in another (see para 44 of his judgment). He gives a further example at para 45, inspired by the case of Hoffman v Krieg (Case 145/86) [1988] ECR 645. Another possibility might be where one spouse (say, the wife) applies for maintenance from the other spouse in one part of the UK and, in another part, the husband applies for an order against himself (see Dart v Dart [1996] 2 FLR 286, 292). Again, this would depend on whether or not the two actions were, in fact, classed as proceedings involving the same cause of action and therefore within article 12 rather than article 13. It is also worth noting that, in this last example, there would need to be consideration of the point made by Lord Sales, at para 46 of his judgment, about the potential problems of a maintenance debtor choosing the jurisdiction for a maintenance claim. But, in all of these examples, it is possible to foresee that, depending on the precise facts, there could be a risk of the two courts giving irreconcilable judgments. Furthermore, looking particularly at article 13(2), as Lord Wilson does, it is possible to contemplate that, in any of these examples, the first instance court first seised might have jurisdiction over both actions, and be permitted to consolidate them. The present case is, in my view, materially different from these examples. As I see it, the Court of Appeal was right to decide that here, where one action deals with status and the other with maintenance, there can be no risk of irreconcilable judgments. It was not deflected from its conclusion by the fact that an application could be made for financial relief in the Scottish proceedings. What mattered, it considered (and I agree) was that the Scottish Court was not actually seised of the question of maintenance. Moreover, as Lord Sales says at para 53, even the Hoffman v Krieg inspired possibility that in some circumstances a proceeding to dissolve a marriage might be regarded as related for article 13 purposes does not assist the husband here. A judgment in the wifes maintenance claim would not be irreconcilable with a divorce decree in Scotland, as provision made under section 27 can survive divorce (see section 28 MCA). Concentrating therefore on the wording of article 13, and reminding myself of the special objective of protecting the maintenance creditor, and of the roots that the article has in the European tradition of a firm separation of maintenance and property issues, I agree with the Court of Appeal, and with Lord Sales, that the English and the Scottish proceedings are not related actions. The frustration that a UK family lawyer might feel, when contemplating the potential fragmentation of the proceedings required to resolve the financial affairs of the husband and wife upon the ending of their marriage, is understandable. It is, however, in my view, a consequence of the system that has been adopted by the 2011 Regulations, promoting maintenance as a separate claim, and prioritising the needs of the maintenance creditor. I should add that I am grateful to Lord Wilson for his searching postscript, which has caused me to revisit my own view of the issues in the case, and to subject it to further careful scrutiny. In the end, however, this process has not caused me to alter my analysis, even though I entirely understand how frustrating the result might be for those who become involved, in whatever capacity, in litigation within the United Kingdom concerning family finance. LORD WILSON: (dissenting) (with whom Lady Hale agrees) A husband, habitually resident in Scotland, lodges a writ for divorce in Scotland. His wife, now habitually resident in England, is constrained by the law to concede that the divorce should proceed in Scotland; so she consents to the dismissal of the petition for divorce which she has issued in England. She wishes to make financial claims against the husband. But, instead of then making them within the Scottish proceedings for divorce, she issues an application in England in which she alleges that he has failed to provide reasonable maintenance for her and so should be ordered to make periodical payments to her and to pay her a lump sum. The issue is whether the English court has power to stay the application made to it by the wife and thereby in effect to require her to make her financial claims against him within the Scottish proceedings for divorce. It is common ground, and a subject of current political debate, that financial awards to a spouse following both separation and divorce are more generous in England and Wales than in Scotland. This fact explains the genesis of the issue but plays no part in its resolution. One would expect resolution of the issue to be straightforward. In fact it proves to be absurdly complicated. The husband is aged 57 and the wife is aged 61. They married in England in 1994. From 1995 until their separation in 2012 they lived in Dumbarton, which lies north west of Glasgow. There was a child of the marriage, now adult. Upon separation, the wife came to live south of the border, now in London, and she has become habitually resident in England. The habitual residence of the husband continues to be in Scotland. In 2013 the wife issued a petition for divorce in England. In 2014 the husband lodged a writ for divorce in Scotland. Since they had last resided together in Scotland and had by then been habitually resident there for at least a year, the English court was obliged to stay the wifes petition: section 5(6) of, and paragraph 8(1) of Schedule 1 to, the Domicile and Matrimonial Proceedings Act 1973 (the DMPA). In January 2015, after it had been stayed, her petition was by consent dismissed. But thereupon the wife issued an application in England under section 27 of the Matrimonial Causes Act 1973 (the MCA). Such applications are rare. The ground of the wifes application under section 27 of the MCA was that the husband had failed to provide reasonable maintenance for her. Upon that ground she sought orders that he should make periodical payments to her under subsection (6)(a) and should pay her a lump sum under subsection (6)(c). Under section 27 a court in England (and of course Wales) has no power analogous to its power when granting a divorce to order a transfer of, or other adjustment of, property in favour of an applicant or to make a pension sharing order. An applicant under section 27 has to be a party to a subsisting marriage. The marriage between these parties subsists even now because no decree of divorce has yet been granted to the husband pursuant to his writ in Scotland. An order for periodical payments under subsection (6)(a) cannot extend beyond the joint lives of the parties: section 28(1)(a). It can extend beyond the parties later divorce. In that event, however, it would also end on the payees remarriage: section 28(2). By contrast the inevitable future grant of a decree of divorce in Scotland will not enable the wife to apply in England for financial relief following overseas divorce under Part III of the Matrimonial and Family Proceedings Act 1984 (the 1984 Act): for, by section 27 of it, Scotland is not an overseas country. The husband, acting in person, defended the wifes application under section 27 of the MCA, which was determined by Parker J on 8 July 2016, [2016] EWHC 668 (Fam), [2017] 1 FLR 1083. The husbands first contention was that the wife had not been habitually resident in England on the date of issue of her application, with the result that the court would have lacked jurisdiction to entertain it. Parker J rejected the husbands first contention, about which nothing further need be said. His second contention was that, even if the court had jurisdiction to entertain it, it should stay the wifes application in the light of the writ for divorce in Scotland, the lodging of which had preceded it. The arguments presented to Parker J in this regard bore little relation to those which have since developed. At all events Parker J refused to stay the application and proceeded to make an interim order for the husband to make periodical payments to the wife. She also made an order for payments by the husband in respect of the cost of legal services to be obtained by the wife; and whether the judge had jurisdiction to do so is irrelevant to this appeal. The husband, still acting in person, applied to the Court of Appeal for permission to appeal against the orders made by Parker J. His application was refused on paper. Then, however, the Bar Pro Bono Unit assigned to him the services of Mr Horton and Mr Laing. At an oral renewal of the application, they secured permission for him to appeal to the Court of Appeal. They have continued to represent him, free of charge, in his substantive appeals to the Court of Appeal and now before this court. The amount of work which they have done for him is phenomenal; and its high quality will become evident as this judgment proceeds. By a judgment delivered by King LJ on 17 May 2018, with which David Richards and Moylan LJJ agreed, the Court of Appeal dismissed the husbands appeal: [2018] EWCA Civ 1120, [2019] Fam 138. Its dismissal of the two, alternative, grounds for a stay of the wifes application, pressed upon it on behalf of the husband, is better explained when, later in this judgment, those grounds are examined. Its reasons for dismissal of the husbands subsidiary objections to the orders for interim periodical payments and for payments in respect of the cost of legal services are irrelevant to this further appeal. Rival Jurisdictions in Respect of Maintenance For reasons which will become clear, analysis of the law in relation to the stay or dismissal of a claim for maintenance in England in favour of the jurisdiction of Scotland or Northern Ireland must be accompanied by an analysis of EU law in relation to such an issue as between member states. The two analyses must go hand in hand; and they must be both historical and chronological in order for them to illumine the evolution of these laws up to the present day. History The history begins with the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters signed at Brussels on 27 September 1968 (the 1968 Convention). The fourth paragraph of its preamble made clear that it governed international jurisdiction, in other words as between one contracting state and another. It did not purport to provide for the allocation of jurisdiction between such different legal parts of a contracting state as might exist. Indeed in due course the European Court of Justice (the ECJ) expressly recognised that it did not thus provide: Kleinwort Benson Ltd v Glasgow City Council (Case C 346/93) [1996] QB 57. The civil matters within the scope of the convention included claims for spousal maintenance. The basic jurisdictional provision, set out in article 2, was that a person domiciled in a contracting state should be sued there. But article 5(2) made special provision in matters relating to maintenance; for the maintenance creditor, in other words the applicant for maintenance, could instead sue in the place where she or he was domiciled or habitually resident. As the Advocate General of the ECJ explained in Farrell v Long (Case C 295/95) [1997] QB 842, paras 69 to 71, there were two main reasons for the grant of this option: first, the applicant for maintenance was likely to be the more impecunious of the parties and might be unable to afford to go abroad to sue in the state of the respondents domicil; and, second, the court of the place of the applicants domicil or habitual residence was better placed to assess her or his needs. By articles 21 and 22, under the heading Lis pendens related actions, the convention provided for the determination of issues of rivalry between contracting states in relation to the exercise of the jurisdiction for which it provided; but, since the substance of these articles was later replicated in a second, and even more relevantly a third, community instrument, there is no need further to consider them at this stage. Schedule 1 to the DMPA governed and continues to govern the staying of matrimonial proceedings in England in favour of the jurisdictions of Scotland and Northern Ireland. Indeed, as noticed in para 96 above, it operated so as to require a stay of this wifes English petition for divorce. But, by paragraph 2 of Schedule 1, matrimonial proceedings are so defined as not to include an application for maintenance made outside proceedings for divorce or for relief analogous to divorce. On 1 January 1973 the UK became a member of what later came to be called the European Union; and it ratified the 1968 Convention. On 1 January 1987 most of the Civil Jurisdiction and Judgments Act 1982 (the 1982 Act) came into force. By section 2(1), it gave the force of law in all three legal parts of the UK to the 1968 Convention, in other words so as to regulate jurisdiction as between any of those parts on the one hand and another contracting state on the other. But, by section 16, entitled Allocation within UK of jurisdiction in certain civil proceedings, it also extended provisions in the 1968 Convention, albeit in a modified form, so as to regulate jurisdiction to entertain civil proceedings within the scope of the convention as between one part of the UK and another part of it. Paragraph 1 of Schedule 4, to which section 16 gave effect, imported, albeit with modification, the basic provision that a person domiciled in one part of the UK should be sued in the courts of that part. But, again with modification, it also imported the special provision in the convention under which an applicant for maintenance could instead sue in the place where she or he was domiciled or habitually resident. In that way the indulgence given to the applicant for maintenance in the convention was carried into the domestic law of the UK. But the provisions in articles 21 and 22 of the convention entitled Lis Pendens related actions were not imported into Schedule 4. So, unless other provision were to be made in the 1982 Act, there would be nothing to determine issues of jurisdictional rivalry between the three parts of the UK in relation to civil proceedings within the scope of the convention. In England the High Court has an inherent power to stay proceedings before it. The power, being inherent at common law, has not been conferred by statute. But its existence has long been recognised in statute: see section 24(5) of the Supreme Court of Judicature Act 1873 (36 & 37 Vict c 66), and now section 49(3) of the Senior Courts Act 1981. The power has also been extended to the county court: see section 76 of the County Courts Act 1984. It was this inherent power to stay proceedings which was specifically recognised in the 1982 Act as applicable to proceedings brought in England pursuant to Schedule 4. For section 49 provides: Nothing in this Act shall prevent any court in the United Kingdom from staying, sisting, striking out or dismissing any proceedings before it, on the ground of forum non conveniens or otherwise, where to do so is not inconsistent with the 1968 Convention Inasmuch as the 1968 Convention did not extend to the subject matter of Schedule 4, namely the allocation of jurisdiction as between the three parts of the UK, a stay of proceedings brought pursuant to the schedule would not be inconsistent with the 1968 Convention. In their General Note to Schedule 4 in Current Law Statutes Annotated 1982, its authors explain the omission from the schedule of articles 21 and 22 of the convention. They refer to section 49 and assert that it enables the courts of the different parts of the UK, in relation to jurisdiction as between themselves, to adopt a more sophisticated approach of assuming or yielding jurisdiction according to the court which is considered most suitable for disposing of the case than is provided for in the [articles], which [adopt] the rule that the court first seised shall have jurisdiction. The English stay and the Scottish sist to which section 49 of the 1982 Act referred, and still refers, were on the ground of forum non conveniens or otherwise. It is possible that, in referring to forum non conveniens, the drafter of the 1982 Act regarded it as the ground only of a Scottish sist; and that the word otherwise was intended to cover the ground of an English stay. For it was only in 1986, four years after the Acts passage into law, that the principle of forum non conveniens was squarely adopted as part of English law: Spiliada Maritime Corpn v Cansulex Ltd (The Spiliada) [1987] AC 460. In Chapter 3 of Forum (Non) Conveniens in England (2019), Ardavan Arzandeh charts the slow movement of the principle across the border. In summary the principle had been established in Scotland by 1873: Macadam v (a) Macadam (1873) 11 M 860; (b) the ground for a stay of proceedings in England was narrower, namely whether they were vexatious and oppressive: McHenry v Lewis (1882) 22 Ch D 397; (c) the narrowness of the English ground, which persisted for 90 years, betrayed a degree of arrogance that proceedings in England were intrinsically better than proceedings elsewhere, exemplified by comments by Lord Denning MR in the Court of Appeal in The Atlantic Star [1973] QB 364, 381 382; (d) on further appeal in that case, [1974] AC 436, the House of Lords, while not expressly adopting the Scottish principle, moved closer to it by enlarging the considerations relevant to a stay; and (e) in the Spiliada case, cited above, the House of Lords, in squarely adopting the Scottish principle as part of English common law, defined the basis of it to be to permit a stay where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, ie in which the case may be tried more suitably for the interests of all the parties and the ends of justice: Lord Goff of Chieveley, at p 476. It is surely better to use English language when attempting to explain English law. In the Spiliada case Lord Goff observed at pp 474 475 that appropriate was a better translation of the Latin word conveniens than convenient. The Latin word forum, however, has also become an English word. So, in what follows, I will refer to the principle as being that of the less appropriate forum. The history continues with Council Regulation (EC) No 44/2001, 22 December 2000, on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (the Judgments Regulation or the Brussels Regulation). The regulation came into force on 1 March 2002 (article 76) and it superseded the 1968 Convention (article 68). It covered much of the ground which the 1968 Convention had covered; and, like that convention, it contained nothing to indicate any purported regulation of jurisdiction as between the different legal parts of a member state. Its main purpose, explained in its sixth recital, was to make provisions which, unlike those in the convention, would be binding and directly applicable. Since it was a regulation, such was its effect. Like the convention, it applied to jurisdiction in matters relating to maintenance; and, by article 5(2), it continued the specific provision for an applicant for maintenance to have the option to proceed in the courts for the place where she or he was domiciled or habitually resident rather than in the courts of the member state in which the respondent was domiciled. By articles 27 and 28, in the section entitled Lis pendens related actions, the regulation repeated articles 21 and 22 of the convention subject only to some verbal re arrangement. Albeit out of chronological order, it is appropriate to note here that, with effect from 10 January 2015, the Judgments Regulation was recast by Regulation (EU) No 1215/2012, 12 December 2012, (the Recast Judgments Regulation). It will be necessary to refer to one article of this in para 152 below. The supersession of the 1968 Convention by the Judgments Regulation required substantial amendment to the 1982 Act. This was achieved by the Civil Jurisdiction and Judgments Order 2001 (SI 2001/3929). But, as in the case of their predecessors in the convention, there was no attempt to import the rules in articles 27 and 28 of the Judgments Regulation into the substituted rules in Schedule 4 for the allocation of jurisdiction within the UK. Issues of jurisdictional rivalry within the UK remained solely governed by section 49 of the 1982 Act, which was not amended. Next in time came Council Regulation (EC) No 2201/2003, dated 27 November 2003 (the Brussels II Revised Regulation or the Matrimonial Regulation), which, in expanding the rules of an earlier regulation, applied to the allocation of jurisdiction as between member states not only in matters of divorce or analogous to divorce but also in most matters relating to children. By paragraph 3(e) of article 1, however, matters of maintenance were excluded from the regulation. As was explained in its eleventh recital, they were to continue to be covered by the Judgments Regulation. Now at last we reach the two pieces of legislation which lie at the heart of the appeal. The first is Council Regulation (EC) No 4/2009, 18 December 2008, on Jurisdiction, Applicable Law, Recognition and Enforcement of Decisions and Cooperation in matters relating to Maintenance Obligations (the Maintenance Regulation). The second is the Civil Jurisdiction and Judgments (Maintenance) Regulations 2011 (SI 2011/1484) (the 2011 Regulations), made by the Secretary of State for Justice pursuant to section 2(2) of the European Communities Act 1972 (the 1972 Act) and extending to all parts of the UK. Both pieces of legislation came into force on 18 June 2011. The effect of the Maintenance Regulation was to remove from the Judgments Regulation the EUs rules in respect both of the rights of its members to determine maintenance applications and of their reciprocal obligations to recognise and enforce maintenance orders: article 68(1). It is a bespoke regulation which addresses only maintenance obligations; and in relation to them it widened, and no doubt improved, the rules in the Judgments Regulation. In its first recital to the Maintenance Regulation the EU Council referred to its intention to adopt measures relating to judicial cooperation in civil matters having cross border implications. In its fourth recital it recorded an invitation made to it in 1999 to establish common procedural rules to simplify and accelerate the settlement of cross border disputes concerning maintenance applications. In its ninth and tenth recitals it stated as follows: (9) A maintenance creditor should be able to obtain easily, in a member state, a decision which will be automatically enforceable in another member state without further formalities. (10) In order to achieve this goal, it is advisable to create a Community instrument in matters relating to maintenance obligations bringing together provisions on jurisdiction, conflict of laws, recognition and enforceability, enforcement, legal aid and cooperation between Central Authorities. Article 3 of the regulation, in Chapter II entitled Jurisdiction, defines the general jurisdiction of a member state to determine a maintenance application in terms different from those of the Judgments Regulation. But, as before, the applicant for maintenance is given an initial choice. For jurisdiction is conferred on the court for the place where (a) the respondent or (b) the applicant is habitually resident; or, if the maintenance application is ancillary to divorce proceedings, it is conferred, (c), on the court which has jurisdiction to hear them. The significance of this third basis of jurisdiction will already be apparent: it is that the regulation expressly recognises that a claim for maintenance can appropriately be made in the divorce court. A fourth basis, (d), is irrelevant. It will be seen that in the present case the Scottish court would have jurisdiction on the first and third bases and that the English court has jurisdiction on the second basis. The Maintenance Regulation did not change the rules which required or permitted the court of a member state to stay proceedings in respect of which jurisdiction had been conferred on it in favour of the court of another member state. For articles 27 and 28 of the Judgments Regulation were repeated, word for word, in articles 12 and 13 of the Maintenance Regulation. Article 12, entitled Lis pendens, provides: 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 13, entitled Related actions, is of central importance to the resolution of this appeal. It is better set out in para 147 below, where it must begin to receive close attention. Articles 12 and 13 of the Maintenance Regulation both refer to the seisin of the court, as had articles 27 and 28 of the Judgments Regulation and indeed articles 21 and 22 of the 1968 Convention. The 15th recital of the Judgments Regulation had declared that there should be a clear mechanism for obviating problems flowing from national differences as to the determination of the time when a case is regarded as pending [and for] the purposes of this Regulation that time should be defined autonomously. The autonomous concept of seisin had therefore been defined in article 30 of the Judgments Regulation; and the definition was repeated, in effect word for word, in article 9 of the Maintenance Regulation in order to enable articles 12 and 13 to be similarly interpreted throughout the member states. It is unnecessary to set it out. The principal purpose of the 2011 Regulations was to facilitate the application of the Maintenance Regulation within the UK. Since the latter was to come into force on 18 June 2011, it was necessary for the 2011 Regulations also to come into force on that date. Unfortunately the Ministry of Justice left it late to make the regulations, which, under paragraph 2(2) of Schedule 2 to the 1972 Act, were subject to the negative resolution procedure. They were both made and laid before Parliament on 13 June 2011 and so came into force only four clear days later. In addition to the Explanatory Note appended to the regulations, an Explanatory Memorandum was also laid before Parliament for the attention of its Joint Committee on Statutory Instruments. In the memorandum the Ministry expressed regret for the breach of the convention which requires instruments subject to the negative resolution procedure to be laid before Parliament at least 21 days before they come into force. It is unclear whether the committee had any opportunity during those four days to consider the regulations. Annexed to the Explanatory Memorandum was a Transposition Note, in which, at para 5, the Ministry of Justice stated: These regulations do not go beyond what is necessary to facilitate the application of the Maintenance Regulation in the United Kingdom, with one minor exception. This minor exception was the product of a decision that, just as the EU was removing its rules in respect of maintenance issues from the Judgments Regulation and was placing them into a regulation of their own, so too the UK should remove its rules for the allocation of maintenance proceedings within the different parts of the UK from the 1982 Act and should place them separately, namely within Schedule 6 to these regulations. Their removal from the 1982 Act was effected by paragraph 11 of Schedule 4 to the regulations. But the rules were not just to be placed separately: they were to be changed, at least to some extent. In its Explanatory Memorandum the Ministry stated, at para 3.3: The Departments view was that the policy decision to align the jurisdiction scheme for intra UK cases on the jurisdictional rules of the EU Maintenance Regulation was the right approach as this replicated what was done in 2002 when the [Judgments Regulation] was implemented Unfortunately, as will be explained in para 171 below, it was not correct to say that the provisions of the 1982 Act had been aligned with the Judgments Regulation in 2002. In para 7.3 of the memorandum the Ministry proceeded to explain that the rules in Schedule 6 would determine which court [within the different parts of the UK] will have power to deal with applications within the scope of the Maintenance Regulation. How much consultation had the Ministry conducted in relation to the proposed content of Schedule 6 to the 2011 Regulations? The answer is given in para 8.1 of the Explanatory Memorandum: there had been a limited specialist technical consultation which had extended to the entire contents of the proposed regulations and which had lasted for only three weeks. The absence of any proper consultation in relation to Schedule 6 and of any sensible opportunity for parliamentary scrutiny of it may help to explain why it is in part an unsatisfactory piece of legislation. Paragraph 1 of Schedule 6 to the 2011 Regulations, to which regulation 8 gave effect, provides: The provisions of this Schedule have effect for determining, as between the parts of the United Kingdom, whether the courts of a particular part of the United Kingdom have jurisdiction in proceedings where the subject matter of the proceedings is within the scope of the Maintenance Regulation as determined by article 1 of that Regulation. Although the reference is to whether the courts have jurisdiction, it seems clear that the provisions of the schedule are also intended to govern, at least to some extent, whether they should exercise such jurisdiction as they have. Paragraph 3 of Schedule 6 provides: The provisions of Chapter II of the Maintenance Regulation apply to the determination of jurisdiction in the circumstances mentioned in paragraph 1, subject to the modifications specified in the following provisions of this Schedule. Paragraph 12 and, being of central importance to the resolution of this appeal, paragraph 13 of Schedule 6 provide: 12. Article 12 applies as if after different member states there were inserted or different parts of the United Kingdom. 13. Article 13 applies as if after different member states there were inserted or different parts of the United Kingdom. The reader of para 117 above will recall that articles 12 and 13 of the Maintenance Regulation fall to be construed by reference to the autonomous concept of seisin, which is defined in its article 9. Paragraphs 12 and 13 of Schedule 6 to the 2011 Regulations make no change to the reference to seisin in articles 12 and 13 of the regulation. Why then does paragraph 10 of the Schedule provide that article 9 does not apply? Sir James Eadie, on behalf of the Secretary of State, confesses to having no clear answer; and he concedes that the absence of a definition of seisin for the purposes of construing articles 12 and 13, as modified for the purposes of Schedule 6, is unsatisfactory. UK courts, so it seems, are expected to seek to interpret the concept by provisions of their own laws. It is important to realise that it was only part of the Maintenance Regulation which was imported, as modified, into Schedule 6 to the 2011 Regulations. The importation relates only to the rules in Chapter II of the Maintenance Regulation entitled Jurisdiction. There was no attempt to import the rule entitled Applicable Law in Chapter III of the regulation nor the rules entitled Recognition, Enforceability and Enforcement of Decisions in Chapter IV of it. Under Chapter III the applicable law falls to be determined by reference to the Hague Protocol dated 23 November 2007, the effect of which, for those states which have ratified it (not including the UK), is that, subject to exceptions, maintenance obligations are governed by the law of the state of habitual residence of the applicant for maintenance. Within the UK, however, the court of such part as has jurisdiction under Schedule 6 will determine the application for maintenance by reference to its own law. Equally, the recognition and enforcement in one part of the UK of a maintenance order made in another part of it (including an order made in England under section 27 of the MCA) are governed by the provisions for registration and enforcement in sections 16 to 18 of the Maintenance Orders Act 1950. A footnote to this section requires the reader, however briefly, to step back from Schedule 6 to the 2011 Regulations and into the text of the regulations themselves. Regulation 10 obliged the Secretary of State to review the operation of the regulations in England and Wales and to publish his conclusions in a report. He was obliged to do so by 18 June 2016. Now, almost four years later, no such report has been published. Sir James has no instructions with which to explain the reason for this breach of the law indeed of the Secretary of States own law. The breach is irrelevant to the disposal of this appeal. But it does not follow that we should overlook it. We should direct the Secretary of State within 28 days to submit proposals for his belated compliance with Regulation 10. Five Points Does, then, the English court have power in one way or another to stay the wifes application? Five points are raised. In my view the first three and the fifth should be rejected; but the fourth should be upheld. First Point The first point arises out of the third. By the latter, the husband asserts that within Schedule 6 to the 2011 Regulations the Secretary of State included a provision which he had no power to include. It is this third point, not raised in the Court of Appeal, which has precipitated the intervention of the Secretary of State in this further appeal. By his intervention the Secretary of State introduces a startling point which logic requires the court to consider first. It is at least arguable, so he contends, that the Maintenance Regulation has effect (and, being a regulation, has direct effect) in allocating jurisdiction to hear maintenance applications not only between member states but also between the different legal parts of a member state such as the UK. The argument would mean, of course, that in creating Schedule 6 to the 2011 Regulations in order that, as modified, the Maintenance Regulation should apply to the allocation of jurisdiction within the UK (see paras 121 and 122 above), the Secretary of State made legislation of wholesale redundancy; and that, in stating in the Explanatory Memorandum that he had made a policy decision to align the provisions of the Maintenance Regulation with those for the allocation of jurisdiction within the UK (see para 119 above), he substantially, albeit no doubt unintentionally, misspoke. It is clear that the provisions of the 1968 Convention had not extended to the allocation of jurisdiction between one part of a contracting state and another: see para 102 above. It is equally clear that the Judgments Regulation had not so extended: Cook v Virgin Media Ltd and McNeil v Tesco plc [2015] EWCA Civ 1287, [2016] 1 WLR 1672, paras 18 to 26. How, then, and indeed why, might that substantial extension have been introduced when maintenance applications were removed from the Judgments Regulation and placed within an instrument bespoke to themselves, namely the Maintenance Regulation? In answer the Secretary of State raises two arguments. The first argument is to refer to two EU regulations to which, as it happens, the UK is not subject and which address not the jurisdiction of member states to determine actions for the enforcement of contractual and non contractual obligations respectively but the law which they are required to apply when they do so: Regulation (EC) No 593/2008, 17 June 2008 (Rome I) and Regulation (EC) No 864/2007, 11 July 2007 (Rome II). Article 22(2) of the former and article 25(2) of the latter provide that member states which comprise different legal parts are not obliged to apply the regulations to conflicts solely between the laws of those parts. The absence of analogous provision in the Maintenance Regulation is said to be significant. Might it, however, have been at least marginally more significant if there had been analogous provision in the Judgments Regulation which had been omitted from the Maintenance Regulation? The second, and main, argument depends largely upon the fact that in article 3, in which it makes general provision for the allocation of jurisdiction, the Maintenance Regulation partly overrides the legal arrangements within a member state by referring to the courts for the place where each party is habitually resident rather than generally to the courts of a member state: see para 115 above. In its article 5, however, the Judgments Regulation had also allocated jurisdiction to the courts for a place within a state rather than to the courts of the state itself. In Color Drack GmbH v Lexx International Vertriebs GmbH (Case C 386/05) [2010] 1 WLR 1909, the ECJ addressed the provision in article 5(1)(b) of the Judgments Regulation which permitted a claimant under a contract for the sale of goods to sue in the place where the goods were delivered. It explained in para 23 that the court of that place was presumed to have a close link to the contract and in para 30 that, by referring to the place, the provision determined local as well as international jurisdiction, in other words without reference to the domestic rules of the member states. In Sanders v Verhaegen; Huber v Huber (Joined Cases C 400/13 and C 408/13), [2015] 2 FLR 1229, the renamed Court of Justice of the European Union (the CJEU) applied the analysis in the Color Drack case to the allocation of jurisdiction in article 3(b) of the Maintenance Regulation to the court for the place where the creditor is habitually resident. It observed in para 28 that the objective behind the allocation was to ensure proximity between the applicant for maintenance, regarded as the weaker party, and the competent court; and in para 37 that to that extent article 3 restricted the freedom of a member state to determine its competent court. By their references to place, the drafters of the Judgments Regulation and of the Maintenance Regulation reflected a need, in the interests of effective access to justice, to allocate jurisdiction not just to the courts of a state but to the courts for places within a state. The references apply to all member states irrespective of whether they comprise more than one legal part. With respect to the Secretary of State, the references to place in the Maintenance Regulation cannot in my view be construed as a different invasion of member state autonomy. For they do not invade the right of a state which comprises more than one part to resolve for itself an issue as to which of its parts should exercise jurisdiction to determine a maintenance application assigned by the regulation to each of those parts as places. I confess that the Secretary of States second argument deserves greater respect than I had originally afforded to it. But, when one stands back, it fails to stand up. In its first recital to the Maintenance Regulation the EU Council referred to the objective, linked to the free movement of people, of judicial cooperation in civil matters having cross border implications and in its ninth recital it identified the objective that orders for maintenance made in one member state should automatically be enforceable in another member state: see para 115 above. Indeed articles 12 and 13 of the regulation are crucial. In the light of the four different, yet equally valid, bases of jurisdiction identified in article 3, it was essential that, when more than one of them was invoked, the regulations should determine which of them should prevail. Such is the function of articles 12 and 13. Yet each is expressly limited to proceedings brought in different member states. The conclusion has to be that, in conferring jurisdiction on the different parts of the UK as places, the Maintenance Regulation, like the Judgments Regulation, did not identify which of them should prevail in the event of rivalry; and that, irrespective of whether it entirely succeeded in filling that gap, Schedule 6 to the 2011 Regulations is not redundant. Second Point The second point, raised by the husband but not in the courts below, arises out of the substitution of a fresh subsection (2) of section 27 of the MCA, which was effected by regulation 9 of, and paragraph 6(2) of Schedule 7 to, the 2011 Regulations. The subsection addresses the jurisdiction of a court in England to entertain an application for financial provision under subsection (1). Prior to 18 June 2011 subsection (2) provided that the jurisdiction could be founded upon the domicil or (broadly speaking) the residence of one or other of the parties in England. But the fresh subsection provides: The court may not entertain an application under this section unless it has jurisdiction to do so by virtue of the Maintenance Regulation and Schedule 6 to the [2011 Regulations]. By reference to the fresh subsection, Mr Horton submits that the English court no longer has jurisdiction to entertain an application for financial provision under section 27 in what he calls a purely domestic case, by which he means a case in which all parties live in the UK. The submission is astonishing because, if valid, it would deprive the section of almost all its effect. Mr Hortons premise is that the court will not have jurisdiction under the Maintenance Regulation unless there is a cross border issue; and therefore that, although Schedule 6 applies within the UK, a purely domestic case cannot fall within the Maintenance Regulation as well as within Schedule 6, as required by the word and in the fresh subsection. Mr Scott QC on behalf of the wife helpfully explains why this argument needs careful unpacking. It is correct that in its recitals the Maintenance Regulation makes clear that its objective is to address cross border issues so as to ensure the effective recovery throughout the EU of maintenance duly awarded in one of its member states. But it in no way follows that a member state is unconstrained by the regulation when a cross border issue is not, or not yet, visible to it in relation to a maintenance application. An effective system for the orderly determination of maintenance applications and for the effective recovery of sums thereby awarded requires rules which determine the jurisdiction of the courts of member states in relation to all maintenance applications made to them. Thus the opening words of article 3 of the regulation are unqualified: In matters relating to maintenance obligations in member states, jurisdiction shall lie with ; and the article then proceeds to identify the four bases of jurisdiction. The fresh subsection (2) of section 27 is therefore correct to recognise that any application under the section for financial provision has to comply with the jurisdictional requirements of the Maintenance Regulation. Indeed, were there to be a rival application for maintenance in a court of another member state which also complied with those requirements, it would again be the provisions of that regulation, namely in articles 12 and 13, which the English court, as well as the other court, would apply with a view to ending the rivalry. But the fresh subsection is also correct to require compliance with Schedule 6 to the 2011 Regulations: for, were there to be a rival application for maintenance in a court in Scotland or Northern Ireland which also complied with those requirements, it would be the provisions of that schedule, supplemented, according to Mr Horton, by the less appropriate forum principle (this being the fifth point below), which, like the rival court, the English court would apply with a view to ending the rivalry. There is nothing wrong with the fresh subsection of section 27. It does not yield absurd results. The premise of Mr Hortons submission is incorrect. The subsection does not exclude what he calls a purely domestic case. Third Point Logically this point follows the fifth point below; but it is convenient to address it now. The husbands argument, not raised in the courts below, is that, if, which he denies, the purported effect of Schedule 6 to the 2011 Regulations is to disapply the less appropriate forum principle from potential deployment in staying maintenance proceedings in one part of the UK in favour of proceedings in another part of it, it is an effect which it was beyond the powers of the Secretary of State, in making those regulations, to achieve. The construction of section 2(2) of the 1972 Act, pursuant to which the Secretary of State made the regulations, also requires consideration of section 2(1) of it. Section 2(1) provides: All such rights obligations and restrictions from time to time created under the [EU] Treaties as in accordance with the Treaties are without further enactment to be given legal effect in the United Kingdom shall be recognised and available in law It is by virtue of this subsection that the Maintenance Regulation is recognised as law in the UK. Had it been a directive rather than a regulation, it would, by contrast, have imposed an obligation which the UK was required to implement by specific legislation. Section 2(2) enables the making of regulations which make provision: (a) for the purpose of implementing any EU obligation of the United Kingdom ; or (b) for the purpose of dealing with matters arising out of or related to any such obligation or the operation from time to time of subsection (1) above; The operation of subsection (1) was such as to recognise the Maintenance Regulation as UK law. It is therefore my view that, in the application of subsection (2)(b) to the present case, the matters to which it refers must arise out of, or be related to, the operation of subsection (1) rather than out of, or to, any such obligation as might have fallen to be implemented under subsection (2)(a). The question then becomes whether the 2011 Regulations were made for the purpose of dealing with matters arising out of, or related to, the operation of subsection (1) in recognising the Maintenance Regulation as UK law. Insofar as they facilitated the way in which that regulation was to be applied in the UK, the 2011 Regulations undoubtedly dealt with matters arising out of the operation in this respect of subsection (1). But, by regulation 8 and Schedule 6, and as the Secretary of State has always acknowledged, they went further than that. So the narrower question is whether any purported disapplication in Schedule 6 of the less appropriate forum principle was for the purpose of dealing with matters related to the operation of subsection (1) in recognising the Maintenance Regulation as UK law. The court has been referred to a number of authorities on the width of the phrase related to in section 2(2)(b) of the 1972 Act. There seems to be a tendency for one judge to offer an explanation of its extent and for the next judge to discard the explanation as an unwarranted gloss. Perhaps it is better to allow the phrase to speak for itself; but never to forget that the required relationship is to the particular terms of the EU instrument which either already has been, or is being, given the force of law in the UK. The most helpful commentaries upon the meaning of the phrase seem to be those of Waller LJ in Oakley Inc v Animal Ltd (Secretary of State for Trade and Industry intervening) [2005] EWCA Civ 1191, [2006] Ch 337, para 39, and of Lord Mance in United States of America v Nolan [2015] UKSC 63, [2016] AC 463, para 61. But there is no need to lengthen this judgment by reciting those paragraphs. For it is already clear that the husbands argument faces insuperable obstacles. The first stems from his making of a realistic, indeed an inevitable, concession. It is that in principle the provisions in Schedule 6 for the purpose of resolving jurisdictional issues between the different parts of the UK were related to the arrival of the Maintenance Regulation into UK law by operation of section 2(1) of the 1972 Act. The Judgments Regulation had, by its reference to place, held out the prospect that different parts of the UK would have equal jurisdiction to hear maintenance applications. But its provisions for the resolution of jurisdictional rivalry between member states in relation to maintenance applications had not extended to such rivalry as might arise between different parts of a member state. In section 49 of the 1982 Act the UK had therefore identified the law which would resolve such rivalry. The effect of the Maintenance Regulation was to remove maintenance applications from the scope of the Judgments Regulation; and so it required at least some adjustment to UK law in that regard. The decision was to make the adjustment in Schedule 6. But, once the concession is made that the Secretary of State had power under section 2(2)(b) of the 1972 Act to resolve issues of jurisdictional rivalry between different parts of the UK in relation to maintenance applications, how can it be said that his suggested inclusion in Schedule 6 of one particular provision in that regard was beyond his power? His power to provide for the resolution of issues of rivalry must have included power to disapply the less appropriate forum principle and to assign the resolution of such issues entirely to other provisions. The real question, which is the fifth point, is whether that power was exercised. So this third point falls to be rejected at an early stage; and there is no need to wrestle with the problems which would have confronted it at a later stage. These are problems arising out of the fact that in Schedule 6 there is on any view no express disapplication of the less appropriate forum principle. The disapplication perceived by the Court of Appeal was, so that court held, implied in Schedule 6. The husbands argument was therefore that any implied provision to that effect was beyond the Secretary of States powers. But, if the result of discerning an implied provision in regulations were to be that it would be beyond the powers of their maker, that would be a strong argument for not discerning it. Would it indeed be a contradiction in terms to speak of a provision implied in a set of rules being beyond the rule makers powers? And another knotty question would the court have to proceed to identify the express provisions in the regulations from which the impugned provision was implied and to rule them to be beyond their makers powers in giving rise to the implication? Fourth Point The husband contends that paragraph 13 of Schedule 6 to the 2011 Regulations applies to the present case. Subject to making an insertion into it, paragraph 13, set out in para 123 above, applies article 13 of the Maintenance Regulation to the resolution of jurisdictional rivalry between the courts of England and Scotland in a case such as the present. Subject to the insertion, which will be set out in square brackets, article 13, entitled Related actions, provides as follows: 1. Where related actions are pending in the courts of different member states [or different parts of the United Kingdom], 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. Since Schedule 6 does not relate to rivalry between the courts of different member states, it is not obvious why the words inserted into article 13 were presented as an alternative to the words different member states rather than as a substitution for them. But nothing turns on it. The husband contends that, as is agreed, the Scottish court must be taken to be the court first that his proceedings for divorce in Scotland and the wifes application (a) for maintenance in England are related actions within the meaning of article 13 of the Maintenance Regulation; (b) seised; (c) that within the divorce proceedings the Scottish court has jurisdiction to hear any application for maintenance which the wife might there bring so long as she were to do so prior to the grant of a decree; and (d) that accordingly the English court has power under article 13 of the Maintenance Regulation, as applied by paragraph 13 of Schedule 6 to the 2011 Regulations, to stay and indeed to dismiss the wifes application for maintenance. Article 13 of the Maintenance Regulation must be construed in its context, adjacent to article 12, set out in para 116 above. The articles have the same shape. In each of them paragraph 1 provides for a court to stay proceedings, in other words to make a temporary order. In each of them paragraph 2 provides for the court in specified additional circumstances to proceed to decline jurisdiction, in other words to proceed to make a permanent order. What, then, is the difference between them? Article 12, which addresses a Lis pendens, governs proceedings involving the same cause of action and imposes a duty on a court other than that first seised to stay its proceedings and in the specified additional circumstances to proceed to decline jurisdiction. But article 13, which addresses Related actions, confers only a power on a court other than that first seised to stay its proceedings and in the specified additional circumstances to proceed to decline jurisdiction. It follows that article 13 applies to proceedings which do not involve the same cause of action. Article 13(3) of the Maintenance Regulation defines the circumstances in which actions are deemed to be related. It is probably intended to provide an exclusive definition of such circumstances. These are that the actions are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments. But actions in different member states, as also in different parts of a member state, cannot be heard and determined together. Paragraph (3) must mean that it is expedient to hear and determine together the issues raised in the two actions. Article 13(2) of the Maintenance Regulation is in principle significant. For, in specifying the additional circumstances in which the court has power to proceed to decline jurisdiction, the paragraph necessarily identifies circumstances which can exist in related actions. But what are those circumstances? In Owens Bank Ltd v Bracco (Case C 129/92) [1994] QB 509, the Advocate General Lenz of the ECJ observed at para 66 that the provision in the 1968 Convention in terms identical to those in article 13(2) was not wholly easy to comprehend. Article 13(2) requires that the related actions should both be pending at first instance. Why? We have the benefit of an interesting insight in relation to this question. Article 13(2) is in identical terms to the provision in the Judgments Regulation which had preceded it, namely article 28(2). But in 2012 the Judgments Regulation was recast; and, when article 28(2) was recast as article 30(2), an opportunity was taken to make a small but significant amendment to it. The words [w]here these actions are pending at first instance were recast as [w]here the action in the court first seised is pending at first instance. Although in the present case the English action, having been to date the subject only of interim orders, happens to remain pending at first instance, as indeed does the Scottish action, the drafters of the Recast Judgments Regulation clearly regarded it as important for the purposes of this provision only that the action in the court first seised should remain pending at first instance. Why? The answer is surely that, once the action has been determined at first instance, the opportunity to add to its subject matter will have been lost. This construction is confirmed by the further requirement of article 13(2), namely that the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof. It seems clear that article 13(2) demands an affirmative answer to the following question: would the court first seised have jurisdiction also to determine the cause of action raised before the other court and if so would its procedural rules permit that cause of action to be consolidated with the cause of action already raised before it and thus permit both to be determined in the same proceedings? To this Mr Scott QC has only one answer. But it deserves respect. Have regard, he says, to the definition of related actions in article 13(3): actions are related only if there is a risk of irreconcilable judgments resulting from separate proceedings. He argues that there would be no risk of irreconcilable judgments if the maintenance proceedings in England and the divorce proceedings in Scotland were each to continue. The difficulty is that the reference to irreconcilable judgments in article 13(3) does not fit with the clear meaning of article 13(2) in identifying circumstances which can exist in related actions. No doubt that is what the Advocate General in the Owens Bank case had in mind when making the comment quoted in para 151 above. What, then, is to be done? In Sarrio SA v Kuwait Investment Authority [1999] 1 AC 32 the two actions brought by the claimant against the defendant each stemmed indirectly from the claimants sale of part of its business to a third party. But the causes of action were entirely distinct. In its action in Spain the claimant alleged that the defendant was obliged to purchase from it shares which it had been required to receive as part consideration for the sale. In its action in England, by contrast, it claimed damages for negligent misrepresentations on the part of the defendant which had induced it to enter into the sale. The House of Lords held that the English court should decline jurisdiction on the basis that the action before it and the action in Spain were related for the purpose of article 22 of the 1968 Convention. [T]he debate, said Lord Saville of Newdigate at p 38H when making the only substantive speech, has concentrated on whether there is a risk of irreconcilable judgments resulting from the two sets of proceedings. The appellate committee reversed the decision of the Court of Appeal, which had held that judgments were irreconcilable only if issues of fact or law essential to the respective decisions were common to both. This, so Lord Saville observed at p 40, gave too limited a meaning to the word irreconcilable. The matters in the two courts, he added, did not need to be virtually identical for the actions to be related; it sufficed that the connection between them was close enough to make it expedient for them to be determined together in order to avoid the risk in question. He summarised the basis of the decision of the House at p 41, [T]here should be a broad commonsense approach to the question whether the actions in question are related, bearing in mind the objective of the article, applying the simple wide test set out in article 22 and refraining from an over sophisticated analysis of the matter. Also of relevance to the present issue is the decision of Moor J in N v N (Stay of Maintenance Proceedings) [2012] EWHC 4282 (Fam), [2014] 1 FLR 1399. The facts bear a striking resemblance to those of the present case. The Swedish husband and the Dutch wife had lived in Sweden. Upon separation she came to live in England. The husband issued divorce proceedings in Sweden. Later the wife issued divorce proceedings in England but they were stayed pursuant to the Brussels II Revised Regulation. The wife thereupon issued an application for financial provision in England under section 27 of the MCA. The husband asked Moor J to decline jurisdiction to entertain her application pursuant to article 13(2) of the Maintenance Regulation. Moor J considered the article in context. In para 18 he recited article 12. In para 19 he observed that, since the wife had chosen not to apply for maintenance in the Swedish divorce proceedings, it could not be said that there were proceedings involving the same cause of action in both states, with the result that article 12 was not engaged. In para 20, however, he proceeded to recite article 13. He then considered the wifes submission that, because of the absence of an application for maintenance in Sweden, the actions in the two states were not related. Although not spelt out in terms, her submission must have been that there was no risk of irreconcilable judgments. But Moor J held in para 25: [I]f article 13 of the Maintenance Regulation only applied to applications in each jurisdiction for maintenance, there would be no need for the article at all. The position would be covered by article 12. The two applications would be the same cause of action and would be automatically stayed without the need for the discretion given by article 13. Having at para 28 given seven reasons for exercising the discretion conferred by article 13, the judge then, at para 29, considered whether to stay the wifes application under para (1) or to decline jurisdiction under para (2). He elected to decline jurisdiction. In the present case the Court of Appeal held in para 87 that Moor J had wrongly decided the N case; in para 86 that, had the earlier decision of the Court of Appeal in Moore v Moore [2007] EWCA Civ 361, [2007] 2 FLR 339, been cited to him, he would probably have decided that the wifes English application had to proceed; and in para 89 that the effect of the decision in the Moore case was that the husbands reliance on article 13 in the present case was misplaced. Although this court would not be bound by it in any event, the decision in the Moore case clearly requires examination. In the Moore case the judgment of the court was delivered by Thorpe LJ. The facts were that the parties were British; that they had gone to live in Spain; that the wife had resumed habitual residence in England; that the husbands petition for divorce in Spain had preceded the wifes petition for divorce in England, with the result that the latter had been stayed; that an order for divorce had been pronounced in Spain; that the husband had then applied in Spain for what the Court of Appeal no doubt correctly understood to be an order defining the parties respective property rights; that, despite an initial reversal, his application in Spain probably remained pending; that later, in England, the wife had sought leave to apply for financial relief following overseas divorce under Part III of the 1984 Act; that the wife had secured leave; that the issue before the Court of Appeal was whether a judge had rightly refused the husbands application to set the leave aside; and that part of the husbands case was that the judge should have stayed the wifes application under what were then articles 27 and 28 of the Judgments Regulation. It is not disrespectful to the Court of Appeal to say that in places its judgment in the Moore case is not entirely easy to follow. One of the complications was that, while at that time the Judgments Regulation governed applications for maintenance (article 5(2)), rights in property arising out of a matrimonial relationship have never been within its scope (article 1(2)(a)). It seems, however, to have been agreed that, at least in part, the wifes application under Part III was indeed for maintenance; and that, since she had resumed habitual residence in England, the English court had jurisdiction under article 5(2) to entertain an application on her part for maintenance. So, in this part of the husbands case, the only questions were surely whether, in the light of his application in Spain, the wifes application either should be stayed under article 27(1) or could be stayed under article 28(1). Instead the court seems to have concentrated on whether the Spanish court itself had jurisdiction under article 5(2) to entertain the husbands application. Its overall conclusion on this part of the husbands case was as follows: 95. Consequently we are satisfied that [the husbands] application was not a matter relating to maintenance for the purpose of article 5.2, and therefore that there would be no basis for the application of articles 27 or 28 of [the Judgments Regulation] even if those proceedings were still pending. Thus, in the light of its reasoning, the Court of Appeal in the Moore case never recognised a need to address either article 27 or article 28 of the Judgments Regulation. Had it addressed article 27, it would, in the light of its analysis of the husbands application, undoubtedly have held that the two sets of proceedings did not involve the same cause of action and thus that there was no requirement for the wifes application to be stayed. But how would it have addressed article 28? There can be no answer to this question. In four places the court referred compendiously to articles 27 and 28. It set out article 27. It did not set out article 28. Nor did it refer to the terms or effect of article 28. Nor did it even note that article 28 provided a ground for stay distinct from, and additional to, the ground in article 27. With respect, I cannot agree with the Court of Appeal in the present case that in its judgment in the Moore case that court based any part of its decision upon what was then article 28 of the Judgments Regulation and is now article 13 of the Maintenance Regulation; cannot agree that the answer to the husbands reliance on article 13 in the present case is therefore to be found in that judgment; and cannot agree that the decision of Moor J in the N case to decline jurisdiction under article 13(2) was therefore wrong. On the contrary, in my view his decision was right. On any view article 13 of the Maintenance Regulation is poorly drafted; and, when in domestic law its effect was extended by the 2011 Regulations, the opportunity was not taken to clarify it for the purposes at any rate of the extension. Called upon to construe it, the court is presented with a conundrum. Should it give effect to the clear meaning of article 13(2) at the expense of attributing a normal meaning to the reference in article 13(3) of the phrase irreconcilable judgments? Or should it attribute a normal meaning to the phrase and deprive article 13(2) of effect? In my view we should follow the decision of our predecessors in the Sarrio case and adopt a broad, common sense, approach to resolution of the conundrum. Our more important function is to give effect to article 13(2). That is the dog. The reference to irreconcilable judgments is no more than the tail. In the light of the pendency of the Scottish proceedings the English court therefore has power under paragraph 13 of Schedule 6 to the 2011 Regulations to stay, and indeed to decline jurisdiction to entertain, the wifes application under section 27. The husbands appeal should in my view be allowed and, in the absence of Parker J who has retired, his application should be remitted to another judge of the Family Division for determination whether the power should be exercised. Fifth Point The husband contends that the common law principle of the less appropriate forum remains available for application by a UK court when determining an issue of jurisdictional rivalry between it and another UK court in relation to an application for maintenance. In the light of my conclusion above in relation to the fourth point, this fifth point may not need to be decided. For there is no reason to consider that in the present case the discretion under article 13(2) of the Maintenance Regulation, as applied by the 2011 Regulations, would be exercised differently from any discretion which might arise under the common law principle. Nevertheless the court has received extensive submissions on the fifth point. I offer a review of the most significant of them in the paragraphs which follow. Were it to apply to jurisdictional rivalry between UK courts in relation to maintenance, the common law principle would extend to some situations beyond those covered by articles 12 and 13 of the Maintenance Regulation, as applied by the 2011 Regulations. In particular it could precipitate a stay both of proceedings in the court first seised and also of proceedings even in the absence of any proceedings yet issued in the court considered to be the more appropriate forum. Even when the law of a member state, such as the UK, adheres to the less appropriate forum principle, it cannot apply it to its determinations under the Maintenance Regulation. For articles 12 and 13 represent an exclusive code for the resolution of jurisdictional rivalry between the courts of different member states in relation to maintenance. The decision of the Grand Chamber of the ECJ in Owusu v Jackson (Case C 281/02) [2005] QB 801, made this clear even in relation to the expanded situation in that case, in which the potential choice of forum was between that of a member state (the UK) and that of a non member state (Jamaica) which might have been more appropriate. Nothing turns on the fact that the decision was made by reference to the terms of the 1968 Convention which was then operative, rather than those of the Judgments Regulation or now of the Maintenance Regulation. The ECJ held in para 41 that the objective of legal certainty which formed the basis of the convention might be undermined by the less appropriate forum principle; in para 43 that in any event there were only a few contracting states which recognised the principle; and in para 46 that it could not be applied so as to displace jurisdiction conferred by the convention. Indeed recently, in R v P (Case C 468/18) ECLI:EU:C:2019:666, [2020] 4 WLR 8 the CJEU confirmed in para 44 that, if conferred with jurisdiction under the Maintenance Regulation, a member state could not decline to exercise it by reference to any principle of the less appropriate forum. To decline to do so would, observed the court in para 45, undermine the priority given by the regulation to the choice of forum made by the applicant for maintenance. By contrast, however, it is clear that, at any rate until 18 June 2011, when the 2011 Regulations came into force, UK courts did have power to apply the less appropriate forum principle when determining issues of jurisdictional rivalry between the courts of the different parts of the UK in relation to maintenance applications. Schedule 4 to the 1982 Act had in a modified form applied within those different parts the provisions of the 1968 Convention for the allocation of jurisdiction to hear civil proceedings. But Schedule 4 had not replicated the articles in the convention entitled Lis pendens related actions; and section 49 of the 1982 Act had expressly provided that the power of UK courts to stay proceedings by reference to the less appropriate forum principle was unaffected by the Act, including therefore by Schedule 4. When in 2002 the Judgments Regulation superseded the 1968 Convention, there was no change in this respect. For, similarly, the articles in the Judgments Regulation entitled Lis pendens related actions were not replicated in the substituted version of Schedule 4; and section 49 continued in force. Indeed, while maintenance applications were removed from the scope of the 1982 Act on 18 June 2011 and were therefore no longer governed by section 49, it has continued to govern the resolution of issues of jurisdictional rivalry between UK courts in relation to other civil proceedings. In the Cook and McNeil cases, cited in para 130 above, the claimants, who lived in Scotland, each brought actions in England for damages for personal injuries sustained in Scotland against companies based in England. The Court of Appeal held that the district judge had been entitled to stay their actions on the ground that Scotland was the more appropriate forum. Lord Dyson, Master of the Rolls, observed in para 30 that the rules in Schedule 4 were not a mirror of those in the Judgments Regulation and in para 33 that section 49 of the 1982 Act provided a complete answer to the claimants contentions. The wife does not dispute that, in determining an issue of jurisdictional rivalry with a court in another part of the UK in relation to all proceedings other than for maintenance, a UK court has power to stay proceedings before it by reference to the less appropriate forum principle. So the question becomes: have the 2011 Regulations rendered the power no longer available in relation to maintenance proceedings? The fact that there is no inclusion of the power in the regulations does not answer the question. The power does not need to be conferred: it already exists in the common law of all parts of the UK. As the wording of section 49 of the 1982 Act recognises in confirming that the Act does not prevent exercise of the power, the question is not whether the 2011 Regulations include the power but whether they exclude it; and, more particularly, whether, in the absence of any express exclusion of it, they exclude it by necessary implication. In R (Child Poverty Action Group) v Secretary of State for Work and Pensions [2010] UKSC 54, [2011] 2 AC 15, the issue concerned the Secretary of States right to recover overpayments of social security benefits. He claimed that he had a right to recover them at common law and that statutory provisions for recovery had not displaced it. This court held that no such right of recovery existed at common law but that if, alternatively, it had existed, the statutory provisions had displaced it by necessary implication. Sir John Dyson JSC, as he was during the first months of his service in this court, said in para 34: The question is whether, looked at as a whole, a common law remedy would be incompatible with the statutory scheme and therefore could not have been intended [to] coexist with it. A question whether something could have been intended is often illumined by inquiry into what was intended. But not in this case. Neither in the consultation paper which preceded the making of the 2011 Regulations nor in the Explanatory Memorandum which accompanied them when laid before Parliament was there reference to the power to stay by reference to the less appropriate forum principle which had hitherto existed in relation to jurisdictional rivalry within the UK. In that regard the amended provisions of the 1982 Act had not aligned the jurisdictional rules for the allocation of maintenance applications within the UK with those in the Judgments Regulation; and the memorandum was wrong to state otherwise. It is impossible to avoid the conclusion that, in their hasty production of the 2011 Regulations, its drafters overlooked the applicability up to that point of the common law power to stay. A substantial change made in Schedule 6 to the 2011 Regulations was to import into the rules for allocation of jurisdiction in relation to maintenance applications within the UK the two articles in the Maintenance Regulation entitled Lis pendens and Related actions. So the question becomes more focussed: is the common law power to stay incompatible with their importation? Under the Maintenance Regulation the two articles represent an exhaustive code for the determination of issues of jurisdictional rivalry between member states. Should they therefore be regarded as an exhaustive code under the 2011 Regulations? Would it be a necessary consequence of their importation that a UK court which regards itself as the less appropriate forum should be disabled from staying a maintenance application in favour of another UK court otherwise than in accordance with their terms? On balance, in answer to Sir John Dysons question, I am reluctantly driven to the conclusion that the less appropriate forum principle is incompatible with, and so cannot be deemed to have been intended to co exist with, articles 12 and 13 which, once imported, have covered much, albeit not all, of the same ground. I stress, however, that I regard my conclusion as correct only if article 13 requires to be construed with reasonable width as suggested above. Were I, by contrast, to have felt obliged to give it so narrow a construction as not to extend to most of the more likely cases of jurisdictional rivalry within the UK, it would have been clear to me that the articles were not incompatible with the common law principle and that their importation had not excluded it. Postscript I drafted almost all of the above before the judgments of Lord Sales and Lady Black became available to me. In the light of their judgments, and of Lord Kerrs agreement with that of Lord Sales, my judgment becomes a dissenting judgment and is rightly placed last. In this postscript I raise six questions which reflect my concerns about the courts decision today in relation to article 13. My respect for each of my three colleagues applies to all that follows. The framing of my concerns as no more than questions reflects my respect for them; and there will be no need to reiterate it. First question: was it optimum for Lord Sales and Lady Black to consider whether the less appropriate forum principle continues to apply prior to considering whether article 13 applies to the present case? In paras 67 and 68 of her judgment Lady Black concludes that the importation of articles 12 and 13 into Schedule 6 to the 2011 Regulations cannot co exist with the survival of the common law principle. But that conclusion depends on the meaning of the articles. I reach that same conclusion but only in the light of my understanding of the meaning of them, in particular of article 13. If, however, as the majority later proceeds to hold, the articles require the narrowest possible construction, the strength of Lady Blacks conclusion falls away. Second question: how credible are the examples given by the majority of the circumstances in which, on its construction, article 13 applies? In para 44 above Lord Sales states that a core object of the article is to address a situation in which by cross maintenance claims, each of a husband and wife might seek to claim that the other owes maintenance. In para 89 above, Lady Black joins Lord Sales in presenting this situation as exemplifying the reach of the article. Her background, like mine, is in family law, and, in the light of her experience, she clearly considers that the situation which he identifies is realistic. In my experience, by contrast, it is entirely unrealistic. I cannot recall having encountered a situation in which each spouse claims maintenance from the other; but, even if a cross claim is conceivable, probably as an ill considered tactic, what is for me inconceivable is that it would be made in a different jurisdiction. Not even in the Moore case was the husband claiming maintenance from the wife. Some lawyers, although clearly not all, would regard it as preposterous that article 13 should be construed by reference to that perception of its core object. In para 89 above Lady Black mines a few other examples, all very rare, of situations which might fall within the majoritys construction of the article, although, she adds, some of them might instead fall within her construction of article 12. Even if one adds her examples to the situation identified by Lord Sales, the second question remains: how credible is their analysis of the circumstances in which article 13 applies? Third question: was it correct for the majoritys analysis of article 13 to be dominated by an understanding that, at every stage, priority must be given to the choice of jurisdiction made by the maintenance creditor (for convenience, the wife)? In 16 paragraphs of his judgment Lord Sales refers, as does Lady Black in seven paragraphs of her judgment, to the objective behind the successive European instruments of giving priority to the choice made by the wife. In para 67 of her judgment Lady Black summarises their conclusion that the objective could not be overridden by the selected court declining to entertain the proceedings. It is clear that, since 1968, the objective to which they refer has been reflected in the wider choice of jurisdiction given to the wife for the issue of her claim. But should it follow and is there authority to suggest that, when a rival action is already pending in another state, resolution of the rivalry pursuant to what are now articles 12 and 13 is in effect foreclosed by reference to that objective? Might it have been forgotten that article 13 confers only a power and that, if for whatever reason the wifes choice deserves continuing priority at that stage, the power to stay or dismiss her action will not be exercised? Indeed is not the law relating to the resolution of rivalry between the three UK jurisdictions clearer still? When in 1987 the provisions of the 1968 Convention, including the wider provisions for the issue of maintenance claims, were extended so as to operate within those jurisdictions, Parliament confirmed that the resolution of rivalry between them was to be governed by an objective not of giving priority to the wifes choice but of identifying the less appropriate forum pursuant to the common law principle. When in 2011 its resolution came instead to be governed by articles 12 and 13, was not the legislative intention that the articles would broadly cover the ground which the common law principle had governed? Why would the legislator have intended to emasculate the jurisdiction to stay by reference to a different objective, namely of giving continuing priority to the wifes choice? Can any such intention be collected from anything then said or done? Fourth question: did the majority afford sufficient significance to article 3(c) of the Maintenance Regulation brought within the UK by paragraph 4 of Schedule 6 to the 2011 Regulations? As part of the priority given to the wifes choice of jurisdiction for the issue of her claim, article 3(c) confers jurisdiction upon the court which, according to its own law, has jurisdiction to entertain proceedings concerning the status of a person if the matter relating to maintenance is ancillary to those proceedings The article thus expressly contemplates that a maintenance claim can be ancillary to divorce proceedings and that, if so, it is appropriate for it to be determined in the divorce court. So the fourth question becomes refined: if a claim for maintenance can be ancillary to divorce proceedings and appropriately issued in that court for the purpose of article 3(c), how can it be other than related to divorce proceedings for the purpose of article 13? Is it convincing for Lord Sales to respond in para 46 above that to reason from article 3(c) to article 13 would be to defeat the priority given to the wife, particularly in circumstances in which article 3(c) itself reflects that priority? Fifth question: did the majority sufficiently address the significance of the decision of the House of Lords in the Sarrio case, analysed by me at para 155 above? In para 83 above Lady Black notes only that Lord Saville there observed that an inquiry into whether actions are related should be approached with broad common sense. But, for present purposes, the real significance of the case lies in the application of broad common sense on the part of the House of Lords to the inquiry before it. For its unanimous decision was that the claimants English action for damages in tort was related to its Spanish action for payment due under a contract within the meaning of what is now article 13 and should be dismissed under what is now paragraph 2 of it. So the question, also prompted by the treatment given by Lord Sales to the decision in para 47 above, is whether further recourse to the mantra of giving priority to the wife justifies the attribution to the word related of a meaning in the context of maintenance claims entirely different from its meaning in the context of other civil claims. Sixth and final question: did the majority check its construction of article 13 in the light of its adverse consequences? When lawyers conclude that the construction of an instrument is clear, they will not shrink from their conclusion by reference to its adverse consequences. If, however, their provisional conclusion has adverse consequences, they will check it before making it their concluded view. There will be two adverse consequences of todays decision, one expressly noticed only by Lord Sales, and the other only by Lady Black. The first will be the untrammelled licence given to a wife to go forum shopping, in other words to put her husband at an initial disadvantage unrelated to the merits of her case. Having observed that in the N case the judge considered that the wife had engaged in illegitimate forum shopping, Lord Sales comments in para 56 above that she had been entitled to choose the forum for her claim by reference to tactical reasons and that, under the Maintenance Regulation, there had been nothing illegitimate in her doing so. The second will be the inability of a court in one part of the UK to decline to determine a wifes maintenance claim even when a court in another part alone has power to determine a claim by one spouse or the other for transfer of property or for some other adjustment (such as would, for example, disentangle them from joint ownership of property) or for a pension sharing order. As Lady Black says in para 79 above, the prospect is not very palatable. So the final question can be refined: did the adverse consequences of todays decision oblige the majority to undertake a rigorous examination of its provisional conclusion about the meaning of article 13 and, if so and in the light of all the questions posed above, can its provisional conclusion have received rigorous examination? |
These appeals raise the question as to the test which is to be applied when considering whether a gay person who is claiming asylum under the Convention relating to the Status of Refugees 1951, as applied by the 1967 Protocol (the Convention) has a well founded fear of persecution in the country of his or her nationality based on membership of that particular social group. The need for reliable guidance on this issue is growing day by day. Persecution for reasons of homosexuality was not perceived as a problem by the High Contracting Parties when the Convention was being drafted. For many years the risk of persecution in countries where it now exists seemed remote. It was the practice for leaders in these countries simply to insist that homosexuality did not exist. This was manifest nonsense, but at least it avoided the evil of persecution. More recently, fanned by misguided but vigorous religious doctrine, the situation has changed dramatically. The ultra conservative interpretation of Islamic law that prevails in Iran is one example. The rampant homophobic teaching that right wing evangelical Christian churches indulge in throughout much of Sub Saharan Africa is another. The death penalty has just been proposed in Uganda for persons who engage in homosexual practices. Two gay men who had celebrated their relationship in a public engagement ceremony were recently sentenced to 14 years imprisonment in Malawi. They were later pardoned in response to international pressure by President Mutharika, but he made it clear that he would not otherwise have done this as they had committed a crime against the countrys culture, its religion and its laws. Objections to these developments have been greeted locally with derision and disbelief. The fact is that a huge gulf has opened up in attitudes to and understanding of gay persons between societies on either side of the divide. It is one of the most demanding social issues of our time. Our own government has pledged to do what it can to resolve the problem, but it seems likely to grow and to remain with us for many years. In the meantime more and more gays and lesbians are likely to have to seek protection here, as protection is being denied to them by the state in their home countries. It is crucially important that they are provided with the protection that they are entitled to under the Convention no more, if I may be permitted to coin a well known phrase, but certainly no less. Background The appellants are both gay men. HJ, who is 40 years old, is an Iranian. He claimed asylum on arrival in the United Kingdom on 17 December 2001. He practised homosexuality in Iran and has continued to do so in the United Kingdom. HT, who is 36 years old, is a citizen of Cameroon. He claimed asylum following his arrest at Gatwick on 19 January 2007. He had presented a false passport while in transit to Montreal. He too is a practising homosexual. Both appellants claim that they have a well founded fear that they would be persecuted if they were to be returned to their home countries. The Secretary of State for the Home Department (the respondent) refused asylum in both cases. HJs appeal against that decision was dismissed by the Asylum and Immigration Tribunal on 15 August 2005. On 26 July 2006 the Court of Appeal remitted his case to the Tribunal for reconsideration: J v Secretary of State for the Home Department [2006] EWCA Civ 1238, [2007] Imm AR 73. On 8 May 2008, following reconsideration, his appeal remained dismissed. HTs appeal to the Tribunal was dismissed on 29 October 2007. Reconsideration was ordered on 14 November 2007 on the ground that the Tribunal might have made an error of law in the test to be applied to a gay person seeking asylum. But on 5 June 2008 Senior Immigration Judge Warr held that the earlier determination was not flawed, and he did not proceed to a reconsideration of the evidence. The appellants appealed against these decisions to the Court of Appeal. On 10 March 2009 the Court of Appeal (Pill and Keene LJJ and Sir Paul Kennedy) dismissed both appeals: [2009] EWCA Civ 172. The Secretary of State accepted that practising homosexuals are a particular social group for the purposes of article 1A of the Convention. The issue was how those who had a well founded fear of persecution could be identified. It was said by counsel for the appellants to be whether it was an answer to a claim for refugee status for the applicant to be required to conceal his sexual identity in order to avoid harm of sufficient severity as to amount to persecution the proposition being that to impose such a requirement was incompatible with the Convention. For the Secretary of State it was submitted that the issue always was whether the applicant could reasonably be expected to tolerate the need for discretion on return: para 7. The Court of Appeal applied the test stated by Maurice Kay LJ in J v Secretary of State for the Home Department [2007] Imm AR 73, para 16, where he said that the tribunal would have to ask itself whether discretion was something that the applicant could reasonably be expected to tolerate, not only in the context of random sexual activity but in relation to matters following from, and relevant to, sexual identity in the wider sense. In HJs case the Court of Appeal held that the Tribunal were entitled to conclude on the evidence that HJ could reasonably be expected to tolerate conditions in Iran: [2009] EWCA Civ 172, para 31. In HTs case there was finding that he would be discreet on return to Cameroon. The question whether he could reasonably be expected to tolerate a life involving discretion was not raised. The Court of Appeal held that there were no facts on which a decision on that matter could be based but that the Tribunal were entitled to find that HT had not established that there was a real risk of persecution in the future: paras 44, 45. In this court Mr Bourne for the Secretary of State submitted that the test of whether the appellants should have refugee status was correctly stated by the Court of Appeal in J v Secretary of State for the Home Department [2007] Imm AR 73, that it was correctly applied by the Tribunal in both cases and that the Court of Appeal was right to dismiss the appeals. Mr Husain QC for HJ said that the test as stated in J v Secretary of State for the Home Department is misconceived. He submitted that it is contrary to the ordinary meaning of the definition of refugee in the Convention, and the objects and purposes of the treaty, to deny a refugees claim on the basis that he was required to suppress or surrender his protected identity to avoid the persecution that would ensue if that identity were to be disclosed. Miss Carss Frisk QC for HT too disputed the test in Js case. She submitted that if the applicant could show that he had a well founded fear of persecution he was entitled to refugee status. He should not be required to demonstrate that concealment of his identity was something that he could not reasonably be expected to tolerate. She also said that HT ought to succeed on the facts in any event because of what happened to him in Cameroon. Background Article 1A(2) of the Convention provides that a refugee is a person who owing to well founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, unwilling to avail himself of the protection of that country Amongst the benefits that a person who satisfies that definition enjoys under the Convention is the prohibition of expulsion or return. Article 33(1) provides: No Contracting State shall expel or return (refouler) a refugee in any manner whatsoever to the frontiers of territories where his life or freedom would be threatened on account of his race, religion, nationality, membership of a particular social group or political opinion. To a large extent the meaning of the definition in article 1A(2) is common ground. It treats membership of a particular social group as being in pari materia with the other Convention reasons for persecution: Fornah v Secretary of State for the Home Department [2006] UKHL 46, [2007] 1 AC 412, para 20, per Lord Bingham of Cornhill. There is no doubt that gay men and women may be considered to be a particular social group for this purpose: Islam v Secretary of State for the Home Department; R v Immigration Appeal Tribunal, Ex p Shah [1999] 2 AC 629, 643 644, per Lord Steyn. As Lord Rodger points out in para 42, regulation 6(1)(e) of the Refugee or Person in Need of International Protection (Qualification) Regulations 2006 (SI 2006/2525) recognises as clearly as can be that a group based on a common characteristic of sexual orientation may be included in a particular social group that is in need of international protection. The group is defined by the immutable characteristic of its members sexual orientation or sexuality. This is a characteristic that may be revealed, to a greater or lesser degree, by the way the members of this group behave. In that sense, because it manifests itself in behaviour, it is less immediately visible than a persons race. But, unlike a persons religion or political opinion, it is incapable of being changed. To pretend that it does not exist, or that the behaviour by which it manifests itself can be suppressed, is to deny the members of this group their fundamental right to be what they are of the right to do simple, everyday things with others of the same orientation such as living or spending time together or expressing their affection for each other in public. The Convention does not define persecution. But it has been recognised that it is a strong word: Sepet and Bulbul v Secretary of State for the Home Department [2003] UKHL 15, [2002] 1 WLR 856, para 7, per Lord Bingham. Referring to the dictionary definitions which accord with common usage, Lord Bingham said that it indicates the infliction of death, torture or penalties for adherence to a belief or opinion, with a view to the repression or extirpation of it. Article 9(1)(a) of the EC Council Directive 2004/83/EC on minimum standards for the qualification and status of third country nationals or stateless persons as refugees (the Qualification Directive) states that acts of persecution must (a) be sufficiently serious by their nature or repetition as to constitute a severe violation of basic human rights or (b) be an accumulation of various measures, including violations of human rights which is sufficiently severe as to affect an individual in a similar manner as mentioned in (a). In Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473, para 40, McHugh and Kirby JJ said: Persecution covers many forms of harm ranging from physical harm to the loss of intangibles, from death and torture to state sponsored or condoned discrimination in social life and employment. Whatever form the harm takes, it will constitute persecution only if, by reason of its intensity or duration, the person persecuted cannot reasonably be expected to tolerate it. To constitute persecution for the purposes of the Convention the harm must be state sponsored or state condoned. Family or social disapproval in which the state has no part lies outside its protection. As Professor J C Hathaway in The Law of Refugee Status (1991), p 112 has explained, persecution is most appropriately defined as the sustained or systemic failure of state protection in relation to one of the core entitlements which has been recognised by the international community. The Convention provides surrogate protection, which is activated only upon the failure of state protection. The failure of state protection is central to the whole system: Horvath v Secretary of State for the Home Department [2001] 1 AC 489, 495. The question is whether the home state is unable or unwilling to discharge its duty to establish and operate a system for the protection against persecution of its own nationals. The reference in the preamble to the Universal Declaration of Human Rights of 1948 shows that counteracting discrimination was a fundamental purpose of the Convention. Article 2 states: Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. Lord Steyn emphasised this point in Islam v Secretary of State for the Home Department; R v Immigration Appeal Tribunal, Ex p Shah [1999] 2 AC 629, 639. He also drew attention to the first preamble to the Declaration, which proclaimed the inherent dignity and the equal and inalienable rights of all members of the human family. No mention is made of sexual orientation in the preamble or any of its articles, nor is sexual orientation mentioned in article 1A(2) of the Convention. But coupled with an increasing recognition of the rights of gay people since the early 1960s has come an appreciation of the fundamental importance of their not being discriminated against in any respect that affects their core identity as homosexuals. They are as much entitled to freedom of association with others of the same sexual orientation, and to freedom of self expression in matters that affect their sexuality, as people who are straight. The guarantees in the Universal Declaration are fundamental to a proper understanding of the Convention. But the Convention itself has, as the references in para 12 show, a more limited purpose. It is not enough that members of a particular social group are being discriminated against. The contracting states did not undertake to protect them against discrimination judged according to the standards in their own countries. Persecution apart, the Convention was not directed to reforming the level of rights prevailing in the country of origin. Its purpose is to provide the protection that is not available in the country of nationality where there is a well founded fear of persecution, not to guarantee to asylum seekers when they are returned all the freedoms that are available in the country where they seek refuge. It does not guarantee universal human rights. So the conditions that prevail in the country in which asylum is sought have no part to play, as matter of legal obligation binding on all states parties to the Convention, in deciding whether the applicant is entitled to seek asylum in that country: Januzi v Secretary of State for the Home Department [2006] UKHL 5, [2006] 2 AC 426, paras 16, 46. As Laws LJ said in Amare v Secretary of State for the Home Department [2005] EWCA Civ 1600, [2006] Imm AR 217 para 31: The Convention is not there to safeguard or protect potentially affected persons from having to live in regimes where pluralist liberal values are less respected, even much less respected, than they are here. It is there to secure international protection to the extent agreed by the contracting states. Thus international protection is available only to those members of the particular social group who can show that they have a well founded fear of being persecuted for reasons of their membership of it who, owing to that fear, are unwilling to avail themselves of the protection of their home country. Those who satisfy this test cannot be returned to the frontiers of a territory where their life or freedom would be threatened on account of their membership of that group: article 33(1). To be accorded this protection, however, the test that article 1A(2) sets out must first be satisfied. As Lord Bingham of Cornhill said in Januzi v Secretary of State for the Home Department [2006] 2 AC 426, para 5, the words owing to well founded fear of being persecuted for reasons of membership of a particular social group in the definition of refugee express a causative condition which governs all that follows. Well founded fear: the causative condition In situations such as those presented by these appeals the fact that members of the particular social group are persecuted may not be seriously in issue. In Iran, where the death penalty exists, persons have been hanged simply because they are gay. In Cameroon homosexuality is illegal and the sanctions for it include sentences of up to five years imprisonment. Although prosecutions are rare, homosexuals are liable to be denounced and subjected to acts of violence and harassment against which the state offers no protection. But the situation in the country of origin is only the beginning, not the end, of the inquiry. The Convention directs attention to the state of mind of the individual. It is the fear which that person has that must be examined and shown to be well founded. In cases where the fear is of persecution for reasons of religion or political opinion, it may be necessary to examine the nature and consequences of any activity that the applicant claims he or she may wish to pursue if returned to the country of nationality. It will not be enough for the person merely to assert that persons who are of that religion or political opinion are liable to be persecuted. The question is, what will the applicant actually do, and does what he or she will in fact do justify the fear that is complained of? INLR 1, 7 8 Simon Brown LJ said: In Ahmed (Iftikhar) v Secretary of State for the Home Department, [2000] In all asylum claims there is ultimately a single question to be asked: is there a serious risk that on return the applicant will be persecuted for a Convention reason? The critical question [is]: if returned, would the asylum seeker in fact act in the way he says he would and thereby suffer persecution? If he would, then, however unreasonable he might be thought for refusing to accept the necessary restraint on his liberties, in my judgment he would be entitled to asylum. Nobody has suggested that there is anything wrong with these observations, as far as they go, and I would respectfully endorse them. They contain two propositions which the Secretary of State in this case accepts, and which I do not think can be disputed. The first is that attention must be focused on what the applicant will actually do if he is returned to his country of nationality. The second is that the fact that he could take action to avoid persecution does not disentitle him from asylum if in fact he will not act in such a way as to avoid it. That is so even if to fail or to refuse to avoid it would be unreasonable. In Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473, para 40, per McHugh and Kirby JJ said that persecution does not cease to be persecution for the purposes of the Convention because the harm can be avoided by taking avoiding action within the country of origin. I am inclined to think that this proposition, as stated, expresses the point too broadly. But I would accept it as accurate if at the end there were added the words which the applicant will in fact not take. Of course, I do not mean by this that persecution ceases to be persecution if those at risk of being persecuted can and do eliminate the harm by taking avoiding action. That is a different point, with which their Honours go on to deal later in the same paragraph. How to define the test for its application is the issue in this case: see paras 21 and 22. It has been recognised, of course, that an applicant may be required to live in a place of relocation within his country of origin so long as it would not be unduly harsh for him to be required to do so: Januzi v Secretary of State for the Home Department [2006] 2 AC 426. As Lord Bingham explained in para 7, the Convention does not expressly address the situation where, within his country of nationality a person has a well founded fear of persecution at place A, where he lived, but not at place B, where he could reasonably be expected to relocate. But that situation may reasonably be said to be covered by the causative condition to which he referred in para 5. A person will be excluded from refugee status if under all the circumstances it would be reasonable to expect him to seek refuge in another part of the same country. Persons seeking refuge from the process known as ethnic cleansing, for example, may be refused asylum on the basis that there are other parts of the country of their nationality where they may live without being persecuted: see also R (Yogathas) v Secretary of State for the Home Department [2002] UKHL 36, [2003] 1 AC 920, para 40; the UNHCR Handbook, para 91. Mr Bourne suggested that an analogy could be drawn between internal relocation, or internal flight as it is sometimes less happily called: see R (Yogathas) v Secretary of State for the Home Department [2003] 1 AC 920, para 6. Mr Husain submitted in his written case that applicants who are gay and who avoid persecution by a modification of their behaviour may be said on return to have taken internal flight within the self to avoid persecution. Mr Bourne submitted that any such analogy supported the respondent. The analogy, as he expressed it in his written case, was put this way. A person to whom geographical internal flight is available is not a refugee unless it would be unduly harsh to take such flight. So a person who will, if necessary, take the metaphorical flight of hiding his sexuality is not a refugee unless it would be intolerable for him to do so. Examples were referred to of situations that might demonstrate the logic of this approach. They were said to include situations where the applicant would be discreet, there would be no real risk that he would come to the attention of the authorities and suffer persecution and the consequences of his discretion were objectively reasonable for him to be expected to tolerate. He would have no well founded fear of persecution and not be a refugee even if the reason why he would be discreet was because, or partly because, he feared persecution. This submission takes me to the core of the issue between the parties and to the question whether the test in para 16 of J v Secretary of State for the Home Department [2007] Imm AR 73 stands up to examination. But I think that the suggested analogy with internal relocation can be dismissed at once as incompatible with the principles of the Convention. The objection to it is that it assumes that the applicant will be prepared to lie about and conceal his sexual orientation when he moves to the place of relocation. Unless he does this he will be no better off than he would be if he did not relocate at all. The misconception lies in the idea that he will be willing and able to make a fresh start when he moves to somewhere where he is not known. In Hysi v Secretary of State for the Home Department [2005] EWCA Civ 711, [2005] INLR 602 the Court of Appeal held that the tribunal had not assessed the consequences of expecting the applicant to lie and dissemble in the place of relocation about his ethnic origins. He would have to be a party to the long term deliberate concealment of the truth, living in continuing fear that the truth would be discovered: para 37. There is no place, in countries such as Iran and Cameroon, to which a gay applicant could safely relocate without making fundamental changes to his behaviour which he cannot make simply because he is gay. The submission that it is proper to examine the question whether it would be objectively reasonable for the applicant to be expected to tolerate some element of concealment I would prefer not to use the word discretion, as this euphemistic expression does not tell the whole truth when he is returned to the country of his nationality cannot be dismissed so easily. Behaviour which reveals ones sexual orientation, whether one is gay or straight, varies from individual to individual. It occupies a wide spectrum, from people who are naturally reticent and have no particular desire to establish a sexual relationship with anybody to those who wish, for various reasons, to proclaim in public their sexual identity. Social and family disapproval of overt sexual behaviour of any kind, gay or straight, may weigh more heavily with some people than others. Concealment due to a well founded fear of persecution is one thing. Concealment in reaction to family or social pressures is another. So one must ask why the applicant will conduct himself in this way. A carefully nuanced approach is called for, to separate out those who are truly in need of surrogate protection from those who are not. The test in J's case In J v Secretary of State for the Home Department [2007] Imm AR 73 the applicant was of Iranian nationality. The Asylum and Immigration Tribunal found that he was a practising homosexual, but that his relationship with his partner in Iran was discreet and that his homosexual practices there had never been such that his own homosexual activity was reasonably likely to result in adverse attention from the authorities. It was held that the tribunal had fallen into error by not asking why the applicant had acted discreetly, especially as the appellant said in his witness statement that he was forced to hide his relationship and was not able to live openly with his partner as he wanted to do. The case was remitted to the tribunal for further reconsideration. In para 16 Maurice Kay LJ gave the following directions to the tribunal: It will have to address questions that were not considered on the last occasion, including the reason why the appellant opted for discretion before his departure from Iran and, by implication, would do so again on return. It will have to ask itself whether discretion is something that the appellant can reasonably be expected to tolerate, not only in the context of random sexual activity but in relation to matters following from, and relevant to, sexual identity in the wider sense recognised by the High Court of Australia (see the judgment of Gummow and Hayne JJ at para 83). This requires consideration of the fact that homosexuals living in a stable relationship will wish, as this appellant says, to live openly with each other and the discretion which they may feel constrained to exercise as the price to pay for the avoidance of condign punishment will require suppression of many aspects of life that related to, or informed by, their sexuality (ibid, para 81). This is not simply generalisation; it is dealt with in the appellants evidence. [Emphasis added] Buxton LJ, making the same point, said in para 20 that the applicant might have to abandon part of his sexual identity in circumstances where failure to do so exposed him to the extreme danger that the country guidance indicated: The Tribunal may wish to consider whether the combination of those two circumstances has an effect on their decision as to whether the applicant can be expected to tolerate the situation he may find himself in when he returns to Iran. [Emphasis added] The passages which I have italicised lie at the heart of the argument. For the Secretary of State, Mr Bourne submitted that there were two major questions that had to be addressed: (1) what will the situation be on return, and (2) in these circumstances is there a real risk of persecution? The inquiry in regard to the first question was directed to how the applicant will conduct himself and how others will react to this. He accepted that a finding that the applicant will in fact be discreet on return to the country of his nationality is not the end of the inquiry. The question that then had to be asked, he said, was whether opting for discretion itself amounted to persecution. The threshold between what was and was not persecution was marked by what he could reasonably be expected to tolerate. As in the case of internal flight, it was what he could not reasonably be expected to tolerate that amounted to persecution. As the references to it in para 16 of J v Secretary of State for the Home Department [2007] Imm AR 73 indicate, the Court of Appeal in that case sought guidance from the decision of the High Court of Australia in Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473. Among the passages from that judgment that are quoted is para 40, where (setting out the paragraph in full) McHugh and Kirby JJ said: The purpose of the Convention is to protect the individuals of every country from persecution on the grounds identified in the Convention whenever their governments wish to inflict, or are powerless to prevent, that persecution. Persecution covers many forms of harm ranging from physical harm to the loss of intangibles, from death and torture to state sponsored or condoned discrimination in social life and employment. Whatever form the harm takes, it will constitute persecution only if, by reason of its intensity or duration, the person persecuted cannot reasonably be expected to tolerate it. But persecution does not cease to be persecution for the purpose of the Convention because those persecuted can eliminate the harm by taking avoiding action within the country of nationality. The Convention would give no protection from persecution for reasons of religion or political opinion if it was a condition of protection that the person affected must take steps reasonable or otherwise to avoid offending the wishes of the persecutors. Nor would it give protection to membership of many a particular social group if it were a condition of protection that its members hide their membership or modify some attribute or characteristic of the group to avoid persecution. Similarly, it would often fail to give protection to people who are persecuted for reasons of race or nationality if it was a condition of protection that they should take steps to conceal their race or nationality. [Emphasis added] It was the appearance in this paragraph of the sentence which I have italicised that led Maurice Kay LJ to use almost the same words when he was framing his directions in para 16. This can be seen from his quotation of it in para 11 of his judgment, where he said that it had been adopted in Z v Secretary of State for the Home Department [2005] Imm AR 75, para 12, Amare v Secretary of State for the Home Department [2006] Imm AR 217, para 27 and RG (Colombia) v Secretary of State for the Home Department [2006] EWCA Civ 57, [2006] Imm AR 297, para 16. Para 40 of the judgment in Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473 is not entirely easy to follow. The Convention does not permit, or indeed envisage, applicants being returned to the countries of their nationality on condition that they take steps to avoid offending their persecutors. The use of the phrase a condition of protection seems to overlook the fact that it is the country in which asylum is sought that is being appealed to for protection, not the country of the applicants nationality. But the flaw in the sentence in para 16 of J v Secretary of State for the Home Department [2007] Imm AR 73 to which the appellants take objection is indicated by the sentence that immediately follows it. It makes the point that persecution does not cease to be persecution for the purpose of the Convention because those persecuted can eliminate the harm by taking avoiding action within the country of nationality. In para 50, which the Court of Appeal did not quote in Js case, McHugh and Kirby JJ said: In so far as decisions in the Tribunal and the Federal Court contain statements that asylum seekers are required, or can be expected, to take reasonable steps to avoid persecutory harm, they are wrong in principle and should not be followed. The same point was made with perhaps greater force by Gummow and Hayne JJ in para 82, where they said: Saying that an applicant for protection would live discreetly in the country of nationality may be an accurate description of the way in which that person would go about his or her daily life. To say that a decision maker expects that that person will live discreetly may also be accurate if it is read as a statement of what is thought likely to happen. But to say that an applicant for protection is expected to live discreetly is both wrong and irrelevant to the task to be undertaken by the Tribunal if it is intended as a statement of what the applicant must do. The references in the judgments of Maurice Kay and Buxton LJJ in J v Secretary of State for the Home Department [2007] Imm AR 73, paras 16 and 20 to what the applicant could be expected to do when he returned do not fit happily with the approach indicated in some parts of the judgment in Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473 which they said they were following. The explanation for this may perhaps lie in para 10 of the judgment in Js case, where Maurice Kay LJ said: In our jurisdiction Buxton LJ demonstrated in Z v SSHD [2005] Imm AR 75 that the approach of the High Court of Australia had in turn been influenced by English authority, particularly Ahmed v SSHD [2000] INLR 1. Having referred to the judgment of Simon Brown LJ in Ahmed, he said at para 16: It necessarily follows from that analysis that a person cannot be refused asylum on the basis that he could avoid otherwise persecutory conduct by modifying the behaviour that he would otherwise engage in, at least if that modification was sufficiently significant to place him in a situation of persecution. In para 11 Maurice Kay LJ added this comment: That brief extract is particularly helpful because it brings together the principle articulated by the High Court of Australia and the underlying need for an applicant to establish that his case contains something significant in itself to place him in a situation of persecution. The principle which the Court of Appeal should have taken from the judgment of the High Court of Australia is that it would be wrong to say that an applicant for protection was expected to live discreetly if it was intended as a statement of what the applicant must do: Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473, para 82. The test of whether the situation he may find himself in on return was one that he could reasonably be expected to tolerate was introduced to address the high threshold that has to be crossed between what does and what does not amount to persecution. But the way the test was expressed in para 16 of Js case suggests that the applicant will be refused asylum if it would be reasonable to expect him to be discreet even if he is unwilling or unable to do this. That is a fundamental error. It conflicts with Simon Brown LJs observation in Ahmed (Iftikhar) v Secretary of State for the Home Department [2000] INLR 1, 8 that, however unreasonable the applicant might be thought for refusing to accept the necessary restraint on his liberties, he would be entitled to asylum. I would hold that the test in para 16 of Js case is not accurately expressed and should no longer be followed. For the reasons that Sir John Dyson gives, I would reject the reasonably tolerable test. As this was the test that the Court of Appeal applied to these appeals, its decision to dismiss them was mistaken and must be set aside. Comparative jurisprudence The Court was referred to a number of decisions in Australia, New Zealand, South Africa, the United States and Canada. I do not think that they reveal a consistent line of authority that indicates that there is an approach which is universally accepted internationally. The Australian cases that are of interest are those that post date the decision in Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473. They are NALZ v Minister for Immigration and Multicultural Affairs [2004] FCAFC 320; NABD of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 29, (2005) 79 ALJR 1142, and SZATV v Minister for Immigration and Citizenship [2007] HCA 40, (2007) 233 CLR 18. In NALZ the Federal Court was divided on the question how the principles set out S395/2002 should be applied. The applicant was an Indian national who was refused refugee status by the tribunal because he could avoid future arrest by not engaging in the activity that would attract persecution. The majority, Emmett and Downes JJ, held that this was not an impermissible approach. Madgwick J thought that the tribunal had fallen into the error identified in S395/2002 because it had not asked itself what the applicant would in fact do. In NABD the High Court was again divided in its identification of the relevant legal principles. It did not reach the question whether a test of what was reasonably tolerable could be applied. It is worth noting however that McHugh J stressed the need for a rigorous and careful examination of the applicants specific characteristics and circumstances. In SZATV the question was whether the tribunal was right to deny asylum on the ground that it would be reasonable for the applicant, a journalist whose fear was of persecution on grounds of political opinion, to relocate to another part of the country of his nationality and do construction work there. The High Court on this occasion was unanimous in holding that the tribunal had failed to address itself to what might reasonably be expected of the applicant with respect to his relocation if he were to be returned. I think that the single most important message to emerge from these cases is the need for a careful and fact sensitive analysis. The New Zealand case is Refugee Appeal No 74665/03 [2005] INLR 68, in which the judgment of the New Zealand Refugee Status Appeals Authority was written by Rodger Haines QC. It contains an impressive analysis of the relevant principles, and it is impossible to do full justice here to what it contains. The passages that are of particular interest are to be found from paras 92 and following. The point made by Sachs J in National Coalition for Gay and Lesbian Equality v Minister of Justice 1999 (1) SA 6, para 130 that to require an applicant to engage in self denial was to require him to live in a state of self induced oppression was approved and adopted: para 114. The decision of the High Court of Australia in S395/2002 is analysed in paras 116 124. Haines is critical of its approach on the ground that it concentrates on an evaluation of the risk rather than being, as it is put in para 124, located in the persecution element. The New Zealand approach, it is said, places international human rights standards at the centre of the being persecuted analysis in the belief that this provides a principled and disciplined framework for analysis. The significance of this distinction becomes apparent at the end of the judgment when, without any detailed analysis of the causative condition by examining what will actually happen on return, the conclusion is reached in a few sentences that the applicant was at risk of serious harm simply because he was gay: para 132. In Karouni v Gonzales (2005) 399 F 3d 1163 the US Court of Appeals upheld an appeal by an applicant who claimed that he had a well founded fear of persecution on return to Lebanon because he was gay. It applied the principle, which the Secretary of State in this case accepts, that he should not be required to change his sexual identity, as it was a fundamental characteristic and an integral part of human freedom. Several Canadian cases were referred to by Mr Bourne in support of his proposition that the tribunal must look at what the applicant will, rather than could, do if he were to be returned: Case no 02751 of 9 January 2007 (unreported) 16 February 2007; Atta Fosu v Canada (Minister of Citizenship and Immigration) [2008] FC 1135 and Okoli v Minister of Citizenship and Immigration [2009] FC 332. In Atta Fosu, for example, the Federal Court held that it was impermissible to require a person to deny or hide his sexuality when there was no evidence that he could, or was even prepared to, keep it secret. What is missing from these cases, especially those from Australia and New Zealand, is clear and consistent guidance as to the way the fact finding tribunals should go about their task. Useful advice is set out in A Guide to Refugee Law in Australia, prepared by the Legal Service Section of the Refugee Review Tribunal and the Migration Review Tribunal, pp 10.25 10.26. But it is not authoritative. The test as stated in para 16 of J v Secretary of State for the Home Department [2007] Imm AR 73 does not fit well with some of the dicta in these cases, and with the recommendation in the Guide that asylum seekers are not required, and cannot be expected, to take reasonable steps to avoid persecutory harm or to live discreetly so as to avoid it. But I have already concluded that it should be departed from. The test This brings me to the test that should be adopted by the fact finding tribunals in this country. As Lord Walker points out in para 98, this involves what is essentially an individual and fact specific inquiry. Lord Rodger has described the approach in para 82, but I would like to set it out in my own words. It is necessary to proceed in stages. (a) The first stage, of course, is to consider whether the applicant is indeed gay. Unless he can establish that he is of that orientation he will not be entitled to be treated as a member of the particular social group. But I would regard this part of the test as having been satisfied if the applicants case is that he is at risk of persecution because he is suspected of being gay, if his past history shows that this is in fact the case. (b) The next stage is to examine a group of questions which are directed to what his situation will be on return. This part of the inquiry is directed to what will happen in the future. The Home Offices Country of Origin report will provide the background. There will be little difficulty in holding that in countries such as Iran and Cameroon gays or persons who are believed to be gay are persecuted and that persecution is something that may reasonably be feared. The question is how each applicant, looked at individually, will conduct himself if returned and how others will react to what he does. Those others will include everyone with whom he will come in contact, in private as well as in public. The way he conducts himself may vary from one situation to another, with varying degrees of risk. But he cannot and must not be expected to conceal aspects of his sexual orientation which he is unwilling to conceal, even from those whom he knows may disapprove of it. If he fears persecution as a result and that fear is well founded, he will be entitled to asylum however unreasonable his refusal to resort to concealment may be. The question what is reasonably tolerable has no part in this inquiry. (c) On the other hand, the fact that the applicant will not be able to do in the country of his nationality everything that he can do openly in the country whose protection he seeks is not the test. As I said earlier (see para 15), the Convention was not directed to reforming the level of rights in the country of origin. So it would be wrong to approach the issue on the basis that the purpose of the Convention is to guarantee to an applicant who is gay that he can live as freely and as openly as a gay person as he would be able to do if he were not returned. It does not guarantee to everyone the human rights standards that are applied by the receiving country within its own territory. The focus throughout must be on what will happen in the country of origin. (d) The next stage, if it is found that the applicant will in fact conceal aspects of his sexual orientation if returned, is to consider why he will do so. If this will simply be in response to social pressures or for cultural or religious reasons of his own choosing and not because of a fear of persecution, his claim for asylum must be rejected. But if the reason why he will resort to concealment is that he genuinely fears that otherwise he will be persecuted, it will be necessary to consider whether that fear is well founded. (e) This is the final and conclusive question: does he have a well founded fear that he will be persecuted? If he has, the causative condition that Lord Bingham referred to in Januzi v Secretary of State for the Home Department [2006] 2 AC 426, para 5 will have been established. The applicant will be entitled to asylum. It should always be remembered that the purpose of this exercise is to separate out those who are entitled to protection because their fear of persecution is well founded from those who are not. The causative condition is central to the inquiry. This makes it necessary to concentrate on what is actually likely to happen to the applicant. As Lord Walker says in para 88, the inquiry is directed to what will happen in the future if the applicant is returned to his own country. An approach which disregards what is in fact likely to occur there in the case of the particular applicant is wrong and should not be adopted. The facts of these cases Applying the guidance in J v Secretary of State for the Home Department [2007] Imm AR 73 to HJs case, the Asylum and Immigration Tribunal said that the issue was whether the need for him to live discreetly would itself constitute persecution. The evidence of suppression of aspects of his life in Iran was limited. It concluded that to live a private life discreetly would not cause significant detriment to his right to respect for private life and that it would not involve suppression of many aspects of his sexual identity. Noting that enforcement of the law against homosexuality in Iran is arbitrary, it said that the evidence did not show a real risk of discovery or of adverse action against homosexuals who conduct their homosexual activities discreetly. It found on the evidence that the level of seriousness for international protection had not been reached. HJ could reasonably be expected to tolerate the position in Iran on any return: para 46. In the Court of Appeal Pill LJ said that in his judgment the test stated in para 16 of Js case by reference to S395/2002 complied with the standard required by the Convention and that the findings of the tribunal were findings that they were entitled to make on the evidence: para 31. In HTs case the Tribunal found that he would be discreet on return to Cameroon. In the Court of Appeal Pill LJ said that the groundwork for a further finding that he could not reasonably be required to be discreet in Cameroon or to tolerate a life involving discretion there was not established: para 44. He upheld the Tribunals decision on the ground that it was entitled to find that the first panel did not err in law in finding that a single attack on HT followed a one off incident of him being seen by a neighbour kissing another man with whom he had a three year relationship in his garden. Miss Carss Frisk pointed out that there was no finding that his behaviour with the other man was a one off incident. He was the victim of a single attack involving serious violence by way of mob justice following the garden incident. Instead of helping him, the police joined in the assault. But he had had two homosexual relationships. The second had lasted for a period of five years. The problem had started when neighbours spotted what he and his partner were doing in the garden. The Tribunal said that he could move to another part of Cameroon where his sexual identity was unknown. But it is plain that to be effective against the risk of persecution, which is present everywhere in that country, he would have to lie about and conceal his sexuality. The Tribunal did not assess the effects on him of suppressing his sexual identity. Conclusion I am not confident that the tribunals would have come to the same conclusion if they had approached the facts in the way I have suggested in paras 35 36. It was suggested by the appellants that this court should make a reference of a question arising under the Qualification Directive to the Court of Justice of the European Union under article 267 TFEU (formerly article 234 EC). But the point that was said to require a reference was not clearly identified, and I would reject that suggestion. I would allow these appeals and set aside the orders of the Court of Appeal. I would remit both cases to the Tribunal, for further reconsideration in HJs case and for reconsideration in the case of HT, in the light of the guidance given by this Court. LORD RODGER A gay man applies for asylum in this country. The Secretary of State is satisfied that, if he returns to his country of nationality and lives openly as a homosexual, the applicant will face a real and continuing prospect of being beaten up, or flogged, or worse. But the Secretary of State is also satisfied that, if he returns, then, because of these dangers of living openly, he will actually carry on any homosexual relationships discreetly and so not come to the notice of any thugs or of the authorities. Is the applicant a refugee for purposes of the United Nations Convention relating to the Status of Refugees 1951 (the Convention)? The answer is Yes. Article 1A(2) of the Convention declares that a refugee is a person who, owing to well founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country. The appellants, HJ, from Iran, and HT, from Cameroon, are gay men who both claim to be outside their country of nationality owing to a well founded fear of being persecuted for reasons of being gay. At one time there would have been debate as to whether homosexuals constitute a particular social group for the purposes of the Convention. But, in more recent years, it has come to be accepted that, at least in societies which discriminate against homosexuals, they are indeed to be regarded as a particular social group. See, for instance, R v Immigration Appeal Tribunal, Ex p Shah [1999] 2 AC 629, 644G 645A, per Lord Steyn, and at p 663, per Lord Millett (dissenting). Indeed regulation 6(1)(e) of the Refugee or Person in Need of International Protection (Qualification) Regulations 2006 (SI 2006/2525) really puts the point beyond doubt by providing that, subject to an exception which is not relevant for present purposes, a particular social group might include a group based on a common characteristic of sexual orientation. The Secretary of State therefore accepts that, in the case of Iran and Cameroon, homosexuals do indeed form a particular social group, of which HJ and HT are members. The approach in HJ In the case of HJ, the Asylum and Immigration Tribunal observed, at para 9 of its determination, that It is accepted that for a person to be openly gay in Iran would attract a real risk of persecution (see in particular RM and BB (Homosexuals) Iran [2005] UKAIT 00117). The issue therefore is whether the need for the appellant to be discreet about his sexuality on return to Iran would itself constitute persecution within the meaning of the Refugee Convention. The Tribunal went on to hold, at para 25, that It remains clear, as it was at the time of RM and BB, that those who confess to homosexual acts or are convicted by whatever means are at real risk as they face condign punishment. But, in its view, the evidence fell well short of showing that surveillance had reached such levels that Iranian citizens who engaged in homosexual activities in private ran a real risk of discovery. It remained the case, as the Tribunal had concluded in RM and BB, at para 124, that, given the legal context in which homosexuals operate in Iran, it can be expected that they would be likely to conduct themselves discreetly for fear of the obvious repercussions that would follow. The Tribunal in the present case summarised the position at para 44: We acknowledge that the way in which he is able to live as a gay man in the UK is preferable for him and we are satisfied that this informs his view that it is impossible for him to return to Iran. We acknowledge too that the appellant is now much more aware of the legal prohibitions on homosexuals in Iran and the potential punishments for breach of those prohibitions. On any return, to avoid coming to the attention of the authorities because of his homosexuality he would necessarily have to act discreetly in relation to it. We are satisfied that as a matter of fact he would behave discreetly. On the evidence he was able to conduct his homosexual activities in Iran without serious detriment to his private life and without that causing him to suppress many aspects of his sexual identity. Whilst he has conducted his homosexual activities in the UK less discreetly, we are not persuaded that his adaptation back to life in Iran would be something he could not reasonably be expected to tolerate. We consider that as a matter of fact he would behave in similar fashion as he did before he left Iran and that in doing so he would, as before, be able to seek out homosexual relationships through work or friends without real risk to his safety or serious detriment to his personal identity and without this involving for him suppression of many aspects of his sexual identity. Having analysed the evidence in more detail in para 45, the Tribunal referred to the test laid down by Buxton LJ in J v Secretary of State for the Home Department [2006] EWCA Civ 1238, [2007] Imm AR 73, at para 20. (The test is set out at para 48 below.) The Tribunal added, at para 46: The circumstances to be tolerated are the inability to live openly as a gay man as the appellant can in the UK. The part of sexuality to be abandoned is on the evidence also the ability to live openly as a gay man in the same way the appellant can do elsewhere. To live a private life discreetly will not cause significant detriment to his right to respect for private life, nor will it involve suppression of many aspects of his sexual identity. Enforcement of the law against homosexuality in Iran is arbitrary but the evidence does not show a real risk of discovery of, or adverse action against, homosexuals who conduct their homosexual activities discreetly. The position has not deteriorated since RM and BB [2005] UKAIT 00117. On the evidence we find the appellant can reasonably be expected to tolerate the position on any return. The approach in HT In the case of HT it is agreed that, following an occasion when he was seen kissing his then (male) partner in the garden of his home, the appellant was attacked by a crowd of people when leaving church. They beat him with sticks and threw stones at him. They pulled off his clothes and tried to cut off his penis with a knife. He attempted to defend himself and was cut just above the penis and on his hand. He was threatened with being killed imminently on the ground that you people cannot be changed. Police officers arrived and demanded to know what was going on and why the crowd were assaulting him. They were told it was because he was gay. One of the policemen said to the appellant How can you go with another man? and punched him on the mouth. The policemen then kicked him until he passed out. As a result of the injuries which he received he was kept in hospital for two months. After that, he was taken home by a member of his church who told him that he feared for his life and safety if he remained in Cameroon. This man made travel arrangements for HT who flew to the United Kingdom via another European country. In HTs case the Tribunal was of the view that in some respects the position in Cameroon was not dissimilar from the position in Iran and it was the view of the Tribunal that there might be difficulties for someone openly professing his homosexuality. A homosexual relationship carried on in private, however, was considered by the Tribunal not to create a reasonable degree of likelihood of persecution. (The Tribunals information about the position in Iran appears to have been taken from the admissibility decision of the European Court of Human Rights in F v United Kingdom (Application No 17341/03), 22 June 2004, unreported.) Because people in the area where he lived before leaving Cameroon knew that he was gay, the Tribunal contemplated that, in addition to conducting any relationship in private, HT would move to another part of the country where he would not be known. On reconsideration, the Senior Immigration Judge held, at para 15 of his determination, that Should the appellant choose to relocate it would be relatively safe for him to practice [sic] his sexual orientation in private and not come to the attention of the authorities. In both cases, therefore, the findings of the Tribunal are to the effect that, if the appellant were to return to his country of origin, he would be at risk of persecution if he were openly homosexual, but he would be unlikely to come to the attention of the authorities or to suffer harm, if he were to conduct any relationship in private. The test adopted by the Court of Appeal The question, whether in such circumstances an applicant has a well founded fear of persecution, seems to have been considered by the Court of Appeal for the first time in Z v Secretary of State for the Home Department [2004] EWCA Civ 1578, [2005] Imm AR 75. The court had been referred to the decision of the High Court of Australia in Appellant S395/2002 v Minister for Immigration (2003) 216 CLR 473. Buxton LJ accepted that the judgments in that case contained a number of statements to the effect that, if an applicants way of life would be subjected to persecution in his home country, he cannot be denied asylum on the basis of a conclusion that he could avoid that persecution by modifying that way of life. Having referred to paras 40 and 43 of the judgment of McHugh and Kirby JJ, Buxton LJ continued, at paras 15 16: 15. Mr Kovats for the Secretary of State pointed out that where avoiding action is forced on the subject, that case only falls under the Refugee Convention if it results in a condition that can properly be called persecutory, in that imposes on the subject a state of mind or conscience that fits with the definition of persecution given by McHugh and Kirby JJ in paragraph 40 of their judgment, and in line with English authority already quoted: Whatever form the harm takes, it will constitute persecution only if, by reason of its intensity or duration, the person persecuted cannot reasonably be expected to tolerate it. That no doubt is the level of interference that McHugh and Kirby JJ had in mind when speaking of threats and menaces in the passage cited in para 14 above. 16. Although S395 was presented to the court that granted permission in this appeal as a new departure in refugee law, and for that reason justifying the attention of this court, in truth it is no such thing. McHugh and Kirby JJ, at their paragraph 41, specifically relied on English authority, Ahmed v SSHD [2000] INLR 1. It has been English law at least since that case, and the case that preceded it, Danian v SSHD [1999] INLR 533, that, in the words of the leading judgment of Simon Brown LJ at pp 7G and 8C D: in all asylum cases there is ultimately a single question to be asked: is there a serious risk that on return the applicant would be persecuted for a Convention reason.the critical question: if returned, would the asylum seeker in fact act in the way he says he would and thereby suffer persecution? If he would, then, however, unreasonable he might be thought for refusing to accept the necessary restraint on his liberties, in my judgment he would be entitled to asylum. It necessarily follows from that analysis that a person cannot be refused asylum on the basis that he could avoid otherwise persecutory conduct by modifying the behaviour that he would otherwise engage in, at least if that modification was sufficiently significant in itself to place him in a situation of persecution. If the IAT in our case refused Mr Z asylum on the basis that he was required to avoid persecution they did not respect the jurisprudence of Ahmed. Buxton LJs formulation of the position, as he derived it from Simon Brown LJs statement in Ahmed v Secretary of State for the Home Department [2000] INLR 1, 7, was quoted by Maurice Kay LJ in J v Secretary of State for the Home Department [2007] Imm AR 73, at para 11. He added that it was particularly helpful because it brings together the principle articulated by the High Court of Australia and the underlying need for an applicant to establish that his case contains something sufficiently significant in itself to place him in a situation of persecution. Maurice Kay LJ went on to say, at para 16, that the Tribunal will have to address questions that were not considered on the last occasion, including the reason why the appellant opted for discretion before his departure from Iran and, by implication, would do so again on return. It will have to ask itself whether discretion is something that the appellant can reasonably be expected to tolerate, not only in the context of random sexual activity but in relation to matters following from, and relevant to, sexual identity in the wider sense recognised by the High Court of Australia (see the judgment of Gummow and Hayne JJ at para 83). This requires consideration of the fact that homosexuals living in a stable relationship will wish, as this appellant says, to live openly with each other and the discretion which they may feel constrained to exercise as the price to pay for the avoidance of condign punishment will require suppression in respect of many aspects of life that related to or informed by their sexuality (Ibid, para 81). Buxton LJ added, at para 20: The question that will be before the AIT on remission will be whether the applicant could reasonably be expected to tolerate whatever circumstances are likely to arise were he to return to Iran. The applicant may have to abandon part of his sexual identity, as referred to in the judgment of Gummow and Hayne JJ in S, in circumstances where failure to do that exposes him to the extreme danger that is set out in the country guidance case of RM and BB. The Tribunal may wish to consider whether the combination of those two circumstances has an effect on their decision as to whether the I would accept both submissions. applicant can be expected to tolerate the situation he may find himself in when he returns to Iran. In his judgment on the present appeals Pill LJ held, at para 31, that the test stated in para 16 of Maurice Kay LJs judgment in J v Secretary of State complies with the standard required by the Refugee Convention. He added that it is an appropriate and workable test. Pill LJ considered that in the case of HJ the Tribunal had plainly understood the test and that their conclusion that he could reasonably be expected to tolerate conditions in Iran was firmly based on the evidence in the case, considered in the context of the in country evidence. On that ground he dismissed the appeal. Keene LJ and Sir Paul Kennedy agreed. The appellants take this fairly well established case law of the Court of Appeal head on. They contend that the Court of Appeal test is incompatible with the definition of refugee in article 1A(2) of the Convention and is based on a misunderstanding of the decision of the High Court of Australia in Appellant S395/2002 v Minister for Immigration (2003) 216 CLR 473. The rationale of the Convention For someone to be a refugee within the terms of article 1A(2) of the Convention, he must be outside his country of nationality owing to well founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion. In effect, the Convention proceeds on the basis that people should be allowed to live their lives free from the fear of serious harm coming to them because of their race, religion, nationality, membership of a particular social group or political opinion. Countries which sign up to the Convention recognise, however, that we do not live in an ideal world and that, in fact, there are many countries where persecution for these reasons does indeed take place. In such countries either agents of the state carry out the persecution themselves or, at least, the state does not offer adequate protection against individuals and groups who carry it out. Of course, diplomatic and other pressures may be exerted on states in the hope of improving the situation. But, in the meantime, the signatories to the Convention do not wash their hands of those at risk: in effect, they agree that, by giving the victims asylum, they will afford them the protection from persecution which their country of origin should have afforded them but did not. See, for example, La Forest J in Canada (Attorney General) v Ward [1993] 2 SCR 689, 709: At the outset, it is useful to explore the rationale underlying the international refugee protection regime, for this permeates the interpretation of the various terms requiring examination. International refugee law was formulated to serve as a back up to the protection one expects from the state of which an individual is a national. It was meant to come into play only in situations when that protection is unavailable, and then only in certain situations. In Horvath v Secretary of State for the Home Department [2001] 1 AC 489, 495D G, Lord Hope of Craighead quoted this passage with approval and adopted Professor Hathaways description of the protection as surrogate or substitute protection. At the risk of repetition, the importance of this analysis for present purposes is that it proceeds on the basis that, so far from permitting or encouraging its agents to persecute the applicant for one of the protected grounds, the home state should have protected him from any persecution on that ground. The underlying rationale of the Convention is therefore that people should be able to live freely, without fearing that they may suffer harm of the requisite intensity or duration because they are, say, black, or the descendants of some former dictator, or gay. In the absence of any indication to the contrary, the implication is that they must be free to live openly in this way without fear of persecution. By allowing them to live openly and free from that fear, the receiving state affords them protection which is a surrogate for the protection which their home state should have afforded them. The applicant who would not take steps to avoid persecution The Secretary of State accepts accordingly that an applicant is entitled to the protection of the Convention if he could avoid suffering any actual harm by modifying his behaviour (say, by conducting himself discreetly) on his return to his home state but would not in fact choose to do so. English authority for this approach in the field of religion is to be found in the judgment of Simon Brown LJ in Ahmed (Iftikhar)v Secretary of State for the Home Department [2000] INLR 1. The applicant was an Ahmadi, who, if returned to Pakistan, would still have been vocal in his proclamation of Ahmadi beliefs, for which he would have suffered persecution. Simon Brown LJ observed, at p 7: It is one thing to say that it may well be reasonable to require asylum seekers to refrain from certain political or even religious activities to avoid persecution on return. It is quite another thing to say that, if in fact it appears that the asylum seeker on return would not refrain from such activities if, in other words, it is established that he would in fact act unreasonably he is not entitled to refugee status. The same point is made, with considerably more elaboration, in the judgment of McHugh and Kirby JJ in Appellant S395/2002 v Minister for Immigration (2003) 216 CLR 473. They begin by pointing out, at p 489, para 40, that persecution does not cease to be persecution for the purpose of the Convention because those persecuted can eliminate the harm by taking avoiding action within the country of nationality. In the remainder of para 40 they point out that, if the position were otherwise, the Convention would not protect those who chose to exercise their right, say, to express their political opinion openly. Similarly, the Convention would not protect those who chose to live openly as gay men rather than take the option of living discreetly. Their Honours added, 216 CLR 473, 489 490, para 41: History has long shown that persons holding religious beliefs or political opinions, being members of particular social groups or having particular racial or national origins are especially vulnerable to persecution from their national authorities. The object of the signatories to the Convention was to protect the holding of such beliefs, opinions, membership and origins by giving the persons concerned refuge in the signatory countries when their country of nationality would not protect them. It would undermine the object of the Convention if the signatory countries required them to modify their beliefs or opinions or to hide their race, nationality or membership of particular social groups before those countries would give them protection under the Convention. They concluded the paragraph by citing the passage from Simon Brown LJ in Ahmed v Secretary of State for the Home Department [2000] INLR 1, 7, which I have quoted at para 54 above. The applicant who would conduct himself discreetly In Ahmed Simon Brown LJ was tackling the case of an applicant who could take steps to avoid persecution on his return, but who would not do so. The present appeals concern a completely different kind of applicant: the applicant who, on his return, would act discreetly to avoid the harm which would come to him if he were to live openly as a gay man. In the passage from Ahmed which I cited at para 54 above, Simon Brown LJ appears to have envisaged that it might, in some sense, be reasonable to require applicants to refrain from certain political or even religious activities to avoid persecution on return. But, in his conspicuously clear argument on behalf of the Secretary of State in the present case, Mr Bourne accepted that neither the Secretary of State nor a tribunal had any power to require a gay applicant to act discreetly on his return to his country of nationality in order to avoid persecution. Both of them might, of course, purport to decide the case on the assumption that the applicant would do so. But counsel accepted that neither the Secretary of State nor any tribunal could reject an application for asylum on the basis of an assumption that the gay applicant would act discreetly and so avoid, say, being beaten up or worse. He might or might not. It would be a question of fact, depending on the circumstances of the individual case. Although counsel for the Secretary of State was at pains to draw this distinction between assuming that the applicant would act discreetly to avoid persecution and finding that this is what he would in fact do, the distinction is pretty unrealistic. Unless he were minded to swell the ranks of gay martyrs, when faced with a real threat of persecution, the applicant would have no real choice: he would be compelled to act discreetly. Therefore the question is whether an applicant is to be regarded as a refugee for purposes of the Convention in circumstances where the reality is that, if he were returned to his country of nationality, he would have to act discreetly in order to avoid persecution. The question is not confined to cases where fear of persecution is the only reason why the applicant would act discreetly. In practice, the picture is likely to be more complicated. A fear of persecution is by no means the only reason why an applicant might behave discreetly if he were returned to his country of nationality. For example, he might not wish to upset his parents or his straight friends and colleagues by revealing that he is gay; in particular, he might worry that, if the fact that he was gay were known, he would become isolated from his friends and relatives, be the butt of jokes or unkind comments from colleagues or suffer other discrimination. Indeed, in a society where gay men are persecuted, it is quite likely that the prevailing culture will be such that some of an applicants friends, relatives and colleagues would react negatively if they discovered that he was gay. In these circumstances it is at least possible that the only real reason for an applicant behaving discreetly would be his perfectly natural wish to avoid harming his relationships with his family, friends and colleagues. The Convention does not afford protection against these social pressures, however, and so an applicant cannot claim asylum in order to avoid them. So if, having considered the facts of any individual case, the Secretary of State or a tribunal concluded that the applicant would choose to behave discreetly on his return simply to avoid these social pressures, his application for asylum would fall to be rejected. He would not be a refugee within the terms of article 1A(2) of the Convention because, by choosing to behave discreetly in order to avoid these social pressures, the applicant would simultaneously choose to live a life in which he would have no well founded fear of being persecuted for reasons of his homosexuality. A similar point arose, in the context of religion, in NABD of 2002 v Minister of Immigration and Multicultural and Indigenous Affairs (2005) 79 ALJR 1142, discussed at para 70 below. Having examined the relevant evidence, the Secretary of State or the tribunal may conclude, however, that the applicant would act discreetly partly to avoid upsetting his parents, partly to avoid trouble with his friends and colleagues, and partly due to a well founded fear of being persecuted by the state authorities. In other words the need to avoid the threat of persecution would be a material reason, among a number of complementary reasons, why the applicant would act discreetly. Would the existence of these other reasons make a crucial difference? In my view it would not. A Jew would not lose the protection of the Convention because, in addition to suffering state persecution, he might also be subject to casual, social anti semitism. Similarly, a gay man who was not only persecuted by the state, but also made the butt of casual jokes at work, would not lose the protection of the Convention. It follows that the question can be further refined: is an applicant to be regarded as a refugee for purposes of the Convention in circumstances where the reality is that, if he were returned to his country of nationality, in addition to any other reasons for behaving discreetly, he would have to behave discreetly in order to avoid persecution because of being gay? It is convenient to use a phrase such as acting or behaving discreetly to describe what the applicant would do to avoid persecution. But in truth he could do various things. To take a few examples. At the most extreme, the applicant might live a life of complete celibacy. Alternatively, he might form relationships only within a circle of acquaintances whom he could trust not to reveal to others that he had gay relationships. Or, he might have a gay partner, but never live with him or have him to stay overnight or indulge in any display of affection in public. Or the applicant might have only fleeting anonymous sexual contacts, as a safe opportunity presented itself. The gradations are infinite. Suppose the Secretary of State or the tribunal were satisfied that, if the applicant took some such precautions, he would be unlikely to suffer any actual harm. Would the applicant then have no well founded fear of persecution by reason of being gay and so be unable to claim asylum under the Convention? Surely not. As already explained in para 53 above, so far as the social group of gay people is concerned, the underlying rationale of the Convention is that they should be able to live freely and openly as gay men and lesbian women, without fearing that they may suffer harm of the requisite intensity or duration because they are gay or lesbian. Their home state should protect them and so enable them to live in that way. If it does not and they will be threatened with serious harm if they live openly, then most people threatened with persecution will be forced to take what steps they can to avoid it. But the applicants country of nationality does not meet the standard of protection from persecution which the Convention envisages simply because conditions in the country are such that he would be able to take, and would in fact take, steps to avoid persecution by concealing the fact that he is gay. On the contrary, the fact that he would feel obliged to take these steps to avoid persecution is, prima facie, an indication that there is indeed a threat of persecution to gay people who live openly. His country of nationality is therefore not affording him the necessary level of protection. So the receiving country should. For this reason, in Appellant S395/2002 v Minister for Immigration (2003) 216 CLR 473, 493, para 51, McHugh and Kirby JJ emphasise that a tribunal will fall into error if it fails to ask why an applicant would act discreetly if he were returned to his home state. That question will be particularly important where the evidence shows that, before leaving his country and applying for asylum, the applicant lived discreetly. Their Honours explained, at p 490, para 43: In cases where the applicant has modified his or her conduct, there is a natural tendency for the tribunal of fact to reason that, because the applicant has not been persecuted in the past, he or she will not be persecuted in the future. The fallacy underlying this approach is the assumption that the conduct of the applicant is uninfluenced by the conduct of the persecutor and that the relevant persecutory conduct is the harm that will be inflicted. In many perhaps the majority of cases, however, the applicant has acted in the way that he or she did only because of the threat of harm. In such cases, the well founded fear of persecution held by the applicant is the fear that, unless that person acts to avoid the harmful conduct, he or she will suffer harm. It is the threat of serious harm with its menacing implications that constitutes the persecutory conduct. Their Honours went on to apply that approach to the decision of the tribunal in that case, at p 493, paras 51 53: 51. Central to the Tribunals decision was the finding that the appellants had not suffered harm in the past because they had acted discreetly. Because the Tribunal assumed that it is reasonable for a homosexual person in Bangladesh to conform to the laws of Bangladesh society, the Tribunal failed to determine whether the appellants had acted discreetly only because it was not possible to live openly as a homosexual in Bangladesh. Because of that failure, the Tribunal, unsurprisingly, failed to give proper attention to what might happen to the appellants if they lived openly in the same way as heterosexual people in Bangladesh live. 52. The Tribunal did find, however, that to attempt to live openly as a homosexual in Bangladesh would mean to face problems ranging from being disowned by ones family and shunned by friends and neighbours to more serious forms of harm, for example the possibility of being bashed by the police. That finding appears to be based on an acceptance of the evidence of Mr Khan, the Executive Director of the Naz Foundation. In its reasons, the Tribunal recorded Mr Khan as saying: [T]he consequences of being identified as homosexual vary enormously, from acceptance and tolerance, to harassment, physical abuse or expulsion from the community. Most of the harassment of males who have sex with males takes the form of extortion by local police and hustlers who threaten to expose them to their families if they do not cooperate. 53. The Tribunals findings on the attitude of Bangladesh society and the statements of the appellants indicate that they were discreet about their relationship only because they feared that otherwise they would be subjected to the kinds of discrimination of which Mr Khan spoke. If the Tribunal had found that this fear had caused them to be discreet in the past, it would have been necessary for the Tribunal then to consider whether their fear of harm was well founded and amounted to persecution. That would have required the Tribunal to consider what might happen to the appellants in Bangladesh if they lived openly as a homosexual couple. Would they have suffered physical abuse, discrimination in employment, expulsion from their communities or violence or blackmail at the hands of police and others, as Mr Khan suggested were possibilities? These were the sorts of questions that the Tribunal was bound to consider if it found that the appellants discreet behaviour in the past was the result of fear of what would happen to them if they lived openly as homosexuals. Because the Tribunal assumed that it is reasonable for a homosexual person in Bangladesh to conform to the laws of Bangladesh society, however, the Tribunal disqualified itself from properly considering the appellants claims that they had a real fear of persecution if they were returned to Bangladesh. In short, the fact that the applicants would act discreetly and so not be subjected to violence if returned to Bangladesh did not mean that they did not have a well founded fear of persecution on their return. Rather, the tribunal had to go on to ask itself why they would act discreetly. If it was because they would suffer serious harm if they lived openly as a homosexual couple, then they would have a well founded fear of persecution since it is the right to live openly without fear of persecution which the Convention exists to protect. The other justices in the majority, Gummow and Hayne JJ, described the tribunals error in this way, 216 CLR 473, 503, para 88: The Tribunal did not ask why the appellants would live discreetly. It did not ask whether the appellants would live discreetly because that was the way in which they would hope to avoid persecution. That is, the Tribunal was diverted from addressing the fundamental question of whether there was a well founded fear of persecution by considering whether the appellants were likely to live as a couple in a way that would not attract adverse attention. That the Tribunal was diverted in that way is revealed by considering the three statements in its reasons that are referred to earlier: first, that it is not possible to live openly as a homosexual in Bangladesh; secondly, that [t]o attempt to [live openly] would mean to face problems; and, thirdly, that Bangladeshi men can have homosexual affairs or relationships, provided they are discreet. Nowhere did the Tribunal relate the first and second of these statements to the position of the appellants. It did not consider whether the adverse consequences to which it referred sufficed to make the appellants fears well founded. All that was said was that they would live discreetly. Again, the point is that the tribunal should have considered why the appellants would live discreetly if they were returned to Bangladesh. In particular, it should have asked whether they would live discreetly because that was the way they would hope to avoid persecution. If so, then the tribunal should have considered whether the adverse consequences sufficed to make the appellants fears of persecution well founded. The decision of the High Court is accordingly powerful authority, which I would respectfully follow, for the proposition that, if a person has a well founded fear that he would suffer persecution on being returned to his country of nationality if he were to live openly as a gay man, then he is to be regarded as a refugee for purposes of the Convention, even though, because of the fear of persecution, he would in fact live discreetly and so avoid suffering any actual harm. The High Court has followed the same line of reasoning in subsequent cases. Application of the High Courts approach in Appellant S395/2002 In NABD of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 79 ALJR 1142 the appellant, who had converted to Christianity, would face persecution if he returned to Iran. He argued that the tribunal had fallen into the same kind of error as the tribunal in S395/2002 v Minister for Immigration by attaching significance to a supposed difference between discreet and confrontational behaviour. By a majority (McHugh and Kirby JJ dissenting), the High Court dismissed his appeal. In doing so, they did not reject the approach in S395/2002 v Minister for Immigration. Rather, applying that approach, they held that the appeal failed on the facts. As Hayne J (one of the majority in S395/2002) and Heydon J explained, at para 168: At no point in its chain of reasoning did the Tribunal divert from inquiring about whether the fears which the appellant had were well founded. It did not ask (as the Tribunal had asked in Appellant S395/2002) whether the appellant could avoid persecution; it asked what may happen to the appellant if he returned to Iran. Based on the material the Tribunal had, including the material concerning what the appellant had done while in detention, it concluded that were he to practise his faith in the way he chose to do so, there was not a real risk of his being persecuted. In SZATV v Minister for Immigration and Citizenship (2007) 233 CLR 18 the appellant had worked as a journalist in Chernovtsy in Ukraine. Due to his political views he had been subjected to a systematic campaign of harassment, including physical maltreatment. The Refugee Review Tribunal none the less rejected his claim for asylum on the ground that he could return to a different part of Ukraine where he would not be known, and work in the construction industry. He would not then come to the notice of the authorities. Allowing his appeal, at p 28, para 28, Gummow, Hayne and Crennan JJ referred to the analysis in para 40 of the judgment of McHugh and Kirby JJ in Appellant S395/2002 v Minister for Immigration (2003) 216 CLR 473, 489, where they had criticised the idea that an applicant would not suffer persecution for his homosexuality if he could avoid it by living discreetly. Similarly, in SZATV, the tribunal had gone wrong by approaching the issue on the footing that it would not be unreasonable for the appellant to relocate within Ukraine and obtain work which would not involve the expression to the public of his political opinions. In other words, he would avoid persecution by giving up the very right to express his political opinions without fear of persecution which the Convention is designed to protect. Again, the decision is consistent with the approach in Appellant S395/2002 v Minister for Immigration. The same approach has been followed in New Zealand. In Refugee Appeal No 74665/03, [2005] INLR 68 at para 124, the New Zealand Refugee Status Appeals Authority considered that its own approach and the approach of the High Court of Australia in Appellant S395/2002 converged on the same point, namely that refugee status cannot be denied by requiring of the claimant that he or she avoid being persecuted by forfeiting a fundamental human right. The difference between the High Court and the Authority which the Authority considered could be important in certain cases was that it preferred to use a human rights framework in order to determine the limits of what an individual is entitled to do and not to do. That approach might, for instance, be relevant if an applicant were claiming asylum on the ground that he feared persecution if he took part in a gay rights march. I respectfully see the attractions of that approach. But no such issue arises in the present appeals and I prefer to leave the point for consideration in a case where it might be of practical effect. For present purposes I take the decision of the Authority, based on a particularly full and impressive analysis of the relevant materials, as clear support for the High Court of Australias approach that an applicant cannot be denied asylum on the basis that he would, in fact, take effective steps, by suppressing his sexual identity, to avoid the harm which would otherwise threaten him. The Court of Appeal: living discreetly as persecution Under reference to the case law of the Court of Appeal set out above at paras 47 49, the Secretary of State argued, however, that if the applicant would actually live discreetly and avoid the danger, then he would have no real fear of persecution unless he could not reasonably be expected to tolerate that situation, viz, having to conceal his sexual identity, and all the restrictions which that would entail, in circumstances where failure to do so would expose him to extreme danger. In other words the basis for claiming asylum would be a well founded fear that he would find it intolerable to live discreetly to avoid the danger. Something of the same idea can be seen in the argument which Mosley J considered in Sadeghi Pari v Canada (Minister of Citizenship and Immigration) 2004 FC 282, para 29: The meaning of persecution is generally defined as the serious interference with a basic human right. Concluding that persecution would not exist because a gay woman in Iran could live without punishment by hiding her relationship to another woman may be erroneous, as expecting an individual to live in such a manner could be a serious interference with a basic human right, and therefore persecution (internal citations omitted). In my view, the approach adopted by the Court of Appeal is unsound. I leave on one side my reasoning so far and also the obvious point that the Court of Appeals test seems to require the applicant to establish a form of secondary persecution brought on by his own actions in response to the primary persecution. In my view the core objection to the Court of Appeals approach is that its starting point is unacceptable: it supposes that at least some applications for asylum can be rejected on the basis that the particular applicant could find it reasonably tolerable to act discreetly and conceal his sexual identity indefinitely to avoid suffering severe harm. The New Zealand Refugee Status Appeals Authority observed in Re GJ [1998] (1995) INLR 387, 420 that sexual orientation is either an innate or unchangeable characteristic or a characteristic so fundamental to identity or human dignity that it ought not be required to be changed (emphasis in the original). So, starting from that position, the Convention offers protection to gay and lesbian people and, I would add, bisexuals and everyone else on a broad spectrum of sexual behaviour because they are entitled to have the same freedom from fear of persecution as their straight counterparts. No one would proceed on the basis that a straight man or woman could find it reasonably tolerable to conceal his or her sexual identity indefinitely to avoid suffering persecution. Nor would anyone proceed on the basis that a man or woman could find it reasonably tolerable to conceal his or her race indefinitely to avoid suffering persecution. Such an assumption about gay men and lesbian women is equally unacceptable. Most significantly, it is unacceptable as being inconsistent with the underlying purpose of the Convention since it involves the applicant denying or hiding precisely the innate characteristic which forms the basis of his claim of persecution: Atta Fosu v Canada (Minister of Citizenship and Immigration) 2008 FC 1135, para 17, per Zinn J. At the most basic level, if a male applicant were to live discreetly, he would in practice have to avoid any open expression of affection for another man which went beyond what would be acceptable behaviour on the part of a straight man. He would have to be cautious about the friendships he formed, the circle of friends in which he moved, the places where he socialised. He would have constantly to restrain himself in an area of life where powerful emotions and physical attraction are involved and a straight man could be spontaneous, impulsive even. Not only would he not be able to indulge openly in the mild flirtations which are an enjoyable part of heterosexual life, but he would have to think twice before revealing that he was attracted to another man. Similarly, the small tokens and gestures of affection which are taken for granted between men and women could well be dangerous. In short, his potential for finding happiness in some sexual relationship would be profoundly affected. It is objectionable to assume that any gay man can be supposed to find even these restrictions on his life and happiness reasonably tolerable. It would be wrong, however, to limit the areas of behaviour that must be protected to the kinds of matters which I have just described essentially, those which will enable the applicant to attract sexual partners and establish and maintain relationships with them in the same way as happens between persons who are straight. As Gummow and Hayne JJ pointed out in Appellant S395/2002 v Minister for Immigration (2003) 216 CLR 473, 500 501, para 81: Sexual identity is not to be understood in this context as confined to engaging in particular sexual acts or, indeed, to any particular forms of physical conduct. It may, and often will, extend to many aspects of human relationships and activity. That two individuals engage in sexual acts in private (and in that sense discreetly) may say nothing about how those individuals would choose to live other aspects of their lives that are related to, or informed by, their sexuality In short, what is protected is the applicants right to live freely and openly as a gay man. That involves a wide spectrum of conduct, going well beyond conduct designed to attract sexual partners and maintain relationships with them. To illustrate the point with trivial stereotypical examples from British society: just as male heterosexuals are free to enjoy themselves playing rugby, drinking beer and talking about girls with their mates, so male homosexuals are to be free to enjoy themselves going to Kylie concerts, drinking exotically coloured cocktails and talking about boys with their straight female mates. Mutatis mutandis and in many cases the adaptations would obviously be great the same must apply to other societies. In other words, gay men are to be as free as their straight equivalents in the society concerned to live their lives in the way that is natural to them as gay men, without the fear of persecution. This is not to give any false or undue prominence to the applicants sexuality or to say that an individual is defined by his sexuality. It is just to accept that sexual identity is inherent to ones very identity as a person: Hernandez Montiel v Immigration and Naturalisation Service, 225 F 3d 1084, 1093 (9th Cir 2000), per Tashima J. A E Housman showed many of the hallmarks of genius both as a textual critic and as a poet; Alan Turing was a mathematical genius. Not only may these talents have been at least as significant to their identity as their homosexuality, but the individuals themselves may well have thought so too. That does not matter in the context of persecution. As the Nazi period showed all too clearly, a secular Jew, who rejected every tenet of the religion and did not even think of himself as Jewish, was ultimately in as much need as any Orthodox rabbi of protection from persecution as a Jew. Similarly, an applicant for asylum does not need to show that his homosexuality plays a particularly prominent part in his life. All that matters is that he has a well founded fear that he will be persecuted because of that particular characteristic which he either cannot change or cannot be required to change. Another way of pointing to essentially the same basic defect in the approach of the Court of Appeal is to say that a tribunal has no legitimate way of deciding whether an applicant could reasonably be expected to tolerate living discreetly and concealing his homosexuality indefinitely for fear of persecution. Where would the tribunal find the yardstick to measure the level of suffering which a gay man far less, the particular applicant would find reasonably tolerable? How would the tribunal measure the equivalent level for a straight man asked to suppress his sexual identity indefinitely? The answer surely is that there is no relevant standard since it is something which no one should have to endure. In practice, of course, where the evidence showed that an applicant had avoided persecutory harm by living discreetly for a number of years before leaving his home country, the tribunal would be tempted to fall into error. The tribunal would be liable to hold that the evidence showed that this applicant, at least, must have found his predicament reasonably tolerable in the past and so would find it reasonably tolerable if he were returned to his country of nationality. But, in truth, that evidence would merely show that the applicant had put up with living discreetly for fear of the potentially dire consequences of living openly. I would therefore hold that the tests formulated by Maurice Kay LJ and Buxton LJ in J v Secretary of State for the Home Department [2007] Imm AR 73, at paras 16 and 20, and applied by Pill LJ in this case, are wrong in principle, unworkable and inconsistent with the way that article 1A(2) of the Convention has been interpreted and applied in other authorities. As can be seen from the passage from Z v Secretary of State for the Home Department [2005] Imm AR 75 quoted at para 47 above, Buxton LJ seems to have thought that he was following the approach of McHugh and Kirby JJ in Appellant S395/2002 v Minister for Immigration (2003) 216 CLR 473. That was, quite simply, a misunderstanding. As the cross heading above para 40 of their judgment showed, at this point in their judgment their Honours were considering the position of a gay person who would live openly. They first explained that persecution could take a variety of forms, and then observed, in the sentence quoted by Buxton LJ, that to count as persecution the harm had to be intolerable. But this is just a general description of what counts as persecution. As I have explained, in paras 55 and 56 above, the remainder of para 40 of their Honours judgment contains not the slightest hint of the approach favoured by the Court of Appeal. That approach should not be followed in future. The approach to be followed by tribunals When an applicant applies for asylum on the ground of a well founded fear of persecution because he is gay, the tribunal must first ask itself whether it is satisfied on the evidence that he is gay, or that he would be treated as gay by potential persecutors in his country of nationality. If so, the tribunal must then ask itself whether it is satisfied on the available evidence that gay people who lived openly would be liable to persecution in the applicants country of nationality. If so, the tribunal must go on to consider what the individual applicant would do if he were returned to that country. If the applicant would in fact live openly and thereby be exposed to a real risk of persecution, then he has a well founded fear of persecution even if he could avoid the risk by living discreetly. If, on the other hand, the tribunal concludes that the applicant would in fact live discreetly and so avoid persecution, it must go on to ask itself why he would do so. If the tribunal concludes that the applicant would choose to live discreetly simply because that was how he himself would wish to live, or because of social pressures, e g, not wanting to distress his parents or embarrass his friends, then his application should be rejected. Social pressures of that kind do not amount to persecution and the Convention does not offer protection against them. Such a person has no well founded fear of persecution because, for reasons that have nothing to do with any fear of persecution, he himself chooses to adopt a way of life which means that he is not in fact liable to be persecuted because he is gay. If, on the other hand, the tribunal concludes that a material reason for the applicant living discreetly on his return would be a fear of the persecution which would follow if he were to live openly as a gay man, then, other things being equal, his application should be accepted. Such a person has a well founded fear of persecution. To reject his application on the ground that he could avoid the persecution by living discreetly would be to defeat the very right which the Convention exists to protect his right to live freely and openly as a gay man without fear of persecution. By admitting him to asylum and allowing him to live freely and openly as a gay man without fear of persecution, the receiving state gives effect to that right by affording the applicant a surrogate for the protection from persecution which his country of nationality should have afforded him. The Secretary of State should, of course, apply the same approach when considering applications of this type. Although I have, for the most part, concentrated on the position of gay men, the Secretary of State and tribunals should approach applications concerning lesbian women in the same way. These appeals I add a comment on the case of HT. The tribunal rejected his application on the ground that, on his return to Cameroon, he could go to live in another part of the country and live discreetly there. In that event he would have no real fear of persecution. But there appears to have been nothing in the evidence to suggest that there was any area of Cameroon where gay men could live openly without any fear of persecution. So in no sense would the applicant be returning to a part of the country where the state would protect him from persecution. In effect, therefore, the tribunal was simply saying that his application should be rejected because, on return, he could take steps to avoid persecution by conducting himself discreetly. For the reasons which I have given, that approach is inconsistent with the very aims of the Convention. In effect, the tribunal made the same error as the tribunal in SZATV v Minister for Immigration and Citizenship (2007) 233 CLR 18, discussed at para 71 above. For these reasons I would allow both appeals and remit matters to the respective tribunals for reconsideration in the light of the approach which I have outlined. LORD WALKER I agree with the reasoning and conclusions in Lord Rodgers judgment. But in view of the importance of this appeal I will add some observations in my own words. After all the carefully researched debate that the Court has heard and participated in (we have had 23 bundles of authorities containing 250 different items) there is, as has often been noted, ultimately a single question: does the claimant asylum seeker have a well founded fear of being persecuted, if returned to his own country, for reasons falling within article 1A(2) of the Convention? As it was put by Simon Brown LJ in Secretary of State for the Home Department v Iftikar Ahmed [2000] INLR 1, cited by McHugh and Kirby JJ in Appellant S395/2002 v Minister for Immigration and Multicultural Affairs [2003] HCA 71 (2003) 216 CLR 473 para 42 : [I]n all asylum cases there is ultimately but a single question to be asked: is there a serious risk that on return the applicant would be persecuted for a Convention reason? If there is, then he is entitled to asylum. This single question is however complex (McHugh J in Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225, 256) described it as a compound conception which nevertheless needs to be interpreted as a totality). It is not directed at ascertaining past facts (though findings as to events asserted by the claimant to have happened in the past will always be relevant, and often crucial). Instead it is directed at predicting what would or might happen in the future if (contrary to his wishes) the claimant is returned to his own country. Here too his evidence as to his own state of mind (in particular his intentions and his apprehensions in an eventuality which he earnestly hopes to avoid) will always be relevant. But his evidence may have to be treated with caution because of his strong personal interest in the outcome of his claim. Moreover the inquiry is by no means wholly subjective. The need for the claimants fear to be well founded introduces a very important objective element. Different jurisdictions have taken different approaches to evaluating what Professor James C Hathaway has called the threshold of concern (Hathaway, The Law of Refugee Status (1991) pp 75 80). When that work was published the test approved by the House of Lords in R v Secretary of State for the Home Department Ex p Sivakumaran (and conjoined appeals) [1988] AC 958 was that there should be a reasonable degree of likelihood (Lord Keith at p 994) or real and substantial danger (Lord Templeman at p 996) or a real and substantial risk (Lord Goff at p 1000) of persecution for a Convention reason. This remains the test. The editors of Macdonald, Immigration Law and Practice 7th ed (2008) prefer the expression real risk, citing the Court of Appeal in MH (Iraq) v Secretary of State for the Home Department [2007] EWCA Civ 852, a real as opposed to a fanciful risk. Risk is in my view the best word because (as explained in the next paragraph) it factors in both the probability of harm and its severity. In understanding the practical implications of the test it is important to note that in Sivakumaran Lord Keith quoted Lord Diplocks remarks in R v Governor of Pentonville Prison, Ex p Fernandez [1971] 1 WLR 987, 994 (an extradition case) as to the relative gravity of the consequences of the courts expectation being falsified either in one way or in the other and Lord Templeman referred to his own similar remarks in R v Secretary of State for the Home Department Ex p Bugdaycay [1987] AC 514, 537. Where life or liberty may be threatened, the balance of probabilities is not an appropriate test. As Sedley LJ said in Batayav v Secretary of State for the Home Department [2003] EWCA Civ 1489, [2004] INLR 126 para 38: If a type of car has a defect which causes one vehicle in ten to crash, most people would say that it presents a real risk to anyone who drives it, albeit crashes are not generally or consistently happening. Getting away from metaphor, I suppose that it may be debatable whether a gay man would be at real risk of persecution (in the Convention sense) if, on returning to his own country, he would face a one in ten risk of being prosecuted and made to pay a fine, or sent to prison for a month. But if he would face a one in ten risk of being prosecuted and sentenced to death by public hanging from a crane there could be only one answer. The notion that a gay man could (and so, some might say, should) avoid trouble by adopting a discreet lifestyle (or leading an entirely celibate life) is not limited to the context of asylum law. It is the way in which hundreds of thousands of gay men lived in England before the enactment of the Sexual Offences Act 1967. But it has assumed particular importance in asylum law since gays and lesbians have become generally recognised as a particular social group for Convention purposes. Jenni Millbank has described this development (which she terms discretion reasoning) in From discretion to disbelief: recent trends in refugee determinations on the basis of sexual orientation in Australia and the United Kingdom (2009) 13 IJHR 391, 393 394 (most references omitted): At its baldest, discretion reasoning entailed a reasonable expectation that persons should, to the extent that it is possible, co operate in their own protection, by exercising self restraint such as avoiding any behaviour that would identify them as gay; never telling anyone they were gay; only expressing their sexuality by having anonymous sex in public places; pretending that their partner is a flatmate; or indeed remaining celibate. This approach subverted the aim of the Refugees Convention that the receiving state provide a surrogate for protection from the home state by placing the responsibility of protection upon the applicant: it is he or she who must avoid harm. The discretion approach also varied the scope of protection afforded in relation to each of the five Convention grounds by, for example, protecting the right to be openly religious but not to be openly gay or in an identifiable same sex relationship. The idea of discretion reflects broader social norms concerning the proper place of lesbian and gay sexuality, as something to be hidden and reluctantly tolerated, a purely private sexual behaviour rather than an important and integral aspect of identity, or as an apparent relationship status. The discretion approach explicitly posited the principle that human rights protection available to sexual orientation was limited to private consensual sex and did not extend to any other manifestation of sexual identity (which has been variously characterised as flaunting displaying and advertising homosexuality as well as inviting persecution). Thus for example in 2001 the Federal Court of Australia held that the Iranian Penal Code prohibiting homosexuality and imposing a death penalty did place limits on the applicants behaviour; the applicant had to avoid overt and public, or publicly provocative homosexual activity. But having to accept those limits did not amount to persecution. (Nezhadian v Minister for Immigration and Multicultural Affairs [2001] FCA 1415, para 12). On appeal, the full Federal Court endorsed the view that public manifestation of homosexuality is not an essential part of being homosexual (WABR v Minister for Immigration and Multicultural Affairs [2002] FCAFC 124, para 23). The discretion approach thus has had wide reaching ramifications in terms of framing the human rights of lesbians and gay men to family life, freedom of association and freedom of expression as necessarily lesser in scope than those held by heterosexual people. This approach has been brought to an end, for the purposes of Australian asylum law, by the majority decision of the High Court of Australia in Appellant S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473. The High Court divided by four to three in favour of allowing the appeal and remitting the case (though the tribunal to which the case was remitted decided that S395/2002 and his co applicant S396/2002 were not gay after all this fact, recorded by Jenni Millbank in her article, is reflected in its title). The minority (Gleeson CJ and Callinan and Heydon JJ) considered that the tribunal had not erred in law. The majority consisted of McHugh and Kirby JJ who joined in one judgment, and Gummow and Hayne JJ who joined in another. I find the joint judgment of Gummow and Hayne JJ illuminating and compelling. Lord Hope and Lord Rodger have quoted parts of paras 81 and 82 but I think it helpful to set out the whole section (paras 78 83) which appears under the heading Discretion and being discreet: The central question in any particular case is whether there is a well founded fear of persecution. That requires examination of how this applicant may be treated if he or she returns to the country of nationality. Processes of classification may obscure the essentially individual and fact specific inquiry which must be made. The dangers of arguing from classifications are particularly acute in matters in which the applicants sexuality is said to be relevant. Those dangers lie within the notions of discretion and being discreet: terms often applied in connection with some aspects of sexual expression. To explain why use of those terms may obscure more than they illuminate, it is useful to begin by considering Convention reasons other than membership of a social group defined in terms of sexual identity. If an applicant holds political or religious beliefs that are not favoured in the country of nationality, the chance of adverse consequences befalling that applicant on return to that country would ordinarily increase if, on return, the applicant were to draw attention to the holding of the relevant belief. But it is no answer to a claim for protection as a refugee to say to an applicant that those adverse consequences could be avoided if the applicant were to hide the fact that he or she holds the beliefs in question. And to say to an applicant that he or she should be discreet about such matters is simply to use gentler terms to convey the same meaning. The question to be considered in assessing whether the applicants fear of persecution is well founded is what may happen if the applicant returns to the country of nationality; it is not, could the applicant live in that country without attracting adverse consequences. It is important to recognise the breadth of the assertion that is made when, as in the present case, those seeking protection allege fear of persecution for reasons of membership of a social group identified in terms of sexual identity (here, homosexual men in Bangladesh). Sexual identity is not to be understood in this context as confined to engaging in particular sexual acts or, indeed, to any particular forms of physical conduct. It may, and often will, extend to many aspects of human relationships and activity. That two individuals engage in sexual acts in private (and in that sense discreetly) may say nothing about how those individuals would choose to live other aspects of their lives that are related to, or informed by, their sexuality. Saying that an applicant for protection would live discreetly in the country of nationality may be an accurate general description of the way in which that person would go about his or her daily life. To say that a decision maker expects that that person will live discreetly may also be accurate if it is read as a statement of what is thought likely to happen. But to say that an applicant for protection is expected to live discreetly is both wrong and irrelevant to the task to be undertaken by the Tribunal if it is intended as a statement of what the applicant must do. The Tribunal has no jurisdiction or power to require anyone to do anything in the country of nationality of an applicant for protection. Moreover, the use of such language will often reveal that consideration of the consequences of sexual identity has wrongly been confined to participation in sexual acts rather than that range of behaviour and activities of life which may be informed or affected by sexual identity. No less importantly, if the Tribunal makes such a requirement, it has failed to address what we have earlier identified as the fundamental question for its consideration, which is to decide whether there is a well founded fear of persecution. It has asked the wrong question. Addressing the question of what an individual is entitled to do (as distinct from what the individual will do) leads on to the consideration of what modifications of behaviour it is reasonable to require that individual to make without entrenching on the right. This type of reasoning, exemplified by the passages from reasons of the Tribunal in other cases, cited by the Federal Court in Applicant LSLS v Minister for Immigration and Multicultural Affairs, leads to error. It distracts attention from the fundamental question. It leads to confining the examination undertaken (as it was in LSLS) merely to considering whether the applicant had a well founded fear of persecution if he were to pursue a homosexual lifestyle in [the country of nationality], disclosing his sexual orientation to the extent reasonably necessary to identify and attract sexual partners and maintain any relationship established as a result. That narrow inquiry would be relevant to whether an applicant had a well founded fear of persecution for a Convention reason only if the description given to what the applicant would do on return was not only comprehensive, but exhaustively described the circumstances relevant to the fear that the applicant alleged. On its face it appears to be an incomplete, and therefore inadequate, description of matters following from, and relevant to, sexual identity. Whether or not that is so, considering what an individual is entitled to do is of little assistance in deciding whether that person has a well founded fear of persecution. Lord Rodger, in paras 78 80 of his judgment, adds a vivid commentary which illustrates and brings to life the general message conveyed by this part of the judgment of Gummow and Hayne JJ. There is a similar message in the joint judgment of McHugh and Kirby JJ (especially paras 40 43). But I have to say, with great respect to those two very distinguished judges, that I have difficulty with some of the reasoning in para 43, and in particular the sentence, It is the threat of serious harm with its menacing implications that constitutes the persecutory conduct. I think that this sentence (together with the unexceptionable comment in para 40 that harm is persecution only if, by reason of its intensity or duration, the person persecuted cannot reasonably be expected to tolerate it) have contributed to the Court of Appeal straying into error in J v Secretary of State for the Home Department [2006] EWCA Civ 1238, [2007] Imm AR 1 paras 16 and 20, an error which was followed in this case: [2009] EWCA Civ 172, paras 11, 12, 31 and 44. In the present case Pill LJ referred, at para 10 of his judgment, to what counsel had described as the Anne Frank principle. That is of course a reference to the Jewish girl who was hidden in an attic in Amsterdam for more than two years, but ultimately discovered by the Nazis and sent to a concentration camp, where she died. The conditions which she had to endure, confined in an attic away from the normal pleasures of childhood and in constant fear of discovery, were certainly severe enough to be described as persecution. But in the context of a claim to asylum under the Convention this approach may be an unnecessary complication, and lead to confusion. The essential question in these cases is whether the claimant has a well founded fear of persecution as a gay man if returned to his own country, even if his fear (possibly in conjunction with other reasons such as his familys feelings) would lead him to modify his behaviour so as to reduce the risk. There are some countries in which a gay couple who lived together quite openly, and made no attempt to conceal their affection, even in public places, would be inviting persecution (an expression used in R v Secretary of State for the Home Department, Ex p Binbasi [1989] Imm AR 595, p 4). That is an unfortunate expression. Some people who risk martyrdom have complex motivation and appear to others to be stubborn and wrong headed. (John Donne, who was born a Catholic and knew a lot about persecution from his own familys experiences, wrote a prose work entitled Pseudo Martyr, published in 1610, deploring the intransigence of some loyal Catholics.) But neither the most courageous nor the most timorous forfeit protection as asylum seekers if, in their different ways, they satisfy the test of a well founded fear of persecution because of their sexuality. I respectfully concur in para 82 of Lord Rodgers judgment, setting out the approach to be followed by tribunals in cases of this sort. It involves (as Gummow and Hayne JJ put it in S395, para 78) an essentially individual and fact specific inquiry. It will often be a difficult task since much of the relevant evidence will come from the claimant, who has a strong personal interest in its outcome. For these reasons, and for the fuller reasons given by Lord Rodger, I would allow both appeals and remit them to the tribunal for reconsideration in the light of Lord Rodgers judgment. LORD COLLINS I agree that the appeal should be allowed for the reasons given by Lord Rodger and that the approach to be followed by tribunals should be as he proposes in paragraph [82] of his judgment. In the context of cases such as this, the use of the words discretion and discreetly tends to obscure the point that what is really involved is concealment of sexual orientation. The relevant question is whether the applicant has a well founded fear of being persecuted for reasons of membership of a particular social group: Refugee Convention, article 1A(2). Persecution is sustained or systemic failure of state protection in relation to one of the core entitlements which has been recognised by the international community, or an affront to internationally accepted human rights norms, and in particular the core values of privacy, equality and dignity: Horvath v Secretary of State for the Home Department [2001] 1 AC 489, 495; Amare v Home Secretary [2005] EWCA Civ 1600, [2006] Imm AR 217, [17]. The test of reasonable tolerability adopted by Buxton LJ in Z v Secretary of State for the Home Department [2004] EWCA Civ 1578, [2005] Imm AR 75 at [17], and applied by Maurice Kay LJ in J v Secretary of State for the Home Department [2006] EWCA Civ 1238, [2007] Imm AR 73 at [16], and Pill LJ in the present case at [31] was based on a misunderstanding of the passage in the judgment of McHugh and Kirby JJ in Appellant S395/2002 v Minister for Immigration [2003] HCA 71,(2003) 216 CLR 473, at [40], when they said: [40] Persecution covers many forms of harm ranging from physical harm to the loss of intangibles, from death and torture to state sponsored or condoned discrimination in social life and employment. Whatever form the harm takes, it will constitute persecution only if, by reason of its intensity or duration, the person persecuted cannot reasonably be expected to tolerate it. But persecution does not cease to be persecution for the purpose of the Convention because those persecuted can eliminate the harm by taking avoiding action within the country of nationality. The Convention would give no protection from persecution for reasons of religion or political opinion if it was a condition of protection that the person affected must take steps reasonable or otherwise to avoid offending the wishes of the persecutors. Nor would it give protection to membership of many a particular social group if it were a condition of protection that its members hide their membership or modify some attribute or characteristic of the group to avoid persecution. Similarly, it would often fail to give protection to people who are persecuted for reasons of race or nationality if it was a condition of protection that they should take steps to conceal their race or nationality. The idea of reasonable toleration was plainly being mentioned in the context of what amounts to persecution and not in the context of what they described as taking avoiding action or where members of the group hide their membership or modify some attribute or characteristic of the group to avoid persecution. If a person would have to conceal his sexual identity because of a well founded fear of persecution, he does not cease to have that well founded fear even if the concealment will be successful: see also NABD of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 29, (2005) 216 ALR 1; SZATV v Minister for Immigration and Citizenship [2007] HCA 40, (2007) 233 CLR 18; Refugee Appeal No 74665/03 [2005] INLR 68 (NZ Refugee Status Appeals Authority, Mr Haines QC). A similar, though not identical, approach has been adopted in Canada and the United States. Thus in Atta Fosu v Canada (Citizenship and Immigration) 2008 FC 1135 (Federal Court of Canada, Zinn J) it was held that to say that an internal flight alternative existed if the homosexual refugee claimant lived a discreet existence, was to say that it was not an internal flight alternative. The applicant was a Ghanaian citizen who claimed to fear persecution by the police and the family of his former same sex partner, on the basis of his homosexuality. The immigration board found that the applicant could live as a homosexual, discreetly, in the city of Accra, and therefore that an internal flight alternative existed for the applicant and therefore held that no determination on his identity as a homosexual needed to be made. The court held that the decision was unreasonable because it required the applicant to deny or hide the innate characteristic which formed the basis of his claim of persecution. See also Sadeghi Pari v Canada (Minister of Citizenship and Immigration), 2004 FC 282. In the United States it was said in Karouni v Gonzales, 399 F 3d 1163, 1173 (9th Cir 2005) that by arguing that the homosexual applicant could avoid persecution by living a life of celibacy in Lebanon, the Attorney General was essentially arguing that the law required him to change a fundamental aspect of his human identity. See also, for a full discussion of the suggestion that applicants could hide their religion to avoid persecution, Kazemzadeh v US Attorney General, 577 F 3d 1341 (11th Cir 2009), following Iao v Gonzales, 400 F 3d 530, 532 (7th Cir 2005), Zhang v Ashcroft, 388 F 3d 713, (9th Cir.2004); Woldemichael v Ashcroft, 448 F 3d 1000 (8th Cir 2006). These principles also answer the Anne Frank question which is discussed in the case law and which was the subject of argument on this appeal. In Win v Minister for Immigration and Multicultural Affairs [2001] FCA 132, a political opinion case, the Minister argued that the Tribunal was only required, under the terms of the Convention, to consider whether the applicants would be punished for their political opinions; and that since the applicants had claimed to have operated clandestinely in the past and gave no indication that they would not do so in the future, it was appropriate for the Tribunal merely to ask what the prospects were that the authorities would discover their activities in the future. Madgwick J said (at [18]): upon the approach suggested by counsel for the [Minister], Anne Frank, terrified as a Jew and hiding for her life in Nazi occupied Holland, would not be a refugee: if the Tribunal were satisfied that the possibility of her being discovered by the authorities was remote, she would be sent back to live in the attic. It is inconceivable that the framers of the Convention ever did have, or should be imputed to have had, such a result in contemplation. In this case the Secretary of State argued that had Anne Frank escaped to the United Kingdom, and had it been found (improbably, as the Secretary of State recognised) that on return to Holland she would successfully avoid detection by hiding in the attic, then she would not be at real risk of persecution by the Nazis, and the question would be whether permanent enforced confinement in the attic would itself amount to persecution. Simply to re state the Secretary of States argument shows that it is not possible to characterise it as anything other than absurd and unreal. It is plain that it remains the threat to Jews of the concentration camp and the gas chamber which constitutes the persecution. SIR JOHN DYSON SCJ On the findings of the tribunals, HJ and HT would have a well founded fear of persecution if, on return to Iran and Cameroon respectively, they were to live openly as gay men. Their claims for asylum failed because it was found that on their return they would conceal their sexual orientation and live discreet lives. I agree that these appeals should be allowed for the reasons given by Lord Rodger. In view of the importance of the issues, I would like to add a few words of my own. How can a gay man, who would have a well founded fear of persecution if he were to live openly as a gay man on return to his home country, be said to have a well founded fear of persecution if on return he would in fact live discreetly, thereby probably escaping the attention of those who might harm him if they were aware of his sexual orientation? It is well established that in asylum cases it is necessary for the decision maker to determine what the asylum seeker will do on return: see Ahmad v Secretary of State for the Home Department [1990] Imm AR 61. Thus, the asylum seeker who could avoid persecution on his return, but who (however unreasonably) would not do so is in principle a refugee within the meaning of the Convention. At first sight, therefore, it might be thought that this should lead to the conclusion that, if a gay man would live discreetly on return and thereby avoid being harmed or persecuted on account of his sexual orientation, he could not have a well founded fear of persecution within the meaning of article 1A(2) of the Convention. I shall call this the prima facie interpretation. But none of the parties to this appeal argues for this interpretation, although their reasons for not doing so differ fundamentally. Reasons why the prima facie interpretation must be rejected The Convention must be construed in the light of its object and purpose, which is to protect a person who owing to well founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country. If the price that a person must pay in order to avoid persecution is that he must conceal his race, religion, nationality, membership of a social group or political opinion, then he is being required to surrender the very protection that the Convention is intended to secure for him. The Convention would be failing in its purpose if it were to mean that a gay man does not have a well founded fear of persecution because he would conceal the fact that he is a gay man in order to avoid persecution on return to his home country. A purposive approach to the meaning of refugee was adopted by McHugh and Kirby JJ in the S395/2002 decision (2003) 216 CLR 473, at para 41 where they said: The object of the signatories to the Convention was to protect the holding of such beliefs, opinions, membership and origins by giving the persons concerned refuge in the signatory countries when their country of nationality would not protect them. It would undermine the object of the Convention if the signatory countries required them to modify their beliefs or opinions or to hide their race, nationality or membership of particular social groups before those countries would give them protection under the Convention. Like Lord Rodger, I would follow this approach which has been substantially followed in Australia. I do not find it necessary to examine the Australian authorities to which we were referred. It is perhaps sufficient to refer to the paper by Jenni Millbank From discretion to disbelief: recent trends in refugee determinations on the basis of sexual orientation in Australia and the United Kingdom (2009) 13 (2 3) IJHR 391 414. This paper explores the impact of the S395/2002 decision on the refugee jurisprudence of Australia and the United Kingdom five years on. It shows that the reasoning of the majority judgments is being generally applied in Australia, but that there has been a clear shift away from discretion towards disbelief as the major area of contest in decisions since S395 and S396, with a significant increase in decisions where the applicants claim to actually being gay, lesbian, or bisexual is outright rejected. The somewhat different analysis of the problem adopted in New Zealand also leads to a rejection of the prima facie interpretation and to the same overall conclusion that a persons claim to refugee status is not to be denied even if on return he will act discreetly in order to avoid being persecuted. On this analysis, which is expounded very fully in the leading case of Refugee Appeal No 74665/03 [2005] INLR 68, the emphasis is on the fact that refugee status cannot be denied to a person who on return would forfeit a fundamental human right in order to avoid persecution. Like Lord Rodger, I see the attractions of this approach. It gives due weight to the fact that the Convention must be interpreted in accordance with its broad humanitarian objective and having regard to the principles, expressed in the preamble, that human beings should enjoy fundamental rights and freedoms without discrimination and that refugees should enjoy the widest possible exercise of these rights and freedoms: see per Lord Bingham in Fornah v Secretary of State for the Home Department [2007] 1 AC 412 at para 10. An interpretation of article 1A(2) of the Convention which denies refugee status to gay men who can only avoid persecution in their home country by behaving discreetly (and who say that on return this is what they will do) would frustrate the humanitarian objective of the Convention and deny them the enjoyment of their fundamental rights and freedoms without discrimination. The right to dignity underpins the protections afforded by the Refugee Convention: see Canada (AG) v Ward [1993] 2 SCR 689, approving Professor Hathaway, Law of Refugee Status, 1991, p 108: The dominant view, however, is that refugee law ought to concern itself with actions which deny human dignity in any key way, and that the sustained or systemic denial of core human rights is the appropriate standard. A particular attraction of the New Zealand approach is that, as was said at [2005] INLR 68, para 120 of the decision delivered by RPG Haines QC, it facilitates a determination of: whether the proposed action by the claimant is at the core of the right or at its margins and whether the prohibition or restriction imposed by the state is lawful in terms of international human rights law. If the proposed action is at the core of the right and the restriction unlawful, we would agree that the claimant has no duty to avoid the harm by being discreet or complying with the wishes of the persecutor. If, however, the proposed activity is at the margin of the protected interest, then persistence in the activity in the face of the threatened harm is not a situation of being persecuted for the purposes of the Refugee Convention. The individual can choose to carry out the intended conduct or to act reasonably or discreetly in order to avoid the threatened serious harm. None of these choices, however, engages the Refugee Convention. It is open to question how far the distinction between harmful action at the core of the right and harmful action at its margin is of relevance in cases of persecution on grounds of immutable characteristics such as race and sexual orientation. But it is a valuable distinction and there may be more scope for its application in relation to cases concerning persecution for reasons of religion or political opinion. There is a yet further analysis that may be adopted which leads to the conclusion that the prima facie interpretation should be rejected. This is that, if a person will conceal his true identity and protected status out of a well founded fear that he will otherwise be persecuted, he will nevertheless continue to have a well founded fear of persecution even if, by concealing his true identity, he may succeed in avoiding serious harm. As McHugh and Kirby JJ said in S395/2002 at para 43: In manyperhaps the majority ofcases, however, the applicant has acted in the way that he or she did only because of the threat of harm. In such cases, the well founded fear of persecution held by the applicant is the fear that, unless that person acts to avoid the harmful conduct, he or she will suffer harm. It is the threat of serious harm with its menacing implications that constituted the persecutory conduct. In other words, the threat of serious harm and the fear of it will remain despite the avoiding behaviour. In Win v Minister for Immigration and Multicultural Attains (2001) FCA 132, at para 18 Madgwick J said: upon the approach suggested by counsel for the respondent, Anne Frank, terrified as a Jew and hiding for her life in Nazi occupied Holland would not be a refugee: if the Tribunal were satisfied that the possibility of her being discovered by the authorities was remote, she would be sent back to live in the attic. It is inconceivable that the framers of the Convention ever did have, or should be imputed to have had, such a result in contemplation. Even if it could be imagined that Anne Frank, as an asylum seeker, would not objectively have been at risk of being discovered in the attic, she would nevertheless have had a well founded fear of the threat of serious harm, a fear not eliminated by her decision to conceal her identity as a Jew and live in the attic. The Secretary of States solution: the reasonable tolerability test The Secretary of State recognises that it cannot have been intended that Convention protection should be denied to those who feel compelled to take extreme measures to avoid persecution. She does not, therefore, espouse the prima facie interpretation. Her case is that, if the measures that an asylum seeker would take on return to avoid persecution are not reasonably tolerable, then that of itself would amount to persecution. I cannot accept this. First, the phrase being persecuted in article 1A(2) refers to the harm caused by the acts of the state authorities or those for whom they are responsible. The impact of those acts on the asylum seeker is only relevant to the question whether they are sufficiently harmful to amount to persecution. But the phrase being persecuted does not refer to what the asylum seeker does in order to avoid such persecution. The response by the victim to the threat of serious harm is not itself persecution (whether tolerable or not) within the meaning of the article. Secondly, the test of what is reasonably tolerable is vague and difficult to apply. Is it a subjective test? Or does the word reasonably import the idea of the reasonable victim? If so, how for example would a decision maker determine whether it is reasonably tolerable to a person to conceal his or her sexual orientation or race? These are difficult questions which those who framed the Refugee Convention surely cannot have intended decision makers to address. On the Secretary of States test, it would seem that a person who feels compelled to conceal his or her protected status, but does not feel strongly about it and does not find the concealment intolerable is denied the protection of the Convention; whereas the person who does feel strongly about it and finds the concealment intolerable has the benefit of its protection. This differential treatment of the tolerant and the intolerant is unfair. It is an unprincipled and improper basis for deciding whether a person should or should not be accorded refugee status. The decision by the AIT in HJs case shows just how unsatisfactory the Secretary of States test is. The AIT comprised three very experienced immigration judges who endeavoured faithfully to apply the reasonable tolerability test prescribed for them by the Court of Appeal. They found at para 44 of their Determination that for 16 years HJ had been able to conduct his homosexual activities in Iran without serious detriment to his private life and without that causing him to suppress many aspects of his sexual identity (my emphasis). They concluded at para 45 that he would behave in the same way on his return to Iran and that it was difficult to see on the evidence that a return to that way of living can properly be characterised as likely to result in an abandonment of the appellants sexual identity. They said that he had been able to express his sexuality albeit in a more limited way than he can do elsewhere. Finally, they said at para 46: To live a private life discreetly will not cause significant detriment to his right to respect for private life, nor will it involve suppression of many aspects of his sexual identity. I do not understand by what yardstick the AIT measured the tolerability of these limitations and concluded that they were reasonably tolerable. True, HJ had endured them for 16 years, but that did not make them tolerable, let alone reasonably tolerable to him. He had endured them because the alternative was the real risk that he would face severe punishment at the hands of the state authorities. In short, there was no basis on which the tribunal could properly conclude that the fact that HJ had to conceal his identity as a gay man was reasonably tolerable to him. I wish to make it clear that I am not seeking to criticise the tribunal, but rather to show the nature of the task that they were asked to perform. Thirdly, the Secretary of State seeks to draw a distinction between the decision maker (i) requiring the asylum seeker to act discreetly on return and (ii) making a finding that the asylum seeker will in fact act discreetly on return. It is said that the former is impermissible and irrelevant to whether the asylum seeker has a well founded fear of persecution, whereas the latter is not only permissible but highly relevant. But as Lord Rodger points out, this is an unrealistic distinction. Most asylum seekers will opt for the life of discretion in preference to persecution. This is no real choice. If they are returned, they will, in effect, be required to act discreetly. Fourthly, the Secretary of States test, as formulated by the Court of Appeal in Z v Secretary of State for the Home Department [2004] EWCA Civ 1578, [2005] Imm AR 75 and applied in subsequent decisions of the Court of Appeal is based on a misunderstanding of two authorities. The test is founded entirely on these authorities and is not supported by any independent reasoning. The first misunderstanding is of para 40 of the judgment of McHugh and Kirby JJ in S395/2002. The sentence relied on by Buxton LJ is: Whatever form the harm takes, it will constitute persecution only if, by reason of its intensity or duration, the person persecuted cannot reasonably be expected to tolerate it. This sentence comes in a passage which is dealing with persecution generally. The paragraph then goes on to say that persecution does not cease to be persecution for the purpose of the Convention because those persecuted can eliminate the harm by taking avoiding action within the country of nationality. The sentence relied on by Buxton LJ is saying nothing about the quality or effect of action taken to avoid persecution. The second misunderstanding is of the true effect of what Simon Brown LJ said in Ahmed v Secretary of State for the Home Department. What he said at p 7 of his judgment (quoted by Lord Rodger at para 54 above) was that an asylum seeker would have a well founded fear of persecution if he could avoid persecution on his return, but would choose not to do so (case A). He did not address either expressly or by implication the question whether an asylum seeker would have a well founded fear of persecution if on his return he would act discreetly to avoid the persecution that he would suffer if he lived openly (case B). A conclusion on case A sheds no light on the correct answer to case B. Fifthly, there is no support for the Court of Appeal approach in any other jurisprudence. This is important in view of the implicit rejection of it in a number of other jurisdictions, including at least Australia and New Zealand, and the fact that it is desirable that, so far as possible, there should be international consensus on the meaning of the Convention. For all these reasons, I would reject the reasonable tolerability test. I should add that in his judgment in the present case, Pill LJ said at para 32 that in determining whether suppression was reasonably tolerable for an individual: . a degree of respect for social norms and religious beliefs in other states is in my view appropriate. Both in Muslim Iran and Roman Catholic Cameroon, strong views are genuinely held about homosexual practices. In considering what is reasonably tolerable in a particular society, the fact finding Tribunal is in my view entitled to have regard to the beliefs held there. Even if I had accepted the reasonable tolerability test, I would not have felt able to agree with this passage. It would have been necessary to conduct the assessment by reference to objective human rights standards, and not by reference to the social mores of the home country. As Lord Hoffmann said in R v Immigration Appeal Tribunal, Ex p Shah [1999] 2 AC 629, 655E: The findings of fact as to discrimination have not been challenged. They cannot be ignored merely on the ground that this would imply criticism of the legal or social arrangements in another country. The whole purpose of the Convention is to give protection to certain classes of people who have fled from countries in which their human rights have not been respected. In Refugee Appeal No 74665/03, the New Zealand Status Appeals Authority stated at para 112: We do not accept that the domestic law of the country of origin or cultural relativity can override international human rights norms in the refugee determination context. I agree. Conclusion It follows that the AIT in HJs case applied the wrong test, although they are not to be criticised for having done so. His appeal must be allowed and his case remitted to a fresh tribunal. The tribunal in HTs case did not apply the reasonably tolerability test. But they dismissed HTs appeal on the basis that he could relocate to a different part of Cameroon, presumably on the basis that he would act discreetly there. Their conclusion is flawed for the simple reason that they seem to have thought that the mere fact that HT had acted discreetly in the past and would do so in the future was determinative of the issue. That was an error of law. His appeal must also be allowed and his case remitted to a fresh tribunal. As regards guidance for immigration judges in the future, I agree with what Lord Rodger has said at para 82. |
Under the Mental Health Act 1983 (the MHA), the Crown Court may impose a hospital order together with a restriction order upon a mentally disordered offender, if this is considered necessary to protect the public from serious harm. This means that the patient is liable to indefinite detention in hospital for medical treatment and can only be discharged by the Secretary of State for Justice or the First-tier Tribunal (the FtT). Such a discharge can be conditional, which means that the patient remains subject to recall to hospital, as well as to whatever conditions are imposed by the Secretary of State or the FtT. The question in this case is whether the conditions imposed can, if the patient consents, be such as would amount to a deprivation of liberty within the meaning of article 5 of the European Convention on Human Rights (ECHR). The patient in this case is anxious to get out of hospital and is willing to consent to a very restrictive regime in the community in order that this can happen. The Secretary of State argues that this is not legally permissible. The factual background The patient was born on 11 July 1983 and so is now aged 35. He has a diagnosis of mild learning disabilities, autistic spectrum disorder, and pathological fire setting. On 27 April 2001, when aged 17, he was convicted of arson, being reckless as to whether life would be endangered, and arson. He was made the subject of a hospital order under section 37 of the MHA, together with a restriction order under section 41. Apart from a brief period from December 2006 to April 2007, when he was conditionally discharged, he has been detained in hospital ever since. He is considered to represent a serious risk of fire setting and of behaving in a sexually inappropriate way towards women. His current application to the FtT for a conditional discharge was heard on 15 May 2015. His responsible clinician and the treating clinical team opposed his discharge but considered that he would benefit from a change of environment and a transfer to another low secure forensic unit. Two external experts considered that he could be safely managed in the community under a conditional discharge, provided that a suitable care plan was in place. There was no plan at that stage, but it was envisaged that a suitable plan would involve a level of restriction, supervision and monitoring which would amount to a deprivation of liberty within the meaning of article 5 of the ECHR, as explained by this court in Surrey County Council v P; Cheshire West and Chester Council v P [2014] UKSC 19; [2014] AC 896 (Cheshire West). In short, he would be required to live at a particular place, which he would not be free to leave, and would not be allowed out without an escort. He was prepared to consent to such a placement and it was agreed that he had the capacity to do so. No such placement had yet been identified, and so it was not possible for the FtT to discharge him then. But the FtT was invited to rule upon whether, as a matter of principle, it would be lawful to discharge him on condition that he complied with a care plan which would amount to a deprivation of liberty. The FtT ruled that it had no such power. In doing so, it followed the decision of the Court of Appeal in B v Secretary of State for Justice [2011] EWCA Civ 1608; [2012] 1 WLR 2043 that the FtT had no power to impose conditions which in themselves amounted to a deprivation of liberty. It rejected an argument that this could be circumvented by a condition of compliance with a care plan, because the conditions in the care plan would be imposed by the authority which devised and implemented the care plan, and not by the hospital or the FtT. It also found that any consent which the patient purported to give would not be a genuine, properly considered and reliable consent, given his propensity to change his mind and that the only alternative was to remain in hospital. It made no decision as to whether such a discharge would be appropriate in his case. On the patients appeal to the Upper Tribunal, Charles J decided that there was power to impose a condition of compliance with a care package, provided that the patient had the capacity to consent to it and did consent: [2015] UKUT 644 (AAC); [2016] MHLR 198. On the Secretary of States appeal to the Court of Appeal, the court held that it was bound by the ratio of B, which was clear: there was no power to impose conditions which amounted to a deprivation of liberty, even with the consent of a patient with the capacity to do so, and the appeal was allowed: [2017] EWCA Civ 194; [2017] 1 WLR 4681. The patient now appeals to this court. The legal background Restriction orders have their origin in the Mental Health Act 1959, which is the foundation of the modern mental health law, now contained in the 1983 Act (as later amended, principally by the Mental Health Act 2007). Under an ordinary hospital order, the patient was admitted to hospital for treatment for a defined period, which could be renewed from time to time by his responsible medical officer (now his responsible clinician). He could be discharged by his responsible medical officer, the hospital managers or a Mental Health Review Tribunal (now the FtT). In other words, the length of time he spent in hospital was in the hands of the medical authorities or the tribunal. There was no power to recall him to hospital after discharge, although he could be admitted afresh if the grounds existed. Under what is now called a restriction order, on the other hand, the patients detention lasted indefinitely, and the powers of the responsible medical officer to discharge him or even to grant him leave of absence, could only be exercised with the consent of the Home Secretary (now the Secretary of State for Justice). The Home Secretary had an independent power to grant a discharge, which could be either absolute or conditional; if conditional, the patient could be recalled to hospital at any time. Those powers survive unchanged into what is now section 42(2) and (3) of the MHA 1983. It is not express, but must be implicit, that the Secretary of State has power to vary the conditions from time to time. Other than that, neither the 1959 Act or its successor the 1983 Act said anything about the kinds of condition which might be imposed and they provided no sanctions for their breach, other than the possibility of recall to hospital. Under the 1959 Act, the Mental Health Review Tribunal could review the case periodically, but could only make recommendations to the Home Secretary and had no power itself to grant a discharge. Thus, from the states point of view, a restriction order combined the advantages of a hospital order with the advantages of indefinite preventive detention and a power of instant recall to hospital after a conditional discharge. All of this was enacted before the United Kingdom recognised the right of individual petition to the European Court of Human Rights in 1966. In X v United Kingdom (1981) 4 EHRR 181, a conditionally discharged restricted patient complained that he had been recalled to hospital after three years in the community, without any grounds having to be shown and without immediate recourse to a tribunal which could direct his release. The court held that, under article 5(1)(e) of the ECHR, he could only be detained as a person of unsound mind if the criteria laid down in Winterwerp v The Netherlands (1979) 2 EHRR 387 were fulfilled: he must reliably be shown to be suffering from a true mental disorder, established on the basis of objective medical expertise; the disorder must be of a kind or degree warranting compulsory confinement; and the validity of continued confinement would depend upon the persistence of such a disorder. In Xs case, the court saw no reason to doubt the medical opinion that these criteria did exist when he was recalled to hospital. On the other hand, the court did find a breach of article 5(4), which requires that every person deprived of his liberty by 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. The result of this (and other developments) was that the 1959 Act was amended in 1982 and then consolidated in the MHA 1983. Restricted patients detained in hospital were given the right to apply to a Mental Health Review Tribunal within the same periods that ordinary hospital order patients could apply: that is, once within the second six months after detention and once within every 12 months thereafter (section 70). A conditionally discharged patient could apply once within the second 12 months after his discharge and within every two-year period thereafter (section 75(2)). If a conditionally discharged patient is recalled to hospital, his case must be referred to a tribunal within one month of the recall (section 75(1)(a)). He himself can also apply within the same periods after his recall as he could after his initial detention (section 75(1)(b)). Allied to that, the tribunal was itself given the power to discharge a restricted patient, either absolutely or conditionally. Originally, the tribunal had to be satisfied that the grounds for detention did not exist; but this was amended, following a declaration of incompatibility, by the Mental Health Act 1983 (Remedial) Order 2001 (SI 2001/3712). As the MHA now stands, the patient must be discharged if the tribunal is not satisfied that all the grounds for his detention continue to exist: ie that he is suffering from mental disorder or from mental disorder of a nature or degree which makes it appropriate for him to be liable to be detained in a hospital for medical treatment; or that it is necessary for the health or safety of the patient or for the protection of other persons that he should continue to receive such treatment; or that appropriate medical treatment is available for him (section 72(1)(b)(i), (ii) and (iia)). If the tribunal is (a) not so satisfied and (b) is satisfied that it is not appropriate for the patient to remain liable to be recalled to hospital for medical treatment, it must direct his absolute discharge (section 73(1)). Where (a) applies but (b) does not, the tribunal must direct his conditional discharge (section 73(2)). Where a tribunal directs a conditional discharge, the Secretary of State may recall the patient to hospital at any time under section 42(3) (section 73(4)(a)). The patient must also comply with the conditions imposed by the tribunal at the time or by the Secretary of State at any later time (section 73(4)(b)). The Secretary of State may vary the conditions set either by the tribunal or by himself at any time (section 73(5)). Thus the Secretary of State is in complete charge of what the conditions are and whether the patient should be recalled to hospital. There are no sanctions for breach of the conditions other than recall to hospital, which may be at any time. No criteria for recall are laid down in the MHA. However, the logic of X v United Kingdom is that at least the Winterwerp criteria must be satisfied; and in any event, the tribunal will have to discharge the patient once more if not satisfied that the MHA criteria are met (and see R (MM) v Secretary of State for the Home Department [2007] EWCA Civ 687, (2007) 98 BMLR 130, where it was agreed that breach of a condition was not a free-standing ground for recall and the Secretary of State must form a view of whether the statutory criteria are met). However, the MHA says nothing, and has never said anything, about what the conditions may be. In practice, the Secretary of State will usually impose conditions of residence at a stated address and for both clinical and social supervision. The social supervisor provides practical support, for example in accessing the aftercare services to which the patient is entitled under section 117 of the MHA, and is expected to have regular meetings with the patient (Ministry of Justice, Guidance for social supervisors, 18 March 2009). The clinical supervisor is responsible for the regular assessment of the patients mental health and monitoring his medication (Ministry of Justice, Guidance for clinical supervisors, 18 March 2009). The Ministry expects reports from both supervisors after the first month and every three months thereafter. It is usually a condition that the patient shall comply with treatment as directed by the clinical supervisor (para 23 of the Guidance for clinical supervisors). However, the power to impose treatment without consent upon hospital patients, by force if need be, contained in section 63 of the MHA, does not apply to conditionally discharged restricted patients (section 56(3)(c), as substituted by section 34(2) of the 2007 Act). A patient is entitled to refuse treatment unless he lacks the capacity to make the decision, in which case the Mental Capacity Act 2005 (MCA) may permit treatment which is in his best interests, but will only permit coercion in order to impose treatment in very limited circumstances (MCA, sections 5 and 6). Hence, in R (SH) v Mental Health Review Tribunal [2007] EWHC 884 (Admin); (2007) 10 CCLR 306, Holman J rejected a challenge to the legality of a condition to comply with treatment as being contrary both to the common law right to choose what medical treatment to have and to the right to respect for private life in article 8 of the ECHR. Although the condition said shall comply, the patient remained free to choose whether or not to have the treatment at each and every time when he was required to do so. That refusal would not, by itself, necessarily lead to his recall to hospital. Nevertheless, the Secretary of States policy on recall states that failure to comply with medication will usually trigger consideration of whether the patient should be recalled, as would non-compliance with other conditions. Whether the patient is in fact recalled depends on a range of factors (Ministry of Justice, The recall of conditionally discharged restricted patients, 4 February 2009, paras 5 and 7). The arguments The purpose of conditional discharge is to enable the patient to make a safe transition from the more institutional setting of a hospital to a less institutional setting in the community. Transition through progressively less secure hospital conditions before discharge into the community is common and conditional discharge is part of the same continuum. As Lord Bingham put it in R (H) v Secretary of State for the Home Department [2003] UKHL 59; [2004] 2 AC 253, at para 26: the conditional discharge regime, properly used, is of great benefit to patients and the public and conducive to the Convention object of restricting the curtailment of personal liberty. If there is any possibility of treating and supervising a patient in the community, the imposition of conditions permits that possibility to be explored and, it may be, tried. So why, in an appropriate case, asks Mr David Lock QC on behalf of the patient, should that purpose not be served by a transition into a community setting which is different from a hospital but nevertheless amounts to a deprivation of liberty, because the patient is under continuous supervision and control and not free to leave? If this condition cannot be imposed, the patient will stay in hospital longer than he otherwise would have done and the MHAs rehabilitative purpose will be frustrated. He argues that there is nothing in either the common law interpretation of section 73(2) (or for that matter section 42(2)) or in article 5 of the ECHR to prevent the imposition of such a condition where the patient consents to it and has the capacity so to do. As to the common law, the interpretation of section 73(2) (and section 42(2)) may depend, in part at least, on what is meant by discharge. Does it mean, as the patient argues, discharge from detention in the hospital where he is currently detained or, as the Secretary of State argues, discharge from the liability to be detained? If it means the latter, then a condition of continued detention, albeit not in a hospital, would not amount to a discharge. If it means the former, then that obstacle at least is removed. In Secretary of State for the Home Department v Mental Health Review Tribunal for Mersey Regional Health Authority [1986] 1 WLR 1170, Mann J held that it meant discharge from hospital, so that a condition could not be imposed that the patient reside in another hospital, even if not under conditions of detention. In R (Secretary of State for the Home Department) v Mental Health Review Tribunal, PH as interested party [2002] EWHC 1128 (Admin); [2002] MHLR 241, known as PH, Elias J held that it meant discharge from detention in hospital, so that there could be a discharge on condition of residence in another hospital: but he also held that the crucial question was whether the conditions amounted to detention, which was not permitted. The Court of Appeal proceeded on the assumption that this proposition was correct and decided that the conditions imposed were not such as to amount to a deprivation of liberty and therefore that they were not ultra vires: [2002] EWCA Civ 1868; [2003] MHLR 202. The MHA draws a clear distinction between being actually detained, being liable to be detained, and being neither. A patient who is detained in hospital under compulsory powers such as a hospital order, including a restriction order, is actually detained. A hospital order or other compulsorily detained patient who is granted leave of absence under section 17 of the MHA remains liable to be detained (see section 17(1)). A patient who is released from hospital under a community treatment order under section 17A is not liable to be detained (see section 17D(2), as inserted by section 32(2) of the 2007 Act). But a restricted patient who is granted a conditional discharge remains liable to be detained: this much appears from section 42(2), which states that a restricted patient who is absolutely discharged ceases to be liable to be detained, with the clear implication that a restricted patient who is conditionally discharged remains liable to be detained. This must mean that discharge has a different meaning when referring to restricted patients in sections 42(2) and 73(2) from the meaning that it has in sections 23 and 72 when dealing with the discharge of unrestricted patients. Section 23(1) states that a patient who is for the time being liable to be detained shall cease to be so liable if ordered to be discharged by his responsible clinician, the hospital managers or (in certain circumstances) his nearest relative. It contains no power to grant a conditional discharge. Section 72 deals with the tribunals powers to discharge non-restricted patients who are liable to be detained and also confers no power to impose a conditional discharge. Discharge in sections 23 or 72 must therefore mean an absolute discharge, not only from detention but also from the liability to be detained. On the other hand, discharge in sections 42(2) and 73(2) when referring to the conditional discharge of restricted patients, cannot mean discharge from the liability to be detained, because the patient remains liable to be detained. It must therefore mean discharge from the hospital in which the patient is currently detained. Does it therefore follow, as Elias J considered, and the Court of Appeal agreed, that it must mean discharge from any sort of detention? In Secretary of State for Justice v RB [2010] UKUT 454 (AAC), the Upper Tribunal (Carnwath LJ, HHJ Sycamore and UTJ Rowland), held that it did not and that it was not bound by PH to hold that it did (para 54). In its view: The premise for exercise of the tribunals powers is that the patient has previously been lawfully detained (so that article 5 has been complied with); but that he does not now need to be detained in a hospital and that some other form of accommodation is appropriate, subject to the possibility of recall. The next step is to devise the conditions. At that stage, it is hard to see why the question whether the conditions would amount to detention for the purposes of article 5 should come into it. Even if they do amount to such detention, there will be no breach of article 5 because the 1983 Act makes provision for the procedural safeguards guaranteed by article 5. The tribunals concern should be simply to decide what is necessary for the well-being and protection of the patient, and the protection of the public and to satisfy themselves that the patient is willing to comply with the conditions and to that extent consents to them. We see no reason why Parliament should have wished them to concern with themselves with the fine distinctions which may arise under the Strasbourg case law on detention. (para 53) The only qualification was that the conditions could not impose detention in a hospital because, by definition, the tribunal had to have held that it was not satisfied that the criteria for such detention existed (para 55) (see para 10 above). The Court of Appeal did not agree: B v Secretary of State for Justice [2011] EWCA Civ 1608; [2012] 1 WLR 2043. The only form of detention of restriction order patients which was authorised by the MHA was detention in a hospital for medical treatment. Such an invasion of the fundamental common law right to liberty should not be read into the general words of section 73. This would be contrary to the principle of legality: R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115. It would conflict with the scheme of the Act, under which the Secretary of State could approve the patients transfer to another hospital or into guardianship. And the lack of criteria would mean that the detention was not in accordance with the law for the purpose of article 5 of the ECHR. The Court of Appeal adopted the reasoning in Bs case when reaching the same conclusion in this case. As to the ECHR, Mr Lock argues that there is no deprivation of liberty if the patient consents: in Storck v Germany (2005) 43 EHRR 6, the European Court held: the notion of deprivation of liberty within the meaning of article 5(1) does not only comprise the objective element of a persons confinement to a certain limited place for a not negligible length of time. Individuals can only be considered as being deprived of their liberty if, as an additional subjective element, they have not validly consented to the confinement in question. (para 74) The same formulation was repeated by the Grand Chamber in Stanev v Bulgaria (2012) 55 EHRR 22, para 117. Hence, in Storck, although there was a deprivation of liberty in respect of one period of detention in a psychiatric clinic, there was no such deprivation in respect of another, as the patient had consented to being there. But it is also clear from Storck that an initial consent can be withdrawn, for example, where the patient attempts to leave the hospital. And it is clear from later decisions, such as Buzadji v Moldova (Application No 23755/07), Grand Chamber Judgment of 5 July 2016, that consent given in circumstances where the choice is between greater and lesser forms of deprivation of liberty - there between detention in prison and detention under house arrest - may be no real consent at all. It is, of course, an irony, not lost on the judges who have decided these cases, that the Secretary of State for Justice is relying on the protection of liberty in article 5 in support of an argument that the patient should remain detained in conditions of greater security than would be the case were he to be conditionally discharged into the community. It is, however, difficult to extract the principle of the least restrictive alternative from the case law under article 5. This has not concerned itself with the conditions of the patients detention (which may raise issues under article 3 or 8), as long as the place of detention is appropriate to the ground upon which the patient is detained: thus, in Ashingdane v United Kingdom (1985) 7 EHRR 528, the court rejected a complaint that the patient should have been transferred from Broadmoor to a more open hospital setting much earlier than he was. Mr Lock also argues that there is unjustified discrimination between a patient who has and a patient who lacks the capacity to decide for himself. If the patient lacks capacity, the Court of Protection can authorise a deprivation of liberty in accordance with the sort of care plan which is envisaged in this case, provided that it is in his best interests, whereas if the patient has capacity, the FtT has no power to do so, even with his consent. This is a new point, perhaps prompted by the obiter dictum in the Court of Appeal (at para 35), to the effect that the FtTs power to defer a decision might be used to invoke the jurisdiction of the Court of Protection to authorise the deprivation of liberty of an incapacitated patient under section 16 of the MCA. The Court of Protection cannot authorise the deprivation of liberty of an incapacitated person who is ineligible within the meaning of Schedule 1A to the MCA, section 16A (as inserted by section 50 of, and Schedule 8 to, the 2007 Act). A restricted patient who is actually detained in hospital is ineligible (falling within Case A in para 2). A restricted patient who is conditionally discharged from hospital falls either within Case B or Case C and is not wholly ineligible. A deprivation of liberty whose purpose consists wholly or mainly in medical treatment in hospital cannot be authorised, but a deprivation for other purposes can be authorised, provided that it is not inconsistent with the requirements of their MHA regime. Whether the Court of Protection could authorise a future deprivation, once the FtT has granted a conditional discharge, and whether the FtT could defer its decision for this purpose, are not issues which it would be appropriate for this court to decide at this stage in these proceedings. Assuming that both are possible, and therefore that there might be an incompatibility with article 14, read either with article 5 or with article 8, it would make no difference to the outcome of this case. The outcome of this case depends upon whether it is possible to read the words discharge subject to conditions in section 42(2) (dealing with the Secretary of States powers) and conditional discharge in section 73(2) (dealing with the FtTs powers) as including the power to impose conditions which amount to a deprivation of liberty within the meaning of article 5. Conditional discharge: what does it mean? The MHA is silent: it says nothing about the type or content of the conditions which may be imposed by the Secretary of State or the FtT. In this respect it has remained unchanged since the 1959 Act. There are several possibilities: (1) that the FtT cannot impose a condition of detention in a hospital but the Secretary of State may do so; (2) that neither may do so; (3) that both may impose a condition of detention in a place which is not a hospital within the meaning of the MHA whether or not the patient consents; (4) that both may do so but only if the patient consents; and (5) that neither may do so. There is of course the argument that a condition which amounts to a detention or deprivation of liberty could nonetheless serve the rehabilitative purpose of the power of conditional discharge. Just as there is nothing in the MHA which permits it, there is nothing in the MHA which prohibits it. The thinking of the experienced Upper Tribunal in RB (para 21 above) is worthy of respect. The main textual argument in favour of a power to impose such a condition is that a conditionally discharged patient remains liable to be detained within the meaning of the MHA (see para 18 above). As such, he is more akin to a hospital patient who has been given leave of absence than to a patient who is subject to a community treatment order. Discharge therefore cannot mean discharge from compulsion. Although it must mean discharge from the hospital where he is currently detained, it need not mean any more than that, and so could encompass a range of possible arrangements. Furthermore, although it is clear that the FtT cannot impose a condition of detention in a hospital for treatment, because by definition the FtT is not satisfied that the grounds for such detention exist (para 10 above), the same is not true of the Secretary of State. He has power to discharge the patient conditionally irrespective of whether the grounds for detention in hospital still exist. Moreover, if there is power to impose such a condition, it is difficult to see why the patients consent should be a pre-requisite. The patients willingness to comply with the conditions is always, of course, a highly relevant factor in deciding whether he is suitable for discharge; but this is a practical rather than a legal requirement. Yet no-one in these proceedings has suggested that there is power to impose such a condition without the patients consent. On the other hand, there are compelling reasons not to construe sections 42(2) and 73(2) in such a way. The first reason is one of high principle: the power to deprive a person of his liberty is by definition an interference with his fundamental right to liberty of the person. This engages the rule of statutory construction known as the principle of legality, as explained in the well-known words of Lord Hoffmann in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, at 131: the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost. Fundamental rights cannot be overridden by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual. The words of sections 42(2) and 73(2) are about as general as it is possible to be. Parliament was not asked to consider whether they included a power to impose a different form of detention from that provided for in the MHA, without any equivalent of the prescribed criteria for detention in a hospital, let alone any of the prescribed procedural safeguards. While it could be suggested that the FtT process is its own safeguard, the same is not the case with the Secretary of State, who is in a position to impose whatever conditions he sees fit. The second reason is one of practicality. The patients continued co-operation is crucial to the success of any rehabilitation plan. There is, as the FtT found in this case, always a concern that the patients willingness to comply is motivated more by his desire to get out of hospital than by a desire to stay in whatever community setting he is placed. As Holman J pointed out in SH (para 13 above), the MHA confers no coercive powers over conditionally discharged patients. Breach of the conditions is not a criminal offence. It is not even an automatic ground for recall to hospital, although it may well lead to this. But a recalled patient cannot be kept in hospital if the grounds for detaining him there are not satisfied. The patient could withdraw his consent to the deprivation at any time and demand to be released. It is possible to bind oneself contractually not to revoke consent to a temporary deprivation of liberty: the best-known examples are the passenger on a ferry to a defined destination in Robinson v Balmain New Ferry Co Ltd [1910] AC 295 and the miner going down the mine for a defined shift in Herd v Weardale Steel, Coal and Coke Co Ltd [1915] AC 67. But that is not the situation here: there is no contract by which the patient is bound. This leads to the third and perhaps most compelling set of reasons against such a power: it would be contrary to the whole scheme of the MHA. That Act provides in detail for only two forms of detention: (1) detention for no more than 36 hours in a place of safety, which may be a hospital, under sections 135 and 136; and (2) detention in a hospital under the civil powers contained in sections 2 (for assessment), 3 (for treatment) and 4 (for assessment in an emergency); or under a court order made in criminal proceedings under sections 35 (remand to hospital for report), 36 (remand to hospital for treatment), 37 (hospital order), 38 (interim hospital order), 41 (restriction order), and 45A (hospital and limitation directions, as inserted by section 46 of the Crime (Sentences) Act 1997); or under the Secretary of States directions under sections 47 (transfer of persons imprisoned under criminal powers) or 48 (transfer of persons imprisoned under civil powers). In each of those cases, the Act gives specific powers, both to convey the patient to the hospital or a place of safety and to detain him there: see sections 135(3) and 136(2) for detention in a place of safety; section 6(2) for detention in hospital under civil powers; sections 35(9) and 36(8) for remands to hospital for report or treatment; section 40(1) and (2) for a hospital order (with or without a restriction order) and an interim hospital order; section 45B(1) for a hospital and limitation direction; and section 47(3) for prisoner transfers. There is no equivalent express power to convey a conditionally discharged restricted patient to the place where he is required to live or to detain him there. If the MHA had contemplated that such a patient could be detained, it is inconceivable that equivalent provision would not have been made for that purpose. The MHA also makes detailed provision for the retaking of people who absent themselves from the place of safety or hospital where they are detained. A person authorised to be detained in a place of safety is deemed to be in legal custody and the person authorised to detain him has all the powers of a constable for that purpose (section 137(1) and (2)). If he escapes from legal custody, he may be retaken by that person or by any constable or Approved Mental Health Professional (section 138(1)). For hospital patients, as already explained (para 18 above), the MHA draws a distinction between being detained and being liable to be detained. A patient who is granted leave of absence and a conditionally discharged restricted patient remain liable to be detained but are not in fact detained under the MHA (at least unless the responsible clinician has directed that a patient given leave of absence remain in custody, under section 17(3)). The MHA contains elaborate provisions for recovering patients who are absent without leave. These are: patients who have absented themselves from the hospital where they are detained without having been granted leave of absence under section 17; patients who fail to return to hospital from leave when they should have done; patients on leave who have been recalled to hospital; and patients who break a condition of residence in their leave of absence (MHA, section 18(1)). A conditionally discharged patient who is recalled to hospital by the Secretary of State is also treated as if he were absent without leave for the purpose of the powers in section 18 (MHA, section 42(4)(b)). Patients who are absent without leave may be taken into custody and returned to hospital (the hospital where they were previously detained or, in the case of a conditionally discharged restricted patient, the hospital specified in the Secretary of States warrant of recall) by any police officer, any Approved Mental Health Professional, or by anyone on the staff of or authorised by that hospital (section 18(2)). Thus a conditionally discharged restricted patient is not liable to be taken into custody and returned anywhere unless and until he is recalled to hospital by the Secretary of State. Merely absenting himself from the place where he is required to live is not enough. Once again, if the MHA had contemplated that he might be detained as a condition of his discharge, it is inconceivable that it would not have applied the same regime to such a patient as it applies to a patient granted leave of absence under section 17. Added to those considerations is another which was influential with the Court of Appeal. A hospital order patient (including a patient on leave of absence) can apply to the FtT once within the second six months of his detention and once within every 12-month period thereafter. A conditionally discharged restricted patient who has not been recalled to hospital can only apply once within the second 12 months of his discharge and once within every two-year period thereafter. At the very least, this is an indication that it was not thought that such patients required the same degree of protection as did those deprived of their liberty; and this again is an indication that it was not contemplated that they could be deprived of their liberty by the imposition of conditions. Conclusion For all those reasons, I conclude that the MHA does not permit either the FtT or the Secretary of State to impose conditions amounting to detention or a deprivation of liberty upon a conditionally discharged restricted patient. It follows that this appeal must be dismissed. The making of a hospital order under section 37 of the Mental Health Act 1983, coupled with a restriction order under section 41, is a power given to the senior criminal courts (the Crown Court) in relation to offenders convicted of offences which carry sentences of imprisonment. The power is designed to provide an alternative to (probably but not invariably lengthy) imprisonment in the case of an offender who is mentally disordered. A restriction order can be imposed only, as section 41 explicitly says, where it is necessary for the protection of the public from serious harm, that is to say where the offender poses a risk of serious harm to the public: R v Birch (1989) 90 Cr App R 78. No one doubts that the machinery now in place for the making of this combination of orders, and for subsequent review by the FTT, complies with the requirements of article 5 of the European Convention on Human Rights. That article, as is well known, specifically contemplates legitimate detention both of persons convicted before a criminal court (article 5(1)(a)) and of those who are of unsound mind, whether convicted or not (article 5(1)(e)). The prime purpose of this combination of orders is thus the protection of the public. Another is, plainly, the treatment and if possible rehabilitation of the offender, since then the risk of serious harm to the public may be reduced or, sometimes, eventually removed. Recovery and rehabilitation are, inevitably, very likely to be progressive and/or partial, rather than instantaneous or complete. If the treatment progresses to the point where the nature of the detention can be relaxed, consistently with the continued protection of the public, it is very plainly in the public interest that it should be. The mechanism contemplated by the Mental Health Act for this relaxation, where it is appropriate, is conditional discharge. The irony so cogently pointed out by Lady Hale at para 24 is that in this case the contention which invokes article 5 ECHR has the result, if it is correct, that a restricted patient who has made sufficient progress for his conditions of detention to be relaxed but not entirely removed, cannot be conditionally discharged to a less severe form of detention. He will, very likely, instead remain in detention in hospital, because in the absence of conditions ensuring public safety it will not be possible for the FTT to say that it is not satisfied that his condition warrants his detention there (section 72(1)(b)(i) and (ii) as applied to restricted patients by section 73(1)(a)). This will be so, on the argument of the Secretary of State, even if everyone is agreed that the protection of the public would sufficiently be safeguarded by the relaxed conditions, and even if, as here, the offender actively seeks the relaxed form of detention. The two arguments which Lady Hale finds lead inevitably to this unsatisfactory result are one of legality and the other of practical construction of the scheme of the Mental Health Act. If they do indeed lead inevitably to this result, then of course they must prevail. It does not seem to me that they do. Lord Hoffmanns celebrated formulation of the rule of legality in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115 at 131 must not be watered down. Fundamental rights are not to be taken away by a side- wind, or by ambiguous or unspecific words. The right to liberty is a paradigm example. But what is in question here is not the removal of liberty from someone who is unrestrained. The restricted patient under consideration is, by definition, deprived of his liberty by the combination of hospital order and restriction order. That deprivation of liberty is lawful, and Convention-compliant. If he is released from the hospital and relaxed conditions of detention are substituted by way of conditional discharge, he cannot properly be said to be being deprived of his liberty. On the contrary, the existing deprivation of liberty is being modified, and a lesser deprivation substituted. The authority for his detention remains the original combination of orders, from the consequences of which he is only conditionally discharged. This was the reasoning of the Upper Tribunal in Secretary of State for Justice v RB [2010] UKUT 454 (AAC), in the passage set out by Lady Hale at para 21. It seems to me that it was clearly right. It might be otherwise if the proposed conditions to be attached to discharge were to amount to a greater level of detention than is authorised by the hospital and restriction orders. If one were to hypothesise an improbable scenario in which a FTT were to be asked to impose a condition which amounted, for example, to solitary and isolated confinement, such a question might arise, and with it the application of the Simms principle. But the present case is not suggested to involve any potential conditions which are other than a relaxation of the detention to which MM is otherwise subject in the hospital. The position of a restricted patient subject to a court order for detention in a secure hospital is not comparable to that of the unconvicted defendant in Buzadji v Moldova, 5 July 2016 (Application No 23755/07). There is no reason to doubt that a deprivation of liberty is involved if a defendant awaiting trial is given, in effect, the choice whether to be remanded in custody or to avoid such remand by consenting to house arrest. Such a defendant is otherwise at liberty. A restricted patient who seeks relaxation of his detention conditions is not. It is necessary to confront the suggested practical and textual objections. (a) The Act specifically provides for conditional discharge. (b) For the reasons given by Lady Hale at paras 19 and 20 discharge in the context of a restricted patient must mean discharge from the hospital in which he is currently detained. (c) Everyone agrees that the power to order conditional discharge enables the FTT (or the Secretary of State) to impose conditions beyond that of liability to recall. Such conditions might include co-operation with treatment, attending appointments and keeping in touch with supervisors, the regular taking of medicine, perhaps keeping away from specified people or places or abstaining from specified practices. The only issue is whether if the conditions (considered outwith the context of an existing restriction order) meet the Cheshire West test of deprivation of liberty, they become impermissible (Surrey County Council v P; Cheshire West and Chester Council v P [2014] AC 896). (d) There clearly is a risk that a patient who initially professed his consent to conditions meeting the Cheshire West test might subsequently change his mind. That may well be a particular risk with a patient who is mentally disordered. There are indeed no specific provisions in the Mental Health Act, if this happens, for taking him into custody and restoring him to the place where his conditions require him to live. But what the Act does do is to authorise the Secretary of State to recall him to hospital (section 73(4)(a)). If he is recalled, that triggers the express provision in section 42(4)(b) which treats him henceforth as absent without leave, and then the various provisions of the Act for his being taken into custody and returned to the hospital come into operation. Whether or not the Act might have provided additional powers, these are perfectly viable and rational remedies for the risk of failure to comply with conditions. It may well be that it was not thought appropriate to vest in those managing some place of lesser security where the patients conditions required him to live, the same powers as those possessed by a secure hospital. (e) Moreover, the same risk of later refusal to comply with conditions will exist where the conditions do not approach the Cheshire West threshold, and it is met with the same remedy or sanction. If the patient, having initially professed himself keen to comply with medication rules, or anxious to avoid contact with particularly vulnerable persons, then decides not to comply with the conditions, then what the Act contemplates is that his case will be assessed by the Secretary of State who will either decide to recall him, or will decline to do so. If he does recall him, there are then ample powers to enforce the recall. Short of that, there are no powers to compel him to obey the conditions; no criminal offence is committed and he cannot physically be compelled to obey. The position is thus the same for conditions which meet the Cheshire West test and for those which do not. (f) Some reliance was placed upon the fact that the interval stipulated in the Act in which application to the FTT can be made is greater for a restricted patient who has been conditionally discharged than for a restricted patient who has not. The latter is entitled to apply within the period 6-12 months from the making of the hospital and restriction orders, and thereafter at 12- month intervals: section 70. The conditionally discharged patient is subject to a longer interval, namely within the period 12-24 months of discharge and bi-ennially thereafter: section 75(2). If, however, a conditionally discharged restricted patient is recalled to hospital, his entitlement to apply to the tribunal reverts to the same intervals as before his discharge: section 75(1). This can be said to be some indication that Parliament did not think that a conditionally discharged restricted patient needed the same protection by way of entitlement to make further application to the tribunal as a patient who either had not made any previous application or whose applications for discharge, conditional or otherwise, had been refused. But that is not surprising, given the difference between the two cases. The conditionally discharged prisoner will, by definition, have had a recent determination of the tribunal relaxing his manner of detention. It is going further than is justified to read into this difference a Parliamentary assumption that the conditions applied on conditional discharge could never amount to ones which, if considered without the background of an extant order for detention in hospital, would meet the Cheshire West test for detention. Whilst this consideration is of some limited weight, I do not think that it can prevail against the scheme of the Act as set out above, for relaxation of detention by means of conditions attached to discharge. Nor do I think that any help can be derived from the intervals prescribed for the different case of a non-restricted hospital order patient, which apply equally to those still actually detained and those on leave of absence. For these reasons it seems to me that the FTT does indeed have the power, if it considers it right in all the circumstances, to impose conditions upon the discharge of a restricted patient which, if considered out of the context of an existing court order for detention, would meet the Cheshire West test, at least so long as the loss of liberty involved is not greater than that already authorised by the hospital and restriction orders. Whether it is right to do so in any particular case is a different matter. The power to do so does not seem to me to depend on the consent of the (capacitous) patient. His consent, if given, and the prospect of it being reliably maintained, will of course be very relevant practical considerations on the question whether such an order ought to be made, and will have sufficient prospect of being effective. Tribunals will at that stage have to scrutinise the reality of the consent, but the fact that it is given in the face of the less palatable alternative of remaining detained in hospital does not, as it seems to me, necessarily rob it of reality. Many decisions have to be made to consent to a less unpalatable option of two or several: a simple example is where consent is required to deferment of sentence, in a case where the offence would otherwise merit an immediate custodial sentence. I would, myself, for those reasons, allow this appeal. |
These appeals raise several matters which are important to the international market in telecommunications. The first (in all three appeals) is whether a court in the United Kingdom (UK) has jurisdiction and may properly exercise a power, without the agreement of both parties, to (a) grant an injunction to restrain the infringement of a UK patent where the patented invention is an essential component in an international standard of telecommunications equipment, which is marketed, sold and used worldwide, unless the implementer of the patented invention enters into a global licence of a multinational patent portfolio, and (b) determine royalty rates and other disputed terms of such a global licence. Secondly, there is a dispute (in the Conversant appeals: para 17 below) whether England is the appropriate forum to determine those matters. Thirdly, (in the Unwired appeal: para 16 below) there is a question as to the nature of the requirement that the licence, which the owner of a Standard Essential Patent (SEP) must offer to an implementer, be non discriminatory. Fourthly, (again in the Unwired appeal) there is a question whether the court should refuse to grant the owner of such a SEP an injunction on the ground that it has breached EU competition law because it has not complied with the guidance given in the judgment of the Court of Justice of the European Union (CJEU) in Huawei v ZTE (Case C 170/13) EU:C:2015:477; [2015] 5 CMLR 14; [2016] RPC 4. Fifthly, the appeals raise a more general question as to the circumstances in which it is appropriate for an English court to grant a prohibitory injunction or to award damages instead. Each member of the panel has contributed to this judgment which addresses those matters. Patents: the legal background The starting point is the patent bargain which promotes innovation and justifies the monopoly which a patent gives an inventor. The patent bargain is this: an inventor receives the reward of a time limited monopoly of the industrial use of its invention in return for disclosing the invention and dedicating it to the public for use after the monopoly has expired. See for example Actavis Group PTC EHF v ICOS Corpn [2019] UKSC 15; [2019] Bus LR 1318, para 53. The patents conferring such monopoly rights are national in scope and are usually conferred by national governments. Legal questions as to their validity and their infringement are determined by the national courts of the state which has conferred the patent right or, in the case of a European patent, in a designated state. An inventor has to protect its invention by applying for patents to the national authorities of each of those states in which it seeks to obtain a monopoly (unless it obtains a patent from the European Patent Office under the European Patent Convention which creates a nationally enforceable patent within each designated state). It is not unusual for a national patent for an invention to be upheld by the courts of one state and another national patent for what in substance is the same invention to be invalidated by the courts of another state. Within Europe, the same European patent can on occasion be upheld by the courts in one signatory state but be invalidated in another. Much may depend on the differing evidence led and arguments advanced in national legal proceedings. In English law, once a patent owner has established that a patent is valid and has been infringed, it is prima facie entitled to prevent further infringement of its property rights by injunction. In Scots law an interdict provides a similar remedy. We discuss this matter (the fifth issue) in more detail in paras 159 169 below. This prima facie entitlement and the patent owners entitlement in other jurisdictions to obtain similar prohibitory remedies form part of the backdrop to the contractual arrangements which lie at the centre of these appeals. To promote the development of global markets for telecommunications products, including mobile phones, the infrastructure equipment and devices produced by competing manufacturers need to communicate and inter operate with one another and the phones need to be available for use internationally by consumers who travel with their phones from one jurisdiction to another. Two attributes of patent law have militated against this development. First, the prima facie entitlement of the owner of a patent to prohibit by injunction the use of its invention within a national jurisdiction has the potential to disrupt a global market for equipment using that invention. Secondly, the national nature of patent monopolies, which forces the patent owner seeking to protect its monopoly to raise proceedings in individual national courts, makes it very difficult, if not wholly impracticable, for a patent owner to protect an invention which is used in equipment manufactured in another country, sold in many countries and used by consumers globally. The first attribute may give owners of patents included in an agreed standard excessive power to disrupt an otherwise global market to the prejudice of manufacturers of equipment using such inventions (implementers) and to exact excessive royalties for the use of their inventions. The second attribute may enable implementers to avoid paying an inventor a proper price for the use of its invention internationally. There was therefore potential for the alternative evils of the abuse by a patent owner of its monopoly rights and of the denial by implementers of the patent owners legitimate rights. Organisations involved in the telecommunications industry have sought to address those evils by establishing Standard Setting Organisations (SSOs) to which they bring their most advanced technologies, promoting standards using those technologies, and putting in place contractual arrangements to which we now turn. SSOs aim to promote both technological innovation, which is made available to the public, and competition between manufacturers, and thereby to benefit consumers through more convenient products and services, interoperability, lower product costs and increased price competition. Standard Setting Organisations Telecommunications SSOs have been established in China, Europe, India, Japan (two), South Korea and the United States. The first telecommunications SSO was the European Telecommunications Standards Institute (ETSI), which is a French association formed in 1988 and which has adopted an intellectual property rights (IPR) policy and contractual framework governed by French law. ETSI is recognised as the SSO in the European Union telecommunications sector. It has over 800 members from 66 countries across five continents. Its purposes, as set out in article 2 of its Statutes (5 April 2017), include the production of the technical standards which are necessary to achieve a large unified European market for telecommunications [etc] and to contribute to world wide standardization in that field. SSOs bring together industry participants to evaluate technologies for inclusion in a new standard. ETSI is the relevant SSO as the patents which are the subject of these appeals are the UK designations of European patents (UK patents) which have been declared to ETSI as essential. The relevant standards in these appeals are telecommunications standards for 2G (GSM), 3G (UMTS) and 4G (LTE) telecommunications equipment and devices. The seven SSOs have cooperated to form the 3rd Generation Platform Partnership (3GPP) to develop and oversee those standards. ETSI through its secretariat manages the process by which its members contribute to the development of international standards. Participants in SSOs have an incentive to put forward their technology as a component of a proposed standard as inclusion in the standard ensures a market for the technology. Alternative technologies which are not included in a standard may well disappear from the market. Participants also accept obligations to declare IPRs which might potentially have an effect on the implementation of standards developed by the SSOs. Although it is necessary to examine the arrangements in more detail below, it may be useful to give an overview of how ETSI deals with Essential IPRs, a term which we equate with SEPs, when it devises those standards. Owners of patented inventions which might be used in a telecommunications industry standard, which is under preparation, declare their patents to ETSI. When considering whether to include a technology in a standard, ETSI requires the patent owner to enter into an irrevocable undertaking or contract with it to allow implementers of the standard to obtain a licence to use the relevant patented technology on fair, reasonable and non discriminatory (FRAND) terms. If the declared patented invention is included in a standard and it is not possible to make, sell, use or operate etc equipment or methods which comply with the standard without infringing that IPR, it is treated as an Essential IPR. The irrevocable undertaking to give a licence on FRAND terms to implementers applies to any such Essential IPRs. But ETSI is not under an obligation to check whether patents declared to be essential are in fact essential. Nor does ETSI make any binding judgment on the validity or status of any such patents: ETSI Guide on IPRs (19 September 2013) (the Guidance) para 3.2.1. Those are matters for the relevant national courts. ETSI leaves it to the relevant parties, if they so wish, to resolve those questions by court proceedings or alternative dispute resolution: the Guidance para 4.3. The purpose of the ETSI IPR Policy is, first, to reduce the risk that technology used in a standard is not available to implementers through a patent owners assertion of its exclusive proprietary interest in the SEPs. It achieves this by requiring the SEP owner to give the undertaking to license the technology on FRAND terms. Secondly, its purpose is to enable SEP owners to be fairly rewarded for the use of their SEPs in the implementation of the standards. Achieving a fair balance between the interests of implementers and owners of SEPs is a central aim of the ETSI contractual arrangements. The ETSI IPR Policy The ETSI IPR Policy (the IPR Policy) is a contractual document, governed by French law. It binds the members of ETSI and their affiliates. It speaks (clause 15(6)) of patents which are inevitably infringed by the sale, lease, use, operation etc of components which comply with a standard as Essential IPR. By requiring an IPR holder whose invention appears to be an Essential IPR to give an irrevocable undertaking to grant a licence of the IPR on FRAND terms, it creates a stipulation pour autrui, in other words an obligation which a third party implementer can enforce against the IPR holder. The IPR Policy falls to be construed, like other contracts in French law, by reference to the language used in the relevant contractual clauses of the contract and also by having regard to the context. In this case, that context is both the external context and the internal context of the IPR Policy document itself, such as the policy objectives declared in the document. The external context includes (i) the Guidance (above) which ETSI has produced on the operation of the IPR Policy, (ii) ETSIs statutes (above), (iii) the globalised market which ETSI and other SSOs were and are seeking to promote, which we have discussed in para 4 above, and (iv) the fact that ETSI is a body comprising experts and practitioners in the telecommunications industry who would be expected to have a good knowledge of the territorial nature of national patents, the remedies available to patent owners against infringement of their patents, the need to modify by contract the application of patent law to promote the development of a globalised market in telecommunications products, and the practice of the industry in negotiating patent licensing agreements voluntarily. The policy statements which provide the internal context include the objectives set out in clause 3 of the IPR Policy. They include the statement in clause 3.1 that the IPR Policy: seeks to reduce the risk to ETSI, MEMBERS, and others applying ETSI STANDARDS and TECHNICAL SPECIFICATIONS, that investment in the preparation, adoption and application of STANDARDS could be wasted as a result of an ESSENTIAL IPR for a STANDARD or TECHNICAL SPECIFICATION being unavailable. That statement clearly reveals a policy of preventing the owner of an Essential IPR from holding up the implementation of the standard. But that policy is to be balanced by the next sentence of clause 3.1 which speaks of seeking a balance, when achieving that objective, between the needs of standardization for public use in the field of telecommunications and the rights of the owners of IPRs. The importance of protecting the rights of the owners of IPRs is declared in the second policy objective (clause 3.2) in these terms: IPR holders whether members of ETSI and their AFFILIATES or third parties, should be adequately and fairly rewarded for the use of their IPRs in the implementation of STANDARDS and TECHNICAL SPECIFICATIONS. This objective seeks to address the mischief of holding out by which implementers, in the period during which the IPR Policy requires SEP owners not to enforce their patent rights by seeking injunctive relief, in the expectation that licence terms will be negotiated and agreed, might knowingly infringe the owners Essential IPRs by using the inventions in products which meet the standard while failing to agree a licence for their use on FRAND terms, including fair, reasonable and non discriminatory royalties for their use. In circumstances where it may well be difficult for the SEP owner to enforce its rights after the event, implementers might use their economic strength to avoid paying anything to the owner. They may unduly drag out the process of licence negotiation and thereby put the owner to additional cost and effectively force the owner to accept a lower royalty rate than is fair. Having looked at context, we turn to the operative clauses of the IPR Policy. A member of ETSI is obliged to use its reasonable endeavours to inform ETSI in a timely manner of Essential IPRs during the development of a standard or technical specification. If a member submits a technical proposal for a standard or technical specification it is obliged to inform ETSI of its IPRs which might be essential (clause 4.1). Clause 4.3 confirms that this obligation of disclosure applies to all existing and future members of a patent family and deems the obligation in respect of them to be fulfilled if an ETSI member has provided details of just one member of the patent family in a timely manner, while also allowing it voluntarily to provide information to ETSI about other members of that family. A patent family is defined as all the documents having at least one priority in common, including the priority document(s) themselves and documents in this context means patents, utility models, and applications therefor (clause 15(13)). The patent family thus extends to patents relating to the same invention applied for and obtained in several jurisdictions. It shows an intention for the arrangement to apply internationally. This is important because the undertaking to grant a licence under clause 6, to which we now turn, extends to all present and future Essential IPRs in that patent family. The key to the IPR Policy is clause 6, which provides the legal basis on which an owner of an Essential IPR gives an irrevocable undertaking to grant a licence and thereby protects both ETSI and implementers against holding up. Clause 6.1 provides so far as relevant: When an ESSENTIAL IPR relating to a particular STANDARD or TECHNICAL SPECIFICATION is brought to the attention of ETSI, the Director General of ETSI shall immediately request the owner to give within three months an irrevocable undertaking in writing that it is prepared to grant irrevocable licences on fair, reasonable and non discriminatory (FRAND) terms and conditions under such IPR It provides that the licences must at least cover the manufacture of equipment, the sale, lease or other disposal of equipment so manufactured, and the repair, use or operation of such equipment. FRAND licensing undertakings made pursuant to clause 6 are intended to bind all successors in interest in respect of a SEP, and upon transfer of a SEP the SEP owner is required to take steps to ensure that this is achieved (clause 6.1bis). The undertaking made in respect of a specified member of a patent family is applied to all existing and future Essential IPRs of that patent family unless specified IPRs are excluded in writing when the undertaking is made (clause 6.2). It is envisaged in the IPR Policy that this process will usually take place while ETSI is working to create a standard because clause 6.3 provides that, if the IPR owner does not grant the requested undertaking, relevant office bearers in ETSI will decide whether to suspend work on the relevant parts of the standard or technical specification until the matter is resolved, or to submit any relevant standard or technical specification for adoption. Similarly, if, before a standard or technical specification is published, an IPR owner is not prepared to license an IPR, clause 8.1 provides for the adoption of a viable alternative technology for the standard or technical specification if such a technology exists. If such technology does not exist, clause 8.1 provides an option for work on the standard or technical specification to cease. If the refusal to grant a licence occurs after ETSI has published a standard or a technical specification, clause 8.2 provides the option of modifying the standard so that the relevant IPR is no longer essential. Clause 6bis instructs members of ETSI to use one of the declaration forms annexed to the Policy. So far as relevant, the licensing declaration is an irrevocable declaration by the declarant and its affiliated legal entities that, to the extent that disclosed IPRs are or become and remain Essential IPRs, they (a) are prepared to grant irrevocable licences in accordance with clause 6.1, and (b) will comply with clause 6.1bis. It appears from this brief review of the IPR Policy in its context that the following conclusions may be reached. First, the contractual modifications to the general law of patents are designed to achieve a fair balance between the interests of SEP owners and implementers, by giving implementers access to the technology protected by SEPs and by giving the SEP owners fair rewards through the licence for the use of their monopoly rights. Secondly, the SEP owners undertaking, which the implementer can enforce, to grant a licence to an implementer on FRAND terms is a contractual derogation from a SEP owners right under the general law to obtain an injunction to prevent infringement of its patent. Thirdly, the obtaining of undertakings from SEP owners will often occur at a time when the relevant standard is being devised and before anyone may know (a) whether the patent in question is in fact essential, or may become essential as the standard is developed, in the sense that it would be impossible to implement the standard without making use of the patent and (b) whether the patent itself is valid. Fourthly, the only way in which an implementer can avoid infringing a SEP when implementing a standard and thereby exposing itself to the legal remedies available to the SEP owner under the general law of the jurisdiction governing the relevant patent rights is to request a licence from the SEP owner, by enforcing that contractual obligation on the SEP owner. Fifthly, subject only to an express reservation entered pursuant to clause 6.2, the undertaking, which the SEP owner gives on its own behalf and for its affiliates, extends to patents in the same patent family as the declared SEP, giving the implementer the right to obtain a licence for the technology covering several jurisdictions. Finally, the IPR Policy envisages that the SEP owner and the implementer will negotiate a licence on FRAND terms. It gives those parties the responsibility to resolve any disputes as to the validity of particular patents by agreement or by recourse to national courts for determination. Industry practice in negotiating licensing agreements The parties do not dispute that SEP owners, which have a large portfolio of patents covering many countries, and implementers, which market their products in many countries, would as a matter of practice voluntarily negotiate worldwide licences, or at least licences from which a given territory is carved out while the rest of the world is licensed. Implementers in the telecommunications industry are often also owners of many SEPs and negotiate cross licences with other implementers. As Birss J explained in his judgment at first instance ([2017] EWHC 2988 (Pat); [2017] RPC 19, para 544), no rational business would seek to license products country by country if it could be avoided. This is, as Birss J said, in part because of the effort required to negotiate and agree so many different licences and thereafter to keep track of so many different royalty calculations and payments. It is also, as he recognised, because businesses and consumers will move mobile handsets across borders and an implementer would want to be able to bind the SEP owner into allowing the entry of otherwise unlicensed handsets into the jurisdictions in which the SEP owner had a valid SEP or valid SEPs. The Court of Appeal in its judgment in the Unwired appeal ([2018] EWCA Civ 2344; [2018] RPC 20, paras 55 56) also referred to the prohibitive cost of litigating the validity and essentiality of patents territory by territory. These obvious considerations must have been part of the factual background of which the expert framers of the IPR Policy were aware when they devised that Policy. The parties to the appeals In this judgment the court addresses three appeals. In the first, the appellants are Huawei Technologies Co Ltd (Huawei (China)), a Chinese company which develops telecommunications technology and also implements the technology of others, and Huawei Technologies (UK) Co Ltd (Huawei (UK)), a UK subsidiary of Huawei (China) (collectively Huawei). The respondents are Unwired Planet International Ltd and Unwired Planet LLC (collectively Unwired) which are registered in Ireland and the United States of America respectively. They are both intellectual property licensing companies (sometimes called Patent Assertion Entities) which obtain income from the licensing of patents to companies which make and sell telecommunications equipment. In 2013 Unwired acquired a portfolio of patents and patent applications from Ericsson, which was a major developer of telecommunications technology and a participant in standard setting. At the time of trial, the portfolio covered 42 countries and comprised 276 patents and applications declared as essential, of which 29 were UK patents or applications. Each of Ericsson and Unwired made an ETSI IPR Licensing Declaration and a Specific IPR Licensing Declaration in respect of patent families which encompass five of the UK patents on which Unwired sued Huawei in England. Ericsson had licensed patents to Huawei, including the UK patents which are the subject of these proceedings, but the licence expired in 2012. Huaweis continued use of the technology covered by the patents in suit forms the backdrop to its appeal. In the second and third appeals the appellants are respectively (i) Huawei and (ii) ZTE Corporation (ZTE (China)), a Chinese company, and its UK subsidiary ZTE (UK) Ltd (ZTE (UK)), collectively ZTE and both part of the ZTE group, which is a global supplier of telecommunications and information technology equipment. The respondent in both appeals is Conversant Wireless Licensing SRL (Conversant), a company registered in Luxembourg and part of a Canadian group of companies which is managed from the United States. It is an intellectual property licensing company or Patent Assertion Entity, which licenses patents for royalty income. Conversant acquired a portfolio of about 2,000 patents and patent applications, covering over 40 countries, from Nokia in 2011. Conversant pleads that the portfolio includes 28 patent families which are essential. It also pleads that it and/or Nokia have given an ETSI IPR Licensing Declaration and a Specific IPR Licensing Declaration in respect of its portfolio, which include the UK patents in suit, and that Conversant gave a General IPR Licensing Declaration on 22 July 2014. We also received short written interventions from Apple Inc, Ericsson and Qualcomm Incorporated, in the in which telecommunications industry set out their views on industry practice and on the principal issues of these appeals, including the interpretation of the IPR Policy. We are very grateful for their assistance. The legal proceedings important players three (i) Unwired v Huawei Unwired commenced proceedings in England on 10 March 2014 against Huawei, Samsung and Google, alleging infringement of the UK designation of six European patents (EP), and requesting, among other remedies, an injunction to prevent further infringement. Unwired began parallel proceedings in Germany at the same time. Before the proceedings commenced, Unwired and Huawei had discussed the possibility of Huawei buying some of Unwireds patents but Huawei did not do so. We discuss the further exchanges between Unwired and Huawei, both before the proceedings commenced and during the course of those proceedings, when we address the fourth issue (whether the court should refuse an injunction because of any failure to comply with the guidance of the CJEU in Huawei v ZTE) in paras 128 158 below. In 2015 and 2016 three trials were held to determine whether the UK patents in suit were valid and infringed. After a seven day trial, Birss J held that one patent (EP 744) was both valid and essential. His findings were upheld on appeal. In the second trial, after a hearing over eight days, two patents (EP 287 and EP 514) were held to be invalid, permission to appeal was granted, and the appeal was stayed in July 2017. In the third trial, after a five day hearing, a patent (EP 818) was held to be valid and essential. Permission to appeal was granted and the appeal was stayed in July 2017. The equivalent technical trial on the remaining UK SEP (EP 991) has been postponed indefinitely. At the same time Unwired brought proceedings in Germany, in which it had mixed success and from which appeals are pending. In particular, the German designation of EP 744 has been held to be valid but not infringed and an appeal on infringement is pending. The German designations of EP 287 and EP 514 have been held to be infringed but the Opposition Division of the European Patent Office has held those patents to be invalid and appeals from those decisions to the EPO Technical Board of Appeal are pending. The German designation of EP 818 has been held to be valid and infringed and those judgments have been upheld on appeal. The claims of EP 991 which were alleged to be infringed were revoked for the German designation and an appeal against that judgment is pending, as is a proceeding relating to the infringement of that patent. Huawei (China) challenged several of Unwireds patents in China. The Patent Re examination Board (PRB) has held that two Chinese family members of Unwireds European patents (EP 287 and 514) are invalid but those findings are under appeal. The PRB has held the Chinese family member of EP 744 to be valid and Huawei (China) has appealed. Huawei (China) has also challenged five other patents, which Unwired declared to be SEPs; three have been upheld, one upheld in part and one invalidated. Appeals from those decisions are pending. As matters currently stand, and subject to continuing appeal proceedings in Germany and China, Huawei has been held to be infringing one or more of Unwireds SEPs through its use of patented technology in both the UK and Germany and in China challenges to two patents have failed. Unwired settled with Google in 2015 and with Samsung in July 2016, after the technical trials of the UK patents but before Birss J held the trial to determine remedies for infringement of its UK patents, in an arrangement in which it granted Samsung a global licence for its portfolio. Unwired was sold to the PanOptis group of companies in July 2016. It was in serious financial trouble and was close to insolvency. We address in more detail the Samsung settlement when we discuss the third issue, namely what is required to make the licence offered by a SEP owner non discriminatory, in paras 105 127 below. Between October and December 2016 Birss J held a trial to determine the remedies for the infringement of Unwireds valid SEPs. In his judgment of 5 April 2017 ([2017] EWHC 711 (Pat)), later reissued with revised redactions on 30 November 2017, [2017] EWHC 2988 (Pat)) he concluded, among other things, that the FRAND undertaking was justiciable and enforceable in the English courts and that an implementer who refused to take a licence on terms which the court held to be FRAND exposed itself to an injunction for infringing a UK patent which the court held to be valid and infringed. He held that a willing licensor, with Unwireds portfolio of patents, and a willing licensee, with almost global sales, acting reasonably and on a willing basis would agree a worldwide licence. He concluded that such parties would regard the negotiation of licences country by country as madness. Having been presented with detailed expert evidence, Birss J determined the rates of royalty and other terms of the licence, so far as they were in dispute, that he considered to be FRAND. He held that in the circumstances a UK portfolio licence, for which Huawei had argued, would not be FRAND but that a FRAND licence between Unwired and Huawei had to be a worldwide licence. In case he was wrong in his conclusion that only a worldwide licence was FRAND, he also determined the rates and terms of a UK only licence covering Unwireds UK portfolio. The judge also made findings which are relevant to the third and fourth issues which we discuss below. He held that the royalty rates which he settled for the global licence were FRAND notwithstanding that they were higher than those in the licence which Unwired gave to Samsung. He also held that Unwired had not breached article 102 of the Treaty on the Functioning of the European Union (TFEU) and that the Huawei v ZTE case did not give Huawei a defence if it decided not to enter into the global licence which he had settled. In a hearing on 7 June 2017 Birss J granted an injunction to restrain infringement of the relevant UK patents with a proviso that the injunction would cease to have effect if the defendant entered into the FRAND global licence which he had settled. He stayed the injunction pending appeals: [2017] EWHC 1304 (Pat); [2017] RPC 20. Huawei has given certain undertakings to the court and has sought to conduct itself according to those undertakings pending the determination of all appeals in the English proceedings. Huawei appealed against Birss Js orders. On 23 October 2018 the Court of Appeal (Lord Kitchin, and Floyd and Asplin LJJ) handed down a judgment dismissing the appeal: [2018] EWCA Civ 2344; [2018] RPC 20. The court disagreed with the judges conclusion that in any particular case there could only be one set of FRAND terms. Ifa circumstance were to arise in which either a local or a global licence would be FRAND, it would be for the SEP owner to choose which it preferred because the SEP owner performed its obligation by offering a licence on FRAND terms. But this aspect of the judges reasoning had no material effect on the conclusion which he had reached because he had not erred in deciding that, in the circumstances of this case, only a global licence would be FRAND. (ii) Conversant v Huawei and ZTE Conversant commenced proceedings against Huawei and ZTE in England in July 2017. It seeks among other things a declaration that the global licence which it offered the defendants is FRAND, alternatively, if that is not granted, a determination of FRAND terms. It also seeks, after amending its pleadings, injunctions in respect of UK patents found to be valid and infringed which will last until the defendants enter into a licence which the court determines is FRAND. Huawei and ZTE challenged the jurisdiction of the English courts on the grounds of (a) a lack of jurisdiction to determine the validity of foreign patents and (b) forum non conveniens. Conversant sought permission to serve the Chinese defendants out of the jurisdiction. In a judgment handed down on 16 April 2018, Henry Carr J dismissed the jurisdiction challenges and granted Conversants application to serve out of jurisdiction: [2018] EWHC 808 (Pat); [2018] RPC 16. Commenting on Birss Js judgment, he held that the English courts had jurisdiction to enforce the contract contained in the IPR Policy and to determine such terms of a licence as were in dispute. Enforcing the contract and determining the terms of a FRAND licence did not involve the English courts intruding on the jurisdiction of foreign courts in relation to the validity or infringement of foreign patents. The licences determined by the English courts could be adjusted to reflect the rulings of foreign courts on such matters. The effect of this jurisdiction was to put the onus on an implementer to challenge foreign patents once the court had found a UK SEP to be valid and infringed. The royalty rates which the court could adopt would be based on evidence of comparable real life licences which could be expected to take into account the competition policies of foreign states. He concluded on the basis of expert legal evidence led before him that the Chinese courts did not have jurisdiction to determine FRAND royalty rates in respect of non Chinese patents without the agreement of the parties. He regarded it as no more than speculative whether the Chinese courts would have such jurisdiction, even if the parties consented, and he rejected the plea of forum non conveniens. Before the hearing in England on the jurisdiction challenges, Huawei and ZTE raised proceedings in China to challenge the validity of Conversants declared Chinese patents. After Henry Carr J handed down his judgment on the jurisdiction challenge in England, Conversant raised proceedings in Germany against Huawei (China) and ZTE (China) and their German subsidiaries claiming infringement of its German patents. In England, four UK patents were in suit but trials of two of them were stayed once they had expired. After a technical trial of EP (UK) 659 Arnold J handed down a judgment on 4 July 2019 in which he held that the patent was infringed but that the patent was invalid for added matter. Conversant was given permission to appeal and that appeal has now taken place. The technical trial of EP (UK) 177 and its divisional family members (EP (UK) 722 and EP (UK) 206) took place in the autumn of 2019. Birss J handed down a judgment on 8 January 2020 in which he held that EP (UK) 177 and EP (UK) 722 were partially valid and infringed and that EP (UK) 206 was invalid. An appeal is scheduled to take place in November 2020. A FRAND trial was listed for April 2020 with a time estimate of 15 days but was adjourned due to the Coronavirus pandemic and to await the outcome of these appeals. Huawei and ZTE appealed the judgment of Henry Carr J on jurisdiction. On 30 January 2019, the Court of Appeal (Patten, Floyd and Flaux LJJ) handed down judgment, dismissing the appeal: [2019] EWCA Civ 38; [2019] RPC 6. In the Conversant appeals to this court therefore, Huaweis and ZTEs cases relate to the preliminary questions of jurisdiction and forum non conveniens. In the Chinese proceedings Huawei (China) and ZTE (China) challenged 11 Chinese patents. As at the date of the chronology which the parties provided, the PRB had ruled that of those 11, eight are invalid, two are valid and one is partially valid. Those decisions are under appeal. None of the Chinese patents held to be valid are of the same families as the UK patents in suit. Huawei (China) and ZTE (China) have raised separate proceedings in China with the aim of obtaining a determination of FRAND royalty rates for Conversants Chinese patents if they are found to be valid and essential. Huawei and ZTE have offered Conversant to allow the Chinese courts to address global FRAND terms and rates for Conversants non Chinese patents in its portfolio. Conversant did not accept those offers and Henry Carr J held that it acted reasonably in so doing. In the German proceedings Conversant has claimed infringement of the German designations of EP 177, EP 659 and EP 986. Hearings on those claims took place on 18 June 2020 and Conversant has given undertakings which seek to address the possibility of conflict between judgments of the English courts and the German courts. (iii) Overview of the markets and the proceedings It is clear from the UK, German and Chinese proceedings that ascertaining the validity, essentiality and infringement of national patents within a portfolio by legal proceedings in several different jurisdictions involves the expenditure of a prodigious amount of money and effort by both claimants and defendants, although the proceedings in China are significantly less costly than those in the West. It is not disputed that it would be impracticable for the parties to litigate these matters in each of the countries which the portfolio covers. It also appears to be clear and it is not disputed that within a substantial portfolio of patents there may be many patents, which (if subject to examination in proceedings) would be found to be invalid in whole or in part or not infringed by the technology used in the standard. These are in our view relevant facts when one addresses the fair balance between the interests of the SEP owner and the implementer which the IPR Policy seeks to achieve. At the same time, Huawei and ZTE point out that only a very small proportion of their worldwide sales are made in the UK. Huawei manufactures in China and its principal market is in China. It asserts that 64% of its relevant sales occur in China or in countries in which Unwired has no patent protection and is dependent on the validity and infringement of Chinese patents for its claim for royalties. In relation to the Conversant claim, Huawei asserts that the Chinese market accounts for 56% of its groups worldwide sales on which Conversant makes claims, and a further 19% of such sales occur in countries in which Conversant has no patents, so that Conversants claims in those countries depend on the Chinese patents. The UK market comprises only 1% of Huaweis sales of those products. Similarly, ZTE manufactures in China and in the first six months of 2017 60% of the groups operating revenue was from China. At that time only 0.07% of its turnover was generated in the UK. Thus, Huawei and ZTE submit that questions as to the validity and infringement of Chinese patents, which are within the jurisdiction of the Chinese courts, are of central importance to the value of a global licence of declared SEPs. The force of this contention can be seen from the current state of play in litigation which Huawei commenced in China, seeking declarations that Conversants Chinese patents were invalid or were not essential. Of the 15 patents which Conversant put forward for trial from its portfolio of Chinese patents, 14 were held to be either invalid or not infringed and only one was found to be essential but the trial of its validity has yet to take place. In China, the Nanjing Intermediate Peoples Court of Jiangsu Province in a judgment dated 16 September 2019 in actions raised by Huawei ((2018) Su 01 Min Chu No 232, 233 and 234) criticised Conversant for seeking to obtain a global rate for its patents from a foreign judge without obtaining the view of the Chinese courts on the validity and infringement of its Chinese patents. As we have said, many of the foreign judgments have been appealed, but they nonetheless show what is in fact common ground between the parties, that declared SEPs within a portfolio are often invalid or not essential. Before turning to the challenges raised in these appeals we set out briefly the methodology which Birss J adopted in determining what was a FRAND licence between Unwired and Huawei. An understanding of the nature of the exercise which he undertook is important to an analysis of the relationship between the determination of the terms of a FRAND licence on the one hand and, on the other, the exclusive right of foreign courts to adjudicate on the validity and infringement of their national patents. (iv) Birss Js methodology in the Unwired case Birss J did not purport to determine the validity of any non UK patent or to find that any such patent was or was not a SEP. What he sought to do was to value the portfolio as a whole, recognising that it was likely to include patents which were not valid and patents which although valid were not infringed and so were not SEPs. One possible method, called the top down method, was to take a view on what the total aggregate royalty burden would be for all the intellectual property relating to the standardised telecommunications technology in a product such as a handset. We refer to that aggregate burden as T. Various companies in the industry had made public statements as to the value of T. The task was then to share out the aggregate royalty T across all licensors in proportion to the value of each licensors patent portfolio as a share S of the total relevant patent portfolio essential to the standard. By this method the FRAND rate for a portfolio was the product of T and S (ie T x S). The second method was to use comparable licences. These are licences which parties engaged in the telecommunications industry had already agreed and operated. As the experts who gave evidence recognised and Birss J accepted, many patent licences including cross licences may have different terms, including different ways of calculating royalties, which make comparison difficult. The experts had to adopt methods of unpacking the licences in order to make them comparable and this introduced uncertainty into the exercise of comparison. Unwired had obtained most of the patents in its portfolio from Ericsson. Thus, Ericssons licences in the past had included all the SEPs in issue. That made Ericssons licences particularly relevant as comparables. As Birss J explained (para 180), if the rate for Ericssons portfolio was E and the relative value of Unwireds portfolio to Ericssons portfolio was R, the Unwired rate is E x R. Birss J accepted evidence that parties when agreeing licences of a substantial portfolio of declared SEPs did not evaluate the importance of individual patents but adopted methods involving patent counting. While it may be possible sometimes to identify a patent which is a keystone invention underpinning the technical approach on which a standard is based, none of Unwireds patents were in that category. Patent counting therefore involved identifying from among the declared SEPs those which were to be treated as essential, which he described as Relevant SEPs. There is a problem that more patents are declared to be essential than in fact are essential. This problem of over declaration is in part the result of the IPR Policy process which requires patent owners to declare SEPs in a timely manner when a standard is being prepared, as it encourages patent owners to err on the safe side by making a declaration. In part, there are difficulties in interpreting both the patents and the standards. In part also, patent claims are amended over time; different national patents within a patent family will vary in scope around the world; and standards themselves will vary over time. Further, the process of negotiating rates by counting patents within a portfolio creates a perverse incentive to over declare. This phenomenon must be recognised and be taken into account when identifying Relevant SEPs and calculating shares and ratios S and R above. Significantly, Birss J held, on the evidence led before him, that no one in counting Relevant SEPs takes account of the validity of the patents. Much of Birss Js impressive judgment involved an analysis of the competing methods by which the parties sought to carry out this exercise. He also analysed a number of licences which Unwired and Ericsson had agreed and identified those licences to which Ericsson was a party on which he was prepared to place any weight (para 462) in determining a rate for E in relation to each of the standards for handsets and infrastructure. Birss J also looked for guidance to decisions of courts in Japan and China (paras 472 474). The Intellectual Property High Court in Japan used the top down method described above (ie looking to the total royalty burden) in Apple Japan v Samsung Electronics (Case No 2013 [Ne] 10043). In China, the Guangdong High Peoples Court in Huawei v Interdigital (2013), Guangdong High Ct Civ. Third Instance No 305, fixed a FRAND rate for Interdigitals portfolio in China by unpacking other Interdigital licences. The Chinese courts judgment supported Huaweis case that rates in China were low in comparison with rates elsewhere. But of more significance for present purposes is the fact that the Japanese and Chinese courts used methods similar to those presented to and adapted by Birss J, who relied principally on the analysis of comparable licences and used the top down method as a cross check. Birss J, having heard the evidence, including that of the parties experts, and having analysed comparable international licences, concluded that on a FRAND approach the royalty rates for China would be 50% lower than the rest of the world. He divided the rest of the world into major markets and other markets and held that the rate applicable in the latter markets would be the same as in China. He provided a mechanism for the adjustment of royalties payable in major markets if successful challenges to the validity or infringement of SEPs reduced the number of declared SEPs in any of those markets (paras 582 592). In deciding that a worldwide licence was FRAND Birss J had regard to practice in the telecommunications industry to agree portfolio licences and observed that every patent licence which the parties had produced in the trial bundles was a worldwide portfolio contract, although some licences carved out a particular territory while licensing the rest of the world (paras 524 534). Unwireds portfolio covered 42 countries and was large enough that it would not be practicable to fight over every patent. A willing licensor of such a portfolio and a willing licensee such as Huawei with global sales would agree on a worldwide licence (paras 538 543). He recorded that it was common ground that the industry assessed patent families rather than individual patents within a family (para 546). He thus drew on industry practice in deciding that a FRAND licence would be a worldwide licence. Against that background we turn to address the first issue. Issue 1: Whether the English courts have jurisdiction and may properly exercise a power without the agreement of both parties (a) to grant an injunction restraining the infringement of a UK SEP unless the defendant enters into a global licence on FRAND terms of a multinational patent portfolio and (b) to determine royalty rates and other disputed items for a settled global licence and to declare that such terms are FRAND. The principal arguments which Huawei advances against the finding that it must take a worldwide licence of the SEP owners relevant patents on FRAND terms fixed by the English court in order to avoid an injunction restraining the infringement of a UK SEP are as follows. First, the English courts are not entitled to grant an injunction for the infringement of a UK patent unless an implementer agrees to take a licence of disputed foreign patents because this involves the implementer having to compromise foreign rights, including the right to challenge (a) the validity of those foreign patents and (b) the assertion that they are SEPs in the use of the standards in the foreign jurisdictions. The validity or infringement of disputed foreign patents is not justiciable in the courts of England and Wales. If the declared SEPs were foreign patents, the relevant national courts alone can determine validity and infringement. Foreign patents should be exposed to proper scrutiny by the national courts which determine their validity and infringement. An English court cannot compel a company to take a licence in respect of rights which may not exist. Thus, once an implementer disputes the validity or infringement of a foreign patent, the English courts have no jurisdiction to require the implementer to take a global licence to avoid an injunction. Secondly, the English courts in so acting are fixing the terms and the royalty rates on which foreign patents are to be licensed without regard to what the foreign courts with jurisdiction over the foreign patents would decide. English judges were, in Mr Howard QCs words, setting up the English jurisdiction as a de facto international or worldwide licensing tribunal for the telecommunications industry. In so acting the English courts were out of step with the approach of other national courts. Thirdly, a clear distinction falls to be drawn between what two global telecommunications companies might do voluntarily in a commercial negotiation to license patents to enable the conduct of a global business and what a national court may impose on such companies. Companies may choose to compromise rights which otherwise might be enforced and challenges to validity and infringement which might otherwise be made; national courts cannot or should not impose such compromises. Fourthly, the IPR Policy, when properly construed, removes the SEP owners right to obtain an injunction and limits its remedy to monetary compensation for infringement of such patents as the SEP owner has established or the implementer has agreed are valid and infringed. Once a SEP owner has established that a national patent was valid and infringed, a national court can determine the terms of a licence of such a patent if the parties cannot agree on those terms. The IPR Policy does not overturn the legal right of an implementer to challenge the validity of a patent or to seek to establish that the patent was not infringed. The IPR Policy, it is submitted, is not focussing on an international portfolio of patents but addresses particular SEPs, the validity and infringement of which, if challenged, would have to be established in national courts. In construing the IPR Policy it is important to note that ETSI has not established an international tribunal or forum to determine the terms of global licences of portfolios of patents. This points against a construction which would allow a national court to determine a global licence. Fifthly, Huawei also submits that it is improper for an English court to exclude the products of implementers, both handsets and infrastructure, from the UK market as the result of an infringement of a SEP. Such a remedy is said to be disproportionate. It is also said to be anomalous that an implementer should be liable only for damages for infringing the established UK SEP if it chose to withdraw from the UK market but that infringement of that patent should entitle the SEP owner to receive global royalties if the implementer wished to market its products in the UK. Huawei also argues that there is a fundamental difference between what commercial parties may choose to do in their own interests and what an intellectual property court can impose on them. It also expresses concern about the role of Patent Assertion Entities in litigation to enforce SEPs. Huawei also argues, based on general principles of English equity, that the only appropriate remedy which the English courts should consider is to address only the UK rights and to require an implementer to enter into a licence to pay in the future the same royalty as it has awarded as damages for past infringement. This is an argument which we address under Issue 5 in paras 159 169 below. ZTE generally supports Huaweis submissions but accepts that patent by patent licensing is unlikely to be FRAND. It focusses its case on jurisdiction on questions of comity and as a fall back argues forum non conveniens. It submits that the determination by one national court of a worldwide FRAND licence raises issues of comity as it amounts to interference with the patent regimes of other states which adopt different approaches to the licensing of their national patents and as to what terms would be FRAND. Such a licence could also impair a partys ability to comply with foreign law such as the competition law of a country in which it was active. Mr Bloch QC submits that the English courts have placed themselves out on a limb through their willingness to determine the terms of a compulsory licence of foreign patents. We discuss in more detail his arguments on forum non conveniens under issue 2 below (paras 92 104). In addressing the submissions set out above, we recognise, as is undisputed, (a) that questions as to the validity and infringement of a national patent are within the exclusive jurisdiction of the courts of the state which has granted the patent and (b) that in the absence of the IPR Policy an English court could not determine a FRAND licence of a portfolio of patents which included foreign patents. It is the contractual arrangement which ETSI has created in its IPR Policy which gives the court jurisdiction to determine a FRAND licence and which lies at the heart of these appeals. We therefore address first the fourth of Huaweis submissions concerning the interpretation of the IPR Policy. In our view, the submission attaches too much weight to the protection of implementers against holding up, which is the purpose stated in clause 3.1, and fails to give due weight to the counterbalancing purpose of clause 3.2, which seeks to secure fair and adequate rewards for SEP holders and which requires protection against holding out. The suggestion that the IPR Policy removes a SEP owners right to exclude implementers from a national market while requiring the SEP owner to establish the validity and infringement of each of its alleged SEPs, in the absence of a concession by the implementer, runs counter to the balance which the IPR Policy seeks to achieve. The submission also fails adequately to take into account the external context which we have discussed. Operators in the telecommunications industry or their assignees may hold portfolios of hundreds or thousands of patents which may be relevant to a standard. The parties accept that SEP owners and implementers cannot feasibly test the validity and infringement of all of the patents involved in a standard which are in a sizeable portfolio. An implementer has an interest in taking its product to the market as soon as reasonably possible after a standard has been established and to do so needs authorisation to use all patented technology which is comprised in the standard. The implementer does not know which patents are valid and infringed by using the standard but needs authority from the outset to use the technology covered by such patents. Similarly, the owner who declares a SEP or SEPs does not know at this time which, if any, of its alleged SEPs are valid and are or will be infringed by use pursuant to the developing standard. The practical solution therefore is for the SEP owner to offer to license its portfolio of declared SEPs. That is why it is common practice in the telecommunications industry for operators to agree global licences of a portfolio of patents, without knowing precisely how many of the licensed patents are valid or infringed. It is a sensible way of dealing with unavoidable uncertainty. It ought to be possible for operators in an industry to make allowance for the likelihood that any of the licensed patents are either invalid or not infringed, at least in calculating the total aggregate royalty burden in the top down method. By taking out a licence of an international portfolio of generally untested patents the implementer buys access to the new standard. It does so at a price which ought to reflect the untested nature of many patents in the portfolio; in so doing it purchases certainty. The IPR Policy was agreed against that background and the undertaking required from the SEP owner likewise needs to be interpreted against that background. We therefore do not construe the IPR Policy as providing that the SEP owner is entitled to be paid for the right to use technology only in patents which have been established as valid and infringed. Nor do we construe the IPR Policy as prohibiting the SEP owner from seeking in appropriate circumstances an injunction from a national court where it establishes that an implementer is infringing its patent. On the contrary, the IPR Policy encourages parties to reach agreement on the terms of a licence and avoid litigation which might involve injunctions that would exclude an implementer from a national market, thereby undermining the effect of what is intended to be an international standard. It recognises that if there are disputes about the validity or infringement of patents which require to be resolved, the parties must resolve them by invoking the jurisdiction of national courts or by arbitration. The possibility of the grant of an injunction by a national court is a necessary component of the balance which the IPR Policy seeks to strike, in that it is this which ensures that an implementer has a strong incentive to negotiate and accept FRAND terms for use of the owners SEP portfolio. The possibility of obtaining such relief if FRAND terms are not accepted and honoured by the implementer is not excluded either expressly or by necessary implication. The IPR Policy imposes a limitation on a SEP owners ability to seek an injunction, but that limitation is the irrevocable undertaking to offer a licence of the relevant technology on FRAND terms, which if accepted and honoured by the implementer would exclude an injunction. The IPR Policy is intended to have international effect, as its context makes clear. This is underlined by the fact that the undertaking required of the owner of an alleged SEP extends not only to the family of patents (subject only to reservations entered pursuant to clause 6.2 of the IPR Policy) but also to associated undertakings, as stated in the declaration forms in the IPR Policy. In imposing those requirements and more generally in its requirement that the SEP owner makes an irrevocable undertaking to license its technology, ETSI appears to be attempting to mirror commercial practice in the telecommunications industry. We do not accept the distinction which Huawei draws (in its third submission above (para 53)) between voluntary agreements which operators in the telecommunications industry choose to enter into on the one hand and the limited powers of a court on the other, since the IPR Policy envisages that courts may determine whether or not the terms of an offered licence are FRAND when they are asked to rule upon the contractual obligation of a SEP owner which has made the irrevocable undertaking required under the IPR Policy. It is to be expected that commercial practice in the relevant market is likely to be highly relevant to an assessment of what terms are fair and reasonable for these purposes. Moreover, the IPR Policy envisages that the parties will first seek to agree FRAND terms for themselves, without any need to go to court; and established commercial practice in the market is an obvious practical yardstick which they can use in their negotiation. In our view the courts below were correct to infer that in framing its IPR Policy ETSI intended that parties and courts should look to and draw on commercial practice in the real world. We now turn to the submission (para 51 above) that the English courts have no jurisdiction to determine the terms of a licence involving disputed or potentially disputed foreign patents. We disagree. If the judgments of the English courts had purported to rule on the validity or infringement of a foreign patent, that would indeed be beyond their jurisdiction. But that is not what Birss J and the Court of Appeal have done. Instead, they looked to the commercial practice in the industry of agreeing to take a licence of a portfolio of patents, regardless of whether or not each patent was valid or was infringed by use of the relevant technology in the standard, and construed the IPR Policy as promoting that behaviour. We agree with the parties that the FRAND obligation in the IPR Policy extends to the fairness of the process by which the parties negotiate a licence. If an implementer is concerned about the validity and infringement of particularly significant patents or a group of patents in a particular jurisdiction which might have a significant effect on the royalties which it would have to pay, it might in our view be fair and reasonable for the implementer to reserve the right to challenge those patents or a sample of those patents in the relevant foreign court and to require that the licence provide a mechanism to alter the royalty rates as a result. It might also be fair and reasonable for the implementer to seek to include in the licence an entitlement to recover sums paid as royalties attributable to those patents in the event that the relevant foreign court held them to be invalid or not infringed, although it appears that that has not been usual industry practice. Huawei suggests that it would serve no purpose for a UK court to fix the terms of a global licence but to provide for the alteration of royalties in the event of successful challenges to declared SEPs overseas. This would, it suggests, reduce a licence to an interim licence. Again, we disagree. Under a FRAND process the implementer can identify patents which it wishes to challenge on reasonable grounds. For example, in the Conversant case, it might well be argued by Huawei or ZTE at trial that the obligation of fairness and reasonableness required any global licence granted by Conversant to include provision to allow for Huawei or ZTE to seek to test the validity and infringement of samples of Conversants Chinese patents, with the possibility of consequential adjustment of royalty rates, given the importance of China as a market and a place of manufacture. In other cases, such challenges may make little sense unless, at a cost proportionate to what was likely to be achieved in terms of eliminating relevant uncertainty, they were likely significantly to alter the royalty burden on the implementer. In the Unwired case, Huawei appears not to have sought any provision in the draft global licence to alter the royalties payable if Unwireds Chinese patents or a relevant sample of them were successfully challenged. As we have said (para 47 above) the only adjustment mechanism which the draft licence provided was to the royalties payable in relation to major markets. Huawei has not appealed the detailed terms of that draft licence but has focussed its attack on the principle of a national court determining that a global licence was FRAND without the consent of the parties to such an exercise. That notwithstanding, it would be open to Huawei in another case to seek to make such a reservation when negotiating or debating in court the terms of a licence and to seek to persuade the court at first instance that the reservation was appropriate in a FRAND process. We turn to the submission (para 52 above) that the English courts are out of step with foreign courts in requiring an implementer to enter into a global licence in order to avoid an injunction for infringement of a national patent and in being prepared to determine the disputed terms of a global FRAND licence. Huawei suggests that the English courts are uniquely setting themselves up as a de facto global licensing tribunal. We are not persuaded by this submission. The Court of Appeal in the Unwired case (paras 59 74) analysed the cases which the parties had presented to the court and concluded that they did not support the contention that Birss Js approach lost sight of the territorial nature of patents and did not accord with the approach taken in other jurisdictions. We agree. We recognise that Birss J has gone further than other courts have done thus far in his willingness to determine the terms of a FRAND licence which the parties could not agree, but that does not involve any difference in principle from the approach of courts in other jurisdictions. Otherwise his approach is consistent with several judgments in other jurisdictions, which, as this is a developing area of jurisprudence, we now examine briefly. The principles stated in those judgments contemplate that, in an appropriate case, the courts in the relevant jurisdictions would determine the terms of a global FRAND licence. The United States: the US Court of Appeals Federal Circuit has recognised that an injunction against infringement of a national patent may be an appropriate remedy if an implementer refuses to enter into a FRAND licence or unreasonably delays in negotiating such a licence: Apple Inc v Motorola Inc 757 F 3d 1286 (Fed Circuit 2014), Judge Reyna at para 49, p 1332, with whom Chief Judge Rader agreed on this point. That case did not involve a proposed global FRAND licence. The court did not pronounce an injunction in that case because it considered on the facts of the case that the claimant had not suffered irreparable harm and that monetary compensation would suffice. But the judgment is clearly inconsistent with the submission that the standard setting regime which obliges a SEP owner to offer FRAND licences confines the SEP owner to monetary remedies. Three judgments in a dispute between Microsoft Inc and Motorola Inc show the willingness of US courts to enforce the contractual obligation on a SEP owner in a SSO policy to offer an implementer a global FRAND licence (the specific obligations in the case were to offer a licence on reasonable and non discriminatory, ie RAND, terms, but no relevant distinction arises from that). The case was concerned with obligations owed by a SEP owner in relation to a SSO, the International Telecommunication Union (ITU), in relation to video coding technology and the Institute of Electrical and Electronics Engineers (IEEE) in relation to wireless local area network (WLAN). The relevant policies of the IEEE and the ITU expressly envisaged the grant of worldwide licences, but as we have construed the IPR Policy as encompassing the grant of such licences, that is not a basis for distinguishing these cases. Motorola offered Microsoft a worldwide licence of its portfolio of patents which might be SEPs but Microsoft disputed the offers, arguing that Motorola had breached its obligation to offer a RAND licence because its proposed royalty rates were unreasonable. Microsoft commenced proceedings in the USA alleging breach of contract and Motorola counterclaimed that it had offered a RAND licence and that Microsoft had rejected it and so had lost its entitlement to a RAND licence. Several months after Microsoft initiated its lawsuit in the USA, Motorola commenced proceedings in Germany to enforce its German patents. Microsoft sought an anti suit injunction to prevent the enforcement of any injunction which the German courts might grant to enforce the European patents. In Microsoft Corpn v Motorola Inc 871 F Supp 1089 (W D Wash 2012) Judge Robart granted Microsoft a preliminary anti suit injunction. In his reasoning he recorded that a trial had been fixed in the USA to determine the RAND terms and conditions of any licence which Motorola was obliged to provide, including a RAND royalty rate. He stated (p 9): Thus, at the conclusion of this matter, the court will have determined (1) whether Microsoft is entitled to a worldwide RAND license for Motorolas standard essential patents, including the European Patents, (2) whether Microsoft has repudiated its rights to such a license, (3) whether Motorola may seek injunctive relief against Microsoft with respect to its standard essential patents, and (4) in the event Microsoft is entitled to such a license, what the RAND terms are for such a license. He found that the US action was dispositive of whether a German court might issue an injunction against Microsoft. He also observed that his injunction did not prohibit the pursuit of the German proceedings in so far as Motorola sought rulings on the validity or infringement of the German patents and non injunctive relief. On appeal, the US Court of Appeals Ninth Circuit (Microsoft Corpn v Motorola Inc 696 F 3d 872 (9th Cir 2012)) upheld Judge Robarts decision. In her judgment Circuit Judge Berzon explained that the US courts had jurisdiction in a contract action ie an action to enforce the obligation on the SEP owner to grant a RAND licence and therefore not enforce its patents to grant an anti suit injunction against enforcement of foreign patents covered by the contractual obligation. She observed that the ITU contract encompassed all of Motorolas SEPs worldwide and stated (p10): When that contract is enforced by a US court, the US court is not enforcing German patent law but, rather, the private law of the contract between the parties. Although patents themselves are not extraterritorial, there is no reason a party may not freely agree to reservations or limitations on rights that it would have under foreign patent law (or any other rights that it may have under foreign law) in a contract enforceable in US courts. She went on to observe (p 12) that an anti suit injunction was less likely to threaten comity in the context of a private contractual dispute than in a dispute involving public international law or government litigants. The dispute then returned to Judge Robart. The Court of Appeal discussed this decision (Microsoft Corpn v Motorola Inc. Case C10 1823JLR, 2013 US Dist LEXIS 60233) in para 69 of its judgment in the Unwired case. As the parties remained in disagreement as to the meaning of RAND, and that dispute needed to be resolved in order to ascertain whether Motorola was in breach of its obligation to license its patents on RAND terms, Judge Robart held a trial to determine a RAND licensing rate and a RAND royalty range for Motorolas worldwide portfolio of patents. In his judgment he used evidence of real world negotiations in simulating the hypothetical negotiation to determine the rate and range. Mr Howard seeks to distinguish this case on the basis that Microsoft had consented to the courts determination of the RAND terms. We do not consider that to be a material distinction as Huawei has sought the determination of a FRAND licence and because, in any event, the operation of the ETSI regime requires the SEP owner to offer a FRAND licence and the implementer to decline it as preconditions of the grant of an injunction. We were referred to Apple Inc v Qualcomm Inc, Case No 3:17 cv 00108 GPC MDD, which is a judgment by District Judge Curiel in the US District Court, Southern District of California given on 7 September 2017, which the Court of Appeal discussed in paras 67 and 68 of its judgment. In this case Apple was the implementer and Qualcomm the SEP owner. Apple challenged Qualcomms patents in eleven lawsuits in several jurisdictions on the grounds of invalidity, non infringement and breaches of foreign competition law. Apples claim in the US proceedings included assertions of breach of contract and challenges to Qualcomms US patents on the ground of invalidity or non infringement and also on grounds of anti trust/competition law. In a counterclaim Qualcomm sought a declaration that it had complied with its irrevocable undertaking given pursuant to ETSIs IPR Policy and asked the court to hold that particular offers were FRAND or in the alternative to determine worldwide FRAND royalty rates. Judge Curiel refused Qualcomms application for an anti suit injunction on grounds which included that the determination of the global FRAND issue would not dispose of Apples foreign claims, which challenged the foreign patents. The judge did not decide whether he had authority to adjudicate upon Qualcomms claim for a worldwide FRAND determination. His decision therefore is not inconsistent with Birss Js judgment. We were referred to orders of the US International Trade Commission and the US Federal Trade Commission which treated offers by a SEP owner of global licences to prospective licensees as FRAND. We were also referred to a District Court judgment in Optis Wireless Technology LLC v Huawei Case No 2:17 cv 00123 JRG RSP but it has no bearing on the matters before us. Germany: In Pioneer v Acer 7 O 96/14, which the Court of Appeal discussed in para 63 of its judgment, the Regional Court of Mannheim in a judgment dated 8 January 2016 considered the geographical scope of a FRAND licence in the light of the usual practices of the industry. Pioneer sought to restrain infringement of its German patent. As it owned SEPs in many countries and as the defendant was active in many countries it offered to grant the defendants parent company a worldwide portfolio licence. The defendant implementer was prepared to take a licence only of Pioneers German patent rights. The court held that the defendants offer was not FRAND and granted an injunction against infringement. In so concluding it drew on the jurisprudence of the CJEU in the application of competition law to the practices of SEP owners and implementers, which emphasised the importance of complying with usual industry practices, and held that in the light of such practices the offer of a Germany only licence was not FRAND. In accepting as FRAND the SEP owners offer of a worldwide licence it stated (para 119): It does not matter that the offer calls for a worldwide portfolio license and was addressed to the parent company as contract partner and not to the Defendant itself. The [CJEU] relies essentially on the customary practices current in the particular industry. In the view of the chamber, it is the aim of the behavior program set forth by the [CJEU] to lead the parties to license agreements which are otherwise also customary in the particular business area. Evidently it was not the intent of the [CJEU] to artificially bring about licence contracts stipulated for individual countries or even separate licence contracts for each individual SEP used when this does not comport with the business practices of the particular business area. Such a market intervention ignoring the market realities was not the purpose of the [CJEU]. In the experience of the chamber, it corresponds to the usual practices in the area of worldwide applicable standards to make license contracts for SEPs in the case of a patent user active in many affected countries with patent protection not individually for each country with the group company of the patent user there for each individual patent, but instead to stipulate worldwide portfolio licences with the group parent, which the individual national group companies can then also utilize. This judgment is clearly consistent with and supports Birss Js approach both of looking to industry practice when determining the geographical scope of a FRAND licence and of granting an injunction against infringement of a national patent if the implementer is not prepared to accept or delays in accepting the offer of a FRAND licence. The judgment of the District Court of Dsseldorf in St Lawrence v Vodafone 4a 073/14 dated 31 March 2016, which is discussed in para 64 of the Court of Appeals judgment, is consistent with and supports this approach. The SEP owner offered a worldwide licence to the implementer, covering its affiliated companies, in accordance with standard industry practice, and received a counter offer from the implementer, which was active worldwide, to license only its German patents. The court held that the offer by the SEP owner of a worldwide licence would normally be FRAND unless the circumstances of the case justified a different conclusion. The court treated the SEP owners offer as FRAND appropriate and held that the failure of the implementer to make a prompt counter offer which was FRAND exposed it to an injunction. The court also held that the implementer could reserve the right to challenge the validity and infringement (standard essentiality) of the SEP but could not delay concluding the contract of licence for that nor, because it was not consistent with industry practice in licensing contracts, could the implementer refuse to pay the licence royalties or claim repayment of earlier paid royalties. We accept Mr Speck QCs submission that these judgments suggest that the current approach of the German courts, in deciding whether to grant an injunction to a SEP owner for the breach of a national patent, is, first, to look to see whether the SEP owners offer of a licence is apparently FRAND. If it is not, they will not grant an injunction. Secondly, the courts look at the implementers behaviour to see if its response is FRAND before deciding whether to grant the injunction. Thirdly, as the quoted para 119 of Pioneer v Acer illustrates, the courts look to see if the parties behaviour conforms to industry practice, and if in the real world parties would voluntarily agree a global portfolio licence, but the implementer refuses to take such a licence, the way is open to the grant of an injunction. It is also relevant to observe that in Germany, where the courts which determine infringement of a patent are separate from those which determine its validity, it is possible to obtain an injunction against infringement from one court before the validity of a patent has been established in the other. Where there is an obvious challenge to validity, such as a challenge to novelty, the German court dealing with infringement may suspend an injunction pending determination of that challenge. But otherwise an injunction may be granted without the patent owner having established the validity of the relevant patent. In the UK, by contrast, it is necessary first to establish both validity and infringement of the national patent, as Birss J did in this case, before the courts will grant an injunction against infringement. Before leaving Germany, we record that we were referred to the recent case of Huawei Technologies Co Ltd v Unwired Planet International Ltd 4b 0 49/14 G, a judgment of the Higher Regional Court of Dsseldorf concerning the disclosure of information relevant to financial remedies. We are satisfied that the judgment has no bearing on the issue of jurisdiction which we are considering. China: In para 73 of the Court of Appeals judgment it considered the judgment of the Guangdong High Peoples Court in Huawei v Interdigital (para 46 above). The Court of Appeal observed that the trial courts holding that Interdigitals offers of a licence were not FRAND was not made on the basis that the offers were for a worldwide licence and that that court appeared to think that a worldwide licence of Interdigitals SEPs would be both reasonable and feasible. The High Peoples Court upheld the trial courts judgment. Before this court Mr Howard states correctly that the Chinese court settled a FRAND royalty between Huawei and Interdigital in relation to Interdigitals Chinese SEP portfolio but he does not suggest that the Chinese court ruled out a worldwide FRAND licence. Mr Howard also referred this court to the judgment of the Nanjing Intermediate Peoples Court of Jiangsu Province in Huawei Technologies Ltd v Conversant Wireless Licensing SarL (para 39 above) as an example of the Chinese courts fixing a FRAND licence rate for Chinese patents only. In that case, as we have said, the court criticised Conversant for having failed to test the Chinese patents in its portfolio in the Chinese courts and for adopting the device (as it saw it) of seeking a foreign court, ie the High Court in London, to fix a global rate of royalties. Having regard to Conversants lack of success in selecting for testing Chinese patents which were then held to be either invalid or not infringed (para 36 above) one can readily understand the importance of establishing the quality of Conversants Chinese patents. But the Chinese court was responding to Huaweis application for, among other things, the fixing of the Chinese rates and did not criticise the idea of a court in an appropriate case having jurisdiction to fix royalty rates in a worldwide FRAND licence. Japan: We were referred to the judgment of the Intellectual Property High Court of Japan in Samsung Electronics Co Ltd v Apple Japan Godo Kaisha (Case No 2013 (Ne) 10043) dated 16 May 2014, which is discussed in para 72 of the Court of Appeals judgment. As the Court of Appeal said, the Japanese court was not asked to find and did not find that a global portfolio licence cannot be FRAND. Samsung as a SEP owner under the ETSI regime had given an undertaking to enter into a FRAND licence which Apple had not accepted. The case, in so far as relevant to the issue we are considering, concerned the nature of the damages which Samsung could recover from the infringement by Apple, the implementer, of Samsungs Japanese patent and in particular whether those damages could exceed the FRAND royalty. The court in that case declined Samsungs application for an injunction and focussed on its claim for damages, but the judgment is not inconsistent with Birss Js approach. The European Commission: In Motorola (Case AT.39985), which was issued on 29 April 2014, the European Commission (EC) held that Motorola had infringed article 102 of the TFEU, which is concerned with the abuse of a dominant position, by seeking and enforcing an injunction against Apple in the German Federal Court for Apples infringement of one of its German SEPs. In the course of the proceedings Apple had offered to take a licence of relevant SEPs for Germany on terms to be settled by the German courts, if necessary. Motorola argued that this offer was not FRAND for several reasons, including that the offered licence was not worldwide. The EC rejected Motorolas argument, finding that Apples offer was FRAND and that Motorola did not need an injunction to protect its commercial interest. The Court of Appeal discussed this decision in paras 59 and 60 of its judgment, suggesting that this was the high water mark of Huaweis case and that it was based on the view that a licence limited to Germany was FRAND. But the Court of Appeal noted that the EC was not expressing a concluded view that in other circumstances a worldwide licence would not be FRAND. We agree. The Court of Appeal referred to the subsequent communication by the EC to the European Parliament, the Council and the European Social and Economic Committee dated 29 November 2017 (COM (2017) 712 final) (the Communication) setting out a European approach to SEPs. The Communication in so far as relevant for the question in hand endorsed portfolio licensing of products with a global circulation in the interests of efficiency and recognised that a country by country approach might not be efficient or conform to the established practice of the relevant industrial sector. It acknowledged that there was no one size fits all solution to identifying what is FRAND, as what can be considered fair and reasonable varies from sector to sector and over time. Mr Howard played down the Communication, pointing out correctly that it did not purport to be a statement of the law and that it cited only Birss Js judgment as a legal authority in support of global licences. But in our view the Communication represents the considered view of the EC regarding the proper working of the ETSI regime and is consistent with judicial developments in Germany and the United States which we have discussed above. Conclusions about foreign jurisprudence on jurisdiction: In summary, the US case law shows (i) a recognition that the court in determining a FRAND licence in such cases is being asked to enforce a contractual obligation which limits the exercise of the patent owners IP rights including its IP rights under foreign law; (ii) a willingness in principle to grant an injunction against the infringement of a national patent which is a SEP, if an implementer refuses a licence on FRAND terms; (iii) a willingness in principle to determine the FRAND terms of a worldwide licence; (iv) a practice of looking to examples of real life commercial negotiation of licences by parties engaged in the relevant industry when fixing the FRAND terms of a licence; and (v) a recognition that the determination of a FRAND licence by one national court does not prevent an implementer from challenging foreign patents on the grounds of invalidity or non infringement in other relevant national courts. Similarly, in Germany the developing case law shows (i) a recognition that a worldwide licence might be FRAND and an implementers counter offer of a national licence confined to Germany might not be FRAND; (ii) a practice of having regard to the usual practices of parties in the relevant industry when the court determines the FRAND terms of a licence; and (iii) a willingness to grant an injunction against infringement of a national patent if the court holds that a SEP owners offer of a licence is FRAND and the implementer refuses to enter into it. The courts in China have not rejected the proposition that a worldwide licence might be FRAND, nor have the courts ruled that they do not have jurisdiction to determine the FRAND terms of a worldwide licence with the consent of the parties, although it remains a matter of speculation whether they would or would not accept jurisdiction. We therefore reject the submission that Birss J was out of line with the approach of courts in most significant jurisdictions. We can then deal briefly with the various arguments which Huawei raises as to the propriety of the English courts grant of an injunction, which we have summarised in para 55 above. Those arguments do not go to the existence of a jurisdiction to grant an injunction where an implementer refuses a FRAND worldwide licence but to the consequences of a courts decision to grant such an injunction in the exercise of a discretion. As such they overlap with our discussion of the remedy of injunction (issue 5) in paras 159 169 below. The first argument is that in the context of a global standard it is disproportionate to exclude an implementer from the UK market unless it enters into a worldwide licence of untested patents solely because it has infringed a UK patent. But this argument fails to acknowledge that what the implementer is purchasing in entering into such a licence with a SEP owner, which has a sufficiently large international portfolio of patents, is not solely access to the UK market but certainty that it has the ability legally to manufacture and sell products which comply with the standard on a worldwide basis. The second argument is that it is anomalous that an implementer should be liable in damages only for the loss which a SEP owner incurs through the infringement of one or more of its UK patents if the implementer chooses to withdraw from the UK market rather than enter into a worldwide licence but that, if the implementer wishes to market its products in the UK, it must pay global royalties. It is premised on the misplaced equation of the fixing of a licence which requires the payment of royalties for past and future use of patented technology and the separate or alternative award by the court of damages for past infringement of a UK patent. In our view this argument fails for two reasons. First, the award of damages is not to be equated with the royalties that are paid under a contractual licence. If an implementer agrees to enter into a FRAND licence which a SEP owner offers, it is entering into a voluntary obligation. If the court awards damages it does so on proof of the loss which the SEP owner has suffered through the infringement of its patent or patents. It may be that the measure of damages which a court would award for past infringement of patents would equate to the royalties that would have been due under a FRAND licence. That does not alter the different nature of the exercises which the court performs in (i) awarding damages and (ii) determining the terms of a licence, which will usually contain many important provisions in addition to the fixing of royalties. Secondly and in any event, as mentioned above, what the implementer purchases in entering into a worldwide licence is the ability legally to manufacture and sell standard compliant products on a worldwide basis. Thirdly, Huawei argues that there is a fundamental difference between what parties may voluntarily do in reaching agreements with other participants in an industry to compromise their rights for commercial and other pragmatic reasons and what a court may properly compel them to do. In our view this argument is without substance precisely because, as the US courts in particular have recognised, SSOs such as ETSI have crafted a contractual arrangement which enables the courts to determine a FRAND licence which, if accepted by the implementer, may prevent a SEP owner from obtaining a prohibitory injunction to exclude the implementers products from a particular jurisdiction. The implementer has the choice whether to exclude the risk of injunction by accepting a FRAND licence. Fourthly, Huawei points to the increasing involvement of Patent Assertion Entities (PAEs) in the SEP licensing market and in litigation. Such entities accumulate portfolios of patents from patent owners which were or are globally active mobile phone companies, as Unwired has done from Ericsson and Conversant from Nokia, and derive income from licensing them to implementers, if necessary after pursuing expensive legal actions. Huawei expresses concern that PAEs may abuse the power which ownership of SEPs gives. The EC in its Communication which we mentioned in para 83 above noted the increased involvement of PAEs in European litigation and the potential for harmful effects from the behaviour of certain PAEs. In the US Supreme Court, Justice Kennedy in a concurring judgment in eBay Inc v Mercexchange 547 US 388 (2006) has also expressed concerns about the risk that PAEs which do not produce and sell goods may use injunctions as a bargaining tool to charge exorbitant royalties. We are alive to that risk. In our view, however, the rights which PAEs acquire through the transfer by assignment of patents are the same as those which the assignor patent owners had held: assignatus utitur iure auctoris that which is assigned possesses for its use the rights of the assignor or cedent. In some cases, the assignment of rights to a PAE and the reservation of a share of the royalties which it negotiates or obtains through litigation may be the most straightforward means by which a SEP owner can obtain value from its intellectual property which is the fruit of its research and innovation, and if the rights are treated as qualified in the hands of the PAE the consequence will be that the SEP owner will not receive the reward which its investment merits. In the exercise of those rights in pursuit of a FRAND licence the assignee PAE, like the assignor patent owner, must act fairly and reasonably as FRAND is an obligation which governs the process of negotiation as well as the outcome of the determination of a FRAND licence. There is no legal basis under the general law for treating PAE owners of SEPs differently from other SEP owners unless they have different interests which merit different remedies. In so far as the risk of the grant of injunctions may be necessary to achieve the balance which the IPR Policy promotes, it is not evident that a PAE should necessarily be treated differently from a SEP owner which manufactures and sells telecommunications equipment. SEP owners have an interest in making sure that the ETSI regime is enforced. In any event the point does not go to the question of jurisdiction. Finally, Huawei submits that if a national court were prepared to determine that a worldwide licence is FRAND and that entering into such a licence is a precondition of the refusal of an injunction to prohibit infringement of a national patent, there is a risk of forum shopping, conflicting judgments and applications for anti suit injunctions. In so far as that is so, it is the result of the policies of the SSOs which various industries have established, which limit the national rights of a SEP owner if an implementer agrees to take a FRAND licence. Those policies, which either expressly or by implication provide for the possibility of FRAND worldwide licences when a SEP owner has a sufficiently large and geographically diverse portfolio and the implementer is active globally, do not provide for any international tribunal or forum to determine the terms of such licences. Absent such a tribunal it falls to national courts, before which the infringement of a national patent is asserted, to determine the terms of a FRAND licence. The participants in the relevant industry, which have pragmatically resolved many disputes over SEPs by the practice of agreeing worldwide or international licences, can devise methods by which the terms of a FRAND licence may be settled, either by amending the terms of the policies of the relevant SSOs to provide for an international tribunal or by identifying respected national IP courts or tribunals to which they agree to refer such a determination. In the final analysis, the implementers and the SEP owners in these appeals are inviting a national court under the current IPR Policy to rule upon and enforce the contracts into which the SEP owners have entered. If it is determined that the SEP owners have not breached the FRAND obligation in the irrevocable undertakings they have given, they seek to enforce by obtaining the grant of injunctive relief in the usual way the patents which have been found to be valid and to be infringed. The English courts have jurisdiction to rule upon whether the UK patents in suit are valid and have been infringed, and also have jurisdiction to rule on the contractual defence relied upon by the implementers based upon the true meaning and effect of the irrevocable undertaking the SEP owners have given pursuant to the ETSI regime. In agreement with Birss J (para 793), we observe that Huawei is before this court without a licence in respect of infringed UK patents when it had the means of obtaining such a licence. Subject to the plea of forum non conveniens, to which we now turn, this court has no basis for declining jurisdiction. Similarly, ZTEs submission, that if a global licence is FRAND, a FRAND process would identify the courts of China as the appropriate courts to fix the terms of such a licence, is an argument which we address under issue 2 below. Issue 2: Forum non conveniens This issue arises only in the Conversant appeals, where it has two limbs of unequal size. The first and larger limb, which may be said to be a forum conveniens issue strictly so called, is whether the High Court should have set aside service out of the jurisdiction on the two Chinese defendants (Huawei (China) and ZTE (China)) and permanently stayed the proceedings as against the two English defendants (Huawei (UK) and ZTE (UK)) on the ground that China rather than England was the appropriate forum. The second much smaller limb, which may better be labelled case management, is whether the claim for injunctive relief in the English proceedings should be temporarily stayed or otherwise case managed so as to enable relevant matters in dispute first to be litigated to a final conclusion in pending proceedings in the Chinese courts. We will address them in turn. Both these issues necessarily proceed upon the assumption, with which we agree, that, contrary to the appellants main case, the English court has jurisdiction to settle a global licence on FRAND terms for a multinational SEP portfolio. This is mainly because issues as to a global licence need to be determined so as to enable the court to adjudicate upon a contractual defence to the enforcement of an English patent by injunction. Nonetheless the main plank in the appellants case on forum conveniens is that, in substance, the real dispute between the parties is as to the terms of a FRAND licence, with the claim to enforce English patents by injunction being no more than a convenient peg upon which to hang the dispute so as to attract English jurisdiction, which it is said (by Huawei and ZTE) that Conversant would prefer to the less generous outcome likely to be obtained in the Chinese courts. Leaving aside questions as to the burden of proof, at common law the forum conveniens doctrine requires the English court to decide whether its jurisdiction or that of the suggested foreign court is the more suitable as a forum for the determination of the dispute between the parties. The traditional way in which this question has been framed speaks of the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice (per Lord Collins JSC in Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2011] UKPC 7; [2012] 1 WLR 1804, para 88, adopting the language of Lord Goff in Spiliada Maritime Corpn v Cansulex Ltd (The Spiliada) [1987] AC 460). The requirement in complex litigation to define, at the outset, what is the case to be tried runs the risk that the court will by choosing a particular definition prejudge the outcome of the forum conveniens analysis, as the Court of Appeal decided had occurred at first instance in In re Harrods (Buenos Aires) Ltd [1992] Ch 72. Harman J had characterised the case as a petition under the English Companies Act for relief for unfair prejudice in the conduct of the affairs of an English registered company, which made it blindingly obvious to him that England was the appropriate forum. But the company carried on business entirely in Argentina. The matters complained of all occurred there, where there was a parallel jurisdiction to provide relief under Argentinian legislation. So the Court of Appeal preferred Argentina as the appropriate forum. Like the Court of Appeal in the present case, we therefore prefer for present purposes to identify the dispute between the parties as the matter to be tried, lest reference to the case should introduce undue formalism into the analysis of a question of substance. The question how the dispute should be defined has been the main bone of contention between the parties, both in this court and in the courts below. Is it, as the appellants say, in substance a dispute about the terms of a global FRAND licence, or is it, as the respondent maintains, both in form and in substance about the vindication of the rights inherent in English patents, and therefore about their validity and infringement, with FRAND issues arising only as an aspect of an alleged contractual defence? Thus far the respondent has had the better of that argument, both before the judge and the Court of Appeal. At the heart of the analysis which has thus far prevailed is the recognition that the owner of a portfolio of patents granted by different countries is in principle entitled to decide which patents (and therefore in which country or countries) to seek to enforce, and cannot be compelled to enforce patents in the portfolio granted by other countries merely because a common FRAND defence to the enforcement of any of them raises issues which might more conveniently be determined in another jurisdiction than that which exclusively regulated the enforcement of the chosen patents. Were it necessary to choose between the rival characterisations of the substance of the dispute, we would have agreed with the choice made by the courts below. But we think, like the judge, that there is a compelling reason why the appellants must fail on this issue which would apply even if the appellants characterisation had been correct, so that the dispute was in substance about the terms of a global FRAND licence. A challenge to jurisdiction on forum conveniens grounds requires the challenger to identify some other forum which does have jurisdiction to determine the dispute. Even in a case where permission is required to serve out of the jurisdiction, so that the burden then shifts to the claimant to show that England is the more appropriate forum, that still requires there to be another candidate with the requisite jurisdiction. In the present case, China is the only candidate which the appellants have put forward. There may be others, but the court is not required to carry out its own independent search, and such other jurisdictions as might exist in theory may not be remotely convenient. After hearing extensive expert evidence, the judge found that the Chinese courts do not, at present, have jurisdiction to determine the terms of a global FRAND licence, at least in the absence of agreement by all parties that they should do so. Even in the event of such an agreement, he described the prospect that the Chinese courts would embark on the exercise as no more than speculative. Notwithstanding the admission of fresh evidence on this issue, the Court of Appeal reached the same conclusion. In sharp contrast, we have decided, for the reasons set out above, that the English court does have such a jurisdiction, even in the absence of consent by the parties, and it has of course exercised that jurisdiction in the Unwired case. Directions have been given in the Conversant case (subject to the outcome of this appeal) for it to be done again. Furthermore, against the speculative possibility that the Chinese courts might accept jurisdiction to settle a global FRAND licence by consent, there is the judges finding that Conversant had acted reasonably in refusing to give its consent, for reasons connected with the conditions which the appellants sought to impose, a conclusion which was not met with any persuasive challenge in this court. We therefore agree with the judge that the forum conveniens challenge falls at this first hurdle, notwithstanding the fresh evidence introduced in the Court of Appeal. Had it not done, a number of further issues would have arisen, in particular arising from the application of the Owusu principle (Owusu v Jackson and Others ((Case C 281/02) EU:C:2005:120; [2005] QB 801 (ECJ)) to the English defendants, set against the possibility that there might be a reflective application of article 24 of the Brussels I Regulation (Regulation (EU) 1215/2012 of 12 December 2012), and the recent decision of this court in Lungowe v Vedanta Resources plc [2019] UKSC 20; [2019] 2 WLR 1051. But we consider that those issues, which may well arise in future if and when other countries decide to exercise jurisdiction to settle global licences, would best be determined in a context when they might be decisive. We therefore turn to case management. The English courts have wide case management powers, and they include the power to impose a temporary stay on proceedings where to do so would serve the Overriding Objective: see CPR 1.2(a) and 3.1(2)(f). For example a temporary stay is frequently imposed (and even more frequently ordered by consent) in order to give the parties breathing space to attempt to settle the proceedings or narrow the issues by mediation or some other form of alternative dispute resolution. A temporary stay may be ordered where there are parallel proceedings in another jurisdiction, raising similar or related issues between the same or related parties, where the earlier resolution of those issues in the foreign proceedings would better serve the interests of justice than by allowing the English proceedings to continue without a temporary stay: see Reichhold Norway ASA v Goldman Sachs International [2000] 1 WLR 173. But this would be justified only in rare or compelling circumstances: see per Lord Bingham MR at pp 185 186, and Klckner Holdings GmbH v Klckner Beteiligungs GmbH [2005] EWHC 1453 (Comm). No such application has thus far been made in the Conversant case. At first instance the defendants went all out to obtain the permanent termination of the proceedings, by having service on the Chinese defendants set aside, and by having the proceedings against the English defendants permanently stayed. The whole basis of their application was that the Chinese courts were the appropriate forum to decide the whole dispute, or that the dispute should be split into its Chinese and English parts, leaving only (in England) the question what royalty or compensation for infringement they should pay in relation to the English patents. At the hearing of case management issues consequential upon Henry Carr Js judgment, the appellants did suggest that the FRAND trial should be stayed to await the outcome of pending proceedings in China. The judge provided some accommodation by directing that the FRAND trial should not take place before November 2019, so that the outcome of the Chinese proceedings, to the extent relevant, could be factored into the determination of a FRAND global licence. A case management alternative was put forward by Huawei in the Court of Appeal, but still on the basis that the global FRAND issues could and therefore should first be determined in China, before any determination in England of the claim for infringement of UK patents. It was rejected by the Court of Appeal first because the pending proceedings in China sought only to determine the terms of a FRAND licence for Conversants Chinese patents, not a global licence which would extend to the use of its English patents, and secondly because the age of Conversants portfolio militated against allowing further delay. In this court the case management solution was briefly resurrected during argument, although not as a distinct ground of appeal. Meanwhile the FRAND trial had by then been fixed to start in April 2020 and was no doubt the subject of intensive preparation. It has since then been adjourned due to the Coronavirus pandemic. We think it sufficient to confine ourselves to the issue whether the Court of Appeal was wrong to refuse any case management solution, for the reasons it gave, as summarised above. In our view the Court of Appeals reasons cannot be faulted. We have already concluded that the prospect that the Chinese courts might determine a global FRAND licence, even if the parties consented, is no more than speculative. The current proceedings in China relate only to Conversants Chinese patents, and Conversant has been held to have acted reasonably in refusing (even if it were possible) to confer a wider global jurisdiction on the Chinese courts. Further the adverse commercial effect of further delay in the enforcement of Conversants elderly patents is a factor which, in a case management context, the Court of Appeal was plainly entitled to take into account, and to attribute such weight as it thought fit. Issue 3: FRAND and non discrimination Huawei submits that a further error in the judgment of Birss J at first instance and in the judgment of the Court of Appeal in the Unwired case relates to the non discrimination limb of Unwireds FRAND undertaking. This was dealt with under Ground 2 in the judgment of the Court of Appeal (paras 130 210). Huawei relies on the Samsung licence entered into by Unwired on 28 July 2016 (the Samsung licence) as a relevant comparator for the purpose of working out the FRAND licence terms which should have been offered to Huawei by Unwired. The worldwide royalty rate under the Samsung licence was much lower, and hence much more favourable to the licensee, than the worldwide royalty rate which the judge found was required to be on offer to Huawei pursuant to Unwireds FRAND undertaking. Huawei submits that the judge should have held that Unwireds FRAND undertaking meant that Unwired should have offered Huawei a worldwide royalty rate which was as favourable as that agreed with Samsung. Huaweis case is that the non discrimination limb of the undertaking must be given its ordinary and unadorned meaning, which is that like situations must be treated alike and different situations differently. The non discrimination limb of the undertaking means that the SEP owner must grant the same or similar terms to all similarly situated licensees, unless it can be shown that there are objective grounds for treating them differently. Huawei says that this corresponds with the usual meaning given to obligations not to discriminate in other contexts. Birss J used the term hard edged in relation to the non discrimination obligation to describe the interpretation contended for by Huawei. The practical effect of Huaweis submission is that the non discrimination obligation means that a SEP owner is required to grant licence terms equivalent to the most favourable licence terms to all similarly situated licensees. Before the judge, Unwired deployed three lines of defence to this part of Huaweis case. First, it argued that the Samsung licence was not an equivalent or comparable transaction such as could engage the non discrimination obligation. Secondly, if that was wrong, it said that the non discrimination element in the FRAND undertaking did not involve a distinct hard edged discrimination obligation as submitted by Huawei. Instead, Unwired said that the non discrimination element is to be read as part of a single, unitary obligation to license on terms which are fair, reasonable and non discriminatory. To comply with that obligation, a licensor has to offer a royalty rate set by reference to the true value of the SEPs being licensed; that is, a standard fair market royalty rate available to market participants for use of the SEPs. A rate set in this way, which is available to all licensees without discriminating between them by reference to their individual characteristics, does not cease to be FRAND because the SEP owner has previously granted a licence on more favourable terms. The judge referred to the obligation interpreted in this way as a general non discrimination obligation. Thirdly, if the non discrimination obligation was engaged and if the general non discrimination interpretation were rejected, Unwired argued that the mere existence of differential royalty rates is not sufficient to amount to a breach of the obligation. There is an additional element: Huawei had to demonstrate that the difference is such as to cause a distortion of competition, which it had failed to do. For this submission, Unwired said that the non discrimination part of the FRAND undertaking was to be construed by analogy with the obligation of non discrimination as found in EU competition law in article 102(c) of the TFEU. Birss J rejected the first argument. On the facts, he found that there were specific economic circumstances applicable in relation to the negotiation of the Samsung licence which meant that the royalty rates in it were not a good comparator or basis for assessment of the uniform market royalty rate required under the FRAND obligation. The Samsung licence was granted by Unwired after it had been acquired by PanOptis. At that time, Unwired was in a distressed financial position and Samsung was able to take advantage of this in driving down the royalty rates under the licence. Also, PanOptis had a wider commercial interest in building trust with Samsung to develop a strategic relationship with it so as to encourage it to enter into other transactions, and again this gave special bargaining power to Samsung in the circumstances in which the Samsung licence royalty rates were negotiated. This aspect of the judges findings was not challenged in the Court of Appeal (paras 137 146) and is not in issue on this appeal. However, Birss J held that these features of the circumstances in which the Samsung licence was negotiated did not support Unwireds argument that the non discrimination obligation owed to Huawei was not engaged in relation to the Samsung licence. He held that Huawei and Samsung were similarly situated and that the licences available to each of them were equivalent or comparable for the purposes of engagement of the non discrimination element in the FRAND undertaking. Huawei and Samsung were in a similar position as market participants wishing to be able to make use of Unwireds SEPs and the licences were directed to allowing similar forms of use of the relevant SEPs for the provision of products and services with operability around the world. That ruling was upheld by the Court of Appeal (paras 160 176). There is no appeal in relation to this aspect of the judgments below. Birss J accepted Unwireds second argument. He held that the non discrimination element in the FRAND undertaking was general in nature rather than hard edged. The undertaking did not require that royalty rates in the licence on offer to Huawei should be fixed by reference to the royalty rates in the Samsung licence. On this basis, the judge found that the worldwide licence on offer to Huawei was on non discriminatory terms. The Court of Appeal agreed (paras 177 207). This part of the judgments below is under challenge on the appeal to this court. Birss J also ruled in favour of Unwired on the basis of its third argument, should it transpire that he was wrong to hold that the non discrimination obligation was general rather than hard edged. Since the Court of Appeal upheld his judgment on Unwireds second argument, it found it unnecessary to deal with this alternative part of his reasoning (paras 208 209). Huawei submits in this court that Birss J erred in this part of his reasoning as well. This court upholds the judgment of Birss J and the Court of Appeal on the second of Unwireds arguments. They were right to find that the non discrimination element in the FRAND undertaking is general and not hard edged and that there had been no breach of it. Accordingly, the third argument does not arise. The choice between regarding the non discrimination obligation as general or hard edged is a matter of interpretation of the FRAND undertaking in clause 6.1 of the IPR Policy. The obligation set out in that provision is that licences should be available on fair, reasonable and non discriminatory terms and conditions. In our view, the undertaking imports a single unitary obligation. Licence terms should be made available which are fair, reasonable and non discriminatory, reading that phrase as a composite whole. There are not two distinct obligations, that the licence terms should be fair and reasonable and also, separately, that they should be non discriminatory. Still less are there three distinct obligations, that the licence terms should be fair and, separately, reasonable and, separately, non discriminatory. The text of clause 6.1 lends itself naturally to being read in this unitary way. The non discriminatory part of the relevant phrase gives colour to the whole and provides significant guidance as to its meaning. It provides focus and narrows down the scope for argument about what might count as fair or reasonable for these purposes in a given context. It indicates that the terms and conditions on offer should be such as are generally available as a fair market price for any market participant, to reflect the true value of the SEPs to which the licence relates and without adjustment depending on the individual characteristics of a particular market participant. Put another way, there is to be a single royalty price list available to all. This interpretation of the FRAND obligation promotes the purposes of the ETSI regime in general and the IPR Policy in particular, which we have discussed in paras 4 14 above. A powerful indication that the non discrimination obligation is general rather than hard edged is that ETSI had previously considered and rejected the imposition of a most favourable licence clause in the undertaking. This was done in documents which were published and accessible to all market participants. To interpret the FRAND undertaking as incorporating the hard edged non discrimination obligation for which Huawei contends would have the effect of re introducing a most favourable licence term by the back door. The fact that ETSI made a public choice not to incorporate a most favourable licence term into the FRAND undertaking which it eventually decided to introduce means that any reasonable person participating in the relevant market, whether as a SEP owner or as an implementer seeking to enforce the FRAND undertaking, would understand that the FRAND undertaking as eventually promulgated by ETSI did not incorporate a hard edged non discrimination obligation. The background is as follows. In 1993, ETSI published its original proposed licensing regime, Appendix A of which set out the draft of the then proposed ETSI IPR Undertaking. The proposed undertaking to be given by a SEP owner was to grant a licence which should be non exclusive, on fair, reasonable and non discriminatory terms and conditions (the third indented subparagraph of clause 3.1 in Appendix A) and which, under the fourth indented subparagraph in clause 3.1, should: include a clause requiring the licensor to promptly notify a licensee of any licence granted by it to a third party for the same IPRs under comparable circumstances giving rise to terms and conditions that are clearly more favourable, in their entirety, than those granted to the licensee and allowing the licensee to require replacement of the terms and conditions of its licence, in their entirety, either with those of the third party licence, or with such other terms and conditions as the parties may agree. The 1994 and subsequent versions of the IPR Policy did not include this term. The inclusion of such a most favourable licence term in the 1993 draft IPR Policy as an obligation distinct from the FRAND obligation in the previous subparagraph shows that the FRAND obligation (which was expressed in the same terms as in the later versions of the IPR Policy) was not intended to include a most favourable licence term itself. Further, the deletion of the relevant most favourable licence term from the undertaking in 1994 and in the later versions of the IPR Policy shows that a deliberate choice was made not to subject a SEP owner to an obligation of this kind. In TCL Communication Technology Holdings Ltd v Telefonaktiebolaget LM Ericsson Case No 8:14 cv 00341 JVS DFM (CD Cal, Nov 8, 2017), the US District Court for the Central District of California noted the deletion and regarded it as providing guidance regarding the interpretation of the FRAND obligation (pp 13 14 and 91). The Court of Appeal, in the judgment below, took the same view: para 199. We agree. Ms Ford QC for Unwired made further submissions to the Court of Appeal in support of Unwireds proposed general non discrimination interpretation which were repeated to us (see the Court of Appeal judgment, para 192). They have considerable force. First, Unwired submits that to interpret the non discrimination obligation in the general sense for which it contends gives full effect to the non discrimination limb of the FRAND undertaking. Non discrimination between licensees is achieved, because the FRAND rate is objectively determined based on the value of the portfolio and it does not take into account the characteristics of individual licensees. It satisfies the obligation to treat like cases alike, because the same rate is made available to all licensees who are similarly situated in the sense that they seek the same kind of licence. We agree. This reflects our reasoning above. Secondly, Unwired submits that the non discrimination limb of the FRAND undertaking should not be read in isolation so as to trump all other considerations; that is to say, as a separate free standing obligation. Birss J and the Court of Appeal correctly read it as working together with the fair and reasonable limb of FRAND as part of a unitary concept. The role of the non discrimination limb is to ensure that the fair and reasonable royalty is one which does not depend on any idiosyncratic characteristics of the licensee. Huawei's approach, by contrast, would mean that the existence of a prior licence which the judge had expressly and legitimately held did not represent useful evidence of the value of the portfolio compelled Unwired to license its SEPs at the same rate, and therefore receive remuneration which was less than a fair and reasonable return for its portfolio. This would be to give the non discrimination limb an unnecessarily extreme effect. Again, we agree. The conclusion for which Huawei contends cannot be justified with reference to the intended purposes of the ETSI licensing regime and would conflict with those purposes. Thirdly, it cannot be said that there is any general presumption that differential pricing for licensees is problematic in terms of the public or private interests at stake. The position has been summarised in this way: Most important of the lessons that the economics literature has clearly established is that price discrimination is not always or necessarily harmful. On the contrary, in some cases, it can increase efficiency, raise incentives to innovate by easing the recoupment of necessary upfront investments, broaden the markets served, and improve consumer welfare. This is a welcome finding, because price discrimination is the norm within IP licensing. That is, a typical comparison of contracts for two or more firms with licenses to the same IP will generally reveal different royalty rates, terms, and conditions. As long as the patent holder negotiating these differential rates and terms has no market power, there is no need for any concern, because different prices are a natural consequence of the IP licensing process (Anne Layne Farrar, Nondiscriminatory Pricing: Is Standard Setting Different? (2010) Journal of Competition Law and Economics 1, at p 3) Since price discrimination is the norm as a matter of licensing practice and may promote objectives which the ETSI regime is intended to promote (such as innovation and consumer welfare), it would have required far clearer language in the ETSI FRAND undertaking to indicate an intention to impose the more strict, hard edged non discrimination obligation for which Huawei contends. Further, in view of the prevalence of competition laws in the major economies around the world, it is to be expected that any anti competitive effects from differential pricing would be most appropriately addressed by those laws. It is unnecessary and inappropriate (and could well be counterproductive) to adopt the hard edged non discrimination interpretation of the FRAND undertaking urged by Huawei on the basis that this might promote competition and hence innovation and consumer welfare. Any reasonable person who seeks to engage with the ETSI regime, whether as a SEP owner or as an implementer who is a potential licensee, would understand this. Those engaging with the ETSI regime are highly sophisticated and well informed about economics, practice in the market and competition laws across the world. Fourthly, the approach of Birss J and the Court of Appeal reflects commercial reality and sense, in that there may be circumstances in which the owner of a SEP portfolio would choose to license its portfolio at a rate which does not actually reflect its true, FRAND royalty rate value. For example, the concept of so called first mover advantage in some market circumstances is well recognised. It may be economically rational and commercially important for the owner of a SEP portfolio to offer a lower rate to the first implementer to take a licence, because it provides the owner with initial income on its portfolio and may serve to validate the portfolio in the eyes of the market and hence encourage others to seek licences as well. Huaweis proposed interpretation of the FRAND undertaking would eliminate this as a viable approach. But since such an approach is well recognised and may have great commercial importance for a SEP owner, it would have required far clearer language to be used in the ETSI FRAND undertaking if the intention had been to eliminate it. Similar points can be made in relation to the elimination of another important set of commercial options for the owner of a SEP portfolio. If in commercial difficulties, the owner might seek to engage in a fire sale licensing deal at low royalty rates for a particular licensee in order to secure its (the owners) commercial survival. On the judges findings, there was an element of this in Unwireds grant of the Samsung licence. But if the fire sale royalty rate were to be taken to dictate the FRAND royalty rate for the portfolio for the rest of the participants in the market, there would be no incentive for implementers to take advantage of such an opportunity (as they would gain nothing by comparison with their competitors) and portfolio owners would be unable to utilise such means of raising funds without, in effect, permanently devaluing the portfolio. There is nothing in the ETSI scheme or the language of the FRAND undertaking to indicate that it was intended that the undertaking should have these effects. For these reasons, we dismiss Huaweis non discrimination ground of appeal. Issue 4: Competition law and the CJEUs judgment in Huawei v ZTE The fourth issue arises only in the Unwired appeal. It requires consideration of the CJEUs decision in Huawei v ZTE. Huawei argues that the CJEU there laid down a series of mandatory conditions which must be complied with if a SEP owner is to obtain injunctive relief. If the SEP owner fails to comply, its claim for an injunction will be regarded as an abuse of its dominant position, contrary to article 102 TFEU. In the Court of Appeal, Huaweis argument was that the SEP owner had to have complied before even issuing proceedings for injunctive relief (see para 231 of the Court of Appeal judgment). It is not entirely clear whether Huawei continues to pursue its argument in quite such absolute terms. Although our attention is invited to other respects in which Unwired failed to comply with the CJEUs conditions, Huaweis central focus now is upon Unwired not having made a FRAND offer at any stage, its offers being too high to be FRAND. It is not enough, Huawei says, for a SEP owner to be willing to enter into a licence agreement on terms determined by the court; it has to make a FRAND licence offer itself. In Huaweis submission, Birss J therefore erred in granting Unwired an injunction when it had not complied with the CJEUs conditions. It should have been limited to damages. Unwired responds that Birss J and the Court of Appeal interpreted Huawei v ZTE correctly, and it presented no obstacle to the grant of an injunction. Unwired accepts the conclusion of the lower courts that the CJEU did lay down one mandatory condition, namely the notice/consultation requirement in para 60, which must be observed by the SEP owner, who will otherwise fall foul of article 102. But, in its submission, that is the sole mandatory condition that the CJEU laid down; the other steps set out by the court were intended only as a safe harbour. If they are followed, the SEP owner can commence proceedings for injunctive relief without that amounting to an abuse of its dominant position, but failure to follow them does not necessarily mean that article 102 is infringed, because it all depends on the circumstances of the particular case. Article 102 TFEU So far as material, article 102 provides: Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States. The decision in Huawei v ZTE Huawei v ZTE arose in connection with a dispute in Germany between Huawei, which held a telecommunications SEP and had given an undertaking to grant licences on FRAND terms, and ZTE which marketed products using the SEP without paying a royalty or exhaustively rendering an account in respect of the use. Discussions as to a licence did not bear fruit. Huawei brought an action for infringement, seeking an injunction prohibiting infringement, accounts, recall of products and damages. It was not disputed that Huawei was in a dominant position, for article 102 purposes, but the referring court requested assistance from the CJEU as to the circumstances in which a SEP owner would abuse its dominant position as a result of bringing an action for a prohibitory injunction. The referring court identified two different approaches that might be taken to this question, which would produce different results on the facts of the case. On the one hand, the Bundesgerichtshof had held, in 2009, in Orange Book (KZR 39/06) (referred to in paras 30 to 32 of the CJEU judgment) that the applicant will only breach article 102 if, in essence, the defendant has made an unconditional offer to conclude a licensing agreement, not limited exclusively to cases of infringement, and, where the defendant uses the teachings of the patent before the applicant accepts the offer, it complies with its obligations to account for use and to pay the sums resulting therefrom. On this approach, there would have been no abuse of Huaweis dominant position. On the other hand, the European Commission (in press releases No IP/12/1448 and MEMO/12/1021, referred to in para 34 of the CJEU judgment) appeared to take the view that it would be an abuse to bring an action for an injunction where the infringer is willing to negotiate a FRAND licence, even if terms cannot be agreed. As ZTE was willing to negotiate, this approach would have made Huaweis action for an injunction unlawful under article 102. The referring courts central question was therefore whether it was an abuse to seek an injunction even though the infringer has declared that it is willing to negotiate concerning a licence or only where the infringer has submitted to the proprietor of the [SEP] an acceptable, unconditional [FRAND] offerand the infringer fulfils its contractual obligations for acts of use already performed in anticipation of the licence to be granted (see para 39 of the CJEU judgment). The CJEU commenced its consideration of the referred questions with the following observation: 42. For the purpose of providing an answer to the referring court and in assessing the lawfulness of such an action for infringement brought by the proprietor of an SEP against an infringer with which no licensing agreement has been concluded, the Court must strike a balance between maintaining free competition in respect of which primary law and, in particular, article 102 TFEU prohibit abuses of a dominant position and the requirement to safeguard that proprietors intellectual property rights and its right to effective judicial protection, guaranteed by article 17(2) and article 47 of the Charter respectively. It went on to note, at paras 48 to 52, the special features that distinguish SEPs from other patents, namely that the use of the patent is indispensable in manufacturing products which comply with the standard to which it is linked, and that SEP status is obtained only in return for the SEP owners irrevocable undertaking to grant licences on FRAND terms. It observed that, in those circumstances, a refusal by the proprietor of the SEP to grant a licence on [FRAND] terms may, in principle, constitute an abuse within the meaning of article 102 (para 53), and the abusive nature of such a refusal may, in principle, be raised in defence to actions for a prohibitory injunction or for the recall of products (para 54). The court then went on to deal with the situation where the parties could not agree on what FRAND terms were, observing: 55. In such a situation, in order to prevent an action for a prohibitory injunction or for the recall of products from being regarded as abusive, the proprietor of an SEP must comply with conditions which seek to ensure a fair balance between the interests concerned. It is of particular note that in the following paragraph, before embarking on its consideration of what conditions might ensure a fair balance, the court emphasised the need to take account of the specific circumstances of the case, saying: 56. In this connection, due account must be taken of the specific legal and factual circumstances in the case (see, to that effect, judgment in Post Danmark A/S v Konkurrenceradet [(C 209/10)] EU:C:2012:172; [2012] 4 CMLR 23 at para 26 and the case law cited). The passage from Post Danmark A/S to which reference is made is as follows: 26. In order to determine whether a dominant undertaking has abused its dominant position by its pricing practices, it is necessary to consider all the circumstances and to examine whether those practices tend to remove or restrict the buyers freedom as regards choice of sources of supply, to bar competitors from access to the market, to apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage, or to strengthen the dominant position by distorting competition (see, to that effect, Deutsche Telekom v Commission, para 175 and case law cited). The irrevocable undertaking to grant licences on FRAND terms could not, the court said, negate the entitlement of the SEP owner to have recourse to legal proceedings to ensure effective enforcement of his exclusive intellectual property rights (paras 58 and 59), but: 59. it does, none the less, justify the imposition on that proprietor of an obligation to comply with specific requirements when bringing actions against alleged infringers for a prohibitory injunction or for the recall of products. Paras 60 and 61 appear (from para 62) to be inspired by the possibility that the infringer of a SEP may not be aware that it is using the teaching of a SEP that is both valid and essential to a standard, and deal, in the following terms, with the need to alert the infringer: 60. Accordingly, the proprietor of an SEP which considers that that SEP is the subject of an infringement cannot, without infringing article 102 TFEU, bring an action for a prohibitory injunction or for the recall of products against the alleged infringer without notice or prior consultation with the alleged infringer, even if the SEP has already been used by the alleged infringer. 61. Prior to such proceedings, it is thus for the proprietor of the SEP in question, first, to alert the alleged infringer of the infringement complained about by designating that SEP and specifying the way in which it has been infringed. In paras 63 to 69, the court went on to anticipate that, thereafter, there would be a number of further exchanges between the SEP owner and the alleged infringer. Para 63 deals with the position once the alleged infringer has expressed its willingness to conclude a licensing agreement on FRAND terms. At this point: it is for the proprietor of the SEP to present to that alleged infringer a specific, written offer for a licence on FRAND terms, in accordance with the undertaking given to the standardisation body, specifying, in particular, the amount of the royalty and the way in which that royalty is to be calculated. Then, it is for the alleged infringer diligently to respond to that offer, in accordance with recognised commercial practices in the field and in good faith, with no delaying tactics, and it may rely on the abusive nature of an action for a prohibitory injunction only if it has submitted promptly and in writing, a specific counter offer that corresponds to FRAND terms (paras 65 and 66). And finally, if the counter offer is rejected, and the alleged infringer is using the teachings of the SEP already, from the point at which the counter offer is rejected, it is for that alleged infringer to provide appropriate security, in accordance with recognised commercial practices in the field, for example by providing a bank guarantee or by placing the amounts necessary on deposit (para 67). In paras 68 and 69, the court clarified that: i) in default of agreement on terms, the parties may, by common agreement, request that the amount of the royalty be determined by an independent third party without delay (para 68); and ii) the alleged infringer cannot be criticised for challenging, in parallel to the negotiations relating to the grant of licences, the validity and/or the essential nature of the patents, and/or their actual use, or for reserving the right to do so in the future (para 69). The court then went on, in paras 70 and 71 to address itself to the referring court, and to answer the questions it had referred: 70. It is for the referring court to determine whether the above mentioned criteria are satisfied in the present case, in so far as they are relevant, in the circumstances, for the purpose of resolving the dispute in the main proceedings. 71. It follows from all the foregoing considerations that the answer to [the questions referred] is that article 102 TFEU must be interpreted as meaning that the proprietor of an SEP, which has given an irrevocable undertaking to a standardisation body to grant a licence to third parties on FRAND terms, does not abuse its dominant position, within the meaning of article 102 TFEU, by bringing an action for infringement seeking an injunction prohibiting the infringement of its patent or seeking the recall of products for the manufacture of which that patent has been used, as long as: prior to bringing that action, the proprietor has, first, alerted the alleged infringer of the infringement complained about by designating that patent and specifying the way in which it has been infringed, and, secondly, after the alleged infringer has expressed its willingness to conclude a licensing agreement on FRAND terms, presented to that infringer a specific, written offer for a licence on such terms, specifying, in particular, the royalty and the way in which it is to be calculated, and where the alleged infringer continues to use the patent in question, the alleged infringer has not diligently responded to that offer, in accordance with recognised commercial practices in the field and in good faith, this being a matter which must be established on the basis of objective factors and which implies, in particular, that there are no delaying tactics. The facts of the present case Turning to the facts of the present case, between 2009 and 2012, Huawei had a licence from Ericsson which included the SEPs which were assigned to Unwired in 2013. In 2013, there was brief discussion between Unwired and Huawei about the possibility of Huawei buying some of the SEPs, but Huawei did not do so. In September 2013, Unwired wrote to Huawei proposing discussion with a view to concluding a licence, but received no reply. Unwired then wrote, in November 2013, to Huaweis IP department which replied very promptly, and there was communication between the companies. Before proceedings were begun against Huawei in March 2014, on Birss Js findings (see particularly para 750 of his judgment), the position was as follows: Huawei had sufficient notice that Unwired Planet held particular SEPs and they knew or ought to have known that if the declared SEPs held by Unwired Planet were indeed valid and essential, then a licence was required. They did not yet have claim charts. All the same, for Huawei, the only realistic and foreseeable ways in which the existing contact with Unwired Planet was going to conclude would be by Huawei persuading Unwired Planet that they had no good SEPs or proving it in court or by Huawei taking a licence. Huawei also knew that Unwired Planet wanted to license Huawei. In these circumstances the information Huawei had by March 2014 was quite sufficient for Huawei to understand that issuing proceedings including an injunction claim did not represent a refusal to license. Quite the reverse. In April 2014, Unwired made the first of a number of offers of licensing terms. Huawei responded, saying that no licence was needed, but also denying that the offered terms were FRAND. Birss J found (para 706) that Huawei never made an unqualified commitment to enter into a FRAND licence, its stance having always been that it was willing to enter into what it contended was a FRAND licence. Until shortly before the trial in front of Birss J, its contention was that only a patent by patent licence for any patent found valid and infringed would be FRAND, and from 11 October 2016, this was replaced by the contention that a FRAND licence meant a UK portfolio licence. Birss J contrasted this with Unwireds stance (para 709). Whereas Huawei had only been prepared to take a licence with a particular scope, Unwireds case in the High Court involved trying to insist on a worldwide licence, but its approach took account of the possibility that it might not be entitled to demand that. The position it took was that if the court decided that it was not entitled to insist on a global licence, it would accept that there be a UK portfolio licence at a rate and on terms set by the court (Birss J, para 23(i)). The decisions of Birss J and the Court of Appeal Birss J did not accept Huaweis argument that it had a defence to the injunction claim because the proceedings were commenced before FRAND terms were offered to it by Unwired. He interpreted the CJEU as saying that it would necessarily be abusive for the SEP owner to bring an action without some kind of prior notice to the alleged infringer, but otherwise he saw the CJEUs scheme as setting out a standard of behaviour against which both parties behaviour can be measured to decide in all the circumstances if an abuse has taken place, rather than imposing mandatory requirements which had to be complied with in all cases (para 744 (iv) and (v)). Measuring the parties behaviour against the standard, Birss J was satisfied that the commencement of the action, including the claim for an injunction, was not an abuse of Unwireds dominant position (para 755). It can be seen from the extract from para 750 which is quoted above that he considered that Huawei had sufficient notice prior to the commencement of proceedings, that it was clear that issuing the proceedings did not represent a refusal to license, and that Huawei knew that Unwired wanted to license it. The issue of the proceedings did not prevent the parties from negotiating (para 752). Unwired provided key terms of its offer to Huawei a few weeks after commencing proceedings (para 753), but Huawei never made an unqualified offer to accept whatever were FRAND terms (para 754). The Court of Appeal agreed with Birss Js interpretation of the CJEUs judgment, which it considered entirely correct, and it saw no reason to interfere with his conclusion that Unwired had not behaved abusively. Discussion In our view, Birss J and the Court of Appeal interpreted the CJEUs decision in Huawei v ZTE correctly. Bringing an action for a prohibitory injunction without notice or prior consultation with the alleged infringer will amount to an infringement of article 102, as para 60 of the CJEUs judgment sets out. In that paragraph, the language used is absolute: the SEP owner cannot bring the action without infringing the article. We agree with Birss J and the Court of Appeal, however, that the nature of the notice/consultation that is required must depend upon the circumstances of the case. That is built into the reference to notice or prior consultation, which conveys the message that there must be communication to alert the alleged infringer to the claim that there is an infringement, but does not prescribe precisely the form that the communication should take. This is to be expected, given that the CJEU had just introduced its discussion of the conditions which seek to ensure a fair balance between the various interests concerned in a SEP case with a very clear statement, at para 56 (set out above), that account had to be taken of the specific legal and factual circumstances in the case. In so saying, the court was reflecting its well established approach in determining whether a dominant undertaking has abused its dominant position, as it demonstrated by its reference back to the Post Danmark case, and the case law there cited. It also makes obvious sense that the court should have built in a degree of flexibility, given the wide variety of factual situations in which the issue might arise, and the fact that different legal systems will provide very different procedural contexts for the SEP owners injunction application. In Germany, for example, as we observed earlier, validity and infringement are tried separately, so that the alleged infringer faces the risk that the SEP owner could obtain a final injunction against it without validity first being determined, and in some member states, an injunction might be granted before a FRAND rate is determined. In contrast, in the United Kingdom, it is not the practice to grant a final injunction unless the court is satisfied that the patent is valid and infringed, and it has determined a FRAND rate. The courts statement in para 56 also colours the interpretation of the scheme it set out between paras 63 and 69 of its judgment. As the Court of Appeal observed, para 56 does not sit comfortably with the notion that the CJEU was laying down a set of prescriptive rules, intending that failure to comply precisely with any of them would necessarily, and in all circumstances, render the commencement of proceedings for an injunction abusive. It is important, it seems to us, to take account of where para 56 is placed in the judgment. Immediately preceding it, the court had identified the very real problem that occurs where, as in the case which had generated the reference to it, there is no agreement as to what terms would be FRAND, and then said (in para 55, quoted above) that in order to prevent an action being regarded as abusive, the SEP owner must comply with conditions which seek to ensure a fair balance between the interests concerned. This identifies what the conditions need to seek to ensure, but is no more prescriptive than that, and it is of considerable significance that para 56 immediately follows, requiring that [i]n this connection, which must surely be a reference back to the conditions which seek to ensure a fair balance, due account must be taken of the specific legal and factual circumstances of the case. It would be surprising if the steps then set out by the CJEU were expected by it to apply in all cases, no matter what their legal and factual circumstances. Unwired submits that the language used by the CJEU is language intended to signpost a safe harbour for the SEP owner. We agree that this does lend a degree of support to Unwireds argument. In particular, in contrast to the absolute language of para 60, in para 71, the court speaks of the SEP owner not abusing its dominant position as long as it follows the steps laid out. This does not tell us that if the SEP owner does not follow the steps, it will be abusing its dominant position. To answer that, due account has to be taken of the particular circumstances of the case, although, of course, it is likely to be valuable to compare what occurred with the pattern set out by the CJEU. By way of further reinforcement for its contention that the CJEU was providing guidance only, Unwired points to the unfairness that would arise, in a case (such as the present one) which began before the CJEU gave judgment in Huawei v ZTE, if the application for injunctive relief were to be condemned as abusive by virtue of a failure to comply with conditions which had not yet been spelled out when the proceedings were commenced, but which, once spelled out, operated ex tunc. The fact that any rigid and prescriptive rules laid down by the CJEU would necessarily operate in this way makes it unlikely, says Unwired, that the CJEU was actually seeking to lay down a mandatory protocol. Had the CJEUs judgment been in terms clearly intended to lay down universal, immutable, conditions, this point would not have been sufficient to displace that interpretation of it, but, in our view, given that the judgment is not in such terms, the point does perhaps provide a degree of further confirmation that all the circumstances of the case must be taken into account before concluding that article 102 has been infringed. It is worth noting how the European Commission has interpreted the CJEUs decision. In its communication of 29 November 2017, setting out the EU approach to Standard Essential Patents (see para 83 above), it encapsulated, at para 3, the conflicting considerations which operate in relation to injunctive relief in SEP cases, saying that: [s]uch relief aims to protect SEP holders against infringers unwilling to conclude a licence on FRAND terms. At the same time, safeguards are needed against the risk that good faith technology users threatened with an injunction accept licensing terms that are not FRAND, or in the worst case, are unable to market their products (hold ups). It then went on, at para 3.1 of the Communication, to set out its understanding of the CJEUs judgment: In its Huawei judgment, the CJEU established obligations applying to both sides of a SEP licensing agreement, when assessing whether the holder of a SEP can seek an injunction against a potential licensee without being in breach of Article 102 TFEU. SEP holders may not seek injunctions against users willing to enter into a licence on FRAND terms, and the CJEU established behavioural criteria to assess when a potential licensee can be considered willing to enter into such a licence. The following paragraphs consider further the various elements in the negotiation, but make clear that what precisely is required is, in the Commissions view, dependent on the facts of the individual case. This coincides with the interpretation that we would adopt of the CJEUs decision. As the Commission pointed out, the objective is to protect both the intellectual property rights of SEP owners and the interests of what it calls good faith technology users. The scheme set up by the CJEU, as we would interpret it, does this. It prevents an organisation which is unwittingly using a SEP without a licence from being ambushed by injunction proceedings without any prior notification of the problem, provides the SEP owner with a route map which, if followed precisely, will ensure it can seek an injunction without risking infringing article 102, and otherwise provides a number of points of reference to assist in assessing the all important question of whether each of the parties is willing to enter into a licence on FRAND terms. Interpreted in this way, it has sufficient flexibility built into it to cater for the inevitable variations that will occur from case to case, and from country to country. Given that we share Birss Js interpretation of the CJEUs judgment, we see no reason to interfere with his assessment that Unwired had not behaved abusively. He found that sufficient notice was given to Huawei before the injunction application was made. He properly evaluated the course of the negotiations between the parties in light of what the CJEU had said. There was no mandatory requirement that Unwired itself make an offer of terms which coincided with those that were ultimately determined by the court to be FRAND. Apart from the more general points that we have made earlier, in rejecting the argument that the CJEUs scheme was mandatory, such an absolute requirement to hit the target precisely with an offer could not sit easily alongside para 68 of the CJEUs judgment, which contemplates determination of the amount of the royalty by an independent third party. What mattered on the facts of this case was that Unwired had shown itself willing to license Huawei on whatever terms the court determined were FRAND, whereas Huawei, in contrast, had only been prepared to take a licence with a scope determined by it. Issue 5: The equitable jurisdiction to award a prohibitory injunction The fifth issue in the appeal raises a point which was not argued in the courts below. Huawei contends that even if it is infringing the claimants UK SEPs, and even if the claimants are willing to offer a licence on terms which the court has found to be FRAND, nevertheless the court should not grant the claimants an injunction to prevent the continuing infringement of their patents, since such a remedy is neither appropriate nor proportionate. Since the claimants only interest in the observance of the UK SEPs is in obtaining reasonable royalties, and that interest can be fully recognised by an award of damages in lieu of an injunction, it follows that such an award, based on the royalties which would reasonably be agreed for a licence of each of the UK patents infringed, is the appropriate and proportionate remedy. In support of that argument, Huawei refers to the discussion of awards of damages in lieu of an injunction under section 50 of the Senior Courts Act 1981 (formerly under Lord Cairnss Act) in One Step (Support) Ltd v Morris Garner [2018] UKSC 20; [2019] AC 649, where Lord Reed explained at paras 43 44 and 95(3) that such damages can be awarded in respect of an injury which has not yet occurred, and that they are a monetary substitute for what is lost by the withholding of injunctive relief. Reference is also made to Co operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1, where the House of Lords decided that damages were normally a more appropriate remedy than a mandatory injunction requiring the carrying on of a business, and Lawrence v Fen Tigers Ltd [2014] UKSC 13; [2014] AC 822, where damages were considered to be a more appropriate remedy, in the circumstances of that case, than an injunction to prevent the continuation of a nuisance. Huawei also refers to eBay Inc v Mercexchange LLC 547 US 388 (2006), where the United States Supreme Court vacated a decision by the Federal Circuit reversing the District Courts denial of permanent injunctive relief to a PAE. The Supreme Court held that neither court had exercised its discretion in accordance with traditional principles of equity, as established in the law of the United States. The Court of Appeals was held to have erred in applying a rule that courts would issue infringement absent exceptional permanent circumstances. The District Court was held to have erred in adopting a rule that injunctions against patent injunctive relief would not issue where the plaintiff was willing to licence its patents rather than bringing them to market itself. The Supreme Court took no position on whether permanent injunctive relief should or should not issue in that case. Huawei relies in particular on the concern expressed by Kennedy J, in a concurring opinion in which Stevens, Souter and Breyer JJ joined, that an injunction could be employed by a PAE as a bargaining tool to charge exorbitant fees. Kennedy J expressed the opinion that where the patented invention was only a small component of the product the defendant sought to produce, and the threat of an injunction was employed simply for undue leverage in negotiations, damages might well be sufficient to compensate for the infringement, and an injunction might not serve the public interest. As Lord Neuberger remarked in the case of Lawrence at para 120, the court's power to award damages in lieu of an injunction involves a classic exercise of discretion. In most cases of patent infringement, judges have exercised their discretion in favour of granting an injunction. As Roberts CJ observed in the eBay case, in a concurring judgment in which Scalia and Ginsburg JJ joined: From at least the early 19th century, courts have granted injunctive relief upon a finding of infringement in the vast majority of patent cases. This long tradition of equity practice [Weinberger v Romero Barcelo, 456 US 305, 320 (1982)] is not surprising, given the difficulty of protecting a right to exclude through monetary remedies that allow an infringer to use an invention against the patentees wishes. (Emphasis in original) In the present case, the courts below were not invited to consider the possibility of awarding damages in lieu of an injunction. We are not in any event persuaded that there is any basis on which this court could properly substitute an award of damages for the injunction granted by Birss J and upheld by the Court of Appeal. There are, in the first place, no grounds in this case for a concern of the kind expressed by Kennedy J in the eBay case. The threat of an injunction cannot be employed by the claimants as a means of charging exorbitant fees, or for undue leverage in negotiations, since they cannot enforce their rights unless they have offered to license their patents on terms which the court is satisfied are fair, reasonable and non discriminatory. This point was clearly in the mind of Birss J. He stated at para 562: If a worldwide licence is not FRAND then a putative licensee should not be coerced into accepting it by the threat of an injunction in one state. However, if a worldwide licence is FRAND then the situation changes. The logic of the FRAND undertaking applied in the context of patent rights is that the remedy of an injunction to restrain infringement, granted in respect of a patent found valid and infringed/essential, should present the licensee with a simple choice either to take a FRAND licence or stop dealing in the products. He returned to this point at the end of his judgment, when explaining at para 793 why an injunction was appropriate: The relevant patents have been found valid and infringed. Unwired Planet wish to enter into a worldwide licence. Huawei is willing to enter into a UK portfolio licence but refuses to enter into a worldwide licence. However a worldwide licence is FRAND and Unwired Planet are entitled to insist on it. In this case a UK only licence would not be FRAND. An injunction ought to be granted because Huawei stand before the court without a licence but have the means to become licensed open to them. Secondly, in a case of the present kind, an award of damages is unlikely to be an adequate substitute for what would be lost by the withholding of an injunction. The critical feature of a case of this kind is that the patent is a standard technology for products which are designed to operate on a global basis. That is why standard technology is essential, and why the patent holders whose patents are accepted as SEPs are required to give an undertaking that licences will be made available on FRAND terms. Once the patents have been accepted as SEPs, it may well be impractical for the patent holder to bring proceedings to enforce its rights against an infringing implementer in every country where the patents have been infringed. That is because, as Huaweis witness Mr Cheng accepted in evidence, the cost of bringing enforcement proceedings around the world, patent by patent, and country by country, would be impossibly high. In those circumstances, if the patent holder were confined to a monetary remedy, implementers who were infringing the patents would have an incentive to continue infringing until, patent by patent, and country by country, they were compelled to pay royalties. It would not make economic sense for them to enter voluntarily into FRAND licences. In practice, the enforcement of patent rights on that basis might well be impractical, as was accepted in the present case by Huaweis witness, and by the courts below. An injunction is likely to be a more effective remedy, since it does not merely add a small increment to the cost of products which infringe the UK patents, but prohibits infringement altogether. In the face of such an order, the infringer may have little option, if it wishes to remain in the market, but to accept the FRAND licence which ex hypothesi is available from the patent holder. However, for the reasons explained in paras 164 165, that does not mean that the court is enabling the patent holder to abuse its rights. This point was understood by the courts below. In the Court of Appeal, Lord Kitchin observed at paras 55 56: It may be wholly impractical for a SEP owner to seek to negotiate a licence of its patent rights country by country, just as it may be prohibitively expensive for it to seek to enforce those rights by litigating in each country in which they subsist. This latter point was accepted by Mr Cheng in the course of his evidence: he agreed that the costs of such litigation for [Unwired] would be impossibly high [I]t seems to us, at least as a matter of principle, that there may be circumstances in which it would not be fair and reasonable to expect a SEP owner to negotiate a licence or bring proceedings territory by territory and that in those circumstances only a global licence or at least a multi territorial licence would be FRAND. Lord Kitchin also noted at para 111 the implications of accepting Huaweis contention that country by country licensing was appropriate: The patentee must then bring proceedings country by country to secure the payment of the royalties to which it is entitled. But unlike a normal patent action, where an unsuccessful defendant faces the prospect of an injunction, the reluctant licensee would know that, on the assumption it could only be required to take licences country by country, there would be no prospect of any effective injunctive relief being granted against it provided it agreed to pay the royalties in respect of its activities in any particular country once those activities had been found to infringe. So it would have an incentive to hold out country by country until it was compelled to pay. That reasoning was criticised by Huawei, but far from being erroneous, it identifies the central reason why an injunction is necessary in order to do justice, and why damages in lieu would not be an adequate substitute. Conclusion Before concluding we would like to record our appreciation of the high quality of the judgments of the courts below and the help which we gained from the judgments of the Court of Appeal in each of these cases. It follows from what we have discussed above that the appeals must fail. We therefore dismiss the appeals. |
Does a decision by a public prosecutor to bring criminal proceedings against a person fall potentially within the scope of article 8 of the European Convention on Human Rights in circumstances where a) the prosecutor has reasonable cause to believe the person to be guilty of the offence with which they are charged and b) the law relating to the offence is compatible with article 8? That is the primary question raised by this appeal and it is one of general importance. If that question is answered in the affirmative, the question arises whether in the present case the decision by the respondent (the CPS) to charge the appellant with the offence of possessing a false document under section 25(1) of the Identity Cards Act 2006 was a violation of her article 8 rights. Prosecution of offences Different states who are parties to the Convention have different institutions and processes for the investigation and prosecution of offences. The CPS was established by the Prosecution of Offences Act 1985, section 1. Its essential functions are to advise the police and others, including immigration officers, on the institution of criminal proceedings and to take over the conduct of such proceedings: section 3(2)(a)(aa)(e) and (ec). The head of the CPS is the Director of Public Prosecutions (DPP). Under section 10 the DPP is required to issue a Code for Crown Prosecutors. The code requires prosecutors to apply a two stage test in deciding whether a person should be prosecuted for an offence. The first stage involves considering whether there is enough evidence to provide a realistic prospect of conviction. If that requirement is satisfied, the second stage involves deciding whether a prosecution would be in the public interest, which may entail weighing a wide variety of considerations. The CPS is a body independent of the investigating authority, whether it be the police or immigration or other authority, and also independent of the court before which any prosecution may be brought. Identity Cards Act 2006 Under section 25(1) of the Identity Cards Act 2006 (now substantially re enacted by section 4 of the Identity Documents Act 2010), it was an offence punishable with up to ten years imprisonment for a person to be in possession of an identity card relating to somebody else, with the intention of using it to establish his identity as that persons identity. But it has long been recognised that those fleeing persecution may have to resort to deceptions such as possession and use of false papers in order to make good their escape: R v Asfaw (United Nations High Commissioner for Refugees intervening) [2008] 1 AC 1061, para 9, per Lord Bingham. Article 31(1) of the 1951 Convention and Protocol relating to the Status of Refugees (1951) (Cmd 9171) and (1967) (Cmnd 3906) (the Refugee Convention) prohibits contracting states from imposing penalties, on account of their illegal entry or presence, on refugees coming directly from a territory where their life or freedom was threatened, provided that they present themselves without delay to the authorities and show good cause for their illegal entry or presence. Article 31 of the Refugee Convention has been given effect in domestic law by section 31 of the Immigration and Asylum Act 1999, which applies to offences including those under section 25 of the Identity Cards Act 2006. Section 31(1) of the 1999 Act provides: It is a defence for a refugee charged with an offence to which this section applies to show that, having come to the United Kingdom directly from a country where his life or freedom was threatened (within the meaning of the Refugee Convention), he presented himself to the authorities in the United i) Kingdom without delay; ii) showed good cause for his illegal entry or presence; and iii) made a claim for asylum as soon as was reasonably practicable after his arrival in the United Kingdom. Although on a literal reading the defence might not be thought to apply to a person who stopped over in an intermediate country en route from the country of persecution to their country of intended refuge, in Asfaw the House of Lords held that article 31 of the Refugee Convention and section 31 of the 1999 Act were to be given a purposive interpretation consistent with their humanitarian aims, and that the protection given by them was not excluded by a short term stopover in an intermediate country. The appellant was born on an island in Somalia on 26 December 1991. She is a member of a minority clan. She and her family suffered severe violence from majority clans over many years. The violence included the murder of her father in 1995 and, two years later, the rape of the appellant herself in front of her disabled mother. After that attack she and her mother moved to the mainland, but in 2008 another militant gang murdered her mother and beat the appellant senseless with a rifle. In December 2008 the appellant fled from Somalia with a friend and she spent the next year living in Yemen. On 25 December 2009 the appellant left Yemen with an agent and flew to an unknown destination in Europe, from where she travelled to Eindhoven in Holland. On 27 December she flew from Eindhoven to the UK on a false passport provided to her by an agent. On arrival at Stansted Airport on the evening of 27 December the appellant attempted to pass through immigration control using a British passport. She was stopped and challenged by immigration officers from the United Kingdom Border Agency (UKBA), part of the Home Office. She immediately claimed asylum and gave her true name and date of birth. She was detained overnight. On 28 December the appellant had an initial asylum screening interview in which she described how she had left Somalia and come to the UK. She explained her reasons in summary and said that she was in fear of her life if she were to return home. Later that day the appellant was told by an immigration officer, IO Webb, that she could return to Holland and, if so, she would not be prosecuted. The appellant declined to return to Holland and maintained her claim for asylum. Thereafter she was arrested on suspicion of committing an offence under section 25(1) of the 2006 Act. On the same day the appellant was interviewed at Stansted Airport Police Station by IO Webb. The appellant was represented at that stage by a duty solicitor. Her account of her movements and her personal circumstances was consistent with her earlier account. When asked why she had not claimed asylum in Holland, she said that she knew nothing about Holland and had been advised to travel to the UK to claim asylum. On the evening of 28 December a CPS lawyer, Ms Jo Golding, reviewed the file. She applied the full code test under the Code for Crown Prosecutors and concluded that both the evidential test and the public interest test were satisfied. It was accepted on the appellants behalf in the courts below that the CPS was reasonably entitled to consider that the evidential test was satisfied at the time when the decision to prosecute was taken. On 29 December the appellant appeared before a magistrates court and was remanded by the court in custody. On 11 January 2010 she attended a preliminary hearing at Chelmsford Crown Court and was again remanded in custody. On 28 January another CPS lawyer, Ms Charlotte Davison, conducted a full review of the case. She raised a question about what consideration UKBA had given to the availability of a defence under section 31. On 22 February a Plea and Case Management Hearing took place at the Crown Court. The appellants counsel served the CPS with a skeleton argument that the proceedings should be dismissed because her case fell within the scope of the section 31 defence. It appears from the Crown Court minute sheet that the prosecution had not received the skeleton argument in advance and it was agreed that the application should be adjourned. After further exchanges between the CPS and UKBA, Ms Davisons view was that the period of a year spent by the appellant in Yemen took her outside the scope of section 31 and that she was minded to proceed with the prosecution. On 26 May the appellants full asylum interview took place. Six days later, on 1 June, the appellant appeared before Chelmsford Crown Court. The CPS was on this occasion represented by a CPS advocate, Ms Lesli Sternberg. At the hearing IO Webb told Ms Sternberg that a decision on the appellants asylum application was expected shortly and that it was likely to be granted. In those circumstances the appellants application to dismiss the proceedings was adjourned until 14 June. After the hearing Ms Sternberg researched the position of Somali refugees in Yemen. Although Yemen was party to the Refugee Convention it appeared that the procedure for bringing it into effect was poor. Ms Sternbergs view was that, subject to confirmation of the grant of asylum, the prosecution should not continue because it would not be in the public interest. On 10 June the appellant was granted asylum. On the next day the prosecution offered no evidence at a mention hearing at the Crown Court. The appellant was found not guilty and released from custody. The proceedings On 22 December 2010 the appellant issued proceedings against the CPS, the Home Office and the police for damages on various grounds including breach of her rights under article 8. The claims against the Home Office and the police were not pursued. On 1 February 2013 Irwin J dismissed the claim. On the facts, he accepted that the appellant was very vulnerable and already suffering anxiety and depression before the decision to prosecute her and her incarceration, and that her arrest and remand in custody had added to the psychological impact. He accepted too that if the CPS had learned more from UKBA at an early stage about conditions in Somalia and the Yemen, it would probably not have begun a prosecution before the outcome of her asylum application. However, he held that the decision to prosecute was not capable of engaging article 8. He said that in presenting false papers to an immigration officer the appellant was not engaged in an activity which was part of her private life, but was self evidently a matter affecting the business of the state. He accepted that the consequences of the decision to prosecute could affect her enjoyment of a private life, but he rejected the consequentialist argument as a basis for applying article 8 to the decision to prosecute. Otherwise, he said, article 8 would apply to every decision to prosecute for any offence, at least where there was a possibility of a custodial sentence or a remand in custody. He held that a decision to prosecute could only engage article 8 if the prosecution targeted an activity which could credibly claim to be an exercise of an article 8 right. If, however, article 8 was engaged, Irwin J concluded that the CPSs decision was justified on the material which it had. Irwin Js dismissal of the appellants claim was upheld by the Court of Appeal on 6 February 2014 in a decision which is reported at [2014] 1 WLR 3238. The leading judgment was given by Pitchford LJ, with whom the other members of the court agreed. After reviewing the authorities he accepted that article 8 could apply to a law criminalising behaviour which itself amounted to the exercise of a right protected by article 8, but he held that section 25 of the 2006 Act did not interfere with rights protected by that article. It did not impede the appellants ability to claim asylum, and the possession of false identity documentation with intent to deceive at the point of border control was not an expression of personal autonomy. Pitchford LJ also accepted that a decision to prosecute for an offence under section 25 might fall within article 8 if, for example, the prosecutor knew that there was no proper basis for the prosecution. But he held that article 8 was not engaged by a decision to prosecute for a Convention compliant offence in the absence of extreme circumstances. If, however, article 8 was engaged, the concession made that the appellants case passed the evidential test meant that in the absence of compelling circumstances personal to the appellant the public interest in prosecution was obvious. The outcome would be a matter for judicial decision and it was not for the prosecutor, when deciding to prosecute, to concern herself with questions of remand or likely sentence, which would be for the court to determine. He concluded therefore that if article 8 was engaged, there was no breach. Did article 8 apply to the decision to prosecute? Mr Richard Hermer QC argued that article 8 applied to the decision to prosecute for two reasons: it targeted conduct which was itself protected by article 8, and its consequences were to interfere with the enjoyment of the appellants private life. Mr Hermer submitted that the range of article 8 is broad, that the threshold for it to apply is low, and that it is almost inevitable that the decisions of the CPS, as a public body, will impact on the private life of the defendant and so engage article 8. He said that anything done by a public body which has the consequence of affecting someones private life in a more than minimal way involves interference with respect for it within the meaning of article 8. Broad as article 8 undoubtedly is, the consequentialist argument advanced by Mr Hermer is far too broad. To take an example far removed from the present case, if a highway authority closes a road for roadworks, or introduces a partial closure, there may be a more than minimal effect on how long it takes residents to get to work, but that cannot be enough to make article 8 applicable. Such matters are part of the ordinary incidents of daily life in a community and involve no lack of respect for personal autonomy of the kind which article 8 is designed to protect. Questions about the possible application of article 8 to a prosecutorial decision were considered by the House of Lords and the European Court of Human Rights in the case reported as R v G [2009] 1 AC 92 and G v United Kingdom (2011) 53 EHRR SE 237. The appellant aged 15, had sexual intercourse with a girl aged 12. He pleaded guilty to a charge of rape of a child under 13, contrary to section 5 of the Sexual Offences Act 2003, on the written basis that the intercourse was consensual in fact (although by reason of her age the girl was incapable of giving legal consent) and that he believed her to be aged 15 because she had told him so. The prosecution accepted his basis of plea and he received a custodial sentence. He appealed to the Court of Appeal against conviction and sentence. It was argued that his conduct amounted to a less serious offence under section 13, aimed specifically at a person under 18 who had sexual intercourse with a child under 13, and that on the accepted facts it was a disproportionate interference with his private life, contrary to article 8, to proceed on the more serious charge, which had the consequence of giving him a criminal record as a rapist. The Court of Appeal dismissed his appeal against conviction but substituted a non custodial sentence. The House of Lords upheld the Court of Appeals decision by a three to two majority. Lord Hoffmann said that article 8 confers a qualified right protecting a persons private or family life, but if the state is justified in treating the persons conduct as unlawful that is the end of the matter. Lady Hale also considered that article 8 did not apply, because a rule which prevented a child under 13 from giving legally recognised consent to sexual activity and a statute which treated penile penetration as a most serious form of such activity did not amount to a lack of respect for the private life of the penetrating male. If, however, article 8 applied, Lady Hale considered that the interference was justified and proportionate in the pursuit of the legitimate aims of the protection of health and morals and of the rights and freedoms of others. Lord Hope and Lord Carswell disagreed. They considered that prosecutorial choices must be exercised compatibly with the Convention, and that the decision to proceed against G under section 5, rather than section 13, was disproportionate. Lord Mance did not expressly state whether article 8 applied but he agreed with Lord Hoffmann and Lady Hale that it was not breached. G took his case to Strasbourg, but the court held that his complaint was inadmissible. On the question whether article 8 applied, the court said that not every sexual activity behind closed doors would necessarily fall within its scope, but, in the circumstances that both parties in fact consented and that G reasonably believed the girl to be the same age as himself, it was prepared to accept that the sexual activities at issue fell within the meaning of private life. However, it held that the states margin of appreciation regarding the means of protecting children from sexual exploitation was wide and that the complaint must be rejected as manifestly ill founded. The focus of the reasoning of the Strasbourg court is significant. It focused on the nature of Gs conduct. The court was prepared to accept that uncoerced sexual behaviour of a 15 year old boy with a girl whom he believed to be the same age could fairly be seen as falling within the meaning of private life. Perhaps because it was an admissibility decision and the court was satisfied that the complaint of a breach of article 8 was manifestly ill founded, it did not directly address Lord Hoffmanns and Lady Hales reasons for holding that the article did not apply. There is no support in the Strasbourg authorities for the argument that even if the conduct for which a person is prosecuted was not within the range of article 8, the article may apply to a decision to prosecute because of the attendant consequences. By commencing a criminal prosecution the CPS places the matter before a court. In other Convention countries the court is itself in charge of deciding whether a person should be treated as an accused in a criminal case. There is a striking absence of any reported case in which it has been held that the institution of criminal proceedings for a matter which is properly the subject of the criminal law may be open to challenge on article 8 grounds (as Munby LJ observed in R (E) v Director of Public Prosecutions [2012] 1 Cr App R 66, paras 72 75). It would be illogical; for if the matter is properly the subject of the criminal law, it is a matter for the processes of the criminal law. The criminalisation of conduct may amount to interference with article 8 rights; and that will depend on the nature of the conduct. If the criminalisation does not amount to an unjustifiable interference with respect for an activity protected by article 8, no more does a decision to prosecute for that conduct. The consequences will be matters for the determination of the court. Article 6 protects the defendants right to a fair hearing within a reasonable time by an independent and impartial tribunal. Turning to the argument that the prosecution targeted conduct which was protected by article 8, Mr Hermer submitted that the courts below wrongly concentrated too much on the moment when the appellant tried to pass through immigration control on a false passport and should have looked at her conduct in the wider context of a vulnerable young person who had suffered grievously and was trying to escape by the only means available to her. He submitted that proper investigation should have led the CPS to realise at an early stage that she had a defence under section 31 and in any event that a prosecution was not in the public interest. The decision which is challenged is the initial decision to prosecute. (The issues listed in the agreed statement of facts and issues all focus on that decision, although in the course of his oral argument Mr Hermer sought to extend the challenge to include the conduct of the CPS throughout the period from the decision to prosecute up to the decision to offer no evidence. I refer to this in the postscript below.) The difficulty for the appellant in advancing the claim that the decision to prosecute her was a violation of her human rights is that it is accepted that the offence under section 25 is compliant with her Convention rights, and it was conceded in the courts below that the CPS was reasonably entitled to conclude at the time of the decision to prosecute that the evidential test was satisfied. It is difficult to envisage circumstances in which the initiation of a prosecution against a person reasonably suspected of committing a criminal offence could itself be a breach of that persons human rights. It is true that the CPS is not bound to prosecute in every case, depending on its view of the public interest, but I do not see that the fact that in this jurisdiction a prosecution is not obligatory makes a difference. Whether it is in the public interest to prosecute is not the same as whether a prosecution would unjustifiably interfere with a right protected by article 8. applicability of article 8 to the decision to prosecute. I agree with Irwin J and the Court of Appeal on the question of the However, if article 8 was applicable, I agree also that there was no breach. Things could have been done better and it is regrettable that the claimant, a vulnerable young woman, spent the time that she did in custody. Criticism can be made of the CPS for the length of time it took to investigate the position regarding the Yemen and to conclude that the appellant was likely to succeed in the section 31 defence, but that is far from there being a breach of article 8 in the decision to prosecute. Indeed, even if the original decision to prosecute was an error of judgment by the CPS, it would not in my view have involved a breach of article 8. It would be a different thing if the state deliberately trumped up false charges against someone as a form of harassment. In terms of domestic law, that would involve the torts of malicious prosecution or misfeasance in public office or both, to which article 8 would add nothing; but no duty of care is owed by the police towards a suspect (Calveley v Chief Constable of the Merseyside Police [1989] AC 1228), and the same applies to the CPS. In Elguzouli Daf v Comr of Police of the Metropolis [1995] QB 335 (cited with approval in Brooks v Comr of Police of the Metropolis [2005] 1 WLR 1495, Van Colle v Chief Constable of the Hertfordshire Police [2009] 1 AC 225 and Michael v Chief Constable of South Wales Police [2015] AC 1732) two claimants were arrested, charged and remanded in custody for some weeks before the CPS discontinued proceedings against them. In the first case the claimant contended that the CPS was negligent in failing to act with due diligence in obtaining the results of forensic evidence which showed him to be innocent. In the second case the claimant contended that it should not have taken the CPS three months to conclude that the prosecution was bound to fail. In both cases the Court of Appeal upheld decisions striking out the statements of claim against the CPS. Steyn LJ in the leading judgment said that a citizen who is aggrieved by a prosecutors decision has potentially extensive remedies for a deliberate abuse of power, but the court rejected the argument that the CPS should owe a duty of care towards those it decided to prosecute. The duty of the CPS is to the public, not to the victim or to the suspect, who have separate interests. To recognise a duty of care towards victims or suspects or both, would put the CPS in positions of potential conflict, and would also open the door to collateral interlocutory civil proceedings and trials, which would not be conducive to the best operation of the criminal justice system. Similar considerations are relevant when considering the applicability of article 8 in the context of a decision to prosecute. A decision to prosecute does not of itself involve a lack of respect for the autonomy of the defendant but places the question of determining his or her guilt before the court, which will itself be responsible for deciding ancillary questions of bail or remand in custody and the like. Postscript As mentioned above, Mr Hermer sought during the course of his oral argument to advance an additional argument that the prosecution of the appellant was a breach of her article 8 rights in its continuation, if not in its commencement. This was not how the case had been presented in the lower courts or in the appellants written case or in the statement of facts and issues. In those circumstances Mr Havers QC properly objected to this court being asked to conduct its own factual examination of the CPSs alleged shortcomings during the course of the prosecution. If this had been a live issue, it would have been necessary to consider whether (and, if so, in what circumstances) article 8 may become applicable to the CPS in the continuation of a prosecution, if it was not applicable at the time of its commencement. The court did not hear argument on that question, about which it would therefore not be appropriate to express a concluded view. It may be that a defendants right to a prompt and fair disposal of criminal proceedings, which have been properly commenced, lies in the particular provision of article 6 rather than in the general language of article 8, but without the benefit of considered argument it is better to say no more. Conclusion LORD KERR: At para 75 of the Court of Appeals judgment [2014] 1 WLR 3238 Pitchford LJ said: I would dismiss the appeal. I do not accept that before a prosecutor decides to prosecute she must anticipate and assess all possible consequences to the defendant of prosecution. Among the hierarchy of Convention rights article 5 applies to regulate the defendants right not to be detained arbitrarily. The state has, in performance of its responsibilities under article 5, instituted a system of criminal justice by which a judicial decision is made whether it is necessary to detain the defendant pending trial and, in the event of conviction, whether the defendant should be sentenced to a term of custody. These are matters all within the wide margin of appreciation afforded to member states. It is in my judgment, not for the prosecutor, when making the decision whether to prosecute, save in exceptional circumstances which did not exist here, to concern herself either with the risk of detention pending trial or with the probable sentence on conviction (save perhaps as to the latter for the purpose of assessing the seriousness of the conduct alleged). The prosecutor would in that event be taking on herself the judgment it is for the judicial authority to make. She is entitled to have in mind the obligation of the court itself to act in compliance with the law and the Convention. To give practical examples: should the judge conclude that the prosecution is unfair he or she has power to stay the indictment as an abuse of processor to grant bail; should it emerge that the prosecution is oppressive because the defendant is physically or mentally unwell, the judge has power to adjourn the proceedings and/or to grant bail. (emphasis supplied) These observations must be viewed in light of a later judgment of the Court of Appeal in Zenati v Metropolitan Police Comr [2015] EWCA Civ 80; [2015] QB 758. In that case a police officer, suspecting that the claimant's passport might be counterfeit, charged him with offences under the Identity Cards Act 2006. The claimant was remanded in custody on 10 December 2010. On the same day, the Crown Prosecution Service asked the officer in the case to arrange a more comprehensive examination of the passport to be carried out by the National Document Fraud Unit by 24 December. The request was not forwarded to the officer until 31 December. On 19 January the officer was informed that the passport was genuine. At a plea and management hearing on 4 February, the CPS informed the judge that they needed to obtain a statement from immigration authorities to confirm that the passport was a forgery. The judge allowed 14 days for this to be done. As a consequence, the claimant was detained for more than three weeks after the CPS should have been informed that the passport was genuine. The Court of Appeal found that this was capable of amounting to a breach of article 5(1)(c) and article 5(3). At para 44 Lord Dyson MR said: if the investigating authorities fail to bring to the attention of the court material information of which the court should be made aware when reviewing a detention, this may have the effect of causing a decision by the court to refuse bail to be in breach of article 5(3). The investigating authorities must not prevent the court from discharging its duty of reviewing the lawfulness of the detention fairly and with a proper appreciation of all the relevant facts of which the authorities should make the court aware. Unless this is done, there is a risk that the court will make decisions which lead to arbitrary detention in breach of article 5(3). The propriety of continuing a prosecution must be kept under review by prosecuting authorities, not least for the reason which the Master of the Rolls articulated. In this case, the possibility of a defence under section 31 of the 1999 Act was in play (or should have been) from the earliest stages. The view taken by Ms Davison that the period which the appellant had spent in Yemen precluded such a defence was misconceived for the reasons given by Lord Toulson. Although it did not feature in the case, there is, therefore, a real issue as to whether the appellants detention beyond the time that it should have been recognised that she had an unanswerable defence under section 31, constituted a violation of her article 5 rights. If a decision to prosecute resulting in detention is capable of amounting to a breach of article 5, it is capable of interfering with article 8. In Norris v Government of the United States of America (No 2) [2010] 2 AC 487 Lord Phillips said this at para 52: It is instructive to consider the approach of the Convention to dealing with criminals or suspected criminals in the domestic context. Article 5 includes in the exceptions to the right to liberty (i) the arrest of a suspect, (ii) his detention, where necessary, pending trial, and (iii) his detention while serving his sentence if convicted. Such detention will necessarily interfere drastically with family and private life. In theory a question of proportionality could arise under article 8(2). In practice it is only in the most exceptional circumstances that a defendant would consider even asserting his article 8 rights by way of challenge to remand in custody or imprisonment: see R (P) v Secretary of State of the Home Department [2001] 1 WLR 2002, para 79, for discussion of such circumstances. Normally it is treated as axiomatic that the interference with article 8 rights consequent upon detention is proportionate. This passage is important in the present context for its implicit acceptance that detention for the purpose of prosecuting a criminal offence is at least capable of engaging article 8. That is not an extravagant proposition. If prosecuting authorities are aware or ought to have become aware that the basis for a proposed prosecution no longer obtains, or that there is a defence available to the defendant which will provide a complete answer to the crime charged, and if they fail to act on that information in order to secure the defendants release, that is an obvious instance of a failure to have respect for the defendants right to a private life. The responsibility of the prosecuting authorities cannot be shirked because the court has a duty to inquire into the basis on which someone continues to be held in custody pending trial. That is a relevant circumstance but it does not relieve the prosecution of its duty to act on a change in circumstances which makes detention no longer justified. This is particularly so where the court, as in this case, was dependent on information which it was the prosecutions obligation to supply which bore on the question of whether the appellant should continue to be detained. A decision to prosecute someone against whom there is evidence that they have committed a criminal offence does not automatically constitute a failure to have respect for that persons private life. Respect may be forfeit by engaging in criminal activity which justifies prosecution, although measures taken to identify an individual suspected of criminal activity may not involve forfeiture of the right see JR38s application [2015] UKSC 42; [2016] AC 1131. In that case there was disagreement between the members of the court as to whether steps taken to identify a minor by publishing photographs of him engaging in criminal behaviour engaged article 8. That debate is not relevant in the present case for it has been accepted that there was an evidential basis for prosecuting the appellant at the time that the prosecution was initiated. On that basis I agree that this appeal must be dismissed. As Lord Toulson has pointed out, the focus of the appellants case has always been that the decision to prosecute constituted the breach of article 8. It was simply not possible to allow a late entry into the field of argument that continuing to prosecute involved such a violation. The respondents had not produced evidence germane to that case and it would not have been fair (even if it had been feasible) to require them to do so. I reach the decision that the appellant must fail in her appeal with regret. This woman, in her short life, has had to endure experiences of the most horrific nature. They have been described in Lord Toulsons judgment. It is not in the least surprising that she had resort to the subterfuge of false papers in order to secure the measure of safety which she believed that this country would afford her. It is sad that her terrible circumstances were compounded by her incarceration at a time when she was vulnerable and defenceless. |
These proceedings were brought by the Financial Conduct Authority (FCA) against Asset Land Investment plc and associated parties, alleging the carrying on of regulated activities without authorisation, contrary to section 19 of the Financial Services and Markets Act 2000 (FSMA). The activities in question related to sales of individual plots at six possible development sites in various parts of the country. The only issue in the appeal is whether these activities amounted to collective investment schemes within the meaning of section 235, and thus regulated activities for the purpose of section 19 (as defined by section 22 and the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544)). (It is convenient to refer generally to FCA as embracing its predecessor, the Financial Services Authority or FSA.) The FCA became aware in early 2007 that Asset Land was selling land to investors, and was representing itself as responsible for seeking rezoning for residential development and for arranging a sale to a developer. Following correspondence with Asset Lands solicitors, SJ Berwin, it accepted assurances that the company would cease to make such representations. In a further exchange in July 2008, SJ Berwin indicated that there were by then 64 plot owners, who had all been informed of the change in the arrangements. They had been offered the choice of exchanging their existing plots for plots that were larger in size and had access to services and roads (enhanced plots), thereby allegedly making it possible for plot owners to apply for planning permission themselves in respect of their individual plots; or of selling their existing plots back to the company for the price paid. It was said that of the 64 owners one had chosen to sell his plot back and the rest had opted for an enhanced plot. On the basis of this and other information provided by SJ Berwin, the FCA closed its inquiry in November 2008. In June 2011 it formed the view that the agreed restrictions on the companys method of working were not being observed. It reopened its inquiry, and gave notice of the appointment of investigators. The present proceedings were begun in June 2012, following a worldwide freezing injunction against the company and Mr Banner Eve. In a judgment given on 8 February 2013 ([2013] EWHC 178 (Ch); [2013] 2 BCLC 480) Andrew Smith J decided that its activities amounted to a collective investment scheme, in breach of the Act. After a second hearing on remedies the judge directed an inquiry into the amounts of restitutionary orders to be made under section 382. He made interim orders for payments totalling over 20m, based on FCA estimates of the amounts paid by investors for their plots, and on the assumption that their residual value, in the absence of planning permission, was nil. There is at this stage no issue before us arising out of those remedial orders (which have been suspended pending the determination of this appeal). The judges decision on liability was upheld by the Court of Appeal, in a judgment given by Gloster LJ ([2014] EWCA 435; [2014] Bus LR 993). Two of the parties Asset Land and its principal owner and director, Mr Banner Eve, appeal to this court. The statutory definition The issue turns on the interpretation and application to the facts of section 235, which reads as follows: 235: Collective investment schemes In this Part collective investment scheme means any (1) arrangements with respect to property of any description, including money, the purpose or effect of which is to enable persons taking part in the arrangements (whether by becoming owners of the property or any part of it or otherwise) to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income. (2) The arrangements must be such that the persons who are to participate (participants) do not have day to day control over the management of the property, whether or not they have the right to be consulted or to give directions. (3) The arrangements must also have either or both of the following characteristics (a) the contributions of the participants and the profits or income out of which payments are to be made to them are pooled; the property is managed as a whole by or on (b) behalf of the operator of the scheme The background and general purpose of the legislation are described by Lord Sumption. In Financial Services Authority v Fradley [2005] EWCA 1183; [2006] 2 BCLC 616, para 32, Arden LJ gave helpful guidance as to the correct approach to construction of the relevant section: First section 235 is drafted in an open textured way in that it is drafted at a high level of generality and uses words such as arrangements and property of any description, which have a wide meaning. Secondly, the application of section 235 depends on the specific facts of the case and in the event of a dispute those facts will have to be determined by a court of law on the evidence before it. Once those facts are found, then it is unlikely that an appellate court will set those findings aside unless the judge was plainly wrong. Thirdly, since contravention of the general prohibition in section 19 may result in the commission of criminal offences [subject to section 23(3) of FSMA], section 235 must not be interpreted so as to include matters which are not fairly within it. We have been referred to comparable legislation, and related authorities, from other Commonwealth countries. However, the wording varies, sometimes significantly. For example, the Australian Corporations Act 2001, Part 1.2, applies to a managed investment scheme, but refers in the definition of that expression, to investors control not over management of the property, but over the operation of the scheme. Such differences make it advisable to keep the discussion within the ambit of the United Kingdom statute and authorities decided under it. Section 235 and land banking The possible application of section 235 to so called land banking arrangements was given prominence by the publication in March 2006 of draft FSA guidance, which became section 11 of its PERG Manual. We were told by Mr Peacock QC for the FCA that this was a response to the proliferation of schemes offering investors the opportunity to participate in land development projects. As illustrated by the present case, large sums of money may be involved. In the earlier schemes the promoter would often be subject to a contractual obligation to negotiate a sale to a developer, and would retain a call option over individual plots. Once it became known that such arrangements would be regarded as unlawful under section 235, and often following legal advice, adjustments were made to the schemes to keep them outside what was thought to be the ambit of the section. As already noted, the present is such a case. Another reported example of such changes in a land banking scheme (in a director disqualification case) is described in the judgment of Hildyard J in Secretary of State for Business Innovation and Skills v Chohan [2013] Lloyds Rep FC 351 (paras 73ff). He quotes (para 88) the advice of leading counsel (Mr Blair QC) summarising the changes then thought necessary to comply with the law in the light of the guidance: To be safe, the scheme must ensure that the owners actually control the management of their property (and that any management that is carried out on their behalf by the promoter is done on an individual basis). And the scheme must ensure that the owners are not subject to rights or duties, as against the promoter, or anyone else, that could lead to the conclusion that they were locked into any kind of collective management or development of the land. It is the FCAs case that in many instances the wording of brochures, marketing material and contracts ignored reality. The more unscrupulous operators simply took to making covert as opposed to overt representations, and promises to investors regarding the planning or rezoning gains that they would procure for the site. Whatever was said, the true object of the schemes, at least as understood by investors, was to enable them to benefit from an increase in the collectivised value of the individual plots, to be brought about by the operators supposed expertise and experience in the rezoning process, without any real involvement by investors in the management of that process. Although individuals could sell their plots at any time, this was not what was expected to happen. Other schemes have related to different forms of land exploitation. In Financial Conduct Authority v Capital Alternatives Ltd [2015] EWCA Civ 284, [2015] Bus LR 767 (Capital Alternatives) the Court of Appeal considered two schemes, one relating to exploitation of a rice farm in Sierra Leone, the other to tradable carbon credits in respect of forest areas in Australia, Sierra Leone and the Amazon. It will be necessary to consider some aspects of the judgment in due course. This appeal raises the general question whether the FCAs understanding of the law is correct, and specifically whether the law was correctly applied to the facts of the present case. It has potentially wide ranging significance for the application of the Act to this and similar arrangements. In re Sky Land Consultants plc Before turning to the judges findings in detail, it is convenient to refer to the judgment of David Richards J in In re Sky Land Consultants plc [2010] EWHC 399 (Ch) (Sky Land), which has been influential in subsequent cases and in FCA practice. It involved a land banking arrangement similar in many respects to the present. It was held to amount to a collective investment scheme within section 235. In that case, as in the present, the company purported to change its practices following intervention by the FCA. The changes were held by the judge insufficient to take it outside section 235. The case concerned two sites, the Crewe land and the Winterton land, involving sales respectively of some 56 and 98 individual plots. The companys option agreements for both sites stipulated the terms of any future transfers of individual plots, including a restrictive covenant precluding residential development without the consent of Sky Land (paras 22, 25). In the first period investors were given the clear understanding that the company would seek to obtain planning permission for each site as a whole, and would bear the full cost of doing so (paras 29 33). Its website identified by name its planning consultants and planning solicitors. The judge noted the common expectation (though not formally agreed) that in the meantime the land would remain in the occupation of the original owner and would continue to be farmed (para 34). Following the intervention of the FCA, the company agreed to write to investors indicating that the restrictions would be removed, that Sky Land cannot and will not play any further role in the development of the site, and that the individual owners would need to make their own arrangements to realise the value of the site as a whole (paras 37 39). The judge concluded that these statements had not been fulfilled, and that the company had continued as before, representing to investors that it would deal with planning and sale, and undertaking activities for that purpose (para 70). The judge concluded that the arrangements fell within section 235: A scheme whereby investors purchase individual plots within a site on the shared understanding that the company will seek planning permission and market the site including the plots are clearly capable of being arrangements Each of these requirements [of section 235(1)] appears to be satisfied: (i) the arrangements concern land sold off in small plots to investors, (ii) the investors become owners of the individual plots and (iii) the purpose of the arrangements is to receive profits arising from the sale of the individual plots as parts of the larger site. (para 73) He rejected the argument that the property for these purposes should be looked at by reference to individual plots: I consider the property to be the land comprising the individual plots sold to investors. It is that land, very probably as part of a larger site which includes areas retained by the original owner and areas acquired by the company, for which planning permission and a buyer would be sought by the company. The investors participate by each becoming an owner of part of the property. While it is legally possible for an investor to sell his plot on its own, that is not what is intended or likely to happen. The purpose is to obtain planning permission, for, and to sell, the property as a whole. (para 75) On the question whether the individual investors had day to day control for the purposes of section 235(2), the answer depended on the reality of how the arrangements are operated, as to which he saw no real issue: There was no aspect of the management of the property over which the investors had day to day (or any other) control. Steps with a view to obtaining planning permission and with a view to developing or selling the property were in the hands of the company. The physical management of the land continued, as it had before, to be under the control of those farming the land. (para 76) Under section 235(3)(b), the issue was whether the property was managed as a whole by the company. He said: What constitutes management is dictated by the property. Some property, short dated deposits for example, require active and constant management. The management of property of long term nature may involve only intermittent activity. As regards the land in question, management could be said to involve (i) long term goals, such as planning permission, development and sale, and (ii) the short term physical stewardship of the land. The latter was of no real concern to the investors. This was not intended to be an investment in agricultural land the reasonable inference from the evidence is that investors were content to leave it to the company to agree the use of the land pending development or sale. The purpose was to make a profit from an actual or prospective change from agricultural to residential or other use. The management of the property, so far as relevant to the investors, was taking steps with a view to obtaining planning permission and developing or selling the land. Such activities fall naturally within the ambit of management of land. The respondents submission that individual participants were left to deal with their own plots as they see fit has no basis in the evidence. (paras 77 79) This reasoning was in substance adopted in the present case by the judge and by the Court of Appeal. The facts in more detail The judges findings as to the course of dealings between the company and the investors was based largely on the oral evidence of 15 of the latter. Mr Banner Eve was the sole witness for the company, but his evidence was regarded by the judge as generally unreliable. The judges difficulties were compounded by the limited documentary evidence available from the company itself, but also by the FSAs failure to anticipate the need to agree or prove some of the documents (para 21). It is no criticism of the judge that his findings as to how the companys business was in practice conducted, or intended to be conducted, are lacking in precision on some aspects. Happily there is no significant disagreement on matters material to the issues in the appeal. Asset Land Associates Ltd (later Asset Land Investment plc) was incorporated in April 2005. It was owned (as to 95% of its shares) by Mr Banner Eve and his wife, who were also directors. Mr Banner Eve controlled its day to day activities. Some later purchases were made in the name of Asset LI Inc, a Panamanian corporation, of which Mr Cohen (another defendant) was a director. The judge found that Mr Banner Eve was as fully involved with the activities of that company as with the English company. Nothing turns on the difference for the purpose of this appeal. I will refer generally to both as Asset Land or the company. The first site was in South Godstone. It can be taken as typical. The company acquired two sites in February 2006 followed by a third in October 2007. The judge found (on the basis of inferences from bank statements) that the company began to sell plots at South Godstone and receive payments for them shortly after 2 February 2006. It sold plots at trade exhibitions and through telephone sales. In 2007 it began to sell properties through off shore brokers, including an agency called Services Global Destinations (Global) in Spain. During the life of the project some 300 to 400 investors bought plots at South Godstone. The site has never been allocated for development, nor sold to a developer. A valuation report prepared in March 2013 by consultants for the FCA recorded that the site was in the green belt and had currently little prospect of development. There is no evidence of what attempts (if any) were made by or on behalf of the company (or anyone else) to secure rezoning, or to attract the interest of developers. Later sites acquired and apparently marketed in the same way were in Liphook (acquired on 30 April 2008), Lutterworth (11 August 2008), Newbury (20 March 2009), Harrogate (14 May 2010), Stansted (June 2011). They all remain unallocated, and are likewise assessed as currently having little prospect of development. The judge accepted the investors evidence as showing how the company sold plots between July 2007 and 2012: A representative telephoned the potential investor, often by way of a cold call but sometimes in response to an interest in making an investment or buying land expressed over the internet or elsewhere. There generally followed several telephone discussions between Asset Land and the investors. They were given extravagant expectations about the profit that they were likely to make from a short term investment, often within no more than a year or two. Some, but by no means all, potential investors were sent brochures in hard copy or electronically If the investor agreed to invest in a plot (or plots), he or she paid a deposit, generally of 10% of the price. Before paying a deposit, most investors had received at least one letter from Asset Land, and the represented defendants rely upon wording in small print by way of a footer, and its wording was similar to that on the so called check box form [see below] Some time after paying their deposit, the investors were required to pay the rest of the price. After they had done so, Asset Land sent them two copies of a contract for the purchase of the plot(s) that they were buying. It was not Asset Lands practice for investors to have a copy of the contract before they had fully paid for their plot(s) (paras 62 64) This account was also confirmed by the contents of a draft letter prepared for a potential investor in November 2011, which spoke of re zoning being anticipated for two to three years, after which the land would be entered into the LDF (Local Development Framework), and then made available to developers to purchase. Investors were told to have their signature to the contract witnessed, in some cases by a solicitor, but none was encouraged to seek legal or other professional advice. Those who spoke of using a solicitor were told that it was unnecessary to do so (para 65 67). The documents sent to a prospective investor included a so called check box form, to be completed and returned to the company. The form included confirmation that the investor had read and understood a disclaimer (which appeared as a footer in smaller print at the bottom of the form). This noted that the company did not give investment advice or offer regulated investment products to the public, and that having sold the land the company does not pursue re zoning or planning permission , and neither it nor any person connected with it would have any role in pursuing re zoning or planning permission. The contract itself contained what the judge called a representations clause, by which it was confirmed that no representations were relied on outside the contract; and a services clause, which provided that the seller would not apply for planning permission for the property or provide any other services amounting to regulated activities under the Act, although it reserved the right to apply for planning permission for land retained by itself. Notwithstanding these written provisions, and notwithstanding differences in the detailed understanding of the various witnesses, the judge found that they all shared a consistent understanding of the structure of the scheme: i) That Asset Land would seek to progress planning procedures with a view to the sites being used for housing. ii) That Asset Land would then procure their sale, probably to developers. iii) That the investors who sold the plots at the site would be paid a share of the total consideration paid by the purchaser. (paras 71 76) The judge found further support for his view of the arrangements in the evidence of a Sky News reporter, Mr Mansfield (paras 78 80). In spring 2012, in connection with a programme about land banking, he had contacted the company in the guise of a potential investor. In a secretly recorded discussion with a company representative (Ms McKenna) about the Harrogate and the Stansted sites, he was told how Asset Land operated. This involved buying sites by reference to strict criteria, usually with gas, water and electricity all plugged so that a developer can build quickly to maximise his profit margins . The right to build would be sold on to developers under sealed bids. The company was nothing to do with planning permission since it was not involved in construction; but it would, she said, walk (him) hand in hand right up to the end of the investment, advise him of a fair and true market offer, and then return the title deeds to the developer from whom he would by return of post to (his) bank account get the profit (para 78). After agreeing to invest in a plot on the Harrogate site, Mr Mansfield met Mr Cohen (director of ALI Panama) who emphasised that he would have title to his plot and be in control of it: All we do is re zone [the land], get a percentage of the value lifted and then, thats it, were out of it people who buy it, normally construction companies come in and buy it and they put in for the planning and everything. When an offer was made, all the investors would be made aware of it, and they would have to agree the price because otherwise an investor might be left out in the cold anyway because [the developers would] just leave [his plot] as gardens. To avoid the risk of two or three people saying Oh no, were not going to sell and holding the process up for everybody else, they would normally say its 50% who say yes, and then in the contract you have to agree (para 79). The judge summarised the effect of Mr Mansfields evidence: consistently with the FSAs case, the scheme explained to Mr Mansfield was that (i) Asset Land would seek to have the sites re zoned, and (ii) Asset Land would arrange for a third party, in all likelihood a developer, to make an offer for the site as a whole. Mr Cohen recognised that a minority were legally entitled to refuse the offer, but the scheme operated on the basis that it would make no financial sense to do so and in reality they would have to sell. (para 80) Ms McKennas reference to sale by sealed bids also reflects email exchanges in 2010 between Mr Banner Eve and Ms Smeed Hughes (who worked for the company and became a friend: para 25). The judge noted these emails in support of his conclusion that, to Mr Banner Eves knowledge, brokers were telling investors that sites would be sold as a whole with the obvious inference that the company would arrange the sales (para 150). One in January 2010 spoke of the land at South Godstone being sold by sealed bids; another in July spoke of land having been sold at auction; and the third in August commented that Global seemed to adopting different pitches as to how the land would be sold, a favourite being the sealed bids routine, or developers already lined up to purchase. Management activity As already noted, a significant feature of section 235 is the reference to management of the property, either by the operator or by (or under the control of) the participants. The judge did not find it necessary to make detailed findings on the nature and extent of management activity under the arrangements. In agreement with David Richards J in Sky Land he held that steps with a view to enhancing the development value of the land and selling to a developer constituted such management. That approach has since been endorsed by the Court of Appeal in Financial Conduct Authority v Capital Alternatives Ltd [2015] EWCA Civ 284; [2015] Bus LR 767, where management of a development site was contrasted with that of the agricultural property in issue in that case: The [Sky Land] judgment rightly concentrated on the management with which the investors were concerned, namely that which would lead to the intended profit. In the present case that is the management of the farm with its buildings, roads, fields, irrigation areas, machinery and equipment, appurtenances and labourers. (para 85, per Christopher Clarke LJ) Similarly Vos LJ highlighted the need to read the word managed in the context of the particular type of scheme in issue (para 120): The arrangements that need to have the characteristic of being managed as a whole are those relating to one or more of the acquisition, holding, management or disposal of the property. The question of whether the property is managed as a whole may be answered differently depending on which of these types of arrangements have been made in order to produce the intended profits or income. For example, in the land bank cases, the arrangements relate to the obtaining of planning permission which is the core management activity from which profit is expected to arise on disposal. That is plainly a management of the property as a whole The reasoning of the courts below The High Court The judge first addressed the question whether the company had changed its operations after the FSAs intervention in 2007. He held that it continued to lead investors to believe that it would work with the planning authorities to enhance the prospects of housing development, and arrange for planning applications. It also led investors to think that the whole site would be sold together and the proceeds distributed. That was the obvious way for the plots to be sold, and the companys representatives confirmed that this was what would happen (paras 109 110). Under the heading the disclaimer defence: the representations clause and the services clause, he considered arguments relating to the interpretation of the clauses and the application of the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) (paras 114 141). He concluded that the representations clause did not assist the defendants because properly interpreted it did not cover what the brokers told investors, it was not binding under the 1999 Regulations, and it was of no effect under the Misrepresentation Act 1967; likewise the services clause did not assist because, even assuming that it could be read as submitted by the company, it was not binding under the 1999 Regulations (para 141). He identified three issues under section 235: i) Were there arrangements within section 235(1)? ii) Were the arrangements such the investors did not have day to day control? iii) Were the arrangements such that the property was managed as a whole by or on behalf of the operator? He answered all three in favour of the FCA. On the first, adopting the reasoning of David Richards J, he held that there were arrangements within section 235: I conclude that, as the FSA submitted, the brokers (or other sales representatives) of Asset Land and investors with Asset Land made arrangements when plots were marketed and investors paid a deposit that they should acquire land at a site, and that the object of the arrangements (as evinced in the exchanges) was that Asset Land should achieve a sale of the site (or a substantial part of it) after it had sought to enhance its value and so the price that it would attract by improving the prospects for housing development (through the site being re zoned, if not granted planning permission), the price paid for it being shared between the owners of the land. (para 157) He rejected the arguments of Mr Coppel QC (for the company) based on the varying understandings of different investors, and the lack of mutual expectation of adherence to [what was planned]. The investors all had a shared understanding of the essential features of the schemes. It was enough that the understanding was reasonably based on what they were told by the companys representatives, whether or not the company had any intention of acting in accordance with them (paras 159 160). He also rejected arguments based on non contractual disclaimers in the letters, including the footers in the check box forms. The footers were verbose and not prominently presented and did not in terms exclude the possibility of a planning application by an agent acting for the company. The investors reasonably continued to rely on what they had been told. The whole structure of the scheme called for plots to be sold together and this could be coordinated only by Asset Land (paras 161 163). Finally he rejected the argument that the company and the investors could not be found to have entered into arrangements inconsistent with the contracts signed by them: People do not live their lives only by reference to their legal rights, and often manage their affairs, and make arrangements, on the basis that the legal framework in which they operate will not be invoked, or is unlikely to be invoked. Non legal arrangements are commonly made in parallel with legal contracts: they do not operate only outside territory occupied by contractual arrangements. Nor are non contractual arrangements and contracts inconsistent if they express differences about what the parties are to do: they operate on different levels (para 164) On the second issue (section 235(2)), again following the reasoning in Sky Land, he held that the relevant property was each site acquired by Asset Land (para 157), and that on that basis none of the investors had any control over the site as whole (para 168). He reached the same view even treating the relevant property as the individual plots, given that the key feature of management was to do with enhancing the development status of the land and arranging a sale, which was in the hands of Asset Land. It was true that investors had the right as owners to deal with their land, and to apply for planning permission: But section 235(2) is not about what legal rights investors had over their plots. First, the subsection is directed to having actual control, and requires that the investors must actually exercise that control sufficiently to be regarded as being in effective control. Secondly, [citing Sky Land] section 235(2) is about what the arrangements were and the reality of how [they] are operated. In reality the arrangements described by Asset Lands representatives and therefore contemplated by the investors could not work if investors in fact exercised the rights to which Mr Coppel referred. (para 169) On the third point (section 235(3)(b)) he said: , the essential nature of the schemes was that plots were investments, and the plan was that they were to be sold as part of the sites after their value had been enhanced through planning permission or the prospect of development after re zoning. The management of the property relevant for identifying the characteristics of the arrangements is therefore, as I see it, management directed to what David Richards J called in [Sky Land] at para 78, the long term goals. The arrangements were that Asset Land would deal with those management matters and the whole structure of the schemes made it obvious that only Asset Land would do so and realistically investors could not do so. (para 172) The Court of Appeal The Court of Appeal in substance adopted the reasoning of the judge on the main issues. Without disrespect it is unnecessary to repeat its reasoning for the purposes of this judgment. It will be sufficient to refer below to those aspects which are subject to specific challenge by the appellants. The appellants arguments in the Supreme Court General approach In this court, Mr Michael Blair QC for the appellants submitted that, given the serious consequences of a finding that the arrangements fall within section 235, a conservative approach to construction is appropriate, and one which promotes certainty. He accepted (appellants case, para 58) the judges finding as to the consistent understanding of the arrangements shared by the investors (para 28 above): that the company would progress the necessary planning procedures, and procure sale of the sites, and the investors would share in the proceeds. But he criticised the legal conclusions drawn from those findings by the courts below. His submissions were grouped under four principal grounds (case, para 59ff): i) Ground 1 The Court of Appeal erred in its identification of the component parts of the arrangements, and in particular gave inadequate weight to an essential feature of the arrangements, that each investor was intended to (and in fact did) own his plot(s) outright. ii) Ground 2 Under sections 235(2) and (3) the court erred in treating the property as each of the sites acquired by the company, rather than the aggregate, from time to time, of the all plots sold to and owned outright by individual investors, together with all the investors appurtenant rights. Applying that approach to section 235(2), it should have held that the arrangements left investors with the necessary control: they owned their individual plots outright, had full control over their inclusion in the scheme or eventual sale, and so between them had day to day control of the management of all the relevant property. iii) Ground 3 Under section 235(3)(b) the critical question was whether the arrangements reserved to the investor the final decision as to the exploitation of the property pursuant to the arrangements. The answer must be yes. Because each investor was the outright owner of his plot, only he could make the final decision to sell (or not sell) his individual plot. iv) Ground 4 The interpretation adopted by the courts below would if uncorrected potentially interfere with a wide range of legitimate business arrangements that should not be characterised as Collective Investment Schemes. These grounds were developed in impressive detail in the written and oral submissions. The following is no more than a summary of what I understood to be the main points. Ground 1 arrangements Under the first ground (para 87ff), the appellants accepted that the company made arrangements for the purpose of section 235. However the courts had extended that concept beyond the legislative intention, for reasons discussed under four sub issues: whose arrangements?, representations, pick and choose, and timing. The overall thrust was that it was wrong to look for a form of compact between the promoter and potential participants. In the interests of certainty in the application of the law, the relevant arrangements had to be those made by the operator himself. They were to be judged objectively, as by an independent observer, taking account of their physical structures and operating machinery, the property to be subject to the arrangements, and representations made by or on behalf of the promoter as to their content; but not of investors understandings, save so far as they were evidence of what representations were actually made. Furthermore it was wrong for the court to pick and choose between the different elements, oral and written, of the arrangements (such as the contractual documents, which were an intrinsic part of what was proposed by the operator). The Court of Appeal had also been wrong also to focus on the early stage of evolution of the arrangements, rather than looking at their whole period. Ground 2 property and day to day control The second ground (paras 119ff) was similarly divided into four sub issues: property, purpose, exercise and legal rights and realities. In substance they addressed two linked issues of interpretation under the section: identification of the property (relevant to both sections 235(2) and (3)(b)), and the meaning of day to day control over management (relevant to section 235(2)). First he criticised the Court of Appeal for wrongly treating the judgment of David Richards J in Sky Land as equating the property with the site acquired by the promoter, rather than the aggregate of the interests owned by the investors. He illustrated the distinction by reference to the example of a property development consisting of individual units and common parts, such as a block of flats, where the flat owners individual rights consist of their ownership of their own flats, and also rights relating to the common parts, to be exercised jointly with other flat owners. On the Court of Appeals interpretation, the flat owners could never have day to day control of the property. By contrast, he submitted, under the manifestly better approach in Sky Land, the arrangement would not be within section 235 because the individual flat owners would have day to day control of their flats and of their rights over the common parts, which together constituted the relevant property (case para 128). He also criticised the courts below, following Sky Land, for directing attention to the purpose of the arrangements, which is a word used in subsection (1) but not subsection (2). The steps taken to achieve the purpose of enhancing the planning status of the site and attracting a developer did not require the company to have any control over management of the property. They could have been undertaken in relation to land owned by strangers. The only essential acts of management relating to individual plots were the decisions first whether or not to withdraw from the arrangements and secondly whether or not to sell to a particular buyer and on what terms. These were under the control of the individual owners. The judge and the Court of Appeal had been wrong also to direct attention to the question not of control as such, but of how it was exercised in practice (following Hamblen J in Brown v InnovatorOne plc [2012] EWHC 1321 (Comm), para 1170). Mr Blair submits that this is a misreading of the section, under which the question is whether the investors have day to day control, not whether or how they exercise it. Further, the concept of control is concerned with the physical and legal aspects of the arrangements, not with their purpose or effect (nor how it may have been represented to investors). It is the legal rights and duties which reflect the realities of the scheme. Ground 3 management by the operator as a whole Mr Blairs submissions under this ground (paras 175ff) were the counterpart of those under Ground 2. The relevant property is the aggregate, from time to time, of the all plots owned by the individual investors, and it is they who have ultimate control over its management. He drew an analogy with FCA guidance as to the role of a managing agent in respect of a block of flats (PERG 11.2). The effect of this guidance, as he submitted, was that an arrangement with respect to multiple units of property would not entail management of the property as a whole by or on behalf of the operator if the arrangement has the following characteristics: (i) individual investors each own a unit of property outright; (ii) the final decision as to whether or not to deal with or exploit the unit in question (to let out the flat, or sell the plot) rests with the owner of that unit; and (iii) the investor receives any net proceeds of dealings with his individual unit. The critical question was whether the arrangements reserved to the investor the final decision as to the application of his own unit. It was immaterial that they would in practice follow the recommendation of the promoter, so long as they retained the right to exercise their own choice as to how to proceed, whether on their own or in collaboration with other unit holders. Ground 4 conservative interpretation Finally (paras 189 191) he submitted that section 235 should not be stretched to cover issues for which other remedies were available, for example misrepresentation, breach of contract, or unenforceability of unfair terms in contracts. There were well established remedies for such practices, in private law or under the comprehensive regulatory regime for consumer protection. The expansion of collective investment schemes in order to bring such ordinary commercial transactions within the regulatory ambit of the FCA was neither necessary nor sensible. Discussion Arrangements I can deal shortly with the first ground. It was not in dispute, as David Richards J held, that section 235 can in principle cover a scheme of the present kind, involving sale of a property in small units to investors with a view to participation in the development profits of the whole site. The word arrangements has its ordinary meaning, and there is no dispute that Asset Land entered into arrangements within the meaning of the section. The content of the arrangements was a matter of fact for the judge. Mr Blair accepts his finding as to the consistent understanding of the investors of what was involved. He argues that the focus of attention should have been on the arrangements as made by the operator, including the documents prepared for that purpose, rather than as they were perceived by others. In my view this is an artificial and unrealistic distinction. The judge was entitled to take the view that the understandings of the investors conformed to what was intended by the operator. Similarly he was not required to give special weight to contractual or other documents, without regard to their context. The four sub issues raised under this head by Mr Blair are in truth no more than factors which may be relevant in the overall assessment, none of them definitive. The judge concluded that arrangements within the section were made when plots were marketed and investors paid their deposits, the object of the arrangements being that the company should achieve a sale of the site after seeking to enhance its value by improving the prospects for housing development, the price to be shared between the owners. That conclusion was amply supported by the evidence, and discloses no error of law. The property and its management Grounds 2 and 3 overlap and it is convenient to deal with them together. It is clear in my view that the relevant property for the purposes of section 235(1) was each of the companys sites taken as a whole, not the individual plots. That was the property whose sale was to lead to the profits which were the object of the exercise, and which brought the scheme within the scope of the section. The appellants, as I understand Mr Blairs submissions, do not dispute that the property means more than the individual plots. However, it is, he submits, not so much the site as acquired by the company, but the aggregate of all the plots owned by the individual investors. It is by virtue of those individual ownerships, viewed collectively, that they have ultimate control over its management. Under his suggested analogy with a block of flats, section 235 would not apply, because the individual flat owners have day to day control of their flats and of their rights relating to the common parts, which together would constitute the relevant property. In my view the distinction drawn by Mr Blair is not one of substance. The property for the purposes of subsection (1) is the whole site. That definition remains the same in principle throughout the section. But management control of the property under subsections (2) and (3) may be achieved in different ways. It is necessary to consider the mechanisms by which the participants on the one hand or the operator on the other manage or have management control of the property. The mechanisms may not be the same in each case, and they need not be legal mechanisms. That follows from the acceptance that the term arrangements is not limited to agreements binding in law. By the same token, the control envisaged by those arrangements is not confined to legal control. Have control in subsection (2) is not a technical term. In context, as David Richards J held in Sky Land, it must be taken to refer to the reality of how the arrangements are to be operated, which may or may not involve rights or powers enforceable in law. Nor is there any absolute rule for what Mr Blair calls multiple units of property, including blocks of flats. The FCAs guidance (PERG 11.2) draws the correct contrast: If the substance is that each investor is investing in a property whose management will be under his control, the arrangements should not be regarded as a collective investment scheme. On the other hand, if the substance is that each investor is getting rights under a scheme that provides for someone else to manage the property, the arrangements would be regarded as a collective investment scheme. The judge found that the facts of the present case brought it within the FCAs second category. He was clearly entitled to do so. Mr Blair does not, as I understand him, challenge the judges view (following Sky Land) that the relevant management of the property as a whole comprised the steps necessary to obtain planning permission and secure a sale to a developer. It was no part of the arrangements that the investors should have any part in, or control over, those management activities. Their ability as individual owners to determine ultimately whether or not to participate in a sale cannot be equated with control of its management in the meantime. In any event as the judge found, it would make no sense for them in practice to opt out of the realisation of the profit which was the only purpose of the arrangements. Even if one directs attention to the rights attached to individual units, there is no parallel with the position of individual lessees in a block of flats. They have day to day control over the management both of their own flats and (collectively) of the common parts, which together make up the relevant property. That remains the position even if in practice they delegate part of that control to a managing agent. It represents the substance of the arrangements from the outset. Under the present arrangements, by contrast, the investors ownership of the individual units was not linked to any exercise of management control, individually or collectively. It was not even envisaged that the plots should be separately identifiable on the ground. The move to marketing of so called enhanced plots did not alter the position. That may have been designed in theory to enable investors to promote individual developments, although the practicalities of that were not put to the test, nor explored in evidence. In any event, the possibility of some individual management activity of that kind added nothing to their management control of the remainder of the property. Conversely, turning to subsection (3)(b), under the arrangements as found by the judge control of the management activities for the property as a whole lay with the company. It was acting as the operator of the scheme, not as mere managing agent for the individual owners. It is true that its control was not underpinned by any legal rights over the units making up the property. That did not affect the substance of the arrangements, even if it might have been an obstacle to their effective implementation. Indeed it might have been thought that lack of legal control would lead to a need for increased management activity to ensure that individual plot owners continued to be committed to the project as it progressed. Unsurprisingly, it was no part of Mr Blairs case that the companys management activity should be disregarded because it lacked reality. That would have been tantamount to an admission that the whole scheme was a fraudulent sham. For the purpose of applying the definition under section 235, the judge was entitled to take the arrangements as found by him at their face value. The issue was not whether those arrangements were good or bad, or even dishonest, but whether they fell within the statutory words. For these reasons I would reject the appeal under Grounds 2 and 3. On this view, no separate issue arises under Ground 4. I accept of course that section 235 should not be stretched to cover matters covered by other legal remedies, under common law or statute. However, the judges application of the section to the facts as found by him involved no distortion of its natural meaning or its intended purpose. Conclusion the appeal. In conclusion, I would uphold the decisions of the courts below, and dismiss LORD SUMPTION: (with whom Lord Mance, Lord Clarke and Lord Hodge agree) I agree with Lord Carnwath that this appeal should be dismissed. My reasons are similar to his, but I propose to express them in a judgment of my own because this is the first case to reach this court or the Appellate Committee of the House of Lords about one of the more problematic features of the United Kingdoms system of statutory investor protection, namely the regulation of collective investment schemes. The appeal is about a scheme for investing in land with development potential. Such schemes are commonly referred to as land banks, although the variety of arrangements that carry that label is so wide that the term is probably better avoided. The question at issue is whether the arrangements made by companies controlled by Mr David Banner Eve to enable members of the public to invest in land constituted a collective investment scheme regulated by the Financial Services and Markets Act 2000. Asset Land was not authorised under the Act to establish or operate collective investment schemes. The facts Shorn of peripheral detail, the facts are straightforward. Between February 2006 and October 2007, Asset Land Investment plc bought three adjoining parcels of greenfield land at South Godstone in Surrey with a view to consolidating them into a single site. The object was to increase the value of the site by persuading the local authority to re zone it for housing development. The site would then be sold as a whole at a profit to a developer. Shortly after acquiring the first parcel the company began to subdivide it into plots and to offer the plots for sale to investors. Ultimately, the consolidated site was divided into 319 plots. Subsequently, another site was acquired at Liphook in Hampshire. A Panamanian company called Asset LI Inc, in which the judge found that Mr Banner Eve was also involved, acquired further sites at Newbury, Lutterworth, Harrogate and Stansted. The additional sites were acquired with the same object and were treated in the same way. Like the judge, I shall refer to the English and the Panamanian company indiscriminately as Asset Land. At the trial, there was much dispute and a good deal of evidence about the manner in which the plots had been marketed to investors. The judge found that it was done orally, mainly by telephone, and usually began with a cold call. Potential investors were given extravagant expectations about the profits to be made, often within a year or two. If the investor decided to proceed, he was required to pay a deposit, generally 10% of the price. Sometime after the payment of the deposit the investor was required to pay the balance of the price. After the investor had paid the full price, he received two copies of the contract for the purchase of his plot(s) from the relevant Asset Land company. He also received a check box form. Once these documents had been signed and returned, the investors plot was conveyed to him and in due course he received a Land Registry certificate of title. Asset Land retained title to the roadways between the plots, the access points to the site and certain other common spaces. During the marketing process, different investors were given different understandings of how the development potential would be realised. However, the judge found that the salesmen gave them all to understand that the scheme had three basic features, which he summarised as follows (para 71): (i) that Asset Land would seek to progress planning procedures with a view to the sites being used for housing; (ii) that Asset Land would then procure their sale, probably to developers; (iii) that the investors who sold the plots at the site would be paid a share of the total consideration paid by the purchaser. I shall refer to these as the core representations. On the judges findings, there was no general understanding about how the shares of the total price would be calculated, although one investor seems to have been told that it would be pro rata to the size of each plot. It is, however, clear that it was not proposed to price each plot separately so that if, say, part of the site was approved for affordable housing the owners of plots in that part would get less while others whose plots lay across an access point designated in the planning permission would be able to hold out for more. Each investor would derive his profit from a share of the price realised for the site as a whole. The core representations by which Asset Land explained how the scheme would work did not extend to requiring investors to sell on terms proposed by Asset Land. But the judge went on to find that in practice the whole structure of the scheme called for plots to be sold together and this could be coordinated only by Asset Land (para 162); and that, although each investor could sell, lease, mortgage or occupy his plot as he pleased once he had acquired it, and could apply for the re zoning of the site or planning permission for his own plot, in reality the arrangements described by Asset Lands representatives and therefore contemplated by the investors could not work if investors in fact exercised [these] rights (para 169). The contracts of purchase and the check box form contradicted the representations in a number of respects. In particular, the contracts included a representations clause (clause 14) and a services clause (clause 16). The representations clause provided: The Buyer confirms that there are and have been no representations made by or on behalf of the Seller on the faith of which the Buyer is entering into this Agreement except and to the extent to which such representations are herein expressly set out or form part of written replies by the Solicitors for the Seller to the written Inquiries before Contract raised by the solicitors for the Buyer or the Sellers replies to Property Information Forms. The services clause provided: For the avoidance of doubt, the Seller is not obliged to and will not apply for planning permission in relation to the Property or in relation to the land as a whole of which the Property forms part, nor will the Seller provide any other services to the Buyer following the purchase of the Property by the Buyer to the extent that the provision of such services would constitute the carrying on by the Seller of regulated activities for the purposes of the Financial Services and Markets Act 2000 unless the Seller is authorised under that Act and permitted by the Financial Services Authority to carry on the relevant regulated activities. Notwithstanding the foregoing, the Seller reserves the right to (but is not obliged to) apply for planning permission in relation to any land owned by the Seller which forms part of the land of which the Property forms part. In addition, the check box form included a non contractual confirmation, signed by the investor, that he had read and understood a disclaimer in the following terms: Asset Land Investment plc is not regulated by the Financial Services Authority (FSA) or any other regulatory body. Asset Land Investment plc is not authorized to give investment advice or offer regulated investment products to the public. Asset Land Investment plc offers parcels of land for sale. Asset Land Investment plc does not pursue planning permission or re allocation of the land once it has been sold and as such, this is not to be viewed as a Collective Investment Scheme (as defined by the Financial Services and Markets Act 2000). Neither Asset Land Investment plc nor any person connected with it will have any role in pursuing planning permission as a way of increasing the value of the land. The judge found that the arrangements governing the scheme were contained in the core representations made when the plots were marketed and before the price was paid (para 157). The contract and the check box form came later. The judge rejected the submission that these last documents superseded or supplemented the representations. This was because the services clause dealt with planning permission but not re zoning of the sites, and was in any event unenforceable under the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083); the representations clause was of no effect under the Misrepresentation Act 1967; and the disclaimer was verbose, not prominently presented and would not have been read or understood by many investors. The investors, he said, reasonably continued to rely on what they had been told (para 161). The Financial Services and Markets Act 2000: the general prohibition Section 19 of the Financial Services and Markets Act 2000 substantially re enacts section 3 of the Financial Services Act 1986. It provides that no person may carry on a regulated activity unless that person is authorised or exempt. This is referred to in the Act of 2000 as the general prohibition. In the earlier Act, regulated activities had been defined in the Act itself. But in the Act of 2000, a regulated activity is simply defined as an activity of a specified kind which relates to an investment of a specified kind or is carried on in relation to property of any kind: section 22. For this purpose, specified means specified by the Treasury by statutory instrument. The relevant statutory instrument is the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544). The order identifies specified activities as including (i) activities such as promoting, advising on, managing or dealing in investments; and (ii) establishing, operating or winding up a collective investment scheme: para 51(1)(a) (now renumbered as article 51ZE). Specified investments are identified in Part III of the same order. Although the Treasury is empowered to specify any assets as investments, the order in fact identifies broadly the same kinds of asset as had previously been identified in the Financial Services Act 1986. They comprise shares, bonds and other debt instruments, government and public securities, warrants and tradeable certificates for any of the foregoing, mortgages, options and futures, contracts for differences, units in a collective investment scheme, and similar financial instruments. The statutory consequences of a breach of the general prohibition are severe. The infringer commits a criminal offence: section 23. Any contract made in the course of carrying on the relevant activity is unenforceable: section 26(1). And there are provisions for compensation and restitution in favour of the other party: section 26(2). Collective Investment Schemes Specific provision is made for collective investment schemes in Part XVII of the Financial Services and Markets Act 2000. Chapter I of Part XVII comprises definitions, including the general definition in section 235, which provides: 235 Collective investment schemes. (1) In this Part collective investment scheme means any arrangements with respect to property of any description, including money, the purpose or effect of which is to enable persons taking part in the arrangements (whether by becoming owners of the property or any part of it or otherwise) to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income. (2) The arrangements must be such that the persons who are to participate (participants) do not have day to day control over the management of the property, whether or not they have the right to be consulted or to give directions. (3) The arrangements must also have either or both of the following characteristics the property is managed as a whole by or on the contributions of the participants and the (a) profits or income out of which payments are to be made to them are pooled; (b) behalf of the operator of the scheme. If arrangements provide for such pooling as is (4) mentioned in subsection (3)(a) in relation to separate parts of the property, the arrangements are not to be regarded as constituting a single collective investment scheme unless the participants are entitled to exchange rights in one part for rights in another. (5) The Treasury may by order provide that arrangements do not amount to a collective investment scheme in specified circumstances; or if the arrangements fall within a specified (a) (b) category of arrangement. The rights or interests of participants in a collective investment scheme are referred to in the Act as units: see section 237(2). The statutory definition substantially re enacts section 75 of the Financial Services Act 1986, except that the exclusions which are left to secondary legislation in the later Act are defined in the body of the earlier one (subject to the general right of amendment reserved to the Treasury). Chapter II of Part XVII comprises restrictions on the promotion of collective investment schemes. Chapters III, IV and V then provide detailed schemes of regulation for the three classes of collective investment scheme at which the Act is principally directed, respectively unit trusts, open ended investment companies and recognised overseas schemes. More recently a fourth category has been added by amendment, namely master feeder structures governed by EU legislation for UCITS (undertakings for collective investments in transferable securities), but nothing more needs to be said about these. The definition and its statutory predecessor of 1986 have been regarded as highly unsatisfactory provisions by professional advisers ever since they were first enacted, mainly because of their generality, lack of definition and dependence on secondary legislation to take transactions out of the scope of the legislation which ought not to be there. As its opening words show, section 235 is primarily intended to operate in conjunction with the detailed provisions of Part XVII relating to units trusts, open ended investment companies and recognised overseas schemes, all of which must satisfy the general definition in section 235 in addition to further criteria specific to each of the three categories. In that context, its application is relatively straightforward. However, section 417, which is a general interpretation section covering the entire Act, adopts the definition in section 235 for all other purposes. Most of the difficulties about the definition arise from its application to transactions not covered by Part XVII. Those difficulties were comprehensively examined in a report prepared by a committee chaired by Michael Brindle QC under the auspices of the Financial Markets Law Committee in July 2008 (Operating a Collective Investment Scheme). The litigation arising from land banks has only served to emphasise them. The legislative background Before examining the statutory provisions in greater detail, it is necessary to say something about the background against which they were enacted and their place in the statutory scheme as a whole. The current statutory provisions for regulating collective investment schemes have their origin in previous schemes for regulating unit trusts, ie arrangements under which a manager invests in securities which are then held in trust for participants. Unit trusts became popular during the 1950s, when they largely replaced direct investment in securities for many private investors, especially the less experienced ones. At that time, statutory investor protection was based on the Prevention of Fraud (Investments) Act 1939, which had introduced a licensing scheme for dealers in securities. The Act was replaced by the Prevention of Fraud (Investments) Act 1958. This retained the basic scheme of the 1939 Act but included a special regime for the managers and trustees of unit trusts. They were not subject to the Acts restrictions on dealing in securities, provided that the unit trust had been authorised under section 17 of the Act by what was then the Board of Trade. A substantial body of practice for authorising and de authorising unit trusts was developed by the Board of Trade and its successor the Department of Trade and Industry, which resulted in unit trusts becoming the most heavily regulated financial products in the United Kingdom. In 1981 Professor LCB Gower was commissioned to examine the existing arrangements for statutory investor protection. He reported in 1984 in his Review of Investor Protection, Part I, Cmnd 9215 (1984), making extensive recommendations for overhauling the existing law. One of Professor Gowers principal objections to the then current statutory arrangements was that their coverage was arbitrary and adventitious. They regulated certain modes of investment while leaving unregulated other arrangements which were functionally similar. In particular, he recommended the extension of regulation to other modes of collective investment which operated in a similar way to unit trusts, except that instead of holding a beneficial interest in the assets, the participant had purely contractual rights (as in the case of life insurance) or redeemable shares (as in the case of open ended investment companies). During the consultation process which preceded the publication of his report, the question was raised of regulating alternative investments in physical assets, such as land, wine, bloodstock, works of art and the like. Professor Gower said about this (para 4.03): Although some responses suggested that physicals as well as futures should be regarded as investments, I do not think that this is necessary. Nor, consistently with the provisional views expressed in the discussion document, do I think it necessary to include stamps, medallions, works of art, porcelain, limited editions, and other collectibles, or interests in land providing that the acquirer obtains exclusive control over them and is not in reality buying rights to share in the income or capital appreciation under an arrangement whereby someone else controls and manages them. If the latter is the situation, they should be treated as investments. This would liberalise and strengthen the present law. Professor Gower recommended that all forms of investment should be regulated other than those in physical objects over which the investor will have exclusive control: para 4.29(a). In 1985, the Government published a White Paper, Financial Services in the United Kingdom: A New Framework for Investor Protection (Cmnd 9432) 1985. The White Paper announced the governments intention of introducing new legislation. It declared, at para 4.2: The definition of investments will set the boundary of the regulated area. It is therefore fundamental to the proposed system of regulation. In defining investments the Government proposes, with minor exceptions, to adopt Professor Gowers approach. The definition which will be in the primary legislation will be specific (to provide certainty for practitioners, customers and investors) and wide (to achieve consistency of treatment between different financial services). In addition to securities and other financial products such as futures contracts or options, the legislation would cover participatory rights in other forms of property: para 4.3(iii). But it would exclude property which can be inspected by or for the potential purchaser and which passes under his direct physical control if he buys it: para 4.7(i). Chapter 9 of the White Paper dealt with the specific forms of regulation proposed for unit trusts, in which category it included not only unit trusts properly so called but open ended investment companies and all collective investment arrangements other than pensions and life assurance; para 9.2. The latter were to be regulated under separate statutory arrangements. These principles informed the drafting of Part I, Chapter VIII of the Act of 1986 and Part XVII of the Act of 2000 which replaced it in 2001. In both cases, the draftsman resolved to deal with the regulation of collective investment schemes comprising physical assets as part of the broader system of statutory regulation governing unit trusts and open ended investment companies, which they largely resembled. In keeping with the policy objectives identified by Professor Gower, there is an important difference, which runs through the whole of the Act between financial instruments and physical assets. With very limited exceptions, regulated activities must relate to assets specified by the Treasury in the Regulated Activities Order. They are (as I have pointed out) financial instruments of one kind or another. Regulated activities as defined do not relate to physical or other non specified assets. Collective investment schemes are the one exception to this. They may comprise arrangements with respect to property of any description. The only respect in which the Act regulates non specified assets is that regulated activities include (i) establishing, operating or winding up a collective investment scheme, which may include non specified assets, and (ii) promoting, advising on, managing or dealing in units in a collective investment scheme, which may include non specified assets. In other words, the Financial Services and Markets Act 2000 regulates only the indirect sale or holding through collective investment schemes of non specified assets. It has no application to the direct acquisition, management or disposal of non specified assets such as land. A huckster may engage in all manner of sharp practice in selling land to consumers, in which case he is likely to fall foul of the common law rules concerning misrepresentations and may well infringe consumer protection legislation such as the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) (now in Part 2 of the Consumer Rights Act 2015). But he will not be carrying on an activity regulated by the Financial Services and Markets Act 2000, and will not in general fall under the regulatory powers of the Financial Conduct Authority. Under the Asset Land schemes as found by the judge, Asset Land sold the plots to the investors, but thereafter proposed to do just two things: negotiate with the planning authority to rezone the site and then find a buyer for it. It is accepted by Mr Peacock QC, who appeared for the Financial Conduct Authority, that if Asset Land had simply sold the land and left it at that, they would not have been operating a collective investment scheme. That is plainly right, because land is not a specified asset. Selling it to investors is not therefore a regulated activity. He also accepted that if a planning consultant and an estate agent had come in after the investors had acquired their plots and assumed the functions of negotiating with the planning authority and finding a developer willing to buy the site, the planning consultant and the estate agent would not be operating a collective investment scheme. That is also plainly right. They would simply have been providing professional services to the landowners. Advising, negotiating and finding a buyer might in some circumstances be regulated activities in relation to specified assets, but not in relation to physical assets like land. The Authoritys submission is that it makes all the difference that Asset Land was going to perform all of these functions. But why should that matter? Mr Peacock was inclined to submit that it was because Asset Land set up the whole thing and promoted it as a package. But, with respect, that will not do. The Act does not regulate the establishment or promotion of schemes, unless they are collective investment schemes or involve regulated activities in relation to specified assets. It must first be established that they are. I would agree with the submission, which provided the abiding theme of the Authoritys argument, that it is important when construing a regulatory statute of this kind not to allow technical distinctions to frustrate the purpose of the legislation. But the Financial Services and Markets Act 2000 cannot be construed on the assumption that it was intended to regulate every kind of investment in which members of the public are liable to have advantage taken of them by an unscrupulous intermediary. In the first place, as cases like Office of Fair Trading v Abbey National plc [2010] 1 AC 696 remind us, most regulatory legislation is a compromise between the protection of consumers and the avoidance of regulatory overkill. In a statute such as the Financial Services and Markets Act 2000, which deliberately sets out to regulate some forms of investment but not others, the omission of some transactions from the regulatory net cannot of itself be regarded as compromising the efficacy of the statutory scheme. Secondly, there is, as the White Paper preceding the 1986 Act pointed out, a tension between the need to provide certainty for practitioners, customers and investors, and the need to cast the net wide enough to ensure consistency of treatment between different financial services. The consequences of operating a collective investment scheme without authority are sufficiently grave to warrant a cautious approach to the construction of the extraordinarily vague concepts deployed in section 235. Arden LJ was surely right in Financial Services Authority v Fradley [2006] 2 BCLC 616, para 32, to say that the section must not be interpreted so as to include matters which are not fairly within it. It must, moreover, be interpreted in a way that provides intelligible criteria which can be applied by professional advisers considering schemes in advance of their being marketed. The Treasury has a wide power under section 235(5) to exempt particular categories of transaction, but criminal liability and the avoidance of contracts are not results which can properly be made to depend wholly on the discretion of the Treasury or the enforcement division of the Financial Conduct Authority. It follows that any conclusion that Mr Banner Eve and his companies were operating collective investment schemes must be firmly founded on the language and purpose of section 235, without making arbitrary teleological assumptions. Section 235: general Section 235 begins in subsection (1) with a wholly general description of collective investment schemes which on its own would cover virtually all cooperative arrangements for deriving profits or income from assets. Subsections (2), (3) and (4) narrow down the breadth of that description. They are the heart of the definition. Their function is to give effect to the distinction between direct and indirect dealings, which I have described above. The paradigm cases of arrangements for indirect dealing with assets are the three classes of collective investment regulated by Part XVII to which the definition is primarily directed: unit trusts, open ended investment companies and corresponding overseas schemes. All of these have the common feature that the investors have no control over the assets comprised in the scheme. This is because they have no legal interest in the assets, and in the case of an open ended investment company no beneficial interest either. Of course, other forms of collective investment may exhibit the same lack of control over the assets on the part of the investors, but in different ways. Hence the wider terms of the statutory definition and its application to schemes lying outside Part XVII. Section 235(1): arrangements A collective investment scheme means, as section 235(1) provides, arrangements of the prescribed description. Subsections (1) to (4) all describe the characteristics that the relevant arrangements must have if the resultant scheme is to qualify as a collective investment scheme. Arrangements is a broad and untechnical word. It comprises not only contractual or other legally binding arrangements, but any understanding shared between the parties to the transaction about how the scheme would operate, whether legally binding or not. It also includes consequences which necessarily follow from that understanding, or from the commercial context in which it was made. In these respects, the definition is concerned with substance and not with form. It is, however, important to emphasise that it is concerned with what the arrangements were and not with what was done thereafter. Of course, what was done thereafter may throw light on what was originally understood. It may for example serve to show that some record of the understanding was a sham. It may found an argument that the arrangements originally made were later modified. But it must be possible to determine whether arrangements amount to a collective investment scheme as soon as those arrangements have been made. Whether the scheme is a collective investment scheme depends on what was objectively intended at that time, and not on what later happened, if different. The judge held that the core representations represented a shared understanding about how the scheme would work. On his findings there can I think be no real doubt but that that he was right to say that the mutual understanding based on the core representations constituted arrangements within the meaning of that word in section 235, and that so far as they were inconsistent with those representations, the contract, the disclaimer and publicity material were not part of the arrangements. Section 235(1): with respect to property The next question is: with respect to what property were Asset Lands arrangements with these investors made? The core representations are consistent only with its being the whole of a site. It is not the individual plots. Nor is it, as Asset Land submitted, the totality of the individual plots plus the rights of the plot holders over the roadways, access points and common parts. The reason is that the property referred to in subsection (1) is the property from whose acquisition, holding, management or disposal the profits or income were to be derived. On the judges findings, that was the whole site. It was the whole site that was to be rezoned, and it was the whole site which was to be sold to a developer. The profit which each investor would derive from these transactions would be derived from an aliquot share of the entire sale price for the site. Section 235(2): day to day control The arrangements must be such that the investors do not have day to day control of the management of the property. The judge adopted the opinion of Hamblen J in Brown v InnovatorOne plc [2012] EWHC 1321 (Comm) at para 1170, that the subsection was directed to investors having actual control and required that they must actually exercise that control sufficiently to be regarded as being in effective control: para 169. The Court of Appeal (para 83) agreed with him, but I regret that I do not, essentially for the reason which I have given in para 91 above. Control of property means the ability to decide what is to happen to it. I would accept that that does not only mean the legal ability to decide. It extends to a case where the arrangements are such that the investor will in practice be able to do so. But the critical point is that the absence of day to day control in subsection (2) has to be a feature of the arrangements. This is necessarily prospective, viewed from the time when the arrangements are made. Either those arrangements confer or allow control on the part of the investors or they do not. The test cannot depend on what happens after the arrangements have been made. Nor would a test based on the actual exercise of control be realistic. Some kinds of property require little or nothing by way of management. Some situations do not require any exercise of management control. The question must necessarily be in whom would control be vested were control to be required. For the answer to turn on what exercise of control turned out to be required, would add an arbitrary element to the test which can hardly have been intended. In my opinion, subsection (2) in this case is satisfied for the simpler reason which the judge gave as his main one. The property over whose management the investors must lack day to day control means the property referred to in subsection (1) with respect to which the arrangements were made. The question is therefore whether the arrangements were such that the investors had day to day control of the management of the whole site. This cannot refer to the powers of control exercisable by any individual investor. It is hard to conceive of a case in which an individual investor could ever have day to day control of any more than his own plot. The subsection must therefore refer to the control exercisable by the investors collectively. In the case of Asset Lands sites, the investors collectively did not have the relevant control for two reasons. First, they were not in a position to exercise control of the management of the whole site because the roadways, access points and other common parts were retained by Asset Land. The investors had only easements in respect of those parts. Secondly, even if the investors had been for practical purposes in a position to control the management of the whole site by organising themselves to that end, there were no arrangements to that effect. It follows that the critical part of the definition is subsection (3). Section 235(3)(b): management of the property as a whole Section 235(3) lays down two alternative criteria. The arrangements must be such that either (a) the contributions and the profits or income are pooled, or (b) the property is managed as a whole by or on behalf of the operator of the scheme. The Authority does not rely on (a). That is because the arrangements in this case envisaged the pooling of the proceeds of sale, but not the pooling of their contributions, ie their plots. It follows that the question whether subsection (3) was satisfied depends on paragraph (b). It should be noted that paragraph (b) operates entirely irrespective of whether there is any pooling. It would be the determinative provision in this case even if the arrangements had been that the plots would be individually priced and each investor would receive the price of his own plot. Subsection (3)(b) provides that what has to be managed as a whole is the property the subject of the scheme, not the scheme itself so far as that is different. Acts by way of management of the scheme are relevant only so far as they involve the management of the property. In a classic collective investment scheme, say a unit trust, the property the subject of the scheme will usually comprise incorporeal property such as securities. But where the property of the scheme comprises physical assets, subsection (3)(b) requires the arrangements to be such that the operator manages the physical assets. In this case the property falling to be managed by or on behalf of the operator is, as we have seen, the site. Accordingly, the question is whether, objectively, the functions which the arrangements assigned to Asset Land after the investors acquisition of his plot constituted management of the site. Asset Land had, as I have pointed out, two functions: negotiating with the planning authority and finding a buyer for the site. These two functions amounted to managing the business project, in other words the scheme. But that is not the question. The question is whether, either separately or together, they also constituted managing the site. Management is a protean word which can embrace a wide range of activities involving varying degrees of control over the property being managed. But in section 235 it has a specific purpose. Subsections (2) and (3) together perform two closely allied functions. They describe the classic features of unit trusts and open ended investment companies, under which the investor has no control over the assets. And they give effect to Professor Gowers recommendation that investment in physical assets (which are covered only through the provisions relating to collective investment schemes) should not be regulated if the investor had exclusive control of them. In each case, the section is concerned with arrangements under which the investor exchanges property over which he has entire dominion for units in a larger property over which he has more limited rights. A collective investment scheme may exist in respect of property of which the investors become owners, as section 235(1) makes clear. But their rights in respect of that property are nevertheless limited by the collective nature of the scheme. Section 235(3) identifies two ways in which the investor may part with control over the property. The reason why the subsection treats them as alternative criteria for recognising a collective scheme is that they are functionally equivalent. Subsection (3)(a) refers to cases where the contributions and the profits or income generated by them are pooled, which necessarily imports a loss of control in favour of whoever controls the pool. Subsection (3)(b) refers to cases in which there may be no pooling, but there is an equivalent loss of control to the operator by virtue of his powers of management of the whole property. The fundamental distinction which underlies the whole of section 235 is between (i) cases where the investor retains entire control of the property and simply employs the services of an investment professional (who may or may not be the person from whom he acquired it) to enhance value; and (ii) cases where he and other investors surrender control over their property to the operator of a scheme so that it can be either pooled or managed in common, in return for a share of the profits generated by the collective fund. Unit trusts and open ended investment companies are, as I have said, the paradigm cases in the latter category, and indeed the only cases regulated in detail by Part XVII to which section 235 primarily relates. In the context of land schemes, a good example of a surrender of control by virtue of the arrangements for the management of the property is supplied by the facts of Financial Conduct Authority v Capital Alternatives Ltd [2015] EWCA Civ 284; [2015] Bus LR 767: a farm was divided into plots which were owned outright by investors but run by a manager with complete autonomy over its management: see paras 74 75. It is convenient to deal first with Asset Lands role in finding a buyer. In my opinion, this is an act of management if the arrangements empowered Asset Land to effect a sale on the investors behalf, in the same way as the manager of a unit trust sells securities. The same would be true if the arrangements required the investors to sell on the terms approved by the company. Selling or procuring the sale of an asset is an act of management. The power of disposition which is involved would constitute sufficient control to satisfy the object of section 235(3)(b). This appears to have been the position in In re Sky Land Consultants plc, where the investors entered into a marketing agreement appointing the promoter as their sole agent to sell their plots and gave him a power of attorney for that purpose. The promoter claimed to have abandoned these rights after being challenged by the Financial Services Authority, but the judge found that the changes were notified to only a handful of investors and that the scheme continued to be marketed as before. For that reason I think that that case was rightly decided notwithstanding my reservations about aspects of the reasoning. On the other hand, Asset Lands role in finding a buyer was not an act of management within the meaning of subsection (3)(b) if all that they were expected to do was put a proposal for sale before the investors for them to approve or reject as they saw fit. On that footing the alleged manager had no control at all. The distinction is necessary if there is to be a workable distinction between collective investment schemes and cases in which an intermediary such as an estate agent simply supplies professional services without assuming control over the assets. Some examples will illustrate the point. A wine merchant stores investors wines in specialised storage along with those of other customers, thereby enhancing their value over time. Investors buy flats to let in a block managed by a single manager. Adjoining owners of plots in a commercial forest employ a professional forester to manage the whole forest and sell the timber. The owners of the four flats in a town house get together to instruct an estate agent to sell the whole house as a single property. In each of these cases the owners property or its proceeds are not necessarily pooled, and they do not necessarily have day to day control over all of the property comprised in the arrangement. But, as I have pointed out, paragraph (b) of section 235(3) is an alternative to paragraph (a) and operates entirely independently of any considerations of pooling. Mr Peacock understandably did not go so far as to suggest that these arrangements would be collective investment schemes. But if they are not, then why not? In my opinion, it can only be because in each case the assets were not managed as a whole by or on behalf of the operator of the scheme. This was because the owner retained entire dominion over his property and merely contracted for professional services in relation to its exploitation. On which side of the line does the present case fall? In strictly legal terms, the three core representations did not call for any surrender of control over the plots to an investment intermediary. On the contrary, each investor remained the entire owner and sole controller of his plot and simply counted on Asset Land to enhance its value and find him a buyer. But the transaction cannot be viewed only in legal terms, and the judge has found that the practical consequences of the arrangements went wider than the express terms of the three core representations. He discounted the significance of the investors legal right to dispose of their plots as they pleased, because he considered that the arrangements embodied in the core representations could not work if the investors exercised the rights that they theoretically possessed: see paras 162, 169 of his judgment. The dominion of the investors over their plots, although apparently complete, was in reality an illusion. This was essentially a factual assessment for the judge and, a challenge to it having failed in the Court of Appeal, it could not be right for this court to substitute a different view of its own. On that ground, which is substantially narrower than the submissions addressed to us by the Financial Conduct Authority, but enough for the resolution of this appeal, I agree that the schemes with which we are concerned are collective investment schemes. |
This appeal raises the issue as to whether a third country (ie non member state) national (TCN) otherwise benefiting from the derivative right to reside within the territory of the European Union pursuant to the principle in Ruiz Zambrano v Office national de l'emploi (Case C 34/09) EU:C:2011:124; [2012] QB 265 (Zambrano) enjoys enhanced protection against deportation, such that she can be deported in exceptional circumstances only. In Zambrano, the Court of Justice of the European Union (the CJEU) held that a TCN parent of a Union citizen child resident in Union territory who was dependent on the TCN parent, was entitled to a right of residence if expulsion of the TCN parent would require the child to leave the territory of the Union, thereby depriving the child of the genuine enjoyment of the substance of the childs Union citizenship rights. The principle extends to dependants who are not children, and applies even though the Union citizen has not exercised their right of free movement. The right of residence of the TCN is a derivative right, that is, one derived from the dependent Union citizen. It flows from article 20 of the Treaty on the Functioning of the European Union (article 20FEU) and was expressed in unqualified terms in Zambrano so as to be thought to prevent expulsion of the TCN parent in all circumstances. The Upper Tribunal (the UT) in its decision promulgated on 23 August 2013 proceeded on the basis that the Zambrano right of residence was unqualified, so that there was an absolute prohibition preventing deportation of the TCN parent without any consideration of proportionality even if that parent had committed serious crimes. The Secretary of State for the Home Department (the Secretary of State) appealed to the Court of Appeal against the determination of the UT which appeal was stayed to await the judgments of the CJEU in S v Secretary of State for the Home Department (Case C 304/14) EU:C:2016:674; [2017] QB 558 (CS) and Rendn Marn v Administracin del Estado (Case C 165/14) EU:C:2016:675; [2017] QB 495 (Marn). These judgments were delivered on 13 September 2016. By its judgments in CS and Marn the CJEU held that there was a limitation on the Zambrano derivative right of residence so that the right was not absolute. In CS at para 36 it stated that article 20FEU does not affect the possibility of member states relying on an exception linked, in particular, to upholding the requirements of public policy and safeguarding public security. In the same judgment at para 50 it stated However, in exceptional circumstances a member state may adopt an expulsion measure provided that it is founded on the personal conduct of that third country national, which must constitute a genuine, present and sufficiently serious threat adversely affecting one of the fundamental interests of the society of that member state, and that it is based on consideration of the various interests involved, matters which are for the national court to determine (emphasis added). Following the delivery of the judgments in CS and Marn the issues on appeal narrowed. The appellant accepted that the UT had erred in law in that it had wrongly concluded that protection against removal was absolute and there was no need to consider proportionality if it concluded that the deportation of a TCN parent would require a child who was a Union citizen to depart from the territory of the Union with the person being deported. On behalf of the Secretary of State it was submitted and the Court of Appeal [2018] EWCA Civ 85; [2018] WLR 81 held at para 67, that exceptional circumstances in para 50 of CS simply means that it is an exception to the general rule which general rule was that a person who enjoys the fundamental rights of an EU citizen cannot be compelled to leave the EU. The Court of Appeal added that It does not mean that, where the criteria set out in the proviso are satisfied, there is an additional hurdle that there must also be exceptional circumstances. The Court of Appeal remitted the case to the UT in order to carry out the proportionality exercise required by the decisions of the CJEU in CS and Marn. The appellant applied for permission to appeal to the Supreme Court on three grounds: a. Ground one: Whether the Court of Appeal was wrong to conclude that there was no need for exceptional circumstances to be established before a person relying on Zambrano could be deported. b. Ground two: Whether there was a sufficient evidential basis for finding that the deportation of the appellant was potentially lawful. c. Ground three: Whether the Court of Appeal erred by remitting rather than determining proportionality directly. On 4 July 2019 permission to appeal was granted on ground one only (whether exceptional circumstances need to be established before a Zambrano carer could be deported). That is the only question to be determined in this appeal. After the Court of Appeal delivered its judgment on 2 February 2018 the CJEU on 8 May 2018 delivered judgment in KA v Belgische Staat (Case C 82/16) EU:C:2018:308; [2018] 3 CMLR 28 (KA) which again addressed the test that should be applied as an exception to the Zambrano principle. This means that there are now three CJEU decisions addressing the sole issue in this appeal. It is a feature of this appeal that the decisions in Zambrano, Marn, CS and KA were all decisions of the CJEU (Grand Chamber). In this judgment I will refer to these decisions as the decisions of the CJEU to avoid repeating Grand Chamber on each occasion. II Factual background The appellant is a national of Jamaica who was born on 13 March 1975. She is now aged 45. Initially she entered the United Kingdom as a visitor on 2 August 2002 and was granted leave to enter until 23 August 2002. Further extensions were made permitting her to remain as a student until 28 February 2004. On 11 November 2003 the appellant married Marlon MacPherson, a person present and settled in the United Kingdom. Following her marriage and on 24 February 2004, she applied for leave to remain as the spouse of a person present and settled in the United Kingdom. She was granted leave until 2 March 2006. On 28 February 2006 she applied for indefinite leave to remain which was granted on 22 March 2006. The appellant committed a serious criminal offence, of supplying a class A drug (cocaine). On 5 October 2006, at Wood Green Crown Court the appellant was convicted of this offence and was sentenced to a period of imprisonment of two years and six months. The appellants evidence to the First tier Tribunal was that she decided to sell drugs as she needed additional funds because her grandmother had fallen seriously ill in Jamaica with heart failure, arthritis, and high blood pressure. On 20 November 2007 a deportation order in respect of the appellant was signed by the Secretary of State. On 24 September 2008 the appellant was detained, pending removal but her removal was subsequently deferred as she was pregnant. On 29 December 2008, the appellant gave birth to a boy, whom I will call D, who is now almost 12 years old. His father is Mr MacPherson. D is a British national and a citizen of the Union. The appellants evidence is that D has lived in the United Kingdom with her throughout his life. There was a history of unsuccessful challenges to the deportation order culminating on 7 January 2009 with an unsuccessful judicial review application following which the appellant failed to co operate with the authorities between 2009 and 2012, being listed as an absconder on 6 May 2009. On 20 February 2012, the appellant submitted an application for leave to remain outside the Immigration Rules. This was treated by the Secretary of State as an application to revoke her deportation order. On 29 August 2012, the Secretary of State refused the application. It is that decision which gave rise to a further right of appeal to the First tier Tribunal and is the subject of these proceedings. III The judgments of the Tribunals and the Court of Appeal (a) The First tier Tribunal On appeal to the First tier Tribunal before Judge Mitchell the appellant contended that her deportation would violate rights under article 8 of the European Convention on Human Rights (ECHR). The judgment of the CJEU in Zambrano which had been delivered on 8 March 2011 was referred to in the determination of Judge Mitchell promulgated on 7 December 2012. However, the appeal before Judge Mitchell proceeded purely on the basis that deportation would violate the article 8 ECHR rights of the appellant, D and of Mr MacPherson. In summary the evidence before Judge Mitchell was that by 22 February 2012 the appellant and her husband were living separately but had prior to the hearing reconciled so that they were back together again. The appellant stated that her husband played an important role in Ds life and that the deportation order requiring the appellant to leave the United Kingdom would also require D to leave with her so as to separate the appellant and her son from her husband who would remain in the United Kingdom. Judge Mitchell carried out an article 8 ECHR proportionality exercise stating at para 74 that the appellant was convicted of extremely serious offences. She is a foreign criminal. The scourge of drugs on society has been held many times to be utterly reprehensible. The decision of the Secretary of State to deport a foreign criminal who has received such a significant sentence for drugs offences is proportionate even taking into account the circumstances of the appellants family and herself. The judge dismissed the appellants appeal finding that deportation would not violate article 8 ECHR. (b) The Upper Tribunal The appeal before the UT proceeded not only on the basis that deportation would violate article 8 ECHR but also on the basis of the appellants derived right of residence under the Zambrano principle. The UT (which comprised UT Judges Jordan and Pitt) allowed the appeal with the determination being given by UT Judge Jordan. He held that the effective care of D was in the hands of the appellant so it followed that the appellants removal would be the effective cause of Ds removal to Jamaica. At para 19 he stated that the rights of Union citizens arising from Ruiz Zambrano are not derived from rights arising under the Citizens [Parliament and Council Directive 2004/38/EC] or the Immigration (European Economic Area) Regulations 2006 (2006 No 1003) transposing them into domestic law. They are a principle of European Union citizenship law developed by the Court of Justice in [Luxembourg]. Importantly, they are not a principle of European human rights law operated on principles of proportionality. In other words, the court or tribunal is not deciding whether it [is] proportionate to remove the British child so that his best interests (as a primary consideration) are weighed against the public interest in favour of removing those who commit serious crimes. The prohibition against removal is absolute and prevents removal, notwithstanding the seriousness of the offence. (Emphasis added) On this basis the UT held that no question of proportionality arose as a matter of EU law and that the removal of the appellant was not permitted under the Zambrano principle. The UT then remade the decision and allowed the appeal against the Secretary of State. This meant that it was not necessary to consider proportionality, but for the sake of completeness the judge proceeded to do so in the context of article 8 ECHR. He stated at para 28 The appellant was sentenced to 30 months imprisonment. Whilst this is at the low end of sentences for supplying cocaine, this was nevertheless serious offending and the canker caused by the spread of drugs particularly those recognised as Class A creates a substantial public interest in removing those who are involved, if their removal is permissible. Ds best interests (those of a single individual) have to be weighed against the interests of society in its entirety. That interest includes, UT Judge Jordan held, following Wilson LJ in OH (Serbia) v Secretary of State for the Home Department [2008] EWCA Civ 694 the role of a deportation order as an expression of societys revulsion at serious crimes and in building public confidence in the treatment of foreign citizens who have committed serious crimes. On this basis UT Judge Jordan held that he was not persuaded that the appellants removal together with D would be disproportionate, notwithstanding that the best interests of D was a primary consideration. I would add as a footnote to the quotation from OH (Serbia) v Secretary of State for the Home Department that in Ali v Secretary of State for the Home Department [2016] UKSC 60; [2016] 1 WLR 4799, at para 70 Lord Wilson regretted his reference to societys revulsion at serious crimes as being too emotive a concept to figure in this analysis. However, he maintained the substance of the point made by stating that Laws serve society more effectively if they carry public support. He continued that Unless it lacks rational foundation (in which case the courts should not pander to it), the very fact of public concern about an area of the law, subjective though that is, can in my view add to a courts objective analysis of where the public interest lies: in this context it can strengthen the case for concluding that interference with a persons rights under article 8 by reason of his deportation is justified by a pressing social need. (c) The Court of Appeal The issues before the Court of Appeal (which comprised Underhill, Lindblom, Singh LJJ) had become narrower because of the CJEUs determination in CS and Marn that the prohibition against removal was not absolute so that it was conceded by the appellant that there were errors of law made by the UT. The Secretary of State submitted that the case should be remitted to the UT for redetermination, after considering any further evidence that might be necessary. The appellant submitted that the errors of law were not material as the decision of the UT would inevitably have been the same so that the appeal should be dismissed. The appellants submission raised the issue as to whether the test that should be applied in the light of the decisions of the CJEU in Marn and CS included a requirement of exceptional circumstances to justify the appellants deportation. At para 47 Singh LJ giving the judgment of the court, identified all the remaining issues before the Court of Appeal as being: (1) Should this court perform the proportionality exercise itself or should it remit the case to the UT? (2) What is the correct test that should be applied in the light of the decisions of the CJEU in Rendn Marn and (CS)? (3) What is the current status and effect of the decision in R v Bouchereau (Case C 30/77) EU:C:1977:172; [1978] QB 732? (4) What is the relevance, if any, of the Rehabilitation of Offenders Act 1974? Singh LJ having referred to In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] UKSC 33; [2013] 1 WLR 1911, rejected the appellants submission that the Court of Appeal should perform the proportionality exercise itself. At paras 50 52 Singh LJ identified three difficulties with the appellants submission, none of which could be subject to any sensible challenge particularly given that at no previous stage had the threat which the appellant posed to the United Kingdoms public policy or public security been considered in accordance with the proportionality test set out by the CJEU in Marn and CS. It is sufficient to refer solely to the third difficulty which Singh LJ identified. At para 52 he stated This leads me to my third point. It is that the question of proportionality should be addressed in the present case only after full consideration has been given to the issues of fact and, in particular, up to date information should be placed before the UT. One reason for this in the present case is that it concerns the potential impact of deportation on a young child, D. Since the best interests of a child must always be a primary consideration for the court, it is important that the UT should have available to it the most up to date information about the likely impact of Ds mothers deportation on him. Singh LJ held that the case should be remitted to the UT for redetermination, but proceeded to address the remaining issues to provide guidance to the UT as to how it should approach the case on remittal. In relation to the correct test which should be applied in the light of the decisions of the CJEU in Marn and CS Singh LJ conducted a careful and comprehensive analysis of both of those judgments together with the joint opinion of the Advocate General (M Szpunar) in CS and Marn (p 500). The Advocate General made the following recommendation to the CJEU in the case of CS (at point 177 of his opinion): , I propose that the courts answer should be that it is, in principle, contrary to article 20FEU for a member state to expel from its territory to a non member state a third country national who is the parent of a child who is a national of that member state and of whom the parent has sole care and custody, when to do so would deprive the child who is a citizen of the Union of genuine enjoyment of a substance of his or her rights as a in exceptional citizen of circumstances, a member state may adopt such a measure, provided that it: observes the principle of proportionality and is based on the personal conduct of the foreign national, which must constitute a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society, and is based on an imperative reason relating to public security. (Emphasis added) the Union. Nevertheless, As is apparent from the words to which I have added emphasis, the Advocate Generals recommendation included the phrase exceptional circumstances and a requirement of an imperative reason confined solely to public security so as to exclude an imperative reason relating to public policy. Relying on that recommendation and the CJEUs reference to exceptional circumstances in para 50 of its judgment in CS, Mr Southey QC on behalf of the appellant sought to establish an enhanced level of protection for carers by restricting the exception to the Zambrano principle. Singh LJs conclusions at paras 66 67 were as follows: 66. Mr Blundell [on behalf of the Secretary of State] invites this court to attach significance to the fact that the last phrase in that passage (and is based on an imperative reason relating to public security) did not find its way into the judgments of the CJEU. He submits that the CJEU did not adopt that part of the recommendation made by the Advocate General. He also points out that the language used by the Advocate General is the language of (Directive 2004/38/EC), in particular article 28(3). He submits that it imposes a higher test than the test that was eventually adopted by the CJEU in the context of articles 20 21FEU. I agree with those submissions by Mr Blundell. 67. Mr Southey emphasises the use of the phrase exceptional circumstances in the opinion of the Advocate General, at para 177, and in the judgment of the CJEU in (CS), at para 50. I do not attach the significance to that phrase which Mr Southey submits it has. In my view, it does not import an additional requirement which the state must satisfy on top of what follows; rather the phrase is a helpful summary of what follows (provided . ). In other words exceptional circumstances simply means that it is an exception to the general rule, which is that a person who enjoys the fundamental rights of an EU citizen cannot be compelled to leave the EU. It does not mean that, where the criteria set out in the proviso are satisfied, there is an additional hurdle that there must also be exceptional circumstances. Accordingly, the Court of Appeal held that the correct test that should be applied did not require exceptional circumstances to be established before someone in the appellants position could be deported. Rather the reference to exceptional circumstances in the relevant case law of the CJEU was merely a reference to the fact that deportation of someone in the appellants position is a departure from the general rule that a person who enjoys the fundamental rights of an EU citizen cannot be compelled to leave the territory of the EU. Singh LJ then addressed at paras 68 86 the current status and effect of the decision of the European Court of Justice in R v Bouchereau. That decision envisages that past conduct alone which has caused public revulsion and is therefore a threat to the requirements of public policy may be sufficient to justify deportation without there necessarily being any clear propensity on behalf of the individual to act in the same way in the future. Singh LJ concluded that, subject to various limitations this remained good law. That conclusion has not been appealed to this court. In relation to the final issue as to the relevance of the Rehabilitation of Offenders Act 1974 Mr Southey conceded, and for the reasons set out at paras 87 90 Singh LJ held, that the Act had no direct application in the present context. The outcome in the Court of Appeal was that the Secretary of States appeal was allowed and the case was remitted to the UT for redetermination on the merits. IV The impact on this appeal of the United Kingdoms withdrawal from the EU Section 2(1) of the European Communities Act 1972 (the 1972 Act) 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 legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly; and the expression enforceable EU right and similar expressions shall be read as referring to one to which this subsection applies. Section 1 of the European Union (Withdrawal) Act 2018 (the 2018 Act) repealed the 1972 Act on exit day which is defined by section 20 as 11pm on 31 January 2020. However, exit day is followed by an implementation period (IP) which ends on the IP completion day defined in section 39 of the European Union (Withdrawal Agreement) Act 2020 (the 2020 Act) as 31 December 2020 at 11pm. During this period the 1972 Act continues to have effect pursuant to section 1A of the 2018 Act, as amended by the 2020 Act. The Charter of Fundamental Rights of the European Union (the Charter) also continues to have effect during this period: see Part Four of the Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (OJ 2019, C384 l, p 1) and section 1A(3) of the 2018 Act. As to the position after IP completion day the current position is that the Immigration (European Economic Area) Regulation 2016, and relevant provisions of the FEU Treaty to the extent that they are not implemented in domestic law, would continue to have effect as retained EU law pursuant to sections 2 and 4 of the 2018 Act. However, this is subject to the Immigration and Social Security Co ordination (EU Withdrawal) Act 2020 as well as secondary legislation made under it. This Act provides for repeal of the main retained EU law relating to free movement. The present position is that the United Kingdoms withdrawal from the EU has no impact on this appeal but the legal principles to be applied may change after 31 December 2020 at 11pm. V Legal landscape (a) Union citizenship and the right to move and reside freely Article 20(1)FEU establishes Union citizenship and provides that Every person holding the nationality of a member state is a citizen of the Union. Under article 20(2)(a)FEU, citizens of the Union have the right to move and reside freely within the territory of the member states. Article 21(1)FEU also provides that Every citizen of the Union shall have the right to move and reside freely within the territory of the member states. This right is not absolute but is subject to the limitations and conditions laid down in the Treaties and by the measures adopted to give them effect. The significance of citizenship of the Union is apparent from Zambrano at para 41 and KA at para 47 in that citizenship of the European Union is intended to be the fundamental status of nationals of the member states. The CJEU confirmed at para 48 of KA that Union citizenship conferred a primary and individual right to move and reside freely within the territory of the member states but continued that this was not absolute as it was subject to the limitations and restrictions laid down by the Treaty and the measures adopted for their implementation. (b) Parliament and Council Directive 2004/38/EC On 29 April 2004 the Parliament and Council of the European Union adopted Parliament and Council Directive 2004/38/EC of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of member states (OJ 2004 L158, p 77) (the Directive). The Directive lays down the conditions surrounding the exercise of the right of free movement and residence within EU territory, the right of permanent residence and the limits placed on those rights. Under the rubric of Beneficiaries article 3(1) provides that the Directive applies to all Union citizens who move to or reside in a member state (the host member state) other than that of which they are a national and to their family members who accompany or join them. Accordingly, the Directive does not apply in this case as the only Union citizen is D and he has not moved to or resided in a member state other than that of which he is a national, see Zambrano at para 39, CS at para 22 and Marn at para 40. In so far as D is not covered by the concept of beneficiary for the purposes of article 3(1) of the Directive, a member of his family is not covered by that concept either, given that the rights conferred by that Directive on the family members of a beneficiary of the Directive are not autonomous rights of those family members, but derived rights, acquired through their status as members of the beneficiarys family: see McCarthy v Secretary of State for the Home Department (Case C 434/09) EU:C:2011:277; [2011] ECR I 3375; [2011] All ER (EC) 729, para 42. However, both articles 27 and 28 of the Directive are relevant as the CJEU has used some but not all of the language in those articles in relation to the limitation on the Zambrano derived right of residence under article 20FEU. Articles 27 and 28 are in Chapter VI of the Directive under the rubric Restrictions on the right of entry and the right of residence on grounds of public policy, public security or public health. Article 27 of the Directive under the rubric General principles and in so far as relevant provides: 1. Subject to the provisions of this Chapter, member states may restrict the freedom of movement and residence of Union citizens and their family members, irrespective of nationality, on grounds of public policy, public security or public health. These grounds shall not be invoked to serve economic ends. 2. Measures taken on grounds of public policy or public security shall comply with the principle of proportionality and shall be based exclusively on the personal conduct of the individual concerned. Previous criminal convictions shall not in themselves constitute grounds for taking such measures. The personal conduct of the individual concerned must represent a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society. Justifications that are isolated from the particulars of the case or that rely on considerations of general prevention shall not be accepted. (Emphasis added) The CJEU has incorporated into the limitation on the Zambrano derived right of residence many parts of article 27, including those parts to which I have added emphasis. In relation to the grounds of public policy and public security see Marn at para 81, CS at para 36 and KA at para 90. In relation to the requirement to comply with the principle of proportionality see Marn at para 85, CS at para 41 and KA at paras 93 and 97. In relation to the requirement that the conduct must represent a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society see Marn at para 84, CS at para 40 and KA at para 92. Article 28(1) of the Directive under the rubric Protection against expulsion provides 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. Again, the CJEU has incorporated into the limitation on the Zambrano derived right of residence the language of article 28(1). In relation to the requirement to take into account considerations such as how long the individual concerned has resided on its territory, his/her age, state of health (etc) see Marn at para 86, CS at para 42 and KA at para 94. As expected given the context of both a crime committed by the TCN parent and the interests of children, the list of factors identified by the CJEU as in particular to be taken into account include factors not mentioned in article 28(1), such as the nature and gravity of the offence committed, the extent to which the person concerned is currently a danger to society, the age of the children at issue and their state of health, as well as their economic and family situation. The CJEU also referred to the legality of the residence of the TCN parent as a relevant factor, which is not specifically mentioned in article 28(1). Article 28(2) and (3) provides: 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 [the UNCRC]. The CJEU has not incorporated into the limitation on the Zambrano derived right of residence the parts of article 28(2) and (3) to which I have added emphasis. However, in relation to the UNCRC the Zambrano derived right of residence is within the ambit of EU law so that article 24(2) of the Charter applies which provides that In all actions relating to children, whether taken by public authorities or private institutions, the childs best interests must be a primary consideration. Furthermore, article 7 of the Charter which provides for the right to respect for private and family life must be read in conjunction with the obligation to take into consideration the childs best interests, recognised in article 24(2) of the Charter, see Marn at paras 66 and 81. In considering article 28(3) it should be recalled that the Directive does not apply in this case. However even if the Directive did apply D is not the individual subject to the expulsion decision so that article 28(3) would not be engaged. It is correct that the effective result of the expulsion of Ds Zambrano carer is that D also is expelled. However, the consequences are different as between D and a minor expelled under article 28(3). D is entitled to return to the territory of the Union at any time whilst a minor expelled under article 28(3) is restricted to submitting an application under article 32 after a reasonable period, depending on the circumstances, and in any event after three years from enforcement of the final exclusion order by putting forward arguments to establish that there has been a material change in the circumstances which justified the decision ordering their exclusion. It is then for the member state concerned to reach a decision on this application. Furthermore, a minor expelled under article 28(3) has no right of entry to the territory of the member state concerned while their application under article 32 is being considered. (c) The Directive was implemented into domestic law by the Immigration (European Economic Area) Regulations 2006 (SI 2006/1003) (the 2006 Regulations). Those Regulations were amended on 16 July 2012 to give effect to a number of derivative rights of residence in EU law and to include an associated power of removal for persons enjoying such rights, where removal would be conducive to the public good. The 2006 Regulations were further amended on 8 November 2012 to make wider provision reflecting CJEU case law, as then embodied in the Zambrano decision, based, as it was, on article 20FEU and to apply the conducive to the public good removal provision to such persons. The 2006 Regulations have since been replaced by new Regulations made in 2016 (the 2016 Regulations). However, it was the 2006 Regulations that applied at the time of the impugned decision (see paragraph 5 of Schedule 6 to the 2016 Regulations). The 2006 Regulations must, to the extent possible, be interpreted to ensure conformity with article 20FEU. If, in its case law since the Zambrano decision, the CJEU has interpreted article 20FEU as requiring exceptional circumstances as an additional Implementation of the Directive into domestic law requirement, then national courts must strive to interpret the 2006 Regulations on that basis in accordance with the Marleasing principle, see Marleasing SA v La Comercial Internacional de Alimentacin SA (Case C 106/89) EU:C:1990:395; [1990] ECR I 4135; [1992] 1 CMLR 305, para 13 and Pfeiffer v Deutsches Rotes Kreuz Kreisverband Waldshut eV (Joined Cases C 397/01 and C 403/01) EU:C:2004:584; [2005] ICR 1307; [2004] ECR I 8835; [2005] 1 CMLR 44, para 115. So, the focus of this appeal returns to the decisions of the CJEU in order to determine what test is to be applied in order to accord with CJEUs case law. (d) The Zambrano right of residence The CJEUs ruling in Zambrano is the landmark decision. Mr Ruiz Zambrano and his wife, Mrs Moreno Lopez, were both nationals of Colombia. While they were living in Belgium Mrs Moreno Lopez gave birth to two children, who acquired Belgian nationality by operation of Belgian law. Accordingly, both children were also citizens of the EU and their parents were TCN parents. The two children did not at any stage exercise their right to move freely within the EU but remained in Belgium with their parents. Mr Zambrano applied for unemployment benefit. That application was rejected on the ground that, since he had never held a work permit in Belgium, he did not have the requisite qualifying period as required by national legislation governing the residence and employment of foreign workers. The Employment Tribunal in Belgium made a reference to the CJEU which held that article 20FEU is to be interpreted as precluding a member state from refusing a TCN on whom his minor children, who are European Union citizens, are dependent, a right of residence in the member state of residence and nationality of those children, and from refusing to grant a work permit to that TCN, in so far as such decisions deprive those children of the genuine enjoyment of the substance of the rights attaching to the status of European Union citizen. (e) The Zambrano right of residence is a derivative right As is apparent from para 50 of KA the Treaty provisions on citizenship do not confer any autonomous right on third country nationals. Any rights conferred on third country nationals are not autonomous rights of those nationals but rights derived from those enjoyed by a Union citizen. The purpose and justification of those derived rights are based on the fact that a refusal to allow them would be such as to interfere, in particular, with a Union citizens freedom of movement: see also CS at para 28. (f) The consideration of a Zambrano right of residence falls within the ambit of European Union law Consideration of whether there is a Zambrano derived right of residence falls within the ambit of EU law. Accordingly, account must be taken of the right to respect for private and family life, as laid down in article 7 of the Charter, an article which, must be read in conjunction with the obligation to take into consideration the childs best interests, recognised in article 24(2) of the Charter, see Marn at para 81. (g) The very specific situations giving rise to the Zambrano derived right of residence The very specific situations giving rise to this derived right of residence are set out in Zambrano at paras 43 and 44, in Chavez Vilchez v Raad van bestuur van de Sociale verzekeringsbank (Case C 133/15) EU:C:2017:354; [2018] QB 103; [2017] 3 CMLR 35 at para 63 and most recently in KA at paras 51 and 52 as follows: 51. , a right of residence must nevertheless be granted to a third country national who is a family member of that Union citizen, since the effectiveness of Union citizenship would otherwise be undermined, if, as a consequence of refusal of such a right, that citizen would be obliged in practice to leave the territory of the EU as a whole, thus depriving him of the genuine enjoyment of the substance of the rights conferred by that status 52. However, a refusal to grant a right of residence to a third country national is liable to undermine the effectiveness of Union citizenship only if there exists, between that third country national and the Union citizen who is a family member, a relationship of dependency of such a nature that it would lead to the Union citizen being compelled to accompany the third country national concerned and to leave the territory of the EU as a whole The requirement of being compelled to leave the territory of the EU as a whole as opposed to being compelled to leave the territory of the member state was specifically referred to in the decision of the CJEU in Dereci v Bundesministerium fr Inneres (Case C 256/11) EU:C:2011:734; [2011] ECR I 11315; [2012] All ER (EC) 373; [2012] 1 CMLR 45. The CJEU stated at para 66 of its judgment that the criterion refers to situations in which the Union citizen has, in fact to leave not only the territory of the member state of which he is a national but also the territory of the Union as a whole. (h) The first question to be addressed by the national court On this basis the first question to be addressed in determining whether there is a Zambrano derived right of residence is whether there is a relationship of dependency of such a nature that it would lead to the Union citizen being compelled to accompany the TCN concerned and to leave the territory of the Union as a whole. In determining that question the CJEU set out at para 71 of KA the factors to be taken into account. The CJEU stated: More particularly, in order to assess the risk that a particular child, who is a Union citizen, might be compelled to leave the territory of the EU and thereby be deprived of the genuine enjoyment of the substance of the rights conferred on him by article 20 TFEU if the childs third country national parent were to be refused a right of residence in the member state concerned, it is important to determine, in each case at issue in the main proceedings, which parent is the primary carer of the child and whether there is in fact a relationship of dependency between the child and the third country national parent. As part of that assessment, the competent authorities must take account of the right to respect for family life, as stated in article 7 of the Charter, that article requiring to be read in conjunction with the obligation to take into consideration the best interests of the child, recognised in article 24(2) of the Charter (Chavez Vilchez [2017] 3 CMLR 35, para 70). (i) The second question to be addressed by the national court In CS at para 40 the CJEU stated that an expulsion decision founded on the existence of a genuine, present and sufficiently serious threat to the requirements of public policy or of public security, in view of the criminal offences committed by a TCN who is the sole carer of children who are Union citizens, could be consistent with EU law. At para 46 it stated that the national court has the task of examining what, in the TCNs conduct or in the offence that she committed, constitutes a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society or of the host member state, which may justify, on the ground of protecting the requirements of public policy or public security, an order deporting her from the United Kingdom. Accordingly, the second question to be addressed is whether there is such a threat. It is clear from CS at para 41 and Marn at para 85 that the existence of such a threat cannot be drawn automatically on the basis solely of the criminal record of the person concerned. Furthermore, article 20FEU must be interpreted as precluding national legislation which requires a TCN parent of minor children who are Union citizens in his sole care to be automatically refused the grant of a residence permit on the sole ground that he has a criminal record, where that refusal has the consequence of requiring those children to leave the territory of the European Union. Rather it is incumbent upon the national court to assess (i) the extent to which the TCN parents criminal conducts is a danger to society and (ii) any consequences which such conduct might have for the requirements of public policy or public security of the member state concerned, see Marn at para 87 and CS at para 47. (j) The third question to be addressed by the national court If there is such a threat then the national court carries out an exercise balancing, on the one hand, the nature and degree of that threat which leads to the legitimate aim of safeguarding public order or public security. On the other hand, the national court has to take account of the fundamental rights whose observance the CJEU ensures, in particular the right to respect for private and family life, as laid down in article 7 of the Charter and to ensure that the principle of proportionality is observed. In a case involving children account is to be taken of the childs best interests when weighing up the interests involved. Particular attention must be paid to his age, his situation in the member state concerned and the extent to which he is dependent on the parent: see CS at paras 48 49. VI Whether exceptional circumstances need to be established before a Zambrano carer can be deported (a) The parties submissions On behalf of the appellant Mr Southey submitted that the use of the phrase exceptional circumstances demonstrates the weight to be attached to the interests of the Zambrano child when conducting a proportionality balancing exercise. He also submitted that the use of the phrase exceptional circumstances in CS at para 50 cannot merely connote a departure from the norm but rather that it implies that the interests of the Zambrano child must carry great weight that can only be outweighed by particularly compelling reasons. On behalf of the Secretary of State Mr Blundell relied on the CJEU decisions in CS, Marn and KA in order to submit that the imperative grounds test does not apply, and nor does any broader exceptional circumstances test. He submitted that on a proper textual analysis of the judgment in CS the single use of the phrase exceptional circumstances was to be read as an exception to the usual application of the Zambrano principle. (b) Rejection by the CJEU of imperative grounds of public security Advocate General M Szpunar in his opinion in CS proposed the adoption of enhanced protection based on imperative grounds relating to public security. At point 168 he stated that In the present case, given that the minor child who is a citizen of the Union might, as a consequence of the expulsion of his mother, temporarily have to leave the territory of the European Union altogether, it is appropriate, to my mind, that he should be accorded the enhanced protection implied by the term imperative grounds of public security. Accordingly, only imperative grounds of public security are capable of justifying the adoption of an expulsion order against (CS) if, as a consequence, her child would have to follow her. (Emphasis added) In this paragraph he did not propose the adoption of the phrase exceptional circumstances. At point 177 Advocate General M Szpunar proposed that the courts answer in CS should be that it is, in principle, contrary to article 20FEU for a member state to expel from its territory to a non member state a third country national who is the parent of a child who is a national of that member state and of whom the parent has sole care and custody, when to do so would deprive the child who is a citizen of the Union of genuine enjoyment of the substance of his or her rights as a citizen of the Union. He went on to define a proposed limitation on the derived right of residence in terms that used the phrases exceptional circumstances and based on an imperative reason relating to public security. He proposed that Nevertheless, in exceptional circumstances, a member state may adopt such a measure, provided that it: observes the principle of proportionality and is based on the personal conduct of the foreign national, which must constitute a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society, and is based on an imperative reason relating to public security. (Emphasis added) At para 36 of the judgment in CS the CJEU recognised an exception to the Zambrano principle linked, in particular, to upholding the requirements of public policy and safeguarding public security. That is entirely inconsistent with the test of imperative grounds in article 28(3) of the Directive which is only linked to public security. The rejection of the test of imperative grounds is also apparent from para 40 which requires the expulsion decision to be founded on the existence of a genuine, present and sufficiently serious threat. That is not a test of imperative grounds. Again, in that paragraph it is made clear that this is a threat to either the requirements of public policy or of public security. I consider that it is clear that the CJEU rejected the proposal of enhanced protection based on imperative grounds of public security. Two questions remain. The first is whether by using the phrase exceptional circumstances Advocate General M Szpunar was proposing that a Zambrano carer should enjoy enhanced protection against deportation, such that she can be deported in exceptional circumstances only. In view of his associated proposal that there should be an imperative reason relating to public security I am prepared to proceed, without deciding the point, on the basis that he was proposing an additional requirement of exceptional circumstances. On the basis of that assumed answer to the first question the second remaining question is whether the CJEU adopted Advocate General M Szpunars proposal of exceptional circumstances. (c) Textual analysis of the judgment in CS CJEU did not adopt the proposal in relation to exceptional circumstances. In CS the applicant, a TCN, married a British national and was granted indefinite leave to remain in the United Kingdom where she had a child for whom she was the sole carer. She was convicted of a criminal offence in the United Kingdom and sentenced to a term of imprisonment whilst her child was still very young. The Secretary of State rejected the applicants asylum application and ordered her deportation after she had been released from prison, in reliance on, inter alia, section 32(5) of the UK Borders Act 2007 under which deportation would always be ordered in respect of a TCN who was convicted of an offence of a certain gravity, unless that order breached the offenders rights under, inter alia, the European Union treaties. The applicants appeal was allowed by the First tier I consider that a textual analysis of the judgment in CS makes it clear that the Tribunal on the ground that her deportation would lead to, inter alia, a breach of her childs right as a Union citizen to move and reside within the European Union under article 20FEU in that, if the applicant were deported, her child would also have to leave the European Union. On the Secretary of States appeal, the UT referred to the CJEU for a preliminary ruling the question whether article 20FEU precluded the national legislation. The CJEU held that a decision to expel a TCN who was the sole carer of a Union citizen child on the ground of public policy or public security could not be made automatically on the sole basis of the criminal record of the person concerned. The CJEU went on to consider the basis upon which such an expulsion decision could be made. In paras 34 50 of the judgment and under the heading The possibility of limiting a derived right of residence flowing from article 20FEU the CJEU set out its analysis of the limitation on the Zambrano right of residence. At para 36 the CJEU stated as follows: It should be pointed out that article 20FEU does not affect the possibility of member states relying on an exception linked, in particular, to upholding the requirements of public policy and safeguarding public security. (Emphasis added) In other words, conduct which is potentially contrary to the interests of public policy and public security in most cases, the commission of a criminal offence was capable, in principle, of justifying an exception to the ordinary general rule (namely, that a Zambrano carer cannot be expelled where to do so would lead to the departure of the dependent EU citizen from the territory of the Union). As I have emphasised the CJEU specifically referred to reliance on an exception, rather than the existence of exceptional circumstances. At para 37 in relation to the exception the CJEU relying on its case law stated that the concepts of public policy and public security must be interpreted strictly. At para 38 the CJEU considered the exception as linked to upholding the requirements of public policy identifying that in addition to the disturbance of the social order which any infringement of the law involves there must exist a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society. At para 39 the CJEU analysed its case law in relation to the public security exception. At para 40 the CJEU set out the test as being whether the expulsion decision is founded on the existence of a genuine, present and sufficiently serious threat to the requirements of public policy or of public security. Then at paras 41 42 and 46 49, the CJEU set out in detail the particular factors which have to be considered when deciding whether that test was satisfied. I consider that para 50 provides a summary of what is contained in the preceding paragraphs so that the reference to exceptional circumstances can only sensibly be read in the context of what comes before. When seen against the background of the analysis beginning at para 34, it is clear that the CJEU did not add any additional criterion through the use of the words exceptional circumstances. On the contrary, and as the Court of Appeal correctly decided, it was simply explaining that, in the prescribed circumstances, an exception could be made to the general rule that a Zambrano carer could not be compelled to leave the territory of the Union. It was not stating that certain undefined exceptional circumstances had first to be demonstrated. (d) The judgments in Marn and KA In Marn under the same heading as used in CS (The possibility of limiting a derived right of residence flowing from article 20FEU) the CJEU at paras 81 88 carried out the same analysis as in CS as to the exception to the Zambrano derived right of residence, specifying the test to be applied and the factors to be taken into account. In that respect the analysis of the CJEU in Marn is identical to the analysis in CS. Furthermore, the test in para 84 of Marn is in the same terms as the test in para 40 of CS. In paras 85 and 86 in Marn the CJEU set out the matters to be taken into account. There is no reference in Marn to the phrase exceptional circumstances. The CJEU also took the same approach in KA, at paras 85 97. In that case, the Belgian authorities refused to consider applications for residence permits from the TCN parents of Belgian children on the grounds that the applicant was subject to an entry ban. Having dealt with the circumstances in which a Zambrano right could come into being at paras 63 76, the CJEU repeated at para 90 that article 20 TFEU did not affect the possibility of member states relying on an exception linked to upholding the requirements of public policy and safeguarding public security. The CJEU went on, at paras 90 97, to repeat the factors set out in CS and Marn which should be taken into account when that test is being applied. At para 92 it stated: , it must be held that, where the refusal of a right of residence is founded on the existence of a genuine, present and sufficiently serious threat to the requirements of public policy or public security, in view of, inter alia, criminal offences committed by a third country national, such a refusal is compatible with EU law even if its effect is that the Union citizen who is a family member of that third country national is compelled to leave the territory of the EU Again, this is a repetition of the test in para 84 of Marn and in para 40 of CS. Nowhere in its detailed analysis in KA does the CJEU state or even imply that there is an additional hurdle that there must also be exceptional circumstances. On three occasions, the CJEU has set out what must be taken into account when the deportation of a Zambrano carer is being considered. Not once has it stated that an imperative grounds test applies, nor has it stated that there is an additional hurdle that there must also be exceptional circumstances. I consider that it is inconceivable that the CJEU would have omitted to mention this on three occasions if such a test applied. VII Disposal of the appeal For my part I consider that the Court of Appeals clearly reasoned conclusion cannot be faulted and was plainly right. The phrase exceptional circumstances simply means that it is an exception to the general rule that a person who enjoys the fundamental rights of an EU citizen cannot be compelled to leave the territory of the EU. The phrase does not import an additional hurdle. I would dismiss the appeal and would, as a consequence maintain the order of the Court of Appeal remitting the case to the UT for redetermination on the merits. |
Biometric data such as DNA samples, DNA profiles and fingerprints is of enormous value in the detection of crime. It sometimes enables the police to solve crimes of considerable antiquity. There can be no doubt that a national database containing the data of the entire population would lead to the conviction of persons who would otherwise escape justice. But such a database would be controversial. It is not permitted by our law. Parliament has, however, allowed the taking and retention of data from certain persons. The questions raised by these appeals are whose data may be retained and for how long. originally enacted, provided: Section 64 of the Police and Criminal Evidence Act 1984 (PACE), as (1) If (a) fingerprints or samples are taken from a person in connection with the investigation of an offence; and (b) he is cleared of that offence, they must be destroyed as soon as is practicable after the conclusion of the proceedings. (3) If (a) fingerprints or samples are taken from a person in connection with the investigation of an offence; and (b) that person is not suspected of having committed the offence, they must be destroyed as soon as they have fulfilled the purpose for which they were taken. Section 64(1A) of PACE was enacted by section 82 of the Criminal Justice and Police Act 2001. It is still in force. It provides: (1A) Where(a) fingerprints, impressions of footwear or samples are taken from a person in connection with the investigation of an offence, and (b) subsection (3) below does not require them to be destroyed, the fingerprints, impressions of footwear or samples may be retained after they have fulfilled the purposes for which they were taken but shall not be used by any person except for purposes related to the prevention or detection of crime, the investigation of an offence, the conduct of a prosecution or the identification of a deceased person or of the person from whom a body part came. It will be seen at once that section 64(1A) does not specify any time limit for the retention of the data or any procedure to regulate its destruction. These are matters which are addressed in guidelines issued by the Association of Chief Police Officers (the ACPO guidelines) entitled Exceptional Case Procedure for Removal of DNA, Fingerprints and PNC Records and published on 16 March 2006. So far as is material, these provide: it is important that national consistency is achieved when considering the removal of such records. Chief Officers have the discretion to authorise the deletion of any specific data entry on the [Police National Database] owned by them. They are also responsible for the authorisation of the destruction of DNA and fingerprints associated with that specific entry. It is suggested that this discretion should only be exercised in exceptional cases. Exceptional cases will by definition be rare. They might include cases where the original arrest or sampling was found to be unlawful. Additionally, where it is established beyond doubt that no offence existed, that might, having regard to all the circumstances, be viewed as an exceptional circumstance. In R (S) v Chief Constable of the South Yorkshire Police and R (Marper) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196 (Marper UK) the claimants sought judicial review of the retention by the police of their fingerprints and DNA samples on the grounds inter alia that it was incompatible with article 8 of the European Convention on Human Rights (ECHR). The majority of the House of Lords held that the retention did not constitute an interference with the claimants article 8 rights, but they unanimously held that any interference was justified under article 8(2). The ECtHR disagreed: see its decision in S and Marper v United Kingdom (2008) 48 EHRR 1169 (Marper ECtHR). In considering whether retention of data in accordance with the ACPO guidelines was proportionate and struck a fair balance between the competing public and private interests, the court said at para 119: In this respect, the Court is struck by the blanket and indiscriminate nature of the power of retention in England and Wales. The material may be retained irrespective of the nature or gravity of the offence with which the individual was originally suspected or of the age of the suspected offender; fingerprints and samples may be takenand retainedfrom a person of any age, arrested in connection with a recordable offence, which includes minor or non imprisonable offences. The retention is not time limited; the material is retained indefinitely whatever the nature or seriousness of the offence of which the person was suspected. Moreover, there exist only limited possibilities for an acquitted individual to have the data removed from the nationwide database or the materials destroyed; in particular, there is no provision for independent review of the justification for the retention according to defined criteria, including such factors as the seriousness of the offence, previous arrests, the strength of the suspicion against the person and any other special circumstances. The court concluded at para 125: that the blanket and indiscriminate nature of the powers of retention of the fingerprints, cellular samples and DNA profiles of persons suspected but not convicted of offences, as applied in the case of the present applicants, fails to strike a fair balance between the competing public and private interests and that the respondent State has overstepped any acceptable margin of appreciation in this regard. Accordingly, the retention at issue constitutes a disproportionate interference with the applicants right to respect for private life and cannot be regarded as necessary in a democratic society. On 16 December 2008, the Secretary of the State for the Home Department announced the Governments preliminary response to the ECtHR decision. The data of children under the age of 10 would be removed from the database immediately and the Government would issue a White Paper and consult on bringing greater flexibility and fairness into the system by stepping down some individuals over timea differentiated approach, possibly based on age, or on risk, or on the nature of the offences involved. The White Paper, Keeping the Right People on the DNA Database, was published on 7 May 2009. It contained a series of proposals for the retention of data, the details of which are immaterial for present purposes. On 28 July 2009, ACPOs Director of Information wrote to all chief constables (including the respondent Commissioner) saying that the final draft for publication of new guidelines was not expected to take effect until 2010 and that until that time the current retention policy on fingerprints and DNA remains unchanged. On 11 November 2009, after the consultation period had ended, the Secretary of State made a written ministerial statement outlining a revised set of proposals. Again, the details are not material. It was decided to include these proposals in the Crime and Security Act 2010 (the 2010 Act) which had its first reading on 19 November 2009. The 2010 Act received the Royal Assent on 8 April 2010, but the relevant provisions (sections 14, 22 and 23) have not been brought into effect. Section 23 provides that the Secretary of State must make arrangements for a National DNA Database Strategy Board (Database Board) to oversee the operation of the National DNA Database (section 23(1)); the Database Board must issue guidance about the immediate destruction of DNA samples and DNA profiles which are or may be retained under PACE (section 23(2)); and any chief officer of a police force in England and Wales must act in accordance with any such guidance issued (section 23(3)). The Coalition Government stated in the Queens Speech on 25 May 2010 that it intended to seek amendment of the 2010 Act by bringing forward legislative proposals (in Chapter 1 of Part 1 of the Protection of Freedoms Bill) along the lines of the Scottish system. This system permits retention of data for no more than three years if the person is suspected (but not convicted) of certain sexual or violent offences, and permits an application to be made to a Sheriff by a Chief Constable for an extension of that period (for a further period of not more than two years, although successive applications may be made): see sections 18 and 18A of the Criminal Procedure (Scotland) Act 1995, as inserted by sections 83(2) and 104 of the Police, Public Order and Criminal Justice (Scotland) Act 2006. GC and C issued proceedings for judicial review of the retention of their data on the grounds that, in the light of Marper ECtHR, its retention was incompatible with their article 8 rights. Recognising that there was an irreconcilable conflict between Marper UK and Marper ECtHR and that the former decision was binding on it, the Divisional Court (Moses LJ and Wyn Williams J) dismissed both judicial review challenges on 16 July 2010 and in both cases granted a certificate pursuant to section 12 of the Administration of Justice Act 1969 that the cases were appropriate for a leapfrog appeal to the Supreme Court. The facts of these two cases can be stated briefly. On 20 December 2007, GC was arrested on suspicion of common assault on his girlfriend. He denied the offence. A DNA sample, fingerprints and photographs were taken after his arrest. On the same day, he was released on police bail without charge. Before the return date of 21 February 2008, he was informed that no further action would be taken. On 23 March 2009, GCs solicitors requested the destruction of the DNA sample, DNA profile and fingerprints. The Commissioner refused to do so on the grounds that there were no exceptional circumstances within the meaning of the ACPO guidelines. On 17 March 2009, C was arrested on suspicion of rape, harassment and fraud. His fingerprints and a DNA sample were taken. He denied the allegations saying that they had been fabricated by his ex girlfriend and members of her family. No further action was taken by the police in respect of the harassment and fraud allegations. On 18 March 2009, he was charged with rape. On 5 May 2009 at Woolwich Crown Court, the prosecution offered no evidence and C was acquitted. C requested the destruction of the data and its deletion from the police database. On 12 November and again on 2 February 2010, the Commissioner informed C that his case was not being treated as exceptional within the meaning of the ACPO guidelines and his request was refused. The issue It is common ground that, in the light of Marper ECtHR, the indefinite retention of the appellants data is an interference with their rights to respect for private life protected by article 8 of the ECHR which, for the reasons given by the ECtHR, is not justified under article 8(2). It is agreed that Marper UK cannot stand. The issue that arises on these appeals is what remedy the court should grant in these circumstances. On behalf of C, Mr Fordham QC submits that the court should grant a declaration under section 8(1) of the Human Rights Act 1998 (HRA) that the retention of Cs biometric data is unlawful. Section 8(1) provides that 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. He seeks no other relief. On behalf of GC, Mr Cragg seeks an order quashing the ACPO guidelines and a reconsideration of the retention of GCs data within 28 days. The primary submission of Lord Pannick QC (on behalf of the Commissioner of Police of the Metropolis) is that the correct remedy is to grant a declaration of incompatibility under section 4 of the HRA. The primary submission of Mr Eadie QC (on behalf of the Secretary of State) is that, although there is no fundamental objection to a declaration of incompatibility, it is not necessary to grant one. The arguments in support of a declaration of incompatibility Section 6 of the HRA provides: (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. In summary, Lord Pannick and Mr Eadie say that it is not possible to read or give effect to section 64(1A) of PACE in a way which is consistent with Marper ECtHR. They accept that section 64(1A) confers a discretionary power on the police to retain the data obtained from a suspect in connection with the investigation of an offence. That is why they concede that section 6(2)(a) of the HRA is not in play. But they say that it is a power which, save in exceptional circumstances, must be exercised so as to retain the data indefinitely in all cases. Section 64(1A) cannot, therefore, be read or given effect so as to permit the power to be exercised proportionately in the way described in Marper ECtHR. The hands of the police are tied by section 64(1A) and that position is faithfully reflected in the ACPO guidelines. Two arguments are advanced in support of this submission. The first (and principal) argument is that to interpret section 64(1A) as requiring police authorities to comply with article 8 would defeat the statutory purpose of establishing a scheme for the protection of the public interest free from the limits and protections required by article 8. It would rewrite the statutory provision in a manner inconsistent with a fundamental feature of the legislative scheme which is that, instead of being destroyed, data taken from all suspects shall be retained indefinitely. It is this feature of the scheme which leads Lord Rodger to invoke authorities such as Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997. Parliament intended that the discretion conferred by section 64(1A) should be exercised to promote the statutory policy and object that data taken from all suspects in connection with the investigation of an offence should be retained indefinitely. Accordingly, any exercise of the discretion conferred by section 64(1A) which does not meet this statutory policy and object would frustrate the intention of Parliament. The second argument is that the nature of the changes to the ACPO guidelines that would be required in order to make them compatible with the ECHR is such that, for reasons of institutional competence and democratic accountability, these should be left to Parliament to make. The choice of compatible scheme involves a difficult and sensitive balancing of the interests of the general community against the rights of the individual and a number of different schemes would be compatible. Neither the police nor the court (in the event of a judicial review challenge to the scheme devised by the police) is equipped to make the necessary policy choices. Thus, for example, only Parliament is constitutionally and institutionally competent to decide whether to adopt the Scottish model in preference to the 2010 Act model. Discussion The first argument This argument is based on the premise that it was the intention of Parliament that, save in exceptional cases, the data taken from all suspects in connection with the investigation of an offence should be retained indefinitely. It goes without saying that, if that premise is correct, section 64(1A) of PACE can only be interpreted as conferring a discretion which must be exercised so as to give effect to that intention. The conclusion necessarily follows from the premise. On that hypothesis, a purposive interpretation of the statute inevitably leads to the conclusion that the first argument is correct. But I do not accept the premise. It is uncontroversial that Parliament intended (i) to abrogate section 64(1) of PACE and remove the obligation to destroy data as soon as practicable after the conclusion of the proceedings if the suspect is cleared of the offence; (ii) to create a scheme for the retention of the data taken from a suspect, whether or not he is cleared of the offence and whether or not he is even prosecuted; and (iii) that the data was to be retained so that it might be used for purposes related to the prevention or detection of crime, the investigation of an offence, the conduct of a prosecution or the identification of a deceased person or of the person from whom a body part came (to use the language of section 64(1A)). I shall refer to these purposes as the statutory purposes. It is also clear that, in order to promote the statutory purposes, Parliament must have intended that an extended, even a greatly extended, database should be created. But in my view that is as far as it goes. To argue from the premise that Parliament intended that a greatly extended database should be created to the conclusion that it intended that, save in exceptional circumstances, the data should be retained indefinitely in all cases is a non sequitur. Parliament did not prescribe the essential elements of the scheme by which the statutory purposes were to be promoted. That task was entrusted to the police, no doubt with the assistance of the Secretary of State. If it had been intended to require a scheme whose essential elements included an obligation that, save in exceptional circumstances, the data lawfully obtained from all suspects should be retained indefinitely, that could easily have been expressly stated in the statute. If that had been intended, surely section 64(1A) would have said in terms that, save in exceptional circumstances, the fingerprints and samples taken shall in every case be retained indefinitely after they have fulfilled the purpose for which they were taken. This would have been the obvious way of expressing that intention. The grant of an apparently unfettered discretion (signalled by the unqualified use of the word may) was certainly not the obvious way of expressing that intention. The natural meaning of the word may is permissive, not mandatory. As I have said, it is clear that Parliament intended to get rid of the requirement to destroy data after it has served its immediate purpose and to permit the retention of data in order to fulfil the statutory purposes. But the statute is silent as to how the statutory purposes are to be fulfilled. There is no reason to suppose that Parliament must have intended that this should be achieved in a disproportionate way so as to be incompatible with the ECHR. Lord Rodger suggests that Mr Fordhams argument entails the proposition that under section 64(1A) the police were free to do what they liked and that the subsection contains nothing to delimit the exercise of their discretion. I agree that, if this is the effect of Mr Fordhams argument, it would cast doubt as to its correctness. But section 64(1A) clearly delimits the exercise of the discretion. It must be exercised to enable the data to be used for the statutory purposes. I would add that the discretion must be exercised in a way which is proportionate and rationally connected to the achievement of these purposes. Thus, for example, the police could not exercise the power to retain the data only of those suspected of minor offences; or only of serious offences of a particular type; or only of suspects of a certain age or gender; or only for a short period. But it is possible to exercise the discretion in a rational and proportionate manner which respects and fulfils the statutory purpose and does not involve the indefinite retention of data taken from all suspects, regardless of their age and the nature of the alleged offence. The Commissioner and the Secretary of State assert that a fundamental feature (possibly the fundamental feature) of section 64(1A) is that data should be retained for use from all suspects indefinitely. But, although expressed in different words, this is the same as the premise argument that I have already rejected. For the reasons I have given for rejecting that argument, it is not possible to extract this fundamental feature from the statute, whether one looks at its language alone or in the context of the mischief which it was intended to cure. In my view, the fundamental feature of section 64(1A) is that it gives the police the power to retain and use data from suspects for the stated statutory purposes of preventing crime, investigation of offences and the conduct of prosecutions. But that does not justify a blanket or disproportionate practice. Neither indefinite retention nor indiscriminate retention can properly be said to be fundamental features of section 64(1A). As I have said, following the judgment of the ECtHR the Secretary of State for the Home Department took steps to take the DNA of children under the age of 10 off the database. If the meaning of section 64(1A) is that, save in exceptional cases, there is a duty to retain samples taken from all suspects indefinitely, then surely this amendment to the ACPO guidelines was ultra vires section 64(1A). That is not, however, suggested by Lord Pannick or Mr Eadie. It seems to me that, once it is accepted that section 64(1A) permits a scheme which does not insist on the indefinite retention of data in all cases, then the extreme position advocated by the Commissioner and the Secretary of State cannot be maintained. So what did Parliament intend if it was not a scheme of indefinite retention in all cases? The obvious answer is a proportionate scheme which gives effect to the statutory purposes and is compatible with the ECHR. The fact that it is possible to create a number of different schemes all of which would meet these criteria does not matter. Section 64(1A) gives a power. Powers can often be lawfully exercised in different ways. The Commissioner and the Secretary of State seek support for the first argument from two sources. The first is the Explanatory Notes to the 2001 Act which explained at para 210: An additional measure has been included to allow all fingerprints and DNA samples lawfully taken from suspects during the course of an investigation to be retained and used for the purposes of prevention and detection of crime and the prosecution of offences. This arises from the decisions of the Court of Appeal (Criminal Division) in R v Weir and R v B (Attorney General's Reference No 3/199) May 2000. These raised the issue of whether the law relating to the retention and use of DNA samples on acquittal should be changed. In these two cases compelling DNA evidence that linked one suspect to a rape and the other to a murder could not be used and neither could be convicted. This was because at the time the matches were made both defendants had either been acquitted or a decision made not to proceed with the offences for which the DNA profiles were taken. Currently section 64 of PACE specifies that where a person is not prosecuted or is acquitted of the offence the sample must be destroyed and the information derived from it can not be used. The subsequent decision of the House of Lords overturned the ruling of the Court of Appeal. The House of Lords ruled that where a DNA sample fell to be destroyed but had not been, although section 64 of PACE prohibited its use in the investigation of any other offence, it did not make evidence obtained as a failure to comply with that prohibition inadmissible, but left it to the discretion of the trial judge. The Act removes the requirement of destruction and provides that fingerprints and samples lawfully taken on suspicion of involvement in an offence or under the Terrorism Act can be used in the investigation of other offences. This new measure will bring the provisions of PACE for dealing with fingerprint and DNA evidence in line with other forms of evidence. But this does not advance matters. It shows that Parliament intended to remove the requirement of destruction of data and that fingerprints and samples lawfully taken on suspicion of involvement in an offence . can be used in the investigation of other offences. But that sheds no light on whether it was intended that there should be a policy of blanket indefinite retention. The Commissioner and the Secretary of State draw attention to the words an additional measure has been included to allow all [data]to be retained (emphasis added). But in my view this is an insufficient foundation on which to base a conclusion that the true meaning of section 64(1A) is that, save in exceptional circumstances, biometric data must be retained indefinitely in all cases. Even if all means all data taken from all suspects, the Explanatory Notes do not say that data must be retained in all cases, still less do they say anything about how long the data must or may be kept. There is no indication in the Notes that Parliament intended all material to be kept indefinitely even if it was not necessary to do so in an individual case within the meaning of article 8(2) of the ECHR. The second source is certain passages in speeches of the House of Lords in Marper UK. The issue there was whether section 64(1A) and the ACPO guidelines were compatible with article 8 and 14 of the ECHR: see para 6 of the speech of Lord Steyn. At para 2, Lord Steyn said: But as a matter of policy it is a high priority that police forces should expand the use of such evidence where possible and practicable. But that is a statement at a high level of generality. Lord Steyn was not purporting to define the statutory purpose with any precision. At para 39 Lord Steyn addressed the submission on behalf of the appellants that the legislative aim (of assisting in the investigation of crimes in the future) could be achieved by less intrusive means. He considered the conclusion of Sedley LJ in the Court of Appeal that the degree of suspicion should be considered in individual cases before a decision was made whether or not to retain the data. He rejected this suggestion saying: this would not confer the benefits of a greatly expanded database and would involve the police in interminable and invidious disputes (subject to judicial review of individual decisions) about offences of which the individual had been acquitted. I have already accepted that Parliament intended that the exercise of the section 64(1A) power should lead to a greatly expanded database and that Lord Steyn was rejecting the idea that the scheme contemplated by section 64(1A) should involve assessment of the degree of suspicion on a case by case basis. But he was not saying that, subject to exceptional circumstances, section 64(1A) required the introduction of a scheme under which the data taken from all suspects would be retained indefinitely, since any other interpretation would undermine the statutory purpose. At para 78, Lady Hale said that the whole community (as well as the individuals whose samples are collected) benefits from there being as large a database as it is possible to have. The present system is designed to allow the collection of as many samples as possible and to retain as much as possible of what it has. That is undoubtedly true. But the system included the ACPO guidelines. It was, therefore, not contentious that the system was designed to catch and retain as many samples as possible. Moreover, leaving ECHR issues aside, section 64(1A) does allow the collection and retention of as many samples as possible. Lady Hale was not, however, saying that section 64(1A) required the collection and retention of as many samples as possible. Similarly, at para 88 Lord Brown said that the benefits of the larger database brought about by the now impugned amendment to PACE were manifest. The more complete the database, the better the chance of detecting criminals and of deterring future crime. But here too, Lord Brown was not considering the question whether section 64(1A) conferred a power which, save in exceptional circumstances, could only be exercised by requiring the retention of the data taken from all suspects indefinitely. The question whether, leaving ECHR issues aside, section 64(1A) required the retention of the data taken from all suspects indefinitely was not in issue in Marper UK. The focus of the argument in Marper UK was on whether section 64(1A) and the ACPO guidelines were compatible with the ECHR. In particular, it was on whether article 8(1) was engaged and whether the ACPO scheme was justified under article 8(2). The context of the observations relied on to support the first argument was the practice of the police, save in exceptional cases, to retain all data indefinitely. There was no debate on whether, if article 8(1) was engaged and the ACPO guidelines could not be justified under article 8(2), section 64(1A) could be read and given effect in a way compatible with the ECHR. So I reject the submission that Marper UK provides support for the submission that underpins the first argument, namely that it was the intention of Parliament that, save in exceptional cases, the data of all suspects should be retained indefinitely. In my view, section 64(1A) permits a policy which (i) is less far reaching than the ACPO guidelines; (ii) is compatible with article 8 of the ECHR; and (iii) nevertheless, promotes the statutory purposes. Those purposes can be achieved by a proportionate scheme. It is possible to read and give effect to section 64(1A) in a way which is compatible with the ECHR and section 6(2)(b) of the HRA cannot be invoked to defeat the claim that the ACPO guidelines are unlawful by reason of section 6(1) of the HRA. For the reasons that I have given, to interpret section 64(1A) compatibly with article 8 does not impermissibly cross the line where, to use the words of Lord Bingham in Sheldrake v Director of Public Prosecutions [2005] 1 AC 264, para 28, it would be incompatible with the underlying thrust of the legislation, or would not go with the grain of it, or would call for legislative deliberation, or would change the substance of a provision completely, or would remove its pith and substance, or would violate a cardinal principle of the legislation. This conclusion is consistent with the decision in R (L) v Commissioner of Police of the Metropolis [2010] 1 AC 410. The claimant was employed by an agency providing staff for schools. The agency required her to apply under section 115(1) of the Police Act 1997 for an enhanced criminal record certificate giving the prescribed details of every relevant matter relating to her which was recorded in central records, since she was a prospective employee who was being considered for a position involving regularly being involved with persons under the age of 18. Section 115(7) provided that, before issuing a certificate, the Secretary of State shall request the chief police officer of every relevant police force to provide any information which, in the chief officers opinion (a) might be relevant for the purpose described in the statement under subsection (2), and (b) ought to be included in the certificate. The Commissioner of Police of the Metropolis disclosed certain information about the claimant which was included in the certificate. She sought judicial review of the decision to disclose the information on the ground that her article 8 rights had been violated. On behalf of the Secretary of State, it was submitted that the words any information and ought to be included in section 115(7) showed that Parliament intended widespread disclosure of relevant material and a narrow exception. This interpretation was supported by the protective purpose of the legislation: see p 416G. That was the practice under the relevant police guidelines. It is true that there was no issue in that case about section 6(2) of the HRA. That is why the analogy cannot be pressed too far. But in essence it was being argued in the context of article 8(2) of the ECHR that it was a fundamental feature of the Police Act 1997 that all relevant information could (and should) be disclosed in a criminal record certificate, since anything less would defeat the fundamental protective purpose of the statute. These submissions are similar to those advanced in the present case. But they were rejected. Despite the protective purpose of the legislation and the use of the word any, at para 44, Lord Hope said that the words ought to be included should be read and given effect in a way that was compatible with the applicants article 8 rights. At para 81, Lord Neuberger MR adopted a broad interpretation of section 115(7)(b) and said that, in deciding whether the information ought to be included, there would be a number of different, sometimes competing, factors to weigh up. For all these reasons, I would reject the first argument advanced on behalf of the Commissioner and the Secretary of State. The second argument The second argument is that Parliament could not have intended to entrust the creation of a detailed scheme pursuant to section 64(1A) to the police (with or without the assistance of the Secretary of State) subject only to the judicial review jurisdiction of the court. It is said that the creation of guidelines for the exercise of the section 64(1A) power is a matter for Parliament alone and that it could not have been intended that section 64(1A) should grant a broad discretion to the police such as is contended for by Mr Fordham. This is because the context involves high policy, balancing the public interest in the effective detection, prosecution and prevention of crime against individual freedoms. It is a matter of political controversy, as evidenced by the different policy solutions of the previous and present Government. There are choices to be made between a variety of compatible legislative schemes. These choices are for Parliament alone. The police are in no position, constitutionally or institutionally, to choose between them. It is important to note the scope of this argument. It is not that Parliament could not have granted the police a discretionary power to retain data otherwise than on a blanket indefinite basis. If it had wished to grant such a power to the police, Parliament obviously could have done so. Rather, the argument is that the constitutional and institutional limits on the competence of the police are such that Parliament could not have intended to grant such a power to them. I cannot accept this argument. No question of constitutional competence arises here. Parliament is entitled to give the police the power to create a scheme. No doubt it would have envisaged that a national scheme would be produced such as the ACPO guidelines. The Secretary of State is accountable to Parliament for the scheme so that the democratic principle is preserved. There are circumstances in which institutional competence is a factor in the courts deciding the extent to which it should pay deference to a decision of the executive and allow a discretionary area of judgment. But we are not concerned with the courts judicial review jurisdiction in the present context. We are concerned with a question of statutory interpretation. There is no reason in principle why the police (together with the Secretary of State) should be less well equipped than Parliament to create guidelines for the exercise of the section 64(1A) power. In creating a proportionate scheme, they have to strike a balance. That is inherent in any exercise of this kind, whether it is performed by the executive or Parliament. The police guidelines that were in play in L were not the product of work by Parliament. Policy and guidance documents of this kind, often in areas of acute sensitivity, are frequently created by the executive. Provided that they fulfil the purposes of the enabling statute, they are valid and enforceable. In my view, the fact that difficult decisions would have to be made in producing guidelines for the exercise of the section 64(1A) power is not a sufficient reason for concluding that Parliament could not have intended to give the power to produce them to the police and the Secretary of State. What relief, if any, should be granted? The Biometric Data In deciding what relief to grant, it is important to have regard to the present state of play. As previously stated, Chapter 1 of Part 1 of the Protection of Freedoms Bill includes proposals along the lines of the Scottish model. The history of the varying responses to Marper ECtHR shows that it is not certain that it will be enacted. But we were told by Mr Eadie that it is the present intention of the Government to bring the legislation into force later this year. In shaping the appropriate relief in the present case, I consider that it is right to proceed on the basis that this is likely to happen, although not certain to do so. In these circumstances, in my view it is appropriate to grant a declaration that the present ACPO guidelines (amended as they have been to exclude children under the age of 10), are unlawful because, as clearly demonstrated by Marper ECtHR, they are incompatible with the ECHR. It is important that, in such an important and sensitive area as the retention of biometric data by the police, the court reflects its decision by making a formal order to declare what it considers to be the true legal position. But it is not necessary to go further. Section 8(1) of the HRA gives the court a wide discretion to grant such relief or remedy within its powers as it considers just and appropriate. Since Parliament is already seised of the matter, it is neither just nor appropriate to make an order requiring a change in the legislative scheme within a specific period. The ECtHR has recently decided that, where one of its judgments raises issues of general public importance and sensitivity, in respect of which the national authorities enjoy a discretionary area of judgment, it may be appropriate to leave the national legislature a reasonable period of time to address those issues: see Greens and MT v United Kingdom (Application Nos 60041/08 and 60054/08) (ECtHR, 23 November 2010) at paras 113 115. This is an obviously sensible approach. The legislature must be allowed a reasonable time in which to produce a lawful solution to a difficult problem. Nor would it be just or appropriate to make an order for the destruction of data which it is possible (to put it no higher) it will be lawful to retain under the scheme which Parliament produces. In these circumstances, the only order that should be made is to grant a declaration that the present ACPO guidelines (as amended) are unlawful. If Parliament does not produce revised guidelines within a reasonable time, then the appellants will be able to seek judicial review of the continuing retention of their data under the unlawful ACPO guidelines and their claims will be likely to succeed. The Photographs of GC Mr Cragg raises a discrete issue about the photographs that were taken of GC when he was arrested. Section 64A of PACE confers a power to take, use and retain photographs of arrested persons who are not subsequently convicted of the offence for which they were arrested. In the application for judicial review, the issue of whether the retention of the photographs violated GCs article 8 rights was mentioned in what Moses LJ described as a passing reference in the claim form and in paragraph 20 of the grounds. At para 43, Moses LJ said: the issues of justification for their retention cannot now properly be considered where the Commissioner has had no opportunity to give evidence as to justification. Lord Pannick submits that, in view of the manner in which the issue was raised in the Divisional Court, the consequent absence of any evidence as to justification and the absence of any substantive judgment on the issue from the Divisional Court, the Supreme Court should express no opinion on this part of the appeal, but leave the matter to be determined if and when the point is properly raised in another case. I accept these submissions. I should also mention that Mr Fordham raises a discrete point about information held on the Police National Computer about C. This was the subject of two agreed issues which were dealt with by the Divisional Court at paras 24 26 and 46 47 of the judgment of Moses LJ. It is common ground that the retention of this information raises no separate issues from those raised by the retention of Cs DNA material and his fingerprints. Conclusion For the reasons that I have given, I would allow the appeals and grant a declaration that the present ACPO guidelines are unlawful because they are incompatible with article 8 of the ECHR. I would grant no other relief. I agree with the judgment of Lord Dyson. I have, however, a little that LORD PHILLIPS would add to his reasoning. Section 3 of the Human Rights Act 1998 (the HRA) requires this Court, in so far as it is possible to do so, to interpret legislation in a way which is compatible with Convention rights. Sometimes this results in the Court according to a statutory provision a meaning that conflicts with the natural meaning of a statutory provision see Ghaidan v Godin Mendoza [2004] UKHL 30; [2004] 2 AC 557. In summarising the effect of that decision in Sheldrake v Director of Public Prosecutions [2004] UKHL 43; [2005] 1 AC 264, para 28 Lord Bingham of Cornhill stated that the interpretative obligation under section 3 was very strong and far reaching and might require the court to depart from the legislative intention of Parliament. This is not a case where the HRA requires the Court to accord to a statutory provision a meaning which it does not naturally bear. There is no difficulty in giving section 64(1A) of PACE, set out in para 3 of Lord Dysons judgment (section 64(1A)), an interpretation which is compatible with article 8 of the Convention, as interpreted by the Strasbourg Court in S and Marper v United Kingdom (2008) 48 EHRR 1169. The section gives a discretionary power to the police to retain samples taken from a person in connection with the investigation of an offence. Section 3 of the HRA imposes a duty on the police, as a public authority, in so far as it is possible to do so, to give effect to the power conferred on them in a way which is compatible with Convention rights. There is nothing in the wording of section 64(1A), giving it its natural meaning, which either requires or permits the police to exercise the power conferred on them in a manner which is incompatible with article 8. In order to hold that section 64(1A) is incompatible with the Convention it is thus necessary to identify some matter, extrinsic to the wording of the section itself, that compels one to interpret the section as either requiring or permitting the police to exercise the power conferred on them in a manner incompatible with article 8. Such a matter needs to be extraordinarily cogent in order to overcome the effect of section 3 of the HRA. I have not been able to identify any such matter. In R (S) v Chief Constable of the South Yorkshire Police; R (Marper) v Chief Constable of the South Yorkshire Police [2004] UKHL 39; [2004] 1 WLR 2196 the House of Lords held, wrongly as the Strasbourg Court was to rule, that in so far as section 64(1A) interfered with article 8 rights the interference was justified under article 8(2). In so far as Parliament considered the matter when enacting section 64(1A) it is likely to have taken the same view. Parliament may well have considered that the Convention did not require any restriction to be placed on the exercise of the power conferred by section 64 (1A). It does not follow, however, that Parliament must be presumed to have intended that, if the Convention did require the power to be exercised subject to constraints, the police should none the less be required, or permitted, to disregard those constraints. The effect of section 64(1A) was to reverse the requirement of the previous section 64 of PACE that fingerprints and samples should be destroyed when a suspect was cleared of an offence. The purpose of this reversal was plainly that the police should be permitted to establish a database of such material obtained from those suspected of criminal activity. I see no basis for concluding, however, that Parliament intended that the establishment and maintenance of this database should be untrammelled by any requirements that might be imposed by the Convention. While those requirements limit the circumstances in which material can be retained by application of the familiar test of proportionality, they do not prohibit the maintenance of a database that satisfies that test. Had Parliament foreseen that the Convention required restrictions on the power conferred by section 64(1A) the likelihood is that Parliament, guided by the executive, would itself have wished to define those restrictions rather than leaving them to be determined by executive action. That can be deduced from the fact that Parliaments reaction to Strasbourgs ruling in S and Marper (2008) 48 EHRR 1169 was to pass amending legislation and that the present Government intends to introduce an amending Bill. I do not consider, however, that it follows from this that one must interpret section 64(1A) as requiring the police to exercise the power conferred by that section in a manner which infringes the requirements of the Convention, or even as permitting the police to disregard those requirements. For these additional reasons I can see no warrant for making a declaration of incompatibility, convenient though this might be, and concur in the order proposed by Lord Dyson. LADY HALE Whether and in what circumstances the police should be able to keep the DNA samples and profiles, fingerprints and photographs of people who have been arrested but not convicted is a deeply controversial question. The Government is promoting the Protection of Freedoms Bill which will adopt in England and Wales the present system in Scotland. This allows retention only for a limited period and in respect of certain crimes. It reflects a strong popular sentiment that the police should not be keeping such sensitive material relating to innocent people, even if they are only allowed to use it for purposes related to the prevention or detection of crime, the investigation of an offence, the conduct of a prosecution (Police and Criminal Evidence Act 1984, section 64(1A), as substituted by the Criminal Justice and Police Act 2001, section 82). If the popular press is any guide to public opinion, the decision of the European Court of Human Rights in S and Marper v United Kingdom (2008) 48 EHRR 1169 is one which captures the public mood in Britain much more successfully than many of its other decisions. Among the arguments marshalled against retaining the data are these: (a) The agencies of the state cannot be trusted to use such information only for the permitted purposes, nor can the state be trusted not to enlarge those purposes in future. DNA samples, in particular, might be put to many more controversial uses should the state feel so inclined. (b) Serious bodies have cast doubt upon the usefulness of retaining it even for the permitted purposes. Both the Human Genetics Commission (Nothing to hide, nothing to fear? Balancing individual rights and the public interest in the governance and use of the national DNA Database, November 2009) and the Nuffield Council on Bioethics (The forensic use of bioinformation: ethical issues, September 2007) suggest that the value of casting the net so wide has not yet been proved. (c) The Equality and Human Rights Commission argue, in their intervention in this case, that the premise on which such data are kept, that people who are arrested are more likely than the general population to be involved in future offending, is unsustainable. (d) Liberty point out, in their intervention, that certain sections of the population, in particular men and people from the black and minority ethnic communities, run a disproportionate risk of arrest and therefore of having their data taken and kept. This is a detriment with a discriminatory impact. (e) The detriment is the stigma, certainly felt and possibly perceived by others, involved in having ones data on the database. This stigma, together with wider concerns about potential misuse, is sufficient to outweigh the benefits in the detection and prosecution of crime. Among the arguments marshalled in favour of retaining the data are these: (a) Those of a more trusting nature find it difficult to imagine that there is a serious risk that the agencies of the state will indeed misuse this information for more sinister purposes. The risk would in any event be much reduced if DNA samples were destroyed and only profiles, fingerprints and photographs retained. (b) As to their usefulness, the Chief Constable of the West Midlands gave evidence on 22 March 2011 to the House of Commons Public Bill Committee hearing on the Protection of Freedoms Bill that between 2 and 3 per cent of the 36,000 hits on the database would be lost if the proposals in the Bill became law. These may only be a small proportion of the total, but among the 1000 or so crimes which would not be solved some would be very serious. (c) It is not clear that the underlying premise is indeed that people who have been arrested but not charged or convicted are more likely than the general population to commit crimes. After all, the Act also allows the police to keep data they have collected from people who have never been arrested, provided that they consent. The reality is that arrest gives the police the opportunity compulsorily to collect the data: it is not the reason why they do so. (d) The discriminatory impact of disproportionate arrest rates among male and black and minority ethnic members of the population could as logically be addressed by compiling a national database of everyone, rather than by restricting it to people involved in the criminal justice system. There is now a proliferation of national databases holding data on large sections of the population which data can be put to far more detrimental uses than this. (e) Any stigma felt or perceived is irrational, at least if the information is used for its permitted purposes. A person who might otherwise have been among the usual suspects arrested for a crime may be eliminated before he even gets to the police station. A person who is rightly arrested, prosecuted and convicted because a match is found does not deserve our sympathy. We should be concentrating on the quality of the scientific evidence as to sampling and matching rather than on the feelings of those whose samples have been kept. The feelings of the victims of crime are at least as important as the feelings of the criminals. They too have a human right to have their physical and mental integrity protected by the law, and it is in this context that DNA evidence, in particular, has proved most useful. We are not called upon to resolve that debate in this case. It is common ground that the decision of the House of Lords in R (S) v Chief Constable of the South Yorkshire Police; R (Marper) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196 (Marper UK) cannot stand in the light of the decision of the European Court of Human Rights in S and Marper v United Kingdom (2008) 48 EHRR 1169. The only question is what we should do about it in this case. This is, as I understand it, a question governed by legal principle and the Human Rights Act 1998 and not by our particular preferences for how the United Kingdom should solve the problem. There are three broad options open to the court: (i) We could decide, in the light of the individual facts of the cases before us, whether the retention of data in each case is compatible with the appellants Convention rights. If it is not, we could make declarations to that effect and even mandatory orders for the deletion and destruction of the data involved. (ii) We could declare that the current ACPO guidelines, approved in Marper UK, are unlawful, without determining what would be lawful in the cases before us. (iii) We could declare that section 64(1A) of PACE is incompatible with the Convention rights, thus leaving the current guidelines in place and everything done under them lawful until Parliament enacts a replacement either by primary legislation or under the fast track remedial procedure laid down in section 10 of the Human Rights Act. The choice between (i) or (ii), on the one hand, and (iii), on the other hand, depends upon the difficult and important question (see Lord Mance in Doherty v Birmingham City Council [2008] UKHL 57, [2009] 1 AC 367, para 141) of the meaning and scope of section 6(2)(b) of the Human Rights Act. This, rather than the policy debate outlined above, is the important issue in this case. If it is resolved in favour of (i) or (ii) and against (iii), then the choice between (i) and (ii) depends upon what the court considers a just and appropriate remedy under section 8(1) of the 1998 Act. I should say at once that on both issues I agree with the conclusions reached by Lord Dyson. Under section 6(1) of the Act, it is unlawful for a public authority to act in a way which is incompatible with a Convention right. But the sovereignty of Parliament requires that exceptions be made for certain things which are done pursuant to an Act of the United Kingdom Parliament. As the annotations to the Act (by Peter Duffy QC and Paul Stanley) in Current Law Statutes explain, the exceptions are all designed to prevent section 6 being used to circumvent the general principle of the Act embodied in sections 3(2)(b) and 4(6)(a), that incompatible primary legislation shall remain fully effective unless and until repealed or modified. In that event, the most that the court can do is make a declaration under section 4(2) that the Act is incompatible and leave it to Parliament to decide what, if anything, to do about it. It follows, however, that the exceptions must be read along with section 3(1). Section 3(1) requires that 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. This obligation is laid upon everyone, not just upon the courts. Two exceptions to the general rule in section 6(1) are provided by section 6(2). Section 6(2)(a) has presented little difficulty: it provides that subsection (1) does not apply if as the result of one or more provisions of primary legislation, the authority could not have acted differently. This covers situations where the public authority was required by an incompatible Act of Parliament to do as it did (or perhaps where it had a choice between various courses of action, each of which was incompatible with the Convention rights). Although section 6(2)(a) does not say so, it must be read subject to section 3(1). So both the public authority and the courts, in deciding whether or not the authority could have acted differently, will have first to decide whether the Act of Parliament can be read or given effect in a way which is compatible rather than incompatible with the Convention rights. If the Act can be read compatibly, then it follows that the authority could have acted differently and will have no defence if it has acted incompatibly. Section 6(2)(b) makes the link with section 3(1) explicit, but has caused much more difficulty in practice. It provides that section 6(1) does not apply to an act (or failure to act) if 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. So the first question is always whether the primary legislation can be read or given effect in a compatible way. If it can, that is an end of the matter: see Manchester City Council v Pinnock [2010] UKSC 45, [2010] 3 WLR 1441, paras 93 to 103. In that case, both the provision requiring the court to make a possession order in respect of a demoted tenancy and the provision empowering the local authority to seek one could be read and given effect in a compatible way. This bears out the prediction by Beatson and others, in Human Rights: Judicial Protection in the United Kingdom (2008), para 6 23, that cases where legislation cannot be read down under section 3 are likely to be rare. However, if the legislation cannot be so read or given effect, the second question is whether the public authority was acting so as to give effect to or enforce it. As to this, it is possible to detect some differences of opinion among the judges. Some have taken the view that the fact that there may be choices involved in whether or not to give effect to or enforce the incompatible provision makes no difference: the authority was acting so as to give effect to or enforce it. Others, most notably Lord Mance in Doherty, would draw a distinction between the court, which might have no choice but to give effect to an incompatible provision, and the public authority bringing the proceedings, which could choose whether or not to do so and should be guided by Convention values when making its decisions. Fortunately, we do not have to resolve that debate. This case is about the first question: can section 64(1A) be read and given effect compatibly with the Convention rights? In my view it clearly can. This is for two principal reasons. The first relates to the requirement to read that is, interpret statutory language compatibly with the Convention rights. In this case, to say that section 64(1A) cannot be so read involves reading may be retained as must be retained, save in exceptional circumstances. This would be doing the reverse of what section 3(1) requires. In other words, it would be reading into words which can be read compatibly with the Convention rights a meaning which is incompatible with those rights. It would be giving the broad discretion provided in section 64(1A) an unnatural or strained meaning to require it to be given effect in an incompatible way. That view is reinforced by the fact that it was the clear intention of Parliament to legislate compatibly rather than incompatibly with the Convention rights. Section 64(1A) was introduced into PACE by section 82 of the Criminal Justice and Police Act 2001. When the Bill which became that Act was introduced into Parliament, it was prefaced by the ministerial statement required by section 19(1)(a) of the Human Rights Act. The Home Secretary, Mr Straw, stated that In my view the provisions of the Criminal Justice and Police Bill are compatible with the Convention rights. He was not alone in that view. After all, the House of Lords in Marper UK unanimously took the view that section 64(1A) was compatible with the Convention rights. But this does not suggest to me that Parliaments intention was that the apparent discretion which it conferred should inevitably be read incompatibly with the Convention rights should that view later prove to be unfounded. Quite the reverse. The second relates to the requirement in section 3(1) that legislation be given effect compatibly with the Convention rights. As Lord Rodger emphasised in Ghaidan v Godin Mendoza [2004] UKHL 30, [2004] 2 AC 557, para 107, section 3(1) contains not one, but two, obligations. In retrospect, that is what the Court of Appeal had in mind in the case which became In re S (Minors) (Care Order: Implementation of Care Plan) [2002] UKHL 10, [2002] 2 AC 291: that the courts power to make a care order giving the local authority enhanced (that is, determinative) parental responsibility for a child should be given effect in such a way as to prevent the local authority exercising that responsibility incompatibly with the Convention rights of either the child or his parents. Also in retrospect, one can see that the proper remedy for incompatible actions by the local authority is a free standing action under section 7(1)(a) of the Human Rights Act, rather than by the care court adopting powers which contradicted the cardinal principle of the separation of powers between court and local authority in care proceedings. In re S is the strongest case in favour of the position adopted by the Chief Constable and the Secretary of State in this case. They have to argue that, despite ostensibly giving the police a discretion, the cardinal principle was, not that data may be kept, but that they must be kept. The ACPO guidelines could say only one thing. Further, they must argue that that principle is so fundamental to the legislative purpose that only Parliament can modify it if it turns out that those guidelines are incompatible with the Convention rights. I can readily accept that it may be desirable for Parliament rather than the Association of Chief Police Officers to put something in its place. But I cannot see how it was possible for the discretion conferred by section 64(1A) to be exercised in accordance with ACPO guidelines when it was first enacted but it is not possible for it to be so exercised now. In other words, if it was possible to read and give effect to section 64(1A) by means of ACPO guidelines when it was first enacted, it must be possible to do so now. And ACPO as a public authority has to act compatibly with the Convention rights. For these reasons, therefore, section 64(1A) is not incompatible with the Convention rights and cannot be so declared. However, the need for a consistent national approach must be relevant to the choice between remedy (i) and remedy (ii). The court is empowered by section 8(1) to grant such relief or remedy in relation to an unlawful act as it considers just and appropriate. There would be nothing to stop ACPO promulgating some new and Convention compliant guidelines. Now that Marper UK has been overruled, they clearly should set about doing so unless Parliament does it for them within a reasonably short time. But I certainly accept that the system will not work if different police forces adopt different policies. So it would not be appropriate (such a flexible word) for this court to make mandatory decisions in individual cases unless and until it becomes clear that neither ACPO or Parliament is prepared to make the difficult choices involved. I therefore agree that we should declare the current guidelines unlawful but grant no further relief. LORD JUDGE I agree with the reasoning and conclusions of the majority of the members of the Court. In deference to the contrary views I shall add some brief words of my own. The insertion of section 64(1A) in the Police and Criminal Evidence Act 1984 (the 1984 Act) by section 82 of the Criminal Justice and Police Act 2001 resulted in the promulgation of the Retention Guidelines for Nominal Records on the Police National Computer (the ACPO Guidelines) 2006. Thereafter in England and Wales the retention of biometric data (DNA samples) was governed by these guidelines which derived their authority from section 64(1A). The judicial examination of these provisions in England and Wales culminated in a decision of the House of Lords in R (S and Marper) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196 that the retention of DNA samples did not constitute an interference with the rights granted by article 8 of the European Convention of Human Rights, or if it did, that the interference was modest and proportionate. The Grand Chamber of the European Court of Human Rights disagreed, and concluded that the system created by the ACPO Guidelines constituted an interference with article 8 rights. (S v United Kingdom (2008) 48 EHRR 1169). Taking account of the decision and applying its reasoning we are all agreed that the decision of the House of Lords should no longer be treated as authoritative. Therefore these appeals must be allowed. The forensic battle is directed at the consequences which should now flow. The starting point is the reasoning of the Grand Chamber which identified the way in which different member states addressed the retention issue, and acknowledged that even following acquittal, it was permissible, subject to specific limitations within the domestic arrangements, for DNA samples to be retained. What however was required of any arrangements for retention was an approach which discriminated between different kinds of cases and for the application of strictly defined storage periods for data, even in more serious cases. Attention was drawn to the position in Scotland where the legislative arrangements permitted the retention of the DNA of unconvicted individuals, limited in the case of adults to those charged with violent or sexual offences and even then, for three years only, with the possibility of an extension for a further two years with judicial agreement. These arrangements were not criticised. Indeed the court acknowledged that the retention of DNA profiles represented the legitimate purpose of assisting in the identification of future offenders. In short the existence of the legislative provisions for the retention of DNA samples was endorsed, but criticism was directed at the blanket and indiscriminate nature of the power of retention found in the ACPO Guidelines. Accordingly nothing in the judgment of the Court leads to the conclusion that a different, less all encompassing scheme deriving its authority from section 64(1A) would contravene article 8, or that the law in relation to DNA samples should revert to the former wide ranging prohibition against the retention of samples of any kind which was the striking feature of section 64 of the 1984 Act as originally enacted. Rather the judgement confirmed that legislative arrangements may provide for the retention of the DNA samples of those acquitted of criminal offences. That is what section 64(1A), reversing the provisions of section 64, permits. In these circumstances it was open to ACPO to reconsider and amend the guidelines (as indeed, at least in part, it did) in the light of the decision of the European Court, and it would be open to ACPO to do so in the light of the decision of this court. Section 64(1A) does not preclude an amendment to the Guidelines which addresses the criticisms. In other words, although the process of further amendment to the arrangements for the retention of DNA samples in England and Wales has been and continues to be addressed through legislation, this was not and is not the only way to provide for the protection of article 8 rights against the current scheme for their indiscriminate retention. In my judgment section 64(1A) is Convention compliant, whereas the ACPO Guidelines in their present form are not. Accordingly, the retention of the DNA samples of these appellants was unlawful, but a declaration of incompatibility would be inappropriate. LORD KERR Lord Rodger and Lord Brown in powerfully reasoned judgments, which I initially found persuasive, have concluded that section 64(1A) of the Police and Criminal Evidence Act 1984 (PACE) had as its purpose the institution of a scheme for the indefinite retention of biometric data taken from all suspects (with very limited exceptions) in connection with the investigation of offences. On that account they found that, despite the seemingly permissive language of the subsection, the Association of Chief Police Officers (ACPO), to whom the task of drawing up guidelines for the implementation of section 64(1A) had been entrusted, were obliged to ensure that, instead of being destroyed as previously required by section 64(1) of PACE, samples taken from suspects would be retained indefinitely and so remain available to the police on the national DNA database. If indefinite retention of data was indeed section 64(1A)s unmistakable purpose, I would have readily agreed that the discretion that samples may be retained after they have fulfilled the purposes for which they were taken would have to be exercised so as to give effect to that intention. That, as Lord Rodger has said, would be the inevitable consequence of the application of the principle for which Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 is the seminal authority: that a discretion conferred with the intention that it should be used to promote the policy and objects of the Act can only be validly exercised in a manner that will advance that policy and those objects. More pertinently, the discretion may not be exercised in a way that would frustrate the legislations objectives. Everything therefore depends on what one decides is the true intention or purpose of the legislation. This is not as easy a question to answer as the simple formulation, what was the purpose of the legislation, suggests. As Lord Brown has pointed out in para 145 of his judgment, the search for the purpose of a particular item of legislation may have to follow a number of avenues and may require consideration of several aspects of the enactment what is the grain of the legislation, what its underlying thrust etc. An important factor in the conclusion on this critical question which Lord Rodger has identified is the fact that Parliament clearly saw the need for retreat from the position that had hitherto obtained under section 64(1) and (3) of PACE as originally enacted. Those subsections were in these terms: (1) If (a) fingerprints or samples are taken from a person in connection with the investigation of an offence; and (b) he is cleared of that offence, they must be destroyed as soon as is practicable after the conclusion of the proceedings. (3) If (a) fingerprints or samples are taken from a person in connection with the investigation of an offence; and (b) that person is not suspected of having committed the offence, they must be destroyed as soon as they have fulfilled the purpose for which they were taken. As Lord Rodger has pointed out, the decision of the House of Lords in Attorney Generals Reference (No 3 of 1999) [2001] 2 AC 91 brought to the attention of the public and Parliament the effect of these provisions. Potentially useful evidence was not being used for reasons that, as Lord Steyn put it, were contrary to good sense (p 118). No doubt reaction to the experience in that case contributed to Parliaments decision to enact section 64(1A) but did it, as Lord Rodger has concluded, lead to Parliaments resolve that samples taken from suspects would be retained indefinitely and so remain available to the police on the national DNA database? In my judgment, and largely for the reasons given by Lord Dyson, it did not. In the first place, if that was Parliaments intention it chose a curious way to achieve it. A simple, unambiguous provision to that effect would not have been difficult to devise. And if the purpose of the legislation was to obtain a blanket, universally applied (apart from exceptional cases) policy, why would Parliament have left the practicalities of implementing the policy to ACPO? The drafting of the provision at a level of generality surely suggests that Parliament intended a measure of flexibility to be a feature of its application. This is unsurprising. The history of evolving knowledge as to the use to which DNA evidence could be put provided the clearest possible reasons not to adopt over prescriptive rules that might impede its full exploitation in circumstances unforeseen at the time of their enactment. Just as it was judged, in retrospect, to be unwise to have an immutable requirement to destroy all samples from certain categories of suspects and defendants, so also it would be unwise to substitute that obligation with a blanket requirement to retain all samples. Various members of the Appellate Committee of the House of Lords in R (S) v Chief Constable of the South Yorkshire Police; R (Marper) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196 described the benefits that can flow from the maintenance of an expanded database for DNA samples and I am in respectful agreement with all that Lord Steyn, Lady Hale and Lord Brown had to say on this subject in that case. But I do not consider that it necessarily follows that an inflexible policy requiring retention of virtually every sample taken from suspects and defendants is needed in order to have a viable and worthwhile resource. Whatever view one takes of the competing policy arguments on this issue, however, it is, to my mind, quite clear that Parliament did not intend that this was the only way in which the legislation could be implemented. Not only does section 64(1A) use the permissive may in relation to the retention of samples but subsection (3) is retained in its original state, albeit that it may now be disapplied in a variety of circumstances outlined in section 64(3AA) to (3AD). This seems to me clearly to indicate recognition that there should be limits on the retention of samples but, not surprisingly, Parliament did not attempt to forecast comprehensively what those limits should be. The structure of the new section 64 is strongly suggestive of an intention to devise a scheme that would respond to developments in this field, not least any view that might be taken as to the human rights implications that might come to be recognised. As Lord Dyson has put it, Parliaments intention must be taken to have been to create a proportionate scheme which is compatible with ECHR. There is nothing to impel the conclusion that Parliament intended that the scheme could not adapt to whatever the compatibility requirements were found to be. On the contrary, there is every reason to suppose that Parliament intended that the scheme could be adapted to meet those requirements as and when they became apparent. What the Commissioner and the Secretary of States argument resolves to is that, in interpreting section 64, we should recognise that an underlying, not expressly articulated, purpose was that the samples had to be retained indefinitely, regardless of the circumstances in which they were taken or of the circumstances of the individual from whom they had been taken. There is nothing in the language of the section itself that compels such an exclusive interpretation. Indeed, as Lord Phillips has pointed out, acceptance of this argument would involve reading more into section 64(1A) than its ordinary language conveys. ACPOs guidelines were an essential complement to the statutory scheme. Those guidelines have been altered (in relation to children under 10) as a result of the decision of the Grand Chamber in S and Marper v United Kingdom (2008) 48 EHRR 1169. There is no lawful impediment to ACPO devising and implementing guidelines that take full account of the other features which Strasbourg has decreed are necessary for the operation of the scheme to be Convention compliant. Classifications (as to which categories of offences or individuals should require retention of samples) and long stop provisions (as to the period that they should be retained) are well within the institutional reach of ACPO. So also are the circumstances in which exceptions to the guidelines can be permitted. ACPO chose the exceptionality criteria. They may equally change those criteria. And because there is no legal impediment in them doing so, then under section 6 of HRA, they or Parliament must. Section 6(2)(b) can only come into play if ACPO cannot act. If it can, then it must. Because Parliamentary change is imminent, however, and because significant policy issues need to be considered, it is not unreasonable to leave this to Parliament. I therefore agree with the order proposed by Lord Dyson. I also agree with all that Lord Dyson has had to say on the argument that Parliament could not have intended to entrust the creation of a detailed scheme pursuant to section 64(1A) to the police subject only to the judicial review jurisdiction of the court. As he has said, the scope of the argument is confined. It is to the effect that, although it could have done so if it had considered it appropriate, Parliament must be taken not to have intended to grant such a power because of the constitutional and institutional limits on the competence of the police. But Parliament does not appear to have felt such qualms in giving the initial responsibility for the devising of guidelines to ACPO and, as Lord Dyson has pointed out, no question of constitutional competence arises. Finally, I agree with Lord Dysons conclusion on the discrete issue of GCs photographs. DISSENTING JUDGMENTS ON THE APPROPRIATE RELIEF LORD RODGER In September 1984 Sir Alec Jeffreys made his ground breaking discovery of DNA fingerprints. A few weeks later, on 31 October, the Police and Criminal Evidence Act 1984 (PACE) was enacted. Within a few years Sir Alecs discovery was being used routinely in the criminal courts in this country. Section 64(1) of PACE, as originally enacted in ignorance of this major development that lay just ahead, provided: If (a) fingerprints or samples are taken from a person in connection with the investigation of an offence; and (b) he is cleared of that offence, they must be destroyed as soon as is practicable after the conclusion of the proceedings. In January 1997 an unidentified intruder raped and assaulted a woman in her home in London. Swabs were taken from her and were found to contain semen. A DNA profile was obtained from the semen and placed on the national DNA database. In January 1998 a man was arrested for an unrelated offence of burglary. A saliva sample was taken from him and a DNA profile was derived from it. In August of the same year the man was acquitted of the burglary and, by virtue of section 64(1) of PACE, his sample should have been destroyed. In fact, however, his profile was left on the DNA database and in October a match was made between this profile and the DNA profile derived from the semen in the swabs taken from the woman who had been raped in January 1997. The man was arrested and a DNA profile was obtained from a hair plucked from him. As was to be expected, this profile also matched the DNA derived from the semen. At his trial for the rape the judge held, however, that, since the material which had led to his identification should have been destroyed as required by section 64(1), the evidence relating to the profile from the plucked hair was not admissible. The man was acquitted. The Attorney General referred the matter to the Court of Appeal who agreed with the judge but referred the point to the House of Lords. In Attorney Generals Reference (No 3 of 1999) [2001] 2 AC 91 the House reversed the Court of Appeal. The speech of Lord Steyn, with which the other members of the appellate committee agreed, was notable for his observation, at p 118, that the austere interpretation of the Court of Appeal produced results which were contrary to good sense. For present purposes, that case is important because it alerted the public and politicians to the fact that the obligation under section 64(1) of PACE to destroy samples if the suspect was acquitted meant that evidence which might lead to the detection and prosecution of the perpetrators of other crimes would be lost. Just a few weeks after their Lordships decision, in the course of the second reading debate on the Criminal Justice and Police Bill, the Home Secretary introduced Part IV of the Bill which, he explained, was designed, inter alia, to amend section 64(1) of PACE to prevent evidence being lost in this way. The Home Secretary referred to Lord Steyns speech as demonstrating the need for the change: Hansard (HC Debates), 29 January 2001, col 42. This history shows beyond doubt that Parliaments purpose in enacting section 82 of the Criminal Justice and Police Act 2001, which inserted section 64(1A) into PACE, was to ensure that, in future, instead of being destroyed, samples taken from suspects would be retained indefinitely and so remain available to the police on the national DNA database. This would protect the public by facilitating the detection and prosecution of the perpetrators of crimes. Section 64(1A) provides: (1A) Where (a) fingerprints, impressions of footwear or samples are taken from a person in connection with the investigation of an offence, and (b) subsection (3) below does not require them to be destroyed, the fingerprints, impressions of footwear or samples may be retained after they have fulfilled the purposes for which they were taken but shall not be used by any person except for purposes related to the prevention or detection of crime, the investigation of an offence, the conduct of a prosecution or the identification of a deceased person or of the person from whom a body part came. After this provision came into force, in accordance with guidelines from the Association of Chief Police Officers (ACPO) the police proceeded to retain data indefinitely and so to build up their DNA database of samples and profiles obtained from people who had been suspected of crimes, even if they had not been prosecuted or had been acquitted. In due course in two appeals to the House of Lords this system was challenged as being in violation of the suspects article 8 Convention rights: R (S) v Chief Constable of the South Yorkshire Police; R (Marper) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196. In the leading speech Lord Steyn said, at p 2198E F, para 2, that as a matter of policy it is a high priority that police forces should expand the use of [DNA] evidence where possible and practicable. He went on to refer to public disquiet that the obligation to destroy samples under the unamended section 64(1) of PACE had sometimes enabled defendants who had in all likelihood committed grave crimes to walk free. Baroness Hale of Richmond observed, at p 2219G H, para 78, that The present system is designed to allow the collection of as many samples as possible and to retain as much as possible of what it has. The benefit to the aims of accurate and efficient law enforcement is thereby enhanced. In the light of such considerations the House of Lords held unanimously that the system did not violate the appellants article 8 Convention rights. To Strasbourg, however, the matter appeared differently. In S v United Kingdom (2008) 48 EHRR 1169 the Grand Chamber first held unanimously and contrary to the majority view in the House of Lords that the English system did indeed involve an interference with suspects article 8 rights. Then, when considering the proportionality of that interference, the court observed, at pp 1200 1201, para 119: In this respect, the Court is struck by the blanket and indiscriminate nature of the power of retention in England and Wales. The material may be retained irrespective of the nature or gravity of the offence with which the individual was originally suspected or of the age of the suspected offender; fingerprints and samples may be taken and retained from a person of any age, arrested in connection with a recordable offence, which includes minor or non imprisonable offences. The retention is not time limited; the material is retained indefinitely whatever the nature or seriousness of the offence of which the person was suspected. Moreover, there exist only limited possibilities for an acquitted individual to have the data removed from the nationwide database or the materials destroyed; in particular, there is no provision for independent review of the justification for the retention according to defined criteria, including such factors as the seriousness of the offence, previous arrests, the strength of the suspicion against the person and any other special circumstances. The court went on to conclude, at p 1202, para 125: that the blanket and indiscriminate nature of the powers of retention of the fingerprints, cellular samples and DNA profiles of persons suspected but not convicted of offences, as applied in the case of the present applicants, fails to strike a fair balance between the competing public and private interests and that the respondent State has overstepped any acceptable margin of appreciation in this regard. Accordingly, the retention at issue constitutes a disproportionate interference with the applicants right to respect for private life and cannot be regarded as necessary in a democratic society. In response to the European Courts judgment the last Parliament passed the Crime and Security Act 2010, section 14 of which was designed to amend section 64 of PACE with a view to establishing a regime for the retention and destruction of DNA material and profiles that would be compatible with article 8 as interpreted by the European Court. The new Government, which came into office in May 2010, decided, however, not to commence this legislation Instead, in Chapter 1 of Part 1 of the Protection of Freedoms Bill, it has put fresh legislative proposals, along similar lines to the legislation in Scotland, before Parliament. There were indications in the European Courts judgment that a system along those lines would indeed be compatible with article 8. As in the earlier legislation, the complex proposals include provision for a National DNA Database Strategy Board to oversee the operation of the DNA database. Obviously, in the light of the European Courts judgment the indefinite retention of the data relating to the appellants under the existing system is incompatible with their article 8 rights. The decision of the House of Lords to the contrary in R (S) v Chief Constable of the South Yorkshire Police; R (Marper) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196 must accordingly be overruled. That is accepted by the respondent, the Metropolitan Police Commissioner, and by the Home Secretary, who has intervened in the proceedings. Where the Commissioner and the Home Secretary part company with the appellants is as to the order, if any, which the court should pronounce in these circumstances. In effect, for the appellant C Mr Fordham QC argued that section 64(1A) is worded (may be retained) so as to give the Commissioner and chief constables an open discretion as to whether data should be retained and, if so, for how long and subject to what conditions. The position was therefore quite straightforward. By virtue of section 6(1) of the Human Rights Act 1998 the Commissioner and chief constables were obliged to exercise that discretion so as to establish and maintain a system for the retention of samples and data that would comply with suspects article 8 Convention rights as they are now to be interpreted in the light of the decision of the European Court. It was unlawful for them not to do so. Mr Fordham indicated that he would be content for the court to pronounce a declaration to this effect, without making any order for the removal of the data relating to his client. While adopting the bulk of Mr Fordhams submissions, on behalf of the appellant GC, Mr Cragg asked the court to go further and indicate that in his case the position should be put right within 28 days. Mr Fordhams argument is, of course, unanswerable if he is right to say that the crucial words (may be retained) in section 64(1A) confer a wide indeed open discretion on the Commissioner and the chief constables whose forces retain the samples and data that make up the national DNA database. If that is correct, then, even though, when section 64(1A) came into force, ACPO issued guidelines requiring that subject to a narrow exception all the DNA samples and data relating to suspects should be retained indefinitely, the Association could with equal propriety have issued completely different guidelines which would have resulted in a system that did not provide for the indefinite retention of the samples and data. On that interpretation, any credit for the creation of the present DNA database is to be accorded to ACPO for choosing, of its own freewill, to issue the guidelines which it did. More particularly, since ACPO had been, and still was, free to adopt other completely different guidelines, ACPO could now issue fresh guidelines which would produce a system that was compatible with the European Courts judgment. The key question, therefore, is whether Mr Fordhams construction of section 64(1A) as conferring this wide discretion on the police is correct. On behalf of the Commissioner Lord Pannick QC argued that it is not. He drew attention to the context, which I have already described, in which Parliament enacted section 64(1A). This showed that Parliament had set out to cure the mischief that the original version of section 64(1) of PACE meant that suspects samples and data were removed from the database even although as Attorney Generals Reference (No 3 of 1999) demonstrated the retention of that material could potentially result in the detection and prosecution of serious criminals. Parliament plainly intended that in future this material should be retained on the DNA database indefinitely. In other words, under section 64(1A) the police had to retain it indefinitely. Mr Fordham said, rhetorically, that, if this were correct, then the Home Secretary could have brought proceedings against the police if they had failed to retain the material indefinitely. Accepting the challenge, Mr Eadie QC said that, while the matter would probably have been sorted out in a different way, if necessary, such proceedings could indeed have been brought. It is useful to notice just how far reaching Mr Fordhams argument is: essentially, under section 64(1A) the police were free to do what they liked. On his approach the provision contained nothing to delimit the exercise of their discretion. When listening to his argument, at times I felt that unconsciously, of course he was intent on pulling down one of the most important bulwarks which our predecessors so painstakingly erected against arbitrary acts of the executive. In Car Owners Mutual Insurance Co Ltd v Treasurer of the Commonwealth of Australia [1970] AC 527, 537E F, Lord Wilberforce observed that in a statutory framework it is impossible to conceive of a discretion not controlled by any standard or consideration stated, or to be elicited from, the terms of the Act. He was, of course, reflecting the thinking in Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 where Lord Reid had said, at p 1030B D, that 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. Following that classic authority, in my view the power which was conferred on the police by section 64(1A) had to be exercised in accord with the policy and objects of that enactment. As I have explained, the policy and objects of Parliament in enacting section 64(1A) were plainly that DNA samples and data derived from suspects should be retained indefinitely so that a large and expanding database should be available to aid the detection and prosecution of the perpetrators of crimes. The police were therefore bound to exercise the power given to them by section 64(1A) in order to promote that policy and those objects. This meant, in effect, that, subject to possible very narrow exceptions (e g, those suspected of a crime which turned out not to be a crime at all), the police had to retain on their database the samples and profiles of all suspects. In short, the police were under a duty to do so. By a slightly different route this analysis reaches the same result as the older well known line of authority to the effect that, on the proper construction of a statute as a whole and in its context, it can sometimes be seen that a power granted to, say, an official, court or other body in the public interest must be regarded as having been coupled with an implied duty on the recipient to exercise the power in the circumstances envisaged for its exercise. See, for instance, Julius v Lord Bishop of Oxford (1880) 5 App Cas 214; Attorney General v Antigua Times Ltd [1976] AC 16, 33F G, per Lord Fraser of Tullybelton. In my view, therefore, given the policy and objects of the enactment, before the decision of the European Court the police could not have exercised their power under section 64(1A) by choosing to retain samples and data for, say, only three years (or any other period deliberately not prescribed in the legislation) and then destroying them. Similarly, given the policy and objects of the enactment, the police could not have exercised the power to detain material indefinitely by choosing to delete material from those against whom, in their view, suspicion fell below some arbitrary level not recognised in the legislation. Any such exercise of their power would have defeated, rather than promoted, the policy of the enactment and would therefore have been unlawful. In the light of the European Courts decision, it can now be seen that the policy and objects of section 64(1A), to create a virtually comprehensive and expanding database of DNA profiles from suspects, violate the article 8 Convention rights of unconvicted suspects. Given that the Protection of Freedoms Bill has been introduced into Parliament, there is good reason to believe that legislation will be passed in the foreseeable future to establish a new system. The question in the present proceedings is whether in the meantime, by virtue of section 3(1) of the HRA or otherwise, the police must read and give effect to section 64(1A) in a way that is compatible with article 8 as interpreted by the European Court and whether they act unlawfully if they do not. Since I reject Mr Fordhams argument that section 64(1A) gives the police an open discretion as to what to do, I also reject his further, seductive, argument that, having regard to section 6(1) of the HRA, they can and should simply exercise that discretion in such a way as to establish a lawful system that meets the requirements of the Strasbourg court for example, by choosing to retain samples and data for only three years, subject, perhaps, to a power in an independent body to extend the period for some further defined period (as under the Scottish legislation), or by only retaining the material from those suspected of certain classes of crimes, or by only retaining the material from those against whom there is a high degree of suspicion etc. All of those suggested steps would have been inconsistent with the policy and objects of section 64(1A) as originally enacted. So they could only be adopted now, in order to comply with the European Courts decision, if section 3(1) of the HRA makes that not only possible but indeed obligatory. Section 3 provides: (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. (2) This section (a) applies to primary legislation and subordinate legislation whenever enacted; (b) does not affect the validity, continuing operation or enforcement of any incompatible primary legislation; and (c) does not affect the validity, continuing operation or enforcement of any incompatible subordinate legislation if (disregarding any possibility of revocation) primary legislation prevents removal of the incompatibility. The opening phrase in subsection (1) shows that there are limits to the duty which it imposes. The words of Lord Nicholls of Birkenhead in In Re S (Minors) (Care Order: Implementation of Care Plan) [2002] 2 AC 291, 313, para 40, are a useful guide to where those limits lie: For present purposes it is sufficient to say that a meaning which departs substantially from a fundamental feature of an Act of Parliament is likely to have crossed the boundary between interpretation and amendment. This is especially so where the departure has important practical repercussions which the court is not equipped to evaluate. In such a case the overall contextual setting may leave no scope for rendering the statutory provision Convention compliant by legitimate use of the process of interpretation. Mr Fordham submitted that the fundamental feature of section 64(1A) was the retention of the material for the purposes of creating a DNA database, not the indefinite retention of the material with a view to establishing a virtually comprehensive database of DNA material from suspects. In my view that submission is unrealistic. The truth is that Parliament wanted to eliminate the danger, which existed under the pre existing legislation, that valuable evidence would be lost and potential prosecutions of the guilty based on the latest science would be jeopardised if material had to be removed from the database. Providing for the material to be retained on the database indefinitely was therefore the fundamental feature of the amending legislation which inserted section 64(1A) into PACE. That being so, section 3(1) of the HRA does not oblige or permit the courts or the police to read or give effect to section 64(1A) in a way that departs substantially from that fundamental feature. And it is quite obvious that any reading of section 64(1A) which would be apt to obviate the defects identified in the existing system by the European Court would depart very substantially indeed from that fundamental feature of the provision would, indeed, contradict it. It is therefore nothing to the point that, from a linguistic point of view, the provision might easily be read as though it said that samples may be retained, consistently with the suspects article 8 Convention rights. The hypothetical additional words, though few in number, would have the effect, and would be intended to have the effect, of altering the provision so as, say, to limit the samples and data that were to be retained and the time for which they could be retained, and to impose a duty to remove them after that time and so to negate the defining feature of the legislation. In other words, the court would have crossed the line from interpreting to amending the legislation. Amending section 64(1A) in that way is something which only Parliament can do. Parliament showed itself willing to pass amending legislation in the Crime and Security Act 2010. The fact that the new Government decided not to commence that legislation, but chose to introduce a Bill providing for a different scheme shows that there is a range of possible ways to bring the system into line with the requirements of article 8 and room for doubt about which is the best policy to adopt. This court is in no position to weigh the competing practical advantages and disadvantages of the possible solutions. These are further features which confirm that the necessary changes require legislation and cannot be made by any legitimate interpretation, however extensive, under section 3(1): In Re S (Minors) (Care Order: Implementation of Care Plan) [2002] 2 AC 291, 313, para 40, per Lord Nicholls. Section 64(1A) is therefore incompatible with suspects article 8 Convention rights and cannot be made compatible under section 3(1) of the HRA. Section 3(2)(b) ensures that in these circumstances the continuing operation of section 64(1A) is unaffected. Section 6(1) and (2) provide: (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. Like sections 3(2) and 4(6), section 6(2) is concerned to preserve the primacy and legitimacy of primary legislation. See Aston Cantlow and Wilmcote with Billesley Parochial Church Council v Wallbank [2004] 1 AC 546, 556 557, para 19, per Lord Nicholls, cited with approval by Lord Hoffmann in R (Hooper) v Secretary of State for Work and Pensions [2005] 1 WLR 1681, 1696, para 51. If that is correct and section 3(1) of the HRA cannot be invoked in the present case, then section 64(1A) continues to operate, and Parliament intends it to operate, in the same way as when enacted. It therefore falls to be interpreted and applied just as when enacted. It is accepted that section 6(2)(a) applies to cases where the legislation, which cannot be read compatibly with Convention rights, imposed a duty on a public authority to act in one particular way the authority could not have acted differently. It follows, of course as Lord Hoffmann remarked in Hooper [2005] 1 WLR 1681, 1696, para 49 that, by contrast, section 6(2)(b) assumes that the public authority could have acted differently but nevertheless excludes liability if it was giving effect to a statutory provision which cannot be read as Convention compliant in accordance with section 3. Since the Convention non compliant provision continues to operate, any public authority which is exercising a power conferred by it must continue do so in a way that promotes the object and purposes for which the provision confers the power and these are, ex hypothesi, incompatible with Convention rights. As Lord Hoffmann noted, section 6(2)(b) assumes, however, that under the relevant legislation the public authority could have acted in more than one way. For example, it might be that a public authority could have adopted either of two schemes, A and B, both of which would have promoted the policy and objects of the legislation. So it cannot be said that, when it chose to adopt scheme A, the public authority could not have acted differently. Nevertheless, since, when it adopted scheme A, the authority was promoting the policy and objects of the primary legislation and so was acting to give effect to the legislation, section 6(2)(b) disapplies section 6(1) and ensures that the authority was acting lawfully. In this way the primacy and legitimacy of the provision of primary legislation are preserved. For all the reasons which I have set out, in the present case, in substance the police could really not have acted differently: in order to promote the object and purposes of section 64(1A) of PACE, they had to retain all the samples which they did, indefinitely. If that is so, then what the police did, and continue to do, falls within section 6(2)(a) and is accordingly lawful. Even if one assumes, however, that, while promoting the policy and objects of the legislation, the police could, for example, have recognised a slightly wider exception and so created a slightly different system, that does not matter. The same goes if, while promoting the policy and objects of the legislation, the police could have chosen not to recognise even the very narrow exception which they did and could have decided to retain the samples and data relating to absolutely all suspects. In either event, even though the police could have done something (slightly) different, by doing what they actually did and are still doing, they were acting and are continuing to act so as to give effect to section 64(1A). Section 6(2)(b) of the HRA accordingly applies and so the police have at all times acted, and continue to act, lawfully. In these circumstances section 64(1A) is incompatible with suspects article 8 Convention rights. Even though Parliament and the Government have the matter under review, I consider that the better course is for this court to grant a declaration of incompatibility in terms of section 4(2) of the HRA. Cf Bellinger v Bellinger [2003] 2 AC 467, 482, para 55, per Lord Nicholls. I would accordingly allow the appeals to the extent of making a declaration that section 64(1A) of the Police and Criminal Evidence Act 1984 is incompatible with the article 8 Convention rights of suspects. LORD BROWN On 4 December 2008 the Grand Chamber of the ECtHR in S v UK (2008) 48 EHRR 1169 condemned on article 8 grounds the scheme for the indefinite retention of biometric data adopted in England and Wales pursuant to section 64(1A) of the Police and Criminal Evidence Act 1984 (PACE). The critical issue for decision on these appeals is whether, following that decision and pending the enactment by Government of a fresh legislative scheme compatible with article 8, the police have been acting unlawfully in continuing to operate the indefinite retention scheme. That in turn depends upon whether section 64(1A) can or cannot be read or given effect in a way which is compatible with the Convention rights within the meaning of section 6(2)(b) of the Human Rights Act 1998 (the HRA). Before turning to address this issue it is necessary to sketch out something of the background to the appeal and the circumstances in which the point now arises for decision. These appellants are two amongst the 850,000 odd unconvicted persons whose profiles are kept on the national DNA database, their fingerprints and samples having been taken from them when they were arrested as suspects (from 2003, whether or not they were actually charged). This database has built up following Parliaments introduction on 11 May 2001 of section 64(1A) of PACE in substitution for the original section 64(1) which had required the destruction of a suspects fingerprints and samples as soon as practicable after he was cleared. Section 64(1A) provides so far as is material: Where . fingerprints, impressions of footwear or samples are taken from a person in connection with the investigation of an offence . [they] may be retained after they have fulfilled the purposes for which they were taken but shall not be used by any person except for purposes related to the prevention or detection of crime, the investigation of an offence, the conduct of a prosecution or the identification of a deceased person or of the person from whom a body part came. In 2004 this change in the law was unsuccessfully challenged, principally on article 8 grounds, all the way up to the House of Lords, by two complainants: S, an eleven year old boy with no previous convictions who had been acquitted of attempted robbery, and Mr Marper, a man of 38, also of good character, whose case was discontinued following his arrest on the charge of harassing his partner: R (S) v Chief Constable of the South Yorkshire Police; R (Marper) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196. Lady Hale alone amongst the Appellate Committee thought that the retention and storage of DNA profiles constituted an interference with the claimants rights under article 8. But each member of the Committee, Lady Hale included, was quite clear that, even if it did, it was readily justifiable under article 8(2). Lord Steyn described such evidence as having the inestimable value of cogency and objectivity (para 1) and said that as a matter of policy it is a high priority that police forces should expand the use of such evidence where possible and practicable (para 2). At para 3 he observed that: It can play a significant role in the elimination of the innocent, the correction of miscarriages of justice and the detection of the guilty. At para 36 Lord Steyn dealt with a submission that retention is not in accordance with law (on the basis that a law which confers a discretion must indicate the scope of that discretion: Silver v United Kingdom (1983) 5 EHRR 347, 372, para 88): The discretion involved in the power to retain fingerprints and samples makes allowance for exceptional circumstances, eg where an undertaking to destroy the fingerprints or sample was given or where they should not have been taken in the first place, as revealed by subsequent malicious prosecution proceedings. At para 38 Lord Steyn observed that the expansion of the database by the retention confers enormous advantages in the fight against serious crime and at para 39 he remarked upon the benefits of a greatly extended database. Lord Rodger and Lord Carswell agreed with Lord Steyn. Lady Hale agreed that retention and storage of DNA samples and profiles was readily justifiable for the reasons given by Lord Steyn and myself. She added: The whole community, as well as the individuals whose samples are collected, benefits from there being as large a database as it is possible to have. The present system is designed to allow the collection of as many samples as possible and to retain as much as possible of what it has. The benefit to the aims of accurate and efficient law enforcement is thereby enhanced. (para 78) I myself suggested (para 88): that the benefits of the larger database . are so manifest . that the cause of human rights generally (including the better protection of society against the scourge of crime which dreadfully afflicts the lives of so many of its victims) would inevitably be better served by the databases expansion than by its proposed contraction. The more complete the database, the better the chance of detecting criminals, both those guilty of crimes past and those whose crimes are yet to be committed. The better chance too of deterring from future crime those whose profiles are already on the database. And I pointed out too that: The larger the database, the less call there will be to round up the usual suspects. Instead, those amongst the usual suspects who are innocent will at once be exonerated. These views notwithstanding, the Grand Chamber in Strasbourg, as already indicated, on the application of the same complainants, some four years later unanimously condemned the scheme as unjustifiable under article 8. It is sufficient for present purposes to quote just three paragraphs from the Courts lengthy judgment: 119 . the Court is struck by the blanket and indiscriminate nature of the power of retention in England and Wales. The material may be retained irrespective of the nature or gravity of the offence with which the individual was originally suspected or of the age of the suspected offender; fingerprints and samples may be taken and retained from a person of any age, arrested in connection with a recordable offence, which includes minor or non imprisonable offences. The retention is not time limited; the material is retained indefinitely, whatever the nature or seriousness of the offence of which the person was suspected. Moreover, there exist only limited possibilities for an acquitted individual to have the data removed from the nationwide database or the materials destroyed; in particular, there is no provision for independent review of the justification for the retention according to defined criteria, including such factors as the seriousness of the offence, previous arrests, the strength of the suspicion against the person and any other special circumstances. 125 In conclusion, the Court finds that the blanket and indiscriminate nature of the powers of retention of the fingerprints, cellular samples and DNA profiles of persons suspected but not convicted of offences, as applied in the case of the present applicants, fails to strike a fair balance between the competing public and private interests and that the respondent State has overstepped any acceptable margin of appreciation in this regard. 134 . In accordance with article 46 of the Convention, it will be for the respondent State to implement, under the supervision of the Committee of Ministers, appropriate general and/or individual measures to fulfil its obligations to secure the rights of the applicants and other persons in their position to respect for their private life. Before turning to the circumstances in which these particular appellants had their fingerprints and samples taken and the precise nature of the argument they advance on this appeal, it is convenient first to indicate something of the response to the Grand Chambers judgment, on the part both of the Government and of the police. So far as the Government was concerned, the then Home Secretary in a Press Release on 16 December 2008 indicated that the Home Office would institute a consultation process but that meantime: The DNA of children under ten the age of criminal responsibility should no longer be held on the database. There are around 70 such cases [we are told that there were in fact 96], and we will take immediate steps to take them off. (S and Mr Marpers data was also removed.) On 7 May 2009 the Home Office published a White Paper, Keeping the Right People on the DNA Database, setting out certain key proposals for the future and inviting views upon them. The White Paper also considered what should happen to the 850,000 odd profiles already on the national DNA database. On 28 July 2009 ACPOs Director of Information wrote to all Chief Constables indicating that new guidelines were not expected to take effect until 2010 and that: Until that time, the current retention policy on fingerprints and DNA remains unchanged. ACPO strongly advise that decisions to remove records should not be based on proposed changes. It is therefore vitally important that any applications for removals of records should be considered against current legislation and the Retention Guidelines Exceptional Case Procedure . Those Guidelines, which have remained essentially the same since section 64(1A) was introduced, provide: Chief Officers have the discretion to authorise the deletion of any specific data entry on the PNC owned by them. They are also responsible for the authorisation of the destruction of DNA and fingerprints associated with that specific entry. It is suggested that this discretion should only be exercised in exceptional cases . Exceptional cases will by definition be rare. They might include cases where the original arrest or sampling was found to be unlawful. Additionally, where it is established beyond doubt that no offence existed, that might, having regard to all the circumstances, be viewed as an exceptional circumstance. On 11 November 2009, following the consultation period, the Home Secretary made a written Ministerial statement outlining a revised set of proposals for the retention of fingerprints and DNA data (Hansard (HC Debates), 11 November 2009, col 25WS). It was originally intended to implement these by way of order making powers under the Policing and Crime Act 2009 but, following strong opposition to the introduction of a new scheme by secondary rather than primary legislation, the proposed new scheme was included in the Crime and Security Act 2010, introduced in the House of Commons on 19 November 2009 and receiving Royal Assent on 8 April 2010. Following a change of government in May 2010, however, rather than bringing the Crime and Security Act into force, the incoming government instead announced its proposal for new legislation designed essentially to mirror the Scottish system and this finally, by the Protection of Freedoms Bill 2011, introduced in the House of Commons as recently as 11 February 2011, it has now set in train. For reasons which will shortly become clear, it is unnecessary for the purposes of this judgment to indicate anything of the detailed nature of the various proposals which at one time or another have been considered for enactment in substitution for the existing scheme so as to achieve compatibility with article 8 pursuant to the Grand Chamber judgment. It is sufficient to indicate that a wide range of differing schemes have been canvassed and considered and that arriving at the preferred solution has inevitably involved complex and sensitive choices. It is similarly unnecessary to describe in any detail the facts of these appellants cases and the following brief summary will suffice. GC is 41. On 20 December 2007, following his girlfriends complaint that he had assaulted her (albeit without causing her injury), he voluntarily attended the police station and was arrested on suspicion of common assault. He strongly denied the allegation, explaining rather that he had been defending himself against attack by her. Following the taking of DNA samples, fingerprints and a photograph, GC was released on police bail without charge. Before 21 February 2008, when he was due to surrender to his bail, GC was told that no further action would be taken against him. GCs fingerprints (but not DNA) had in fact been taken previously and retained in connection with a firearms offence for which he had been sentenced at the Central Criminal Court on 18 February 1992 to seven years imprisonment. C is 34, a man of good character. On 17 March 2009 he was arrested on suspicion of rape, harassment and fraud following allegations made the previous day by a former girlfriend and members of her family, allegations which C strenuously denied. The same day, Cs fingerprints and DNA samples were taken. Although no further action was taken in relation to the alleged harassment and fraud, on 18 March 2009 C was charged with rape. On 5 May 2009, however, the prosecution offered no evidence on the rape charge and C was accordingly acquitted. Both appellants, through solicitors, applied to the respondent Police Commissioner to have their fingerprints and DNA data deleted from police records GC on 23 March 2009, C on 19 August 2009 (in each case, of course, after the Grand Chambers decision in S v UK). Consistently with ACPOs guidelines, however, both applications were refused. The appellants then issued judicial review proceedings, GC on 11 December 2009, C on 9 February 2010. The applications were heard together by the Divisional Court (Moses LJ and Wyn Williams J) on 15 July 2010 and on 16 July 2010 were dismissed, the Divisional Court correctly holding itself bound by the decision of the House of Lords in S and Marper v Chief Constable of the South Yorkshire Police (the subsequent Grand Chamber decision notwithstanding). The Divisional Court did, however, certify a point of law of general importance and, with the consent of all parties, granted a certificate pursuant to section 12 of the Administration of Justice Act 1969, thus enabling the matter to proceed directly to this court. Before this court, Mr Fordham QC for C and Mr Cragg for GC both submit that, in the light of the Grand Chambers judgment, the earlier decision of the House of Lords can no longer stand and the existing scheme must now be recognised to be unlawful so much, indeed, is clear and conceded. Pursuant to section 6 of the HRA, their argument then continues, the police must now therefore cease retaining their data incompatibly with their article 8 rights. Instead, they submit, the police must take account of the various criticisms made by the Grand Chamber of the existing scheme, must devise a new, compatible scheme, and must then deal with these appellants requests (and any other outstanding or future requests) for the removal of information from the national DNA database this, indeed, in GCs case, within 28 days, contends Mr Cragg. Not so, submit Lord Pannick QC for the Metropolitan Police Commissioner and Mr Eadie QC for the Home Secretary (properly joined in the proceedings as an interested party). It is, they submit, for the government, not for the police, to devise and enact a new scheme; the police meantime have no alternative but to continue operating the existing scheme pursuant to section 64(1A) of PACE. Their case is founded on section 6(2)(b) of the HRA which, they argue, disapplies section 6(1) and thus relieves the police of liability for continuing to operate what the Grand Chamber has ruled to be (in international law) an unlawful scheme. The most the appellants are entitled to is a declaration of incompatibility pursuant to section 4 of the HRA. As I indicated at the outset, this is the critical issue in the appeal and plainly it centres upon the proper understanding of, and interplay between, sections 3, 4 and 6 of the HRA which (as to their most material parts) I now set out: 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. 4(2) If the court is satisfied that [a provision of primary legislation] is incompatible with a Convention right, it may make a declaration of that incompatibility. 6(1) It is unlawful for a public authority to act in a way which is incompatible with a Convention right. 6(2) Subsection (1) does not apply to an act if (a) as the result of one or more provisions of primary legislation, the authority could not have acted differently; or (b) in the case of one or more provisions of, or made under, primary legislation which cannot be read or given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provisions. The precise symmetry between section 3(1) and section 6(2)(b) will at once be noted: each invites consideration of whether legislation can be read or given effect in a way which is [Convention] compatible section 3 indicating what must be done if this is possible, section 6(2)(b) indicating the consequence (the disapplication of section 6(1)) if it is not. At first blush the respondents argument appears distinctly unpromising. Section 64(1A) is, after all, couched in terms that appear to confer on the police an open discretion: samples may be retained. On the face of it, therefore, the police appear to be in a position to act compatibly with the article 8 rights of those whose samples have been taken and this, indeed, even without resort to section 3. But suppose there were some doubt about this, why would that not fall to be resolved by the interpretative imperative of section 3? How can it be appropriate, in the face of such a strong statutory direction, to place upon section 64(1A) a construction which denies the police the ability to exercise their data retention power compatibly? I confess to having come only comparatively late to the conclusion that, difficult though the respondents argument initially appears, it is in fact correct. Section 6(2)(b) has long been recognised to give rise to difficulty at the margins see, for example, the judgments respectively of Lord Hope, Lord Walker and Lord Mance in Doherty v Birmingham City Council [2009] AC 367. Clearly, as Lord Hoffmann observed in R (Hooper) v Secretary of State for Work and Pensions [2005] 1 WLR 1681, 1696, para 49, section 6(2)(b) assumes that the public authority could have acted differently but nevertheless excludes liability if it was giving effect to a statutory provision which cannot be read as Convention compliant in accordance with section 3. This, as was pointed out, was in contradistinction to section 6(2)(a) which applies when a public authority could not have acted differently when, in other words, the authority has been compelled by primary legislation to act in a way ex hypothesi incompatible with Convention rights. Superficially, of course, the very assumption that a public authority could have acted differently appears to postulate that the power in question could therefore have been exercised compatibly with Convention rights. Plainly, however, section 3 notwithstanding, it cannot follow that the power must therefore in all cases be exercised compatibly else section 6(2)(b) could never come into play. A simple illustration of section 6(2)(b) in operation is, of course, where primary legislation confers a power on a public authority and where a decision to exercise that power (or, as the case may be, not to exercise it) would in every case inevitably give rise to an incompatibility. R v Kansal (No 2) [2002] 2 AC 69 was just such a case and in such situations it can readily be understood why section 6(2)(b) applies. Otherwise, instead of giving effect to a provision conferring a power, the public authority would have to treat the provision (in cases where not to exercise it would give rise to incompatibility) as if it imposed a duty or, in cases where any exercise of the power would give rise to incompatibility (as in Kansal (No 2) itself), would have to abstain from ever exercising the power. In either instance, it is obvious, Parliaments will would be thwarted. I would take this opportunity to resile from what I myself said in the latter part of para 118 of my own judgment in Hooper. I was surely right to say in the first part of that paragraph: Plainly it is not the case that section 6(2)(b) applies whenever a statutory discretion falls to be exercised in a particular way to ensure compliance with a Convention right. This occurs in a host of different situations and, so far as I am aware, no one has ever suggested that, had the discretion not been exercised compatibly, the public authority would nevertheless have been protected against a domestic law claim by the section 6(2)(b) defence on the basis that otherwise a power would be turned into a duty. I was, however, wrong to suggest that the situation would be no different if to secure Convention compliance the statutory discretion had to be exercised in every case. It now seems to me that the underlying question in all these cases indeed, the determinative question in every case lying between the two extremes I have thus far dealt with is: what essentially was Parliament intent on achieving by this legislation? Is it or is it not something which could realistically be achieved consistently with the observance of Convention rights? If it is, then it must be so construed and applied. If, however, it is not, then section 6(2)(b) will apply: the legislation will be incompatible, a declaration of incompatibility may be made, and the public authority will be immune from liability. In short, the question to be asked in deciding whether section 6(2)(b) applies is essentially the same question as is more usually asked under section 3 when deciding whether or not, by a strained construction of apparently incompatible legislation, it is possible to read and give effect to it compatibly with Convention rights. Would such a construction depart substantially from a fundamental feature of the legislation? Would it be inconsistent with the underlying thrust of the legislation? Would it go with the grain of the legislation? Would it violate a cardinal principle of the legislation? Would it remove its pith and substance? Would it create an entirely different scheme? The Court must not cross the boundary from interpretation into legislation. All these familiar concepts and phrases are to be found in the well known cases on section 3 but their importance has hitherto not perhaps been fully recognised in the context also of section 6(2)(b). It is time to return to section 64(1A) of PACE and in the light of these considerations to ask whether realistically it could be construed for all the world as if, in enacting it, the government was leaving it to individual police forces or even to ACPO acting on their joint behalf to decide upon just what sort of scheme should be implemented for the future retention of biometric data. Is it really suggested that the police could and should then (in 2001) of their own volition have decided that, instead of retaining data indefinitely, they would retain it for only, say, one year or five years, or different periods in different cases and so forth? And if this was not open to them in 2001, how then could it become so merely because of the Grand Chambers condemnation of the indefinite scheme some years later? As Lord Nicholls observed in Ghaidan v Godin Mendoza [2004] 2 AC 557, 572, para 33, when indicating the limits of the courts section 3 powers: There may be several ways of making a provision Convention compliant, and the choice may involve issues calling for legislative deliberation. It is difficult to think of any case in which that objection to a section 3 construction applies more obviously than here. Lord Steyn reflected the same objection in the same case (para 49): Interpretation could not provide a substitute scheme. It is surely plain that legislative deliberation was required here. DNA retention can only sensibly operate on a national basis and section 64(1A), properly understood, in my judgment not merely authorised but required precisely the sort of scheme for the indefinite retention of biometric data that the House of Lords came to describe (and, indeed, so enthusiastically to support, in my case unrepentingly) in S and Marper. Realistically it was just not possible to construe the section differently, least of all as authorising the police to create for themselves a fundamentally different scheme which would achieve compatibility with the requirements of article 8 as subsequently identified by the Grand Chamber. Of course, some degree of latitude was given to the police as to how precisely the retention scheme was to operate. But this was essentially to decide what narrow categories should be excluded from its scope cases of the sort described by Lord Steyn at para 36 of S and Marper (see para 125 above) and, indeed, in the ACPO Guidelines (see para 129 above). The discretion could not sensibly be construed as extending to the basic nature of the scheme: whether retention should be indefinite or time limited. That section 64(1A) was intended to introduce a database for the indefinite retention of DNA samples is surely clear from the very circumstances in which this legislative change was brought about the deeply disturbing circumstances in which a violent rapist and a brutal murderer had both gone free because of the unsatisfactory existing scheme see Attorney Generals Reference (No 3 of 1999) [2001] 2 AC 91 and In re British Broadcasting Corporation [2010] 1 AC 145 and, indeed, to my mind clear also from the speeches in the House in S and Marper to which I have already referred. One of the specific issues before the House in S and Marper was, it should be noted: (4) if the retention of fingerprints and DNA profiles and/or samples is an unjustified interference with the appellants Convention rights, whether it would be possible to give section 64(1A) a Convention compatible interpretation under section 3 of the 1998 Act (Lord Steyns judgment at para 17) an issue, of course, as Lord Steyn observed at para 57, that in the event fell away. In short, the argument before the House assumed that section 64(1A) called for the indefinite retention of data and that, if this was incompatible with article 8, the appellants then needed to resort to section 3 of HRA for their requests for data removal to succeed. The appellants here submit that, following the Grand Chamber judgment, it was open to the police to adjust their data retention policy to meet the newly recognised requirements of article 8 in just the same way as they were required by this court in R (L) v Commissioner of Police of the Metropolis [2010] 1 AC 410 on article 8 grounds to adjust their previous approach to the disclosure of information for the purposes of enhanced criminal record certificates (ECRCs) pursuant to section 115(7) of the Police Act 1997. In my judgment, however, the two situations are entirely different: in L all that the courts decision required of the police was that in future they give no less weight to the statutory requirement that in their opinion the information ought to be included in the certificate than the requirement that they think it might be relevant (and in borderline cases give the prospective employee an opportunity to say why the information ought not to be disclosed). There was no requirement whatever for fresh policy choices to be made let alone legislative deliberation or democratic accountability. Rather the court was well able to decide the limited adjustment that needed to be made. Contrast the position in the present case. The Grand Chamber, in para 134 of its judgment (see para 126 above), can hardly have been expecting the police, rather than the Government, to implement the newly required measures under the supervision of the Committee of Ministers. Correspondingly, the States reaction to the Grand Chambers judgment was that it was plainly for Government, not the police, to devise and implement a new and Convention compliant scheme. It was, indeed, the Home Office rather than the police who decided that children under ten should be removed from the database (see para 127 above). No less significantly, the perceived need for a fully legitimate parliamentary solution to the problem was manifested by the political insistence upon the new scheme being introduced by primary and not merely secondary legislation. If this was not appropriate by secondary legislation, how much less so by revised ACPO guidelines. Even if it is suggested that section 64(1A) does not preclude ACPO from now amending their Guidelines to address the Grand Chambers criticisms in S v UK, that with respect is not a sufficient answer to the section 6(2)(b) defence. As I have said (para 143 above), the section 6(2)(b) defence necessarily postulates that the public authority could act differently. The critical question is whether they could do so consistently with the essential scheme and thrust of the legislation and a good test of that, I would suggest, is to ask whether it can really be said to be their duty to do so and to be unlawful and wrong for them not to do so. The whole purpose of section 6(2)(b) is to safeguard a public authority from liability (and, indeed, from misplaced criticism) in circumstances where in truth it is acting (as for my part I have no doubt that the police are acting here) perfectly properly. It follows from all this that, in common with Lord Rodger, with whose judgment on the section 6 issue I respectfully agree, I would hold that it is not unlawful (under domestic law) for the respondent police commissioner to continue to hold the appellants data on the national DNA database. As to whether this Court should now make a declaration of incompatibility in respect of section 64(1A) I hold no strong view. Nowhere is this identified as an issue before us and frankly I find it difficult to see any possible need or use for it in the present circumstances. But if others think it desirable, I would be quite content with that. I would add that, even had I concluded that the police could now act compatibly with article 8 under section 64(1A), I should certainly not have thought it just and appropriate within the meaning of section 8 of the HRA to require them to change their existing practice pending the introduction of a new legislative data retention scheme. It may be, indeed, that the strength of this reaction to the respondents fall back argument under section 8, on true analysis, reinforces the correctness of my primary conclusion on the section 6 issue: quite simply it would be wrong for the police to change their approach to section 64(1A) before Parliament so dictates and this court cannot properly direct them to do so. If anyone is to be criticised for the failure of the existing database to meet the States obligations under article 8, it is surely the Government, not the police. In my judgment they have a section 6(2)(b) defence to these claims. |
Ill health can be dreadfully cruel. Some 30 years ago the appellant was the prima ballerina of Scottish Ballet. Alas, in September 1999 (then aged 56) she suffered an incapacitating stroke leaving her with severely limited mobility and other disabilities besides. In April 2006 she fell heavily and broke her hip in several places, remaining in hospital for four months. She then suffered two further falls each leading to further hospitalisation. The problem at the centre of these proceedings, however, is that the appellant suffers also from a small and neurogenic bladder which makes her have to urinate some two to three times a night. Up to now she has dealt with this by accessing a commode with the help of a carer provided by the respondent Royal Borough as part of a package of care services to ensure her safety. For some years past, however, the respondents have been proposing instead that the appellant should use incontinence pads or special sheeting (hereafter pads) which would avoid the need for a night time carer. The respondents say that this would provide the appellant with greater safety (avoiding the risk of injury whilst she is assisted to the commode), independence and privacy, besides reducing the cost of her care by some 22,000 per annum. The appellant, however, is appalled at the thought of being treated as incontinent (which she is not) and having to use pads. She considers this an intolerable affront to her dignity. Whether night time care can be provided on this revised basis is the critical issue in these proceedings. The history of the proceedings The respondents decision to reduce the sum allocated to the appellants weekly care was communicated by letter dated 21 November 2008 and was sought to be challenged by the appellants judicial review application made on 22 December 2008. The application came before Frances Patterson QC sitting as a Deputy High Court Judge in the Administrative Court on 5 March 2009 at a rolled up hearing (the application for permission and substantive inter partes hearing being dealt with together), at the end of which permission was refused. A Needs Assessment dated 2 July 2008, completed on 28 October 2008, on which the impugned decision had been based, had described the appellants needs as assistance to use the commode at night and the deputy Judge resolved in the respondents favour what she described as the very narrow issue arising, namely whether that need fell to be read literally or whether, as the respondents contended, it was permissible to examine its underlying rationale and treat it as a need for safe urination at night. Given that it was the latter, the deputy judge held that it was open to the respondents to meet that need in the more economical manner, ie by the provision of pads. Article 8 of the European Convention on Human Rights had also been invoked, but not as a freestanding ground of challenge. Permission to apply for judicial review having thereafter been granted by a single Lord Justice, and the case reserved to the Court of Appeal, the substantive challenge came before Rix LJ, Wilson LJ and Sir David Keene on 29 April 2010. At the Court of Appeal hearing the arguments were expanded. The respondents sought to rely not only on their Needs Assessment of 2 July 2008 but additionally upon their subsequent Care Plan Reviews of 4 November 2009 and 15 April 2010. The appellant for her part again sought to invoke article 8 (this time, submits Mr Cragg, wrongly understood by the Court to be again merely ancillary to the appellants primary ground), and for the first time sought also to rely on section 21E of the Disability Discrimination Act 1995 (the DDA 1995), as inserted by section 2 of the Disability Discrimination Act 2005. By their reserved judgment dated 13 October 2010 the Court of Appeal disagreed with the deputy judge that the Needs Assessment of 2 July 2008 could properly be understood as a need for the management of the appellants night time urination rather than (as the deliberately chosen language of the assessment put it: para 49) as assistance to use the commode at night, so that, at the time when the proceedings were commenced, the Court of Appeal held the respondents to have been in breach of their statutory duty. But the court held that, since the December 2008 decision was not in fact put into operation, and since the need had been reassessed in the Care Plan Reviews of November 2009 and April 2010, the appellant had no substantial complaint. The court also rejected the appellants claims under article 8 and under the DDA 1995. Rix LJ gave the only reasoned judgment: [2010] EWCA Civ 1109, (2010) 13 CCL Rep 664. The issues before this Court appeal: Four issues are identified by the parties as arising for decision on this (1) Was the Court of Appeal correct to hold that the 2009 and 2010 Care Plan Reviews are to be read as including a reassessment of the appellants community care needs? (2) Did the respondents decision to provide pads interfere with the appellants article 8 rights and, if so, was such an interference justified and proportionate? (3) Were the respondents operating any relevant policy or practice for the purposes of section 21E(1) of the DDA 1995 and, if so, was this policy justified as a proportionate means of achieving a legitimate aim, namely the equitable allocation of limited care resources? (4) Have the respondents failed to have due regard to the needs specified in section 49A of the DDA 1995 (the general disability equality duty) when carrying out their functions in this case? (The appellant needs the courts leave to raise this issue, permission to invoke section 49A having been refused by a single Lady Justice before the Court of Appeal hearing and not sought afresh from that court.) Issue One the 2009/2010 Care Plan Reviews With regard to the first three issues and, indeed, the entire framework of this appeal, both factual and legal I really cannot hope to improve upon Rix LJs judgment below. I could, of course, lengthen it: one can always do that. But I prefer instead to refer any interested reader to it and to confine myself to a substantially shorter summary of the reasons why for my part I agree with its conclusions. I cannot, however, escape a brief recitation of the main legal provisions governing care arrangements. I shall start with section 47 of the National Health Service and Community Care Act 1990 (NHSCCA 1990) since it is common ground here that (i) the appellant is substantially and permanently handicapped within the meaning of section 29(1) of the National Assistance Act 1948 (NAA 1948), (ii) the respondents are required under that section to make arrangements for promoting her welfare, (iii) the respondents are satisfied that it is necessary in order to meet the appellants needs to make arrangements for the provision of practical assistance for her in her own home within the meaning of section 2(1)(a) of the Chronically Sick and Disabled Persons Act 1970 (CSDPA 1970), and (iv) the respondents are accordingly pursuant to that section under a duty to make those arrangements, acting under the Secretary of States general guidance issued pursuant to section 7(1) of the Local Authority Social Services Act 1970 (LASSA 1970). Section 47 of NHSCCA 1990 provides: (1) . where it appears to a local authority that any person for whom they may provide or arrange for the provision of community care services may be in need of any such services, the authority (a) shall carry out an assessment of his needs for those services; and (b) having regard to the results of that assessment, shall then decide whether his needs call for the provision by them of any such services. (4) The Secretary of State may give directions as to the manner in which an assessment under this section is to be carried out or the form it is to take but, subject to any such directions . , it shall be carried out in such manner and take such form as the local authority consider appropriate. Before turning to the Secretary of States guidance issued under section 7(1) of LASSA 1970 (the Fair Access to Care Services (FACS) Guidance) and directions issued under section 47(4) of NHSCCA 1990, I should say a word about the relevance of a local authoritys social care resources both to the assessment of the handicapped persons needs and to the way in which such assessed needs may then be met. It was decided by the House of Lords in R v Gloucestershire County Council Ex p Barry [1997] AC 584 (by a majority of three to two) that need within the meaning of section 2(1) of CSDPA 1970 is a relative concept and that needs for services cannot sensibly be assessed without having some regard to the cost of providing them. A persons need for a particular type or level of service cannot be decided in a vacuum from which all considerations of cost have been expelled. (Lord Nicholls of Birkenhead, at p 604). The position now established is that the local authority are under a duty to make an assessment of needs under section 47(1)(a) of NHSCCA 1990 and in doing so may take account of their resources. Assuming, as in the present case, that the need falls into one of the four bands critical, substantial, moderate or low as described in the FACS Guidance which, having regard to their resources, the local authority have indicated that they will meet, then meet it they must, although in deciding how to do so they are once again entitled to take account of their resources. None of this, I may say, was in dispute before us; least of all did the appellant suggest that we might like to revisit the decision in Barry, controversial though at the time that was. I come then to the FACS Guidance issued on 1 January 2003 which remained in force until fresh guidance (for present purposes not materially different) was issued in February 2010. Amongst its most directly relevant passages are these: Councils should ensure that . within a council area, individuals in similar circumstances receive services capable of achieving broadly similar outcomes (paras 1 and 54); Reviews should be undertaken at regular intervals to ensure that the care provided to individuals is still required and achieving the agreed outcomes. These reviews should include a re assessment of an individuals needs (para 4); under the heading General principles of assessment, it is important for assessment to be rounded and person centred and for the evaluation of assessment information to lead to appropriate eligibility decisions and services that promote independence (para 35) and the evaluation of risks should focus on the following aspects that are central to an individuals independence: autonomy and freedom to make choices, health and safety including freedom from harm, abuse and neglect . , the ability to manage personal and other daily routines, involvement in family and wider community life . (para 40); under the heading Reviews, Reviews should: establish how far the services provided have achieved the outcomes, set out in the care plan, re assess the needs and circumstances of individual service users, help determine individuals continued eligibility for support, confirm or amend the current care plan . (para 58), the re assessment part of the review should follow the general principles of assessment in this guidance (para 59), reviews should be scheduled at least annually or more often if individuals circumstances appear to warrant it (para 60). Finally before returning to the facts of the present case I should note the following paragraphs within the Secretary of States Directions the Community Care Assessment Directions 2004 issued under section 47(4) of NHSCCA 1990: 2(2) The local authority must consult the person, consider whether the person has any carers and, where they think it appropriate, consult those carers. 2(3) The local authority must take all reasonable steps to reach agreement with the person and, where they think it appropriate, any carers of that person, on the community care services which they are considering providing to him to meet his needs. The care plan reviews of 4 November 2009 and 15 April 2010 are both lengthy documents, the latter extending to 15 pages. The following brief quotations from the 2010 review (in large part foreshadowed in the 2009 review) must suffice: Toileting/Substantial Risk: Ms McDonald has been diagnosed with having a neurogenetic bladder, which makes [her] want to go to the toilet more frequently. Ms McDonald needs assistance to access the toilet during the day, and if she uses it at night. Ms McDonald and the carers confirm that she needs to go to the toilet two to three times during the night. no issues were raised about the need to open her bowels at night. Ms McDonald did not want to discuss the option of using incontinence pads or Kylie sheets as a way of meeting her toileting needs. Ms McDonald said that she is not incontinent and has repeatedly said that she is opposed to wearing a pad to meet her toileting needs. Ms McDonald became angry and upset when discussing this. As Ms McDonald has not consented to a referral to the Continence Service, it has not been possible to fully explore how all of her needs can best be managed. Conclusion: Ms McDonald continues to live safely at home. There have been no hospital admissions since she was discharged in early 2007. Ms McDonald has chosen not to take up the offer of assistive technology to help monitor her safety, has declined the offer of moving to one of the boroughs extra care sheltered housing schemes and she has to date refused to consider incontinence pads as a means to manage risk when she cannot safely get to the commode unaided. it remains social services view that the use of incontinence pads is a practical and appropriate solution to Ms McDonalds night time toileting needs. I remain of the opinion that Ms McDonalds need to be kept safe from falling and injuring herself can be met by the provision of equipment (pads and/or absorbent sheets). She has, however, consistently refused this option, refusing even to try the pads or to discuss the absorbent sheet option. I am aware that she considers pads and/or sheets to be an affront to her dignity. Other service users in my experience have held similar views when such measures were initially suggested but once they have tried them, and been provided with support in using them, they have realised that the pads/sheets improve quality of life by protecting them from harm and allowing a degree of privacy and independence in circumstances which, as a result of health problems, are less than ideal. The practicalities can be managed within the existing care package to accommodate Ms McDonalds preferred bedtime and to allow her to be bathed in the morning and/or have sheets changed. If Ms McDonald were willing to try this option, she might similarly alter her views. In the light of those passages from the reviews and the Secretary of States FACS Guidance and Directions it seems to me impossible to disagree with Rix LJs conclusion on this first issue: 53. In my judgment, the 2009 and 2010 reviews are to be read as including a reassessment of Ms McDonalds needs. It is irrelevant that there has been no further separate Needs Assessment document. Such a document is not, it seems, necessary in the first place, because a care plan could incorporate a needs assessment; but in any event FACS itself contemplates that a care plan review will incorporate a review of assessed needs. As for the 2009 and 2010 reviews in this case, it is noticeable that they no longer assess Ms McDonalds needs as including assistance to access the commode at night, although they recognise that that is what Ms McDonald wants. On the contrary, they refer to Ms McDonalds night time toileting needs in much more general terms (as the earlier needs assessments had at one time done). Thus they speak of need for support at night and that the need should be managed through the use of incontinence pads. They specifically consider that the elimination of the risk of injury is best achieved by avoiding a transfer to the commode, and that Ms McDonalds desire for independence and privacy is best accommodated by dispensing with a night time carer. Ms McDonald needs assistance safely to access the toilet only if she uses it at night, but, with the use of pads there is no need for such use. The issue is whether pads should be used or not to meet her toileting needs. The use of pads is a practical and appropriate solution to Ms McDonalds night time toileting needs. Ms McDonald did not want to discuss the use of pads as a way of meeting her toileting needs. Her need to be kept safe from falling and injuring herself can be met by the provision of equipment. I would add that to my mind the respondents could hardly have gone further in compliance with the Secretary of States Directions in their efforts to consult the appellant and if possible agree with her the services they were considering providing to meet her needs. The 2010 Review rightly described the appellants position on this as entrenched and the situation reached as an impasse. The respondents also fully consulted the appellants partner, Mr McLeish who, although not in fact her carer indeed, he himself has experienced health problems and is no longer actually living with her for a time assisted with her night time needs. Before leaving issue one, I should just note that, as I understood Mr Craggs argument, it was no part of the appellants case that the respondents were not entitled under domestic legislation to re assess her need as night time toileting need or need for safe urination at night or some equivalent designation, and to meet such need, as proposed, by pads (together with whatever further assistance might be advised following the proposed referral of the appellant to the Continence Service). Rather the case, as clearly reflected in the terms in which issue one has been formulated, is that the 2009 and 2010 reviews in fact contained no such reassessment so that the respondents remained bound to continue the same care provision as had been made under the differently worded 2008 needs assessment. I add for good measure that in any event I am clear that there can be no objection under domestic law (leaving aside the other issues) to the respondents identifying and meeting the appellants night time needs in the manner proposed. Issue Two Article 8 Article 8 is too well known to require citation again here. There is no dispute that in principle it can impose a positive obligation on a state to take measures to provide support and no dispute either that the provision of home based community care falls within the scope of the article provided the applicant can establish both (i) a direct and immediate link between the measures sought by an applicant and the latters private life Botta v Italy (1998) 26 EHRR 241, paras 34 and 35 and (ii) a special link between the situation complained of and the particular needs of [the applicants] private life: Sentges v The Netherlands (2003) 7 CCLR 400, 405. Even assuming that these links do exist, however, the clear and consistent jurisprudence of the Strasbourg Court establishes the wide margin of appreciation enjoyed by states in striking the fair balance . between the competing interests of the individual and of the community as a whole and in determining the steps to be taken to ensure compliance with the Convention, and indeed that this margin of appreciation is even wider when . the issues involve an assessment of the priorities in the context of the allocation of limited state resources Sentges, at p 405, Pentiacova v Moldova (Application No 14462/03 (unreported) 4 January 2005, p 13) and Molka v Poland (Application No 56550/00 (unreported) 11 April 2006, p 17). Really one only has to consider the basic facts of those three cases to recognise the hopelessness of the article 8 argument in the present case. Sentges (considered by Rix LJ at para 64 of his judgment) concerned a sufferer from muscular dystrophy complaining of a refusal to supply him with a robotic arm. Without it he depended on others for every single act and so was unable to develop and establish relationships with others; with it, his severely curtailed level of self determination would be increased: 7 CCLR 400, 404. The applicants in Pentiacova suffered from renal failure and complained of insufficient funding for their haemodialysis treatment. The applicant in Molka was confined to a wheelchair and, for want of positive assistance, was unable to vote in local elections. The complaints in all three cases were unanimously held to be manifestly ill founded and thus inadmissible. This approach is consistent too with the domestic jurisprudence on the point. The appellant seeks to rely on R (Bernard) v Enfield London Borough Council [2002] EWHC 2282 (Admin); [2003] HRLR 111; [2003] LGR 423 (considered by Rix LJ at para 63 of his judgment). But really what is striking about Bernard is the contrast between that case and this. The claimants there were husband and wife. They had six children. The wife was severely disabled and confined to a wheelchair. In breach of their duty under section 21(1)(a) of NAA 1948, the respondent council failed for some 20 months to provide the family with accommodation suited to her disability. The consequences were appalling. The wife was doubly incontinent and, because there was no wheelchair access to the lavatory, was forced to defecate and urinate on the living room floor. And she was unable to play any part in looking after her six children. Small wonder that Sullivan J, at para 31, described the article 8 case as not finely balanced and awarded 10,000 damages. The leading domestic case on the positive obligation to provide welfare support under article 8 is Anufrijeva v Southwark London Borough Council [2004] QB 1124; [2003] EWCA Civ 1406. It concerned three separate asylum seekers, one complaining of a local authoritys failure to provide accommodation to meet special needs, the other two of maladministration and delay in the handling of their asylum applications. All three failed in their claims. Giving the judgment of the court, Lord Woolf, CJ observed (at para 33) that: It is not possible to deduce from the Strasbourg jurisprudence any specific criteria for the imposition of such a positive duty [ie the duty to provide positive welfare support]. At para 43, however, the court concluded that Bernard was rightly decided family life [having been] seriously inhibited by the hideous conditions prevailing in the claimants home but that: We find it hard to conceive . of a situation in which the predicament of an individual will be such that article 8 requires him to be provided with welfare support, where his predicament is not sufficiently severe to engage article 3. Article 8 may more readily be engaged where a family unit is involved. Where the welfare of children is at stake, article 8 may require the provision of welfare support in a manner which enables family life to continue. (Bernard was said to illustrate that.) There is, of course, a positive obligation under article 8 to respect a persons private life. But it cannot plausibly be argued that such respect was not afforded here. As already indicated, the respondents went to great lengths both to consult the appellant and Mr McLeish about the appellants needs and the possible ways of meeting them and to try to reach agreement with her upon them. In doing so they sought to respect as far as possible her personal feelings and desires, at the same time taking account of her safety, her independence and their own responsibilities towards all their other clients. They respected the appellants human dignity and autonomy, allowing her to choose the details of her care package within their overall assessment of her needs: for example, the particular hours of care attendance, whether to receive direct payments in order to employ her own care assistant, and the possibility of other options like extra care sheltered housing. These matters are all fully covered in paras 5, 42 and 66 of Rix LJs judgment below. Like him, I too have the greatest sympathy for the appellants misfortunes and a real understanding of her deep antipathy towards the notion of using incontinence pads. But I also share Rix LJs view that the appellant cannot establish an interference here by the respondents with her article 8 rights. I add only that, even if such an interference were established, it would be clearly justified under article 8(2) save, of course, for the period prior to the 2009 review when the respondents proposed care provision was not in accordance with the law on the grounds that it is necessary for the economic well being of the respondents and the interests of their other service users and is a proportionate response to the appellants needs because it affords her the maximum protection from injury, greater privacy and independence, and results in a substantial costs saving. Issue Three Section 21 of the DDA 1995 All the relevant parts of section 21 are to be found set out in Rix LJs judgment below (at para 68) and need not be repeated all, that is, save for section 21D(5) (referred to in section 21D (2)(b)): Treatment, or a failure to comply with a duty, is justified under this subsection if the acts of the public authority which give rise to the treatment or failure are a proportionate means of achieving a legitimate aim. Mr Craggs argument under these provisions, if I understand it, is that, in substituting incontinence pads for a night time carer to meet the appellants night time toileting need, the respondents are manifesting or applying a practice, policy or procedure which makes it (a) impossible or unreasonably difficult for disabled persons to receive any benefit that is or may be conferred, or (b) unreasonably adverse for disabled persons to experience being subjected to any detriment to which a person is or may be subjected, by the carrying out of a function by the authority within the meaning of section 21E(1), so that, as provided by section 21E(2), it is their duty to take such steps as it is reasonable, in all the circumstances of the case, for the authority to have to take in order to change that practice, policy or procedure so that it no longer has that effect. If that be right, then, by virtue of section 21D(2)(a) and 21B(1), a failure to comply with that duty constitutes unlawful discrimination by the respondents against the appellant unless the respondents can show pursuant to section 21D(2)(b) that this failure is justified under section 21D(5), namely that its acts are a proportionate means of achieving a legitimate aim. The argument to my mind is hopeless. In the first place I find it impossible to regard the respondents decision in this case as the manifestation or application of anything that can properly be characterised as a practice, policy or procedure within the meaning of this legislation. Rather, in taking the impugned decision, the respondents were doing no more and no less than their statutory duty as fully described under issue one above. Secondly, even were that not so, it follows from all that I have already said (not least with respect to article 8(2)) that the respondents acts here must be regarded as constituting a proportionate means of achieving a legitimate aim within the meaning of section 21D(5) (even assuming that there were otherwise steps which it would have been reasonable for them to take to change their practice, policy or procedure within the meaning of section 21E(2)). Here again, therefore, I agree with the views of the court below except only that, whereas Rix LJ was merely sceptical as to whether any relevant policy or practice for the purposes of section 21E(1) exists in this case (para 73), I am clear that it does not. Issue Four Section 49A of the DDA 1995 Having permitted Mr Cragg to advance his section 49A argument, it must be dealt with albeit not at any great length. So far as material, under the heading General duty, section 49A provides: (1) Every public authority shall in carrying out its functions have due regard to . (c) the need to promote equality of opportunity between disabled persons and other persons; (d) the need to take steps to take account of disabled persons disabilities, even where that involves treating disabled persons more favourably than other persons; . As Dyson LJ held in an analogous context in R (Baker) v Secretary of State for Communities and Local Government [2008] EWCA Civ 141; [2008] LGR 239, due regard here means appropriate in all the circumstances see too in this regard R(Brown) v Secretary of State for Work and Pensions (Equality and Human Rights Commission intervening) [2008] EWHC 3158 (Admin); [2009] PTSR 1506. It is Mr Craggs submission that, no express reference to section 49A being found in the respondents documentation in this case, it is to be inferred that, in determining how to assess and meet the appellants needs, they failed in their general duty under this section. This argument too is in my opinion hopeless. Where, as here, the person concerned is ex hypothesi disabled and the public authority is discharging its functions under statutes which expressly direct their attention to the needs of disabled persons, it may be entirely superfluous to make express reference to section 49A and absurd to infer from an omission to do so a failure on the authoritys part to have regard to their general duty under the section. That, I am satisfied, is the position here. The question is one of substance, not of form. This case is wholly unlike Pieretti v Enfield London Borough Council [2010] EWCA Civ 1104; [2011] PTSR 565 (which held that the section 49A duty complements a housing authoritys duties to the homeless under Part 7 of the Housing Act 1996). For the sake of completeness I should just add that both section 21 and section 49A of the DDA 1995 have now been superseded by broadly comparable provisions in the Equality Act 2010. I would dismiss this appeal. Since writing the above I have read the judgments of both Lady Hale and Lord Walker. I cannot but agree with everything that Lord Walker says. I add only that it seems to me, with great respect to Lady Hales acknowledged expertise in social care law, particularly surprising to find her saying (in para 77) that logically, on the majoritys view, the local authority could properly withdraw care even though the client needed to defecate during the night and thus might be left lying in her faeces until the carers came in the morning or, indeed, withdraw this help during the day. One might just as well say that logically, on Lady Hales approach, it would be irrational not to supply a night carer to take the client to the commode, irrespective of cost, if there is any likelihood of the client having to urinate even once during the night. The true position is that the decision is one for the local authority on the particular facts of the case and, on the particular (and undisputed) facts here, it is nothing short of remarkable to characterise the respondents decision as irrational. As to the cost, Lady Hale says (at para 74) that it might well have been open to the local authority . to provide her with the sort of night time care that she was asking for . in one of the Extra Care Sheltered Housing Schemes in the borough. As, however, may be seen from the Conclusion to the boroughs 2010 review (quoted in para 11 above), the appellant has declined the offer of moving to one of the boroughs extra care sheltered housing schemes. In other words, the appellant specifically refused that very solution which Lady Hale mentions. LORD WALKER I agree with Lord Brown and Lord Dyson that this appeal should be dismissed, for the reasons given in their judgments, which address the issues which were argued before the court. But I feel bound to say something about the dissenting judgment of Lady Hale. Having expressed the view that the appeal has focused on a narrow issue which is not a point of law of general public importance, she makes some strongly worded observations on an issue Wednesbury irrationality which was not referred to in the agreed statement of facts and issues, and was not argued by Miss McDonalds counsel. It was raised only in a single paragraph of the written submissions on behalf of the intervener, Age UK. Lady Hale states that the idea that anyone should be obliged to go into a care home in order to be treated with ordinary dignity is extraordinary. Leaving aside the problems of managing functional incontinence in care homes (which are addressed in paras 37 to 46, and in particular para 39, of the witness statement of Mr Harrop, the Director of Policy and Public Affairs at Age UK), I can see no evidence that the respondent (RBKC) is not well aware of Miss McDonalds right to have her dignity respected. She is a courageous and determined lady and RBKCs Adult Social Care Department have tried hard to find a solution to her problems. In successive reviews and assessments they have fully and fairly recorded her feelings and wishes, even when those show antipathy towards RBKC. They have invited her to choose how to deploy, in terms of timing and duration of visits, the weekly sum of 450 available for carers visits. In 2008 they offered to put her in touch with the Home Share Scheme, under which someone such as a female student might have given Miss McDonald help at night in return for rent free accommodation, but she declined because she did not want a stranger living in her house. In 2010 they offered her a move to one of RBKCs Extra Care Sheltered Housing schemes, but Miss McDonald did not want to consider this. Miss McDonald is not incontinent. She can control her bodily functions, but she does need to urinate, sometimes quite frequently, during the night. But paragraphs 74 to 78 of Lady Hales judgment, agreeing with Age UKs argument that RBKC have been irrational in the classic Wednesbury sense, seem to me to ignore completely the evidence of Mr Thomas Brown, the very experienced Head of Assessment at RBKCs Adult Social Care Department. In his second witness statement dated 22 September 2009 he stated (paragraphs 11 12): The court should be aware that the solution of incontinence pads in a case of this nature is not exclusive to RBKC, nor did the suggestion that the claimant should wear them originate from social services, as my previous statement makes clear. In my experience the use of incontinence pads for patients who are not clinically incontinent is both widespread and accepted practice in the provision of social services. Whilst RBKC accepts that the claimant is not clinically incontinent of urine, it is important to emphasise that her difficulty is that, due to impaired mobility, she cannot safely transfer from bed to a commode at night. In practical terms this presents substantially the same problems as a person who is incontinent. A person with this condition is often described as functionally incontinent . He then referred (in a passage which seems to have some words missing) to the website of the St Helens and Knowsley Teaching Hospitals NHS Trust. (paragraphs 13 16): In his third witness statement dated 16 April 2010 Mr Brown stated It is my experience based on 16 years in social care (most of them working with older people) and another four years working in a large general hospital that, in medical and residential care settings, it is general practice in the management of functional incontinence to use night time incontinence pads or absorbent sheets as a means of enduring safety in patients/residents with severely compromised mobility. This management technique was suggested to the council by the claimants GP Dr Parameshwaran on 19 September 2006 and also by the district nursing service, and the suggestion is consistent with my own knowledge of the care management of such persons. The management plan would remain the same if the claimant needs to pass faeces at night, although good practice would be to encourage toileting last thing at night when her night time carer visits and to encourage appropriate dietary changes. The need for morning bathing will arise whether or not faeces are passed at night and it is practical within the care package offered by the council. It should be noted that the need to pass faeces at night was not raised as an issue at the most recent review held in March 2010. I am aware of guidance (DOH 2000) to the effect that incontinence pads should not be offered prematurely in order to prevent dependence on them. I am also aware that aids and adaptations should be explored before such an option is considered. Unfortunately the claimants situation is such that there is no equipment or adaptation which will enable her to access the toilet or commode without assistance. In any event any movement, even assisted, carries a risk to the claimants safety. The primary care need of the claimant is to ensure her safety by protecting her from the risk of further falls, and I remain of the view that the use of night time pads and/or absorbent sheets maximises the claimants safety. Having regard to the guidance and to the particular circumstances of the claimant as well as to the cost indications of the care options, I remain satisfied that the use of continence products is appropriate notwithstanding the claimants objections. I note her concerns about privacy and dignity and about the need to maintain her relationship with her partner. It is the councils view that the use of continence products provides greater privacy and dignity than the presence of a carer assisting with personal and intimate functions at night time. Miss McDonald strongly differs from this view, and so may others. But I do not see how it could possibly be regarded as irrational. It will be noted that in his last witness statement Mr Brown referred to a possible need to pass faeces at night, but noted that it had not been raised as an issue at the most recent review. In view of this I find it rather regrettable that Lady Hales judgment makes so many references to defecation. She says, at the end of para 77, that the consequences (of what she describes as the logical implications of the majority decision) do not bear thinking about. But in this case we do have to think about urine and faeces. For an adult to use incontinence pads for urination may be quite unpleasant for both the user and the carer, but most people would agree that it is a good deal less unpleasant and undignified than their use for defecation. I totally disagree with, and I deplore, Lady Hales suggestion that the decision of the majority would logically entitle a local authority to withdraw help from a client so that she might be left lying in her faeces day and night, relieved only by periodic changes of absorbent pads or sheets. On top of her other misfortunes Miss McDonald has had to have some very personal and private matters aired at public hearings in court. I am sorry to add anything more to that, but I think it should be recorded that according to the very full documentary evidence Miss McDonald has not complained of bowel trouble since an episode about five years ago, when her general health was very frail. As already noted, she did not raise any issue about this at her last assessment. It is true that in her witness statements she did refer to the possibility of sitting around in my own urine or faeces but the latter point was not relied on or even mentioned by her counsel at the appeal hearing. Only counsel making written submissions on behalf of Age UK, saw fit to give it prominence both in the first paragraph and in the last paragraph of his written submissions. LORD KERR Not without regret, I agree that this appeal must be dismissed but I have formed a somewhat different view on the first issue than that expressed by Lord Brown and Lord Dyson. I consider that the respondent authority did not purport to carry out a re assessment of the appellants needs when it conducted the reviews of 4 November 2009 and 15 April 2010. The documents that these reviews generated are both entitled Care Plan Review. By contrast the assessments of the appellants needs which were conducted in February and July 2008 were recorded on forms with the heading, Needs Assessment. The Care Plan that was carried out in November 2008 contained a section in which the appellants needs were specified and particulars were given as to how those needs were to be met. There is nothing in the forms of 4 November 2009 and 15 April 2010 which suggests that an assessment of the appellants needs was being undertaken on either occasion. Rix LJ in para 53 of his judgment (quoted by Lord Brown in para 12 above) stated that the 2009 and 2010 reviews are to be read as including a reassessment of Ms McDonalds needs. If by this Rix LJ meant that the respondent had carried out a re assessment of Ms McDonalds needs, I would, with respect, disagree. In so far as there is any reference to her needs in the report of 4 November 2009, it is to the effect that they remained as before. See the passage from the report quoted by Lord Brown at para 11 Ms McDonald needs assistance to access the toilet during the day, and if she uses it at night. The needs were therefore defined as being associated with access to the lavatory, in other words, difficulties with mobility. The same holds true for the report on the review on 15 April 2010. Again the only reference to needs in this report was in relation to mobility problems. The decision to change the care plan was not prompted by any change in the view about Ms McDonalds needs but by the conclusion that the arrangements that were in place to meet the needs exceeded what was required. And this was the basis on which the case was presented both to the deputy High Court judge and the Court of Appeal. The clinching document in this regard is a letter from the respondent to Ms McDonald dated 4 November 2010 which stated unequivocally that if Ms McDonalds needs had not changed from the previous review, then generally a care plan review would take place. That was precisely what had happened in November 2009 and 15 April 2010. Clearly, if on those dates a re assessment of needs was deemed necessary, a form of review different from that which took place on each of those occasions would have been undertaken and a different type of form would have been completed. The fact that in November 2009 and again in April 2010 a care plan review was undertaken (the very type of review which the November 2010 document stated was appropriate when there had been no change in the appellants needs) demonstrates clearly that it was not the intention of the respondent to carry out any re assessment of the appellants needs on either date. In my opinion, therefore, the Court of Appeals decision can only be upheld on the basis that, although the respondent did not intend to carry out a re assessment of the appellants needs on 4 November 2009 or 15 April 2010, in fact the exercise then conducted yielded sufficient information to allow the court to conclude that the appellants needs could properly be re cast and warranted a change in the means by which those needs may legally be met. This is, at first sight at least, not an easy conclusion to reach. Ms McDonalds needs were precisely the same as they had been when they were originally assessed. The change had come about not because there had been any authentic re evaluation of what the appellants needs were but because it was felt necessary to adjust how those would be expressed in order to avoid undesired financial consequences. And one, somewhat absolutist, way of approaching the case is to say that the appellant is not incontinent. Incontinence pads are provided for use by those who are. She needs help to move and she needs to move during the night. Her needs are therefore related to her difficulty with mobility, not to a problem with incontinence. Properly understood, she needs help with movement, not services which eliminate the need to move. On this approach, the deputy High Court judge was wrong to describe the need as the safety of the claimant and the Court of Appeal was likewise wrong to describe the need as a need to urinate safely at night. Ms McDonald has no problem in urinating safely at night. She does not need assistance to do so. She does need to be helped to move to a place where she can urinate, however. After some hesitation, I have concluded that this is to take a rather too technical and inflexible approach to the issue. And I certainly do not think that it can be said that where the respondent has decided what needs are on one occasion, it is forever bound to that assessment. The essential question on the first issue, it seems to me, is whether needs partake partly of the means by which the disabilities of the appellant may be catered for, as well as the actual nature of the disability and, on reflection, I think that this is the correct approach. In the Guidance on Eligibility Criteria for Adult Social Care document (issued by the Department of Health on 28 May 2002) the issues and problems that are identified when individuals contact, or are referred to, councils seeking social care support are defined as "presenting needs". If needs are defined as the issues and problems that the particular individual presents, that would appear to open the way to taking a rather broader view of what needs means and includes not only the narrow connotation of needs but also how those needs may be met. On that basis, it can be said that the reviews in 2009 and 2010, although it was not their purpose, in fact involved a re assessment of the appellants needs and that they may now be regarded as the need to avoid having to go to the lavatory during the night. Viewed thus, the needs can be met by the provision of incontinence pads and suitable bedding. Not without misgivings, I have therefore concluded that it was open to the respondent to re assess the appellants needs, to re categorise them as a need to avoid leaving bed during the night and to conclude that that need could be met by providing the appellant with the materials that would obviate the requirement to leave her bed. Although that is not the way in which the respondent actually dealt with the appellants case, this was no more than a technical failure on its part and is moreover one that could easily be overcome. Even if it can be said, therefore, that the respondent did not comply with the legal requirement that it re assess the appellants needs before deciding to change the means by which those needs should be met, quite clearly it could and doubtless would, if required do so. In these circumstances, the appellants challenge would have to fail in the exercise of the courts discretion I agree with all that Lord Brown has had to say on the other issues that arise on the appeal. There is nothing that I could usefully add to his admirable judgment on all of those matters. LORD DYSON I agree that, for the reasons given by Lord Brown, this appeal should be dismissed. I wish to add some words of my own on the first issue. Mr Cragg makes two points in relation to the 2009 and 2010 Care Plan Reviews. The first is that they contained no reassessment of Ms McDonalds needs which remained as needs assistance to use the commode at night. The second is that, if the Care Plan Reviews did reassess her care needs, the reassessment was unlawful because it was undertaken in breach of the Community Care Assessment Directions 2004 (the 2004 Directions) and the Fair Access to Care Services (FACS) guidance. Ms McDonald suffers from a small and neurogenic bladder so that she needs to urinate some three times during the night. The combination of this and the fact that, as a result of a stroke, she has very limited mobility (and is therefore liable to fall) means that she cannot safely access a commode without assistance. The history of the respondents assessments of her care needs is set out in detail by Rix LJ (2010) 13 CCL Rep 664, paras 10 to 27. The following is a summary. A Needs Assessment with a start date of 22 January 2007 (signed off on 9 February 2007) stated that frequent toileting still appears to be the major issue. It also stated that Ms McDonald had refused to use incontinence pads and that she was requesting seven hours of care each night to assist her with using a commode. One of her needs was described in these terms: 3. Ms McDonald needs support with health needs including medication and continence issue. Substantial need.: para 12. So at this early stage, her needs were described in general terms as being assistance with toileting. This general description was to be repeated later in the Care Plan Reviews for 2009 and 2010 which contained several references to Ms McDonalds toileting needs. The 2007 Assessment showed that two very different ways of meeting these needs had been identified: the provision of a carer to assist her with the use of a commode and the provision of pads. Ms McDonald made it clear that she wanted the former and was implacably opposed to the latter. That has always been her position. A Care Plan dated 27 April 2007 recorded the fact that Ms McDonald did not use pads because she found them undignified and was in any event not incontinent and that she preferred to have assistance in using the toilet during the day and the commode at night. The plan stated that her needs were to be met inter alia by providing assistance with toileting when it is required during the night. Ten hours over night care. The summary of key problems/needs stated: Miss McDonald needs assistance to manage continence at night. Substantial Need. This summary description was, however, later amended to read Miss McDonald needs assistance at night to use the commode. Moderate Need. The explanation for the change in the description of the need is given by Thomas Brown who is the Service Manager in the respondents Adult Social Care Department. He says at paragraph 8 of his first witness statement that the respondent made it clear to Ms McDonald from January 2007 that there would be no funding for night care. But it agreed to provide such funding on a short term basis pending her application to the Independent Living Fund (ILF) for financial support on the basis that this would be refunded by the ILF to the respondent if her application was successful. Mr Brown says that this was a concession on the part of the respondent. It is not clear from the evidence whether Ms McDonald made this application and, if so, with what result. A further Needs Assessment was made in February 2008. There had been no change in Ms McDonalds condition or in her attitude. She was still requesting assistance with using a commode at night and was still opposed to the use of pads. Her relevant need was expressed in these terms: Miss McDonald needs assistance to use the commode at night Substantial Need. In other words, the need was expressed in the same terms as in the Care Plan of 27 April 2007, although it was now described as a substantial rather than a moderate need. On 17 October 2008, the respondent decided to reduce the amount allocated for Ms McDonalds weekly care to reflect its view that she did not need a night time carer and that pads would meet her toileting needs. This decision was recorded in a letter dated 21 November 2008. Nevertheless, the Needs Assessment started on 2 July 2008 (and signed off on 28 October 2008) and the Care Plan dated 17 November 2008 repeated the description of Ms McDonalds need as assistance to use the commode at night. In the Care Plan Review dated 4 November 2009, the respondent stated formally that it had concluded that the current care arrangements exceeded those reasonably needed to meet Ms McDonalds toileting needs. It said that it remained of the view that the use of pads is a practical and appropriate solution to Ms McDonalds night time toileting needs. The same view was expressed in the Care Plan Review dated 15 April 2010 from which Lord Brown has quoted at para 11 above. From this history, the following points emerge. First, it was never in dispute that Ms McDonald had toileting needs and those needs did not change throughout the relevant period: she needed to urinate three times a night and could not use a commode unaided. Her toileting needs could be met either by providing a carer who would assist her to use a commode or by providing pads. No other way of meeting the needs was canvassed as a possibility. Secondly, Ms McDonald was always opposed to the use of pads. Thirdly, the respondent was always of the view that the most practical and appropriate way of meeting her toileting needs was by using pads. Pads were safer (there was no risk of falls) and cheaper. But in the knowledge that Ms McDonald was opposed to the use of pads and as a concession, the respondent agreed to fund the provision of night time care pending her application for funding to the ILF. Fourthly, the reassessment of her need in the Care Plan dated 27 April 2007 (as amended) as needs assistance at night to use the commode did not reflect the respondents view either of her need or of the most practical and appropriate way of meeting it. It was clear that it remained of the view that the most practical and appropriate way of meeting her toileting needs was by using pads and that she therefore had a need for the provision of pads. In these circumstances, I am very doubtful that it was necessary or appropriate for the respondent to reassess Ms McDonalds needs in 2007. Her condition had not changed and the respondents view as to how to deal with it remained constant. The fact that, as a concession, it made a grant of funding for night care (refundable if the application to the ILF was successful) did not require it to reassess her care needs. Nevertheless, the fact is that the respondent did describe her need in the 2007 documentation as assistance to use the commode at night and the question raised by the first issue is whether it reassessed her need in the 2009 Care Plan Review. Like Lord Brown, I entirely endorse para 53 of the judgment of Rix LJ. It is not in dispute that it is open to a local authority to reassess a persons needs in a Care Plan Review. Nor do I understand it to be in issue that the fact that a persons underlying presenting need has not changed does not prevent a local authority from making a reassessment. Provided that it does not act in a Wednesbury unreasonable way or in breach of a persons rights under the European Convention on Human Rights, it is open to an authority to make a reassessment in circumstances including that (i) there has been a change in the eligibility criteria for the assessment of needs; (ii) there have been relevant medical or technological developments which justify a change and (iii) the authority has simply had further thoughts and changed its mind as to what is the proper assessment of the need. In construing assessments and care plan reviews, it should not be overlooked that these are documents that are usually drafted by social workers. They are not drafted by lawyers, nor should they be. They should be construed in a practical way against the factual background in which they are written and with the aim of seeking to discover the substance of their true meaning. Adopting that approach, I am in no doubt that the Care Plan Reviews of 2009 and 2010 contained reassessments of Ms McDonalds needs. My reasons are essentially those given by Rix LJ. I would merely add the following. It is true that the Care Plan Reviews did not explicitly purport to be reassessments of Ms McDonalds needs. This is because the documents stated that it remained the respondents view that the use of pads was a practical and appropriate solution to Ms McDonalds night time toileting needs. As I have said, the respondents view as to her night time toileting needs had not in fact changed and Ms McDonald could have been in no doubt about that. It is true that the night time care needs had been differently described in the 2007 documentation, but that was only as a concession and on a temporary basis. Following the decisions of 17 October and 21 November 2008, it must have been clear that the respondent was withdrawing its concession and that the need was no longer being assessed as assistance to use the commode at night. It is true that the Care Plan Reviews did not state in terms that the need was being reassessed from assistance at night to use the commode to toileting needs or the provision of pads for night time use. But there can be no doubt that this is the effect of the words used in the documents. In substance, the respondent was saying in the Care Plan Reviews that it was adhering to the view it had always held and which had been reflected in the documentation at all times except during the period of the concession. As regards Mr Craggs second point, he submits that there has been a breach of Direction 2 of the 2004 Directions (set out by Lord Brown at para 10 above) and a breach of the requirements of the FACS guidance that councils should ensure that individuals are active partners in the assessment of their needs (para 28) and councils should recognise that individuals are the experts on their own situation and encourage a partnership approach to assessment. There is a history of consultation in this case. Since 2006, as Mr Brown makes clear in his statements, the respondents officers have sought to maintain a productive dialogue with Ms McDonald and her representatives as regards her care needs. She was consulted in relation to each care plan review. These were scheduled reviews of which she was given advance warning. Since the meeting on 17 October 2008 (if not before), the respondent sought to agree the care package with her. Rix LJ was fully justified in concluding at para 42 that: It is clear from the facts stated above that the Royal Borough has taken great pains to consult both Ms McDonald and [her partner] about Ms McDonalds needs and their assessment and solution, and to seek agreement with Ms McDonald about such matters. For these reasons (as well as those given by Lord Brown) I would dismiss this appeal. I should add that, since writing this judgment, I have read the judgments of Lord Walker and Lady Hale. Like Lord Brown, I entirely agree with what Lord Walker says. Ms McDonald needs to urinate three times a night and cannot safely use a commode unaided. Her need can be met either by providing a carer or by the provision of pads. These two very different ways of meeting her need are not themselves her needs. Of course, if (as Lady Hale does) you define them as needs, then it is irrational to confuse the two and meet one need in the way that is appropriate to the other: it obviously makes no sense to say that the need for help to get to the commode can be met by the provision of pads. But Lady Hale is only able to say that the authoritys decision is irrational because she has chosen to define the two ways of meeting Ms McDonalds need as needs themselves. If the provision of help to get to the commode and the provision of pads are seen as different ways of meeting Ms McDonalds need (described above as her toileting needs), then the only question is whether the authoritys decision to opt for the pads solution is unlawful. The unchallenged evidence of Mr Brown cannot be brushed aside in the way that Lady Hale seeks to do. The use of incontinence pads for patients who are not clinically incontinent is both widespread and accepted practice in the provision of social services and is general practiceas a means of ensuring safety in patients/residents with severely compromised mobility. The use of pads was suggested in this case by Ms McDonalds own GP. In these circumstances, in my view it is impossible to characterise the authoritys decision as irrational. It is no answer to this evidence to say that there is no evidence that it is accepted practice in effect to oblige the client to accept it. The fact that the client may have no alternative but to accept the accepted practice does not mean that to adopt the general practice against the wishes of the client is irrational. And if it is not irrational, it is not unlawful. LADY HALE This case is about a really serious question which could affect any one of us: is it lawful for a local authority to provide incontinence pads (or absorbent sheets) for a person who is not in fact incontinent but requires help to get to the lavatory or commode? It raises an important point of law on the proper interpretation and application of section 2(1) of the Chronically Sick and Disabled Persons Act 1970 (Alf Morriss Act). Unfortunately the parties have not addressed themselves to this point. Instead, most of the argument has focussed upon a much narrower question which is essentially one of fact: whether two documents prepared by the local social services authority entitled care plan review were to be taken also as a reassessment of the appellants community care needs. This is not a point of law of general public importance. But there is ample precedent for this court addressing itself to an important point which has not been argued by the parties (see, for example, Granatino v Radmacher (formerly Granatino) [2010] UKSC 42, [2011] 1 AC 534) and in this case we have a relevant intervention from Age UK, the principal charity working for older people in this country. I propose, therefore, briefly to address the question which we might have been asked. To do so, it is necessary to explain a little of the background to the assessment of and entitlement to social care. Since the foundation of the welfare state in the post war years, local authorities have had power to provide a range of social services for adults who need them, usually because of age, ill health or disability. It is, perhaps, unlikely that the original framers of the legislation envisaged that any of these powers would give rise to an individual entitlement to be provided with a particular service: they were framed in terms of devising schemes to provide such services which would be approved by the Minister. Means tested benefits, on the other hand, became available to fund accommodation in residential care. More and more public money was being spent on old and other vulnerable people living in private or voluntary nursing or care homes without any professional assessment of whether they actually needed to be there. This was not only wasteful and inefficient; it was also inconsistent with the policy aim of enabling people to live independent lives in their own homes for as long as possible. The system was changed following reports from the Audit Commission, Making a Reality of Community Care (1986) and Sir Roy Griffiths, Community Care: Agenda for Action: A Report to the Secretary of State for Social Services (1988), and a White Paper, Caring for People: Community Care in the next Decade and Beyond (1989, Cm 849). Local social services authorities were to be given the task of assessing peoples needs and either providing or arranging appropriate services for those who needed them to do so. Thus, section 47(1)(a) of the National Health Service and Community Care Act 1990 requires a local authority to carry out an assessment if it appears that any person for whom they have power to provide or arrange community care services may be in need of them. Section 46(3) of the 1990 Act defines community care services as those which a local authority may provide or arrange under four different statutory regimes, all of which pre dated the 1990 Act. These include Part III of the National Assistance Act 1948. Part III was amended to draw a clear distinction between two sorts of service: residential accommodation for people who because of age, illness, disability or any other circumstances are in need of care and attention which is not otherwise available to them, under section 21(1)(a), (as amended by section 42(1) of the 1990 Act; and a range of other services for disabled people, under section 29. As amended by section 195 of, and paragraph 2 of the Schedule 23 to, the Local Government Act 1972, both sections provide that the local authority may with the approval of the Secretary of State, and to such an extent as he may direct shall provide the service described for the identified client group. The requisite approvals and directions are contained in the Department of Health Local Authority Circular LAC (93)10. This requires that services be provided for, among others, people who are ordinarily resident in the local authoritys area. This appellant is a disabled person who ordinarily resides in the area of the respondent local authority. But are these merely target duties, owed towards the relevant population as a whole, or do they give rise to individual rights? It was held in R v Sefton Metropolitan Borough Council, Ex p Help the Aged [1997] 4 All ER 532, that section 21(1)(a) of the 1948 Act does give rise to an individual entitlement to accommodation once the local authority have decided that the individual fulfils the statutory criteria. No one has since challenged that decision and, indeed, it has been assumed to be correct in more than one decision of the House of Lords: see R (M) v Slough Borough Council [2008] UKHL 52, [2008] 1 WLR 1808. Logically, the position should be the same for both section 21 and section 29, as the relevant wording has been identical since 1972: the observation in R v Islington London Borough Council, Ex p Rixon [1997] 32 BMLR 136, 139, that the duties in section 29 were merely target duties pre dated the decision that section 21(1)(a) created individual rights. (Incidentally, the Law Commission, in its recent report, Adult Social Care (2011) (Law Com No 326), has recommended that there should be an enforceable right to all the community care services required to meet the individuals eligible needs: para 6.12, recommendation 16.) In any event, it is quite clear that section 2(1) of the Chronically Sick and Disabled Persons Act 1970 was intended to create an individual right to services if its criteria were met. So far as relevant to this case, it reads as follows: Where a local authority having functions under section 29 of the National Assistance Act 1948 are satisfied in the case of any person to whom that section applies who is ordinarily resident in their area that it is necessary in order to meet the needs of that person for that authority to make arrangements for all or any of the following matters, namely (a) the provision of practical assistance for that person in his home; . then, . , it shall be the duty of that authority to make those arrangements in exercise of their functions under the said section 29. The 1970 Act thus specified certain services which had to be provided for disabled people who needed them under section 29 and gave those people an enforceable right to those services. Implicit in that right was a right to have ones needs assessed, at least if the local authority were asked to do so. But the matter was put beyond doubt by section 4 of the Disabled Persons (Services, Consultation and Representation) Act 1986. This requires that, when requested to do so by or on behalf of a disabled person, a local authority shall decide whether the needs of the disabled person call for the provision by the authority of any services in accordance with section 2(1) of the 1970 Act. Significantly, this wording draws a clear distinction between the needs of the disabled person and the services which should be provided in response. The duty in section 4 of the 1986 Act remains in force despite the enactment of the more comprehensive duty in section 47(1) of the 1990 Act. As section 2(1) services are provided in the exercise of the authoritys functions under section 29 of the 1948 Act, it has been held that they are also included in the definition of community care services in section 46 of the 1990 Act and thus within the duty to assess the need for them in section 47(1): see R v Kirklees Metropolitan Borough Council, Ex p Daykin (1996) 1 CCLR 512. Having carried out an assessment under section 47(1)(a), section 47(1)(b) requires that the authority having regard to the results of that assessment, shall then decide whether his needs call for the provision by them of any such services. But not all community care services are a right, so section 47(2) of the 1990 Act expressly preserves the special position of disabled people who are entitled to services under section 2(1) of the 1970 Act. If at any time during an assessment of needs under section 47(1)(a) it appears that the client is a disabled person, then the authority must proceed to make a decision as to the services which he requires under the 1970 Act without being requested so to so. This underlines the fact that Parliament intended to treat the needs of disabled people as a special case. Otherwise, it is hard to see why they did not simply subsume the former provisions in the new. In sum, disabled people have an individual right to certain services under section 2(1) of the 1970 Act and a right to have their entitlement to such services assessed and a decision made under both section 4 of the 1986 Act and section 47 of the 1990 Act. Clearly, it is for the local authority and not the court to make that assessment. It is for the authority to be satisfied that the criteria are met. But in doing so they have to ask themselves the right questions and provide rational answers. The key question is what is meant by necessary in order to meet the needs of the disabled person in section 2(1) of the 1970 Act. These words contain two separate questions: first, what are the needs of the disabled person; and second, what is necessary to meet those needs? The second question is then supplemented by a third: having decided what is necessary to meet those needs, is it necessary for the local authority to arrange it? In R v Gloucestershire County Council, Ex p Barry [1997] AC 584, the issue was whether it was lawful for the local authority to take their resources into account in answering those questions. It was common ground that there was a good deal of flexibility in the arrangements which could be made to meet a persons assessed needs. So the authoritys resources could be taken into account at the second stage, provided always that the need was met. The dispute was over whether those resources could be taken into account in assessing what the persons needs were. Lord Lloyd of Berwick, with whom Lord Steyn agreed, held that they could not. Lord Nicholls of Birkenhead and Lord Clyde, with whom Lord Hoffmann agreed, held that they could. The subsequent Guidance on Adult Social Care, Fair Access to Care Services, Guidance on Eligibility Criteria for Adult Social Care (2003) sought to make sense of the distinction which the House of Lords had elided. Thus it distinguished between a persons presenting needs and her eligible needs: paragraph 2. The presenting needs were those which the client actually had. The eligible needs were those which the authority were prepared to meet. This depended upon whether they were assessed as being critical, substantial, moderate or low: paragraph 16. The authority could decide which categories of need they would meet. This was designed to achieve a good degree of consistency within authorities as to the needs which would be met, but obviously produced a considerable disparity between those authorities who would meet only critical and substantial needs and those authorities who would also meet moderate or even low needs. The lesson which I learn from this guidance (and from its replacement, Prioritising Need in the Context of Putting People First: A Whole System Approach to Eligibility for Social Care (2010)) is that there is an obvious distinction between what people need and what the authorities are prepared to do to meet that need. How otherwise can it be the case that a person with a particular level of need in one local authority area will have that need met but a person with the same level of need in another local authority will not? Hence I confess that I find the reasoning of the minority in Barry much more convincing, both as a matter of statutory construction and as a matter of everyday life, than the reasoning of the majority. There is a clear distinction between need and what is done to meet it. We all need to eat and drink. Resources do not come into it. But there are various ways of meeting that need and it is perfectly sensible to choose the most efficient and economical way of meeting it. Our nutritional needs can met by simple, wholesome food, rather than by giving us the expensive foods that we prefer. I could have wished, therefore, that counsel had taken the opportunity presented by coming to this court to argue that Barry was wrongly decided. It was, after all, a comparatively recent decision, taken by a bare majority, on a highly arguable point of statutory construction. Lord Nicholls acknowledged (at p 604C) that the contrary argument was, at first sight, compelling. The majority view was obviously heavily influenced by the impossible position in which the local authority had been put by the government of the time: wishing to maintain the services which their clients needed but unable to do so because of the combination of rate capping and reduction in the central government grant. The principled view, taken by the minority, was that this was not a good enough reason to interpret the authoritys statutory duties otherwise than in accordance with their plain meaning. Without the decision in Barry, it would be easy to answer the question in this case. If resources did not come into the assessment of need, it would be easy to state what a particular individual needed. Everyone needs to urinate and defecate. People who can control their bladder and/or bowels need a safe and hygienic place in which to do so. People who cannot control their bladder and/or bowels need equipment designed to cater for the fact that they cannot avoid performing these natural functions in the wrong place. The former group of people do not need the latter equipment although they may need help in getting to the safe place. Once the need is accurately identified, the most efficient and economical way of meeting it can be chosen. Just as any parent has to choose whether to use disposable or re usable nappies (to take an obvious example), a local authority can choose the most efficient and economical equipment to meet the need. Likewise, if the need is for help to use the lavatory or commode, there may be all sorts of choices available as to when, how or even where to offer the service. Thus, it might well have been open to the local authority to say to Ms McDonald that it was too expensive for them to provide her with the sort of night time care that she was asking for in her own flat, but that they could do so in one of the Extra Care Sheltered Housing Schemes in the borough, or in her own flat through the Homeshare scheme. She too can be expected to co operate with the authority in choosing the most economical and acceptable way of meeting the need that she has. However, I do not think that it is necessary to hold that Barry was wrongly decided in order to allow this appeal. Section 2(1) clearly does ask two separate questions. Nothing in Barry denies that. Both of those questions have to be answered, and answered rationally, in relation to the individual disabled person. It seems to me that the need for help to get to the lavatory or commode is so different from the need for protection from uncontrollable bodily functions that it is irrational to confuse the two, and meet the one need in the way that is appropriate to the other. Of course, there may well be people who are persuaded that this is in fact a more convenient, comfortable and safer way of solving the problem; then it is no longer irrational to meet their need in this way. The authority suggest that this is accepted practice but they cannot point to evidence that it is accepted practice in effect to oblige the client to accept it. Such Department of Health Guidance as there is points the other way: that people should not be offered this form of assistance prematurely, in case they become unnecessarily dependent upon it. client should not have to have one need met with the solution to another It is clear from the evidence that this local authority have never been prepared to fund the night time care which Ms McDonald wants. They only agreed to do so as a temporary measure while the application to the Independent Living Fund was being processed. It is not clear why their offer of payment lapsed. But ever since then they have been trying to reduce the care to the figure which they have allocated for her. No one can blame them for that. I dare say that they have not found Ms McDonald an easy person to deal with. But the fact that they have been trying so hard for so long to persuade her to accept their point of view does not mean that it is a rational view or one which she is bound to accept. For the reasons already given, I do not think that it is. Furthermore, I am troubled by the implications of the contrary view. A person in her situation needs this help during the day as well as during the night and irrespective of whether she needs to urinate or to defecate. Logically, the decision of the majority in this case would entitle a local authority to withdraw this help even though the client needed to defecate during the night and thus might be left lying in her faeces until the carers came in the morning. This is not Ms McDonalds problem at the moment, but her evidence leaves one in no doubt that this is one of her fears. Indeed, the majority view would also entitle an authority to withdraw this help during the day. The only constraint would be how frequently (or rather how infrequently) it was deemed necessary to change the pads or sheets, consistently with the avoidance of infection and other hazards such as nappy rash. The consequences do not bear thinking about. I therefore agree with the argument of the interveners, Age UK, when they say that it is irrational in the classic Wednesbury sense to characterise the appellant as having a different need from the one which she in fact has. As I understand it, it would not be regarded as acceptable to treat a hospital patient or care home resident in this way. Regulation 17 of the Health and Social Care Act 2008 (Regulated Activities) Regulations 2010 (SI 2010/781) requires a registered person, so far as reasonably practicable, to make suitable arrangements to ensure the dignity, privacy and independence of service users. The Care Quality Commissions Guidance, Essential Standards of Quality and Safety (2010), p 117 requires that people who use services have access to toilets, baths and showers that enable them to maintain privacy and dignity and are in close proximity to their living areas. The Commissions recent Review of Compliance at Ipswich Hospital NHS Trust found that dignity was not always sufficiently considered because people were not taken to a toilet away from their bed space and commodes were used all the time: p 8. There is no suggestion that people with mobility problems should not be able to enjoy the same access to toilet facilities as those who do not. There is no suggestion that it would be acceptable to treat patients in hospital in the way that it is suggested that someone living in her own home should be treated. But the overall cost of admitting anyone to residential or nursing care is usually greater than providing them with what they need in their own homes. The policy aim underlying all the recent guidance is to help people to live independently in their own homes for as long as possible. As Lord Lloyd put it in Barry in every case, simple or complex, the need of the individual will be assessed against the standards of civilised society as we know them in the United Kingdom (p 598F). In the United Kingdom we do not oblige people who can control their bodily functions to behave as if they cannot do so, unless they themselves find this the more convenient course. We are, I still believe, a civilised society. I would have allowed this appeal. |
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. |
The ruling under challenge in this case was made by the Crown Court judge at a preparatory hearing, held in anticipation of a criminal trial. That means that as yet no evidence has been heard and it cannot be known what the facts of the case may turn out to be. Such rulings are occasionally necessary in order to establish the basis on which the trial will be conducted. But it needs to be remembered that a point raised at that early stage may turn out to be at the centre of the trial, or to be merely peripheral, or indeed sometimes not to arise at all, depending on what evidence emerges, and which parts of it are in dispute. For this reason, reporting restrictions apply to this hearing: see para 26 below. The two appellants are charged with the offence of entering into funding arrangements connected with terrorism, contrary to section 17 of the Terrorism Act 2000 (the Act). Because it is not yet known what course the trial will take, as little as possible should be said now about the allegations, which may or may not be proved. It is enough to say that the appellants are charged with sending money overseas, or arranging to do so, when they knew or had reasonable cause to suspect that it would, or might, be used for the purposes of terrorism. The section of the Act which creates this offence says as follows: 17. Funding arrangements. A person commits an offence if (a) he enters into or becomes concerned in an arrangement as a result of which money or other property is made available or is to be made available to another, and (b) he knows or has reasonable cause to suspect that it will or may be used for the purposes of terrorism. The question which arises on this appeal concerns the correct meaning of the expression has reasonable cause to suspect in section 17(b). Does it mean that the accused must actually suspect, and for reasonable cause, that the money may be used for the purposes of terrorism? Or is it sufficient that on the information known to him there exists, assessed objectively, reasonable cause to suspect that that may be the use to which it is put? Of course, it may well be that at any trial under this section it will be the Crown case that a defendant actually did suspect, and for reasonable cause, that the money might be used in this way, and it may well be that an important issue at the trial will be whether that allegation is proved or not. But the judge in the present case addressed the question posed in the previous paragraph in case it were to arise at the trial. The question posed above has been addressed by counsel on both sides with commendable accuracy and lucidity. Both the trial judge and the Court of Appeal (Criminal Division) concluded that the correct answer was that the words used in the statute plainly mean that it is sufficient that on the information known to the accused, there exists, assessed objectively, reasonable cause to suspect that the money may be used for the purposes of terrorism. The appellants contend that this conclusion is wrong. They say that: the words used are capable of either meaning; (i) (ii) given that, the well established presumption that an offence creating provision ought to be construed as requiring an element of a guilty mind (mens rea) operates to accord to the section the meaning that an accused must actually suspect that the money may be put to terrorist use; (iii) this is particularly so since the offence here created is a serious one, to be contrasted with the kind of regulatory contexts where a legislative intention to create an offence of strict liability may more easily be divined; (iv) the Court of Appeal erred in starting by asking the natural meaning of the words, and then whether that meaning had been displaced; it is said that it ought to have begun with the presumption of mens rea and asked whether that presumption had been displaced by the words of the section; and (v) the Court of Appeal erred in giving too much emphasis to the fact that the statute was designed to protect the public against the grave threat of terrorism; whilst this is so, it is not a reason to dilute the presumption. The presumption as to mens rea The presumption on which the appellants rely is indeed well established and has often been applied to the construction of statutes creating offences where the meaning is in doubt. The conventionally authoritative statement of the presumption is found in the speech of Lord Reid in Sweet v Parsley [1970] AC 132, 148, 149: our first duty is to consider the words of the Act: if they show a clear intention to create an absolute offence that is an end of the matter. But such cases are very rare. Sometimes the words of the section which creates a particular offence make it clear that mens rea is required in one form or another. Such cases are quite frequent. But in a very large number of cases there is no clear indication either way. In such cases there has for centuries been a presumption that Parliament did not intend to make criminals of persons who were in no way blameworthy in what they did. That means that whenever a section is silent as to mens rea there is a presumption that, in order to give effect to the will of Parliament, we must read in words appropriate to require mens rea. it is firmly established by a host of authorities that mens rea is an essential ingredient of every offence unless some reason can be found for holding that that is not necessary. It is also firmly established that the fact that other sections of the Act expressly require mens rea, for example because they contain the word knowingly is not in itself sufficient to justify a decision that a section which is silent as to mens rea creates an absolute offence. In the absence of a clear indication in the Act that an offence is intended to be an absolute offence, it is necessary to go outside the Act and examine all relevant circumstances in order to establish that this must have been the intention of Parliament. I say must have been because it is a universal principle that if a penal provision is reasonably capable of two interpretations, that interpretation which is most favourable to the accused must be adopted. This statement of the principle was described by Lord Nicholls in B (A minor) v Director of Public Prosecutions [2000] 2 AC 428, 460 as magisterial. It has often been applied, and it is unnecessary to multiply examples. They include recent cases in this court, such as R v Brown (Richard) [2013] UKSC 43; [2013] 4 All ER 860, R v Hughes (Michael) [2013] UKSC 56; [2013] 1 WLR 2461, and R v Taylor (Jack) [2016] UKSC 5; [2016] 1 WLR 500. Whilst the principle is not in doubt, and is of great importance in the approach to the construction of criminal statutes, it remains a principle of statutory construction. Its importance lies in ensuring that a need for mens rea is not inadvertently, silently, or ambiguously removed from the ingredients of a statutory offence. But it is not a power in the court to substitute for the plain words used by Parliament a different provision, on the grounds that it would, if itself drafting the definition of the offence, have done so differently by providing for an element, or a greater element, of mens rea. The principle of Parliamentary sovereignty demands no less. Lord Reid was at pains to observe that the presumption applies where the statute is silent as to mens rea, and that the first duty of the court is to consider the words of the statute. Hughes (Michael) and Taylor (Jack), mentioned above, concerned offences of causing death by driving. They were cases where the language of the statutes was ambiguous and the presumption assisted the court to reach the conclusion that they imported an element of fault (although not necessarily of subjective mens rea rather than of error of driving). The words used by Parliament were words of causation of death. This court construed those words as importing an element of fault, principally because there were ample unambiguous alternative expressions which could and would have been used if the intention had been to create an offence of homicide which could be committed simply by being present on the road to be run into by someone else. By contrast, Brown (Richard) was a case in which this court had no doubt that the statutory offence of unlawful carnal knowledge of a girl under 14 did not contain a requirement that the accused know that the girl was under age. This conclusion was mandated despite the fact that the offence creating section was silent as to whether such knowledge was required or not. It was a conclusion compelled by the prior common law and statutory context, against which the offence had been created, by other provisions in the legislation, which had to be construed as a whole, and by the social mischief which the Act had been passed to meet. Thus these three recent cases are good illustrations of the truism that the presumption on which the appellants here rely is a principle of statutory construction, which must give way to either the plain meaning of the words, or to other relevant pointers to meaning which clearly demonstrate what was intended. It follows that the Court of Appeal in the present case did not fall into the error suggested, of wrongly starting with the words of the Act. On the contrary, that is the inevitable first port of call for any issue of construction, as Lord Reids statement of the principle in Sweet v Parsley expressly stated. The language of the statute Mr Moloney QC, for the appellants, was characteristically realistic, and correct, to recognise that the words of section 17(b) are such as, at first sight, suggest an objective test. The section makes it an offence where the defendant either knows or has reasonable cause to suspect. It does not say what one would expect it to say if it meant that the defendant must be proved actually to have suspected, that is: if he knows or suspects Nor, for that matter, does it say: if he knows or reasonably suspects It is thus very difficult to see this statutory provision as one of the kind which Lord Reid was describing in Sweet v Parsley, that is to say one which is silent as to the state of mind required for commission of the offence. Saik and OHara The appellants nevertheless contend that, if not silent, the provision is ambiguous, and thus that the presumption should operate to resolve the doubt in favour of the construction which favours an accused by requiring a greater degree of mens rea. This argument is founded largely upon the House of Lords decision in R v Saik [2006] UKHL 18; [2007] 1 AC 18 and particularly on some passages in the speech of Lord Hope in that case and in OHara v Chief Constable of the Royal Ulster Constabulary [1997] AC 286. In Saik the substantive offence under consideration was one of the now repealed offences of money laundering contained in section 93A C of the Criminal Justice Act 1988. The relevant one was section 93C(2): (2) A person is guilty of an offence if, knowing or having reasonable grounds to suspect that any property is, or in whole or in part directly or indirectly represents, another persons proceeds of criminal conduct, he conceals or disguises that property; or converts or transfers that property or removes it (a) (b) from the jurisdiction, for the purpose of assisting any person to avoid prosecution for an offence to which this Part of this Act applies or the making or enforcement in his case of a confiscation order. It is certainly true that in Saik the House of Lords concluded that this section imported a requirement that the defendant actually suspect, as well as that he did so on reasonable grounds. Whilst the section under discussion in the present case speaks not of reasonable grounds but of reasonable cause for suspicion, it is not necessary to contemplate any distinction between the two for the purposes of the present argument. The appellants rely particularly on what Lord Hope said at paras 51 53, where he concluded that to stipulate for reasonable grounds for suspicion assumed the existence of actual suspicion. Lord Hope drew an analogy with statutory powers of arrest, including that considered in OHara which was section 12(1) of the Prevention of Terrorism (Temporary Provisions) Act 1984. There a constable was given powers to arrest without a warrant if he had reason to suspect the person arrested was concerned in terrorism. As Lord Hope remarked in both cases, such a power of arrest plainly assumes an actual suspicion and adds the requirement that it be held on reasonable grounds. It plainly does not contemplate a constable arresting someone whom he might have grounds to suspect, but of whom he has no suspicion, still less someone about whom he has not thought at all, but of whom it could be said that objectively there existed reasonable grounds to suspect him. The existence or otherwise of reasonable grounds for suspicion was not an issue in Saik. The defendant there concerned had made no bones about admitting that he suspected that the property which he had dealt with was the proceeds of crime; his contention was that he suspected but did not know. The charge he faced was not brought under section 93C(2). It was a charge of conspiracy to commit that statutory offence, and the point at issue related to the terms of section 1(2) of the Criminal Law Act 1977 which mandates proof of knowledge or intent when conspiracy is charged, even if the substantive offence is one which can be committed without such a state of mind. Accordingly, the construction of section 93C(2) arose only en route to the real question, which was the meaning of the requirement for knowledge if the charge is conspiracy. As all their Lordships, including Lord Hope at para 51, made clear, section 93C(2) contained within its own terms the answer to any issue about its construction. Since the statutory offence which it created could be committed only if the defendant acted with the purpose of assisting someone else to avoid either prosecution or a confiscation order, the section necessarily meant, or assumed, that the defendant had actual suspicion. As Lady Hale succinctly put it at para 102: Without that actual suspicion, he cannot act with the purpose required. For these reasons it is not possible to read either Saik or OHara as laying down a universal proposition that if a statute speaks of a person having reasonable cause to suspect, that will always assume that he has to have actual suspicion. The statutory context An offence of providing funding towards terrorism first appeared in the Prevention of Terrorism (Temporary Provisions) Act 1976. Section 10(2) of that Act provided: If any person gives, lends or otherwise makes available to any other person, whether for consideration or not, any money or other property, knowing or suspecting that the money or other property will or may be applied or used for or in connection with the commission, preparation or institution of acts of terrorism to which this section applies, he shall be guilty of an offence. [Emphasis supplied] That subsection was re enacted in essentially identical form in section 10(2) of the replacement statute, the Prevention of Terrorism (Temporary Provisions) Act 1984. These sections thus provided for an offence which required proof either of knowledge or of actual suspicion. However, when the 1984 Act was in turn replaced by the Prevention of Terrorism Act 1989 a change was made. Section 9(2) said: (2) A person is guilty of an offence if he (a) gives, lends or otherwise makes available to any other person, (b) whether for consideration or not, any money or other property; or enters into or is otherwise concerned in an arrangement whereby money or other property is or is to be made available to another person, knowing or having reasonable cause to suspect that it will or maybe applied or used as mentioned in subsection (1) above. [Emphasis supplied] A similar formulation (intending or having reasonable cause to suspect) was applied by the 1989 Act to the related offence contrary to section 9(1) of soliciting or receiving contributions; this offence had, in previous statutes, required proof of intention rather than of any form of suspicion. These changes can only have been deliberate. They are inexplicable unless it was the Parliamentary intention to widen the scope of the offences to include those who had, objectively assessed, reasonable cause to suspect that the money might be put to terrorist use, as well as those who intended that it should be, or knew that it would be. In particular, the change in the definition of the offence which is now section 17 of the Terrorism Act 2000, and here under question, is a change from knows or suspects to knows or has reasonable cause to suspect. That change can only have been intended to remove the requirement for proof of actual suspicion. It is not open to the court to ignore this kind of clear Parliamentary decision. That inevitable conclusion is reinforced by the presence in the 2000 Act of section 19. This creates an offence for specified groups of people of failing to disclose to a police officer a belief or suspicion, which has come to their attention in the course of their work, that another person has committed one of a number of specified terrorist offences. The offence is committed, according to section 19, where a person believes or suspects Thus the 2000 Act, here in question, demonstrates the currency, in the context of terrorist offences, of a reference to actual suspicion, at the same time as turning its back on such a reference section 17, with which this court is now concerned. The contrast is clearly a relevant pointer to the meaning of section 17. Similarly, section 18 of the same Act creates an offence of money laundering in relation to terrorist property. The offence contains no requirement of a mental element as a definition of the offence. Rather, by subsection (2), it provides that it is a defence for a person charged to prove that he did not know and had no reasonable cause to suspect that he was dealing with terrorist property. Thus the mental element provided for is consistent with that in the adjacent section 17, namely objectively assessed reasonable cause to suspect, although the onus of proof is reversed. This section also compellingly reinforces the construction of section 17 arrived at by the judge and the Court of Appeal. The contention of the appellants that section 18 can be read as providing a defence to a defendant who shows that he did not in fact suspect the terrorist nature of the property with which he was dealing is simply not consistent with the words used. If that is what had been the intention, section 18 would no doubt have provided a defence for an accused who did not know or suspect, using the juxtaposition of knowledge and suspicion which appears in the next following section 19. Although it is derived from a subsequent legislative amendment, section 21A is perhaps a further indication, if one were required, that the difference between actual suspicion and objectively assessed reasonable cause for suspicion remains one which is observed by Parliament. Section 21A (inserted into the Act by the Anti terrorism, Crime and Security Act 2001) creates an offence, for those operating within the regulated sector, of non disclosure of information suggesting an offence by another. By subsection (2) the first element of the definition of this offence is in the alternative: (2) The first condition is that he (a) knows or suspects, or (b) has reasonable grounds for knowing or suspecting, that another person has committed or attempted to commit an offence under any of sections 15 to 18. In that section, or any other similarly constructed, it is plain beyond argument that the expression has reasonable grounds for suspicion cannot mean actually suspects. Strict liability? The presumption of which Lord Reid spoke in Sweet v Parsley, and which has been invoked since where consistent with the principles of statutory construction, is a presumption that Parliament did not intend to make criminals of persons who were in no way blameworthy in what they did: see para 8 above. The magistrates had found specifically that Miss Sweet, who did not live in the house which she owned but let out had no knowledge whatever that the house was being used by her tenants for the purpose of consuming prohibited drugs. The question posed for the House of Lords by the Divisional Court was whether the relevant section of the Dangerous Drugs Act created an absolute offence. Lord Reid adverted at p 150B to the fact that Parliament could have dealt with the social problem involved either by inverting the onus of proof so as to require an accused to demonstrate lack of knowledge, or by providing that the offence could be committed by negligence. It had not, however, in that case done so. In the present case it would be an error to suppose that the form of offence creating words adopted by Parliament result in an offence of strict liability. It is certainly true that because objectively assessed reasonable cause for suspicion is sufficient, an accused can commit this offence without knowledge or actual suspicion that the money might be used for terrorist purposes. But the accuseds state of mind is not, as it is in offences which are truly of strict liability, irrelevant. The requirement that there exist objectively assessed cause for suspicion focuses attention on what information the accused had. As the Crown agreed before this court, that requirement is satisfied when, on the information available to the accused, a reasonable person would (not might or could) suspect that the money might be used for terrorism. The state of mind of such a person is, whilst clearly less culpable than that of a person who knows that the money may be used for that purpose, not accurately described as in no way blameworthy. It was for Parliament to decide whether the gravity of the threat of terrorism justified attaching criminal responsibility to such a person, but it was clearly entitled to conclude that it did. It is normal, not unusual, for a single offence to be committed by persons exhibiting different levels of culpability. The difference in culpability can, absent other aggravating features of the case, be expected to be reflected in any sentence imposed if conviction results. Conclusion For these reasons it is clear that the conclusions arrived at by the trial judge and the Court of Appeal were correct. The appeal must be dismissed. Reporting restrictions the offences charged, as summarised in this judgment; the names of counsel and solicitors engaged in the appeal; the identity of the court(s) and the name of the judge(s); the names, ages, home addresses and occupations of the accused and (a) (b) witnesses; (c) (d) (e) whether for the purposes of the appeal representation was provided to either of the accused under Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012; and (f) this judgment. Section 37 of the Criminal Procedure and Investigations Act 1996 imposes statutory reporting restrictions in relation to the hearing of interlocutory appeals such as the present. The objective is to ensure that the jurys consideration of the evidence and issues put before it is not at risk of being affected by prior reporting, for example of the details of the allegations or of discussion of possible issues. Those restrictions apply to the hearing of this appeal. Until the conclusion of the trial, nothing may be reported except the following: |
A limited company not in liquidation cannot lawfully return capital to its shareholders except by way of a reduction of capital approved by the court. Profits may be distributed to shareholders (normally by way of dividend) but only out of distributable profits computed in accordance with the complicated provisions of the Companies Act 2006 (replacing similar provisions in the Companies Act 1985). Whether a transaction amounts to an unlawful distribution of capital is not simply a matter of form. As Hoffmann J said in Aveling Barford Ltd v Perion Ltd [1989] BCLC 626, 631, Whether or not the transaction is a distribution to shareholders does not depend exclusively on what the parties choose to call it. The court looks at the substance rather than the outward appearance. Similarly Pennycuick J observed in Ridge Securities Ltd v Inland Revenue Commissioners [1964] 1 WLR 479, 495, A company can only lawfully deal with its assets in furtherance of its objects. The corporators may take assets out of the company by way of dividend, or, with the leave of the court, by way of reduction of capital, or in a winding-up. They may of course acquire them for full consideration. They cannot take assets out of the company by way of voluntary distribution, however described, and if they attempt to do so, the distribution is ultra vires the company. The sole issue in this appeal is whether there may have been an unlawful distribution of capital when the appellant company, Progress Property Company Ltd (PPC), sold the whole issued share capital of a wholly-owned subsidiary, YMS Properties (No. 1) Ltd (YMS1) to another company, Moorgarth Group Ltd (Moorgarth). All these companies were indirectly controlled by Dr Cristo Wiese, a South African investor. The facts have not yet been fully established, which is why the issue must be stated in this inconclusive way. PPC was originally called Tradegro (UK) Property Holdings Ltd and has since changed its name to BLN Property Company Ltd. Moorgarth was originally called Foldfree Ltd. But it is simplest to use the names used by Mummery LJ in his judgment in the Court of Appeal. The transaction between PPC and Moorgarth has been vigorously attacked by the appellant PPC on the ground that it was (as must be assumed for the purposes of this appeal) at an undervalue (PPC says, a gross undervalue). YMS1, a company whose net assets might on PPCs most ambitious case have been worth as much as 4m, was sold for little more than 60,000. But the attack has been stoutly resisted on the ground that (as is now no longer in dispute) Mr Cornus Moore (Dr Wieses right-hand man, and a director of both PPC and Moorgarth) genuinely believed that the sale of the shares in YMS1 was at market value. It is also to be assumed for the purposes of this appeal that Mr Moore was in breach of duty in failing to realise that the transaction was in fact a sale at an undervalue. Had this appeal been allowed, the correctness of these undetermined assumptions (and also issues of valuation and quantum) might have had to be decided in further proceedings. The facts The scale of the undervaluation alleged by PPC, in a transaction negotiated between experienced businessmen advised by experienced surveyors, solicitors and accountants, is truly remarkable. It suggests that the circumstances were such as to call for close enquiry; and the deputy judge, Mr David Donaldson QC, did enquire into them closely in the course of a fourteen-day trial of this action (together with two other actions in which there has been no appeal). The deputy judges task in fact-finding was difficult, as he found Mr Charles Price, the individual indirectly interested (as a minority shareholder in PPC and as prospective purchaser of the majority holding) in the disposal of the YMS1 shares, to be an unreliable witness. PPCs failure to call as a witness its solicitor, Mr Gerber, added to the deputy judges difficulties in making full and clear findings of fact. He dismissed the action on the basis that it could not succeed even if there had been an unintentional sale at an undervalue, and even if Mr Moore was in breach of duty in failing to recognise it. The Court of Appeal (Mummery, Toulson and Elias LJJ) [2009] EWCA Civ 629, [2010] 1 BCLC 1 unanimously upheld the deputy judges dismissal of the action. In doing so Mummery LJ (with whom Toulson and Elias LJJ concurred) did not find it necessary to go far into the factual circumstances. He summarised the essential facts with admirable brevity in paras 6 and 12 of his judgment: The sale and purchase agreement was made on 20 October 2003 at an agreed price of 63,225.72. The sale price was calculated on the basis of the open market value of the YMS1 properties (11.83m), from which there was subtracted liabilities for creditors approaching 8m and the sum of 4m in respect of a repairing liability. The subtraction of 4m was made in the belief that PPC had given an indemnity or counter-indemnity under which that liability would ultimately fall on PPC. As part of the transaction that liability of PPC was to be released. In fact, it turned out that there was no such indemnity liability and there was nothing from which PPC could be released. In consequence there was no 4m to subtract from the value of the YMS1 properties. There was no justification for the reduction in the sale price. So it was said that the sale of the shares was at a gross undervalue. . . . There was no dispute before the deputy judge that Mr Moore genuinely believed that the price of the shares in YMS1 sold by PPC to Moorgarth was their market value. It was not alleged that there was any intention on his part to prefer Moorgarth or to commit a fraud on the creditors of PPC. He acted in the honest belief that the sale of the shares in YMS1 was a commercial transaction. I am reluctant to expand on Mummery LJs summary unless there is a good reason to do so. But in an appeal which is centrally concerned with the substance and reality of the impugned transaction, I think it is appropriate to set out some of the deputy judges findings of fact in rather more detail. They help to answer some (but not all) of the questions prompted by Mummery LJs summary. At the material time (roughly April to October 2003) Dr Wieses investments included interests in the value (or down-market) sector of the United Kingdom retail market. He indirectly controlled (through Brown & Jackson Plc B & J) two retail chains, Poundstretcher and Your More Store. These businesses (especially Your More Store) were not flourishing, and in the early months of 2003 he took various steps intended to improve their prosperity. Your More Store Limited (YMS), which ran Your More Store and two other retail businesses, became a subsidiary of Tradegro (UK) Ltd (Tradegro), another company controlled by Dr Wiese. Mr Carel Stassen was appointed as managing director of YMS and became a minority shareholder in YMS. Mr Price was appointed as managing director of PPC, which was at that time a wholly-owned subsidiary of Tradegro. Mr Price became the holder of 24.9% of the shares in PPC, leaving Tradegro with 75.1%. The freehold interest in the Your More Store premises was vested in a company called YMS Properties (No. 2) Ltd (YMS2). YMS2 was a wholly-owned subsidiary of YMS1, which was a wholly-owned subsidiary of PPC. In the short term YMS continued to occupy its retail premises informally, without any leases from YMS2. There was a similar reorganization of the Poundstretcher business. YMSs informal occupation of the retail premises did not last long. An essential part of Mr Prices task was to manage and raise finance from YMS2s property portfolio. Mr Price embarked on negotiations with Nationwide Building Society (Nationwide) and on 2 May 2003 Nationwide entered into a facilities agreement to advance funds of more than 20m secured on the YMS and Poundstretcher freeholds. But Nationwide insisted that formal leases, with tenants covenants including full repairing and insurance obligations, should be entered into between YMS2 as landlord and YMS as tenant and between the corresponding Poundstretcher companies. The deputy judge summarised the resulting situation in paras 8 and 9 of his judgment: This posed a problem. The properties in the portfolio, and in particular those occupied by YMS, were in significant disrepair. A survey produced by independent surveyors GRD in early 2003 estimated the existing cost of repairs to the YMS properties at more than 4.6m. YMS, whose trading position was already parlous, was in no position to shoulder a liability of this magnitude, and Mr Stassen refused to agree. Moreover, the execution of FRI leases would at a stroke bring about a substantial increase in the value of the [freeholds the judge wrote leases but this must have been a slip] compared with the vacant possession value at which they currently stood in the books of YMS1. As all parties recognised, commercial logic and indeed fairness required that the costs of this benefit should not rest with YMS. It might be that no serious problem would arise so long as both the freeholds and YMS remained within the [Tradegro] group (though a question might still be posed as a result of the minority interests of Mr Stassen and Mr Price in, respectively, YMS and PPC), but that position was always open to change. In the event, YMS did sign FRI leases. Mr Stassen did not however agree to this course until he had obtained an assurance from Mr Moore, with the approval of Dr Wiese, that YMS would be given an indemnity against the costs it might be required to incur in satisfying the repairing liability. At that stage there was a falling out between Mr Price and Dr Wieses management team, and in July 2003 Dr Wiese gave six months notice to terminate the arrangements with Mr Price. But during the next two months there were negotiations which led to an agreement for Mr Price to acquire Tradegros 75.1% shareholding in PPC. The agreed terms were quite complex and were embodied in a share purchase agreement (the SPA), the parties to which were (1) Wigmore Street Investments Ltd (WSIL), then called Real Estate Property Corporation Ltd, a Bermuda company controlled by Mr Price, as purchaser and (2) Tradegro as vendor. The dispute in this appeal is not concerned with the sale of the PPC shares themselves, but with a preliminary step provided for in clause 4.1 of the SPA, that is, the sale by PPC, before completion of the SPA, of the whole share capital of YMS1 to Moorgarth (a direct subsidiary of Tradegro). The deputy judge commented (in para 12 of his judgment) on how matters stood as the negotiations progressed: Since ownership of the freeholds would now move out of the [Tradegro] group, it became imperative to honour Mr Moores assurance to Mr Stassen that YMS would be given an indemnity against the FRI liability. Logic also suggested that in the new circumstances the ultimate liability should pass to the new owner of YMS2. Consistent with this, the running document entitled Summary of principal commercial terms passing between the parties indicated that (1) a deed of indemnity was being discussed between Tradegro and YMS (2) there was broad agreement on the provision of a counter-indemnity by PPC. The same applied to the [Poundstretcher] properties. His comment about what logic suggested must have been directed at the position before the change of plan (embodied in clause 4.1 of the SPA) to extract the YMS freeholds from PPC before the sale of its shares was completed. There would have been no logic in PPC accepting ultimate responsibility for an unquantifiable liability for repairs to dilapidated YMS properties that it was not going to own. What happened instead, and gave rise to the issue in this appeal, was the extraction of the YMS freeholds by the sale of YMS1 by PPC to Moorgarth at the price of 63,225.72. This took place under a simple written agreement entered into on 20 October 2003. It was negotiated mainly by two solicitors, Mr Gerber instructed by Mr Price on behalf of PPC and Mr Emmett instructed by Mr Moore on behalf of Moorgarth. The agreement was signed by Mr Paul Clarke (who was a director of both PPC and Moorgarth) on behalf of both companies. He signed it after a board meeting of the directors of PPC attended by Mr Clarke in person and by Mr Price by telephone. On the same day Tradegro and its overseas holding company gave a formal release of PPC from any possible liability under the supposed indemnity or counter-indemnity. That liability had never actually come into existence, though it had been much discussed. The deputy judges judgment (paras 13 to 31) gives a detailed account of the fairly hectic negotiations leading up to 20 October 2003, and of the events of that day. That is for the present sufficient, and perhaps more than sufficient, as to the factual findings made at first instance in relation to the issue of sale at an undervalue. To recapitulate, that there was a sale at an undervalue is an undetermined assumption made for the purposes of this appeal, as is Mr Moores breach of duty, but his genuine belief in an arms length sale is common ground. I shall return to the facts briefly at the end of this judgment. The authorities PPCs case, as finally formulated at first instance, relied not on section 263 of the Companies Act 1985 (now replaced by sections 829 and 830 of the Companies Act 2006) but on what Mummery LJ referred to (para 23) as the common law rule: The common law rule devised for the protection of the creditors of a company is well settled: a distribution of a companys assets to a shareholder, except in accordance with specific statutory procedures, such as a winding up of the company, is a return of capital, which is unlawful and ultra vires the company. The rule is essentially a judge-made rule, almost as old as company law itself, derived from the fundamental principles embodied in the statutes by which Parliament has permitted companies to be incorporated with limited liability. Mummery LJs reference to ultra vires must be understood in the wider and looser sense of the term identified in Rolled Steel Products (Holdings) Ltd v British Steel Corporation [1986] Ch 246 at 276-278 (Slade LJ) and 302 (Browne-Wilkinson LJ). But in this appeal there is no difference between the parties as to the narrower and wider meanings of ultra vires in the company law context. Whether a transaction infringes the common law rule is a matter of substance, not form. The label attached to the transaction by the parties is not decisive. That is a theme running through the authorities, including Ridge Securities Ltd v Inland Revenue Commissions [1964] 1 WLR 479 and Aveling Barford Ltd v Perion Ltd [1989] BCLC 626 to which I have already referred. I shall take some of the best-known cases in chronological order. Ridge Securities was concerned with a complicated and artificial tax- avoidance scheme carried out at a time when companies were still subject to income tax (rather than corporation tax). Pennycuick J (at p493), upheld the Special Commissioners disallowance of payments of interest grotesquely out of proportion to the principal amounts secured as not being interest within the meaning of section 169 of the Income Tax Act 1952. That was simply a point of construction on the taxing statute. More radically, Pennycuick J also dealt with a company law point not raised before the Special Commissioners, and held that the payments of so-called interest were in fact gratuitous (and so unlawful) dispositions of the companys money. In the crucial passage ([1964] 1 WLR 479, 495, set out at para 1 above) the words however described are important. Re Halt Garage (1964) Ltd [1982] 3 All ER 1016 was, on its facts, at the other extreme from Ridge Securities as regards the sophistication of the parties involved and the outlandishness of the impugned transaction. The company owned what was essentially a husband-and-wife business running a garage near Woburn Sands. From 1964 the couple worked very hard to build up the business, which included recovering broken-down vehicles from the newly-opened M1. They paid themselves modest remuneration as directors. But unfortunately in 1967 the wife became seriously ill and they decided to move to the Isle of Wight. They tried to sell the business but repeatedly failed to do so, and at one stage the husband was commuting between the Isle of Wight and Bedfordshire in an attempt to look after his invalid wife and the ailing business. Other misfortunes followed and the company went into insolvent liquidation in 1971. The liquidator challenged the propriety of directors remuneration paid to the husband and wife during the companys decline. Oliver J upheld the husbands remuneration but reluctantly disallowed most of the wifes last two years remuneration. He observed (at 1043) The real question is, were these payments genuinely directors remuneration? If your intention is to make a gift out of the capital of the company, you do not alter the nature of that by giving it another label and calling it remuneration. That was, with respect, hardly apt on the facts of the case. The evidence suggested that the couple knew little about company law and took the advice of their accountant. But the case does show that if the label of remuneration does not square with the facts, the facts will prevail and the result may be an unlawful distribution, even if the directors in question intended no impropriety. Later in his judgment Oliver J recognized that, observing (at 1044): In the absence of any evidence of actual motive, the court must, I think, look at the matter objectively and apply the standard of reasonableness. In Aveling Barford Ltd v Perion Ltd [1989] BCLC 626 a Singapore businessman, Dr Lee, who indirectly owned and controlled Aveling Barford, procured the sale by it to Perion (a Jersey company also controlled by Dr Lee) of a country house and 18 acres of land at Grantham, formerly used as an employees social and sports club. This property had development potential and had been valued by Strutt and Parker at 650,000 and by Humberts (for prospective mortgagees) at 1,150,000. The price on the sale to Perion was 350,000 (with a provision of doubtful authenticity for 400,000 overage if the property sold for over 800,000 within a year). In the event it was sold within a year for over 1.5m. That was the context in which Hoffmann J made the observations set out in para 1 above. The need to look at substance rather than form also extended to Dr Lees being treated as the real shareholder in Aveling Barford and the real purchaser of the land: Hoffmann J made a passing reference to this at p632 but it was not an issue in the case. Hoffmann J referred to Ridge Securities and Halt Garage and concluded (at 633) with an instructive passage referring to Rolled Steel: It is clear however that Slade LJ excepted from his general principle cases which he described as involving a fraud on creditors (see . . . [1986] Ch246 at 296). As an example of such a case, he cited Re Halt Garage. Counsel for the defendants said that frauds on creditors meant transactions entered into when the company was insolvent. In this case Aveling Barford was not at the relevant time insolvent. But I do not think that the phrase was intended to have such a narrow meaning. The rule that capital may not be returned to shareholders is a rule for the protection of creditors and the evasion of that rule falls within what I think Slade LJ had in mind when he spoke of a fraud on creditors. There is certainly nothing in his judgment to suggest that he disapproved of the actual decisions in Re Halt Garage or Ridge Securities. As for the transaction not being a sham, I accept that it was in law a sale. The false dressing it wore was that of a sale at arms length or at market value. It was the fact that it was known and intended to be a sale at an undervalue which made it an unlawful distribution. Hoffmann Js acceptance that the sale was not a sham, but was a transaction in a false dressing, has an obvious parallel in developments which were taking place at the same time in landlord and tenant law. In Street v Mountford [1985] AC 809 Lord Templeman famously struck down an artificial arrangement designed to avoid a tenancy protected by the Rent Acts. He declared (at 825) that the court should be astute to detect and frustrate sham devices and artificial transactions whose only object is to disguise the grant of a tenancy and to evade the Rent Acts. But three years later in Antoniades v Villiers [1990] 1 AC 417, 462 Lord Templeman said that it would have been more accurate to have used the word pretence, and the rest of the Appellate Committee took the same line (Lord Bridge at 454 an attempt to disguise the true character of the agreement; Lord Ackner at 466 the substance and reality of the transaction . . . he sought vigorously to disguise them; Lord Oliver at 467 an air of total unreality about these documents ; Lord Jauncey at 477 mere dressing up in an endeavour to clothe the agreement with a legal character which it would not otherwise have possessed). Antoniades v Villiers was decided before Aveling Barford and Hoffmann J may well have had it in mind when writing his judgment. There is however one obvious difference between the typical case of a disguised company distribution and the typical case of a tenancy disguised as a licence in order to avoid the Rent Acts. There is no identity of interest between the landlord and the putative licensee quite the reverse and the latter agrees to enter an artificial arrangement, against his or her interest, because of the weak bargaining position of anyone looking for affordable accommodation in an overcrowded city. In the disguised company distribution case, by contrast, the same human beings are usually interested directly or indirectly, on both sides of the corporate manoeuvring: Dr Lee in Aveling Barford, anonymous financiers in Ridge Securities. The fact that the same individuals are interested on both sides is not of course, by itself, a cause for alarm, since company reconstructions are carried out for all sorts of entirely proper purposes (and now have the benefit of sections 845 and 846 of the Companies Act 2006). The point to which I draw attention is simply that where there is a degree of identity of interest between both sides to a corporate transaction, both sides are likely to be in agreement as to its real purpose and its true nature and substance. A question of characterisation The essential issue then, is how the sale by PPC of its shareholding in YMS is to be characterised. That is how it was put by Sir Owen Dixon CJ in Davis Investments Pty Ltd v Commissioner of Stamp Duties (New South Wales) (1957) 100 CLR 392, 406 (a case about a company reorganisation effected at book value in which the High Court of Australia were divided on what was ultimately an issue of construction on a stamp duty statute). The same expression was used by Buxton LJ in MacPherson v European Strategic Bureau Ltd [2000] 2 BCLC 683, para 59. The deputy judge did not ask himself (or answer) that precise question. But he did (at paras 39-41) roundly reject the submission made on behalf of PPC that there is an unlawful return of capital whenever the company has entered into a transaction with a shareholder which results in a transfer of value not covered by distributable profits, and regardless of the purpose of the transaction. A relentlessly objective rule of that sort would be oppressive and unworkable. It would tend to cast doubt on any transaction between a company and a shareholder, even if negotiated at arms length and in perfect good faith, whenever the company proved, with hindsight, to have got significantly the worse of the transaction. In the Court of Appeal Mummery LJ developed the deputy judges line of thought into a more rounded conclusion (para 30): In this case the deputy judge noted that it had been accepted by PPC that the sale was entered into in the belief on the part of the director, Mr Moore, that the agreed price was at market value. In those circumstances there was no knowledge or intention that the shares should be disposed of at an undervalue. There was no reason to doubt the genuineness of the transaction as a commercial sale of the YMS1 shares. This was so, even though it appeared that the sale price was calculated on the basis of the value of the properties that was misunderstood by all concerned. In seeking to undermine that conclusion Mr Collings QC (for PPC) argued strenuously that an objective approach is called for. The same general line is taken in a recent article by Dr Eva Micheler commenting on the Court of Appeals decision, Disguised Returns of Capital An Arms Length Approach, [2010] CLJ 151. This interesting article refers to a number of cases not cited to this court or to the courts below, and argues for what the author calls an arms length approach. If there were a stark choice between a subjective and an objective approach, the least unsatisfactory choice would be to opt for the latter. But in cases of this sort the courts real task is to inquire into the true purpose and substance of the impugned transaction. That calls for an investigation of all the relevant facts, which sometimes include the state of mind of the human beings who are orchestrating the corporate activity. Sometimes their states of mind are totally irrelevant. A distribution described as a dividend but actually paid out of capital is unlawful, however technical the error and however well-meaning the directors who paid it. The same is true of a payment which is on analysis the equivalent of a dividend, such as the unusual cases (mentioned by Dr Micheler) of In re Walters Deed of Guarantee [1933] Ch 321 (claim by guarantor of preference dividends) and Barclays Bank plc v British & Commonwealth Holdings plc [1996] 1 BCLC 1 (claim for damages for contractual breach of scheme for redemption of shares). Where there is a challenge to the propriety of a directors remuneration the test is objective (Halt Garage), but probably subject in practice to what has been called, in a recent Scottish case, a margin of appreciation: Clydebank Football Club Ltd v Steedman 2002 SLT 109, para 76 (discussed further below). If a controlling shareholder simply treats a company as his own property, as the domineering master-builder did in In re George Newman & Co Ltd [1895] 1 Ch 674, his state of mind (and that of his fellow-directors) is irrelevant. It does not matter whether they were consciously in breach of duty, or just woefully ignorant of their duties. What they do is enough by itself to establish the unlawful character of the transaction. The participants subjective intentions are however sometimes relevant, and a distribution disguised as an arms length commercial transaction is the paradigm example. If a company sells to a shareholder at a low value assets which are difficult to value precisely, but which are potentially very valuable, the transaction may call for close scrutiny, and the companys financial position, and the actual motives and intentions of the directors, will be highly relevant. There may be questions to be asked as to whether the company was under financial pressure compelling it to sell at an inopportune time, as to what advice was taken, how the market was tested, and how the terms of the deal were negotiated. If the conclusion is that it was a genuine arms length transaction then it will stand, even if it may, with hindsight, appear to have been a bad bargain. If it was an improper attempt to extract value by the pretence of an arms length sale, it will be held unlawful. But either conclusion will depend on a realistic assessment of all the relevant facts, not simply a retrospective valuation exercise in isolation from all other inquiries. Pretence is often a badge of a bad conscience. Any attempt to dress up a transaction as something different from what it is is likely to provoke suspicion. In Aveling Barford there were suspicious factors, such as Dr Lees surprising evidence that he was ignorant of the Humberts valuation, and the dubious authenticity of the overage document. But in the end the disparity between the valuations and the sale price of the land was sufficient, by itself, to satisfy Hoffmann J that the transaction could not stand. The right approach is in my opinion well illustrated by the careful judgment of Lord Hamilton in Clydebank Football Club Ltd v Steedman 2002 SLT 109. It is an example of the problems which can arise with football clubs owned by limited companies, where some small shareholders see the club as essentially a community enterprise, and other more commercially-minded shareholders are concerned with what they see as underused premises ripe for profitable redevelopment. The facts are complicated, and the main issue was on section 320 of the Companies Act 1985 (approval by company in general meeting of acquisition of non-cash asset by director or connected person). But the judge also dealt with a claim under section 263 (unlawful distribution). He held that the sale of the clubs derelict ground at Kilbowie Park, and another site originally purchased under an abortive plan for a new ground, was a genuine arms-length sale even though effected at a price 165,000 less than the value as eventually determined by the court after hearing expert evidence. In para 76 Lord Hamilton said: It is also clear, in my view, that a mere arithmetical difference between the consideration given for the asset or assets and the figure or figures at which it or they are in subsequent proceedings valued retrospectively will not of itself mean that there has been a distribution. If the transaction is genuinely conceived of and effected as an exchange for value and the difference ultimately found does not reflect a payment manifestly beyond any possible justifiable reward for that in respect of which allegedly it is paid, does not give rise to an exchange at a gross undervalue and is not otherwise unreasonably large, there will not to any extent be a dressed up return of capital. In assessing the adequacy of the consideration, a margin of appreciation may properly be allowed. The words quoted by Lord Hamilton are from Halt Garage and Aveling Barford. In para 79 Lord Hamilton said: It is plain, in my view, that directors are liable only if it is established that in effecting the unlawful distribution they were in breach of their fiduciary duties (or possibly of contractual obligations, though that does not arise in the present case). Whether or not they were so in breach will involve consideration not only of whether or not the directors knew at the time that what they were doing was unlawful but also of their state of knowledge at that time of the material facts. In reviewing the then authorities Vaughan Williams J in Re Kingston Cotton Mill Co (No 2) said at [1896] 1 Ch, p347: In no one of [the cases cited] can I find that directors were held liable unless the payments were made with actual knowledge that the funds of the company were being misappropriated or with knowledge of the facts that established the misappropriation. Although this case went to the Court of Appeal, this aspect of the decision was not quarrelled with (see [1896] 2 Ch 279). I agree with both those passages. In this case there are concurrent findings that the sale of YMS1 to Moorgarth was a genuine commercial sale. The contrary was not pleaded or put to Mr Moore in cross-examination. I would dismiss this appeal. The facts briefly revisited Although the deputy judge refrained from making any findings about the true value of the YMS freeholds, he set out a good deal of information about valuations in the latter part of his judgment (paras 78 and following, dealing with a tax indemnity claim). Crucially, he recorded, at para 80, that the figure of 11.83m in the DTZ valuation of September 2003 explicitly refrained from considering or taking account of the covenant strength of YMS and the state of repair of the property. The valuation disregarding those matters was no doubt prepared on that basis on instructions, and it seems almost certain that if those matters had been taken into account, it would have been much lower. One retrospective valuation produced a figure of just under 8m, and in 2006 Mr Farr, instructed by Tradegro, produced a figure of 5.85m (the deputy judge described this as sitting at an extreme end of pessimism). In October 2003 YMS1s liabilities to Nationwide and Tradegro totalled about 7.6m, according to the minutes of the PPC board meeting on 20 October 2003 (Mummery LJ, para 6, says approaching 8m). So a figure approaching 8m for the true value of the YMS freeholds was the break-even point for whether or not YMS1 had any positive value, in the absence of large-scale financial support from elsewhere in the Tradegro group so as to enable YMS to perform its extensive repairing obligations. In the absence of such financial support the disrepair was a black hole making the DTZ figure of 11.83m unsupportable, and the non-existence of a counter-indemnity from PPC was totally irrelevant. So long as PPC owned the YMS freeholds, it owned property which had been overvalued (on instructions) by about 4m. On this analysis the sale negotiated between Mr Price and Mr Moore, two experienced businessmen, was not at a gross undervalue, and perhaps not at an undervalue at all. But the dismissal of this appeal means that these matters will not be the subject of any further adjudication by the court. I gratefully adopt the statement of the facts contained in Lord Walkers judgment, and I agree with his reasoning and conclusions. I write only to underline aspects of the facts which make this, in my view, both an odd case and one in which the suggestion that the relevant transaction should be re-categorised as an illegitimate distribution of capital at common law is particularly artificial and unappealing. The question is whether the agreement dated 20 October 2003 involved a return of capital by PPC to its shareholder TUK through TUKs subsidiary Moorgarth (it being common ground that no relevant distinction exists in this context between TUK and Moorgarth). PPC submits that the value of its freehold properties was some 11.83 million, from which fell to be deducted some 8 million for creditors, leaving a net value on the face of it in the region of 4 million. PPC further submits that Moorgarth and so Tradegro were aware of these facts through Mr Cornus Moore, then a director of TUK, PPC and Moorgarth. The appeal comes before us on the hypothesis that these submissions can be made good, although they are in issue. As explained by the deputy judge, Mr David Donaldson QC, in his judgment dated 15 October 2008, the reason for a net purchase price of only 63,225.72 appears from a Summary of principal commercial terms and from minutes for a board meeting of PPC held on 20 October 2003 to approve the sale. The summary was prepared before the idea of stripping YMS1 and YMS2 out of PPC had emerged. It indicated that a deed of indemnity was being discussed between TUK and YMS and that there was broad agreement that PPC should provide TUK with a (back-to-back) counter-indemnity. The minutes were prepared after it had been decided that YMS1 and YMS2 should be stripped out of PPC, to explain the basis of the agreement by which this was achieved. Clause 2.2 of the minutes, drafted by solicitors, reads: It was further noted that the Company had previously agreed to counter indemnify [TUK] in respect of TUKs indemnity to Your More Store Ltd. (YMS) in relation to the repairing obligations referred to in paragraph 2.1 and it was a precondition of the Sale that TUK (which is Foldfrees parent company) release the Company from those indemnity obligations. Copies of deeds under which TUK had agreed to indemnify YMS in respect of those repairing obligations were produced to the meeting and its contents noted. Consistently with this, the agreement itself recites (clause 4.1.4) that on completion: the Purchaser shall hand over to the Seller: (a) a certified copy of a deed of indemnity executed by [TUK] and Tradegro Limited in favour of [YMS]; and (b) a deed in favour of the Seller executed by [TUK] and Tradegro Limited under which the Seller is released from any and all liabilities to [TUK] and Tradegro Limited and [they] waive any and all rights and/or claims which they may have against the Seller under or arising out of repairing obligations in respect of properties owned by [YMS2] .. The stated indemnity by TUK to YMS would have ensured that YMS did not suffer loss through having entered into the full repairing and insuring (FRI) leases in order to assist YMS2 to raise money, while PPCs counter-indemnity to TUK ensured that PPC as owner of YMS1, and through it of YMS2, did not benefit from YMSs willingness to do this. The indemnity and counter-indemnity were valued at around 4 million. When YMS1 and YMS2 were stripped out of PPC, PPCs counter-indemnity could either have been maintained in place, in which case the amount payable for YMS1 would have had to be around 4 million, or the counter-indemnity could have been released, in which case TUK/Moorgarth would be entitled to credit for its value (around 4 million). The latter course was chosen, which explains why the actual net payment to be made under the agreement dated 20 October 2003 was only 63,225.72. The illogicality, noted perceptively by the deputy judge, is that the credit for release of the counter- indemnity, which in fact was a credit due between TUK/Moorgarth and PPC, was expressed as if it reduced the value of YMS1, with which it had nothing in reality to do. At trial PPC accepted that Mr Moore genuinely believed in the existence of TUKs indemnity to YMS and of PPCs counter-indemnity to TUK. But it was by the time of trial conceded by TUK/Moorgarth that they could not establish the existence of either TUKs indemnity or PPCs counter-indemnity. I confess to some surprise at this concession, and also at the absence of any suggestion of an estoppel, based in particular on the minutes to which I have referred. But the concession must be accepted, and PPC seeks to build on it by arguing that, although Mr Moore in fact believed in the existence of both the indemnity and the counter-indemnity, he should have appreciated that they did not exist. This is not an attractive submission, in circumstances where the judge disbelieved Mr Price when he denied any knowledge of and agreement to the minutes of 20 October 2003. The judge thus found, in effect, that Mr Price was willing for the transaction to go ahead on a basis which he knew to be incorrect. There appear to be two possible explanations for this attitude. One is that Mr Price took it because he thought that the whole transaction, including the sale of PPC to his own company, would not have gone ahead on any other basis. (In parenthesis, I note that Mr Collings did not controvert Mr McGhees answer during oral submissions, to the effect that, had the transactions relating to PPC and YMS1 not proceeded on the basis that the indemnity and counter-indemnity already existed as TUK/Moorgarth believed, TUK/Moorgarth could have insisted on their being put into express form, as a pre-condition to any such transactions proceeding.) The other, appearing clearly from the exchange of notes by the parties after the oral hearing, is that any increase in the amount of the price payable by Moorgarth to PPC for YMS1 would, under the terms of clause 5.6 of the agreement dated 3 October 2003 for the sale of TUKs 75.1% shareholding in PPC to WSIL, simply have resulted in an equivalent increase in the consideration payable by WSIL to TUK for such shares with the two increases, in commercial terms, cancelling each other out precisely. However, Mr Collings for PPC submits that this is irrelevant. The Court must look only at PPC and its position as a separate legal entity. On this basis, the question now before the Court is one of characterisation. Did the agreement between PPC and Moorgarth involve a distribution of PPCs capital to TUK through Moorgarth? This is a question of substance (or of examining the essence of the agreement, as the New Zealand Court of Appeal put it in Jenkins v Harbour View Courts Ltd. [1966] 1 NZLR 1). It is not necessarily answered by the way in which the parties have expressed themselves. Like Lord Walker, I would not go so far as Mr McGhee QC for Moorgarth in his submission that the ultimate test is always one of the directors (subjective) motives in effecting the transaction. The courts will not second-guess companies with regard to the appropriateness or wisdom of the terms of any transaction (see e.g. re Halt Garage (1964) Ltd. [1982] 3 AER 1016. But there may come a point at which, looking at all the relevant factors, an agreement cannot be regarded as involving in substance anything other than a return or distribution of capital, whatever the label attached to it by its parties. I do not regard Aveling Barford Ltd v Perion Ltd [1989] BCLC 626 as inconsistent with this. The facts in that case made it possible to speak of knowledge and intention to sell at an undervalue, but that does not mean that such knowledge or intention are always necessary factors. In the present case, it is however unnecessary in my view to go further into such areas. Here, the expressed justification for the payment to PPC of only 63,225.72 consisted in PPCs stated liability to TUK under the counter-indemnity stated to have been given by PPC to TUK. It was illogical to treat that liability as reducing the value of YMS1. The court can and must look at the substance of what happened. The amount payable by Moorgarth to PPC was reduced by reference to an independent liability supposed to exist against a somewhat complicated commercial background in which Mr Moore believed PPC to have such liability to TUK under a counter-indemnity. The fact that Mr Price, PPCs managing director, did not believe this can be put aside as irrelevant. He was not a director of TUK or Moorgarth and Mr Collings QC for PPC stated explicitly that PPCs case depends upon attributing to both Moorgarth and PPC the knowledge (about the absence of any indemnity or counter-indemnity) which it is said that Mr Moore had or should have had as a director of both companies. That, he said, was what made the agreement between PPC and Moorgarth one under which PPC was distributing assets at an undervalue. Thus, he accepted that a shareholder (like TUK/Moorgarth) might agree to buy, at what it believed to be a fair price, even though the company selling knew or ought to know that the asset being sold was under-valued on the sale. I will proceed on this basis, namely that it is essential, at least in circumstances such as the present, to attribute to both seller and buyer at least notice of the circumstances involving the alleged undervalue. I need not examine whether it is correct as a general proposition that a companys rights to challenge a transaction as involving a disposition at an under-value necessarily depend upon establishing knowledge or notice of such circumstances by both parties to the transaction, or that they depend upon establishing fault on the part of a director, still less a common director. The argument before us did not examine any such general proposition. On the facts found by the judge, I am unable to accept PPCs case that the agreement between PPC and Moorgarth can or should be treated as involving an element of distribution of capital. First, even putting aside the telling points made in the last two paragraphs of Lord Walkers judgment regarding the probable weakness of YMSs covenant, I cannot see how as a matter of substance it can be said that YMS1 was sold at an under-value. The reason why only 63,225.72 was paid by Moorgarth was unrelated to any view that YMS1 had a net value less than about 4 million. The reason was that PPC (not YMS1) was seen as having independent counter-indemnity obligations to TUK, which fell to reduce (in effect by agreed set-off) any net sum otherwise payable by Moorgarth to PPC on account of the value of YMS1. In so far as PPCs obligations to TUK were seen or presented as reducing the value of YMS1, that was, as the deputy judge said, illogical. The court must look at the real position, not at the parties illogical presentation of the position in an agreement which, read in context, makes clear what was actually happening and motivating the parties. Second, with regard to the value attached as between PPC and Moorgarth to the release of PPCs supposed counter-indemnity, directors can make mistakes about the nature or extent of liabilities attaching to their companies, and can accept or settle supposed liabilities, even though they ought to have known or could have done better. Their acceptance or settlement of such supposed liabilities remains just that, even though it may have been ill-advised or unwise. It does not axiomatically fall to be re-categorised as a distribution of capital, even if it is in relation to a shareholder. Accordingly, if one assumes that Mr Moore as a director ought to have known that PPC had not in fact entered into the counter-indemnity which he believed had been entered into, it does not follow that the release of the supposed counter-indemnity should be regarded as a distribution of capital. This point alone is in my view sufficient to answer PPCs present case. Third, the way PPC has chosen to put its case depends, as I have said, upon the knowledge which it is said that Mr Moore ought to have acquired, being treated as knowledge that he ought to have had as a director of TUK/Moorgarth. I would not, as presently advised, accept this. As a director of TUK and Moorgarth, Mr Moore achieved all that was in their interests. He achieved a recognition and recital of the existence of the indemnity and counter-indemnity in which he believed, and on that basis a credit in the region of 4 million, reducing the net payment to PPC for YMS1 and YMS2 to 63,225.72. If the agreement of 20 October 2003 stands, Mr Moore therefore achieved for TUK and Moorgarth what it was, from the time when the FRI leases were executed, always understood that they would receive. Only if the agreement fails, might it sensibly be said that he was in breach of duty to TUK and Moorgarth. But it is circular to start with an assumption which depends upon the agreement failing. Viewing the position overall, PPCs current case depends upon re- categorising an understandable commercial agreement, involving on its face the giving of value for the release of a counter-indemnity, which Moorgarth genuinely believed to exist and the acknowledgement of which was made a pre-condition to the agreement, and treating it as an entirely different nature of transaction. The case is very far from any previous case in which any such exercise has ever been undertaken, and I see no basis for any such re-categorisation. We have read the judgments of Lord Walker and Lord Mance and we agree that, for the reasons they give, this appeal should be dismissed. The essential question in this case is whether, on the assumed facts, the sale by the appellant to the respondent of the whole issued share capital of a wholly owned subsidiary of the appellant was in truth an unlawful distribution of capital dressed up as a sale. I agree with Lord Walker and Lord Mance that, for the reasons they give, it was not. It follows that I agree that the appeal should be dismissed. |
This is an appeal against an interlocutor of an Extra Division of the Inner House of the Court of Session (Lords Kingarth, Wheatley and Clarke) dated 30 June 2009 ([2009] CSIH 56; 2009 SC 663) refusing a reclaiming motion by the defenders, Tullis Russell Papermakers Ltd (Tullis Russell), against an interlocutor of Lord Glennie sitting in the commercial court dated 11 September 2008 ([2008] CSOH 124). By that interlocutor he granted decree in favour of the pursuers, Inveresk plc (Inveresk), in terms of the first conclusion of the summons, as amended, for payment by Tullis Russell of the sum of 909,395. Prior to the raising of these proceedings Tullis Russell had raised a separate action in the commercial court against Inveresk (CA31/07) in which, among other things, they claimed damages for breach of contract arising out of the same transaction as that which had given rise to Inveresks claim for payment. Those proceedings are the subject of a lengthy proof before answer which is in the course of being heard in the commercial court by Lord Drummond Young. The transaction to which these two sets of proceedings relate was the sale by Inveresk to Tullis Russell of property rights in the Gemini brand of paper, customer information and related assets and the maintenance of the value of the brand by the effective transfer of customer connections. It was recorded in two documents, following a style which is commonly used for transactions for the sale and purchase of intellectual property. They were both executed at the same time on 9 June 2005. They were (i) an agreement for the acquisition on 9 June 2005 by Tullis Russell of the Gemini brand, customer information and related assets (the Asset Purchase Agreement) and (ii) an agreement (the Services Agreement) by which Inveresk undertook to continue to manufacture, sell and distribute specified products for the period from 9 June 2005 until 8 November 2005 or until the agreement was terminated. In recital (C) of the Services Agreement it was stated that Tullis Russell had requested that Inveresk enter into that agreement to ensure continuity in the manufacture and distribution of those products, facilitate the integration of their manufacture and distribution into Tullis Russells operations and enable Tullis Russell to obtain the full benefit and value of the assets being acquired under the Asset Purchase Agreement. The transaction provided for various payments to be made to Inveresk for the assets and services that were being purchased by Tullis Russell. The consideration for the assets that Tullis Russell were to acquire under the Asset Purchase Agreement consisted of an Initial Consideration amounting to 5 million and a further sum as Additional Consideration. The amount of the Additional Consideration was dependent on the volume of certain products sold and invoiced by Tullis Russell during the period from 8 November 2005 to 8 November 2006. It was payable in terms of clause 5 and Part 3 of the Schedule up to a maximum of 2 million. Further sums were payable under the Services Agreement in consideration of Inveresk continuing to manufacture and distribute products pursuant to that agreement. In implement of the transaction Tullis Russell have paid 13 million to Inveresk, consisting of 5 million under the Asset Purchase Agreement and 8 million under the Services Agreement. In this action Inveresk seek a further payment of 909,395 as Additional Consideration under the Asset Purchase Agreement. In the other action Tullis Russell seek payment by Inveresk of 5,358,032.90. They aver that Inveresk failed to manufacture paper products during the currency of the Services Agreement that complied with the relevant quality standards and dealt with the customers in a way which diminished the value of the assets sold by them to Tullis Russell. The proceedings in this action have been protracted. By an interlocutor dated 15 February 2008, following a debate in the commercial court, Lord Drummond Young repelled the defences and granted decree in Inveresks favour for the sum of 909,395: [2008] CSOH 26. Tullis Russell reclaimed against that decision to the Inner House. They also sought leave to amend their pleadings by including a plea that they were entitled to retain any sums that might be due to Inveresk pending the resolution of their own claim against them for damages. On 20 June 2008 an Extra Division of the Inner House, without hearing full argument or issuing an opinion, allowed the summons and defences to be amended, recalled the Lord Ordinarys interlocutor of 15 February 2008 and remitted the whole matter back to the commercial court for a fresh debate on the amended pleadings. It was in the light of that debate that Lord Glennie pronounced the interlocutor of 11 September 2008 to which the Extra Division adhered in its interlocutor of 30 June 2009 which is the subject of this appeal. Two distinct issues are raised in the appeal. The first relates to Inveresks claim for 909,395 as Additional Consideration, which is the sum sued for in the first conclusion of their summons. The question is whether the amount that is due to Inveresk as Additional Consideration has been determined in terms of clause 5 and Part 3 of the Schedule to the Asset Purchase Agreement. Tullis Russell maintain that no sum is payable as Additional Consideration until the procedures provided for in the Schedule have been carried through and that this has not yet happened. The second issue relates to Tullis Russells plea of retention. The question is whether Tullis Russell are entitled to retain performance of their obligation to pay the Additional Consideration due under the Asset Purchase Agreement pending payment of sums due in respect of their claims against Inveresk in the other action, in which sums are sought as damages for breaches of the Services Agreement and of certain post sale obligations of the Inveresk under the Asset Purchase Agreement. Inveresk maintain that the obligations for breach of which Tullis Russell claim damages are not the counterparts of their obligation to make payment of the Additional Consideration, so the plea of retention is not available. Having examined the provisions of Part 3 of the Schedule and the actings of the parties with regard to them, the Lord Ordinary held that Tullis Russell were obliged to pay as Additional Consideration an amount based on the Tonnage shown in the draft Consideration Accounts and that their defence that the action had to be sisted for a Tonnage Audit to take place was irrelevant: para 23. He also held that Tullis Russells plea of retention was irrelevant. He said that, although the two agreements had to be viewed together, the plea must fail for want of mutuality or reciprocity between the obligations to perform the services in the manner required on the one hand and the obligation to pay any part of the price under the Asset Purchase Agreement on the other: para 45. The Extra Division agreed with the Lord Ordinary that the situation that had arisen as a result of the parties actings could be accommodated within the provisions for payment in Part 3 of the Schedule and that a Tonnage Audit was not required. They also agreed with him, for the reasons set out in paras 51 53 of Lord Clarkes opinion, that the plea of retention was irrelevant. The Additional Consideration (a)The Facts The way which the amount due as Additional Consideration is to be calculated is set out in Part 3 of the Schedule. Put very simply, the calculation of the amount due depends on the amount in tonnes of the relevant paper products for which Tullis Russell received orders during the period from 8 November 2005 to 8 November 2006 and issued invoices during the period from 8 November 2005 to 22 November 2006. The first step is the preparation in draft by Tullis Russell of accounts, referred to in Part 3 as the draft Consideration Accounts, specifying the Tonnage and a calculation of the Additional Consideration according to an agreed arithmetical formula. Inveresk are then given an opportunity according to a prescribed timetable to examine the draft Consideration Accounts, to decide whether or not to accept them or to elect that a Tonnage Audit be carried out by Tullis Russells accountants to confirm and verify the Tonnage to be included in the calculation. Agreement as to the Tonnage, or its verification by means of a Tonnage Audit, provides the key to the amount of the Additional Consideration. The date when payment is due varies according to the decisions that Inveresk takes with regard to the various options that are available. The carefully defined procedures that Part 3 of the Schedule sets out appear to have been designed on the assumption that the Tonnage could be ascertained simply by examining the entries in the books and records kept by Tullis Russell during the relevant period. Unfortunately that was not how things turned out when the procedures were put into practice. Tullis Russell did prepare draft Consideration Accounts as required by Part 3 of the Schedule. They were served on Inveresk by Tullis Russell on 8 November 2006, which was within the prescribed timetable. This draft gave a figure for Tonnage which would have produced Additional Consideration amounting to 910,080. Following a meeting at Tullis Russells premises on 10 and 11 January 2007 at which their books and records were available for inspection, Inveresk proposed adjustments to the Tonnage which would have produced an Additional Consideration of 1,030,494.40. The prescribed timetable gave the parties five business days to attempt to agree Inveresks proposed adjustments, which by now had long passed. This period was extended by agreement to 30 January 2007, but on that date Tullis Russells solicitors informed Inveresks solicitors that they were unable to agree Inveresks proposed adjustments. They also told them that Tullis Russell had ascertained that the Tonnage figures used in the draft Consideration Accounts incorrectly included tonnage that related to non branded paper which, it was said, did not fall within the relevant definitions in the two agreements. On the following day Inveresks solicitors wrote to Tullis Russells solicitors stating that, as it was their clients belief that agreement could not be reached, they had been instructed to invoke paragraph 4.4(b) of Part 3 of the Schedule and require that a Tonnage Audit be undertaken. The parties then entered into correspondence about the carrying out of the audit and the accountants terms of engagement. So far, apart from an agreed adjustment of the prescribed time limits, the procedures set out in Part 3 of the Schedule were being followed. But events then happened which those procedures had not provided for. It had become apparent that a more fundamental issue had arisen between the parties than could be resolved simply by examining the books and records kept during the relevant period. This was an issue about the definition of the paper products that were to be included in the Tonnage calculation. The word Product is defined in Part 3 of the Schedule as meaning Products (as defined in the Services Agreement) incorporating the Trade Marks. The Services Agreement defines Products as meaning the products specified in Part 1 of the Schedule to that Agreement, which says that they are paper products which have been coated with Solid Bleached Sulphate. Part 2 of the Schedule to the Services Agreement sets out a list of registered and unregistered trade marks that had been attached to various grades of Gemini and inverX brand products by Inveresk. The expression Trade Marks is defined in the Asset Purchase Agreement as meaning all trade marks of Inveresk relating to the Gemini brand and the inverX brands. Attempts to agree the figure for Tonnage broke down when Tullis Russell sought to exclude from that figure brands of coated paper which had been ordered by, and manufactured and packaged for, paper merchants under their own labels. They maintained that Inveresks goodwill attached only to products which bore the trade marks which had been sold to them under the Asset Purchase Agreement. The dispute as to whether own label brands fall to be excluded from the figure for Tonnage in the Consideration Accounts remains unresolved. In their second conclusion Inveresk seek declarator that quantities of paper under the three own label brand names for which orders were received and invoices issued during the relevant period, which Tullis Russell maintain should be excluded, are included in the Tonnage for the purposes of calculating the Additional Consideration. The Inner House did not hear any argument on this matter, and it does not form part of the subject matter of this appeal. But it forms part of the background, as there is a dispute between the parties as to whether the issue as to what falls within the definition of Product is for determination by Tullis Russells accountants as part of their Tonnage Audit in paragraph 5 of Part 3 of the Schedule. The accountants, Pricewaterhouse Coopers, were instructed to carry out the Tonnage Audit by Tullis Russell on 5 February 2007. But on 20 February 2007 they wrote to the parties solicitors saying that they were unable to proceed with the Tonnage Audit. They had provided the parties with their draft terms of reference, but by their letter dated 16 February 2007 Inveresks solicitors had made it clear that Inveresk did not agree with them. They said that, as matters stood, they were unable to meet the timetable in paragraph 5.1 because they had not been provided by the parties with an agreed terms of reference which they considered necessary for conducting the audit. The solicitors for Inveresk then offered to engage the accountants for the purpose of conducting an audit on a restricted basis, but this was not acceptable to Tullis Russell. On 14 March 2007 Inveresks solicitors wrote to Tullis Russells solicitors stating that no adjustment needed to be made to the draft Consideration Accounts, withdrawing Inveresks request that a Tonnage Audit be undertaken and demanding payment of the sum of 909,395. (b) Part 3 of the Schedule Paragraph 2 lies at the heart of the scheme which Part 3 sets out. It provides that Tullis Russell shall pay to Inveresk the Additional Consideration on the Payment Date in accordance with paragraph 7. Paragraph 7.2 provides that the Tullis Russell shall pay to the Inveresk the Additional Consideration within 10 Business Days of the Payment Date. The question is whether, in the events that have happened, Inveresk are able to show that the Payment Date, as defined in Part 3, has arrived. Unless they are able to do that their claim for payment of the sum sued for in the first conclusion must be dismissed as irrelevant. In the quotations that follow Inveresk are referred to in Part 3 as the Vendor and Tullis Russell as the Purchaser. Paragraphs 4 and 5 of Part 3 of the Schedule provide as follows: 4 Finalisation of draft Consideration Accounts 4.1 The Purchaser shall prepare and serve on the Vendor within 5 Business Days of 1 November 2006 a draft of the Consideration Accounts (draft Consideration Accounts). 4.2 The Vendor may, within the period of 10 Business Days after service of draft Consideration Accounts on the Vendor in accordance with paragraph 4.1 (Review Period): (a) notify the Purchaser in writing of any adjustments they consider need to be made to the draft Consideration Accounts (together with the reasons for such adjustments); or (b) elect that the Purchasers Accountants carry out a Tonnage Audit in accordance with paragraph 5 of this Schedule. 4.3 If: (a) the Vendor notifies the Purchaser during the Review Period that no adjustment needs to be made to the draft Consideration Accounts; or (b) the Vendor notified (sic) the Purchaser during the Review Period that it does not wish to elect that a Tonnage audit be undertaken; (c) the Vendor does not notify the Purchaser during the Review Period of any proposed adjustment to the draft Consideration Accounts, the draft Consideration Accounts, Tonnage and Additional Consideration specified in it shall be the Consideration Accounts, Tonnage and Additional Consideration for all the purposes of this Agreement. 4.4 If the Vendor notifies the Purchaser during the Review period that certain adjustments need to be made and: (a) the Purchaser and the Vendor agree, in writing, on the adjustments to be made to the draft Consideration Accounts and/or Tonnage, and/or Additional Consideration they shall jointly incorporate such adjustments into the draft Consideration Accounts and the draft Consideration Accounts as so adjusted and the Tonnage and Additional Consideration Accounts specified in it shall be the Consideration Accounts and the Tonnage for all purposes of this Agreement; or (b) if the Vendor and the Purchaser are unable to so agree within 5 Business Days then paragraph 5 of this part 3 of the Schedule shall apply. 4.5 The Payment Date shall be: (a) in the case of paragraph 4.3(a) above, the date the Vendor notifies the purchaser that no adjustments need to be made; or (b) in the case of paragraph 4.3(b) above, the date the Vendor notifies the Purchaser that it does not require that a Tonnage Audit be undertaken; or (c) in the case in the case (sic) of paragraph 4.3(c), the last day of the Review Period; (d) and, in the case of paragraph 4.4(a) above, the date of the written agreement, of the adjusted Consideration Accounts and/or Tonnage and or Additional Consideration. 5 Tonnage Audit 5.1 Within 14 Business Days from the date that the Vendor notifies the Purchaser that it requires a Tonnage Audit, the Purchaser shall procure; (a) that the Purchasers Accountants carry out the Tonnage Audit to confirm and verify the Tonnage; (b) deliver to the Vendor the Tonnage Audit Statement. 5.2 In undertaking the Tonnage Audit, the Purchasers Accountants shall act as experts and not as arbitrators, and their decision as to any matter referred to them for determination shall, in the absence of manifest error or fraud, be final and biding in all respects on the parties and shall not be subject to question on any ground whatsoever. 5.3 The fees and expenses of the Purchasers Accountants, and any other professional fees incurred by them shall be borne and paid as they direct or, failing such direction, shall be shared equally between the Vendor and the Purchaser. 5.4 Within 5 Business Days of receipt by the Vendor of the Tonnage Audit Statement, the Vendor and the Purchaser shall jointly incorporate in the draft Consideration Accounts the Tonnage as determined by the Tonnage Audit Statement and shall date the Consideration Accounts and calculation of Tonnage with the date on which such adjustments are made (which date shall be the Payment Date). The draft Consideration Accounts as amended, and the Tonnage stated in it, shall be the Consideration Accounts and the Tonnage for all the purposes of this Agreement. (c) Discussion As I mentioned when I was narrating the facts, apart from an agreed adjustment of the prescribed time limits, the procedures set out in Part 3 of the Schedule were being followed up to 31 January 2010 when Inveresks solicitors wrote to Tullis Russells solicitors stating that, as it was their clients belief that agreement could not be reached, they had been instructed to invoke paragraph 4.4(b) of Part 3 of the Schedule and require that a Tonnage Audit be undertaken. None of the events referred to in paragraph 4.3 had occurred. Inveresk had notified Tullis Russell that certain adjustments needed to be made to the draft Consideration Accounts, and meetings had taken place in an attempt to reach agreement as provided for in paragraph 4.4(a). But the parties were unable to agree. This had two consequences for the working out of the agreed procedures. First, paragraph 4.4(b), which provides that paragraph 5 shall apply, came into effect. Secondly, as none of the events referred to in paragraph 4.5 had occurred, the only event listed in Part 3 that remained to identify the Payment Date was the incorporation in the draft Consideration Accounts of the Tonnage as determined by the Tonnage Audit Statement. Part 3 of the Schedule does not in terms oblige Inveresk to require a Tonnage Audit. But Tullis Russells case is that the effect of its provisions is that, in the events that have happened and in the absence of agreement as to some other procedure, a Tonnage Audit has to be undertaken before Inveresk are entitled to demand payment. In their second plea in law they state that, as the parties have agreed to expert determination in terms of the Asset Purchase Agreement, the Court of Session has no jurisdiction and the action should be dismissed. In their third plea in law they state that, as the parties have agreed to refer the subject matter of the action to expert determination, the action should be sisted pending the outcome of that determination. The Dean of Faculty said however that he was not insisting in either plea at this stage. He invited this Court to hold that a Tonnage Audit was required to determine the amount of the Additional Consideration and to remit the case to the commercial judge for further procedure. Inveresk acknowledge that, as they are seeking payment of the Additional Consideration under and in terms of the Asset Purchase Agreement, they must follow the procedure for determining its amount that is set out in Part 3 of the Schedule. But they submit that the procedure for a Tonnage Audit is only engaged if the Vendor does not agree with the draft Consideration Accounts. They also submit that the Purchaser has no right to submit new or revised draft Consideration Accounts in substitution for those served on the Vendor under paragraph 4.1. Their position is that they are now in agreement with the figures in the draft Consideration Accounts. That being so, they say, a Tonnage Audit is not necessary and they are entitled to payment of the sum sued for. What they are seeking to do, in other words, is to resile from their notification under paragraph 5.1 that a Tonnage Audit was required and to rely instead on the option provided by paragraph 4.3(a). This would mean that 14 March 2007, which was the date when they notified Tullis Russell that no adjustments needed to be made, was to be the Payment Date. The date as from which interest is claimed in the first conclusion appears to have been chosen on that assumption. Developing these submissions, Mr Currie QC said that the rationale for a Tonnage Audit disappeared if Inveresk did not dispute the draft Consideration Accounts. He rejected any suggestion that Inveresk was seeking to take advantage of an obvious error in their favour in that document. There was no such mistake in the original draft which had been served on them under paragraph 4.2. But it had been prepared on a different view from that which Tullis Russell were now taking as to whether the figure for Tonnage should include non branded paper. As this was not agreed Tullis Russell had failed to procure the carrying out of a Tonnage Audit within 14 days of Inveresks notification as required by paragraph 5.1. Inveresk were entitled in this situation to withdraw their notification and to call for payment of the amount shown in the draft Consideration Accounts which was no longer disputed. He submitted that the scope of the Tonnage Audit that was provided for in paragraph 5 was limited to a consideration of the figures in the draft Consideration Accounts. Those were the figures that the Purchasers Accountants were required to confirm and verify. That was the extent of their remit. No provision was made for the consideration of any other figures that the Purchaser might produce. I think that there would have been much to be said for Inveresks position if they had not exercised their right to require a Tonnage Audit under paragraph 5.1. The earlier paragraphs proceed on the basis that the only question, following service of the draft Consideration Accounts on the Vendor, is whether the Vendor thinks that they are in need of adjustment. There is no provision that entitles the Purchaser to withdraw the draft Consolidation Accounts once they have been served on the Vendor or to propose its own adjustments. That is so even at the stage which is envisaged by the opening lines of paragraph 4.4, when the Vendor notifies the Purchaser during the Review Period that adjustments need to be made. The question is whether the Purchaser is locked into that position once the stage has been reached that the parties are unable to agree on the adjustments and a Tonnage Audit is necessary to determine the amount that is to be paid and the Payment Date. This in turn raises the question as to whether, as Mr Currie maintains, the scope of the Tonnage Audit is limited to a consideration of the figures in the draft Consideration Accounts. This was an important part of Lord Glennies reasoning. He said that the words as to any matter referred to them for determination in paragraph 5.2 pointed very strongly to an understanding that the Tonnage Audit was not a general assessment of tonnage in the round but was constrained by the positions adopted by the parties in the draft Consideration Accounts and the proposed adjustments (if any): para 22. As it was not open to the Purchaser to revise its draft Consideration Accounts, it must have been open to the Vendor to drop its objections and indicate that it was content to accept the position put forward in the draft Consideration Accounts served under paragraph 4.1: para 23. In the Inner House Lord Clarke too said that the agreement showed that the experts role was limited to confirming and verifying the figure in the draft Consideration Accounts, not to adjudicate in general between contesting figure proferred by either side: 2009 SC 663, 678, para 22. The crucial question then is whether, on a proper construction of paragraph 5 of part 3 of the Schedule, the Purchasers Accountants role in conducting the Tonnage Audit is so limited. Paragraph 5.1(a) provides that the Purchaser shall procure that its Accountants carry out the Tonnage Audit to confirm and verify the Tonnage. The definition of Tonnage in paragraph 1.1 of Part 3 states that this word means the amount in tonnes of the Product for which the Purchaser receives orders during the Earnout period and thereafter issues invoices in relation to such tonnage in the Invoice Period as provided for in the Consideration Accounts. The definition of Tonnage Audit in the same paragraph states that this expression means the external verification of the Tonnage by the Purchasers Accountants in accordance with paragraph 5 of the Schedule. It seems to me that, read together with these definitions, paragraph 5.1(a) indicates that the experts task is to verify the amount in tonnes of the Product for which orders were received and invoices issued during the relevant periods. The product of this exercise is the Tonnage Audit statement referred to in paragraph 5.1(b), which then falls to be incorporated as the Tonnage in the draft Consideration Accounts under paragraph 5.4. I cannot find anything in wording of paragraph 5.1(a) to indicate that the experts are tied to the figures stated in the draft Consideration Accounts which the Vendor considers need to be adjusted. Their attention is directed instead to a consideration of the relevant orders and invoices. It is the product of that exercise that will produce the figure which they are required to confirm and verify as the Tonnage for the purposes of paragraph 5.4. The words confirm and verify in paragraph 5.1(a) and as to any matter referred to them for determination in paragraph 5.2 were said to indicate that it was not open to the experts to consider any adjustments that the Purchaser might propose while they were undertaking the Tonnage Audit. Pressed to its logical conclusion, however, this submission indicates that it would not have been open to the experts to correct an obvious mistake in computing the relevant figures which produced a greater figure for Tonnage in the draft Consideration Accounts than the Vendor was entitled to having regard to the definition of Tonnage in paragraph 1.1. That produces a very strange result. It would mean the experts were being required to confirm and verify a figure which was obviously not right. It is hard to believe that this is what the parties intended when they entered into the agreement. Commercial contracts are, of course, construed in the light of all the background which could reasonably have been expected to be available to the parties in order to ascertain what would objectively have been understood to have been their intention: Prenn v Simmonds [1971] 1 WLR 1381, 1383, per Lord Wilberforce; Mannai Investmment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, 779, per Lord Hoffmann. But this is not a case where a clause appears to have been badly drafted. On the contrary, the wording of paragraph 5.1(a) read together with the definitions, is perfectly intelligible. It favours the wider approach to what was intended that is contended for by Tullis Russell. This accords with business sense, as the agreed procedure must be taken to have been designed to ensure that the figure for Tonnage in the Consideration Accounts was an accurate statement of the amount in tonnes which in turn would produce the amount which Inveresk were entitled to be paid as Additional Consideration under the agreement. That being the purpose of the procedure, it falls to be read and applied in a way that will give effect to it. It is true that the Vendor can tie the Purchaser to the figure in the draft Consideration Accounts during the Review Period referred to in paragraph 4.2 even if they are not accurate. During this stage the agreed procedures operate exclusively in the interests of the Vendor. But that advantage comes to an end when it notifies the Purchaser that it requires a Tonnage Audit. The focus now is on obtaining an accurate figure for Tonnage as defined in paragraph 1.1. Both parties have an interest in seeing that the Tonnage that the experts confirm and verify is the figure that the parties intended to be used in the draft Consideration Accounts as so defined. This is because a sensible commercial approach to the procedure indicates that the amount paid as Additional Consideration should be based on a correct assessment by the experts of the Tonnage as defined in paragraph 1.1, no more and no less. An error either way would defeat that objective. Once this position is reached, Inveresks position seems to me to be untenable. The argument that it was entitled to resile from its election to require a Tonnage Audit rested on two foundations. These were (a) the restricted nature of the material that the experts were entitled to consider when conducting that exercise, and (b) the proposition that the provision for the carrying out of a Tonnage Audit was conceived solely in the Vendors interests: Manheath Ltd v H J Banks & Co Ltd 1996 SC 42, 48 49. For the reasons that I have given I would reject both of those arguments. Tullis Russell are entitled to insist that, as Inveresk have notified them that they require a Tonnage Audit, the figure for Tonnage that is to be entered in the draft is accurate. The definition of that expression in paragraph 1.1 shows that this figure must be based on an assessment of the amount in tonnes for which orders were received and invoices issued during the relevant periods. That is the measure of the amount that Inveresk are entitled to be paid under the agreement. All the information that is relevant to that assessment must be taken into account. The dispute as to whether there should be excluded from Tonnage brands of paper ordered by, and manufactured and packaged for, paper merchants under their own labels will, of course, need to be resolved before that assessment is undertaken. How this should be done will be for determination by the commercial judge, to whom I would remit the case for further procedure. Retention (a) Introduction On one view, Tullis Russells plea of retention will not need to be considered if the action is sisted pending the outcome of the reference of the Tonnage to the experts for determination. Until that happens Inveresks claim for Additional Consideration will be illiquid and, as such, unenforceable. But the timetable for a resolution of the damages action, for perfectly understandable reasons, remains uncertain. It is possible that the damages claims will still be illiquid when the sist is recalled. In that event retention will once again become a live issue. So, as the question was fully debated before us, I think that we should reach a decision as to whether the Extra Division were right to refuse the reclaiming motion against the Lord Ordinarys decision that the plea should be repelled because the averments in support of it were irrelevant. Tullis Russell base their claim of retention pending resolution of their claim of damages on the rule that a party has the right to withhold performance where both claims arise under a mutual contract. They aver that Inveresk failed, to a material extent, to perform properly obligations in both the Asset Purchase Agreement and the Service Agreement which they say are the counterparts of Tullis Russells obligation to pay Additional Consideration. In their seventh plea in law they claim to be entitled to retain the sum sued for pending the resolution of their claim for damages. For Inveresk Mr Currie did not dispute the rule on which Tullis Russell base their claim. But he submitted that retention can only operate under Scots law where the respective claims arise out of one contract. In this case there were two contracts, albeit both arising from a single transaction. So the plea was not available in this case. In any event fulfilment by Inveresk of the obligations in the Service Agreement was not a counterpart of Tullis Russells obligation to pay the Additional Consideration, and there were no relevant averments of a right to retain based on breaches of the Asset Purchase Agreement. The Lord Ordinary found in favour of Tullis Russell on the first point. He did not think that it was fatal to their plea that the relevant claims in the other action arose out of obligations under a different contract. He saw no reason in principle why the concept of mutuality should not apply to the transaction as a whole: para 44. But he held that the plea must fail for want of mutuality or reciprocity, because the Services Agreement was a wholly separate stage of the overall transaction from the initial acquisition of the assets that were being purchased: para 45. The counterpart of the sale of the assets under the Asset Purchase Agreement was the payment of the Consideration, in the two instalments. The counterpart of the provision of services under the Services Agreement was the payment of the fee for such services. The Extra Division took as its starting point the fact that the parties had deliberately chosen to enter into separate agreements with two separate legal descriptions: one a contract of sale, the other a contract of services. They had different consequences and no case had been referred to in which retention had been held to operate in such circumstances: para 49. The enforcement of the respective obligations was not made dependent one upon the other, and it was not sufficient that some form of inter connectedness could be identified: para 51. The nature of the plea It may be helpful if I were to say something about the use of the word retention. It is a word to be used with care: McBryde, The Law of Contract in Scotland 3rd ed, (2007), para 20 62. This is because it tends to be used to describe a variety of remedies, each with different rules attached to them. This has given rise to a good deal of confusion, with the result that it is not always easy to find clear guidance for the application of each remedy in the authorities. In a footnote to a paragraph which precedes the passage which I have just referred to, McBryde states that confusion is endemic in this area of the law: para 20 61, fn 21. In simple terms, what Tullis Russell seek to do is to withhold, or retain, payment of the sum sued for by Inveresk when the amount due to them has been ascertained, pending the ascertainment of their claim of damages so that, when it has become liquid, they may set off the amount of that claim against the sum payable to Inveresk. As a general rule payment of a debt which has been found to be due and payable cannot be withheld on a plea of retention in respect of a claim which is still illiquid. But Tullis Russell seek to rely on an exception to that rule which applies where the illiquid claim arises directly out of the same contract. The obligation to pay the sum found to be due and payable to Inveresk will not be extinguished, but postponed. It may ultimately be extinguished, however, on the principle known as compensation should it be found that the amount due as damages equals or exceeds the amount due as Additional Consideration to Inveresk. Retention and compensation are sometimes confused with each other, but they are different remedies. As McBryde, The Law of Contract in Scotland, para 20 64 explains, retention does not operate to extinguish claims, whereas compensation when pled and sustained does have this effect. As matters stand in this case, compensation lies in the future. The issue at this stage is whether Tullis Russell are entitled to exercise the remedy of retention. Their case for its exercise rests on the mutuality of contractual obligations. The principle that in mutual contracts neither party should obtain implement of the obligements to him, till he fulfil the obligements by him was recognised by Stair, The Institutions of the Law of Scotland (2nd ed, 1693), I, x, 17. He does not use the word retention in his discussion of the principle. But the examples which he gives in the previous paragraph show that he had in mind withholding performance of obligations which included the payment of money, such as the price in sale or the hire in location, so long as they were properly mutual causes of each other: I, x, 16. As Erskine, An Institute of the Law of Scotland (Nicolsons edition, 1871), iii, 4, 20 points out, retention resembles compensation, though it has not the effect of extinguishing obligations, but barely of suspending them, till he who pleads it obtains payment or satisfaction for his counterclaim. In para 21 he explains that the right of retention is more frequently pleaded by those who have bestowed either their money or their labour upon the subject sought to be retained; and that it commonly arises in that case from the mutual obligations which naturally lie upon the contractor. definition based on Erskines treatment of the subject: Gloag and Irvine, Law of Rights in Security (1897), p 303, provide this Retention may be defined as a right to resist a demand for payment or performance till some counter obligation be paid or performed The law on the subject is complicated by the fact that the word retention is used to denote various rights, widely different in their origin and extent. Thus the right of a party to withhold performance of his obligation under a mutual contract, if the counter obligation is not performed, is often spoken of as a right of retention, and may result in a right to retain money or goods. This use of the word is contrasted with the right of a creditor in bankruptcy to set off the debt owed to him against a debt which he himself owes to the bankrupt, which is said to be in origin a right of retention. As the authors explain at p 304, the law of retention of debts is an equitable extension of the statutory right of compensation under the Compensation Act 1592, c 143. They then provide this summary of the law of retention at p 305: The cases where retention of debts is permissible form the exceptions to the general rule that an illiquid cannot be set off against a liquid claim. These cases may be grouped under four heads: (1) Where the illiquid claim admits of instant verification. (2) Where both the liquid and the illiquid claim arise out of a mutual contract. (3) Where one or other of the parties is bankrupt or vergens ad inopiam. (4) Where, in exceptional circumstances, retention has been allowed to meet the justice or convenience of the particular case. As their seventh plea in law makes clear, Tullis Russells claim for retention falls under the second of these four heads, it being assumed that Inveresks claim will become liquid when the amount due as Additional Consideration has been ascertained. They do not seek an exercise of the courts equitable jurisdiction under the fourth head. That is the second kind of retention to which Lord Rodger helpfully draws attention in his judgment. I agree with him (see para 106) that Tullis Russells seventh plea in law would not be appropriate if their case was that they should be allowed, in the exercise of the equitable power, to retain any sum due to Inveresk pending the resolution of their claim of damages. The fact that these remedies differ in their origin and content is also noted in Gloag and Hendersons Law of Scotland 12th ed, (2007), of which the general editors were Lord Coulsfield and Professor Hector MacQueen. This edition, like all its recent predecessors, is the product of careful revision by its editors. Its treatment of the subject is to be found in paras 3.31 3.32 where the right of compensation referable to the statute of 1592 is dealt with: Compensation is pleadable only between liquid debts, with an exception, largely in the discretion of the court, in cases where an illiquid debt may be rendered liquid without delay. The right of retention when debts arise out of the same contract, or where bankruptcy has supervened, is considered further in a later chapter. A footnote to the last sentence in this passage refers to paras 10.14 10.17. In para 10.14 it is stated that the right, when it takes the form of refusal to pay a debt, is always known as a right of retention. In para 10.16 the rule that applies where debts arise from the same contract is set out: When two claims, one liquid, the other in the nature of a claim for damages, arise from the same contract the creditor in the claim for damages may withhold payment of his debt until the amount due to him as damages is established. The chapters in which the sentences which I have quoted appear have been re organised by the editors of the latest edition, but the sentences themselves can be traced at least as far back as the 6th edition of Gloag and Hendersons Introduction to the Law of Scotland (1964). In my opinion they correctly state the law on this subject, which has been settled since at least 1693: see also Gloag on Contract, pp 626 628; Stair Memorial Encyclopaedia, vol 13, Judicial and Other Remedies, para 94; British Motor Body Co Ltd v Thomas Shaw (Dundee) Ltd 1914 SC 922, 926, per Lord President Strathclyde. It follows, of course, that Tullis Russells case for retention stands or falls on the issue of mutuality. As McBryde explains, it must be appreciated that the mutuality principle applies only where the obligations are counterparts of each other: The Law of Contract in Scotland, para 20 70. So I do not think that either the Lord Ordinary or the Extra Division can be said to have fallen into error by dealing with the case on this basis, although I agree with Lord Rodger that the way the Extra Division dealt with the matter might be taken as suggesting, incorrectly, that retention was governed entirely by fixed rules and that there was no room for the equitable remedy. I turn then to the question whether Inveresks argument that retention is not available because the respective obligations do not arise under a single contract is well founded. This raises an important issue of principle. In most cases where the plea of retention has been argued it has not been necessary to examine the point, as there was only one contract. The many cases where a tenant has been held to be entitled to retain rent on the ground of the landlords failure to fulfil his obligations under the lease provide the most obvious example: eg Earl of Galloway v McConnell 1911 SC 846; John Haig & Co v Boswell Preston 1915 SC 339. For this reason I would not regard references to a single contract in the discussion of the principle by Erskine, An Institute of the Law of Scotland III, iii, 86 and by Gloag on Contract, pp 626 627 as determinative. On the contrary, Gloags observation at p 627 that even in cases where both debts arise out of the same contract a claim of retention is not the assertion of an absolute right suggests that he was willing to accept that it is not essential that the debts (or obligations) should arise under the same contract, so long as they arise from the same transaction and are dependent or conditional on each other. As for the right of retention not being the assertion of an absolute right, this is a reference to the Courts power to prevent its abuse by, for example, compelling the party who seeks to invoke it to consign the sum sued for: Garscadden v Ardrossan Dry Dock Co 1910 SC 178, 180, per Lord Ardwall; Earl of Galloway v McConnell 1911 SC 846, 852, per Lord Salvesen. Inveresk do not seek the exercise of that power in this case. In Claddagh Steamship Co Ltd v Steven & Co 1919 SC (HL) 132 there were two contracts for the sale of two ships. The question was whether, when one of them was requisitioned by the Government, the purchasers were obliged to accept and pay for the other. Their case was that they were not obliged to do so, as the vendors were not able to perform their side of the bargain. I think that this is a good example of the right of retention of the kind explained by Erskine, An Institute of the Law of Scotland, III, iii, 86: No party in a mutual contract, where the obligations on the parties are the causes of one another, can demand performance from the other, if he himself either cannot or will not perform the counter part, for the mutual obligations are regarded as conditional. It was held that, as the evidence showed that the object of the two contracts was to give effect to an agreement for the sale of the two ships together, the purchasers were entitled to refuse to accept delivery of one ship without the other. Viscount Finlay said at p 135 that it is always open to inquiry whether the existence of two separate documents represented the real bargain between the parties. That was a case of a refusal to perform a contractual obligation on the ground that it was impliedly conditional on performance of his obligation by the other party. In this case retention is relied on to delay performance until a claim of damages is satisfied. The distinction between these two forms of retention is noted by Gloag on Contract, p 623. But Viscount Finlays observation supports the view that it would be wrong in either case to insist that retention can only be relied on where the obligations are both to be found in the same contractual document. That would be to give preference to form over substance, and the nature of the plea indicates that it cannot be the right approach. I think that the position is accurately stated by McBryde, The Law of Contract in Scotland, para 20 67 as follows: The principle of mutuality of obligations applies to all contracts, and so in any type of contract a claim for the sums due under the contract may be met by the defence that the defender has claims arising from the pursuers failure to perform that contract. [emphasis added] The law does not compel the parties to a contract to set out the obligations that each owes to the other in a single document. For fiscal or other reasons it may be more helpful to use two or more contractual documents to record their overall agreement. The question in each case of retention will be whether the obligations that are founded on, wherever they are to be found, are truly counterparts of each other. It goes without saying that they must both be part of the same transaction, as there can be no mutuality between two or more transactions each of which has a life of its own. But, as Lord Drummond Young said in Hoult v Turpie 2004 SLT 308, para 10, the principle of mutuality has generally been given a wide scope in Scots law. It is derived from the exceptio non adimpleti contractus. The principle, as explained by Corbett J in ESE Financial Services (Pty) Ltd v Cramer 1973(2) SA 805, 809, concentrates on the obligations that each party owes to the other rather than the way in which the contract is made up: Where a plaintiff sues to enforce performance of an obligation which is conditional upon performance by himself of a reciprocal obligation owed to the defendant, then the performance by him of this latter obligation (or, in cases where they are not consecutive, the tender of such performance) is a necessary pre requisite of his right to sue and should be pleaded by him. Conversely in such a case the defendant may raise as a defence, known as the exceptio non adimpleti contractus, the fact that the plaintiff has failed to perform, or in the appropriate case, tender performance of, his own reciprocal obligation. In the present case there are ample grounds for regarding the two agreements as depending upon one another and as each forming part of the same transaction. Clause 16 of the Asset Purchase Agreement is an entire agreement clause. It states that that Agreement (together with the documents referred to in it or executed at Completion) constitutes the entire agreement and understanding between the parties with respect to its subject matter. The Services Agreement is referred to in clauses 1.1 and 7.1 of the Asset Purchase Agreement, and the parties are agreed that both agreements were executed at the same time. Recital (C) of the Services Agreement, as has been already noted, makes it clear that that agreement was being entered into in order to facilitate the integration of the manufacture and distribution of the Products into existing Tullis Russell operations and to enable Tullis Russell to obtain the full benefit and value of the assets being acquired under the Asset Purchase Agreement. Clause 22, the entire agreement clause, states that the Services Agreement and the Asset Purchase Agreement of even date contain the whole agreement between the parties in respect of the subject matter of that Agreement. The conclusion that these two agreements were part of the same transaction to which, as a whole, the principle of mutuality can apply, is inescapable. The Extra Divisions conclusion to the contrary seems to me, with respect, to be based on a misconception. The fact that each was a nominate contract with different legal effects is no more significant than the fact that the parties decided to give effect to their transaction by entering into two agreements. The true significance of these agreements is to be found in the respects in which they were each linked expressly with each other. The basis for retention For the principle to operate, therefore, the obligations in question must be the counterparts of each other. So the next question is whether that requirement is satisfied in this case. As Corbett J formulated it in ESE Financial Services (Pty) Ltd v Cramer 1973(2) SA 803, 809, is the basic requirement of the exceptio, viz. reciprocity of obligation, satisfied? It is necessary also to consider whether the respective obligations were contemporaneous, as it was because the Lord Ordinary thought that they were not that he held that the plea of retention should be repelled. I think that this question can be taken with the first, as it is so closely related to the question whether there was reciprocity. There is a third question whether the alleged breach by Inveresk was material. In Purak Ltd v Byzak Ltd 2005 SLT 37, para 10, Lord Drummond Young said that the right only arises where one party is in material breach of contract: see also Turnbull v McLean & Co (1874) 1 R 730, 738, per Lord Moncreiff. But lack of materiality is not an issue in this case. The breaches of contract that are founded on by Tullis Russell are said to have been directly related to the benefits that they were seeking to obtain when they entered into the transaction. The amount sued for is more than 5m. It exceeds the sum sued for by Inveresk by a very large margin. It is sufficiently large to allow for the possibility that they may fail to prove all that they aver both in the other action and in this one. As for the question of reciprocity, Tullis Russell aver that they are entitled to retain any sums due to Inveresk pending payment of the claims against them which are set out in the other action (CA31/07). These claims fall into two parts. First, there is an allegation that Inveresk were in breach of clause 15.4 of the Asset Purchase Agreement, which provides that the Vendor shall promptly notify the Purchaser of any claims against the Vendor brought by any party in respect of any goods manufactured or services provided by the Vendor derived from any of the Assets. Secondly, there are allegations that Inveresk were in breach of clauses 2.1(c) and (e), 5, 14(6) and 16.2(d) of the Services Agreement. Clause 2.1(c) obliged Inveresk to maintain the existing levels of customer service to purchasers and potential purchasers of Products and Licensed Products, which as defined were the Products manufactured pursuant to the Services Agreement, and to promote the successful integration of the Owned Intellectual Property rights, as defined in the Asset Purchase Agreement, into Tullis Russell. Clause 2.1(e) obliged Inveresk to conduct its business in the ordinary way so as to maintain that business relating to the Products and Licensed Products as a going concern. Clause 5 is a provision about Quality Standards, which are defined as the quality standards in respect of any Licensed Stock to be acquired in terms of the Services Agreement. Clause 14(6) obliged Inveresk to indemnify Tullis Russell against all loss and expenses incurred by Tullis Russell arising from Customer Claims, which as defined were claims relating to the Licensed Products or any other Products manufactured or supplied by Inveresk after the date of the Service Agreement but prior to 5 November 2005 or the date of termination of that agreement, whichever was the earlier. Clause 16.2(d) refers to Goodwill. It provided that Inveresk was not at any time after 5 November 2005 or the earlier termination of the Services Agreement to do or say anything which was likely to, or intended to, damage the goodwill or reputation of the Owned Intellectual Property Rights, which as defined had the meaning given to that expression in the Asset Purchase Agreement. It can be seen from this brief summary that the two agreements have to be read together to understand the nature and effect of these various obligations. But the Lord Ordinary held, for the reasons set out in his careful analysis in paras 41 45, that the Asset Purchase Agreement was concerned only with the sale and purchase of the Assets as defined in that agreement that is to say, the Owned Intellectual Property Rights, the Customer Information and the Related Assets. The Services Agreement, on the other hand, was concerned only with the stock, Licensed Products and Products manufactured or supplied by Inveresk under that agreement. On a proper construction of article 15.4 of the Asset Purchase Agreement, the Assets sold by Inveresk to Tullis Russell under that agreement and the reference to goods manufactured or sold by them derived from those assets must be a reference to goods manufactured or sold by them prior to the sale and purchase of assets under that agreement. The manufacture and sale of goods thereafter was covered by the Services Agreement. In his view therefore there was, on an ordinary reading of the two agreements, no overlap between them. The obligations in the Services Agreement could not be seen as counterparts of the Asset Purchase Agreement. For the breaches of the Services Agreement to be available in support of a plea of retention against the claim for Additional Consideration they must have been exigible by the time the Additional Consideration fell due. But the Additional Consideration did not become due and payable at any time before the end of the Services Agreement. The Services Agreement was a wholly separate stage of the overall transaction from the initial acquisition of the Assets. It seems to me, with respect, that the approach which commended itself to the Lord Ordinary concentrated too much on the detail and overlooked the overall purpose and effect of the transaction. Although he was right to reject the argument that it was fatal to the plea of retention that the obligations referred to in action CA31/07 arose out of a different contract, he did not carry his finding that the separate agreements were all part of the same transaction to its logical conclusion. The guiding principle is that the unity of the overall transaction should be respected. The analysis should start from the position that all the obligations that it embraces are to be regarded as counterparts of each other unless there is a clear indication to the contrary: see Gloag, p 594; Macari v Celtic Football and Athlectic Co Ltd 1999 SC 628, 639, per Lord President Rodger. In Hoult v Turpie 2004 SLT 308, para 14, Lord Drummond Young said that the requirement that the obligations should be counterparts of each other should not be used in an artificial manner which breaks up the essential unity of a contract. He cautioned against overuse of the mutuality rule as a means of controlling the right of retention lest it swamp the principle that contracts must be duly performed. As he saw it, the most satisfactory means of control was the rule that, before a party is entitled to withhold performance, the other must be in material breach of contract. It has been suggested that this theory needs to be treated with caution, as the breach does not need to be so material as to justify rescission: Gloag and Henderson, The Law of Scotland, 12th ed, para 10.14, footnote 85; McBryde, The Law of Contract in Scotland, para 20.60. Subject to that qualification, however, it seems to me to be a useful protection against abuse. The right of retention must, of course, be kept under control. The rule that the relevant obligations must be counterparts of each other must be respected too, as the right of retention rests upon that principle. It is possible to regard a contract as operating in stages, with the result that the principle will apply separately to each stage: Bank of East Asia Ltd v Scottish Enterprise 1997 SLT 1213. But care should be taken not to lose sight of the overall purpose and unity of the transaction that the parties have entered into when conducting the analysis. The essence of the case for the exercise of a right of retention is to be found in recital (C) of the Services Agreement. It records that the Services Agreement was entered into to enable Tullis Russell to obtain the full benefit and value of the assets being acquired under the Asset Purchase Agreement. Clause 2.1 of the Services Agreement states that the parties recognised that its purpose was to allow Tullis Russell time to integrate the manufacture and distribution of the Products into their existing operations and to protect the value of Tullis Russells investment in the Owned Intellectual Property Rights in terms of the Asset Purchase Agreement. Underlying these complicated arrangements is Tullis Russells concern that the value of their investment could be affected by Inveresks conduct during and following the expiry of the life of the Services Agreement. The basis of the claim of damages is that the value of its investment in the assets purchased under the Asset Purchase Agreement was diminished by Inveresks manufacture and distribution of products which did not meet the specified quality standards and the way they dealt with complaints by customers. The fact that the principal assets that Tullis Russell were seeking to acquire were intellectual property rights, whose value was vulnerable to things said or done by Inveresk after those rights were transferred to Tullis Russell, helps to explain the complex nature of these arrangements. Clause 15.4 of the Asset Purchase Agreement can be taken to refer, as the Extra Division held in para 52, to claims in relation to products manufactured before the transaction was entered into. The clauses of the Service Agreement that are founded on perform the same function in relation to products manufactured after that date. Although the transaction can be regarded as proceeding in stages, it is unrealistic to treat it as divisible into a series of separate and unrelated compartments. The obligations undertaken by Inveresk were all designed to serve the same end, which was to preserve the value of the intellectual property rights and other assets acquired by Tullis Russell after the Completion Date. As for the payments to be made by Tullis Russell, the Services Fees payable under clause 3.1 of the Services Agreement were a counterpart of Inveresks obligation to perform the services referred to in the clause. But in my opinion their obligation to pay the sum of the Initial Consideration and the Additional Consideration to Inveresk was a counterpart of the performance by Inveresk of their obligations under both agreements. For these reasons I would hold that the courts below were wrong to hold that the averments in support of the plea of retention were irrelevant. In my opinion Tullis Russell are entitled to withhold payment of any sums due to Inveresk as Additional Consideration pending the outcome of their claim for damages for breach of the clauses in both the Asset Purchase Agreement and the Services Agreement that they found upon. Conclusion I would allow the appeal. I would recall the Extra Divisions interlocutor and set aside the Lord Ordinarys interlocutor of 11 September 2008. The future course of this action will be a matter for discussion in the commercial court. I would remit the action to the commercial judge to proceed as accords. LORD SAVILLE I agree with Lord Hope and Lord Rodger that the appeal should be allowed for the reasons that they give. I also agree with the views expressed by Lord Collins about the position in English law. LORD RODGER I agree with Lord Hope that, for the reasons he gives, the averments of the pursuers, Inveresk PLC (Inveresk), in support of their conclusion for payment by the defenders, Tullis Russell Papermakers Ltd (Tullis Russell), of the sum of 909,395 are irrelevant. I add some observations on whether, as the issue is put, Tullis Russell would in any event be entitled to retain any sum for which they were found liable in these proceedings, until their claim against Inveresk for payment of various much larger sums by way of damages for breach of contract is resolved. Tullis Russells damages claim against Inveresk is being litigated in another commercial action in the Court of Session. That action began just before this one but, in certain respects at least, it has made rather more rapid progress. In December 2008 Lord Drummond Young assigned a diet for the proof before answer to begin on 6 October 2009 and to take six weeks. In August 2009 in a burst of optimism this was reduced to four weeks starting on 27 October 2009. The proof began then and ran until 20 November, by which time the pursuers, Tullis Russell, had not finished leading evidence. The continued proof is due to begin on 4 May 2010 and to last for sixteen days. In the present action for payment, the seventh plea in law in the defences on behalf of Tullis Russell raises the issue of retention: The defenders, being entitled to payment by the pursuers of sums under the contract, are entitled until such sums have been paid to retain any sums found due to the pursuers. The Lord Ordinary (Lord Glennie) repelled this and all their other pleas in law and granted Inveresk decree for the sum sued for. The Extra Division refused Tullis Russells reclaiming motion. The Parties Submissions Before the courts below and before this Court the lines of battle were drawn very narrowly. Essentially, both sides proceeded on what I would regard as the erroneous basis that in Scots Law the whole matter is regulated by fixed rules and that the court has no power to intervene where it would be equitable to do so. Mr Currie QC, who appeared for Inveresk, maintained that the rule was that retention of a sum was not possible unless a pursuer had failed to perform an obligation under the same contract as gave rise to the right to payment; moreover, the defender could retain the sum only if the pursuer had failed to perform the very obligation under the contract for which the payment of the sum was the consideration. Here, he argued, Tullis Russells claim for damages fulfilled neither of these conditions: their obligation to pay the price for the assets arose under Clause 2 of the Assets Purchase Agreement, while their claim for damages related to the separate Services Agreement; Tullis Russells obligation was to pay the price as consideration for Inveresk transferring the ownership of the assets under Clause 2 of the Assets Purchase Agreement. In contrast, their claim for damages related to an alleged breach by Inveresk of clauses in particular, Clause 16 of the Services Agreement. On behalf of Tullis Russell, the Dean of Faculty also proceeded on the basis that retention was entirely a matter of right, and that the right arose where the pursuers claim for the price and the defenders claim for damages derived from what amounted to the same contract. He argued that the Inner House had been wrong, however, to see the two agreements between the parties in this case as separate contracts; there was, in effect, a single transaction which had been given effect in two contracts in order to assist Inveresks tax position. This could be seen, for example, from Clause 4 of, and Part 1 of the Schedule to, the Assets Purchase Agreement and from Clause 22.2 of the Services Agreement. Even if the contracts were separate, they were so closely interlinked that they should be treated together for purposes of retention. Tullis Russell could not be required to pay the price for the assets when they were claiming damages for loss which they alleged they had suffered due to Inveresk failing to carry out, inter alia, their obligation, under Clause 16 of the Services Agreement, to enable Tullis Russell to obtain the full benefit and value of those assets. In effect, the matter should be treated as if the defenders were claiming damages for breach of a contract on which they were being sued for the price. The Approach of the Inner House In essence, the approach advocated by Inveresk before this Court was the same as the approach of the Extra Division. Indeed, subject to a minor qualification which is not of practical importance, Mr Currie went out of his way to adopt everything which the Division said on retention. This included the following passage, 2009 SC 663, 695: The approach of the reclaimers, before us, appeared to be that a proper reading of the two agreements together led to the implication that the parties intended that performance of the obligation to pay the additional consideration was dependent on the fulfilment of the obligations under the services agreement and Clause 15.4 of the acquisition agreement and that was so because of the obvious interconnection of the matters covered by the two agreements. In our system, at least, where the matter is not covered by express agreement, what the court is searching for is identification of obligations which might fall to be seen to be mutual. There is, we think, a danger of focusing on the expression mutuality of contract rather than on mutuality of obligation in this context. Within a single mutual contract, there may be obligations which are mutually dependent upon each other and can truly be described as reciprocal. There may also be within that single contract an obligation, or obligations, in respect of which there is no direct reciprocal counterpart. That is what Lord President Rodger in Macari v Celtic Football and Athletic Co Ltd 1999 SC 628, 640G H took from the speech of Lord Jauncey in Bank of East Asia Ltd v Scottish Enterprise 1997 SLT 1213 and what Lord Caplan had to say about the matter at page 650. In a single contract situation, the obligation of an employee to carry out his employer's instruction was not regarded as the counterpart of his employer's implied obligation not to seek to damage the relationship of trust and confidence between the parties. Accordingly, the operation of retention even within a single mutual contract, where not expressly provided for, operates subject to these requirements and qualifications. Applying that approach, the Division went on to say, at p 696, Applying the law, as set out authoritatively in Bank of East Asia and Macari, it does not appear to us that, on any view, the reciprocal obligation for payment of the additional consideration under the acquisition agreement was the performance of obligations under the services agreement. The reciprocal obligation in relation to the payment of the additional consideration arose solely from the acquisition agreement and constituted the obligation to transfer the assets in question in accordance with that agreement. The reciprocal obligation for the performance of the obligations in the services agreement was to be found in the terms of the services agreement itself. While it can, no doubt, be said that there was a connection between the obligations contained in both agreements, in that they both came into existence in the context of the whole transaction between the parties, that could have been said of the respective obligations in Macari and in the respective obligations in the South African case, [ESE Financial Services (Pty) v Cramer 1973 (2) SA 805 (C),] but, as in those cases, their enforcement was not, in our opinion, made dependent one upon the other. As is plain from their emphasis on the need to focus on mutuality of obligation, the Extra Division are really confining retention to situations where the defender says that the pursuer has not performed the particular obligation in respect of which he claims payment of the sum in question. In other words, the defender asserts his right not to perform his obligation to pay unless and until the pursuer performs the particular obligation which entitles him to payment as opposed to some other obligation under the contract. Hence the references to Macari v Celtic Football and Athletic Co Ltd 1999 SC 628 where one of the issues was whether Mr Macari had been entitled to refuse to carry out the instructions of the managing director because the club were in breach of another obligation to him under the contract between the parties. I shall have to examine the development of the law in a little detail. In short, however, the approach of the Extra Division conflates two different legal doctrines, to both of which, most unhelpfully, Scots Law tends to apply the label retention. Firstly, a defender has a right to withhold or retain payment of, say, the price of goods which he says are materially defective, until the pursuer proves that he has supplied goods which are conform to the contract. Although their analysis was more detailed and sophisticated, that is the only kind of retention which the Extra Division considered in the passages which I have quoted. But the term retention is also applied to the (different) situation where a defender admits that, say, the price of goods is due. In that situation he cannot have any right to withhold payment of the price. But he can submit to the court that he should not be obliged to pay the price until some unliquidated claim which he has against the pursuer (here, a claim for damages) is resolved. In effect, the defender asks the court to allow him to retain the price meantime so that, if his claim for damages succeeds, he can offset the liquid damages against the liquid price. Here the Extra Division concluded that the Additional Consideration was a liquid debt which Tullis Russell had no right to withhold because the obligation to pay it was not dependent on Inveresk performing their obligations under the Services Agreement. As explained, there was actually a further possibility: that, even if the Additional Consideration was liquid, it would be just and equitable to allow Tullis Russell to retain it until their damages claim against Inveresk was resolved. Their Lordships cannot be blamed for not considering that issue, since clearly it was not argued. Nevertheless, the point is of some general importance. So I shall deal with it, while recognising, of course, that my remarks are obiter, since the appeal is being allowed on other grounds. I must first make good the distinction between the situations where the two different types of retention arise. I can then deal with the first situation very shortly, since, on that form of retention, I agree with the judgment of Lord Hope. I shall then examine how the court decides whether to allow retention of the second kind. Retention withholding performance The fact that the word retention is used in a variety of ways, which can lead to confusion, is well recognised. See, for instance, W M McBryde, The Law of Contract in Scotland 3rd ed, (2007), pp 563 565, paras 20 62 20 65. In W M Gloag and J M Irvine, Law of Rights in Security (1897), pp 303 304, Gloag mentions a number of different doctrines to which the term has been applied. In particular, he identifies the right of a party to withhold performance of his obligation under a mutual contract, if the counter obligation is not performed. He also mentions the case of retention or lien, where the person in possession of property belonging to another is entitled to retain it in security of debts or obligations due to him by the owner. In his later work, The Law of Contract (2nd edition, 1929), p 623, Gloag says that the term retention is often used to refer to the right of one party to withhold performance of the obligations he has undertaken under a contract until performance of the obligations in which he is creditor. A similar approach is found, for example, in Kames, Principles of Equity (new edition, 1825), p 344. This formulation is wide enough to cover the situation where, for example, A leases 100 acres of land to B, but remains in possession of 10 of those acres. B is entitled to refuse to pay the rent unless and until A actually performs his obligation to give B possession of the entire 100 acres. Bs obligation to pay the rent arises only once A performs his obligation to put B in possession of the whole 100 acres. Lord Fullerton put the point succinctly in a much quoted passage in Graham v Gordon (1843) 5 D 1207, 1211: Rent is not liquid in the sense that a sum due by bond is. It is matter of contract in consideration of something to be done. It is paid for possession of the subject let. If the tenant says he has not got entire possession, that is a good answer to the claim for rent. In such a case there is no question of the tenant withholding or retaining rent that is due to the landlord: on the contrary, the tenant withholds the rent on the ground that he has no obligation to pay it because the landlord has not performed the obligation for which the rent is the consideration. See also, for example, Lovie v Bairds Trs (1895) 23 R 1. The same can apply where a pursuer claims the price for carrying out works. If the defender disputes that the works were properly carried out, the pursuer must prove that they were. Unless and until he does so, his claim is illiquid and the defender is not obliged to pay. See, for instance, Johnston v Robertson (1861) 23 D 646, 656, per Lord Justice Clerk Inglis: Every action on a mutual contract implies that the pursuer either has performed, or is willing to perform, his part of the contract; and it is, therefore, always open to the defender to say that under the contract a right arises also to him to demand performance of the contract before the pursuer can insist in his action. In the present case Tullis Russell do not dispute that Inveresk transferred ownership of the various assets on the Completion Date, 9 June 2005, in accordance with Clause 2.1 of the Assets Purchase Agreement. At which point, Tullis Russell paid the Initial Consideration. But they say and the Court now holds that Inveresk have no liquid claim for the Additional Consideration for those assets because it has not been agreed or determined in accordance with Part 3 of the Schedule. So, for that reason, Tullis Russell are under no obligation to pay the Additional Consideration at present. Any possible obligation to do so will arise only when the Additional Consideration is ascertained, either by agreement, or under some procedure to be determined by the commercial judge. If and when that day arrives, Tullis Russell want to be able to withhold payment of the Additional Consideration on two grounds: first, because, they say, Inveresk are in breach of their reciprocal contractual obligations to them and, secondly, pending the outcome of their claims for damages against Inveresk in the other action. Withholding Performance and Claiming Damages Besides withholding payment until the pursuer establishes that he has performed the obligation giving rise to the obligation to pay, a defender may undoubtedly go further and claim that the pursuers breach of contract actually caused him loss. That said, the case law and literature on defenders claims for damages in actions for the price of a contract are notoriously confusing. For a modern reader, the older arguments and discussions are particularly difficult to follow because the counsel and judges were working in a system where, in an action for payment of a debt, the defender could plead any entitlement to damages only as a defence to the pursuers claim in the hope of using those damages to reduce or even extinguish any sum that would otherwise be due to the pursuer. If he wanted to go further, and actually recover the full amount of any damages, the defender had to raise a separate action against the pursuer. So far as the Court of Session is concerned, that remained the position until the law was changed by section 6(2) of the Administration of Justice (Scotland) 1933 and Rule 13 of the Rules of Court 1935. It then became possible for a defender to include in his defences a conclusion and pleadings, by virtue of which he could recover the whole sum of damages due to him without the need to raise a separate action. In Taylor v Forbes (1830) 9 S 113 the pursuer sued for freight for carrying a cargo of flour for the defender from Perth to Aberdeen. The pursuer did not insert sufficient planks to line the hold and protect the cargo from contact with the bilge water. He claimed that it was not customary to do so. When the flour was unloaded, part of the cargo was found to have been damaged by the bilge water. The cargo was sold, the damaged part at a reduced price. The reduction in value exceeded the freight. The pursuer sued for the freight before the Judge Admiral and the defender pleaded his loss by way of defence. The Judge Admiral was satisfied that the damage to the flour had been due to the pursuers fault in failing to line the hold properly. In view of the fact that the defenders loss exceeded the freight, he assoilzied the defender. When the matter came before the First Division, the pursuer argued that his claim for the freight was liquid and that the defender had to pay that liquid debt leaving him to bring any claim for damages in a separate action. The First Division rejected that argument. The brief report does not reveal their reasoning. But, in reality, the defender was saying that the pursuer was in breach of contract because had failed to make appropriate arrangements for carrying the flour to Aberdeen. So the pursuer had to show that, in the circumstances, he had earned the freight by duly performing his contract to carry the flour. Since his claim for freight was therefore illiquid, the defender was entitled to plead in defence the illiquid claim for loss which he had suffered as a result of the pursuers failure to make appropriate arrangements for carrying the flour. (In fact, the line of cases reviewed and affirmed in Aries Tanker Corporation v Total Transport [1977] 1 WLR 185 indicates that the settled policy of English law, at least, is against allowing a claim in respect of cargo to be asserted by way of deduction from the freight. It is unnecessary for present purposes to decide whether the same would now apply in Scots Law.) In Johnston v Robertson (1861) 23 D 646 the parties had contracted for the pursuer to erect a poor house. The work was to be completed and the keys were to be delivered by a specified day, under a penalty of 5 per week of delay in completing it. The court held that this was not a penalty but a provision for pactional damages. Since the pursuers claim for the price was itself illiquid, there could be no objection to the defender seeking to establish his countervailing illiquid claim for the appropriate pactional damages in the event that the jury held that the pursuer had not completed the works in time. Depending on the finding of the jury as to whether the work had been done properly, and as to any sum due as liquidated damages for delay, the pursuers claim for the price would be reduced or, conceivably, extinguished. Retention of liquid debt for purposes of compensation In the cases I have been discussing the pursuers claim is not liquid. He has to establish it and, in that situation, the defender can oppose the pursuers illiquid claim for the freight or price with his own illiquid claim for damages arising out of the pursuers alleged failure to perform the obligation in question. A defender may, however, admit, say, that the work has been done, that the price has therefore been earned, and that the pursuer has a liquid claim for the price, but nevertheless maintain that the pursuer is liable to him in damages for loss which he suffered as a result of the pursuers failure to do the work within the time allowed by the contract. As Lord Justice Clerk Inglis recognised, 23 D 646, 655, that was, essentially, the nature of one aspect of the defence to the action in Johnston v Robertson: supposing the pursuer was entitled to claim the price, still, in consequence of the pursuers delay in executing the work, a counter claim [for damages] arises to the defender under another clause of the contract, on which he specially founds, and his defence under which he desires to try by his counter issues (emphasis added). In that part of his defence, the defender in Johnston v Robertson was seeking to retain payment of any sum, which he was otherwise due to pay as the price for the completed works, against his claim for damages for the loss which he had suffered as a result of the pursuers delay in completing them. In other words, the defender maintained that, even if the pursuer were to prove his claim and it became a liquid debt, he should still not be required to pay the debt unless and until his claim for damages for breach of another clause of the contract had been resolved. In effect, the defender was maintaining that the court should allow him to make his illiquid claim, for damages for the breach of the other clause, liquid so that he could then use that liquid sum to compensate any liquid sum which he was found to owe the pursuer. The point can be focused by a hypothetical example. Suppose that in January B buys an antique clock from a dealer, A. The parties agree that, although B is to become owner and the clock is to be delivered to him forthwith, the price is not to be payable until 1 June. In a separate clause of the contract the parties also agree that, in the period between January and 1 June A is to go to Bs house and renovate the clock. B is to pay him 30 per hour for his work. In fact, A fails to attend to do the renovations and B has to instruct another expert who charges a much higher rate. On 1 June B is undoubtedly under an obligation to pay the price in respect of the transfer of ownership and delivery of the clock. But he has a claim for damages for his loss due to As failure to carry out his obligation to renovate the clock. If the approach of the Extra Division, which I have identified at para 56 above, is right, then the mere fact that Bs obligation to pay the price of the clock is not the counterpart of As obligation to renovate it means that B can never be permitted to retain the price in respect of his claim for damages for As breach of that obligation even if that claim could be easily and speedily quantified and even if it were made the subject of a counter claim in the same process. B has to pay forthwith because A has delivered the clock and given him a good title. So the judge would have to grant A decree de plano for the price and allow him to enforce that decree against B. B would then be left to pursue his counter claim against A for damages. In effect, therefore, on the Extra Divisions approach, which Mr Currie adopted, retention would be confined to cases where the defender was simply withholding payment until the pursuer had proved that he had performed the particular obligation for which the price was the consideration. Retention of liquid debts under a contract would, in effect, be impossible. It would follow also that the court could never permit Tullis Russell to retain the price which is due under Clause 2 of the Assets Purchase Agreement in respect of their claim for damages for Inveresks alleged breach of Clause 16 of the Services Agreement even assuming that the two contracts could be construed as forming a single composite agreement. Lord Hope has examined the two contracts and their relationship in great detail and has emphasised that care should be taken not to lose sight of the overall purpose and unity of the transaction entered into by the parties. Approaching the matter in that way, he has concluded that Tullis Russells obligation to pay the total of the Initial Consideration and the Additional Consideration to Inveresk should be regarded as a counterpart of Inveresks performance of their obligations under both agreements. The transaction between the parties, involving an Asset Purchase Agreement and a (Transitional) Services Agreement, is of a very familiar, indeed commonplace, kind. And it may well be that, usually, it would be right to see the obligations in the two agreements as being related but not reciprocal. Here, however, leaving aside the matter of the coater machine and the associated fees, Clause 3.1 of the Services Agreement provides for payment of a monthly fee of 1m for the five months during which the services were to be provided. Clause 3.3 and part 4 of the Schedule contain elaborate provisions for the entire sum to be paid into an escrow account on completion or as soon as reasonably practicable thereafter. The total sum of 5m is the same as the Initial Consideration under the Acquisition Agreement. In these circumstances, it is hard to see these fees for the services to be supplied as being irrelevant to the real overall consideration that Tullis Russell are to pay for acquiring the assets. That factor points to Lord Hopes conclusion that, in this particular case, the two agreements have to be looked at together and that Tullis Russells obligation to pay the Additional Consideration to Inveresk should be regarded as a counterpart of Inveresks performance of their obligations under both agreements. It follows that, approaching the matter on the basis adopted by the Inner House and by counsel in argument before this Court, in agreement with Lord Hope, I would hold that, even if the Additional Consideration were ascertained, Tullis Russell would be entitled to withhold payment of that sum until the court decides whether Inveresk fulfilled their obligations under the Services Agreement. If it is held that they did, then Tullis Russell will, ipso facto, no longer be entitled to withhold payment. So decree will have to be granted against them for the Additional Consideration. Alternatively, if it is held that Inveresk breached the Services Agreement and so are liable in a sum of damages to Tullis Russell, then, by paying the damages, they, in effect, make good their failure to perform their obligations under the Services Agreement and become entitled to the Additional Consideration. But the liquid sum by way of Additional Consideration and the liquid sum by way of damages can be set off against one another. The appeal raises a further, fundamental, point which requires to be addressed, however. Although in this case the Court finds that the the Additional Consideration is a component of the counterpart of Inveresks obligations under both agreements, the hypothetical example of the clock which I have given in para 73 above suggests that there can be cases where a pursuer will have performed the obligation entitling him to payment of a particular sum, but the defender has a claim for damages for the pursuers breach of another clause in the contract. The Extra Divisions approach suggests that, in such a case, the defender could never be allowed to retain the price, since a party can only retain or withhold a sum which is not actually due, because the other party has failed to perform the obligation for which that sum is the consideration. But the authorities show, beyond all doubt, that, in certain circumstances, the court does permit a defender to retain a liquid debt which he would otherwise be obliged to pay to the pursuer. The necessary conclusion is that there is actually another type of retention which operates on a different basis in Scots Law. The Inner House did not refer to this second type of retention and counsel made no mention of it in argument even though, in their seventh plea in law, quoted at para 51 above, Tullis Russell claim to be entitled to retain any sum that is found due to the pursuers, pending the resolution of their claim for damages against Inveresk. If this Court, too, fails to mention the second type of retention, there is a risk that its existence will continue to be overlooked. This second kind of retention is closely related to compensation. The right to compensation is based on the Compensation Act 1592: Oure Souerane Lord and estaitis of parliament statutis and Ordanis that ony debt de liquido ad liquidum instantlie verifiet be wreit or aith of the partie befoir the geving of decreit be admittit be all Jugis within this realme be way of exceptioun Bot nocht eftir the geving thairof In the suspensioun or in reductioun of the same decreit. The Act provides that judges are to admit any liquid debt that can be instantly verified by writ or oath before judgment is pronounced. Suppose, for example, A sues B for 20,000 as the price of a car which B bought from A and which A has delivered to B. Suppose, further, that A owes B a liquid sum of 10,000 under, say, a bond. In As action for the price of the car, B can plead compensation. In other words, B pleads that As liability to pay him 10,000 under the bond should be set off against Bs liability to pay A 20,000 as the price of the car. In that situation, the effect of the plea of compensation is that Bs debt to A is reduced by 10,000. The court therefore orders B to pay, not the full price, 20,000, but only 10,000. Provided that the two debts are liquid, the basis of the debts does not matter. So, for instance, Bs obligation to pay 20,000 as the price of a car which he bought from A can be compensated by a judgment debt of, say, 20,000, arising out of an action of damages in which B sued A successfully for injuries which A negligently caused him in a ski ing accident. But, even when a defender cannot actually point to a liquid debt which is owed to him by the pursuer, he may insert a plea of compensation in his defences and refer to an obligation which is not yet liquid, but which he anticipates will become liquid. If the debt owed by the pursuer is indeed made liquid before the action against the defender is completed, then the defender will be able to compensate any sum for which he is found liable with the (now) liquid debt owed by the pursuer. But the pursuers action may look like being completed before the pursuers debt to the defender can be made liquid. In that event, the defender will want to delay the final disposal of the pursuers action so as to give him time to make the pursuers debt to him liquid and so be able to set it off against his own liability. This is where the law of retention comes in. In such cases the defender argues that, even if the debt which the pursuer owes him is not yet actually liquid, it can (readily) be made liquid or is indeed in the course of being made liquid. So the defender should not be obliged to pay any sum which he may owe the pursuer before the sum which the pursuer owes to him is made liquid. In other words, the defender argues that the court should allow him to retain any sum for which he may be found liable to the pursuer until the sum owed to him by the pursuer can be ascertained and made liquid. At which point, the defender will be able to set off the sum owed to him by the pursuer against the sum which he owes to the pursuer. The Compensation Act 1592 is clear enough: by its very terms, it applies only to the compensation of a liquid debt with another liquid debt. The whole point of this type of retention, however, is that, in certain circumstances, the court permits a defender to postpone payment of a liquid debt where the debt owed to him by his creditor is still illiquid. Echoing Lord Kames, Principles of Equity, p 344, Gloag explains, in Gloag and Irvine, Rights in Security, p 304, that The law of retention of debts is an equitable extension of the statutory right of compensation. In other words, the judges have allowed retention of debts where that would be equitable, having regard to the essential purpose of the Compensation Act. The equitable nature of retention for purposes of compensation The starting point for the development of the law of retention was the very stipulation in the Compensation Act that compensation is possible only between liquid debts, de liquido in liquidum. Writing in the later eighteenth century, in his Institute of the Law of Scotland 3.4.16, Erskine describes what amounts to a liquid debt for these purposes: Compensation is not regularly receivable where the debts on both sides are not clear beyond dispute. They must be ascertained, either by a written obligation, the oath of the adverse party, or the sentence of a judge. So the rule is that compensation is allowed only where the debts on both sides cannot be disputed. Erskine gives examples of such debts, before going on to say: Though the foresaid act 1592 requires that all grounds of compensation be instantly verified, yet by our uniform practice for near a century, which seems grounded on the Roman law, C.4.31.14, if a debtor in a liquid sum shall plead compensation upon a debt due by his creditor to him which requires only a short discussion to constitute it, sentence is delayed ex aequitate against the debtor in the clear debt, that he may have an opportunity of making good his ground of compensation, according to the rule, Quod statim liquidari potest, pro jam liquido habetur (punctuation and citation modernised). The important point to notice is that, in postponing decree in such circumstances, the court is exercising an equitable power (ex aequitate). In effect, from the seventeenth century onwards, the Court of Session had recognised that, in certain cases, it would be inequitable to force the defender to pay a debt and to ignore a countervailing debt owed by the pursuer, simply because that countervailing debt had not yet been ascertained in a written obligation, or by the pursuers oath or by a judgment. So the court would proceed on the basis of the old brocard to the effect that, if a debt can be made liquid in the near future (mox), it should count as a liquid debt. In other words, the court will not force a defender to pay a liquid debt owed to the pursuer, if a debt owed to him by the pursuer can be made liquid in the near future. In such a case the court will delay matters to allow the defender to make the debt owed by the pursuer liquid. This will enable the defender to compensate his liquid debt to the pursuer with the (now) liquid debt owed by the pursuer. The equitable nature of the courts power to delay is again emphasised in Logan v Stephen (1850) 13 D 262. A farmer sought to defend a claim for wages by the pursuer (variously described as his ploughman or his grieve) by reference to a claim based on an obligation of the pursuer as cautioner and security for a clerk who was alleged to have caused the farmer very large losses. The pursuer submitted that the defence was irrelevant. The First Division agreed and refused to allow the defender to retain the sum due to the pursuer as wages. Lord Cuninghame observed, at p 267: Our ancient Scots Act (1592) sanctions the pursuers plea, as it only admitted mutual claims which are liquid, to be compensated. We have no such case here. The ploughmans wages are liquid, while his masters claims are illiquid, and of a very unfavourable, if not an incredible aspect. No doubt, in practice, we sometimes allow counter claims not yet constituted, to be held pro jam liquido, when they admit almost of immediate ascertainment. But it is always a question of circumstances, and of sound judicial discretion and equity, in what cases that should be allowed. I cannot hang up a labourers wages, by such claims as those now in question. So the defender had to pay the wages that were due and, if so advised, seek to establish his claims against the pursuer in a separate action. Lord Cuninghame referred to the court allowing retention on the basis of a counter claim which admitted almost of immediate ascertainment. That is indeed the starting point. Plainly, much may depend on what will be involved in making the pursuers debt liquid. If, for example, it simply involves counting up the number of items sold to the pursuer at an undisputed price, any delay involved is likely to be short and the court may be disposed to allow it. Stair, Institutions of the Law of Scotland 1.18.6 and Bankton, An Institute of the Law of Scotland 1.24.28 refer to a rule of thumb that, if it would take the pursuer a day to prove his liquid debt, the defender would be given a day to prove and liquidate his grounds of compensation. It would be a very different matter if, on the other hand, the defenders claim were for damages and he had not even begun proceedings against the pursuer. In general, the court will not permit retention in that kind of case, since the delay is likely to be considerable and the outcome uncertain. But, as the cases show, since the court is exercising an equitable power, there are no absolutely hard and fast rules. Early cases on retention for the purposes of compensation In Muir and Milliken v Kennedy (1697) M 2567 a minor was sued as heir to his father, for a sum in a bond of caution granted by his father. The court allowed the defender time to show that the debt had already been paid. He then craved compensation for a sum allegedly owed to the estate on the ground that one of the pursuers had stayed for several years in his fathers house. The pursuers objected that this claim was not liquid. The Lords, considering the favour of this case, being a minor and the heir of a cautioner, and given that the pursuers claim was being delayed in any event to allow the defender to try to prove that the debt had been paid, gave him a term to prove his compensations, seeing quod statim potest liquidari habetur pro jam liquido. The reporter adds: yea, the Lords have allowed this without these favourable circumstances. In Seton (1683) M 2566, the court seems to have been influenced by the fact that the defender was a widow. She had been charged on a bond granted by her husband. She defended the action on the basis that the pursuer had owed her husband freight under a charterparty. The pursuer argued that the debt was not liquid, because the defender would need to prove that her husband had made the voyages. Initially, the court upheld that objection. The defender offered to remit the matter to the pursuers oath. The court then allowed the matter to be proved prout de jure (by any means permitted by law) referring again to the quod mox liquidari brocard. The court decerned for the sum in the bond, but superseded extract for three or four months, so that if the debt be liquidate betwixt and that time, then the compensation was to be received. In other words, the court granted decree for the debt in the bond, but directed that it was not to be enforceable for three or four months, to give the defender time to establish the claim for freight, which could then be set off against the debt under the bond. The reporter thought that this went too far and though it be materially just, yet it is a great relaxation of our antient form. In Brown v Elies (1686) M 2566 the defender was again charged on a liquid bond. He claimed that the pursuers father, who had assigned the bond to him, had actually, by virtue of a trust, uplifted and intromitted with sums equivalent to the debt under the bond. Again, the argument was that the defenders claim was not liquid. Under reference to various writers, there was discussion of how long the court could give a defender to liquidate a debt. In the event, the court gave him two weeks to do so. This was then extended for a further six weeks. But more than six months after that, due to difficulties in getting evidence from someone in the Highlands, the court allowed a further extension of nearly two months. Plainly, the court took the view that it could allow whatever period it thought appropriate in the particular circumstances. Whether or not all, or indeed any, of these cases would be decided in the same way today does not matter for present purposes. Rather, they are significant because they show a range of circumstances in which the court can allow a defender to retain a liquid debt. In particular, first, the cases demonstrate that the court is not hamstrung by the requirement that, for compensation, the debts must be liquid. That requirement is to be treated with a certain discretion cum aliquo temperamento, to use the expression in one of the cases. Once that is admitted, in Lord Cunninghames words in Logan v Stephen (1850) 13 D 262, 267, it is always a question of circumstances, and of sound judicial discretion and equity. In other words, it is a matter for the court to decide, by an application of judgment to all the relevant circumstances, whether to delay the proceedings to give the defender the opportunity to make the pursuers debt to him liquid. Secondly, since a liquid contractual debt can be compensated by a liquid debt arising out of a completely different contract or on a completely different basis, the court must equally have the equitable power to allow the defender to retain a liquid contractual debt to allow the defender to make any other kind of debt liquid. Whether the court will, in practice, do so depends on the policy it adopts and there is, of course, no reason why the policy adopted by the court in the circumstances of the seventeenth century should necessarily be appropriate today. Thirdly, the court has more than one method at its disposal for giving effect to a claim to retain a sum until a countervailing debt can be made liquid. As in Brown v Elies and Muir and Mulliken v Kennedy, it can allow the defender to retain the debt until the circumstances of the debt allegedly due by the pursuer can be clarified. Alternatively, as in Seton, the court can grant decree for the sum sought by the pursuer, but supersede extract to give the defender time to prove the pursuers debt, which can then be set off against the sum in the decree. Later cases on retention for the purposes of compensation The same general approach can be seen in the nineteenth century cases, although by this time the court was anxious to emphasise that, as a rule, justice requires that a defender should not be allowed to postpone his liability to pay a liquid debt by reference to an illiquid debt of the pursuer. Lord Cranworth LC made that point in an obiter passage in National Exchange Company of Glasgow v Drew and Dick (1855) 2 Macq 103. He characterised an argument of the Solicitor General for the respondents as involving setting off against a liquidated demand something that may be recovered of the nature of unliquidated damages. The Lord Chancellor continued, at pp 122 123: I think, that not only by the law of England and of Scotland, but by the law of other civilized countries, that cannot be done; the inconvenience of it would be excessive. If a person has an actual liquidated money demand, which he seeks to enforce, the amount undisputed, it would be unjust, or might be unjust to him, to involve him in a question whether the person who is bound to pay him that liquidated sum may or may not have a right of action against him upon some collateral matter in respect of some damage on account of which he may have a right of action, for a fraudulent representation, or for an assault, or for a trespass, or any other of those various wrongs which may be inflicted upon the man, and for which he may be entitled to compensation. It is clear, in my opinion, that that cannot be the case either by the law of England, or the law of Scotland, or, as I believe, by the law of any other country. The passage has all the sweeping confidence of the Victorian Age. Even so, the Lord Chancellor is careful to say that allowing in such collateral illiquid claims would be, or might be, unjust to the pursuer thereby leaving open the possibility that, in certain circumstances, it would not be unjust. Ultimately, therefore, it is for the judges, having regard to this general rule and the other rules that they have developed, to decide whether it would be just and equitable, in the particular circumstances, to allow a defender to retain a liquid sum which he would otherwise be bound to pay. Some twenty years later Lord Deas observed in Pegler v Northern Agricultural Implement Co (1877) 4 R 435, 439: The rule which prevents illiquid claims being set off against liquid claims is founded in justice. It is intended to prevent parties from being kept out of their money by claims which may turn out to be altogether groundless, and which may be put forward for the mere purpose of delay. So, for instance, in Thomson v Paxton (1849) 11 D 1113 the court refused to sist an action for payment of instalments of rent, which were disputed, in order to allow the defenders action of damages against the pursuer, for his loss due to the disrepair of the house, to be conjoined. Nevertheless, Lord Justice Clerk Hope did suggest, at p 1115, that, before extract, the court might take account of the action of damages. He was indicating that, if the defender established his claim for damages before the decree for rent became enforceable, then, at that stage, the court would allow the one liquid judgment debt to be set off against the other. Similarly, as already explained, in Logan v Stephen (1850) 13 D 262, the court refused to postpone decree for the pursuers wages. But the judgments make plain that the judges were weighing up the equities and that, in doing so, they were influenced by the fact that the pursuers claim was, in Lord Fullertons words, at p 266, a demand so liquid, so urgent, and even alimentary in its nature, as that for wages, while the defenders claims were problematical, to say the least. In Stewart & Co v J & A Dennistoun (1854) 16 D 1061 the pursuers were the owners of a vessel chartered by Morton & Co. The defenders had undertaken to pay a specified sum, representing two thirds of the freight due by Morton & Co, on production of a certificate that a full cargo of flour had been loaded at New Orleans to be taken to Hobsons Bay in Victoria. The certificate was produced. Morton & Co ordered the defenders not to pay, however, on the ground that the pursuers had not, in fact, loaded a full cargo. The pursuers sued the defenders for the specified sum and, of consent, Morton & Co were sisted as parties. Morton & Co had meanwhile raised an action for damages against the pursuers in the Court of Session. The defenders accepted that, in view of the certificate, the pursuers had a liquid claim against them, but submitted that the action should be allowed to lie over ex aequitate, pending the resolution of Morton & Cos action of damages against the pursuers. The First Division held that the sum should be paid. Lord President McNeill acknowledged, however, that the court had an equitable power to delay decree for payment, when he observed, at p 1064: Perhaps if the case had been set down for trial next week, and no risk as to the condition of parties, it would be a different matter. But when the defence is in reference to an action of damages involving an inquiry into disputed facts in New Orleans and Hobsons Bay, it becomes a more serious question for the intervention of the Court. Similarly, Lord Robertson said, also at p 1064, Had this action been with issues adjusted, and set down for the next sittings, one might have been induced to interfere ex equitate: but it will never do to suspend this liquid obligation till proofs are taken at New Orleans and Hobsons Bay. In short, the circumstances favoured following the general rule. Munro v Macdonalds Execs (1866) 4 M 687 shows the court exercising its jurisdiction in the defenders favour. The pursuer sued executors for payment of a legacy of 100. The executors did not dispute the legacy but pleaded that it had been compensated and extinguished by sums of money belonging to the deceased which the pursuer, who had been his servant, had received from him and retained. The pursuer admitted that he had received 200 from the deceased, but said that it had been a gift. The executors had raised an action of count, reckoning and payment against the pursuer for these sums about a week before he raised his action against them. In his action the Lord Ordinary granted the pursuer decree for payment of the legacy. The executors reclaimed. When the reclaiming motion came before the Inner House, the jury trial in the executors action was due to take place the following week. The First Division decided to supersede consideration of the reclaiming motion until the following term, by which time the result of the jury trial would be known. Lord President Inglis said, at p 688: I do not like to disturb the maxim, that a liquid claim cannot be met by one that is illiquid. Still the maxim is subject to exception, if the claim is in such a position that it may be immediately made liquid. Lord Curriehill also noted, at p 688, that the rule that an illiquid claim cannot be pleaded by way of compensation to a liquid claim is not without exception. If a claim is in the course of being made liquid, it may be pleaded by way of compensation. The word statim in the rule, as expressed in Erskine, implies some discretion on the part of the Court. A great deal of inquiry may be necessary in order to ascertain and make a claim liquid. But if it is in the fair course of being made liquid by decree at an early date, and there is no allegation of unnecessary delay, I think that the Court is entitled to exercise a discretion. The fact that the court resolved the problem simply by postponing consideration of the defenders reclaiming motion is a further illustration of the flexible approach that the court can adopt when dealing with such matters. Much the same happened in Ross v Ross (1895) 22 R 461. The pursuer was the widow of Sir Charles Ross who died in 1883 and was succeeded by his pupil son. From then until 1893, when her son attained majority, the pursuer had acted as his sole tutor and curator. She was entitled to an annuity of 2,000 under her marriage contract and certain bonds of provision. In 1894 she raised an action against her son for payment of two instalments of the annuity. Her son admitted that the pursuer was entitled to the instalments, but denied that the sums were due, under reference to an action of count, reckoning and payment which he had brought against her, concluding for payment of 70,000 as the balance of her intromissions as his sole tutor and curator and as an individual. He had also raised an action against her, as executrix of the deceaseds moveable estate, for payment of legitim. The son pleaded compensation and also that he was entitled to withhold payment of the annuity because of the pursuers failure to pay him legitim or to account for her intromissions with the estate. The Lord Ordinary repelled the sons defences and granted decree for payment of the annuity. He reclaimed. In this case also, the First Division decided to supersede consideration of the reclaiming motion until there should be some change of circumstances. They did so by sisting the action and leaving it open to either party to move therein. Again, the judges appear to have been very much influenced by their appreciation of the particular circumstances especially, the huge sums which Lady Ross had apparently spent while tutor and curator, her complete inability to produce accounts for her spending, and the fact that she was simultaneously claiming payment of the annuity, while, in her capacity as executrix and sole intromitter with the moveable estate, claiming the right to retain the capital value of the same annuity. In these exceptional circumstances Lord Adam did not think, 22 R 461, 464, it would be consonant with justice to give this lady immediate decree for the sum she claims. Lord MLaren explained the position in this way, at pp 464 465: In disposing of the pleas in this case I think that the Lord Ordinary has rightly dealt with the plea of compensation, because that is a matter of statutory regulation, and the plea is confined to cases where both debts are liquid or capable of immediate ascertainment; but then there is another principle under which one obligation may be suspended until the performance of a counter obligation the principle of retention, and that, not being subject to the conditions of any statute, must be regarded as an equitable right to be applied by the Court according to the circumstances of each case as it shall arise. The doctrine has received much extension in cases of bankruptcy and insolvency But the principle is not limited to bankruptcy cases, and it seems to me that the circumstances of the present case constitute a very clear ground for its application, because Lady Ross while in the management of her sons estates appears to have wholly neglected the duty of keeping strict accounts, which is incumbent upon every administrator of the property of others, and when she is called upon to account she states that the whole of the money has been expended, and that of a very large sum, amounting to nearly 4,000 a year, she is unable to give any particulars. Now, that is a position which no guardian or administrator is entitled to assume, and upon the statement of these accounts, and also the claim of legitim, I cannot doubt that, if it appears to the Court that there is a probability that Lady Ross has already in her hands as much of her sons money as would satisfy this jointure, she would not be entitled to immediate decree. The judgment which I understand your Lordship will pronounce will be one merely suspending the procedure in this case, and if it turns out, contrary to all the probabilities, that the whole of the sons income has been legitimately and properly expended by his mother, and also that there is no legitim due to him, then of course Lady Ross will be entitled to decree for her jointure. Although Lord MLaren refers to the principle under which one obligation may be suspended until the performance of a counter obligation, he is not using counter obligation to refer to an obligation for which the defenders obligation to pay was the consideration. In that case, after all, the defenders obligation to pay the annuities to the pursuer arose out of the marriage contract and bonds of annuity. Any counter obligations on her part arose out of her administration of the estate between 1883 and 1893 and out of her interest as executrix and universal intromitter with the moveable estate from which the legitim would have to be paid. (It is unnecessary to consider whether all these alleged debts would have been debts owed by Lady Ross as an individual.) Conclusions on retention for purposes of compensation Ross v Ross illustrates the fundamental point that, in cases of this kind, the defender seeks to retain a sum of money which is actually due to the pursuer in that case, the instalments of his mothers annuity. So, either the pursuer has performed the obligation for which the obligation to pay the sum is the consideration or else, as in the case of a legacy, the defenders obligation to pay the sum is not the consideration for any obligation on the pursuers part. Moreover, in Ross v Ross the claims against Lady Ross arose out of quite different circumstances. Yet the court had the equitable power to allow her son to retain the instalments of the annuity owed to her by sisting the action to see what happened in the other actions between the parties. In the event, Lady Ross seems to have had the better of her son: Ross v Ross (1896) 23 R (HL) 67 (the accounting action); Ross v Ross (1896) 23 R 802 (the action for legitim) and 1024 (action for equitable compensation). If the court has the power to allow retention of a sum due under a contract when the illiquid debts are alleged to arise out of wholly different circumstances, a fortiori, the court must have power, in an appropriate case, to allow the defender to retain a sum which is due under one clause of a contract against a claim of damages for the pursuers breach of a different clause of the contract. The same must also apply where the illiquid claims on which the defender relies arise out of different clauses in related contracts which give effect to a single transaction. Whether the court actually considers it right to exercise that power in the defenders favour will depend, however, on a consideration of all the circumstances. Given that the court decides, on the application of an equitable test, whether to allow the defender to retain a sum which he would otherwise be bound to pay, the defender does not have any antecedent right to retain the debt. Rather, a defender who has an illiquid claim against the pursuer must ask the court, in the exercise of its discretion or judgment, to allow him to retain the liquid debt pending the resolution of his claim against the pursuer. For that reason, Tullis Russells seventh plea in law, that they are entitled to retain any sum found due to Inveresk, is inappropriate as are references, in this context, to a right of retention. Since the defender has no right to retain the sum in the circumstances, he has to move the court to exercise its equitable power to allow him to do so. For this reason, the subject is, in many ways, conveniently and appropriately treated in the chapter on motions to sist process in Ae J G M Mackay, The Practice of the Court of Session vol 1 (1877), p 509, and Manual of Practice in the Court of Session (1893), p 266. While the court has this equitable power, the judges constantly remark that an illiquid claim cannot be set off against a liquid claim. See, for example, McConnell & Reid v W & G Muir (1906) 14 SLT 79 and Niven v Clyde Fasteners 1986 SLT 344. When they use this formula, the judges are really saying that the established general rule is that the court will not permit a defender to postpone payment of a liquid debt so as to have the opportunity to make liquid what is presently an illiquid claim against the pursuer and then to set that liquid debt off against the liquid debt which he presently owes to the pursuer. A clear application of that rule is found, for instance, in Scottish North Eastern Railway Co v Napier (1859) 21 D 700. The general rule simply reflects what is considered to be sound legal policy, and so what is usually the equitable course to pursue. The reasons for the policy are outlined by the Lord Chancellor in National Exchange Company of Glasgow v Drew and Dick (1855) 2 Macq 103, 122 123, quoted at para 91 above, and by Lord Deas in the passage from Pegler v Northern Agricultural Implement Co (1877) 4 R 435, 439, quoted at para 93 above. I would not weaken that general rule in any way. I therefore emphasise that the court will depart from that general rule and allow retention, to give the defender the opportunity to make his illiquid claim against the pursuer liquid, only when, for some reason, that would be the just and equitable way to proceed in the particular circumstances. The fact that the defenders claim against the pursuer arises out of the same contract is a relevant factor. But Stewart & Co v J & A Dennistoun (1854) 16 D 1061, discussed at para 96 above, shows that the court would consider taking the same approach where the damages claim arose out of what could be regarded as a different aspect of the same transaction. The Present Case Obviously, given the decisions on the other points, there is no occasion for the Court to exercise its equitable power in the present case. Had it been appropriate to do so, the Court would have required to consider the overall situation at the present time. When the Extra Division gave judgment in June 2009, the proof in the action at the instance of Tullis Russell lay some months in the future. We would have had to consider the position when the proof is partly heard and is due to be completed in June. What the outcome will be we have, of course, no way of knowing. The starting point would be that, as a general rule, payment of a liquid debt is not to be postponed just because the defender has an illiquid claim against the pursuer. Here, however, the defenders have raised an action to enforce their claim. The action has been sent for proof. The defenders do not appear to have delayed in taking that action forward and it has reached an advanced stage. Even assuming in Inveresks favour that the Assets Purchase Agreement and the Services Agreement are to be treated as separate contracts, they are unquestionably closely interlinked and form part of the same overall transaction. Indeed, the Services Agreement is really ancillary to the Assets Acquisition Agreement in the sense that certain of Inveresks obligations under it are designed to forward the interests of Tullis Russell under the Assets Purchase Agreement. The parties would never have entered into the Services Agreement if they had not been entering into the Assets Purchase Agreement at the same time. So Tullis Russells claims for damages relate to breaches of an agreement which is inextricably linked with the agreement under which Inveresk are suing them for payment in the present action. The sums sought are large. Moreover whatever the technicalities as Lord Hope has explained, the reality is that, in substance, Tullis Russell are claiming damages for what they say was a reduction in the value of the assets which they bought, due to a breach by the sellers, Inveresk, of their undertaking, inter alia, to enable Tullis Russell to obtain the full benefit and value of those assets. I would have regarded these circumstances as being, potentially, sufficiently special to justify a departure from the general rule that payment of a liquid debt is not to be postponed because the defender has an illiquid claim against the pursuer. Depending on the position at the relevant time, it might well therefore have been just and equitable to postpone the requirement for Tullis Russell to pay any sum, due to Inveresk by way of Additional Consideration, pending the decision in Tullis Russells action against them. But since the Court has concluded that Inveresk have still to establish the amount of any Additional Consideration, it is unnecessary, and would be unprofitable, to speculate on what method (e g, a sist) the Court would have adopted to achieve that end. Conclusion For these reasons, I would allow the appeal and make the order proposed by Lord Hope. LORD COLLINS I agree with Lord Hope and Lord Rodger that the appeal should be allowed for the reasons which they give. I add only that, although the approach may be different, English law would reach a similar result. In English law a cross claim may give rise to an equitable set off if it flows out of and is inseparably connected with the dealings and transactions which give rise to the claim: Bank of Boston Connecticut v European Grain & Shipping Co [1989] AC 1056, 1102. There can be a sufficiently close connection even though the claim and cross claim arise out of two different contracts: BIM Kemi AB v Blackburn Chemicals Ltd (No 1) [2001] 2 Lloyds Rep 93 (CA). Even where the strict requirements of set off are not fulfilled, for example because there is not the requisite identity of parties, the court may prevent injustice by granting a stay of execution of the judgment on the claim until resolution of the cross claim. In Burnet v Francis Industries plc [1987] 1 WLR 802 (CA) it was held that where a judgment debt was owed by a subsidiary company to a third party, and where the subsidiarys parent company had a claim against the same third party, the court had jurisdiction to order a stay of execution of the judgment, applying Canada Enterprises Corp Ltd v Macnab Distilleries Ltd [1987] 1 WLR 813n (CA, decided in 1976), a case involving more complex facts. LORD CLARKE I also agree with Lord Hope and Lord Rodger that the appeal should be allowed for the reasons which they give. I have read with great interest Lord Rodgers analysis of what he calls a second kind of retention. His reasoning and conclusions both seem to me to be convincing, although I am reluctant to express a final view of my own on this aspect of the law of Scotland without hearing argument. Finally, I agree with the views which Lord Collins has expressed about English law. |
What does article 5 of the European Convention on Human Rights mean by deprivation of liberty in the context of control orders made under the Prevention of Terrorism Act 2005 (the 2005 Act)? This was the central question before the House of Lords in Secretary of State for the Home Department v JJ [2008] 1 AC 385 and, by a majority of three to two, it was held that deprivation of liberty might take a variety of forms other than classic detention in prison or strict arrest; . the courts task was to consider the concrete situation of the particular individual and, taking account of a whole range of criteria including the type, duration, effects and manner of implementation of the measures in question, to assess their impact on him in the context of the life he might otherwise have been living . So states the head note to the report, to my mind entirely accurately. Lord Hoffmanns view, shared by Lord Carswell, that the concept of deprivation of liberty [should be confined] to actual imprisonment or something which is for practical purposes little different from imprisonment (para 44) did not prevail. Nevertheless, as Lord Bingham pointed out in Secretary of State for the Home Department v E [2008] 1 AC 499, 553 (para 11) one of the two associated appeals also then before the House what principally must be focused on is the extent to which the suspect is actually confined: other restrictions (important as they may be in some cases) are ancillary and [can] not of themselves effect a deprivation of liberty if the core element of confinement . is insufficiently stringent. The Committee in both cases recognised that Guzzardi v Italy (1980) 3 EHRR 333 was still the leading Strasbourg authority on the question and so it remains to this day; no subsequent decision of the ECtHR casts the least doubt upon the correctness of the majority view in JJ. In the context of control orders, it therefore follows that within what has been described as the grey area between 14 hour and 18 hour curfew cases, other restrictions than mere confinement can tip the balance in deciding, as in every case the judge has to decide as a matter of judgment, whether the restrictions overall deprive the controlee of, rather than merely restrict, his liberty. It is true that some passages in my own opinion in JJ notably those stating (para 105) that, [p]ermanent home confinement beyond 16 hours a day on a long term basis necessarily to my mind involves the deprivation of physical liberty, and (para 108) that provided the core element of confinement does not exceed 16 hours a day, it is insufficiently stringent as a matter of law to effect a deprivation of liberty suggest that (subject to any future Strasbourg ruling on the point (para 106)) a curfew up to and including 16 hours will always be permissible, a longer curfew never. The fact is, however, that neither Lord Bingham nor Lady Hale, the other members of the Committee constituting the majority, subscribed to this suggestion and, indeed, my own express acceptance of the relevance of a whole range of criteria such as the type, duration [and] effects of the order was hardly consistent with the curfew length being the sole criterion of loss of liberty. I nevertheless remain of the view that for a control order with a 16 hour curfew (a fortiori one with a 14 hour curfew) to be struck down as involving a deprivation of liberty, the other conditions imposed would have to be unusually destructive of the life the controlee might otherwise have been living. Mitting J suggested how that might be in Secretary of State for the Home Department v AH [2008] EWHC 1018 (Admin), in a summary of the principles emerging from JJ which Keith J adopted in his judgment in the present case: Social isolation is a significant factor, especially if it approaches solitary confinement during curfew periods. Quite how to balance on the one hand the precise length of curfew and on the other hand the degree of social isolation involved in any particular case presents a difficulty: the two are essentially incommensurable. But that problem, the inescapable consequence of the majority view having prevailed in JJ, is not, in fact, the particular problem arising in the present appeal. Rather the issues for the Courts determination here have been formulated as follows: (a) Whether conditions which are proportionate restrictions upon article 8 rights can tip the balance in relation to article 5, ie whether they can be taken into account in holding that a control order is a deprivation of liberty when, absent those restrictions, it would not have been held to be such. (b) Whether the judge can take into account subjective and/or person specific factors, such as the particular difficulties of the subjects family in visiting him in a particular location, when considering whether or not a control order amounts to a deprivation of liberty. (c) Whether it was permissible for the Court of Appeal to interfere with the first instance judgment on the ground that the judge had relied on findings of fact in respect of article 5 which were inconsistent with his findings of fact in respect of article 8. With those few introductory paragraphs let me turn to the facts of the present appeal although not in any great detail. Where, as here, no appeal lies from the judge at first instance except on a question of law (section 11(3) of the 2005 Act), it is seldom necessary to explore the facts in detail. Still less is that necessary where not only are the few nominated judges who hear control order appeals properly to be regarded as expert tribunals in this difficult and sensitive field (and so not readily open to challenge see the judgment of Lord Phillips at para 118 and that of Lord Hope at paras 218 219, in RB (Algeria) v Secretary of State for the Home Department [2009] 2 WLR 512) but (rather like SIAC in the context of expulsion cases) they are vested with particular powers and procedures above all the use of closed material under the special advocate scheme which make [their] determinations peculiarly inappropriate for further factual reappraisal and appeal (para 253 of my judgment in RB (Algeria)). This very case was the subject of a six day hearing before Keith J. Anyone interested in its detailed facts will find them in his open judgment [2008] EWHC 2001 (Admin); his closed judgment is not, of course, in the public domain. Put shortly the facts are these. The appellant (AP) is an Ethiopian national. He came to this country with other members of his family in 1992 at the age of 14. On 6 October 1999 he, his siblings and their mother were granted indefinite leave to remain. In May 2005 he travelled to Somalia and then Ethiopia. On 22 December 2006, upon his detention by the authorities in Ethiopia, the Secretary of State decided to exclude him from the UK: he was by then suspected of involvement in terrorism. On APs return to the UK on 28 December 2006 he was duly refused leave to enter and, pending removal, detained under immigration powers until July 2007 when he was released on bail under stringent conditions. The Secretary of State, however, withdrew her decision to exclude AP from the UK when, on 10 January 2008, she was granted permission to make a control order against him. The control order subjected AP to a 16 hour curfew and electronic tagging, together with a number of other restrictions on association and communication such as are usually imposed in these cases, and at first required AP to live at an address in Tottenham, North London. APs family, friends and associates had always lived in the London area. Subsequently, on 21 April 2008, the Secretary of State modified the terms of the control order, requiring AP to move to an address in a Midlands town some 150 miles away. It was that modification and APs appeal against it which has given rise to these proceedings. Even when the matter was before the Court of Appeal there was no dispute about the need for a control order, only about its terms. On 12 August 2008 Keith J allowed APs appeal against the modification and, pursuant to section 10(7)(b) of the 2005 Act, quashed the obligation to live in the Midlands [2008] EWHC 2001 (Admin). On 15 July 2009 the Court of Appeal (Wall and Maurice Kay LJJ, Carnwath LJ dissenting) allowed the Secretary of States appeal against Keith Js determination [2009] EWCA Civ 731. As it happens, the appeal was by then academic. Not only had the Secretary of State, on the very day after Keith Js order, served a modified control order on AP reducing his curfew from 16 to 14 hours albeit maintaining the obligation to reside in the Midlands but, on 2 July 2009, she had actually revoked the control order having in the meantime decided once again that AP should be deported on national security grounds and until then detained under immigration powers. In fact, since 20 July 2009, AP has been on bail pending deportation on conditions, including residence in the Midlands, similar to those of the control order save that the curfew period is now 18 hours. Whilst, however, the outcome of the appeal is no longer relevant for AP himself, the points it raises are said to be of some general importance with regard to control orders. This further appeal is brought by leave of the Supreme Court granted on 4 March 2010. Such additional facts as are material to the issues now arising appear from the following critical paragraphs in Keith Js determination (quoted also by the Court of Appeal): 86. The justification for relocating him outside London was to make it more difficult for him to see his extremist associates . Given that there has been a concentration of Islamist extremists in London, there is a need to remove AP from that milieu. 87. This justification has to be balanced against the incontestable hardship for AP in being isolated from his mother and his brother. His evidence was that while he was in Tottenham, they would visit him about twice a week, and that every week he would see his sisters three children who he would take to the park. His move has had a profound impact on how often he sees them. His mother has not visited him at all, and his brother has visited him just the twice. That is just as upsetting for his mother as it is for him, because at present she needs AP around more than ever. That is compounded by the fact that he does not know anyone in the town where he now lives, and sometimes speaks to no one in the course of the day other than short calls to his solicitors or to his mother and his brother. 88. It is true that the town where he now lives is not that far from London. The journey by rail takes about 1 hours, and trains travel every half hour or so. It is also true that there is no limit on the length of time APs mother and brother can spend with him if they choose to visit him, and there is . no need for them to seek prior Home Office approval. But the practical difficulties of visiting him are not inconsiderable, bearing in mind that his mother now looks after his sisters three young children. She cannot go to the town where AP now lives on those days when she has to take the children to, or collect them from, school, and if she was to go to that town, she would have to take the children with her. It is said that she cannot go to that town without APs brother, because she has never left London alone. The only day of the week he could go when the children are not at school would be on Sundays. But these practical difficulties are not insuperable. The fact is that they could visit AP en famille on Sundays, as well as on other days of the week outside the school terms, and they could travel at off peak times to get the advantage of lower fares. 89. Having said that, there is unquestionably another significant hardship for AP in having to live in the town where he now lives. It is difficult for him to feel part of the local community. He claims that the local Muslim population comes for the most part from Bengal and Pakistan. They are a close knit and closed culture. No one in the mosque has welcomed him into the community, or asked him how he finds the area or even what his name is. The Imam shows no interest in him, though that may be the product of language differences. The mosque has simply become a place to pray. It has not become either the spiritual or social focus of his life. He has spotted the occasional Ethiopian or Eritrean, but he has not tried to befriend them because he does not want to burden them with his problems. He goes to the gym, but people there see his tag and naturally think that he is a criminal. Although he has tried to explain what a control order is, that tends to make things worse. All in all, these experiences merely serve to reinforce his sense of alienation. 93. At the end of the day, the issue boils down simply to a matter of judgment. Moving him out of London altogether is the most effective way of reducing the chances of him maintaining personal contact with those of his associates in London who are or may be Islamist extremists. Giving due, but not undue, deference to the view of the Secretary of State on the topic, my opinion is that, but for the view I have reached on the impact of article 5 of the Convention, the need to ensure that AP does not maintain personal contact with those of his associates in London who are or may be Islamist extremists would have made it necessary, in order to prevent or restrict his involvement in terrorism related activity, for him to be removed from London altogether. Balancing that need against the undoubted hardship which AP experiences as a result of having to live in the town where he now lives, the view I would have reached is that the move was not a disproportionate response to that need. 95. although the paradigm examples of deprivation of liberty are detention in prison and house arrest, deprivation of liberty can take many other forms, and the courts function is to look at the package of measures as a whole . a sense of social isolation would be felt particularly acutely where the controlled person was required to live in an area unfamiliar to him in which he had no family, friends or contacts. If he was cut off from his old haunts and acquaintances, his ability to lead any kind of normal life during non curfew hours as well as curfew ones would be affected . I would characterise it as a form of internal exile . 97. It is the combination of the equivalent of house arrest up to the maximum period identified by Lord Brown [viz 16 hours], and the equivalent of internal exile which makes AP so socially isolated during the relatively few hours in the day when he is not under house arrest, coupled with his inability to make even social arrangements because pre arranged meetings (otherwise than with his mother and his brother) are prohibited, which lead me to conclude that the obligations imposed on him fall on the side of the line which involves the deprivation of liberty rather than the restriction of movement . [Had] he remained in London, so that he could still see and be visited by his mother, his brother and his sisters three children, my view would have been different. In summary, Keith J rejected APs case under article 8 on the ground that the interference with his family life was justified and proportionate in the interests of national security but decided that the overall effect of a 16 hour curfew and APs social isolation (particularly through his being separated from his family) constituted an article 5 deprivation of liberty. As Maurice Kay LJ was later to note, the element of social isolation . is rather greater in the present case than in the JJ cases, where the relocations were within or close to London. But for the difficulties of the family visiting AP in the Midlands, the judge made plain, he would not have found that the control order involved a deprivation of liberty. Maurice Kay LJ, giving the leading judgment in the Court of Appeal, held Keith J to have been wrong in law to permit the issue of family visits to tip the balance. [H]e was wrong . to allow the failed article 8 case to prove decisive in the article 5 case (para 32). Wall LJ agreed with that and (para 37) described it as the contradiction at the heart of the judgment. Whilst recognising (para 38) that it was established law that a restriction relevant to an article 8 claim, even if not such as to establish a breach of that article, may be relevant to a claimed breach of article 5, he nevertheless concluded (para 39): There is, in my judgment, a substantial difference between taking article 8(1) factors into account when discussing article 5 on the one hand, and, on the other, of treating them as determinative of, or, as Maurice Kay LJ puts it, as tipping the balance in relation to an article 5 determination. In my judgment, the judge has done the latter, and it is principally for this reason that I find myself in respectful disagreement with him. It is these holdings of the majority which give rise to the first of the issues now identified for decision (para 4(a) above) and with the best will in the world the answer to it is surely an obvious yes. If an article 8 restriction is a relevant consideration in determining whether a control order breaches article 5, then by definition it is capable of being a decisive factor capable of tipping the balance. The weight to be given to a relevant consideration is, of course, always a question of fact and entirely a matter for the decision maker subject only to a challenge for irrationality which neither has nor could have been advanced here. All this is trite law and indeed the contrary was not argued before us. Issue 2 asks whether the judge can take into account subjective and/or person specific factors, such as the particular difficulties of the subjects family in visiting him. Oddly, this was not a question addressed by the Court of Appeal although it had been touched on in the Secretary of States grounds of appeal before them. As I understand Mr Tam QCs submission for the Secretary of State, it is that in assessing the weight to be given to the restrictive effects of a condition such as that imposed on AP here to reside in the Midlands, the judge should ignore everything that depends on the individual circumstances of the family for example, on the facts of this case, that APs mother has never left London alone and that during term time, because of the children, Sunday is the only day the family can travel. Any health problems suffered by the family (frailty to use Mr Tams word) must be ignored; so too poverty. If a differently organised and wealthier family could readily have visited, runs the argument, it cannot avail the controlee that his own particular family could not. Mr Tam sought to find support for this argument in the judgments of the majority in JJ such as Lord Binghams statement (para 15) that the Courts task is to assess the impact of the measures in question on a person in the situation of the person subject to them. The point Lord Bingham was making there, however, as the immediately following citation from Engel v The Netherlands (No 1) (1976) 1 EHRR 647 showed, was that certain people in Engels case soldiers are in an inherently different situation from others: A disciplinary penalty or measure which on analysis would unquestionably be deemed a deprivation of liberty were it to be applied to a civilian may not possess this characteristic when imposed upon a serviceman. That passage says nothing about ignoring the controlees or his familys individual circumstances and, indeed, Lord Bingham earlier in the paragraph had stated that what has to be considered is the concrete situation of the particular individual. There is nothing in the Secretary of States argument. By the same token that it is relevant that, whilst AP must live in the Midlands, his family are in London, so too it is relevant whether their circumstances are such that their distance away so disrupts contact between them as to cause or substantially contribute to APs social isolation. Plainly the family could not be allowed to thwart what would otherwise be an appropriate residential requirement by unreasonably failing to take the opportunities open to them to visit AP and so save him from social isolation. The correct analysis, however, is that in those circumstances it would be the familys unreasonable conduct and not the residence condition which was the operative cause of APs isolation. In short, the judge must disregard not the particular difficulties of the subjects family in visiting him but rather any lack of contact resulting from the familys unreasonable failure to overcome these difficulties in order to visit him. It is not suggested here that the family behaved unreasonably in failing to overcome more effectively the practical difficulties they faced in visiting AP on a more regular basis, only that their particular difficulties should have been ignored. That submission cannot be accepted. The third and final issue for our determination arises from the apparent conclusion of the majority in the Court of Appeal that Keith J had committed a second error of law in making inconsistent findings of fact. Maurice Kay LJ (para 30) contrasted the judges finding (para 88) that The fact is that they could visit AP en famille on Sundays, as well as on other days of the week outside the school terms, and they could travel at off peak times to get the advantage of lower fares. with his conclusion (para 97) that . had [AP] remained in London, so that he could still see and be visited by his mother, his brother and his sisters three children, my view would have been different. and in the result held: On that basis, the judge erred in law in treating as decisive something that was at variance with his earlier finding of fact. Wall LJ expressly agreed with all of Maurice Kay LJs reasoning. For my part, however, I see no contradiction between the quoted two paragraphs from Keith Js judgment. Of course, as Maurice Kay LJ pointed out, AP could [original emphasis] still see and be visited by those members of his family, although there were logistical and, no doubt, financial difficulties. But to suggest that this is inconsistent with paragraph 97 of Keith Js judgment is to my mind to place altogether too much weight upon the word could in the latter paragraph. To understand paragraph 97 as suggesting that, now that AP had left London, it was impossible for him to see and be visited by his family, is not to give it a fair reading. It is hardly to be thought that by paragraph 97 the judge had forgotten what he had said in paragraph 88. The former must be understood as merely encapsulating in shorthand the judges findings as to the practical difficulties in visiting which he had made in paragraph 88. It follows that all three issues fall to be determined in the appellants favour and that his appeal succeeds. Carnwath LJ was in my opinion right in his analysis of the House of Lords judgments in JJ and the other two associated cases, right as to how they applied to the present case, and right also to emphasise (as, indeed, Wall LJ had done) the importance of respecting the decisions of the judges in the Administrative Court dealing with these difficult cases. They have developed, as he put it, special expertise and experience, not generally shared by members of the Appellate Courts and are also much better placed to develop consistent practice for dealing with orders of this kind, and to provide continuing supervision of their making, variation, and implementation. We were shown a series of first instance decisions in control order cases following the JJ trilogy: Secretary of State for the Home Department v AH [2008] EWHC 1018 (Admin) (where Mitting J just upheld a 14 hour curfew notwithstanding that AH was required to reside in a wholly unfamiliar city and was subject to a high degree of social isolation); Keith Js determination in the present case; Secretary of State for the Home Department v AU [2009] EWHC 49 (Admin) (where Mitting J upheld a 16 hour curfew albeit indicating that he would have reached the same conclusion as Keith J on the facts of the present case); and Secretary of State for the Home Department v GG [2009] EWHC 142 (Admin) (where Collins J upheld a 16 hour curfew where a relocation from Derby to Chesterfield presented no difficulties for family visits). It would be inappropriate to discuss here the detailed reasoning in each of these determinations; suffice it to say that they seem to me to justify Carnwath LJs confidence in the nominated I would allow this appeal, set aside the decision of the Court of Appeal and Administrative Court judges and the wisdom of generally not interfering with their decisions in control order cases. restore the order of Keith J at first instance. At the start of the hearing the court raised the question of whether to maintain the respondents anonymity in this case. Following the hearing written submissions on this question were made by the parties. The court has considered these and decided that there are good reasons for preserving the respondents anonymity. These will be the subject of a further judgment of the court. LORD RODGER Given the rejection of Lord Hoffmanns approach by the majority of the House of Lords in Secretary of State for the Home Department v JJ [2008] 1 AC 385, the question whether someone has been deprived of his liberty for the purposes of article 5 depends on the evaluation of a host of different factors. Keith J carried out the exercise of weighing these factors. For the reasons given by Lord Brown, I am satisfied that there was no proper basis for the majority of the Court of Appeal interfering with his conclusion. I also agree with Sir John Dyson that the Secretary of States argument, supposedly based on Shtukaturov v Russia (Application No 4409/05), 27 March 2008, is without foundation. I would accordingly allow the appeal. SIR JOHN DYSON SCJ I agree that this appeal should be allowed for the reasons given by Lord Brown. I only wish to add a few words on the second issue identified at para 4. As Lord Brown has said, the courts task is to consider the concrete situation of the particular individual taking account of a whole range of criteria such as the type, duration, effects and manner of implementation of the measure in question: see Guzzardi at para 92 and, for example, paras 15 and 18 of Lord Binghams speech in JJ. Mr Tam submits that the reference to an individuals concrete situation is a reference to those factors which are the necessary consequences of the measures concerned, rather than factors which may or may not be present depending on the individuals personality or choices, or on the personality or choices of his family or friends (Case for the Secretary of State at para 9.6). What is required is an objective and not a subjective approach when one considers the effects or impact of the measures on the individual. It is the objective impact of the measures on a person in the situation of the controlee that is relevant, not the consequences of his subjective response or that of his family and friends. In support of his submissions he relies on the decision of the ECtHR in Shtukaturov v Russia (Application No 44009/05), 27 March 2008. I can find no support for Mr Tams approach in the jurisprudence. Shtukaturov does not provide it. In that case, the applicant was placed in a locked facility, tied to his bed, given sedative medication and not permitted to communicate with the outside world. Consent was relevant because it could have prevented those measures from being a deprivation of liberty within the meaning of article 5 of the Convention. At para 106, the ECtHR said: The Court further recalls that the notion of deprivation of liberty within the meaning of article 5.1 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 (see, mutatis mutandis, HM v Switzerland, no 39187/98, para 46, ECHR 2002 II). In this paragraph, the court was not saying that no subjective elements other than lack of consent could be relevant. Indeed, it is clear from Guzzardi and JJ that the objective element of a persons confinement may not be enough to give rise to a deprivation of liberty within the meaning of article 5.1. The other elements, when considered in conjunction with the confinement, may make all the difference. In Shtukaturov, absent consent, the core element of confinement was sufficient to establish a breach of article 5.1. I do not find it helpful to use the subjective/objective terminology in the present context. Take this case. APs mother chose to look after her daughters young children. Practically speaking, she was faced with the choice of not visiting AP or of taking the children on her visits. She chose not to visit AP at all. No doubt, that was a difficult choice for her to make. In a sense, it was a subjective decision as are all choices. But that does not mean that the isolating effect of the choice made by APs mother is to be disregarded when an assessment is made of the effect on AP of the modification of the control order. The focus of the article 5 inquiry is on the actual effect of the measures on the controlee in the circumstances in which he finds himself. Prima facie, the actual isolating effect resulting from choices made by the controlee, his family and friends in response to the measures should be taken into account. But I agree with Lord Brown that isolation attributable to unreasonable conduct on the part of the controlee or his family or friends should be disregarded because unreasonable conduct cannot be said to be caused by the measures. To use the language of Guzzardi, in such a case the measures do not have the isolating effect on the controlee. In further support of his argument, Mr Tam submits that, if the question of whether or not a measure constitutes a deprivation of liberty turned on the effect of personal choices, the answer to the question would vary unpredictably and would turn on matters outside the control and knowledge of the Secretary of State at the time of imposing the control order, such as what child care arrangements the family members of an individual subject to a control order might prefer or how those family members might feel about travelling outside their home area. But the Secretary of State must always seek to find out what the likely effect will be of the control order (or the modification) that she is proposing to make. She cannot make or modify control orders without considering their effect. It is now clearly established that in a case where the confinement is not sufficiently long of itself to amount to a deprivation of liberty, an assessment of the effect of the measures on the controlee may be decisive. If the Secretary of State fails to ascertain what the effect of an order will be, she runs the risk that there will be breach of article 5.1. This is the price that she must pay if she wishes to impose a control order. In some cases, there may be practical difficulties in finding out in advance what the effect of an order (or modification of an order) is likely to be. But that is not a good reason for saying that the Secretary of State is free to make an order without regard to its effect on the controlee. To return to the facts of the present case, it is not suggested that AP or his family have behaved unreasonably. It follows that the judge was right to take into account the isolating effect, in particular, of the lack of contact between AP and his mother. JUDGMENT Secretary of State for the Home Department (Respondent) v AP (Appellant) (no. 2) before Lord Phillips, President Lord Saville Lord Rodger Lord Walker Lord Brown Lord Clarke Sir John Dyson SCJ JUDGMENT GIVEN ON 23 June 2010 Heard on 5 May 2010 Appellant Edward Fitzgerald QC Kate Markus (Instructed by Wilson Solicitors LLP) Respondent Robin Tam QC Tim Eicke Rory Dunlop (Instructed by Treasury Solicitor) LORD RODGER (with whom all members of the court agree) 1. On 16 June 2010 the Court gave judgment in Secretary of State for the Home Department v AP [2010] UKSC 24. As Lord Brown explained, the appeal concerned a control order imposed on AP under the Prevention of Terrorism Act 2005. In April 2008 the Secretary of State had modified the order to include a condition that AP, who had previously lived in London, should now live in a town some 150 miles away. In August 2008 Keith J quashed the residence requirement and the following day the Secretary of State served a modified control order in similar terms, except that the curfew had been reduced to 14 hours. By a majority, the Court of Appeal allowed the Secretary of States appeal against Keith Js order. In its judgment of 16 June, this Court allowed APs appeal and restored the order of Keith J quashing the residence requirement. 2. In fact, as Lord Brown also explained, the appeal was academic, so far as AP himself was concerned, since on 2 July 2009 the Secretary of State had revoked the control order and decided that AP should be deported on national security grounds. AP appealed to the Special Immigration and Asylum Commission (SIAC) against the decision to make the deportation order. On 20 July 2009 AP was granted bail pending deportation, on conditions, including residence in the Midlands, broadly similar to those of the previous control order, except that the curfew period is 18 hours. 3. It appears that an anonymity order was made at the outset of the proceedings in the Administrative Court and has been in force ever since. A similar anonymity order was made in APs appeal to SIAC and it remains in force pending the Commissions decision. 4. At the outset of the hearing of APs appeal to this Court, the Court made an order continuing the anonymity order for the duration of the hearing. The Court also invited submissions from AP and the Secretary of State as to whether the anonymity order should cover the publication of its judgment. No submissions were invited from the media and they did not seek to intervene to make submissions. In their submissions counsel for AP informed the Court that there had been press interest in the proceedings before SIAC and that a representative of a national newspaper had attended those proceedings to make submissions about the exclusion of the press and public from parts of the proceedings. It had not been suggested, however, that SIAC should reveal APs identity in its judgment or that it should be open to the media to reveal his identity in any report of the proceedings or judgment. 5. In the present case the submissions for both AP and the Secretary of State favour the continuation of the anonymity order. That is by no means conclusive, however: on the contrary, the Court has borne in mind Sir Christopher Staughtons warning, in R v Westminster City Council, Ex p P (1998) 31 HLR 154, 163, that when both sides agreed that information should be kept from the public, that was when the court had to be most vigilant. 6. In In re Guardian News and Media Ltd [2010] 2 WLR 325 an application was successfully made by various media to set aside anonymity orders in proceedings relating to orders freezing the assets of suspected terrorists. In that case counsel made some reference to anonymity orders in proceedings relating to control orders. While not making any ruling on control orders none of which was before it the Court observed, at p 348, para 78: Many of the same issues would obviously arise if an application were made to set aside the anonymity orders made in any outstanding control order proceedings. The same principles would also have to be applied, but there may be arguments and considerations in those cases which were not explored at the hearing in this case. Conceivably, also, the position might not be the same in all of the cases. 7. In In re Guardian News and Media Ltd the Court heard full submissions from both the media and the parties involved in the substantive proceedings. The Court reviewed the relevant authorities on the application of articles 8 and 10 of the European Convention on Human Rights and Fundamental Freedoms. There is no call to repeat that exercise in the present case. Rather, so far as articles 8 and 10 are concerned, applying Lord Hoffmanns guidance in Campbell v MGN Ltd [2004] 2 AC 457, 473 474, paras 55 and 56, and the conclusions reached in In re Guardian News and Media Ltd, at pp 340 341, paras 50 52, the Court must ask itself whether there is sufficient general, public interest in publishing a report of the proceedings which identifies [AP] to justify any resulting curtailment of his right and his familys right to respect for their private and family life. The Court emphasised that the answer will depend on the facts of the particular case. No issue under article 3 arose in that case. 8. In the present case both the Secretary of State and AP pointed out that, where proceedings are taken to challenge a control order, the person affected may well wish to argue that, for particular reasons, his identity should not be revealed. He may require time to muster the relevant information and evidence. It therefore makes sense for an interim anonymity order to be made at the ex parte permission stage. Reference was made to the observations of Ouseley J in Times Newspapers Ltd v Secretary of State for the Home Department and AY [2008] EWHC 2455 (Admin) to that effect. I refer to those observations in para 11 below. The Court accepts that, at least as a general rule, an interim anonymity order will indeed be appropriate at that initial stage. It is important, however, that such an order should not just be continued automatically, but that the need for the order in the particular circumstances should be reviewed at the earliest suitable opportunity. 9. The submissions on behalf of the Secretary of State relied to a considerable extent on rather generalised assertions about the effect of setting aside an anonymity order: for example, it might result in harassment of the controlled person or his family, they might be threatened with violence, there might be disorder in the local community and friends and relatives might be reluctant to associate with the controlled person for fear of being identified with an extremist, publicity might prejudice any future prosecution. Experience with the freezing order cases suggests that, when the anonymity order is set aside, these hypothetical fears may well turn out to be exaggerated in the particular case. In line with the approach outlined in In re Guardian News and Media Ltd, the Court has therefore preferred to concentrate on the available information about the circumstances of this particular case. 10. The Secretary of State put forward an argument which did not arise in connexion with freezing orders. She pointed out that, when a control order is imposed, the police have to take steps to monitor and enforce the order, for instance, by visiting and searching the persons residence. Other officials, such as those involved in providing housing and in electronic monitoring, may also have to attend. The Secretary of State argues that an anonymity order allows the police and the other officials to carry out their duties without attracting significant attention or any possible hostility from the local community. In this way the officials can perform their duties more effectively. 11. It is not altogether easy to know just how much weight to attach in any given case to these somewhat general points. But the Court notes that, with his experience of the jurisdiction, in Times Newspapers Ltd v Secretary of State for the Home Department and AY [2008] EWHC 2455 (Admin) Ouseley J was prepared to give some weight to them, in the context of other general considerations. He said, at para 5: Such public identification may lead to harassment of and the risk of violence to the individual and his family by groups or individuals. The individual may continue to live where he was living already, and may remain in his job which could be put at risk. A media thirst for detailed and accurate news, in the public interest, may generate persistent investigative reporting alongside highly intrusive watching and besetting. There may be a risk of disorder in any given local community. The knowledge that he is subject to a Control Order may conversely make him attractive to extremists in the area where he lives. It may make the provision of a range of services, including housing, to the individual or his family rather more difficult. If the individual believes that he faces these sorts of problems, he has a greater incentive to disappear, to live elsewhere in the UK or abroad. All of this can make monitoring and enforcement of the obligations more difficult, and increase significantly the call on the finite resources which the police or Security Service have to devote to monitoring the obligations. This all occurs in circumstances where the Secretary of State has been satisfied that serious criminal prosecution is not presently realistically possible, though not permanently excluded. There may therefore be an impact on other proceedings not yet underway. In his view, such considerations justified the making of an interim anonymity order at the application stage. In the absence of any competing view, the Court considers that some weight should indeed be given to the Secretary of States submissions that anonymity helps to make the administration of control orders more effective. 12. But the Court has been more influenced by the submissions of counsel for AP about the particular circumstances in this case. It would be counter productive to go into the detail of the submissions which might serve to identify the town where AP is required to live. 13. In brief, counsel point out that the town where AP has to live is one where there are already considerable community tensions. There is organised racist activity in the town which has achieved not insignificant local support. There have been racist attacks, including physical violence, on members of the Muslim community in the town. There have also been attempts by racist groups to associate Muslims with terrorism. 14. Given these particular circumstances, the Court considers that there is force in APs submission that, if he were revealed to be someone who was formerly subject to a control order and is now subject to deportation proceedings for alleged matters relating to terrorism, then he would be at real risk not only of racist and other extremist abuse but of physical violence. In other words there is at least a risk that APs article 3 Convention rights would be infringed. 15. AP also makes the point that he has been forced to live in a town where he has no friends and no real social life. A difficult situation would be made very much worse if the anonymity order were lifted and he found that he was ostracised by members of his mosque and subjected to abuse by members of the public. Again, it is hard to assess the precise risk of this happening. But the Court has to weigh that risk in the context of the isolated situation in which AP finds himself due to the requirement that he should live in this particular town. 16. Finally, the Court has had regard to medical evidence to the effect that the bail conditions represent a significant and constant challenge to [AP]s psychological and emotional integrity. Again, this is a matter which has to be taken into account when considering the impact on AP of setting aside the anonymity order. 17. The absence of any submissions on behalf of the media means that, unlike in In re Guardian News and Media Ltd, the Court is not aware of any special circumstances which might point to a particular public interest in publishing a report of the proceedings which identifies AP. On the other hand and, again, unlike in the Guardian News case for the reasons which it has given, the Court is unable to discount the risk that AP might indeed be subjected to violence if his identity were revealed. The Court also has regard to the potential impact on his private life. 18. For all these reasons, the Court has concluded that, in this particular case, the public interest, in publishing a full report of the proceedings and judgment which identifies AP, has to give way to the need to protect AP from the risk of violence. Similarly, in this particular case, that public interest would not justify curtailing APs right to respect for his private and family life. The anonymity order should accordingly be maintained and the Courts judgment, and any reports of that judgment, should not reveal the appellants identity. He should continue to be referred to as AP. 19. The Court is conscious that it has reached this decision without hearing submissions from the media which might, conceivably, have cast a different light on the situation. Therefore, except in relation to interim orders at the application stage, the judgment should not be regarded as laying down any general rule as to the way that applications for anonymity orders should be determined in control order cases. For these reasons, as well as those given by Lord Brown, I would allow the appeal. Trinity Term [2010] UKSC 26 On appeal from: [2009] EWCA Civ 731 |
These two appeals relate to one of the rules currently in force by which the appellant, the Secretary of State for the Home Department, determines an application for a visa to enter or remain in the United Kingdom made by the spouse of a person who is present and settled in the UK (a marriage visa). The Secretary of State appeals against the order of the Court of Appeal dated 21 December 2010 (Sedley, Pitchford and Gross LJJ) [2010] EWCA Civ 1482, [2011] 3 All ER 81) by which it declared that her application of the rule so as to refuse marriage visas to the two effective respondents was unlawful as being so the majority concluded in breach of their rights under article 8 of the European Convention on Human Rights and Fundamental Freedoms 1950 (the ECHR). In effect pursuant to supplementary orders made by the Court of Appeal the Secretary of State has now granted marriage visas to each of the two respondents. But her appeals to this court, although academic for them, retain a general importance which has justified their continued prosecution. The rule is rule 277 of the Immigration Rules 1994 (HC395). The version of the rule which, as substituted by HC1113, came into force on 27 November 2008 was as follows: Nothing in these Rules shall be construed as permitting a person to be granted entry clearance, leave to enter, leave to remain or variation of leave as a spouse or civil partner of another if either the applicant or the sponsor will be aged under 21 on the date of arrival in the United Kingdom or (as the case may be) on the date on which the leave to remain or variation of leave would be granted. That rule therefore governed a spouse or civil partner. There were parallel rules which governed a fianc(e) or proposed civil partner (rule 289AA) and an unmarried or same sex partner (rule 295AA). A sponsor is defined by rule 6 as the person in relation to whom an applicant is seeking leave to enter or remain as their spouse (etc). Thus, for present purposes, the sponsor is the spouse who is present and settled in the UK, for example (as in each of the cases before the court) a British citizen present and ordinarily resident in the UK. The applicant is the other spouse. Prior to 27 November 2008 rule 277 like the parallel rules was in the same terms save only that its reference to age was under 18 rather than under 21. Such had been the rule since December 2004, when the minimum age for the applicant had been raised from 16 to 18 so as to become the same as the minimum age for the sponsor, which had been raised to the same extent in April 2003. With effect from 6 April 2010 rule 277 like the parallel rules was amended in a small and largely irrelevant respect. After the words under 21 were inserted, in parenthesis, the words or aged under 18 if either party is a serving member of HM Forces. The appeals require focus upon the Secretary of States purpose in amending rule 277 so as to provide that, with effect from 27 November 2008, a marriage visa should not in the absence of exceptional, compassionate circumstances which would attract the exercise of her discretion outside the ambit of the rules be granted until both the sponsor and the applicant had attained the age of 21. The Secretary of States purpose is clear. It was not to control immigration. It was to deter forced marriages. At the heart of the appeals is her analysis of the nexus between entry into a forced marriage and the increase in the minimum ages requisite for the grant of a marriage visa. No one could contend that the nexus is very obvious. B. FORCED MARRIAGE A forced marriage is a marriage into which one party enters not only without her or his free and full consent but also as a result of force including coercion by threats or by other psychological means: section 63A(4) and (6) of the Family Law Act 1996, inserted into it by section 1 of the Forced Marriage (Civil Protection) Act 2007 (the Act of 2007). The forcing of a person into marriage is a gross and abhorrent violation of her or his rights under, for example, article 16(2) of the Universal Declaration of Human Rights 1948, article 23(3) of the International Covenant on Civil and Political Rights 1966 and article 12 of the ECHR. A forced marriage is entirely different from an arranged marriage in which, in conformity with their cultural expectations, two persons consent to marry each other pursuant to an arrangement negotiated between their respective families. The prevalence of forced marriage within sections of our community in the UK has come increasingly to the attention of a shocked public during, say, the last 12 years as victims of it, or witnesses to it, have at last and less infrequently summoned the courage to report it. In 1999 the Home Office established a Forced Marriage Working Group, which published its findings in 2000. Parliament has responded actively to revelation of the problem by enactment of the Act of 2007, which provides the court with a flexible jurisdiction to make orders protective of a person who may be, or has been, forced into marriage. Under renewed discussion is whether there is any value in also making the act of forcing a person into marriage into a specific criminal offence. The other main instrument of the states response to the revelation of the problem has been the creation in 2005 by the Home Office and the Foreign and Commonwealth Office of the Forced Marriage Unit (the FMU). In November 2008 the Secretary of State published guidance under section 63Q of the Family Law Act 1996, as inserted by the Act of 2007. It was for the benefit of those exercising public functions potentially relevant to instances of forced marriage. In the guidance the Secretary of State addressed the motives of those who forced a person to marry in the following terms: 36 Some of the key motives that have been identified are: Controlling unwanted sexuality (including perceived promiscuity, or being lesbian, gay, bisexual or transgender) particularly the behaviour and sexuality of women. Controlling unwanted behaviour, for example, alcohol and drug use, wearing make up or behaving in a westernised manner. Preventing unsuitable relationships, e.g. outside the ethnic, cultural, religious or caste group. Protecting family honour or izzat. Responding to peer group or family pressure. Attempting to strengthen family links. Achieving financial gain. Ensuring land, property and wealth remain within the family. Protecting perceived cultural ideals. Protecting perceived religious ideals which are misguided. Ensuring care for a child or vulnerable adult with special needs when parents or existing carers are unable to fulfil that role. Assisting claims for UK residence and citizenship. Long standing family commitments. Thus Assisting claims for UK residence and citizenship was one of 13 suggested motives. Data included in the guidance or otherwise provided by the FMU suggest the following: (a) most persons forced into marriage in the UK are female; (b) for example 86% of the 815 possible cases of forced marriage considered by the FMU between September 2009 and February 2010 related to female victims; (c) most victims are aged between 13 and 29; (d) more particularly, of the 145 cases in 2005 in which the FMU provided direct support (as opposed to general or preliminary advice) to victims or potential victims of forced marriage, 44, i.e. 30%, related to victims aged between 18 and it is usually the parents (or one of them) of the victim who apply the force; 20; in 2006 the number of victims of that age was again 44 albeit out of 167 cases, i.e. 26%; and in 2007 the number was 69 out of 212 cases, i.e. 33%; (e) (f) most victims are members of South Asian families; and for example, of the cases in which the FMU gave general or preliminary (g) advice in 2008, 2009 and 2010, over 70% related to families of Pakistani, Bangladeshi or (to a much lesser extent) Indian origin. THE FACTS Mr Aguilar Quila, the first respondent, is a national of Chile who was born on 12 July 1990. His wife, Ms Amber Aguilar, is a British citizen who was born on 25 April 1991 and who until 2009 lived in England. They began a relationship in 2006 when, with his parents, the first respondent was living temporarily in London. Later, on 17 August 2008, he returned to the UK on a student visa which was expressed to expire on 3 August 2009. In September 2008 they became engaged and on 22 November 2008 they were married. The Secretary of State acknowledges that they married because they were in love. By then they were aware of the imminent change in the rule; but even under the old rule the first respondent was not then entitled to a marriage visa because, although he had attained the age of 18, his wife would not attain it until 25 April 2009. On 23 November 2008 the first respondent sought a marriage visa on the basis of exceptional, compassionate circumstances. The Secretary of State responded to the effect that the first respondents wife had not attained the age of 18 and that there were no such exceptional, compassionate circumstances as would justify a discretionary grant. On 1 May 2009, acting by the Joint Council for the Welfare of Immigrants, the first respondent sought a fresh decision on the basis that his wife had by then attained the age of 18 and by reference to fresh material which was said to call for the exercise of the Secretary of States discretion. But she responded to the effect that, because of the serious nature of forced marriages, the minimum age of both parties had been raised to 21; that by then the first respondents case fell to be determined and inevitably refused by reference to that new minimum age; and that, as before, there was no basis for a discretionary grant. She reminded the first respondent that, by virtue of the fact that he had leave to remain in the UK until 3 August 2009 and of the terms of section 82(2)(d) of the Nationality, Immigration and Asylum Act 2002, he had no right of appeal against her decision. Thus, on 31 July 2009, the first respondent, accompanied by his wife, duly returned to Chile. But by then he had issued the claim for judicial review, which was to be dismissed by Burnett J in the Queens Bench Division, Administrative Court, on 7 December 2009 but was to be the subject of the successful appeal to the Court of Appeal. The exceptional, compassionate circumstances which the first respondent had pressed unavailingly on the Secretary of State related in particular to the position of his wife. He stated that it would be intolerable for them not to live together for the following three years but that the effect on her of removal to Chile for such a period would be highly detrimental. He explained that both her parents were teachers; that she wanted to become a teacher of modern languages; that it would take five years for her so to qualify in the attainment of an undergraduate degree for four years and of a Post Graduate Certificate of Education for the fifth year; that she had been offered a place at Royal Holloway, University of London, to study French and Spanish for four years beginning in October 2009, provided that (as later she duly did) she were to attain the requisite grades at A level; and that life in Chile for three years would set back the plans for her career to a grossly unfair and in that the marriage was not forced to a wholly unnecessary extent. In August 2010 the first respondent and his wife, who had been staying with his family in cramped conditions in Santiago, moved to Ireland, where she embarked on a course at University College, Dublin. The paradox that the first respondent and his wife were entitled to live in Ireland but not in the UK arose from the fact that, as an EEA citizen exercising treaty rights to live in an EU state, the first respondents wife had a right to live there with him. In February 2011 the Secretary of State granted the marriage visa to the first respondent with the result that, with his wife, he moved back to the UK. Bibi (as she invites the court to describe her), the effective second respondent, is a citizen of Pakistan who was born on 7 July 1990 and has always lived there. Her husband, Mohammed (as he invites the court to describe him), is a British citizen who was born on 8 April 1990 and who, save for some weeks in 2008, has always lived in England. They were married in Pakistan on 30 October 2008. It was a marriage which, in accordance with their cultural traditions, their two sets of parents had arranged. They allege and the Secretary of State does not dispute that each of them freely consented to the marriage and that they had been engaged since October 2007, whereupon they had begun to speak occasionally on the telephone. They had first met in Pakistan about a week prior to the marriage. On 1 December 2008 the second respondent, with the help of her father in law, applied to the Entry Clearance Officer (the ECO) in Islamabad, for a marriage visa. But the ECO had already told the father in law that, unless she were to apply prior to 27 November 2008 (which was to prove impracticable for her), her application would be rejected on the basis that, although both she and her husband had attained the age of 18, neither had attained the age of 21. On 19 January 2009 the ECO duly refused the application on that ground. Following the marriage the second respondent and her husband appear to have cohabited briefly in Pakistan perhaps only for some weeks whereupon he returned to England. In April 2009, together with her husband, she applied to the Administrative Court for permission to apply for judicial review of the ECOs refusal. It was against His Honour Judge Pearls refusal of permission on 5 August 2009 that she brought her successful appeal to the Court of Appeal. In May 2011 the Secretary of State granted the marriage visa to her, with the result, I presume, that she has joined her husband in the UK. D. THE GENESIS OF THE AMENDMENT TO RULE 277 On 22 September 2003 the Council of the European Union adopted Directive 2003/86/EC. Its purpose was to determine the conditions under which third country nationals, i.e. not citizens of the EU, who were residing lawfully in an EU state could, by sponsorship, secure entry to it for their spouses and other family members. It did not address, even implicitly, how an EU state should respond to such requests when made by one of its own citizens or by a citizen of another EU state. Article 4(5) provided: In order to ensure better integration and to prevent forced marriages Member States may require the sponsor and his/her spouse to be of a minimum age, and at maximum 21 years, before the spouse is able to join him/her. The UK, Ireland and Denmark were not bound by the directive. As it happens, Denmark had already in 2002 raised to 24 the minimum ages both for the applicant and for the sponsor, and indeed in effect for all sponsors permanently resident in Denmark: see now section 9(1)(i) of the Aliens (Consolidation) Act 2009. At the time when the ages were raised, it was argued not only that the change would promote better integration of foreign spouses into Danish society but also that it would contain forced marriage. But subsequent research in Denmark did not confirm that the reform had reduced forced marriage; and it highlighted negative and socially alienating effects on the reasonable aspirations of young spouses whose marriages were not forced. In about 2004, in the wake of the directive, several other EU states, such as Germany and the Netherlands, raised their minimum ages to 21 and, again at least in the case of some such states, not merely in the case of the limited category of potential sponsors who had been the subject of the directive. I will assume that such states made the change in the hope of achieving each of the goals described in the article: but there is no evidence as to whether their hope has proved to be justified in either respect. In the above circumstances it was entirely appropriate that the Secretary of State should examine whether the minimum ages for a marriage visa should be raised to 21 or 24 in the UK. In 2006 she commissioned Professor Hester and a team at Bristol University to prepare a report on the merits of any such change. But Professor Hesters report, dated 15 February 2007, was expressly negative. Her first recommendation was that [t]he age of sponsorship/entry should not be raised either to 21 or 24. She said that the predominant view across all aspects of the research was that any such increase would be detrimental and, in particular, discriminatory on racial and ethnic grounds and with regard to arranged and love marriages. The Secretary of State did not publish Professor Hesters report; and it was later published independently. It was the view of the Secretary of State and of two external peer reviewers that, while the methodology used for the research had been sound, the report was marred by unsubstantiated statements, unclear terminology and sampling bias, and thus that its findings should be treated with considerable caution. In these proceedings there has been no debate about the validity of these criticisms. In December 2007 the Secretary of State issued a consultation paper entitled Marriage to Partners From Overseas. The main questions were whether, in order to reduce the incidence of forced marriage, the minimum ages for a marriage visa should be increased to 21. A subsidiary question was whether a person should be required to declare her intention to be a sponsor prior to departure from the UK in order to contract a marriage abroad. On 13 June 2008 the Home Affairs Select Committee of the House of Commons published a report entitled Domestic Violence, Forced Marriage and Honour Based Violence. It was a magisterial report upon various types of domestic abuse in the UK and it extended far beyond the subject of forced marriage. But the report included a section on the question which the Secretary of State had put out for consultation. It noted that the use of visa application rules in order to tackle forced marriage was controversial. It concluded as follows: 110. The testimony we heard from forced marriage survivors suggests that the desire to procure a marriage visa for a spouse can be an important factor in forced marriage. When we asked for their views on this issue, survivors told us that raising the age of sponsorship for marriage visas from 18 to 21 could better equip victims to refuse an unwanted marriage. However, associated with such a change is a significant risk that young people would be kept abroad for sustained periods between a marriage and being able to return to the UK with their spouse. 111. We have not seen sufficient evidence to determine whether or not raising the age of sponsorship would have a deterrent effect on forced marriage. Given the potential risks involved, we urge the Government to ensure that any changes it proposes to its policy on visa application procedures in respect of sponsorship are based on further research and conclusive evidence as to the effect of those changes. This evidence must demonstrate that any changes will not inadvertently discriminate against any particular ethnic groups. In July 2008, in the light, inter alia, of the responses to the consultation, the Secretary of State issued her proposals for reform in a report entitled Marriage Visas: The Way Forward. Although there were proposed provisions which would equip applicants for marriage visas with greater knowledge of English, its main proposal was to increase the minimum ages from 18 to 21. The report stated as follows: 3.4 We believe that there will be a number of benefits involved in raising the age, these include: It will provide an opportunity for individuals to develop maturity and life skills which may allow them to resist the pressure of being forced into a marriage. It will provide an opportunity to complete education and training. It will delay sponsorship and therefore time spent with (sometimes abusive) spouse if the sponsor returns to the UK. It will allow the victim an opportunity to seek help/advice before sponsorship and extra time to make a decision about whether to sponsor. CONSULTATION RESPONSES 3.5 Supporters of the increased sponsorship age felt the proposal: provided an opportunity for individuals to develop maturity and life skills. removed young people from parental pressure to marry. gave them an opportunity to complete education and training. Opponents raised a variety of reasons against the proposal, stating that it: could be perceived as discrimination based on cultural differences. was detrimental to the human rights of young people. would not prevent forced marriage since this affects people of all ages. would penalise those with genuine marriage intentions. Then the report quoted the urgent request recently made by the Home Affairs Select Committee that no increase in the minimum ages be made without conclusive evidence that it would deter forced marriage and not be discriminatory. The reports response was as follows: 3.8 We believe there is such conclusive evidence because reports of forced marriage peak sharply at ages 18 and above. By age 21, reports of forced marriage begin to decline sharply. There was then a reference, in tabular form, to the statistics provided by the FMU about the age of victims of forced marriage, to which I have referred in para 11(d) above. But the response at para 3.8 above to the Select Committees call for conclusive evidence was wholly inadequate: for the call had been for evidence not about the age of victims of forced marriage but about whether an increase in the minimum ages for a marriage visa would deter it. The relevant section of the report concluded as follows: 3.14 We have carefully considered the issues raised by the Home Affairs Select Committee and the respondents to the consultation. We have paid particular attention to whether an increase in age from 18 21 would be proportionate given concerns that raising the age would penalise a number of genuine couples and discriminates against specific religious communities where the average age of marriage is likely to be lower including such communities where forced marriage is uncommon. 3.15 The committee was also concerned that there is a significant risk that young people would be kept abroad for sustained periods between a marriage and being able to return to the UK with their spouse. However, this has not been the general pattern of movement observed by the Forced Marriage Unit who indicated that sponsors generally return to the UK until they reach the sponsorship age. There was no attempt in the document to explain why the Secretary of State had concluded that the increase would indeed be proportionate in the light of its effect on those who entered into marriages which were not forced and of whom at least one was aged between 18 and 21. There was no attempt even to address the size of that constituency. In an annexe to the report there was an analysis of the responses to the consultation. It was to the effect that, of the 89 relevant respondents, 45 had supported the increase, 41 had opposed it and three had expressed mixed views. Of the 45 in support, most had suggested that an increasing level of maturity and education during the three years would help a potential sponsor to resist being forced to marry but four of them had nevertheless doubted whether the increase would achieve its stated aim. Of the 41 in opposition, many had suggested that it would be discriminatory towards ethnic communities in which marriage at a young age was the cultural norm and would impact unfairly on the parties to marriages in which at least one of them was aged between 18 and 21 in that most of such marriages were not forced. In general the analysis of responses in the annexe was fairly summarised in para 3.5 of the document, set out at para 27 above. THE ENGAGEMENT OF ARTICLE 8, ECHR In R (Razgar) v Secretary of State for the Home Department [2004] UKHL 27, [2004] 2 AC 368, Lord Bingham suggested, at para 17, that the engagement of article 8 depended upon an affirmative answer to two questions, namely whether there had been or would be an interference by a public authority with the exercise of a persons right to respect for his private or family life and, if so, whether it had had, or would have, consequences of such gravity as potentially to engage the operation of the article. Having analysed the authority, namely Costello Roberts v United Kingdom (1993) 19 EHRR 112, which, at para 18, Lord Bingham had cited by way of justification of the terms in which he had cast his second question, the Court of Appeal in AG (Eritrea) v Secretary of State for the Home Department [2007] EWCA Civ 801, [2008] 2 All ER 28, observed, at para 28, that the threshold requirement referable to the nature of the consequences was not a specially high one. Mr McCullough QC, on behalf of the Secretary of State, concedes that family life arose upon the marriage of each of the respondents to their sponsors notwithstanding that, at the date of the refusals of the marriage visas, it had scarcely been established in the case of the second respondent and was relatively undeveloped in the case of the first respondent. Counsel correctly suggests, however, that the more exiguous is the family life, the more substantial are the requisite consequences. These were two British citizens who had lived throughout their lives in the UK and who, aged 17 and 18 respectively, had just embarked upon a consensual marriage. The refusal to grant marriage visas either condemned both sets of spouses to live separately for approximately three years or condemned the British citizens in each case to suspend plans for their continued life, education and work in the UK and to live with their spouses for those years in Chile and Pakistan respectively. Unconstrained by authority, one could not describe the subjection of the two sets of spouses to that choice as being other than a colossal interference with the rights of the respondents to respect for their family life, however exiguous the latter might be. But central to this appeal is Mr McCulloughs reliance in this regard on the decision of the ECtHR in Abdulaziz v United Kingdom (1985) 7 EHRR 471. Three women, all lawfully settled in the UK, had married third country nationals but at any rate at first the Secretary of State had refused permission for their husbands to remain with them, or join them, in the UK. In the second and third cases, as a result of a relaxation of the Immigration Rules, adequate permissions had ultimately been granted and had rendered the applications largely academic. In the present proceedings the Court of Appeal distinguished the courts decision in Abdulaziz on the ground that the three women were not British citizens but women of other nationalities with, therefore, a right of abode elsewhere. But in the first case the woman had been deprived of her Malawi citizenship and, at the date of the refusal, was stateless; she almost certainly had no right of abode in Malawi. In the second case the woman had become a British citizen albeit following the date of the refusal. And in the third case the woman, albeit not a British citizen until later, was a citizen of the United Kingdom and Colonies at the date of the refusal. In these circumstances it is accepted on behalf of the respondents that the ground of distinction favoured by the Court of Appeal is untenable. The decision of the ECtHR in Abdulaziz was that the refusals of permission had not infringed the rights of the women and of their husbands to respect for their family life under article 8 but that, in that the ground for the refusals had been a rule which had afforded a different and unjustified treatment of male, as opposed to female, spouses of persons lawfully settled in the UK, the women had suffered discrimination on the ground of sex in violation of their rights under article 14, taken together with article 8, of the Convention. The importance of the decision for present purposes is the route by which the court came to reject the complaint under article 8 alone. The majority held that article 8 was not engaged; two judges, however, concurred in the conclusion in relation to article 8 only on the basis that, although the article had been engaged, the interference with respect for the family life of the applicants had been justified under article 8(2). In para 66 to para 68 of their judgment the majority stressed that: (a) the suggested obligation of the state was a positive one i.e. to take active steps to admit the husbands and especially as far as positive obligations are concerned, the notion of respect is not clear cut; immigration control was an area in respect of which states enjoyed a wide margin of appreciation; (b) (c) (d) the rights of the husbands to enter, or remain in, the UK under the rules were known to be precarious when the marriages were contracted; and the extent of a states obligation to admit spouses of settled immigrants depended upon the circumstances of each case and the women had not shown that they could not establish family life in their own or their husbands home countries. The majority also said, at para 68: The duty imposed by article 8 cannot be considered as extending to a general obligation on the part of a contracting state to respect the choice by married couples of the country of their matrimonial residence and to accept the non national spouses for settlement in that country. The above proposition has recently been cited with approval both in the ECtHR (see Y v Russia (2008) 51 EHRR 21, at para 103) and in this court (see ZH (Tanzania) v Secretary of State for the Home Department [2011] UKSC 4, [2011] 2 WLR 148, at para 19, per Baroness Hale). Four decisions of the ECtHR subsequent to Abdulaziz deserve attention. First, Gl v Switzerland (1996) 22 EHRR 93. A Turkish father, who had been permitted on humanitarian grounds to reside with his wife in Switzerland, failed to establish that, by refusing to allow their seven year old son to join them in Switzerland, the state had interfered with respect for his family life. Although, therefore, the court applied the decision in Abdulaziz, it stressed, at para 41, that the father and his wife had no permanent right of abode in Switzerland. In a powerful dissenting opinion two judges explained why in their opinion the state had not only interfered with the applicants right under article 8 but, by reference to the terms of its paragraph two, had violated it. In effect they pointed out, at para 7 and para 8, that in Abdulaziz stress had been laid on the fact that the disputed obligation was positive (to allow the husbands to reside in the UK); that the disputed obligation in the present case was similar (to allow the son to reside in Switzerland); that, where the challenge was to the states removal of a person, the disputed obligation was negative (not to remove him); that it would be illogical if this elusive difference were to affect whether there had been interference with rights under article 8; and that indeed, since the decision in Abdulaziz in 1985, the difference in the courts treatment of positive and negative obligations had dwindled away. Second, Boultif v Switzerland (2001) 33 EHRR 1179. An Algerian citizen married a Swiss citizen and was permitted to reside in Switzerland. Following his conviction for a robbery the state refused to extend his residence permit and he was removed from Switzerland. The court found that his right under article 8 had been infringed. The court, at para 40, summarily addressed the initial question whether the state had interfered with his right as follows: In the present case, the applicant, an Algerian citizen, is married to a Swiss citizen. Thus, the refusal to renew the applicants residence permit in Switzerland interfered with the applicants right to respect for his family life The question whether the couple could reasonably live together in Algeria was answered, negatively, at para 53, only in the course of the courts enquiry into whether the interference was justified. Third, Tuquabo Tekle v The Netherlands [2006] 1 FLR 798. A mother, father and their three sons were of Eritrean ethnicity but lived in the Netherlands and had acquired Dutch citizenship. When leaving Eritrea in 1989, the mother had left behind a daughter, then aged eight. When she was aged 15, an application was made for her to be allowed to enter the Netherlands in order to live with the family; but it was refused. The court held that, by the refusal, the state had violated the rights under article 8 of all six of its members. The court observed, at para 41 and para 42, that the asserted obligation of the state was positive, that the boundaries between the states positive and negative obligations under this provision do not lend themselves to precise definition and that the applicable principles are, nonetheless, similar. The minority view in Gl had become that of the majority. The court did not tarry to consider interference: it moved straight to justification. And fourth, Rodrigues da Silva, Hoogkamer v Netherlands (2006) 44 EHRR 729. A Brazilian citizen lived, albeit unlawfully, in the Netherlands. She gave birth to a daughter who lived with the father but with whom she had contact. The court held that the states refusal to grant a residence permit to the mother had violated her right and that of the daughter under article 8. The court acknowledged, at para 38, that, in that the state had never granted a residence permit to the mother, its breach was of a positive, rather than of a negative, obligation. The difficulty for the respondents which arises out of the case of Abdulaziz lies less in the proposition at para 68 of the judgment, set out in para 36 above, and more in the actual decision of the majority. The proposition is only to the effect that article 8 imposes no general obligation on a state to facilitate the choice made by a married couple to reside in it. On analysis, the proposition is unexceptionable: it invites, instead, a fact specific investigation, which logically falls within the realms of whether the states obstruction of that choice is justified under paragraph 2. But the actual decision enables Mr McCullough to ask: inasmuch as there was not even an interference with the rights under article 8 of the three women in Abdulaziz in refusing to allow their husbands to join them, or remain with them, how can the analogous decisions of the state in the present cases generate a different conclusion? Having duly taken account of the decision in Abdulaziz pursuant to section 2 of the Human Rights Act 1998, we should in my view decline to follow it. It is an old decision. There was dissent from it even at the time. More recent decisions of the ECtHR, in particular Boultif and Tuquabo Tekle, are inconsistent with it. There is no clear and consistent jurisprudence of the ECtHR which our courts ought to follow: see R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2001] UKHL 23, [2003] 2 AC 295 at para 26, per Lord Slynn. The court in Abdulaziz was in particular exercised by the fact that the asserted obligation was positive. Since then, however, the ECtHR has recognised that the often elusive distinction between positive and negative obligations should not, in this context, generate a different outcome. The area of engagement of article 8 in this limited context is, or should be, wider now. In that in Tuquabo Tekle the states refusal to admit the 15 year old daughter of the mother, in circumstances in which they had not seen each other for seven years, represented an interference with respect for their family life, the refusals of the Secretary of State in the present case to allow the foreign spouses to reside in the UK with the British citizens with whom they had so recently entered into a consensual marriage must a fortiori represent such an interference. The only sensible enquiry can be into whether the refusals were justified. F. JUSTIFICATION UNDER ARTICLE 8(2) The burden is upon the Secretary of State to establish that the interference with the rights of the applicants under article 8, wrought by the amendment to rule 277 effective from 27 November 2008 (the amendment), was justified under paragraph 2 of the article: see Marcic v Thames Water Utilities Ltd [2003] UKHL 66, [2004] 2 AC 42, para 37. But in an evaluation which transcends matters of fact it is not in my view apt to describe the requisite standard of proof as being, for example, on the balance of probabilities. The amendment had a legitimate aim: it was for the protection of the rights and freedoms of others, namely those who might otherwise be forced into marriage. It was in accordance with the law. But was it necessary in a democratic society? It is within this question that an assessment of the amendments proportionality must be undertaken. In Huang v Secretary of State for the Home Department [2007] 2 AC 167, Lord Bingham suggested, at para 19, that in such a context four questions generally arise, namely: a) b) c) d) is the legislative objective sufficiently important to justify limiting a fundamental right? are the measures which have been designed to meet it rationally connected to it? are they no more than are necessary to accomplish it? do they strike a fair balance between the rights of the individual and the interests of the community? In the present case the requisite enquiry may touch on question (b) but the main focus is on questions (c) and (d). But what is the nature of the courts enquiry? In R (SB) v Governors of Denbigh High School [2007] 1 AC 100 Lord Bingham said, at para 30: it is clear that the court's approach to an issue of proportionality under the Convention must go beyond that traditionally adopted to judicial review in a domestic setting There is no shift to a merits review, but the intensity of review is greater than was previously appropriate, and greater even than the heightened scrutiny test The domestic court must now make a value judgment, an evaluation, by reference to the circumstances prevailing at the relevant time. Proportionality must be judged objectively, by the court Lord Browns call, at para 91 below, for the courts in this context to afford to government a very substantial area of discretionary judgement is at odds with my understanding of the nature of their duty. Indeed, in the case of Huang cited above, Lord Bingham proceeded to explain, at para 16, that it would be wrong to afford deference to the judgments of the Secretary of State on matters related to the above questions albeit that appropriate weight had to be given to them to the extent, in particular, that she was likely to have had access to special sources of knowledge and advice in connection with them. He added, at para 17, that, notwithstanding the limited right of Parliament to call upon the Secretary of State to reconsider proposed changes in the Immigration Rules provided by section 3(2) of the Immigration Act 1971, it would go too far to say that any changes ultimately made had the imprimatur of democratic approval such as would be relevant in particular to any answer to question (d) set out in para 45 above. In the present appeals the questions identified above fall upon two sides. One side asks whether, and if so to what extent, the amendment is likely to have deterred, and to continue to deter, forced marriages. The other side asks how many parties to unforced marriages are likely to be condemned by the amendment to suffer the interference with their rights exemplified in the two cases before the court. The Secretary of States contention that the amendment is likely to deter forced marriages remains based upon the four bullet points included in para 34 of her report entitled Marriage Visas: The Way Forward, set out in para 27 above. Her main suggestion is that the passage of up to three years should strengthen the ability of either the intended or the actual victim of a forced marriage to resist either entry into it or her later act of sponsorship which, were she to have remained living in the UK, would enable the spouses to cohabit here. The suggestion is tenable. But ten other questions arise and, since they are but questions, there is no need for me to identify in the materials and submissions presented to the court the source from which they come. In what follows I will, for convenience, take the victim of a forced marriage to be a girl present and settled in the UK whose parents force her to marry a man resident abroad without a pre existing right of abode in the UK. The ten questions are as follows: a) Of the 13 motives for forcing a marriage suggested in para 36 of the guidance published by the Secretary of State in November 2008, set out in para 10 above, how prevalent in the genesis of forced marriages is that of Assisting claims for UK residence and citizenship? b) From the fact that a forced marriage has precipitated an application for a marriage visa does it follow that the motive behind it was immediately to secure the visa and that, were it not immediately available, the marriage would not have occurred? c) Even if by virtue of the amendment, the ages of the girl and/or of the man were such as to preclude the grant of a marriage visa for up to three years, might the parents nevertheless force the girl into the marriage in order, for example, to prevent her from entering into a consensual marriage which they regarded as unsuitable? d) Even if the effect of the amendment were to preclude the immediate grant of a marriage visa, might the girl nevertheless be forced to marry the man abroad and thereupon be kept under control abroad until their ages were such as to enable her successfully to sponsor his application for a visa? In the example at (d) might the girl kept under control abroad there have a lesser opportunity to escape from the forced marriage than if the rules had enabled her to set up home with the man in the UK immediately following the marriage? e) f) Alternatively to the example at (d), might the girl be brought to the UK following the forced marriage and be kept under control in the UK until their respective ages were such as to enable her successfully to sponsor the mans application for a visa? g) Even if the preclusion of the grant of a marriage visa for up to three years were to deter her parents from forcing the girl to marry at that stage, might the result be an increased intensity of control on their part over her for that period whether by moving her abroad or by continuing to keep her in the UK and, in either event, would her increasing maturity be likely to enable her to combat it? h) How readily could one or more false certificates of birth be obtained which would deceive the immigration authorities into accepting that the girl and the man were both aged over 21? i) Might the effect of the amendment be to precipitate a swift pregnancy in the girl, following the forced marriage and an act or acts of rape, such as might found an application for a discretionary grant of a marriage visa by reference to exceptional, compassionate circumstances? j) Even if the effect of the amendment were to deter her parents from forcing the girl to marry a man resident abroad without a pre existing right of abode in the UK, might they instead force her to marry a man with UK or EU citizenship or some other pre existing right of abode in the UK? The ten questions are not easily answered. Professor Hester and her team attempted to address most, if not all, of them but, for reasons good or bad, the Secretary of State did not accept her report. In June 2008 the Home Affairs Select Committee urged the Secretary of State not to introduce the amendment until, following further research, there was conclusive evidence about its effect. But she proceeded to introduce it. The questions remain unanswered. The Secretary of State has failed to demonstrate that, when she introduced it, she had robust evidence of any substantial deterrent effect of the amendment upon forced marriages. I turn to unforced marriages. What was the likely scale of the inevitably detrimental effect of the amendment on unforced marriages. A subsidiary question, raised by the Home Affairs Select Committee in June 2008, was whether the detrimental effect was likely to be visited disproportionately upon members of communities with a tradition of marriage at a young age. In this regard the evidence of the Secretary of State in these proceedings was provided by Ms Smith, Deputy Director of Immigration Policy. She said: 17. The question of proportionality in terms of the impact upon couples intending to enter a marriage that was not forced where one or both of the couple are aged under 21 was considered carefully when drafting the policy. 20. the numbers affected by the rule change constituted a very small proportion of those applying for marriage visas for the UK. In 2006, for example, 7% (3,420) of spouses granted leave to enter the UK were aged between 18 and 20 and 2.5% (520) of people granted leave to remain in the UK as a spouse were within this age group. In 2007, 2.7% (1,245) of spouses granted leave to enter and 2.6% (700) of spouses granted leave to remain in the UK as a spouse were aged 18 to 20 21. We concluded that as the policy would affect less than 3% of those granted both leave to enter and leave to remain in the UK as a spouse in 2007, and as the evidence demonstrated that the rates of forced marriage were highest amongst those aged 17 20 in 2005 2008, the policy would represent a proportionate response to the issue of forced marriage, and the importance of protecting the rights and freedoms of vulnerable persons who might be forced into marriage would outweigh the significance of any adverse impact on particular communities or age groups But it establishes nothing to note first that 3,940 and 1,945 marriage visas were granted in 2006 and 2007 respectively to those aged between 18 and 20; second that at any rate the figure for 2007 was less than 3% of all marriage visas granted in that year (therefore presumably amounting to about 65,000); and that the rates of forced marriage were highest (ie about 30% see para 11(d) above) among those aged between 17 or 18 and 20. To deny marriage visas to 3,940 or even only to 1,945 applicants in a year is, irrespective of percentages, to deny them in a vast number of cases. The relevant question relates to the likely size of forced marriages within these numbers. The evidence does not begin to provide an answer to this question. By referring back to para 11(d) above, we can compare the number of cases in 2006 in which the FMU provided support to victims or potential victims of forced marriage aged between 18 and 20, namely 44, with the number of visas granted to that age group, in that year, namely 3,940; for 2007, the comparison is of 69 with 1,945; and, albeit only partly visible in what I have set out above, the evidence suggests a comparison for 2005 of 44 with 3,065. But the above exercise is hardly worth the undertaking. For on the one hand the FMUs figures relate to all forced marriages, irrespective of whether the spouse may reside in the UK only pursuant to a marriage visa. On the other hand and no doubt much more importantly the FMUs figures understandably represent only a proportion of all intended forced marriages. So double them? Or treble them? Or multiply them by ten? The only conclusion soundly available on the evidence before the court not challenged by the Secretary of State save in relation to the emotive word exile is, in the words of Sedley LJ in the Court of Appeal, that rule 277 is predictably keeping a very substantial majority of bona fide young couples either apart or in exile and that it has a drastic effect on thousands of young adults who have entered into bona fide marriages. As the Secretary of State acknowledges, the amendment is, in the words of Gross LJ, a blunt instrument. On 10 May 2011 the Home Affairs Select Committee of the House of Commons published a report, entitled Forced Marriage, by which it reviewed developments in relation to the matters which it had addressed in its report published on 13 June 2008. In a short section it noted the amendment introduced by the Secretary of State and the decision of the Court of Appeal in these proceedings. It then summarised evidence which it had received both from Karma Nirvana, a respected organisation providing support to victims or potential victims of forced marriage, and from Southall Black Sisters, an intervener in these appeals and an equally respected organisation dedicated to the protection of black and Asian women from abuse of all types including forced marriage. The committee stated: 16. Karma Nirvana supported the change in the Immigration Rules on the grounds that: We at Karma Nirvana have received feedback from victims that they have been helped by the rule. On the helpline we receive a number of calls from potential victims (and professionals on their behalf) under the age of 21 years asking about their legal position. Most, if not all, seem quite relieved to find that they have extra breathing space in which to make up their minds. 17. However, Southall Black Sisters disagreed that the change has had a positive effect, stating that it does not in reality protect victims from forced marriage, but simply increases pressure on them to remain within an abusive situation, and discriminates against migrant communities. In evidence to our predecessor Committee in March 2010, Nazir Afzal of the Crown Prosecution Service, had mixed views: I have spoken to several members of the third sector and police officers and they tell me that it has had a very positive effect in terms of the people who would ordinarily have been forced into marriage at an earlier age several hundred women have not been forced into marriage because they have been given the opportunity to wait until beyond 21 It has sent out a message to some families and to some communities that they need to be taking this a little bit more seriously than they have done. However, there has been an increase in relation to fraud involving birth certificates obtained abroad for individuals who are trying to pretend that they are 21 when they are not. 18. We have received mixed evidence about the impact of the change in the Immigration Rules in 2008 to require sponsors of marriage visas and their incoming spouses to be over the age of 21. We recognise that the change may be seen as discriminatory and has the potential for young people to be held in abusive situations for longer; however, it has undoubtedly helped a number of young people to resist forced marriage. The Secretary of State suggests that the Select Committees recent report, not available to the Court of Appeal, remedies any deficiencies in her case in relation to the proportionality of the amendment and thus to the justification for her interference with the rights of the respondents. I disagree. Although its reference to discrimination against migrant communities is, by implication, a reference to unforced marriages within those communities, the Select Committees report is, as its title suggests, upon forced marriage; and the focus of the conflicting evidence which it surveyed related to whether the amendment had succeeded in deterring it. The committee did not also weigh its effect on unforced marriages in the manner mandated of the court by article 8(2). There is a helpful parallel with the decision in R (Baiai) v Secretary of State for the Home Department [2008] UKHL 53, [2009] AC 287. In order to prevent marriages of convenience in the UK the Secretary of State introduced a scheme under which certain persons subject to immigration control required her written permission to marry and would not receive it unless they were present in the UK pursuant to a grant of leave for more than six months of which at least three months was unexpired. The House of Lords held that, notwithstanding that the right to marry under article 12 was not qualified in the way in which article 8(2) qualified the right in article 8(1), the state could take reasonable steps to prevent marriages of convenience; but that the scheme represented a disproportionate interference with the right to marry. It was, said Lord Bingham at para 31, a blanket prohibition on exercise of the right to marry by all in the specified categories, irrespective of whether their proposed marriages are marriages of convenience. The scheme, said Lady Hale at para 43, was overinclusive and [m]aking a serious attempt to distinguish between the sham and the genuine was considered too difficult and too expensive. On 14 December 2010, in ODonoghue v United Kingdom (Application No 34848/07), the ECtHR approved the decision in Baiai and extended it to two later versions of the Secretary of States scheme. Furthermore, in Thlimmenos v Greece (2000) 31 EHRR 411 it held that the application of a rule that a felon could not become a chartered accountant infringed the rights under article 14, taken in conjunction with article 9, of a pacifist convicted of the felony of refusing to perform military service. The court observed, at para 47, that it was legitimate to exclude some felons from entitlement to become chartered accountants but that there was no objective and reasonable justification for having treated the applicant in that way. I would, in conclusion, acknowledge that the amendment is rationally connected to the objective of deterring forced marriages. So the Secretary of State provides a satisfactory answer to question (b) set out in para 45 above. But the number of forced marriages which it deters is highly debatable. What seems clear is that the number of unforced marriages which it obstructs from their intended development for up to three years vastly exceeds the number of forced marriages which it deters. Neither in the material which she published prior to the introduction of the amendment in 2008 nor in her evidence in these proceedings has the Secretary of State addressed this imbalance still less sought to identify the scale of it. Even had it been correct to say that the scale of the imbalance was a matter of judgement for the Secretary of State rather than for the courts, it is not a judgement which, on the evidence before the court, she has ever made. She clearly fails to establish, in the words of question (c), that the amendment is no more than is necessary to accomplish her objective and, in the words of question (d), that it strikes a fair balance between the rights of the parties to unforced marriages and the interests of the community in preventing forced marriages. On any view it is a sledge hammer but she has not attempted to indentify the size of the nut. At all events she fails to establish that the interference with the rights of the respondents under article 8 is justified. By refusing to grant marriage visas to the respondents the Secretary of State infringed their rights under article 8. Her appeals must be dismissed. In line with the helpful analysis of the Upper Tribunal (Immigration and Asylum Chamber) conducted in somewhat similar circumstances in FH (Post flight spouses: Iran) v Entry Clearance Officer, Tehran [2010] UKUT 275 (IAC), I consider that, while decisions founded on human rights are essentially individual, it is hard to conceive that the Secretary of State could ever avoid infringement of article 8 when applying the amendment to an unforced marriage. So in relation to its future operation she faces an unenviable decision. LADY HALE I agree that the Secretary of State has infringed the article 8 rights of the parties to each of the marriages with which we are concerned and that these appeals should therefore be dismissed. Lord Wilson has dealt comprehensively with the relevant evidence, information and arguments and I add these few comments only because we are not all of the same mind. The issue, as Mr Drabble reminded us at the outset of his submissions, is whether the Secretary of State has acted incompatibly with the Convention rights of these particular young people. By reason of section 6(1) of the Human Rights Act 1998, it is unlawful for her to do so. This is subject to section 6(2), where a public authority is acting, to put it loosely, in compliance with primary legislation which cannot be read or given effect in any other way. That is not this case. The Secretary of State has acted in compliance with her own Immigration Rules, which do not even have the status of delegated legislation: see Odelola v Secretary of State for the Home Department [2009] UKHL 25, [2009] 1 WLR 1230. She does have a choice and it is her duty to act compatibly with the Convention rights of the people with whom she is concerned. Of course, where delicate and difficult judgments are involved in deciding whether or not she has done so, this Court will treat with appropriate respect the views taken by those whose primary responsibility it is to make the judgments in question. But those views cannot be decisive. Ultimately, it is for the court to decide whether or not the Convention rights have been breached: R (SB) v Governors of Denbigh High School [2006] UKHL 15, [2007] 1 AC 100; Belfast City Council v Miss Behavin Ltd [2007] UKHL 19, [2007] 1 WLR 1420. The immigration rules in question, paragraph 277 (which applies to spouses and civil partners) and its counterpart in paragraph 289AA (which applies to fianc(e)s and proposed civil partners), make an exception to the general rules governing the admission of spouses and fianc(e)s, civil partners and proposed civil partners, of people who are present and settled or being admitted for settlement here. Those rules (paragraphs 281 and 290) require principally that the parties have met and intend to live permanently with each other as spouses or civil partners; there are also requirements as to self sufficiency and knowledge of the English language. These requirements have a discernible connection with immigration control. The rules reflect a general policy that, subject to such conditions, spouses, partners and fianc(e)s should be able to join their spouses, partners and fianc(e)s who are settled here. The exception with which we are concerned prohibits the grant of a marriage visa (strictly, entry clearance, leave to enter, leave to remain or variation of leave on marriage grounds) unless both parties to the marriage or civil partnership will be aged 21 or over on the date of the applicants arrival in the United Kingdom or the grant of leave to enter, leave to remain or variation of leave, as the case may be. We happen to be concerned with the extension of that exception from those below 18 to those below 21. No one challenged its introduction for 16 and 17 year olds, so we cannot speculate about them. The crucial point is that, as the Secretary of State assures us, and the other parties accept, the purpose of this exception has nothing to do with immigration control. Its sole purpose is to deter or prevent forced marriages. Forced marriage can be defined in a number of different ways. There is a definition in section 63A(4) and (6) of the Family Law Act 1996 for the purpose of the power to grant civil protection orders, which was inserted into the 1996 Act by the Forced Marriage (Civil Protection) Act 2007: see para 68 earlier. In 2000 a Home Office Working Group, in A Choice by Right, defined forced marriage as a marriage conducted without the valid consent of both parties where duress is a factor (p 6). But the Group took a broad view of what constituted duress. They pointed out that, for the purpose of rendering a marriage voidable under section 12(c) of the Matrimonial Causes Act 1973, the Court of Appeal in Hirani v Hirani (1984) 4 FLR 232 had defined the test for duress as whether the mind of the applicant (the victim) has in fact been overborne, howsoever that was caused (p 7). They went on to explain that There is a spectrum of behaviours behind the term forced marriage, ranging from emotional pressure, exerted by close family members and the extended family, to the more extreme cases, which can involve threatening behaviour, abduction, imprisonment, physical violence, rape and in some cases murder (p 11). More recently, The Right to Choose: Multi agency statutory guidance for dealing with forced marriage (2008), takes a similar broad view, defining a forced marriage as one in which one or both spouses do not (or, in the case of some vulnerable adults, cannot) consent to the marriage and duress is involved. The duress in question is not limited to physical duress, but may involve emotional, psychological, financial or sexual duress. An example given of emotional duress is making the individual feel as though she is bringing shame upon her family by not entering into the marriage. Hence both the definitions of a forced marriage referred to above give a wider meaning to duress than its traditional definition in the criminal law, which is limited to threats of physical harm (Archbold, Criminal Pleading Evidence and Practice 2011, para 17.120). But most forced marriages will be legally valid unless or until they can be avoided or dissolved. Forced marriages, even in the wider sense set out in these definitions, are quite different from arranged marriages, in which the families of both spouses take a leading role in arranging the marriage, but the choice whether to solemnise the arrangement remains with the spouses and can be exercised at any time (A Choice by Right, p 10). In various forms this has been a common and perfectly acceptable practice in many, even most, societies throughout history. The idea that young (and not so young) people should find and choose their partners without either the help or approval of their families is a comparatively modern one. But clearly the dividing line between an arranged and a forced marriage may be difficult to draw, particularly in communities where there is a strong cultural tradition that it is for the parents to control their childrens marriages. But anyone who has read Jasvinder Sangheras powerful novel based on her own experiences, Shame (Hodder and Staughton, 2007), can be in no doubt that the difference is real and the consequences of forcing anyone into a marriage which she does not want are grave indeed, not only for the victims but often also for their families. As the Working Group pointed out, the perpetrators aim may be to strengthen the family and protect their culture, but it may have the reverse effect of turning their children against their background because of their experiences (A Choice by Right, p 20). In todays world, it is recognised that everyone has the right to decide whether or not to enter a particular marriage. Article 23(3) of the International Covenant on Civil and Political Rights (ICCPR), in an exact echo of article 16(2) of the Universal Declaration of Human Rights, requires that No marriage shall be entered into without the full and free consent of the intending spouses: see also article 1 of the Convention on Consent to Marriage, Minimum Age for Marriage and Registration of Marriages, article 10(1) of the International Covenant on Economic, Social and Cultural Rights (ICESC), article 16(1)(b) of the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW). Full and free means that the marriage should be entered into without improper pressure of any kind. Equally, it is recognised that anyone of marriageable age is free to marry whom they choose: see article 16(1) of the Universal Declaration, article 23(2) of the ICCPR, article 16(1)(a) of CEDAW, and of course article 12 of the ECHR. The right to marry is just as important as the right not to marry. Married couples also have the right to live together. This is inherent in the right to found a family, which is coupled with the right to marry in the Universal Declaration, the ICCPR and the ECHR. But the ECHR goes further, because article 8 protects the right to respect for family life. Family life arises virtually automatically upon a genuine marriage. In Abdulaziz, Cabales and Balkandali v United Kingdom (1985) 7 EHRR 471, at para 62, the European Court of Human Rights observed that Whatever else the word family may mean, it must at any rate include the relationship that arises from a lawful and genuine marriage, such as that contracted by Mr and Mrs Abdulaziz and Mr and Mrs Balkandali, even if a family life of the kind referred to by the Government has not yet been fully established. The Court also decided, at para 63, that family life had been established between Mr and Mrs Cabales, even though there was a question mark over the formal validity of their marriage, because they had gone through a ceremony of marriage, believed themselves to be married and genuinely wished to cohabit and lead a normal family life. Hence all three marriages were sufficient to attract such respect as may be due under article 8. Most significantly for our purposes, the Court held at para 62 that the expression family life in the case of a married couple, normally comprises cohabitation. The latter proposition is reinforced by the existence of article 12, for it is scarcely conceivable that the right to found a family should not encompass the right to live together. However, in the context of immigration control, the court went on to hold, at para 68, that The duty imposed by article 8 cannot be considered as extending to a general obligation on the part of a contracting state to respect the choice by married couples of the country of their matrimonial residence and to accept the non national spouses for settlement in that country. In all three cases, the marriage had been contracted after the UK spouse had become settled here as a single person, at a time when they must have known that there was no right for the non UK spouse to join them here, and it had not been shown that there were obstacles to establishing family life in their husbands countries or the countries from which they had originally come, or that there were special reasons why this should not be expected of them. The majority therefore held that there was no lack of respect for family life and thus no breach of article 8. A minority held that there was a lack of respect, but that it was justified under article 8(2) in the interests of the economic well being of the country. Although it has not wholly disappeared, subsequent developments have eroded the distinction between the negative obligation, not to interfere in family life by expelling one member of the family, and the positive obligation, to respect family life by allowing family reunion to take place. Many later cases have repeated the principle stated in Gl v Switzerland (1996) 22 EHRR 93, at para 38, that the boundaries between the states positive and negative obligations under this provision do not lend themselves to precise definition. The applicable principles are, none the less, similar. In both contexts regard must be had to the fair balance that has to be struck between the competing interests of the individual and of the community as a whole; and in both contexts the state enjoys a certain margin of appreciation. The language of fair balance is much more compatible with a search for justification under article 8(2) than with identifying a lack of respect under article 8(1). Nevertheless, the Court continues to state that, in expulsion cases, the question is whether the interference with the family life established in the host country can be justified, whereas in reunion cases, the question is whether the host country should be obliged to allow the family to settle there: for a recent example, see Haghighi v Netherlands (2009) 49 EHRR SE8. The factors applicable in deciding whether an expulsion can be justified under article 8(2) have been laid down in the Chamber decision in Boultif v Switzerland (2001) 33 EHRR 1179, approved and augmented in the Grand Chamber in ner v Netherlands (2006) 45 EHRR 421. A similar but not identical set of factors has been referred to when deciding whether a failure to grant a permit for family reunion violates article 8, in cases such as Sen v Netherlands (2001) 36 EHRR 81, Tuquabo Tekle v Netherlands [2006] 1 FLR 798, Rodrigues da Silva v Netherlands (2006) 44 EHRR 729 and Y v Russia (2008) 51 EHRR 531. However, the reunion cases do draw upon the distinction, which they attribute to Abdulaziz, between cases where family life was established in another country, which the parents left to come to the host country, and now wish to bring a left behind child to the host country, and cases, like Abdulaziz itself, where a couple marry when one is settled in the host country and wish to establish a home there. In the former type of case, apart from Gl itself, the Court has often found a violation in failing to allow the left behind member to join the family in the host country. In Y v Russia, on the other hand, the Court found no violation in refusing to allow a failed asylum seeker from China to remain with his Russian wife in Russia. Significantly, however, he had made no attempt to obtain a residence permit as the husband of a Russian national (to which it appears that he would prima facie have been entitled under Russian law) so it was an open question whether he could have done so or whether his wife could join him in China. Even more significantly, perhaps, while drawing its statement of principle, in para 103, virtually word for word from para 39 of Rodrigues da Silva, the Court referred to Boultif in one of its footnotes. It would appear, therefore, that although all these cases depend upon their particular facts and circumstances, the approach is now similar in all types of case. The Courts approach is much more compatible with an analysis in terms of justification under article 8(2) than with an analysis of the extent to which respect is due under article 8(1): and in Omoregie v Norway [2009] Imm AR 170, the Court expressly analysed a reunion case in article 8(2) terms. It would seem, therefore, that we can safely consign the no lack of respect aspect of Abdulaziz to history. But in this case that debate seems to me to be something of a red herring. In Abdulaziz itself it was clearly established that family life exists between husband and wife by virtue of their marriage and that family life normally comprises cohabitation. Absent the immigration dimension, there can be no doubt that forcing a married couple to choose either to live separately for some years or to suspend their plans to live in one place and go to live where neither of them wishes to live, is, as Lord Wilson puts it at para 32, a colossal interference with their right to respect for family life. And in this case, the immigration dimension can be ignored. This measure has not been adopted as a measure of immigration control. The United Kingdom has no objection to admitting genuine spouses who fulfil certain self sufficiency and language requirements to this country. The Secretary of State cannot at one and the same time say that she is not doing this for the purpose of controlling immigration and rely upon jurisprudence which is wholly premised on the states right to control immigration. So the only question is whether this colossal interference can be justified under article 8(2). The justification claimed is that this measure will prevent, deter or delay forced marriages. This is undoubtedly a legitimate aim, in article 8(2) terms, for the protection of the rights and freedoms of others. The action taken was undoubtedly in accordance with the law. The sole question is whether it was necessary in a democratic society, in other words, whether it was a proportionate response to a pressing social need. As Lord Wilson has shown, there are many reasons to conclude that it was not. First and foremost, although nobody knows the figures, it is clear that the rule will interfere with many more entirely voluntary marriages than it will prevent, deter or delay forced marriages. The scale and severity of the impact upon these unforced marriages has scarcely been considered. Nicola Smith, in her first witness statement on behalf of the Secretary of State, says that it was considered carefully, but the reasoning was that, as only a small proportion of foreign spouses are from this age group, the impact was proportionate. No one has said: We know that many innocent young people will be caught by this rule but we think that the impact upon them will not be so great while the protection given to victims of forced marriage will be so much greater. There are, of course, circumstances in which the imposition of a blanket rule can be justified. The best known example is the ban on assisting suicide, upheld by the Strasbourg Court even though not every would be suicide was vulnerable and in need of its protection: see Pretty v United Kingdom (2002) 35 EHRR 1. But even then, an important factor in the Courts decision was the prosecutors discretion: It does not appear to be arbitrary to reflect the importance of the right to life, by prohibiting assisted suicide while providing for a system of enforcement and adjudication which allows due regard to be given in each particular case to the public interest in bringing a prosecution . (para 76). We know from cases such as Hirst v United Kingdom (No 2) (2005) 42 EHRR 849, para 82, that a general, automatic, indiscriminate restriction (their word) on a vitally important Convention right falls outside any acceptable margin of appreciation. We are, of course, concerned with a restriction rather than a perpetual ban, but it is none the less general, automatic and indiscriminate. In this case, it is understood that individualised decisions may create their own problems, because taking steps to determine whether or not the marriage is forced may exacerbate the risks to the reluctant spouse. But, as the House of Commons Home Affairs Committee has pointed out, the Government has a mechanism to help reluctant sponsors: Domestic Violence, Forced Marriages and Honour based Violence, 6th Report of Session 2007 08, HC 263 I, paras 112114. Secondly, it is entirely unclear whether the rule does have the desired effect upon the marriages which it is designed to prevent or deter. Karma Nirvana gave evidence that some girls ringing their helpline have found it helpful to be able to say to their families that they will not be able to sponsor an immigrant spouse until they are both 21: House of Commons Home Affairs Committee, Forced Marriage, 8th Report of Session 2010 12, HC 880, para 16. But there is also evidence that the desire to obtain a visa is not the predominant motive for forcing a child into marriage. It is only the 12th of the list of 13 motives given in the statutory guidance: see para 10 earlier. We have no idea how many forced marriages with non resident spouses have been deterred. We have no idea how many forced marriages with resident spouses have been substituted for those which have been deterred. We do know that the rule can have no effect at all upon the forced marriages which take place within this country or within the European Union. Thirdly, we also know that if the rule is not effective in preventing a forced marriage it may do a great deal more harm than good. A young woman may be sent abroad and forced to marry against her will and kept there until she can sponsor her husband to come here. During this time she may be raped many times, bear children she does not want to have and be deprived of the education and life which she would otherwise have had here. Even if she is allowed to come home, she will not be able to escape from the marriage. She will be obliged to stay married so that she can sponsor her husband to come here. The rule will have made her life more difficult. The cases coming before the Family Division of the High Court, although only the tip of the iceberg, provide ample illustration of the difficulties of rescuing a young person who has been trapped into marriage abroad: see, for example, In re KR (Abduction: Forcible Removal by Parents) [1999] 2 FLR 542. Hence it is scarcely surprising that the views of knowledgeable people and organisations are so divided. While Karma Nirvana support the change, Southall Black Sisters and the Henna Foundation do not. In 2008, the Home Affairs Committee concluded, at para 111, that there was not sufficient evidence to determine whether it would have the desired deterrent effect. Given the potential risks involved, it urged that the age should not be raised without further research and conclusive evidence. There certainly was no conclusive evidence when the change was made. The Department had previously commissioned research from Bristol and Manchester Universities, which found that the change would be unlikely to prevent forced marriages, and indeed might increase the risk of negative actions associated with the increased age (Hester and others, Forced Marriage: the risk factors and the effect of raising the minimum age for a sponsor, and of leave to enter the United Kingdom as a spouse or fianc(e), 2007, chapter 3). The Department concluded that, because of methodological difficulties, these findings should be treated with caution and not regarded as representative. They went on to publish their own consultation paper, Marriage to Partners from Overseas (December, 2007). Six months later, they published their conclusions, in Marriage Visas: The Way Forward (July, 2008). Clearly, those who choose to respond to consultation papers are even less representative than the organisations, individuals and focus groups who were chosen for the purpose of the academic research. Even so, the response was hardly a ringing endorsement: 15 of the 29 individual respondents supported the change, the organisations were evenly divided between supporters and opponents and three organisations had mixed views. None of this amounts to the conclusive evidence for which the Home Affairs Committee called in 2008. None of it amounts to a sufficient case to conclude that the good done to the few can justify the harm done to the many, especially when there are so many other means available to achieve the desired result. There is a further reason for holding the interference disproportionate. Although the means used is an interference with article 8 rights, the object is to interfere with article 12 rights. The aim is to prevent, deter or delay marriage to a person from abroad. The right to marry is a fundamental right. It does not include the right to marry in any particular place, at least if it is possible to marry elsewhere: see Savoia and Bounegru v Italy (Application No 8407/05) (unreported), Admissibility Decision of 11 July 2006. But it is not a qualified right: the state can only restrict it to a limited extent, and not in such a way or to such an extent as to impair its very essence. In ODonoghue v United Kingdom (Application No 34848/07) (unreported) given 14 December 2010, the Court was concerned with the Home Office scheme for approving marriages with people from abroad, the first version of which was struck down by the House of Lords in R (Baiai) v Secretary of State for the Home Department [2008] UKHL 53, [2009] 1 AC 287. The Court agreed that a system of approval designed to establish the capacity of the parties to marry and whether or not it is a marriage of convenience is not objectionable. But this scheme was objectionable for a number of reasons: first, the decision to grant a certificate was not based on the genuineness of the marriage; second, it imposed a blanket prohibition on certain categories of people; and third, the fee was set at a level which the needy could not pay. A fee fixed at such a level could impair the essence of the right to marry. This scheme shares all three characteristics. The delay on entry is not designed to detect and deter those marriages which are or may be forced. It is a blanket rule which applies to all marriages, whether forced or free. And it imposes a delay on cohabitation in the place of their choice which may act as at least as severe a deterrent as a large fee. I say this, not to conclude that there has been a violation of these couples right to marry. They have in fact both been able to get married, one in England and one in Pakistan. But these factors lend weight to the conclusion that it is a disproportionate and unjustified interference with the right to respect for family life to use that interference for the purpose of impeding the exercise of another and even more fundamental Convention right in an unacceptable way. Like Lord Wilson, therefore, I would hold that the Secretary of State has acted incompatibly with the Convention rights of these two couples. I also agree with him that, although we are only concerned with these young people, it is difficult to see how she could avoid infringing article 8 whenever she applied the rule to an unforced marriage. LORD BROWN Forced marriages are an appalling evil. Most commonly the victims are young women and all too often such marriages occur within the immigrant community. One reason for this, amongst several identified by the National Centre for Social Research (NCSR) in their July 2009 report, is that: FM can be a way of ensuring land, property and wealth remain within a family. It may take place because of a long standing family commitment or to appease an aggrieved family member. This is often associated with assisting a claim for UK residency and citizenship. (para 2.1) One way of seeking to combat this aspect at least of the problem of forced marriages has been by raising the age at which a UK national or settled resident can sponsor a fiance or spouse seeking admission to this country (and also the age at which a fiance or spouse may gain entry). In April 2003 the age for sponsorship was raised from 16 to 18 and in December 2004 the age for those seeking entry was similarly raised. As stated in the July 2008 Home Office UK Border Agency Report (proposing a further such increase from 18 to 21) Marriage Visas: The Way Forward: These measures were introduced to help tackle the problem of forced marriage with the aim of giving young people extra time to mature which would help them to resist inappropriate family pressure to marry. (para 3.1) The proposed further increase from 18 to 21 was implemented by the amendment of paragraph 277 of the Immigration Rules (HC 395) with effect from 27 November 2008. It is this increase which by order made on 21 December 2010 the Court of Appeal declared to be unlawful, at least where, as in the present cases, one party to the (actual or proposed) marriage is a UK national. The essential ground on which the Court of Appeal held the increase to be unlawful was that its interference with the respondents article 8(1) rights was unjustified and disproportionate (indeed, in Gross LJs view, irrational or unreasonable in the traditional, common law, Wednesbury sense). It is my misfortune to disagree with what I understand will be the decision of the majority of the court on this further appeal to uphold the Court of Appeals conclusion. The Court of Appeal did not have, as this Court has had, the advantage of the May 2011 report (with evidence annexed) of the House of Commons Home Affairs Committee on Forced Marriage. This report, having noted the Court of Appeals ruling in the present case and that this matter is still currently before the courts continues: 16. Karma Nirvana [the largest NGO concerned with the victims of forced marriage and an organisation of unchallenged repute] supported the change in the Immigration Rules on the grounds that: We at Karma Nirvana have received feedback from victims that they have been helped by the rule. On the helpline we receive a number of calls from potential victims (and professionals on their behalf) under the age of 21 years asking about their legal position. Most, if not all, seem quite relieved to find that they have extra breathing space in which to make up their minds. 17. However, Southall Black Sisters disagreed that the change has had a positive effect, stating that it does not in reality protect victims from forced marriage, but simply increases pressures on them to remain within an abusive situation and discriminates against migrant communities. In evidence to our predecessor Committee in March 2010, Nazir Afzal of the Crime Prosecution Service, had mixed views: I have spoken to several members of the third sector and police officers . and they tell me that it has had a very positive effect in terms of the people who would ordinarily have been forced into marriage at an earlier age . several hundred women have not been forced into marriage because they have been given the opportunity to wait until beyond 21 . It has sent out a message to some families and to some communities that they need to be taking this a little bit more seriously than they have done. However, there has been an increase in relation to fraud involving birth certificates obtained abroad for individuals who are trying to pretend that they are 21 when they are not. 18. We have received mixed evidence about the impact of the change in the Immigration Rules in 2008 to require sponsors of marriage visas and their incoming spouses to be over the age of 21. We recognise that the change may be seen as discriminatory and has the potential for young people to be held in abusive situations for longer; however, it has undoubtedly helped a number of young people to resist forced marriage. The overall balance of this latest report, as it seems to me, is in favour of the rule change. True, Southall Black Sisters (one of the interveners before this court) are against it. But their view is more than offset by that of Karma Nirvana and Mr Afzals only concern appears to be in respect of forged birth certificates. There is furthermore before this court information about the practice of other EU countries which impose minimum ages for marriage visas. Germany, Austria and the Netherlands impose an age requirement of 21 for both parties (including their own citizens) precisely as the UK does. Belgium is planning to have the identical rule (although at present it does not apply to Belgian citizens or EU nationals). Denmark has the same rule except that it imposes a minimum age requirement of 24 rather than 21. In addition our attention is drawn to Council Directive 2003/86/EC of 22 September 2003 on the right to family reunification which, with regard to third country national sponsors, provides (by article 4(5)): In order to ensure better integration and to prevent forced marriages Member States may require the sponsor and his/her spouse to be of a minimum age, and at maximum 21 years, before the spouse is able to join him/her. (emphasis added) The October 2008 Report from the Commission to the European Parliament and the Council on the application of that Directive stated in respect of article 4(5): Most Member States made use of this optional clause, arguing that it can help prevent forced marriages. Now it is of course obvious that this rule has significant disruptive effects on many young couples whose actual or proposed marriages are entirely voluntary indeed, the very substantial majority of those affected. Predictably these couples, whether or not they marry, will be kept apart or have to live abroad. As, moreover, is recognised in a recent statement (dated 9 June 2011) from Suzelle Dickson, the Joint Head of the Forced Marriage Unit (FMU): The FMU is aware of a concern that the increase in the minimum age for obtaining a marriage visa would lead to young people being kept abroad against their will for an extended period following the marriage until reaching the age for sponsorship. She adds, however: From the FMUs experience the majority of reluctant sponsors return to the UK soon after the marriage although there are no statistics or data held in relation to this. This is generally so that the sponsor can establish themselves financially, gaining employment so that they can support the visa application. It is also perfectly true that, certainly at the time this measure was introduced in November 2008, there had been little in the way of research to indicate just how far the rule would help in combating forced marriages. As, indeed, the 2011 Home Affairs Committee Report noted (at para 14), their predecessor committee in May 2008 had concluded: We have not seen sufficient evidence to determine whether or not raising the age of sponsorship would have a deterrent effect on forced marriage. Given the potential risks involved, we urge the government to ensure that any changes it proposes to its policy on visa application procedures in respect of sponsorship are based on further research and conclusive evidence as to the effect of those changes. The unfortunate fact is, however, that, by the same token that the full extent of the problem of forced marriage is impossible to gauge as stated in the NCSR July 2009 report (para 3), it is likely that there are a large number of victims who have not come to the attention of any agencies or professionals, described as hidden cases so too research is problematic and conclusive evidence impossible to come by. The reason forced marriages are hard to detect is, of course, that victims inevitably risk yet further serious harm and suffering if they reveal the true facts. Lord Wilson (at para 49 of his judgment) poses ten questions all, I readily accept, perfectly good questions which (at para 50) he recognises are not easily answered and remain unanswered. The unfortunate fact is, however, that these questions can never be satisfactorily answered and that a judgment call is therefore required. This is a matter to which I return at para 91 below. Or is it to be said that the whole matter is all just too difficult and uncertain and that the Secretary of State is therefore disabled from taking the course adopted by those other EU countries which share her view on the best way forward (although not apparently from increasing the sponsoring age from 16 to 18 as was earlier done)? For my part, therefore, I would be less critical than the majority of the Secretary of States view the Hester Research Report having been analysed by Immigration Research and Statistics and two external peer reviewers as not of sufficient quality to be published by the Home Office that, public consultation [having] found that a small majority of respondents were in favour . , raising the marriage visa age would represent a robust and publicly endorsed approach to the problem of forced marriage. (para 33 of Nicola Smiths witness statement for the appellant dated 30 October 2009). Altogether more important than this, however, as it seems to me, is that this courts duty is to decide the appeal, not by a reference to the sufficiency or otherwise of the research carried out by the Home Office before the new rule was introduced, but rather by reference to the proportionality as perceived today between the impact of the rule change on such innocent young couples as are adversely affected by it and the overall benefit of the rule in terms of combating forced marriage. As Lord Bingham of Cornhill said in R (SB) v Governors of Denbigh High School [2007] 1 AC 100, 116, para 31: what matters in any case is the practical outcome, not the quality of the decision making process that led to it. In the light of all the material now before this court, most notably the May 2011 Home Affairs Committee Report and Karma Nirvanas evidence before it, the evidence of other EU countries imposing similar minimum age requirements for sponsoring marriages, the 2003 EC Directive (and the 2008 Council Report on its application) recognising that such requirements are widely regarded as helping to prevent forced marriages, the original, never disputed, increase in the age requirement for sponsorship from 16 to 18 with that aim in mind, together with such (admittedly, albeit to my mind inevitably, limited) Home Office statistical evidence as suggests the benefit of a further such increase from 18 to 21, I find it hard to see how this court can properly strike down the rule as incompatible with article 8. The extent to which the rule will help combat forced marriage and the countervailing extent to which it will disrupt the lives of innocent couples adversely affected by it is largely a matter of judgment. Unless demonstrably wrong, this judgment should be rather for government than for the courts. Still more obviously, the comparison between the enormity of suffering within forced marriages on the one hand and the disruption to innocent couples within the 18 21 age group whose desire to live together in this country is temporarily thwarted by the rule change, is essentially one for elected politicians, not for judges. Lady Hale suggests (at para 66 of her judgment) that: The right to marry is just as important as the right not to marry. But she cannot possibly mean by this that the postponement by up to three years of a couples wish to live together as man and wife in this country involves just as great a violation of human rights as a forced marriage. What value, then, is to be attached to preventing a single forced marriage? What cost should each disappointed couple be regarded as paying? Really these questions are questions of policy and should be for government rather than us. Of course, the ultimate decision on article 8(2) proportionality must be for the courts but in this particular context the courts should to my mind accord government a very substantial area of discretionary judgment. Huang v Secretary of State for the Home Department [2007] 2 AC 167 (to which Lord Wilson refers at para 46 of his judgment) was a very different sort of case from the present, concerning as it did the article 8 claims of two particular individuals on their own special facts. No one was seeking there, as here, actually to strike down an immigration rule. Certainly, at paragraph 16 of the committees opinion (given by Lord Bingham) in Huang, we deprecated the use of the term deference to describe the weight to be given to certain factors considered important by the Secretary of State. But we expressly recognised the need to accord appropriate weight to the judgment of a person with responsibility for a given subject matter and access to special sources of knowledge and advice. That is precisely what I am suggesting should be done here: it is the Secretary of State who has the responsibility for combating forced marriages in the context of immigration and who should be recognised as having access to special sources of knowledge and advice in that regard. Lady Hale (at para 74 of her judgment) says that: We know from cases such as Hirst v United Kingdom (No 2) (2005) 42 EHRR 849, para 82, that a general, automatic, indiscriminate restriction on a vitally important Convention right falls outside any acceptable margin of appreciation. I confess to the greatest difficulty in understanding the suggested relevance of Hirst in the present context. Were the UK government now to legislate to accord the vote, say, to all prisoners serving less than four year terms of imprisonment, could it then seriously be argued that the rule (denying the vote to those serving four years or more) would still fall foul of some principle against a general, automatic, indiscriminate restriction? I suggest not and that that would be the real parallel with the rule in the present case (just as with the previous rule postponing sponsorship from 16 to 18 as to which Lady Hale says nothing as, indeed, she says nothing about the similar rules adopted in other Council of Europe states). In any event, it is not as if the Secretary of State makes no exception whatever to the operation of the rule. Obviously, given the difficulty of discovering which marriages (or proposed marriages) are forced, exceptions cannot be too readily made if the rule is to have its intended effect. But, in exceptional compassionate circumstances (perhaps, for example, where children are involved or the woman is pregnant) or where, indeed, on the particular facts of an individual case article 8 would otherwise be breached (the demonstrable disadvantage to a particular couple plainly outweighing the public interest in maintaining a general rule for the benefit of the wider community, a category of exception likely to overlap with the first), the rule will be disapplied. Such exceptions, one may note, are broadly mirrored in the Danish legislation (helpfully supplied to us following the hearing by Mr Setright QC acting on behalf of the second interveners) which, by section 9c(i) of the Aliens (Consolidation) Act 2009, provides for a resident permit to be issued to an alien under 24 upon the fulfilment of certain specified conditions if exceptional reasons make it appropriate, including regard for family unity. Similarly the exception to rule 277 constituted by its further amendment with effect from 6 April 2010 to reduce the minimum age to 18 if either party is a serving member of HM Forces, so far from mak[ing] all but untenable the Home Secretarys contention that an all embracing rule, making no distinction of persons, is necessary if the objective is to be met (Sedley LJs judgment at para 57), is to my mind convincingly explained in Nicola Smiths third witness statement (before the Court of Appeal) dated 14 October 2010: The change reflects the unique circumstances in which military personnel operate. Additional support provided by the Armed Forces to families during deployments is more efficiently delivered if they live close to the Service persons duty station. This support gives a Service person a degree of reassurance when they are deployed on operations and is considered to have a positive effect on families at home. It is the Ministry of Defences view that military personnel will be more operationally effective when deploying to difficult environments if they have increased certainty that their spouse or partner will not be excluded from the UK. Mr Al Mustakim on behalf of the respondents in the second appeal and all the interveners (although conspicuously not Mr Drabble QC for the respondents in the first appeal) seek to rely on the decision of the House of Lords in R (Baiai) v Secretary of State for the Home Department [2009] AC 287 in support of an argument under article 12 of the Convention. As Sedley LJ records (para 47 of his judgment), Mr Al Mustakim and the AIRE Centre placed the right to marry at the centre of their arguments and, indeed, Mr Satvinder Juss for the third intervener contends before us (para 1 of his written case) that Baiai is dispositive of this appeal. In my judgment, however, the differences between the two cases are altogether more striking than their similarities and reliance here on the decision in Baiai is entirely misplaced. Baiai involved a direct contravention of the first limb of article 12, the right to marry. Here by contrast the case cannot be put higher than an interference with the right to found a family. As stated in Clayton and Tomlinsons The Law of Human Rights, 2nd ed, (2009) para 13.114: a claim that legal restrictions preclude a couple from marrying will come under article 12 whereas complaints concerning the states failure to provide the material circumstances which make marriage effective will engage article 8. Secondly, the legitimate aim advanced for the blanket prohibition in Baiai was the combating of marriages of convenience, ie marriages designed to defeat immigration control. Here by contrast the aim is to combat forced marriages, obviously a more compelling objective. Thirdly, the justification advanced for adopting a blanket prohibition rather than investigating each application individually has been very different in the two cases. It is one thing to stigmatize a rule as insufficiently precisely targeted (Ms Monaghan QCs characterisation of the respective policies at para 20 of her written argument for the AIRE Centre) if the only reason put forward for not considering cases individually is that such investigation is too expensive and administratively burdensome (para 31 of Lord Bingham of Cornhills judgment in Baiai); quite another to do so given, as here, the impossibility (explicitly recognised by Mr Setright in argument) of satisfactorily investigating individual applications in the context of forced marriages. It is now an established principle of our law that the Convention should not be interpreted and applied more generously in favour of an applicant than the Strasbourg jurisprudence clearly warrants. If this court now concurs in striking down rule 277 on article 8 grounds, there is nothing the Secretary of State can do by way of an appeal to Strasbourg to reinstate it. Are we really to say that the position is plain and that Germany, Austria, the Netherlands, Belgium, Denmark and other such Council of Europe states with similar rules must also necessarily be in breach of article 8? What if the equivalent rule is later challenged elsewhere in Europe and eventually upheld in Strasbourg? Article 8 is a difficult provision which has already led to some highly contentious, not to say debateable, decisions. Upon that I am sure we would all agree. In a sensitive context such as that of forced marriages it would seem to me not merely impermissible but positively unwise for the courts yet again to frustrate government policy except in the clearest of cases. To my mind this cannot possibly be regarded as such a case. I would allow these appeals. LORD PHILLIPS AND LORD CLARKE We agree that these appeals should be dismissed for the reasons given by Lord Wilson and Lady Hale. |
The issue before the Supreme Court lies within a very narrow compass. The appellant is applying to the European Court of Human Rights to challenge the fairness of his trial because it was held partially in camera. The United Kingdom has in its observations to the court resisted this application. The appellant wishes to be permitted in his response to disclose and refer to contents of the evidence given in camera. The limited issue now before the Supreme Court is whether the English courts have any discretionary power in any circumstances to refuse to permit the appellant to do this at this stage of the proceedings before the European Court of Human Rights. If the English courts have any discretion at all in this regard, the question whether circumstances exist justifying its exercise in this case is not before the Supreme Court. In a purely domestic context, it is now common ground that the English courts have a discretionary power to refuse to permit disclosure of material deployed in camera. The issue on this appeal is whether this power ceases or ceases to be exercisable, whatever the circumstances, once an applicant to the European Court of Human Rights decides that he wishes to disclose the material to that court in the context (here) of a complaint that the in camera proceedings made his trial unfair. The appellant invokes in this connection obligations which he alleges are imposed on the United Kingdom at the international level under article 34 of the European Convention on Human Rights, an article not incorporated into United Kingdom law by the Human Rights Act 1998. The appellants conviction In circumstances which attracted much public attention at the time, Mr Allen Chappelow, an 86 year old reclusive writer, was on 14 June 2006 found to have been murdered, plainly some weeks beforehand, in his house in Downshire Hill, Hampstead, London. The appellant, who lived two or three streets away, was subsequently charged with his murder and with associated offences of fraudulent misuse of his identity and bank accounts. The appellant denied the murder charge and alleged that he had been given the deceaseds cheques, credit cards and banking information by gangsters who he named as Gaz, Zhao Dong and Ah Ming. He gave descriptions of them and places they frequented or where, in the case of Ah Ming, he said he worked. The appellant alleged that they were responsible for the theft of the deceaseds identity and that he was playing along with them as a means of assembling evidence against them and reporting them. The Crown applied for an order that part of the trial relating to this defence take place in camera in the interests of national security and to protect the identity of a witness or other person. The judge, Ouseley J, considered this exceptional application in the light of the relevant case law of the European Court of Human Rights. By judgment and order dated 15 January 2008 he held that the risks to national security and to witnesses or others, together with the risk that no trial at all might otherwise be possible, justified the making of the order sought and that the defendant would have a fair trial were it to be made. The Court of Appeal (Criminal Division) (Lord Phillips of Worth Matravers CJ, Silber and Underhill JJ) upheld this decision by judgment dated 28 January 2008, after considering the in camera material. On a first trial, the jury could not agree on the murder charge, but convicted the appellant on charges of fraudulent misuse of the deceaseds identity and bank accounts. (That was a conviction which the jury should not have been allowed to deliver while the murder charge and a retrial were outstanding, and it was subsequently set aside by the Court of Appeal.) On a retrial, a second jury on 16 January 2009 convicted the appellant of both murder and burglary, and he was sentenced to life imprisonment with a minimum term of 20 years. During the trial, because of the appellants difficulty in keeping distinct the sensitive and non sensitive aspects of his evidence, the entire defence case was heard in camera in the presence of the appellant and those representing him, who were Mr Robertson QC leading Ms Brimelow instructed by Janes Solicitors. At the end of the retrial, Ouseley J made a further order that nothing be published revealing any evidence or other matter heard or dealt with in camera, other than that which had been said in public during the proceedings. The appeal against conviction The appellant appealed against his conviction, on the grounds that, in the light of the hearing of part of the trial in camera, the conviction was unsafe. The fairness of this procedure was again considered by the Court of Appeal (Criminal Division) (Hughes V P, Saunders and Thirlwall JJ), this time in the light of the way the trial had actually proceeded and again after considering the in camera material. The court dismissed the appeal in a full judgment dated 5 October 2010. Inter alia, it addressed submissions advanced on behalf of the appellant by Mr Robertson QC in a passage which also indicates how substantially the essence of the appellants case was in fact publicly disclosed: 21. He [Mr Robertson] contends that if the evidence which was taken in private, which consisted of four witnesses plus that of the defendant, had been heard in public, there would have been likely to be significantly greater media coverage of the trial, and that there is a real possibility that additional witnesses supporting the defendant in his case would have come forward on seeing it. In particular, he suggests that there is a real possibility that witnesses would have come forward to confirm the existence and gangster characteristics of those whom the defendant blamed for the supply to him of the deceaseds cheques, credit card and banking information. Secondly, he says, there may well have been further evidence of the essentially good and non violent past character of the defendant. 22. This possibility was considered carefully at the time of the decision to conduct part of the case in camera. We are unable to see that it can be more than the merest speculation. Most of the trial was conducted in public. The defendant was able to name the three persons who he said were responsible for the supply of the cheques and to give a good deal of circumstantial identifying material. The order for the taking of evidence in private had excluded that part of his evidence, expressly so that it could be heard by anyone who chose to be in court, but the defendant when he came to give evidence was unable to confine himself even for a brief period to this kind of material and so it was in the end necessary for all his evidence to be taken in private. Nevertheless, the information about the alleged gangsters was available to be put to several Crown witnesses who gave evidence in open court, including the officer in the case who was cross examined about them and about what efforts had been made to trace them. Moreover, at the first trial counsel for the defendant had made an opening statement after the Crown opening in public and had had the opportunity, taken as we understand it, to identify the persons on whom, on the defendants case, the defence turned. At the second trial a similar statement could no doubt have been made, but as a matter of trial strategy no request to do so was made. The existence of Aming [Ah Ming] was confirmed by at least one witness and other information about him was elicited. The defendant was also able to advance, in open court, a number of allegations against a prosecution witness, He Jia Jin, and to put before the jury material which suggested, perhaps without much in the way of proof but advantageously so to the defendant, that that man similarly participated in nefarious activities. This all happened twice, in two trials a year or so apart. We are unable to accept that there is a real possibility that other evidence would have emerged given further publicity and that such would have been exculpatory. In reaching that conclusion we have taken into account the enormously strong evidence, summarised below, that the defendant's account of being involved only in very limited use of the deceased's identity and bank accounts at the behest of others, was simply not true. Insofar as Mr Robertson suggested that further material 23. might also have emerged on which to cross examine the few witnesses who gave evidence in private this was not made out. The kind of material to which he referred was available at the time and no attempt was made to deploy it. 24. The suggestion that additional good character evidence might also have emerged is similarly unarguable. There was a great deal of evidence of the defendant's character, both praiseworthy and non violent on the one hand and less good, involving a history of forgery and dishonesty, on the other. The judge summed it up very favourably to the defendant. The appellants application to the European Court of Human Rights By Application No 31295/11 lodged on 28 April 2011 the appellant, again represented by Mr Robertson and Ms Brimelow instructed by Janes Solicitors, has initiated proceedings against the United Kingdom before the European Court of Human Rights, complaining inter alia that his trial and conviction were unfair and violated article 6.1 of the Convention because of the in camera hearing of that part of the trial that went to his defence. The evidential prejudice alleged (in the applicants application dated 28 April 2011) to have arisen from material being deployed in camera, rather than in public, is the same as that previously alleged and considered by the English trial and appellate courts, namely: 42. If the trial had been conducted in the normal way in public it could have encouraged additional witnesses, who would have supported the defence, to come forward. It would have placed witnesses called by the Crown under public scrutiny. 43. In particular, there is a real possibility that witnesses who were able to substantiate the applicants defence that he was being supplied with material stolen from the deceased by gangsters, would have made themselves known. Not only could these witnesses have given evidence for the defence, but they also could have provided material with which defence counsel could have cross examined prosecution witnesses. To that end, the defence was impaired by being unable to properly challenge the case against Mr Yam and present an alternative explanation. A public reporting of this case, undoubtedly, would have raised awareness within the close knit Chinese community in London and the confidence raised by open criminal due process would have encouraged witnesses to come forward. The United Kingdom in observations dated 9 April 2013 has submitted that the application should be declared manifestly ill founded and inadmissible or alternatively dismissed on the merits. The issue has thus subsequently arisen, whether the appellant can or should be permitted to refer to the contents of in camera material in his response to the United Kingdoms observations. The European Court of Human Rights on 30 August 2013 extended the time for any response to allow the appellant to apply to the English courts for leave to refer to the contents of in camera material in his response. The court when doing this confirmed that it has procedures in place to ensure the safe storage of secret documents, should the need arise. The further application to Ouseley J and the present judicial review proceedings in respect of his ruling The appellant duly made an application to Ouseley J. The Attorney General intervened as an interested party. A certificate dated 11 December 2013 was made by the Rt Hon William Hague MP, Secretary of State for Foreign and Commonwealth Affairs, stating that he had considered in camera material set out in a schedule (not itself disclosed to those acting for the appellant) together with the appellants draft of the response which he wishes to put before the European Court of Human Rights, and that: I have concluded that there would be a real risk of serious harm to an important public interest were either the Order to be discharged in its entirety, or in part, permitting disclosure of the in camera information, or were disclosure to be made to the Strasbourg court of the information in the draft response document. It is not possible for me to be specific in this certificate about the precise harm that disclosure of the information in question would cause, since my doing so would be liable to cause the very damage that the certificate seeks to avoid. Full details are, however, given for the benefit of the court in the Schedule to this certificate. 10. On 27 February 2014 Ouseley J ruled that the appellant was not and should not be able to disclose the in camera material in his response and, for the avoidance of doubt, expanded the wording of his order of 15 January 2008 to make this express. The appellant brought proceedings challenging the ruling by way of judicial review. On 31 October 2014, the Divisional Court (Elias LJ and Hickinbottom J) granted permission for judicial review, but dismissed the application on its merits. 11. Before Ouseley J and the Divisional Court, Ms Brimelow QC representing the appellant referred to the Supreme Courts decision in Bank Mellat v HM Treasury (No 2) [2013] UKSC 38; [2014] AC 700. The Supreme Court there held by a majority that it must in the interests of justice be able on an appeal to consider closed material deployed before a first instance judge. She submitted that the Supreme Court should adopt similar reasoning as regards in camera material, in the context of the appellants current application to the European Court of Human Rights. Ouseley J was referred to articles 34 and 38 of the Convention and to case law of the European Court of Human Rights dealing with their effect. Articles 34 and 38 bind the United Kingdom at the international level. They are not incorporated into English law by the Human Rights Act 1998. They read: 34. Individual applications The court may receive applications from any person, nongovernmental organisation or group of individuals claiming to be the victim of a violation by one of the High Contracting Parties of the rights set forth in the Convention or the Protocols thereto. The High Contracting Parties undertake not to hinder in any way the effective exercise of this right. 38. Examination of the case The court shall examine the case together with the representatives of the parties and, if need be, undertake an investigation, for the effective conduct of which the High Contracting Parties concerned shall furnish all necessary facilities. Ms Brimelow submitted that, although articles 34 and 38 are not part of domestic law, domestic courts should, so far as free to, act consistently with the obligations which she submitted that they involve under international law, and should leave it to the European Court of Human Rights to make such use as it may decide of its own procedural powers to hear the case in camera and to protect the in camera material. In the light of the parties submissions and after considering the open certificate as well as its closed schedule, Ouseley J reconsidered whether disclosure as sought by the appellant should be permitted. He concluded that it should not be. On the material before him, he held that The purpose of the in camera order would be put at risk by disclosure of the in camera material to the Strasbourg Court. He said that, although a court should not stand in the way of what an applicant wishes to place before Strasbourg, unless there is very good reason to do so, he had no doubt that there are very good reasons to do so in this case (para 50). Any obligations arising under articles 34 and 38 of the European Convention on Human Rights operated on the United Kingdom at the international level only (para 51). He was not satisfied that the European Court of Human Rights would insist on disclosure to it by the United Kingdom of the in camera material (para 52). Undertaking, as a domestic court, the balancing exercise referred to by the European Court of Human Rights in Janowiec v Russia (2013) 58 EHRR 792, he had no doubt but that the balance lies in favour of non disclosure to the Strasbourg court, even assuming the use by it of its protective procedural powers, bearing in mind the nature of the evidence as to the interests to be protected, the decisions made thus far on that by the trial and appellate courts, the degree of risk and the possible consequences of disclosure (para 58). Ouseley J further amplified his reasons for these conclusions, noting, as had done the Court of Appeal (Criminal Division) (para 6 above), the speculative nature of the appellants case that a trial in the open would have led to either the named gangsters or any third party coming forward (para 62). He went on: 63. There is nothing in this point, and nothing to go in the balance favouring disclosure beyond allowing the ECtHR to reach that same, and to my mind inevitable, conclusion itself. That is not nearly enough. I say that, having seen the partial draft of the response which Ms Brimelow wishes to submit to the ECtHR. The United Kingdom government had also suggested that, with various amendments, the appellants response could avoid any breach of the prohibition on disclosure. As to this Ouseley J said: 64. Those amendments would permit the response document to be submitted and it would then convey something of the flavour of the envisaged submissions. However, if the application on that basis were declared admissible, I doubt that they could all be effectively pursued let alone answered, without the in camera material. But, with the amended response document, the Strasbourg court would be in a better position to judge relevance and what requirement, if any, it should place on the UK Government in relation to the in camera material. 65. At present, therefore, I see no reason to vary the order to enable the material to be deployed before Strasbourg. The Government will have to see how far it can persuade the Strasbourg court not to ask for the material, whether or not in camera, and then decide whether or not to comply with any obligations which Strasbourg may impose. It is not for this court to make that decision for it, let alone at this stage. 66. If the Government wished to disclose material covered by the order, the court would again consider an application for its variation or discharge. The Government is just as much covered by the order as Wang Yam and his lawyers. To the extent that the order covers the use of the in camera material in applications to Strasbourg, whether under its own in camera rules or not, it would be a breach of the order by either party or others to refer to that material without variation of the order or its discharge. Before the Divisional Court Ms Brimelow advanced essentially the same submissions as had been advanced before Ouseley J. The Divisional Court gave essentially the same reasons for rejecting them. It noted that the right of access to the European Court of Human Rights operates at the international level, and is not analogous to a domestic right of appeal. It said that it was far from clear that the European Court of Human Rights would consider that the order made would infringe Convention principles; and that, in any event, there was no absolute obligation on a domestic court to exercise a domestic discretion in a way which would ensure that the United Kingdom acted compatibly with its international obligations (paras 16 to 22, 28 and 35). The Divisional Court was asked not to look at and did not look at the in camera material. It was told that there was in this regard a further matter which [the appellant] may wish to pursue at a later occasion. The Divisional Court addressed this further matter as follows: 59. He [the appellant] wishes to contend that even if in principle it was open to the judge to make an order interfering with the way in which he wished to present his case, in the particular circumstances of this case the order ought not to have been made. The judge gave disproportionate weight to the national security considerations. The claimant said that he was unable to run this argument because in order to do so his lawyers needed to be able to see the material which had only been disclosed in the closed session, but they were unable to do. The reason is that the Secretary of State has required certain undertakings to be complied with before permitting access to the material. The claimants lawyers say that these are unjustified conditions and they have refused to comply; hence there has been a stand off. We were not asked to resolve this matter and in any event we were not in a position to do so. Moreover, we were asked in the circumstances not to look at the confidential material, and have not done so. 60. I confess that it is not clear to me from the grounds that this point had been raised. Counsel has undertaken to give careful consideration as to whether in all the circumstances it is still proper to pursue that ground. If it is pursued, there should be a short hearing before the same court if possible. The Divisional Court certified the following point of law as being of general public importance, but refused permission to appeal on it to the Supreme Court: Is there a power under the common law or under section 12 of the Administration of Justice Act 1960 to prevent an individual from placing material before the European Court of Human Rights? If so, can the power be exercised where the domestic court is satisfied that it is not in the interests of state for the material to be made public even to the Strasbourg court? The Supreme Court granted permission to appeal. The parties appearing are the appellant, represented by Lord Pannick QC leading Ms Brimelow QC and Nikolaus Grubeck instructed by Janes Solicitors, and the Attorney General as an interested party. The parties cases before the Supreme Court Before the Supreme Court, Lord Pannick QC accepted, indeed emphasised, that the appellants case depends on the proposition that the courts below had no relevant power or discretion to exercise at all. This proposition in turn depends upon the submission that the existence or exercise of any such power or discretion would inevitably involve the United Kingdom in a breach of international obligations owed under article 34, at least once an appellant determines to refer to the contents of in camera material in submissions to the European Court of Human Rights. The further matter referred to by the Divisional Court (para 18 above) does not and cannot arise on this appeal, since it would involve a challenge to the reasonableness or proportionality of the exercise of any power or discretion which exists. This matter was not argued before the Divisional Court, was linked with the closed schedule which the appellants advisers have not seen and was left over for further pursuit, if the appellants advisers thought proper (as they do not appear, at least as yet, to have done), before the Divisional Court. In relation to the first stated question, both parties have on this appeal proceeded on the basis that any relevant power is to be found in the common law. It is thus unnecessary in this judgment to consider section 12(1)(c) of the Administration of Justice Act 1960, on which the Divisional Court also relied and to which the first certified question set out in para 19 above refers, or section 11 of the Contempt of Court Act 1981, the application of which the Divisional Court considered but did not find it necessary to decide. Lord Pannick accepts that in a purely domestic context the common law power extends to enable the protection of the national interest and/or the interests of witnesses or others by an order regarding in camera material such as Ouseley J made on 15 January 2008. But in his submission no such power can exist or continue to be exercisable in any circumstances where its use would put the United Kingdom in breach of an international obligation. The only basis upon which the power could be exercised inconsistently with such an obligation would be, he submitted, if Parliament expressly authorised this. The international obligation on which he relies before the Supreme Court is article 34, rather than article 38, of the Convention. Analysis The appellant can (as I have emphasised) only succeed on this appeal by making good a proposition that there are no circumstances in which refusal to permit disclosure of the in camera material to the European Court of Human Rights in the appellants response could be justified. For reasons which appear in paras 24 to 34 below, that proposition is not in my opinion made good at the international level by reference to the Convention and case law of the European Court of Human Rights. Moreover, even if it were made good at the international level, it would not, in my opinion and for reasons which appear in paras 35 to 38, follow that the English courts would as a matter of domestic law be obliged to give effect to it. The right of access to the European Court of Human Rights in Strasbourg is a right conferred by the Convention at the international level. The European Court of Human Rights is an independent international court, not another tier in the domestic appellate structure. The domestic principles according to which a domestic appellate court may have access to all the materials available to a first instance court have no direct application. Further, any obligations which the United Kingdom may have under articles 34 and 38 operate at the international level, not at a domestic level. However, as stated already, Lord Pannick submits that the United Kingdom is currently under international obligations under article 34, which must under domestic law be seen as controlling the domestic power to restrict disclosure of in camera material. I will address this submission, starting with the question whether it is made good at the international level. The international legal position under article 34 The submission is that the United Kingdom would, contrary to article 34, be hindering the effective exercise of the appellants right of application to the European Court of Human Rights, whereby he claims to be the victim of a violation of article 6 of the Convention because of the in camera procedure adopted at his trial. The application itself has been made without hindrance, but Lord Pannicks submission is, clearly, that its effective exercise includes its pursuit and that the English courts can and should conclude that this is being hindered by the appellants inability at this stage to refer to the in camera material in his response. The appellant asks the English courts to accept this, in circumstances where English courts have repeatedly examined the question whether it was both necessary and fair to hold part of the trial in camera and have repeatedly concluded that it was. The appellant and those representing him knew of and were able to address the in camera material at trial and on appeal. It arose, as Lord Pannick noted, from the appellants own defence. The appellants assertion that publication of its content would in any way have advanced his defence has repeatedly been rejected as implausible. The appellants current appeal can only succeed if one accepts that the inability to deploy the in camera material in the appellants response will inevitably constitute a breach by the United Kingdom of an obligation owed by it in international law under article 34. In my opinion, that is not shown to be the case, and in any event, if any court is to reach such a conclusion, it must be the European Court of Human Rights, not the English courts. Case law of the European Court of Human Rights on article 34 is limited. Sisojeva v Latvia (2007) 45 EHRR 753 to which the Supreme Court was referred concerned the very different subject matter of pressure to dissuade or discourage pursuit of a Convention remedy. The European Court of Human Rights reiterated, uncontroversially, that: 115. it is of the utmost importance for the effective operation of the system of individual petition instituted by article 34 of the Convention that applicants or potential applicants are able to communicate freely with the court without being subjected to any form of pressure from the authorities to withdraw or modify their complaints. 116. The word pressure must be taken to cover not only direct coercion and flagrant acts of intimidation of applicants or their families or legal representatives but also other improper indirect acts or contacts designed to dissuade or discourage them from pursuing a Convention remedy. Whether or not contacts between the authorities and an applicant or potential applicant amount to unacceptable practices from the standpoint of article 34 must be determined in the light of the particular circumstances in issue. The actual decision was that there was insufficient evidence that the questioning by security police in the circumstances of that case should be regarded as a form of pressure, intimidation or harassment which might have induced the applicants to withdraw or modify their application or hindered them in any other way in the exercise of their right of individual petition. (para 124) Contrary to the appellants case, it is in my opinion relevant to look in the present context not just at article 34, but also at article 38. On the appellants case under article 34 he would be the sole judge of what is necessary at this stage for the effective presentation of his case in Strasbourg. This would be so, even though the English courts have, as I have mentioned, repeatedly concluded both that it would be prejudicial to the national interest, to witnesses or to others, if the disclosure were made, and that it was not unfair to him that the disclosure he wishes should not be made. In contrast, the order under appeal leaves it at the international level to the European Court of Human Rights to consider and decide under article 38 whether any and if so what further material should be requested from the United Kingdom to enable it to consider the appellants case both at the admissibility stage and, if the matter were to go further, on the merits. Further, the case law of the European Court of Human Rights indicates that that Court will not in this context act as if it were a fourth instance appeal court re determining issues of national security, but will review the domestic adjudication on the issues involved and, if satisfied of its fairness and thoroughness, may accept the outcome without insisting on automatic disclosure to itself of secret material. The most relevant case law consists of Janowiec v Russia (2013) 58 EHRR 792 and Al Nashiri v Poland (2014) 60 EHRR 393. As the reference (above) to secret material indicates, these two cases concerned closed material held and used by the relevant state which the applicants to Strasbourg had never seen. In contrast, the present appeal concerns material which the appellant and his representatives have been able to see and address in camera both at trial and on appeal. The complaint is simply that its publication to the world at large might have been beneficial to his defence. That is a difference which in my opinion may well weigh with the European Court of Human Rights, as a factor inclining that court to accept the judgment of domestic courts which have adjudicated fairly and thoroughly on the question whether material should, in the interests of national security, witnesses and others, remain in camera at and after trial. In Janowiec the applicants were relatives of the alleged victims of a massacre of Polish prisoners of war held at Ostashkoy in 1940, for which massacre Russia in 1990 accepted responsibility. They had been refused access to Russian prosecutorial investigation files as well as to a decision on 21 September 2004 to discontinue the criminal case on the ground that the persons responsible were already dead. The European Court of Human Rights in holding that there had been a breach of article 38 said this (italics added): 208. The court reiterates that article 38 of the Convention requires the Contracting States to furnish all necessary facilities to the court, whether it is conducting a fact finding investigation or performing its general duties as regards the examination of applications. Being master of its own procedure and of its own rules, the court has complete freedom in assessing not only the admissibility and the relevance but also the probative value of each item of evidence before it. Only the court may decide whether and to what extent the participation of a particular witness would be relevant for its assessment of the facts and what kind of evidence the parties are required to produce for due examination of the case. The parties are obliged to comply with its evidential requests and instructions, provide timely information on any obstacles in complying with them and provide any reasonable or convincing explanations for failure to comply. It is therefore sufficient that the court regards the evidence contained in the requested decision as necessary for the establishment of the facts in the present case. 209. As regards the allegedly derivative nature of the obligation to furnish all necessary facilities for its investigation, flowing from article 38 of the Convention, the court reiterates that this obligation is a corollary of the undertaking not to hinder the effective exercise of the right of individual application under article 34 of the Convention. Indeed, the effective exercise of this right may be thwarted by a Contracting Partys failure to assist the court in conducting an examination of all circumstances relating to the case, including in particular by not producing evidence which the court considers crucial for its task. Both provisions work together to guarantee the efficient conduct of the judicial proceedings and they relate to matters of procedure rather than to the merits of the applicants' grievances under the substantive provisions of the Convention or its Protocols. Although the structure of the courts judgments traditionally reflects the numbering of the articles of the Convention, it has also been customary for the court to examine the Governments compliance with their procedural obligation under article 38 of the Convention at the outset, especially if negative inferences are to be drawn from the Governments failure to submit the requested evidence. Furthermore, it is not required that the Governments alleged interference should have actually restricted, or had any appreciable impact on, the exercise of the right of individual petition. The court reaffirms that the Contracting Partys procedural obligations under articles 34 and 38 of the Convention must be enforced irrespective of the eventual outcome of the proceedings and in such a manner as to avoid any actual or potential chilling effect on the applicants or their representatives. As to national security considerations, the court said: 213. The court reiterates that the judgment by the national authorities in any particular case that national security considerations are involved is one which it is not well equipped to challenge. However, even where national security is at stake, the concepts of lawfulness and the rule of law in a democratic society require that measures affecting fundamental human rights must be subject to some form of adversarial proceedings before an independent body competent to review the reasons for the decision and the relevant evidence. If there was no possibility to challenge effectively the executives assertion that national security was at stake, the state authorities would be able to encroach arbitrarily on rights protected by the Convention. In Janowiec itself, there had been no substantive analysis by the Russian courts of the reasons for maintaining the classified (secret) status, no meaningful scrutiny of the executive assertions and no independent review of whether the conclusion that declassification constituted a danger to national security had a reasonable basis in fact (para 214). In Al Nashiri the two applicants had been detained for six and nine months respectively in a secret CIA detention facility operated in a Polish training base in Poland, where they alleged that they were not only unlawfully detained, but also tortured and ill treated. The Polish authorities refused access to findings of inquiries by a Polish Parliamentary Committee and Regional Prosecutor. The European Court of Human Rights had twice issued procedural orders for production of the non confidential part of the investigative file (para 358), and further found that the Polish Government had provided no reasonable and solid grounds to justify the treatment of most of the relevant documents in the investigation as secret (para 354). The European Court of Human Rights concluded that there had been a breach of article 38, and in para 363 repeated what it had said in para 208 in Janowiec. Dealing specifically with cases where national security or confidentiality are involved, the court in Al Nashiri returned to the theme of para 213 of its judgment in Janowiec in these terms (italics added): 365. The judgment by the national authorities in any particular case that national security considerations are involved is one which the court is not well equipped to challenge. Nevertheless, in cases where the Government have advanced confidentiality or security considerations as the reason for their failure to produce the material requested, the court has had to satisfy itself that there were reasonable and solid grounds for treating the documents in question as secret or confidential. Where such legitimate concerns exist, the court may consider it necessary to require that the respondent Government edit out the sensitive passages or supply a summary of the relevant factual grounds. Furthermore, such concerns may, depending on the document, be accommodated in the courts proceedings by means of appropriate procedural arrangements, including by restricting access to the document in question under rule 33 of the Rules of Court, by classifying all or some of the documents in the case file as confidential vis vis the public and, in extremis, by holding a hearing behind closed doors. The reasoning in this case law makes clear the inter play between articles 34 and 38. The European Court of Human Rights has a central role in deciding what material should be disclosed to it: see especially the passages italicised in the quotations from the judgments in Janowiec and Al Nashiri set out in paras 29 and 32 above. A suggestion of breach of article 34 is a matter for the European Court of Human Rights to consider under article 38. It by no means follows that the court will always order disclosure, even of secret material which the alleged victim has never seen, and still less of in camera material which the alleged victim has seen and addressed. On the contrary, the European Court of Human Rights recognises the sensitivity of national security considerations, and the particular competence one might add responsibility of national authorities in handling material affecting national security or the safety of witnesses or others. Thus, in deciding whether to order that material withheld by governmental authorities from an alleged victim should be disclosed to it, the European Court of Human Rights will consider the independence and thoroughness of the domestic procedure for reviewing the authorities decision. It will consider in that light whether any and if so what further disclosure should be made. It will by no means necessarily conclude that any further disclosure was required. Here, Ouseley J was satisfied at trial that the in camera procedure was necessary and fair and on 27 February 2014 that it continued to be necessary and fair that there should be no disclosure of the in camera material. He was satisfied that there were reasonable and solid grounds for continuing non disclosure. The reasonableness and proportionality of his conclusion have not been (at least as yet) challenged before the Divisional Court or therefore before the Supreme Court: para 20 above. But, even apart from that, I see no basis for concluding that the European Court of Human Rights would either inevitably or probably conclude that any further disclosure should be made to it. More importantly, it will as Ouseley J said in paras 64 to 66 of his judgment (para 16 above) be for the European Court of Human Rights to decide at an appropriate time under article 38 whether any and if so what further disclosure should be made, rather than for the appellant to prejudge its view by insisting on such disclosure as of right under article 34; and it will then be for the United Kingdom to consider its position further. For this reason alone, I would therefore dismiss this appeal. The domestic legal position In the light of the above, the question whether the English courts domestic power to restrain disclosure of in camera material is limited by reference to any international obligation incumbent on the United Kingdom under article 34 does not necessarily arise. But I can consider it shortly. The United Kingdom takes a dualist approach to international law. The case does not concern the construction of a statutory right, duty or power which would otherwise be of uncertain scope in a context where it can be seen or presumed that Parliament intended the statute to comply with the United Kingdoms international obligations: see eg Garland v British Rail Engineering Ltd [1983] 2 AC 751, 771A C per Lord Diplock, R v Secretary of State for the Home Department, Ex p Brind [1991] 1 AC 696, 747H 748A per Lord Bridge and Assange v Swedish Prosecution Authority [2012] UKSC 22; [2012] 2 AC 471. It concerns a general discretionary common law power, to be exercised in the light of all circumstances which the common law identifies as relevant. The starting point in this connection is that domestic and international law considerations are separate. In accordance with R v Secretary of State for the Home Department, Ex p Brind [1991] 1 AC 696, R v Lyons [2002] UKHL 44; [2003] 1 AC 976, para 13 and R (Hurst) v London Northern District Coroner [2007] UKHL 13; [2007] 2 AC 189, para 56, per Lord Brown of Eaton under Heywood with whose reasons Lord Bingham of Cornhill and Lord Rodger of Earlsferry agreed at paras 1, 9 and 15, a domestic decision maker exercising a general discretion (i) is neither bound to have regard to this countrys purely international obligations nor bound to give effect to them, but (ii) may have regard to the United Kingdoms international obligations, if he or she decides this to be appropriate. In relation to point (i), even the minority who have suggested that a domestic decision maker should at least give consideration to international rights which can properly be regarded as fundamental go no further: see per Lady Hale and Lord Mance in Hurst at paras 18 and 78 to 79. Neither by reference to the principle of legality, which refers to rights and obligations recognised at a domestic level, nor on any other basis is it possible to limit the domestic courts general discretion by reference to unincorporated international obligations or to require Parliamentary authorisation before a court can consider whether it should in particular circumstances exercise such a discretion in a way which will or may prove inconsistent with such obligations. For completeness, I add that, in the light of the powers of the European Court of Human Rights under article 38, I would not regard any obligation (if any) which is regarded as existing at this stage under article 34 as fundamental in the sense under discussion in Hurst. In the present case Ouseley J did have regard to the United Kingdoms international legal position under articles 34 and 38, but made clear (inter alia) that, whatever the United Kingdoms obligations might prove to be at the international level, he did not consider the suggested relaxation of his order to allow disclosure in the appellants response to be appropriate. That was in my opinion an orthodox approach to the exercise of his general discretion. He also made clear his willingness to reconsider the position further, in the circumstances indicated in paras 64 to 66 of his judgment (para 16 above). In these circumstances, and bearing in mind that the only issue now before the Supreme Court is whether Ouseley J had a common law power to maintain and expand his order for non disclosure, so as to cover the appellants application to the European Court of Human Rights, as he did on 27 February 2014, this appeal must also fail on the second ground. Conclusions In the light of the above, the appellant has not made good the proposition which he needs to establish, namely that there are no circumstances in which refusal to permit disclosure of the in camera material to the European Court of Human Rights in the appellants response could be justified. First, he has not established at the international level that the non disclosure at this stage involves any breach by the United Kingdom of any obligation under article 34 of the Convention: see paras 24 to 34. Second, even if a contrary conclusion had been reached on the first point, it would not follow that the order maintained and made by Ouseley J on 27 February 2014 involved any breach of English law: see paras 35 to 38. It follows that, for each of these separate reasons, this appeal must be dismissed. |
The appellant, Mr Campbell, was employed by the company (the first respondent) as an apprentice joiner. The second respondent, Mr Gordon, was the sole director of the company and responsible for its day to day operation. On 28 June 2006 the appellant suffered an injury whilst working with an electric circular saw. Although the company had employers liability insurance policy, the policy (surprisingly for a business of this kind) excluded claims arising from the use of woodworking machinery powered by electricity. It therefore excluded any claim arising out of Mr Campbells accident. The companys failure to have in place appropriate insurance was a breach of its obligations under section 1(1) of the Employers Liability (Compulsory Insurance) Act 1969. The company itself went into liquidation in 2009. Mr Campbell now seeks to hold Mr Gordon, as director, liable in damages for the companys failure to provide adequate insurance cover. Mr Gordon himself is recently bankrupt. We were told by Mr Smith QC, appearing for Mr Campbell, that there are discussions with him with a view to obtaining an assignation of any rights he may have against the broker who arranged the inadequate insurance. However, the sole issue for us is whether civil liability attaches to Mr Gordon for that failure. The claim was upheld by the Lord Ordinary, but dismissed by the Inner House by a majority (Lord Brodie and Lord Malcolm, Lord Drummond Young dissenting). In this respect they arrived at the same conclusion, albeit not by identical reasoning, as the English Court of Appeal in Richardson v Pitt Stanley [1995] QB 123 (Russell and Stuart Smith LJJ, Sir John Megaw dissenting). The foundation of the claim has to be found in the 1969 Act. The primary duty to insure is placed on the employer by section 1, which provides: 1. Insurance against liability for employees. 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 Section 4 provides for regulations governing the issue of certificates of insurance and their display for the information of employees and production on demand to inspectors duly authorised by the Secretary of State. These also are obligations placed on the employer. Section 5 which is at the heart of the appeal provides, as amended: 5. Penalty for failure to insure. An employer who on any day is not insured in accordance with this Act when required to be so shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale; and where an offence under this section committed by a corporation has been committed with the consent or connivance of, or facilitated by any neglect on the part of, any director, manager, secretary or other officer of the corporation, he, as well as the corporation shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. (emphasis added) On its face that is an unpromising basis for Mr Campbells present claim. This provision does not in terms impose any duty to insure on a director or other officer as such, let alone any civil liability for failure to do so. The duty rests on the corporate employer. The veil of incorporation is pierced for a limited purpose. It arises only where an offence is committed by the company, and then in defined circumstances imposes equivalent criminal liability on the director or other officer on the basis, not that he is directly responsible, but that he is deemed to be guilty of the offence committed by the company. For the appellant Mr Smith relies on well established principles governing civil liability in respect of statutory obligations. He accepts that as a general rule, where a statute imposes an obligation and imposes a criminal penalty for failure to comply, there is no civil liability; but that is subject to exceptions, including where upon the true construction of the Act it is apparent that the obligation or prohibition was imposed for the benefit or protection of a particular class of individuals, as in the case of the Factories Acts and similar legislation (per Lord Diplock, Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173, at 185) There are many examples of this exception in practice, dating back more than 100 years, for example (in England) to Groves v Lord Wimborne [1898] 2 QB 402, relating to the Factory and Workshop Act 1878, and in Scotland in Black v Fife Coal Co Ltd, 1912 SC (HL) 33; [1912] AC 149, concerning the Coal Mines Regulation Act 1887. In the latter case, Lord Kinnear said (pp 45 and 165 166): We are to consider the scope and purpose of the statute, and in particular for whose benefit it is intended. Now the object of the present statute is plain. It was intended to compel mine owners to make due provision for the safety of the men working in their mines, and the persons for whose benefit all these rules are to be enforced are the persons exposed to danger. But when a duty of this kind is imposed for the benefit of particular persons, there arises at common law a correlative right in those persons who may be injured by its contravention. Therefore I think it is quite impossible to hold that the penalty clause detracts in any way from the prima facie right of the persons for whose benefit the statutory enactment has been passed to enforce the civil liability. The same principle was applied to a failure to insure, in the context of motor insurance, in Monk v Warbey [1935] 1KB 75. Section 35 of the Road Traffic Act 1930 made it illegal to use or to cause or permit any other person to use a motor vehicle on a road unless there was in force in relation to the user of the vehicle a policy of insurance against third party risks that complied with the requirements of the Act. It was held by the Court of Appeal that, where the owner of a car permitted its use by a person uninsured against third party risks and injury to a third party was caused by the negligent driving of that person, the owner was liable in damages to that third party for breach of his statutory duty to insure. That was followed in Scotland in Houston v Buchanan, 1940 SC (HL) 17, [1940] 2 All ER 17. Mr Smith submits that Lord Diplocks words are directly applicable to this case. The duty in question was imposed for the protection of employees such as Mr Campbell, and the context is identical to that of the Factories Acts. In its application to the duty to insure, he submits, the case is indistinguishable from Monk v Warbey. As a cross check of the appropriateness of such liability, he relies on the tri partite test set out by Lord Bridge in Caparo Industries plc v Dickman [1990] AC 605, 617 618 for a duty of care in negligence, including foreseeability, proximity and fairness. He relies also on the statement of Lord Bingham in Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32, 67, referring to 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. Mr Smith submits that the contrary conclusion arrived at by the English Court of Appeal in Richardson was based on a flawed analysis, not least the view of Stuart Smith LJ (p 131E H) that the duty to insure was for the benefit of the employer rather than the employee. He relies on the detailed criticism of that decision by Lord Drummond Young in the Inner House. In the court below, and in argument before this court, there was some discussion whether Lord Diplocks statement of the exception represented the modern law. Lord Brodie thought that it needed to be seen in the light of more recent judicial statements of high authority, which he read as placing less emphasis on definitive presumptions, and more on the need to ascertain the intention of Parliament in enacting the particular provision (paras 10, 20). He referred in particular to statements by Lord Rodger in Morrison Sports Ltd v Scottish Power UK Plc 2011 SC (UKSC) 1 (at paras 28 29, 41), citing in turn the judgment of Lord Browne Wilkinson in X (Minors) v Bedfordshire County Council [1995] 2 AC 633, 731 732; and by Lord Jauncey in R v Deputy Governor of Parkhurst, Ex p Hague [1992] 1 AC 58, 170H 171A. This view finds some academic support in Professor Stantons work on Statutory Torts (2003), paras 2 019 2 020. For my part I find it unnecessary in this appeal to engage in discussion of the extent to which Lord Diplocks formulation has been modified by later authorities. I would only observe that the statements of Lord Browne Wilkinson and Lord Jauncey referred to by Lord Brodie were made in the context of cases concerning liability of public authorities, which may raise rather different issues. I am content to assume (without deciding) that Lord Diplocks words remain a reliable guide at least in relation to statutory duties imposed for the benefit of employees. I would also proceed on the basis (agreeing in this respect with Sir John Megaw in the Richardson case: p 135C D) that the duty of the employer under section 1 of the 1969 Act was imposed for the benefit of the employees, in the sense indicated by Lord Diplock. This however is not enough for the appellant. The essential starting point for Lord Diplocks formulation is an obligation created by statute, binding in law on the person sought to be made liable. There is no suggestion in that or any other authority that a person can be made indirectly liable for breach of an obligation imposed by statute on someone else. It is no different where the obligation is imposed on a company. There is no basis in the case law for looking through the corporate veil to the directors or other individuals through whom the company acts. That can only be done if expressly or impliedly justified by the statute. Comparison with Monk v Warbey is instructive. The statute in that case (Road Traffic Act 1930, section 35) provided by subsection (1) that it was not lawful for any person to use, or to cause or permit any other person to use a motor vehicle on the road unless insured; and by subsection (2) imposed a criminal penalty on any person acting in contravention of the section. It was held that civil liability was not excluded by the separate provision creating a criminal offence. Far from supporting Mr Smiths arguments, this analogy points in the opposite direction. In that case Parliament dealt specifically with both the user, and any person causing or permitting the use, and determined to impose direct responsibility on each. The 1969 Act imposes direct responsibility only on the employer. The equivalent issue would be whether that is to be treated as giving rise to civil liability on the employer for failure to insure, notwithstanding the criminal liability imposed on him by section 5. That issue (on which there were differences in the courts below) does not arise in this appeal. However, there is no analogy with the position of a director or officer. Parliament has recognised that a director or officer may bear some responsibility for the failure to insure, but has dealt with it, not by imposing direct responsibility equivalent to that of the company, but by a specific and closely defined criminal penalty, itself linked to the criminal liability of the company. I would accept that the adoption of a particular statutory model is not necessarily critical. Lord Brodie (para 12) referred to the decision of the Court of Appeal in Rickless v United Artists Corpn [1988] QB 40, in which it was held that a provision which on its face did no more than classify a specified act as a criminal offence did indeed create civil liability. The relevant provision was section 2 of the Dramatic and Musical Performers Protection Act 1958, by which if a person knowingly makes a cinematograph film from a dramatic or musical work without the consent in writing of the performers he shall be guilty of an offence Giving the leading judgment Sir Nicholas Browne Wilkinson V C accepted that the form of the provision pointed against civil liability: although this point is far from decisive, it is easier to spell out a civil right if Parliament has expressly stated the act is generally unlawful rather than merely classified it as a criminal offence. (p 51G H) However, he held that other factors showed an intention to create civil liability, including the clear purpose of providing protection for performers, and the need to comply with this countrys obligations under the relevant international conventions (p 53A). This accordingly was a somewhat special case. But there was no suggestion that civil liability could be imposed other than on those made directly responsible by statute for compliance with the primary obligation. Lord Drummond Young gave a number of reasons for extending civil liability to the directors. A corporate employer could only act through its officers who accordingly had a duty to ensure so far as possible that the company fulfils its statutory duties. In that way he thought it is apparent that section 1, by itself, has the effect of imposing a duty on the directors (para 43). He relied also on the common law rules governing liability of directors for acts of the company, citing for example the relevant principle as stated by Atkin LJ in Performing Right Society Ltd v Ciryl Theatrical Syndicate [1924] 1 KB 1, pp 14 15: Prima facie a managing director is not liable for tortious acts done by servants of the company unless he himself is privy to the acts, that is to say unless he ordered or procured the acts to be done. I conceive that express direction is not necessary. If the directors themselves directed or procured the commission of the [wrongful] act they would be liable in whatever sense they did so, whether expressly or impliedly. (Emphasis added) Consent, connivance and facilitation through neglect were the criteria for the imposition of criminal liability under section 5 of the Act; on general common law principles they are also sufficient to render the director civilly liable for the companys breach of section 1 (paras 44 45). He saw nothing unfair in imposing such liability, given that the director may have ignored or deliberately disregarded the existence of the statutory duty and so incurred personal liability, and that, if he has relied on professional advice from an insurance broker, he will have a right of recourse against the broker (para 46). He criticised the majority for an approach which frustrated the policy of the Act through an over literal construction and an excessively conceptual approach. In his opinion, the objectives of the Act demanded that a director who has consented to or who has been complicit in a breach of the duty to obtain insurance, or who has facilitated such a breach through neglect, should incur civil liability. This substantive point should prevail over structural niceties. (para 47) With respect to him, I do not find these observations helpful in resolving the issue before us, which depends not on general questions of fairness, but on the interpretation of a particular statutory scheme in its context. The fact that the company can only act through its officers tells one nothing about their potential liability to third parties for its acts or failures. The judgment of Atkin LJ to which he refers affirms the rule (supported by reference to a statement of Lord Buckmaster in Rainham Chemical Works v Belvedere Guano Co [1921] 2 AC 465, 476) that directors are not in general liable for the tortious actions of the company. The scope of a potential common law claim against a director for ordering or procuring such a tortious act is not in issue in this case, which turns entirely on alleged liability under the statute. This requires the court to pay due respect to the language and structure used by Parliament, rather than to preconceptions of what its objectives could or should have been. My view of the provisions is reinforced by a factor which was not addressed in the courts below or the written cases, but was drawn to our attention by Mr Dunlop QC for the respondent in the course of oral submissions. This concerned the statutory background of the wording of section 5. It seems that provisions in similar form, imposing criminal liability on directors and other officers for offences by their companies, have a long history. We were told that a Westlaw search (looking for statutory provisions using all three of the words consent, connivance and neglect) had disclosed more than 900 examples of this type of formula, all apparently in the context of corporate offences (although, as Mr Smith pointed out, examples of precisely the same wording are much rarer). This general picture has been confirmed by a similar exercise carried out by legal assistants for the court. We have received nothing from the appellant since the hearing to suggest otherwise. A typical example is found in the Companies Act 2006 itself. Section 1255 (repeating a provision first introduced in this form in 1981) provides: (1) Where an offence under this Part committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, an officer of the body, or a person purporting to act in any such capacity, he as well as the body corporate is guilty of the offence and liable to be proceeded against and punished accordingly. A much earlier example to which Mr Dunlop referred us (dating from before the 1969 Act) comes from the Interpretation Act (Northern Ireland) 1954. This is of general application to all corporate offences created by subsequent statutes in Northern Ireland. Section 20(2) provides: Where an offence under any enactment passed after the commencement of this Act has been committed by a body corporate the liability of whose members is limited, then notwithstanding and without prejudice to the liability of that body, any person who at the time of such commission was a director, general manager, secretary or other similar officer of that body or was purporting to act in any such capacity shall, subject to sub section (3), be liable to be prosecuted as if he had personally committed that offence and shall, if on such prosecution it is proved to the satisfaction of the court that he consented to, or connived at, or did not exercise all such reasonable diligence as he ought in the circumstances to have exercised to prevent the offence, having regard to the nature of his functions in that capacity and to all the circumstances, be liable to the like conviction and punishment as if he had personally been guilty of that offence. (emphasis added) There are differences of wording between the three statutes. The 1954 statute talks not of neglect, as in the 1969 Act and the Companies Act, but of failure to exercise reasonable diligence. On the other hand the reference to liability as if he had personally been guilty seems to anticipate the language of deemed criminal liability in the 1969 Act, but is not replicated in the Companies Act. However, the general pattern is the same in these and in the other examples to which we have been referred. In spite of the apparent frequency of the use of this formula, the researches of counsel and our own legal assistants have not disclosed any reported authority in which its significance or meaning has been considered, nor any previous suggestion that it might be treated as giving rise to civil liability. I would be reluctant to attach too much weight to a point which has emerged so late in the day. Without more substantial research it is impossible to know to what extent this formula has been used in comparable contexts involving protection of employees. However, to my mind it tends to confirm the view that the language of section 5 was deliberately chosen and is intended to mean what it says. The formula is specifically directed at criminal liability, and as far as we know has always been used in that context. Where Parliament has used such a well established formula, it is particularly difficult to infer an intention to impose by implication a more general liability of which there is no hint in its actual language. For all these reasons, I would agree with the conclusion reached by the majority of the Inner House and dismiss the appeal. LORD TOULSON: (dissenting) (with whom Lady Hale agrees) The issue before the court is a) whether Mr Gordon breached a statutory provision intended for the protection of a particular class including Mr Campbell and b) if so, whether Mr Gordon should be held liable for Mr Campbells resulting loss. Lord Carnwath has set out sections 1 and 5 of the 1969 Act. The object of the Act is that a companys employees should have the protection, in the event of suffering an illness or injury arising out of their employment for which the company is liable, of the liability being covered by insurance up to a specified sum. Failure by the company to arrange and maintain such insurance carries a penal sanction. But the pool of those bearing legal responsibility for seeing that such protection is in place is not confined to the company itself. It extends to the companys relevant officer or officers. In order to bring such persons within the pool, the drafter has used the device of a deeming provision. The form of the drafting device is that a director, manager, secretary or other officer of the company who consents to, connives at or by neglect facilitates, a failure to maintain the requisite insurance is deemed to be guilty of the same offence as the company. The effect in substance is to place on such an officer a legal obligation not to cause or permit the company to be without the required insurance by consent, connivance or neglect, on pain of a criminal penalty. To say that the imposition of criminal responsibility for a specified act (or omission) carries with it a legal obligation not to act (or omit to act) in such a way is to state the obvious. The two are opposite sides of the same coin. The language of deeming involves artificiality. In addressing sub issue a), the court has a choice whether to adopt a formalistic approach or to look through the artificiality and consider the function, substance and effect of the provision in real terms. The answer to the question What does it really do? is that the provision is a concise means of extending statutory responsibility for seeing that the company is properly insured to the companys appropriate officer(s), backed by a penal sanction. As an alternative, the drafter might have used words such as It shall be illegal for any director, manager, secretary or other officer of a corporation which is an employer carrying on business in the United Kingdom to consent to, connive at or by neglect facilitate a failure by the corporation to insure (etc), and any such person shall be liable on summary conviction (etc). This would have been longer but the practical result would have been the same: the director or officer would have been liable to a criminal penalty for his wrongful act or omission, imposed for the protection of employees. Sir John Megaw made a similar point. He said: In his dissenting judgment in Richardson v Pitt Stanley [1995] QB 123, 135, With great respect, I find it difficult to believe that the parliamentary draftsman would have intended to make provision that there should be no civil right or remedy by using the formula of section 1 of the Employers Liability (Compulsory Insurance) Act 1969, shall insure, followed by section 5 shall be guilty of an offence; as contrasted with the formula of declaring an act or omission to be unlawful and then separately providing a criminal penalty for the breach. I agree. The approach which commends itself to the majority concentrates on the form of the language. It is argued that the structure of the Act is such that the only duty created by it is explicitly placed on the company by section 1(1), and that the mechanism by which a director or other officer of the company is deemed to be guilty of a breach of that duty is consistent with and supports that proposition. I have set out the alternative approach, which looks at the function and substantive effect of the deeming provision in real terms. The choice between a formal approach and a functional approach in the interpretation and application of statutory language is an aspect of the choice between formalism and realism which has been a fruitful subject since as long ago as the publication of Holmess The Common Law in 1881. In deciding which approach is preferable, the context matters. The present context is legislation for the protection of a vulnerable group, a companys employees. In that context I regard the functional approach as more appropriate. I cannot improve on Lord Drummond Youngs pithy statement, in his dissenting opinion in this case, that in the context of legislation aimed at employee protection the formalist approach is excessively conceptual; it focuses on differences of structure that do not reflect the basic objectives of the statute (para 47). If, however, a formalist approach is preferred, there should be no half measure about it. On the formalist approach, the director in the eyes of the law is himself guilty of committing an offence under sections 1 and 5. The language of the Act does not impose an accessory liability on the director. It would be unnecessary for that purpose. Rather, it explicitly deems him to be himself guilty of the offence of failing to insure and maintain insurance, etc. As a matter of insurance law, it is of course the insurer who insures and someone else (usually the insured) who procures the insurance, but the meaning of shall insure, and maintain insurance in section 1 is clear enough. The effect of the deeming provision is that in the eye of the law the director is guilty as a principal of failing to insure and maintain the necessary insurance. Logic and justice would not permit the director to say that his criminal liability is in substance and reality a form of accessory liability, if one is living in formality land, for, as I have stressed, on the formalists approach the director is in law guilty as a principal of failing to insure. On either approach Mr Gordon breached a statutory provision intended for the protection of a particular class, employees, of which Mr Campbell was a member, but I prefer the former approach for the reasons which I have given. As to sub issue b), legislation for the protection of employees began in the Victorian age. From the outset the courts have consistently held that breaches of provisions in that class of legislation are actionable at the suit of an employee who suffers from the breach. This was established in Groves v Lord Wimborne [1898] 2 QB 402, a case under the Factory and Workshop Act 1878. Rigby LJ said at pp 414 415: The provisions of section 5 are intended for the protection from injury of a particular class of persons, who come within the mischief of the Act. The plaintiff is one of those persons, the possibility of injury to whom through neglect to fence machinery the section contemplates. That being so, the only question seems to be whether the provisions of the Act with regard to the imposition of fines for neglect of the duty created by the section reasonably lead to the conclusion that the Legislature intended that such fines should be the only remedy for breach of that duty. I think that, when those provisions are examined, it is impossible to arrive at that conclusion. The maximum fine that can be imposed in any case, however serious the injury may be, is one of 100. It seems monstrous to suppose that it was intended that in the case of death or severe mutilation arising through a breach of the statutory duty, the compensation to the workman or his family should never exceed 100. Again, section 82 does not provide that the fine imposed under it shall necessarily go to the workman if he be injured, or to his family if he be killed; but only that the Secretary of State may, if he thinks fit, order that the fine or part of it shall do so. Looking at the purview of the whole Act, I cannot think it reasonable to suppose that the Legislature intended the penalty imposed by section 82 to be the only remedy for injury occasioned by breach of the absolute statutory duty created by the Act. The reference to the purview of the whole Act came from the speech of Lord Cairns LC in Atkinson v Newcastle and Gateshead Waterworks Co (1877) 2 Ex D 441, 448. The maximum fine for an offence under the 1969 Act was originally 200. An offence is committed on any day that a company is not insured in accordance with the Act. Groves v Lord Wimborne was approved by the House of Lords in Butler (or Black) v Fife Coal Co Ltd [1912] AC 149. Lord Kinnear said at 165 166: We are to consider the scope and purpose of the statute and in particular for whose benefit it is intended. Now the object of the present statute is plain. It was intended to compel mine owners to make due provision for the safety of the men working in their mines, and the persons for whose benefit all these rules are to be enforced are the persons exposed to danger. But when a duty of this kind is imposed for the benefit of particular persons, there arises at common law a correlative right in those persons who may be injured by its contravention. Therefore I think it is quite impossible to hold that the penalty clause detracts in any way from the prima facie right of the persons for whose benefit the statutory enactment has been passed to enforce the civil liability. This passage was cited as a statement of general principle by Lord Simonds and Lord Normand in Cutler v Wandsworth Stadium Ltd [1949] AC 398, 407 408, 413 414, and by Lord Diplock in Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173, 185. As Lord Kinnears statement indicates, the cause of action is at common law (except in cases where a statute expressly creates a civil right of action). The cause of action which was held to exist in Groves v Lord Wimborne was created by the court. It was founded on a statute but it was the court that determined that breach of the provisions of the Act should be actionable at the suit of the injured party for whose protection the provisions were intended. The conventional jurisprudence is that the courts function is to ascertain as a matter of interpretation whether Parliament intended that there should be civil liability, but that understates the role of the courts in cases where the legislation is silent on the point. In such cases the judges face hieroglyphs without a Rosetta Stone, to borrow a metaphor of Judge Richard Posner writing extra judicially (Divergent Paths The Academy and the Judiciary, Harvard University Press, 2016, p 172). Judge Posner candidly and correctly states that the judges role in such cases is the active role of filling gaps left by the legislature. The courts use a combination of methods for this purpose. They examine the whole purview of the legislation and they employ default rules, with which parliamentary drafters may be taken to be familiar. Lord Du Parcq spelt this out in Cutler v Wandsworth Stadium Ltd [1949] AC 410 411. After a plea that Parliament should reveal its intention in plain words, he said: Parliament must be taken to have known that if it preferred to avoid the crudity of a blunt statement and to leave its intention in that regard to be inferred by the courts, the general rule would prevail unless the scope and language of the Act established the exception. It cannot be supposed that the draftsman is blind to the principles which the courts have laid down for their own guidance when it becomes necessary for them to fill in such gaps as Parliament may choose to leave in its enactments. The default rules were summarised by Lord Diplock in Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173, 185: The sanctions Order thus creates a statutory prohibition upon the doing of certain classes of acts and provides the means of enforcing the prohibition by prosecution for a criminal offence which is subject to heavy penalties including imprisonment. So one starts with the presumption laid down originally by Lord Tenterden CJ in Doe d Murray v Bridges (1831) 1 B & Ad 847, 859, where he spoke of the general rule that where an Act creates an obligation, and enforces the performance in a specified manner that performance cannot be enforced in any other manner a statement that has frequently been cited with approval ever since, including on several occasions in speeches in this House. Where the only manner of enforcing performance for which the Act provides is prosecution for the criminal offence of failure to perform the statutory obligation or for contravening the statutory prohibition which the Act creates, there are two classes of exception to this general rule. The first is where upon the true construction of the Act it is apparent that the obligation or prohibition was imposed for the benefit or protection of a particular class of individuals, as in the case of the Factories Acts and similar legislation. As Lord Kinnear put it in Butler (or Black) v Fife Coal Co Ltd (I have cited the passage which followed.) In his opinion in the present case Lord Brodie said (at para 10) that statements of Lord Kinnear and Lord Diplock are not the modern law. For this (to my mind startling) proposition, Lord Brodie relied on the speech of Lord Jauncey in R v Deputy Governor of Parkhurst, Ex p Hague [1992 1 AC 58, 170 171, and a passage in the speech of Lord Browne Wilkinson in X (Minors) v Bedfordshire County Council [1995] 2 AC 633, 731, cited by Lord Rodger in Morrison Sports Ltd v Scottish Power UK plc 2011 SC (UKSC) 1, para 28, in a judgment with which the other members of the court (including Lady Hale) agreed. Those three cases were far removed from the area of legislation for the protection of employees. In the passage from X (Minors) v Bedfordshire County Council, cited in Morrison Sports Ltd v Scottish Power UK plc, by Lord Rodger, Lord Browne Wilkinson began by describing the principles for determining whether a statutory breach gives rise to a cause of action as well established. He went on to refer to the trilogy of Groves v Lord Wimborne, Cutler v Wandsworth Stadium Ltd and Lonrho Ltd v Shell Petroleum Co Ltd (No 2). He did not suggest that he considered those cases to be not the modern law; quite the opposite. Had he intended to depart from long standing authority, including decisions of the House of Lords, there can be no doubt that he would have said so. Lord Brown Wilkinson referred to R v Deputy Governor of Parkhurst Prison, Ex p Hague, but only to give it as an example of legislation which was treated not as being passed for the benefit of a particular class of persons (those serving prison sentences), but for the benefit of society in general. It provides an illustration of the need for a purview of the whole legislation in question in order to determine whether it is to be regarded as passed for the intended benefit of a particular class. Lord Brodie and Lord Malcolm each cited Lord Jaunceys statement in the Parkhurst case, at pp 170 171, that The fact that a particular provision was intended to protect certain individuals is not of itself sufficient to confer private law rights of action upon them, something more is required to show that the legislature intended such conferment. But that sentence should not be taken in isolation. It needs to be understood in its context. The claim in that case was brought by a prisoner who had been deprived for a time of rights of association, by an order of the deputy governor which was held to be in breach of rules under the Prison Act 1952. In addressing the question whether the breach entitled the claimant to damages, the House of Lords held that it was necessary to consider not only the benefit of the rule to the claimant, but the wider purpose of the legislative scheme. In the paragraph immediately following the words quoted above, Lord Jauncey described the objects of the legislation as far removed from those of legislation such as the factories and coal mines Acts whose prime concern is to protect the health and safety of those who work therein (emphasis added). In the present case the Act has no purpose other than the protection of employees. The principles summarised by Lord Diplock in Lonrho Ltd v Shell Petroleum Co Ltd (No 2) are no more than general principles or default rules, but they have stood the test of time and I would hold that they continue to be the law unless and until the Supreme Court makes a conscious decision otherwise. In particular, where legislation is passed for the protection of employees, in accordance with Lord Diplocks first exception, a breach will ordinarily give rise to a potential cause of action, unless the language of the legislation points clearly in the opposite direction. In this case the legislation was plainly intended for the protection of employees and I do not consider that the form of the language employed by the drafter takes the case in relation to Mr Gordon outside Lord Diplocks first exception. I would allow the appeal. LADY HALE: The question for this court is whether in 1969, when Parliament passed the sections 1 and 5 of the Employers Liability (Compulsory Insurance) Act, it was intended that breach of those sections should give rise, not only to criminal liability, but also to civil liability towards an employee who had been injured by the employers breach of duty towards him and who, because of the failure to insure, would otherwise not receive the compensation for his injuries to which he was entitled. In my view, it is absolutely plain that Parliament did intend there to be such civil liability. Parliament is presumed to legislate in the knowledge of the current state of the law when it is doing so. In 1969, the law had been clearly laid down in Groves v Lord Wimborne [1898] 2 QB 402, approved by the House of Lords in Butler (or Black) v Fife Coal Co Ltd [1912] AC 149, and again in Cutler v Wandsworth Stadium Ltd [1949] AC 398. Statutory duties imposed upon employers for the benefit of employees who suffer injury as a result of their breach give rise to civil as well as criminal liability, absent a clear statutory intent to the contrary. That is still the law. Parliament understood this when it passed the Health and Safety at Work etc Act 1974, section 47 of which made clear which breaches did not give rise to civil liability, and amended it in 2013, further to restrict the extent of civil liability. Quite apart from the fact that we are concerned with the Parliamentary intention in 1969, it is quite wrong to suggest (as the majority in the lower House did) that a trilogy of more recent cases have changed the law as it has long been understood to be. The traditional understanding was reaffirmed in the House of Lords by Lord Diplock in Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173, 185. It was reaffirmed yet again in the House of Lords by Lord Browne Wilkinson in X (Minors) v Bedfordshire County Council [1995] 2 AC 633, 732 one of the trilogy. The other two are R v Deputy Governor of Parkhurst Prison, Ex p Hague [1992] 1 AC 58 and Morrison Sports Ltd v Scottish Power UK plc [2011] SC 1. In none of the three is there any suggestion that the approach of the courts to deciding whether the breach of a statutory duty gives rise to civil liability in damages has changed. In X v Bedfordshire, the principles applicable were said to be well established, albeit difficult to apply (p 731). Those difficulties arise in novel situations rather than in well established situations like this. In X v Bedfordshire, Lord Browne Wilkinson stressed that in no previous case had [it] been held that statutory provisions establishing a regulatory system or a scheme of social welfare for the benefit of the public at large gave rise to a right of action for damages (p 731). Although individuals might in fact be protected, the legislation was for the benefit of society in general and not just a particular class. The cases where civil liability had been imposed were very limited and specific as opposed to general administrative functions imposed on public bodies and involving the exercise of administrative discretions (p 732). Cutler, being concerned with the regulation of betting at dog races, was an example of such a scheme, which did not give rise to civil liability. Hague, being concerned with the management of prisons, was another. Something more should be said about Morrisons Sports, as it is a recent decision of this court, to which I was a party. It was concerned with whether there was civil liability for breach of the Electricity Supply Regulations, made in 1988 but to be treated as if made under the power in section 29 of the Electricity Act 1989. Section 29(3) provided that the Regulations might impose criminal penalties for their contravention; but it also provided that nothing in this subsection shall affect any liability of any such person to pay compensation in respect of any damage or injury which may have been caused by the contravention. Much of the judgment is devoted to explaining why the view of the Inner House that this wording was apt to impose civil liability, as opposed to acknowledging it if it existed, was untenable. When Lord Rodger (with whom the other members of the court agreed) turned to whether the regulations did indeed impose civil liability for breach, he cited the above passage from the speech of Lord Browne Wilkinson in X v Bedfordshire, which referred to, and cast no doubt upon, the law on employers liability as decided in Groves v Lord Wimborne. There is no suggestion in Morrisons Sports that that is no longer the law. The judgment goes on to look at the overall legislative scheme for regulating the supply of electricity. While this clearly contemplated that there might be civil liability, it did not expressly provide for it. Looked at as a whole the scheme of the legislation, with its carefully worked out provisions for various forms of enforcement on behalf of the public, points against individuals having a private right of action for damages (para 37). It was also difficult to identify any limited class of the public for whose protection the Regulations were intended (para 38). In short, this was a general regulatory scheme intended for the benefit of the whole population. The difference between that case and this could hardly be greater. This is a very specific statutory duty imposed upon employers, and also imposed upon specified officers where the employer is a limited company. There can be no difference in substance between imposing criminal liability for failing to do something and imposing a duty to do it. The purpose was to protect a very specific class of people, namely employees who might be injured by the employers breach of duty (whether arising by statute or at common law). The protection intended was that they should be compensated for their injuries even if, for whatever reason, the employer was unable to do so. Failure to insure means that the employee is denied the very thing that the legislation is intended to provide for him. For these reasons, as well as for the fuller reasons given by Lord Toulson, I would allow this appeal and let the case go to proof. |
This case is all about the meaning of the word regularly when describing the attendance of a child at school. Under section 444(1) of the Education Act 1996, if a child of compulsory school age fails to attend regularly at the school where he is a registered pupil, his parent is guilty of an offence. There are at least three possible meanings of regularly in that provision: (a) evenly spaced, as in he attends Church regularly every Sunday; (b) sufficiently often, as in he attends Church regularly, almost every week; or (c) in accordance with the rules, as in he attends Church when he is required to do so. When does a pupil fail to attend school regularly? Is it sufficient if she turns up regularly every Wednesday, or if she attends over 90% of the days when she is required to do so, or does she have to attend on every day when she is required to do so, unless she has permission to be absent or some other recognised excuse? This case The respondent is the father of a child whom I shall call Mary, who is now aged nearly eight and three quarters, but was aged nearly seven at the relevant time. Her parents are separated and she lives roughly half the time with each of them. She is a registered pupil at a primary school on the Isle of Wight. On 30 January 2015, her father sent her head teacher a form entitled Request to remove a child from education during term time, with a covering letter seeking permission to take Mary out of school for a holiday from 12 to 21 April 2015. On 9 February, the head teacher replied refusing the request and warning that a fixed penalty notice would be issued if Mary was taken on holiday. Coincidentally, Marys mother had taken her on a holiday which had not been authorised by the school for the week beginning the 9 February (five days, amounting to ten attendances). Neither, as it happens, had she sought the fathers permission to take the holiday (although we do not know whether she was required by law to do so). Marys mother was issued with a penalty notice by the school which she had paid. Despite the head teachers refusal of permission, Marys father took her out of school from 13 to 21 April (for seven school days, amounting to 14 attendances). On 29 April, the head teacher sent a Fixed Penalty Notice Referral Form to the Councils Education Welfare Officer (EWO). The reason given for believing that a penalty notice was appropriate was unauthorised family holiday during term time. The EWO checked that the Councils Code of Conduct had been complied with and authorised the issue of the notice, which was done on 14 May. This required the father to pay 60 by 4 June 2015. He did not do so. Accordingly, that day he was sent a further invoice requiring him to pay 120 by 10 June 2015. He did not do so. On 1 July, he was sent a letter before action, advising him that the EWO was preparing to prosecute him. He responded by email and telephone call to explain the reason for the absence. The EWO replied that the penalty notice had been correctly issued and the matter would now proceed to prosecution. Proceedings were duly brought in the Isle of Wight Magistrates Court, alleging that Mary had failed to attend school regularly between 13 and 21 April and that as her parent he was guilty of an offence under section 444(1) of the Education Act 1996. He pleaded not guilty. The trial took place on 12 October 2015. At the close of the prosecutions case, the magistrates ruled that there was no case to answer. As they explained, the question we have to ask ourselves is whether [M] was a regular attender. Before the holiday with Dad, her attendance was 95%. Afterwards it was 90.3%. The document supplied on refusal of leave stated that satisfactory attendance is 90 95%. The Council appealed by way of case stated. In their case stated, the Magistrates certified the following question for consideration by the High Court: Did we err in law in taking into account attendance outside of the offence dates (13th April to 21st April 2015) as particularised in the summons when determining the percentage attendance of the child? On 13 May 2016, a Divisional Court of the Queens Bench Division answered that question in the negative: the magistrates had not erred in taking into account the childs attendance outside the absent dates in determining the percentage attendance of the child. On 30 June 2016, the Divisional Court certified a slightly different point of law of general public importance, pursuant to section 1 of the Administration of Justice Act 1960: Whether, on an information alleging a failure by a parent over a specified period to secure that his child attends school regularly contrary to section 444(1) of the 1996 Act, the childs attendance outside the specified period is relevant to the question whether the offence has been committed. Thus the magistrates had assumed that they were required to determine the percentage attendance of the child. The question certified by the Divisional Court makes no such assumption. The essential question for this court is the meaning of fails to attend regularly in section 444(1) of the Education Act 1996. The law from 1870 to 1944 We have been given an account of the history of the law leading up to section 444(1) of the 1996 Act which is interesting as well as instructive. During the early 19th century, the Church of England, the Methodist Church and other Churches set up many elementary schools, but attendance was not compulsory and the state had no obligation to provide universal elementary education. The Elementary Education Act 1870 (Vict 33 & 34, c 75) by section 5 required there to be provided in every school district sufficient amount of accommodation in public elementary schools for all the children resident in the district for whose elementary education efficient and suitable provision is not otherwise made. However, the 1870 Act did not insist that attendance be made compulsory everywhere. This was politically controversial. There was concern about the practicality of compelling the attendance of children whose parents moved frequently in search of work and even more concern about the justice of depriving parents of the earnings of their children while imposing the costs of school attendance upon them. Instead, therefore, section 74 of the 1870 Act empowered each school board, with the approval of the Secretary of State, to make bye laws (1) requiring parents of children of specified ages (between five and 12 inclusive) to cause them to attend school, unless there was some reasonable excuse, (2) fixing the times when children were required to attend school, with two exceptions, one of which was for any day exclusively set apart for religious observance by the religious body to which his parent belongs, and (4) imposing penalties for breach. There was a list of reasonable excuses (held to be non exclusive in London County Council v Maher [1929] 2 KB 97): (1) that the child is under efficient instruction in some other manner; (2) that the child has been prevented from attending school by sickness or any unavoidable cause; and (3) that there was no public elementary school within what was thought to be a reasonable walking distance of the childs home, with a maximum of three miles. Only a minority of school boards made such bye laws. However, the climate of opinion soon changed. The Elementary Education Act 1876 (39 & 40 Vict, c 79) prohibited the employment of children under ten, and of children between ten and 13 who had not attained an appropriate standard of education (section 5), and for the first time imposed upon parents a duty to cause their children to receive efficient elementary instruction in reading, writing and arithmetic (section 4). If a parent habitually and without reasonable excuse neglected to do this, the local authority was under a duty to apply to court for an order requiring the childs attendance at a specified school. Thus such a parent might not only be prosecuted for a breach of the bye laws but also have the education of his child taken out of his hands. This was followed up by section 2 of the Elementary Education Act 1880 (43 & 44 Vict, 23), which required all school boards to introduce bye laws to compel attendance, although they could still set the times at which attendance was required. We have been shown a sample of these local byelaws. They made it a criminal offence for a parent to fail to cause his child of school age to attend school, unless there was a reasonable excuse. Many fixed the time when attendance was required at the whole time for which the school selected shall be open for the instruction of children of a similar age. Some fixed the number of days for which older children were required to attend, varying with the seasons, presumably in order to allow them to take time off for seasonal agricultural work. The school leaving age was raised to 14 by the Education Act 1918 (8 & 9 Geo 5, c 39). The Education Act 1921 consolidated the earlier legislation, with its three basic features: the parental duty to cause their children to be efficiently educated in reading, writing and arithmetic; the duty of the local education authority (as school boards had become) to apply for a school attendance order where a parent habitually and without reasonable excuse neglected to do this; and the duty to make bye laws requiring the parents to cause their children to attend school at the times required by the bye laws unless there was a reasonable excuse. The 1921 Act was passed in the knowledge of the case law under the earlier legislation. In Ex p the School Board of London, In re Murphy (1877) LR 2 QBD 397, at 400, Cockburn CJ had said that an occasional omission might suffice to constitute the offence under the bye laws, contrasting it with the graver sanction of a school attendance order which might result from an habitual failure. In other cases, convictions on informations alleging a single days absence had been upheld, the argument being about whether there was a reasonable excuse: examples are Hares v Curtin [1913] 2 KB 328; and Bunt v Kent [1914] 1 KB 207. And in Marshall v Graham [1907] 2 KB 112, parents were prosecuted for failing to send their children to school on Ascension Day; the argument was about whether Ascension Day was a day exclusively set aside for religious observance by the Church of England. No one suggested that the offence could not be committed by a single days absence if the childs attendance were otherwise satisfactory. The principle that the parent had to cause the child to attend school at all times when required to do so by the bye laws was affirmed in Osborne v Martin (1927) 91 JP 197, where the Divisional Court held that a parent who withdrew his child from school every week for piano lessons should have been convicted. Lord Hewart CJ observed, at p 197: It was never intended that a child attending the school might be withdrawn for this or that hour to attend a lesson thought by the parent to be more useful or possibly in the long run more remunerative. The time table and discipline of a school could be reduced to chaos if that were permissible. Salter J pointed out, at p 198, that parents were not obliged to take advantage of the free education provided by the state, but if they did, they had to take it as a whole. The law since 1944 The modern law of school attendance dates back to the Education Act 1944, generally known as Rab Butlers Act. This was the Act which provided, not only for compulsory elementary, or primary, education, but also for compulsory secondary education of a sort thought suitable for the particular child. The general shape of the school attendance regime remained the same, but there were some changes. First, the parents duty was no longer limited to causing the child be efficiently educated in the three rs. Instead, the duty was to cause him to receive efficient full time education suitable to his age, ability and aptitude, either by regular attendance at school or otherwise (section 36). Second, if a parent failed to satisfy the local education authority of this, the authority could issue a school attendance order requiring him to register the child at a particular school; failure to comply was an offence (section 37). Third, the duty of LEAs to make byelaws was replaced by a statutory offence: if a child of compulsory school age who is a registered pupil at a school fails to attend regularly thereat, the parent was guilty of an offence (section 39(1)). The child was not to be deemed to have failed to attend regularly: if he was absent with leave, or when prevented by sickness or any unavoidable cause, or on any day exclusively set aside for religious observance, or if the school was not within walking distance and no suitable transport arrangements had been made (section 39(2)). These were all derived from the earlier legislation. Thus the concept of reasonable excuse was replaced by a closed list of circumstances in which absence was permitted: see Spiers v Warrington Corpn [1954] 1 QB 61, holding that Parliament had decided to depart from London County Council v Maher, above. Unavoidable cause had to be something affecting the child rather than the parents: see Jenkins v Howells [1949] 2 KB 218. But the circumstances now included absence with leave. And the requirement that parents cause their children to attend school was replaced by an offence committed if the child failed to attend school regularly. These provisions were replaced by provisions in materially identical terms in the Education Act 1993. These were then consolidated in the Education Act 1996. Section 7 reproduces the parents duty in section 36 of the 1944 Act, with the addition that the education has also to be suitable to any special educational needs he may have. Sections 437 to 443 deal with school attendance orders, which may be made where a parent, having been notified, fails to satisfy the local authority that the child is receiving suitable education and the authority are of the opinion that it is expedient that the child attend school (section 437(3)). The school attendance requirement is now contained in section 444, which (as amended) now provides: (1) If a child of compulsory school age who is a registered pupil at a school fails to attend regularly at the school, his parent is guilty of an offence. (1A) If in the circumstances mentioned in subsection (1) the parent knows that his child is failing to attend regularly at the school and fails to cause him to do so, he is guilty of an offence. (1B) It is a defence for a person charged with an offence under subsection (1A) to prove that he had a reasonable justification for his failure to cause the child to attend regularly at the school. (2) Subsections (2A) to (6) below apply in proceedings for an offence under this section in respect of a child who is not a boarder at the school at which he is a registered pupil. (2A) The child shall not be taken to have failed to attend regularly at the school by reason of his absence from the school at any time if the parent proves that at that time the child was prevented from attending by reason of sickness or any unavoidable cause. (3) The child shall not be taken to have failed to attend regularly at the school by reason of his absence from the school (a) with leave, or [repealed] (b) (c) on any day exclusively set apart for religious observance by the religious body to which his parent belongs. [Subsections (3A) to (5) deal with the circumstances in which a child is not to be taken to have failed to attend regularly because of a failure to make the required travel arrangements for him.] (6) If it is proved that the child has no fixed abode subsections (3B), (3D) and (4) shall not apply, but it is a defence for the parent to prove (a) that he is engaged in a trade or business of such a nature as to require him to travel from place to place, (b) that the child has attended at a school as a registered pupil as regularly as the nature of that trade or business permits, and (c) if the child has attained the age of six, that he has made at least 200 attendances during the period of 12 months ending with the date on which the proceedings were instituted. (7) In proceedings for an offence under this section in respect of a child who is a boarder at the school at which he is a registered pupil, the child shall be taken to have failed to attend regularly at the school if he is absent from it without leave during any part of the school term unless the parent proves that at that time the child was prevented from being present by reason of sickness or any unavoidable cause. (7A) Where (a) a child of compulsory school age has been excluded for a fixed period on disciplinary grounds from a school in England which is a maintained school, (i) (ii) a pupil referral unit, (iii) an Academy school, (iiia) an alternative provision Academy, (iv) a city technology college, or (v) arts, a city college for the technology of the (b) he remains for the time being a registered pupil at the school, the appropriate authority make arrangements for (c) the provision of full time education for him at the school during the period of exclusion, and (d) notice in writing of the arrangements has been given to the childs parent, the exclusion does not affect the application of subsections (1) to (7) to the childs attendance at the school on any day to which the arrangements relate. (7B) In subsection (7A)(c) the appropriate authority means in relation to a maintained school, the governing (a) body of the school, in relation to a pupil referral unit, the local (b) authority, and (c) (7A)(a)(iii) to (v), the proprietor of the school. in relation to any school mentioned in subsection (8) A person guilty of an offence under subsection (1) is liable on summary conviction to a fine not exceeding level 3 on the standard scale. (8A) A person guilty of an offence under subsection (1A) is liable on summary conviction to a fine not exceeding level 4 on the standard (a) scale, or (b) months, or both. to imprisonment for a term not exceeding three (8B) If, on the trial of an offence under subsection (1A), the court finds the defendant not guilty of that offence but is satisfied that he is guilty of an offence under subsection (1), the court may find him guilty of that offence. In this section leave, in relation to a school, means (9) leave granted by any person authorised to do so by the governing body or proprietor of the school. It will be seen that this now distinguishes between the less serious offence in section 444(1), where the local authority do not have to prove that the parent was at fault, and the more serious (but still summary) offence in section 444(1A), where the parent knows that his child is failing to attend regularly and has no reasonable justification for his own failure to cause the child to do so. It will also be seen that, as before, the circumstances in which a childs absence is not to be treated as a failure to attend regularly are limited to sickness or other unavoidable cause, where the burden lies on the parent (section 444(2A); when he has leave or the day is set aside for religious observance; and when there is a failure to make appropriate travel arrangements. Unavoidable cause has been strictly construed: it did not cover the decision of a 15 year old child to leave home to live with her boyfriend (in Bath and North East Somerset District Council v Warman [1999] ELR 81) or where a 15 year old girl did not go to school because she was bullied there and her mother kept her away (in R (R) v Leeds Magistrates Court [2005] ELR 589). The penalty notice regime, as an alternative to immediate prosecution, is contained in sections 444A and 444B, introduced by section 23 of the Anti social Behaviour Act 2003. The details need not concern us, but the broad shape is that an authorised officer may issue such a notice where he has reason to believe that a person has committed an offence under section 444. The notice offers that person the opportunity of escaping liability to conviction for the offence by paying the prescribed penalty. If he does so within the prescribed time he cannot be prosecuted for the offence. The current penalty prescribed by the Education (Penalty Notices) (England) Regulations 2007 (SI 2007/1867) (as amended by SI 2012/1046 and SI 2013/757) is 60 if paid within 21 days or 120 if paid within seven days after that. If the person does not pay, he can of course be prosecuted for the original offence, as happened here. The Regulations also require each local authority to publish a Code of Conduct for issuing penalty notices, after consultation with governing bodies, head teachers and the police. Guidance from the Secretary of State states that this should set out the criteria that will be used to trigger the use of a penalty notice. Among the examples given where this might be done was one off instances of irregular attendance, such as holidays taken during term time without the schools permission. Regulation 7(1A) of the Education (Pupil Registration) (England) Regulations (SI 2006/1751) (as amended by SI 2013/756) provides that leave of absence for any purpose may only be given where there are exceptional circumstances. The Isle of Wights Code of Conduct stated, among other things, that It is for Headteachers to determine whether or not such a request is exceptional; and to state the number of days granted. Each request can only be judged on a case by case basis but it is usual that Headteachers will be sparing in their use of this discretion. Only if they feel obliged to categorise as unauthorised any holiday absence should a warning letter be issued and the penalty notice procedure invoked. Regularly There is no doubt that, before the 1944 Act, a parent was liable to conviction if his child failed to attend for a single day or half day when required to do so. Most of the case law, both before and after that Act, was concerned with the scope of the statutory exceptions or excuses. But the introduction, in 1944, of the phrase fails to attend regularly raised the possibility that this was no longer the law. The question arose, but was not fully explored, in London Borough of Bromley v C [2006] EWHC 1110 (Admin), [2006] ELR 358. A mother was prosecuted for failing to secure the regular attendance of her three daughters at their school between specified dates. The magistrates appear not to have decided exactly how many attendances, out of the possible 114 (that is, 57 days) between those dates, had been missed. They found that there were good and cogent reasons for some of the absences; the Divisional Court generously regarded this as the magistrates way of saying that there had been an unavoidable cause for each of them. That left the 18 attendances or nine days during which each girl had been absent from school on holidays for which the school had not given leave. The magistrates found that the mother ought to have exercised more care regarding absences for holidays during school term but the absences were, in our view, justified. Overall, they found that the mother had not failed to secure regular attendance. On the local authoritys appeal by way of case stated, one of the questions asked was does the taking of an unauthorised holiday of itself amount to failing to secure regular school attendance?. In an extempore judgment, Sullivan LJ held that this was the wrong question: The real question is whether any reasonable bench of magistrates could have concluded that there was regular attendance by these three children if 18 out of a possible 114 attendances had been missed because of two unauthorised holidays. There could be no suggestion that the holidays were with leave or that they fell within the description of an unavoidable cause (para 15) He went on to say this: I would readily accept the submission that it does not automatically follow that there will not have been regular attendance merely because there has been an unauthorised holiday. The question will be very much one of fact and degree in each case, but in the present case the holidays amounted to some 16% of possible attendances. (para 19) The magistrates had to have regard to all the circumstances, including the extent to which the children had attended school. Against the background of their attending for 40 days (out of a possible 57), their absence for nine days on unauthorised holidays could lead to only one conclusion. There had not been regular attendance. He repeated that the question was one of fact and degree for the magistrates but there was only one answer on these facts (para 21). Auld LJ agreed that on the facts found, the magistrates did exceed the generous ambit of judgment available to them in determining whether there was regular school attendance (para 28). No authorities were cited to the court in the Bromley case and it would appear that no argument was addressed to the court on the meaning of regularly. It seems to have been assumed that regularly meant sufficiently frequently. Some support from that view might have been gleaned from the case of Crump v Gilmore (1969) 68 LGR 56, where the magistrates had acquitted the parents because they had not known that their daughter was bunking off secondary school and took immediate steps to ensure her 100% attendance when they did know. The Divisional Court sent the case back with a direction to convict, because this is an absolute offence. But in the course of doing so, Lord Parker of Waddington CJ said, at p 59: The real and only question here is whether the 12 occasions out of a possible 114 when this little [sic] girl was not attending school and had no reasonable excuse for not attending, amount to a failure to attend regularly. But he went on to hold that they did and that the magistrates must have been of the same opinion. The assumption may have been that regularly meant sufficiently frequently but the matter was not addressed. Bromley was cited to the Divisional Court in this case. In another extempore judgment, the Court adopted the same approach, which it considered correct. The question of regular attendance was one of fact and degree and the magistrates were entitled to take the attendance record over the whole school year into account. The local authority could not pre empt that enquiry by limiting the period charged to the period of absence on holiday. Taken to its logical conclusion, this would mean that the offence could be committed by a single days absence (para 16). The question whether attendance had been regular could not be ascertained solely by reference to the period of absence. It was necessary to have regard to the period of absence in the wider context of attendance (para 20). Hence the answer to the question posed was yes. The assumption that regularly means sufficiently frequently seems also to have been made in this case, because counsel for the father argued that, without a definition, regular was far too vague to be the basis of a criminal offence (see para 21); but the Divisional Court found it unnecessary to reach a view. The answer to that problem could, of course, have been that regularly does not mean what everyone seems to have assumed that it means. I turn, therefore, to the three possible meanings of regularly mentioned in para 1 above and ask which was the meaning intended by Parliament when enacting section 444(1). (a) At regular intervals We speak of a person going regularly to church or to Sunday school when he goes every Sunday or almost every Sunday. But this cannot have been the intended meaning in the case of school attendance. It would enable attendance every Monday to count as regular even though attendance every day of the week is required. It would enable a childs attendance to be regular even if he was regularly late, yet in Hinchley v Rankin [1961] 1 WLR 421, the Divisional Court held that a father had been rightly convicted when his son had been recorded as absent because he had not been at school when the register was closed, for it must be regular attendance for the period prescribed by the person upon whom the duty to provide the education is laid (at p 425). (b) Sufficiently frequently This might well be the meaning assumed by many people at first reading, as it was by the Divisional Court in Bromley and in this case. This is what we mean when we talk about a person being a regular at the pub or a regular at church services. But there are many reasons to think that this was not what Parliament intended, either in 1944 or in 1996. First, attendance at the pub or at church is not compulsory. There are no rules about when a customer should attend the pub. Such rules as there are about church attendance are not rules of law. School attendance is compulsory and there are rules about when it is required. Second, the purpose of the Education Act 1944 was to increase the scope and character of compulsory state education. Parents were required to cause their children to receive efficient full time education suitable to their age, ability and aptitude, no longer just efficient education in the three rs. The compulsory school age was to be raised and a wider range of educational opportunities provided free of charge. It is implausible to suggest that Parliament intended to relax the previous obligations placed on parents to secure their childrens attendance to take advantage of those opportunities. Third, other features of the 1944 Act indicated an intention to tighten rather than to relax the parental liability. The open ended defence of reasonable excuse was replaced in such a way as to make it clear that only the statutory excuses were acceptable. Allowing parents the flexibility inherent in this interpretation would mean that their excuses did not even have to be reasonable. Taking a child to football or failing to get up in time to get the child to school would do, provided that it did not happen too often. Fourth, section 444(3), in providing that a child is not to be taken to have failed to attend regularly by reason of his absence on any day exclusively set apart for religious observance suggests that otherwise his absence on a single day would be a failure to attend regularly. Fifth, in section 444(6), dealing with children of no fixed abode, the parent has a defence if he can show that he has an itinerant trade or business, that his child had attended as regularly as the nature of that trade or business permits, and in any event for the minimum number of attendances prescribed during the previous school year. Regularly in this provision does not suggest a matter of fact and degree; rather that the child has attended as often as he can. The provision also illustrates that when Parliament wishes to indicate what, in its view, is sufficiently frequent, it can and does do so. Sixth, by section 444(7) of the 1996 Act, a boarder is taken to have failed to attend regularly at the school if he is absent from it without leave during any part of the school term, unless the parent proves that he was prevented by sickness or any unavoidable cause. If 100% attendance is expected of boarders, why should it not also be expected of day pupils? Both the school and the parents are in loco parentis. Seventh, although subsequent amendments should not be used to assist in interpreting what was already there, it is not without interest that section 444(7A), dealing with excluded children for whom alternative provision has been made, proceeds on the basis that absences are to be counted by the day. Eighth, and above all, this interpretation is far too uncertain to found a criminal offence. Over what period is the sufficiency of attendance to be judged? How much is sufficient? Does one take into account how good or bad the reasons for any previous absences were? If attendance over the whole school year, or over the period before the information is laid, is taken into account, how can the parent know whether taking the child out of school on any particular day will be an offence? How is a parent like Mrs C, contemplating taking her children on holiday, to know whether the local authority and the magistrates will consider that it was (a) acceptable because there were no other absences, (b) acceptable because the other absences were for good cause, or (c) unacceptable because of the length of the holiday, or (d) unacceptable because, given the number of days the child had already missed for good reasons, he should not have been taken on holiday too? (No doubt other permutations are available.) The point is that, on this interpretation, the parent will not know on any given day whether taking his child out of school is a criminal offence. Ninth, and this is the reason why the local authority have appealed and the Secretary of State has intervened in support, there are very good policy reasons why this interpretation simply will not do. It is not just that there is a clear statistical link between school attendance and educational achievement. It is more the disruptive effect of unauthorised absences. These disrupt the education of the individual child. Work missed has to be made up, requiring extra work by the teacher who has already covered and marked this subject matter with the other pupils. Having to make up for one pupils absence may also disrupt the work of other pupils. Group learning will be diminished by the absence of individual members of the group. Most of all, if one pupil can be taken out whenever it suits the parent, then so can others. Different pupils may be taken out at different times, thus increasing the disruptive effect exponentially. Finally, given the strictness of the previous law, Parliament is unlikely to have found it acceptable that parents could take their children out of school in blatant disregard of the school rules, either without having asked for permission at all or, having asked for it, been refused. This is not an approach to rule keeping which any educational system can be expected to find acceptable. It is a slap in the face to those obedient parents who do keep the rules, whatever the cost or inconvenience to themselves. In accordance with the rules All the reasons why sufficiently frequently cannot be right also point towards this being the correct interpretation. The Divisional Court was clearly worried about the consequence that a single missed attendance without leave or unavoidable cause could lead to criminal liability. However, there are several answers to this concern. First, there are many examples where a very minor or trivial breach of the law can lead to criminal liability. It is an offence to steal a milk bottle, to drive at 31 miles per hour where the limit is 30, or to fail to declare imported goods which are just over the permitted limit. The answer in such cases is a sensible prosecution policy. In some cases, of which this is one, this can involve the use of fixed penalty notices, which recognise that a person should not have behaved in this way but spare him a criminal conviction. If such cases are prosecuted, the court can deal with them by an absolute or conditional discharge if appropriate. Second, this had not been thought an objection under the pre 1944 law. It was recognised that this sometimes produced harsh results, but the aim was to bring home to parents how important it was that they ensured that their children went to school. The offence in section 444(1) is an offence of strict liability, whereas the offence in section 444(1A) is not. Third, while the general rule is that statutes imposing criminal liability should be construed strictly, so as not to impose it in cases of doubt, it is an even more important rule that statutes imposing criminal liability should do so in a way which enables everyone to know where they stand, to know what is and is not an offence. The alternative interpretations discussed above do not do this, whereas this interpretation does. This interpretation is also consistent with the provision in section 444(3)(a) and (9) that a child is not to be taken to have failed to attend regularly if he is absent with the leave of a person authorised by the governing body or proprietor of the school to give it. Unlike sickness or unavoidable cause, leave is not a defence. It is part of the definition of the offence. Your child is required to attend in accordance with the normal rules laid down by the school authorities for attendance but the school can make an exception in your case. As noted above, it is also consistent with section 444(3)(b). There is another pointer in the link between the parents obligation in section 7, to cause the child to receive full time education, and the offence committed under section 444(1), if the child fails to attend school regularly. Full time indicates for the whole of the time when education is being offered to children like the child in question. Conclusion I conclude, therefore, that in section 444(1) of the Education Act 1996, regularly means in accordance with the rules prescribed by the school. I would therefore make a declaration to that effect. To the extent that earlier cases, in particular Crump v Gilmore and London Borough of Bromley v C, adopted a different interpretation, they should not be followed. The question remains what should be done with this case. The father asks us to content ourselves with making such a declaration and the local authority take a neutral position. They and the Secretary of State are interested in the point of principle and not in the outcome of this particular prosecution. Nevertheless, the father did have a case to answer. On the agreed facts, the penalty notice was properly issued and, having failed to pay it, he should have been convicted of the offence with which he was charged unless he can establish one of the statutory exceptions. The case will be returned to the magistrates with a direction to proceed as if his submission of no case to answer had been rejected. I am particularly mindful of the fact that the mother did exactly the same thing, was issued with a penalty notice and paid it. She might well feel a sense of injustice if, it now having been held that the penalty notice to the father was properly issued, the case did not proceed. |
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 |
The tort of defamation is an ancient construct of the common law. It has accumulated, over the centuries, a number of formal rules with no analogue in other branches of the law of tort. Most of them originated well before freedom of expression acquired the prominent place in our jurisprudence that it enjoys today. Its coherence has not been improved by attempts at statutory reform. Statutes to amend the law of defamation were enacted in 1888, 1952, 1996 and 2013, each of which sought to modify existing common law rules piecemeal, without always attending to the impact of the changes on the rest of the law. The Defamation Act 2013 is the latest chapter in this history. Broadly speaking, it seeks to modify some of the common law rules which were seen unduly to favour the protection of reputation at the expense of freedom of expression. In particular, there had been criticism of a state of the law in which persons resident outside the United Kingdom with only a very limited reputation in the United Kingdom were able to sue here for defamation and obtain substantial damages. One of the principal provisions of the new Act was section 1, which provided that a statement was not to be regarded as defamatory unless it had caused or was likely to cause serious harm to the claimants reputation. The claimant, Bruno Lachaux, is a French aerospace engineer who at the relevant time lived with his British wife Afsana in the United Arab Emirates. The marriage broke down, and in April 2011 he began divorce proceedings in the UAE courts and sought custody of their son Louis. In March 2012, Afsana went into hiding with Louis in the UAE, claiming that she would not get a fair trial in its courts. In August 2012, the UAE court awarded custody of Louis to his father. In February 2013, Mr Lachaux initiated a criminal prosecution against Afsana for abduction. In October of that year, having found out where Louis was, he took possession of him under the custody order. In January and February 2014, a number of British newspapers published articles making allegations about Mr Lachauxs conduct towards Afsana during the marriage and in the course of the divorce and custody proceedings. These appeals arise out of two libel actions begun by him in the High Court on 2 December 2014 against the publishers of the Independent and the Evening Standard, and a third begun on 23 January 2015 against the publisher of the i. Other libel actions were begun against the publisher of similar articles in another online newspaper, but we are not directly concerned with them on these appeals. In February 2015, Eady J conducted a meaning hearing. In a reserved judgment, he held that the article in the Independent bore eight defamatory meanings, and the article in the Evening Standard 12. In summary, the articles were held to have meant (inter alia) that Mr Lachaux had been violent and abusive towards his wife during their marriage, had hidden Louis passport to stop her removing him from the UAE, had made use of UAE law and the UAE courts to deprive her of custody and contact with her son, had callously and without justification taken Louis out of her possession, and then falsely accused her of abducting him. For the purpose of the trial of the issue before of serious harm, which took place before Warby J in July 2015, the newspapers did not contest the primary facts set out in Mr Lachauxs Particulars of Claim. Their case was that the statements in the articles were not defamatory because they did not meet the threshold of seriousness in section 1(1) of the Act of 2013. To appreciate the force of this point, it is necessary to summarise some well established features of the common law relating to damage to reputation. The common law background The law distinguishes between defamation actionable per se and defamation actionable only on proof of special damage. But although sharing a common label, these are very different torts with distinct historical origins. Libel, which is always actionable per se, originated in the disciplinary jurisdiction of the ecclesiastical courts and the criminal jurisdiction of the Court of Star Chamber. The gist of the tort is injury to the claimants reputation and the associated injury to his or her feelings. Defamation actionable per se comprised, in addition to all libels, four categories of slander which were assimilated to libel on account of their particular propensity to injure the reputation of the claimant. These categories were (i) words imputing criminal offences, (ii) words imputing certain contagious or infectious diseases, and (iii) words tending to injure a person in his or her office, calling, trade or profession. The Slander of Women Act 1891 added (iv) words imputing unchastity to a woman. In these cases, the law presumes injury to the claimants reputation and awards general damages in respect of it. These are not merely compensatory, but serve to vindicate the claimants reputation. In a frequently quoted passage of his speech in Broome v Cassell & Co Ltd [1972] AC 1027, 1071, Lord Hailsham LC acknowledged that this may put the plaintiff in a purely financial sense in a much stronger position than he was before the wrong. Not merely can he recover the estimated sum of his past and future losses, but, in case the libel, driven underground, emerges from its lurking place at some future date, he must be able to point to a sum awarded by a jury sufficient to convince a bystander of the baselessness of the charge . Special damage, ie pecuniary loss caused by the publication, may be recovered in addition, but must be proved. By comparison, slander which is not actionable per se originated as a common law action on the case, and is governed by principles much closer to those of the law of tort generally. The law does not presume injury to reputation by mere oral statements and treats injury to feelings as insufficient to found a cause of action. Special damage, representing pecuniary loss rather than injury to reputation, must be proved: see McGregor on Damages, 20th ed (2017), paras 46.002, 46.003; Gatley on Libel and Slander, 12th ed (2013), para 5.2. The interest which the law protects in cases where a defamatory statement is actionable per se differs from that which it protects in other cases. The gist of the tort where the statement is not actionable per se is not injury to reputation but, as Bowen LJ observed in Ratcliffe v Evans [1892] 2 QB 524, 532, wrongfully inflicted pecuniary loss: cf Jones v Jones [1916] 2 AC 481, 490 (Viscount Haldane). Indeed, it is an open question, which has given rise to conflicting dicta, whether general damage is recoverable at all in such cases. For present purposes a working definition of what makes a statement defamatory, derived from the speech of Lord Atkin in Sim v Stretch [1936] 2 All ER 1237, 1240, is that the words tend to lower the plaintiff in the estimation of right thinking members of society generally. Like other formulations in the authorities, this turns on the supposed impact of the statement on those to whom it is communicated. But that impact falls to be ascertained in accordance with a number of more or less artificial rules. First, the meaning is not that which other people may actually have attached to it, but that which is derived from an objective assessment of the defamatory meaning that the notional ordinary reasonable reader would attach to it. Secondly, in an action for defamation actionable per se, damage to the claimants reputation is presumed rather than proved. It depends on the inherently injurious character (or tendency, in the time honoured phrase) of a statement bearing that meaning. Thirdly, the presumption is one of law, and irrebuttable. In two important cases decided in the decade before the Defamation Act 2013, the courts added a further requirement, namely that the damage to reputation in a case actionable per se must pass a minimum threshold of seriousness. The first was Jameel (Yousef) v Dow Jones & Co Inc [2005] QB 946. The Saudi claimant had sued the publishers of the Wall Street Journal for a statement published online in Brussels to the effect that he had been funding terrorism. The statement was shown to have reached just five people in England and Wales. The Court of Appeal rejected a submission that the conclusive presumption of general damage was incompatible with article 10 of the Human Rights Convention. Lord Phillips of Worth Matravers MR, delivering the leading judgment, observed (para 37) that English law has been well served by a principle under which liability turns on the objective question of whether the publication is one which tends to injure the claimants reputation. But he held that the presumption could not be applied consistently with the Convention in those cases, said to be rare, where damage was shown to be so trivial that the interference with freedom of expression could not be said to be necessary for the protection of the claimants reputation. The appropriate course in such a case was to strike out the claim, not on the ground that it failed to disclose a cause of action, but as an abuse of process. The Court of Appeal held that it was an abuse of process for the action before them to proceed where so little is now seen to be at stake, and duly struck it out. The effect of this decision was to introduce a procedural threshold of seriousness to be applied to the damage to the claimants reputation. Two things are clear from the language of Lord Phillips judgment. One is that the threshold was low. The damage must be more than minimal. That is all. Secondly, the Court of Appeal must have thought that the operation of the threshold might depend, as it did in the case before them, on the evidence of actual damage and not just on the inherently injurious character of the statement in question. The second case was Thornton v Telegraph Media Group Ltd [2011] 1 WLR 1985, a decision of Tugendhat J. It arose out of an application by the Defendant newspaper to strike out part of the Particulars of Claim in a libel action on the ground that the statement complained of was incapable of being defamatory. Allowing the application, Tugendhat J held that in addition to the procedural threshold recognised in Jameel, there was a substantive threshold of seriousness to be surmounted before a statement could be regarded as meeting the legal definition of defamatory. The judges definition (para 96) was that a statement may be defamatory of him because it substantially affects in an adverse manner the attitude of other people towards him, or has a tendency so to do (the emphasis is the judges). He derived this formula from dicta of Lord Atkin in Sim v Stretch [1936] 2 All ER 1237. At para 94, he dealt with the relationship between the definition thus arrived at and the presumption of general damage, in terms which suggested that (unlike the Jameel test) the application of the threshold depended on the inherent propensity of the words to injure the claimants reputation: If the likelihood of adverse consequences for a claimant is part of the definition of what is defamatory, then the presumption of damage is the logical corollary of what is already included in the definition. And conversely, the fact that in law damage is presumed is itself an argument why an imputation should not be held to be defamatory unless it has a tendency to have adverse effects upon the claimant. It is difficult to justify why there should be a presumption of damage if words can be defamatory while having no likely adverse consequence for the claimant. The Court of Appeal in Jameel (Yousef)s case [2005] QB 946 declined to find that the presumption of damage was itself in conflict with article 10 (see para 37), but recognised that if in fact there was no or minimal actual damage an action for defamation could constitute an interference with freedom of expression which was not necessary for the protection of the claimants reputation: see para 40. Section 1 of the Defamation Act 2013 Section 1 is in the following terms: 1 Serious harm (1) A statement is not defamatory unless its publication has caused or is likely to cause serious harm to the reputation of the claimant. (2) For the purposes of this section, harm to the reputation of a body that trades for profit is not serious harm unless it has caused or is likely to cause the body serious financial loss. On the present appeals, the rival constructions of this provision may be summarised as follows. The case on behalf of Mr Lachaux is that the Act leaves unaffected the common law presumption of general damage and the associated rule that the cause of action is made out if the statement complained of is inherently injurious or, as Lord Phillips put it in Jameel and Tugendhat J in Thornton, it has a tendency to injure the claimants reputation. The effect of the provision on this view of the matter is simply that the inherent tendency of the words must be to cause not just some damage to reputation but serious harm to it. The defendant publishers dispute this. Their case is that the provision introduces an additional condition to be satisfied before the statement can be regarded as defamatory, on top of the requirement that the words must be inherently injurious. It must also be shown to produce serious harm in fact. They submit that unless it was self evident that such a statement must produce serious harm to reputation, this would have to be established by extraneous evidence. Warby J, after a careful analysis of the Act and the antecedent common law, substantially accepted the defendant publishers case on the law. But he found, on the facts, that the relevant newspaper articles did cause serious harm to Mr Lachaux. The Court of Appeal (McFarlane, Davis and Sharp LJJ) [2018] QB 594, preferred Mr Lachauxs construction of section 1, but they upheld the judges finding of serious harm. Although the Act must be construed as a whole, the issue must turn primarily on the language of section 1. This shows, very clearly to my mind, that it not only raises the threshold of seriousness above that envisaged in Jameel (Yousef) and Thornton, but requires its application to be determined by reference to the actual facts about its impact and not just to the meaning of the words. In the first place, the relevant background to section 1 is the common law position, as I have summarised it. Parliament is taken to have known what the law was prior to the enactment. It must therefore be taken to have known about the decisions in Jameel (Yousef) and Thornton and the basic principles on which general damages were awarded for defamation actionable per se. There is a presumption that a statute does not alter the common law unless it so provides, either expressly or by necessary implication. But this is not an authority to give an enactment a strained interpretation. It means only that the common law should not be taken to have been altered casually, or as a side effect of provisions directed to something else. The Defamation Act 2013 unquestionably does amend the common law to some degree. Its preamble proclaims the fact (an act to amend the law of defamation). It is not disputed that there is a common law presumption of damage to reputation, but no presumption that it is serious. So the least that section 1 achieved was to introduce a new threshold of serious harm which did not previously exist. The question on these appeals is what are the legal implications of that change, and what necessarily follows from it. Even where some change to the common law was intended, it should not go any further than that. As Lord Reid observed in Black Clawson International Ltd v Papierwerke Waldhof Aschaffenburg AG [1975] AC 591, 615, Parliament can be presumed not to have altered the common law further than was necessary. Secondly, section 1 necessarily means that a statement which would previously have been regarded as defamatory, because of its inherent tendency to cause some harm to reputation, is not to be so regarded unless it has caused or is likely to cause harm which is serious. The reference to a situation where the statement has caused serious harm is to the consequences of the publication, and not the publication itself. It points to some historic harm, which is shown to have actually occurred. This is a proposition of fact which can be established only by reference to the impact which the statement is shown actually to have had. It depends on a combination of the inherent tendency of the words and their actual impact on those to whom they were communicated. The same must be true of the reference to harm which is likely to be caused. In this context, the phrase naturally refers to probable future harm. Ms Page QC, who argued Mr Lachauxs case with conspicuous skill and learning, challenged this. She submitted that likely to cause was a synonym for the inherent tendency which gives rise to the presumption of damage at common law. It meant, she said, harm which was liable to be caused given the tendency of the words. That argument was accepted in the Court of Appeal. She also submitted, by way of alternative, that if the phrase referred to the factual probabilities, it must have been directed to applications for pre publication injunctions quia timet. Both of these suggestions seem to me to be rather artificial in a context which indicates that both past and future harm are being treated on the same footing, as functional equivalents. If past harm may be established as a fact, the legislator must have assumed that likely harm could be also. As to pre publication injunctions, the section is designed to import a condition to be satisfied if the statement is to be regarded as defamatory at all. It is not concerned with the remedies available for defamation, whether interlocutory or final. It is right to add that pre publication injunctions are extremely rare, because of the well established constraints on judicial remedies which restrict freedom of expression in advance of publication. Thirdly, it is necessary to read section 1(1) with section 1(2). Section 1(2) is concerned with the way in which section 1(1) is to be applied to statements said to be defamatory of a body trading for profit. It refers to the same concept of serious harm as section 1(1), but provides that in the case of such a body it must have caused or be likely to cause serious financial loss. The financial loss envisaged here is not the same as special damage, in the sense in which that term is used in the law of defamation. Section 1 is concerned with harm to reputation, whereas (as I have pointed out) special damage represents pecuniary loss to interests other than reputation. What is clear, however, is that section 1(2) must refer not to the harm done to the claimants reputation, but to the loss which that harm has caused or is likely to cause. The financial loss is the measure of the harm and must exceed the threshold of seriousness. As applied to harm which the defamatory statement has caused, this necessarily calls for an investigation of the actual impact of the statement. A given statement said to be defamatory may cause greater or lesser financial loss to the claimant, depending on his or her particular circumstances and the reaction of those to whom it is published. Whether that financial loss has occurred and whether it is serious are questions which cannot be answered by reference only to the inherent tendency of the words. The draftsman must have intended that the question what harm it was likely to cause should be decided on the same basis. Finally, if serious harm can be demonstrated only by reference to the inherent tendency of the words, it is difficult to see that any substantial change to the law of defamation has been achieved by what was evidently intended as a significant amendment. The main reason why harm which was less than serious had given rise to liability before the Act was that damage to reputation was presumed from the words alone and might therefore be very different from any damage which could be established in fact. If, as Ms Page submits, the presumption still works in that way, then this anomaly has been carried through into the Act. Suppose that the words amount to a grave allegation against the claimant, but they are published to a small number of people, or to people none of whom believe it, or possibly to people among whom the claimant had no reputation to be harmed. The laws traditional answer is that these matters may mitigate damages but do not affect the defamatory character of the words. Yet it is plain that section 1 was intended to make them part of the test of the defamatory character of the statement. I agree, as the judge did, that this analysis is inconsistent with the previous common law governing statements actionable per se. But it is inconsistent with it only to this extent: that the defamatory character of the statement no longer depends only on the meaning of the words and their inherent tendency to damage the claimants reputation. To that extent Parliament intended to change the common law. But I do not accept that the result is a revolution in the law of defamation, any more than the lower thresholds of seriousness introduced by the decisions in Jameel and Thornton effected such a revolution. Ms Page argued that to construe section 1 in the way that I have done would transform the way in which the Limitation Act 1980 applies to actions for defamation; and that it would effectively abolish the distinction between defamation actionable per se and defamation actionable only on proof of special damage. In both respects, this was said to be inconsistent with other provisions of the Act, notably sections 8 and 14. Section 8 is concerned with limitation. Section 4A of the Limitation Act 1980 provides for a limitation period in defamation actions of one year from the accrual of the cause of action. The cause of action is treated at common law as accruing on publication where it is actionable per se, and on the occurrence of special damage in other cases. Successive publications therefore give rise at common law to distinct causes of action. Section 8 of the Defamation Act 2013 provides that where a statement has been made to the public or a section of the public (for example in a newspaper) and later republished in the same or substantially the same terms, any cause of action against the [same] person for defamation in respect of the subsequent publication is to be treated as having accrued on the date of the first publication. The object of this provision is to deprive claimants of the right to sue on a further publication by the same person of substantially the same defamatory statement, more than a year after the first publication. They must sue on the first publication or run the risk of being time barred. The argument is that section 8 assumes that the common law rule that the cause of action accrues on publication subsists, subject only to the modification that the accrual of the cause of action for a qualifying second publication is backdated to the date of the first. Therefore, it is said, section 1 must be construed on the footing that the cause of action is complete on publication and not on some later date at which serious harm may occur. One of the problems of legislating piecemeal for different aspects of the law of defamation, as the Act of 2013 does, is that the interrelation between different rules may be overlooked. I rather doubt whether Parliament got to grips with the implications of section 1 for limitation. I would not therefore modify my construction of section 1, which I regard as clear, even if I agreed with Ms Page that its effect was to postpone the accrual of the cause of action for defamation actionable per se. But I do not agree with her about that. It is necessary to distinguish between the damage done to an interest protected by the law, and facts which are merely evidence of the extent of that damage. Where a statement is actionable per se, the interest protected by the law is the claimants reputation. As an element in the cause of action for defamation, publication does not mean commercial publication, but communication to a reader or hearer other than the claimant. The impact of the publication on the claimants reputation will in practice occur at that moment in almost all cases, and the cause of action is then complete. If for some reason it does not occur at that moment, the subsequent events will be evidence of the likelihood of its occurring. In either case, subsequent events may serve to demonstrate the seriousness of the statements impact including, in the case of a body trading for profit, its financial implications. It does not follow that those events must have occurred before the claimants cause of action can be said to have accrued. Their relevance is purely evidential. The position is different where a statement is not actionable per se, because the interest protected by the law in that case is purely pecuniary. The pecuniary loss must therefore have occurred. Section 14 is concerned only with the law of slander. It abolishes two of the four categories of slander actionable per se, by repealing the Slander of Women Act 1891 which made the imputation of unchastity to a woman actionable per se, and by providing that an imputation that a person has a contagious or infectious disease is not to be actionable without proof of special damage. The argument is that since section 14 abolishes two of the categories of slander actionable per se, section 1 should not be read as abolishing all of them. The fallacy of this argument is that it assumes that section 1 does abolish all of them. I do not think that it does. To say that a slander is actionable per se simply means that it is actionable without proof of special damage. That is still the case for the two surviving special categories of slander. As I have pointed out above, special damage in this context means damage representing pecuniary loss, not including damage to reputation. Section 1 is not concerned with special damage in that sense but with harm to the reputation of the claimant, ie with harm of the kind represented by general damage. It simply supplements the common law by introducing a new condition that harm of that kind must be serious and in the case of trading bodies that it must result in serious financial loss. The Court of Appeals analysis not only gives little or no effect to the language of section 1. It is to my mind internally contradictory. Davis LJ, who delivered the only reasoned judgment, accepted the submission on behalf of Mr Lachaux that the seriousness of the harm caused to the claimants reputation by the publication depended on the inherent tendency of the words. But he appears to have thought (paras 70 73) that where this was serious, the result was to set up an inference of fact, which it was open to the defendant to rebut by evidence. As Ms Page accepted, this will not do. The common law rule was that damage to reputation was presumed, not proved, and that the presumption was irrebuttable. If the common law rule survives, then there is no scope for evidence of the actual impact of the publication. That is the main reason why in my opinion it cannot survive. Davis LJ has, with respect, accepted the legal analysis advanced on behalf of Mr Lachaux, while attaching to it the consequences of the legal analysis advanced on behalf of the newspapers. In my opinion, Warby Js analysis of the law was coherent and correct, for substantially the reasons which he gave. Application to this case On the footing that (as I would hold) Mr Lachaux must demonstrate as a fact that the harm caused by the publications complained of was serious, Warby J held that it was. He heard evidence from Mr Lachaux himself and three other witnesses of fact, and received written evidence from his solicitor. He also received agreed figures, some of them estimates, of the print runs and estimated readership of the publications complained of and the user numbers for online publications. He based his finding of serious harm on (i) the scale of the publications; (ii) the fact that the statements complained of had come to the attention of at least one identifiable person in the United Kingdom who knew Mr Lachaux and (iii) that they were likely to have come to the attention of others who either knew him or would come to know him in future; and (iv) the gravity of the statements themselves, according to the meaning attributed to them by Sir David Eady. Mr Lachaux would have been entitled to produce evidence from those who had read the statements about its impact on them. But I do not accept, any more than the judge did, that his case must necessarily fail for want of such evidence. The judges finding was based on a combination of the meaning of the words, the situation of Mr Lachaux, the circumstances of publication and the inherent probabilities. There is no reason why inferences of fact as to the seriousness of the harm done to Mr Lachauxs reputation should not be drawn from considerations of this kind. Warby Js task was to evaluate the material before him, and arrive at a conclusion on an issue on which precision will rarely be possible. A concurrent assessment of the facts was made by the Court of Appeal. Findings of this kind would only rarely be disturbed by this court, in the absence of some error of principle potentially critical to the outcome. It was submitted on behalf of the defendant newspapers that there were errors of principle in the judges treatment of the facts. It was said that the injury to Mr Lachauxs reputation was at least in part the result of artificial legal rules, notably the repetition rule which treats as defamatory the reporting, even without endorsement, of another persons statement; and the Dingle rule (see Associated Newspapers Ltd v Dingle [1964] AC 371) that a defendant cannot rely in mitigation of damages on the fact that similar defamatory statements have been published about the same claimant by other persons. The argument was that while these rules of law are well established, they do not affect the factual inquiry required by section 1, namely whether the harm caused by a particular publication was serious. It was also said that the judge should not have taken account of the damage that Mr Lachauxs reputation might suffer in the eyes of people who might get to know him in future. Warby J must have rejected all of these submissions, and the Court of Appeal agreed with him. So do I. The repetition rule is a rule governing the meaning of a statement and the availability of the defence of truth. A statement that someone else has made a defamatory statement about the claimant, although literally true, is treated as equivalent to a direct statement to the same effect. The policy is that repeating someone elses libellous statement is just as bad as making the statement directly: Lewis v Daily Telegraph [1964] AC 234, 260 (Lord Reid). The rule is nothing to do with the threshold of seriousness, and nothing in the 2013 Act can be taken as implicitly abolishing it or limiting its application. The effect of the Dingle rule is to treat evidence of damage to the claimants reputation done by earlier publications of the same matter as legally irrelevant to the question what damage was done by the particular publication complained of. It has been criticised, but it is well established. It has the pragmatic advantage of making it unnecessary to determine which of multiple publications of substantially the same statement occurred first, something which in the case of a newspaper would often be impossible to ascertain and might differ from one reader to the next. The practical impact of the Dingle rule in the modern law is limited by section 12 of the Defamation Act 1952, which allows a defendant to rely in mitigation of damage on certain recoveries or prospective recoveries from other parties for words to the same effect; and by the operation of the Civil Liability (Contribution) Act 1978. Section 1 of the Act is concerned with the threshold of harm and not with the measure or mitigation of general damage. But both raise a similar question of causation. It would be irrational to apply the Dingle rule in one context but not the other, and no one is inviting us to abrogate it. The judge was therefore entitled to apply it. Turning, finally, to the complaint about the impact of the publications on those who did not know Mr Lachaux but might get to know him in future, there is no principled reason why an assessment of the harm to the claimants reputation should not take account of the impact of the publications on those who had never heard of him at the time. The claimants reputation is harmed at the time of publication notwithstanding that the reader or hearer knows nothing about him other than what the publication tells him. It cannot make any difference that it is only later, when he comes to know the claimant personally, that the latters diminished reputation is of any personal interest to him. Disposal For these reasons, while I would state the law differently from the Court of Appeal, I would dismiss these appeals on the facts. |
This appeal is about the defence of illegality: ex turpi causa non oritur actio. The first claimant Les Laboratoires Servier is a French pharmaceutical company which originated the perindopril erbumine compound, an ACE inhibitor used for treating hypertension and cardiac insufficiency. The respondents are companies of the Apotex Group, a Canadian pharmaceuticals group specialising in the manufacture and marketing of generic pharmaceutical products. The parties have agreed that for the purpose of resolving the issues on this appeal, both groups can be treated as one entity without regard to the distinct corporate personality of the companies comprising them. 4. A number of patents for the perindopril erbumine compound have been granted to Servier and its associated companies. In Europe, patent protection for the compound itself expired in June 2003. However, the corresponding Canadian patent for the compound will not expire until 2018. The present dispute relates to a United Kingdom patent not for the compound but for a specific crystalline form of the compound, which was granted to Servier. Its UK subsidiary Servier Laboratories Ltd was the exclusive licensee. In March 2006 Apotex wrote to Servier to notify them that they intended to market generic perindopril in the UK, and at the end of July 2006, upon obtaining marketing authorisation, they began to do so. On 1 August 2006, Servier began proceedings against Apotex for infringement of the UK patent. On 7 August, Mann J granted an interlocutory injunction restraining the importation and sale by the Apotex companies of generic perindopril erbumine in the United Kingdom. The injunction was obtained upon Servier giving the ordinary undertaking to comply with any order that the court might make if it should later find that the order had caused loss to Apotex for which it should be compensated. Pumfrey J gave judgment on the claim on 11 July 2007 [2007] EWHC 1538. He held that the patent had been infringed but that it was invalid, and discharged the injunction. Serviers appeal was dismissed by the Court of Appeal on 28 April 2008 [2008] EWCA Civ 445. 6. 5. Meanwhile, separate proceedings were in progress in Canada for infringement of the Canadian patent for the compound itself. An interlocutory injunction had been refused in those proceedings. But on 2 July 2008, Snider J held that the Canadian patent was valid and infringed, and granted a final injunction. The Canadian Federal Court of Appeal dismissed Apotexs appeal on 30 June 2009, and leave to appeal to the Supreme Court of Canada was refused on 25 March 2010. A separate trial of damages is expected in November 2014. It is agreed that damages under the undertaking in the English proceedings fall to be assessed on the basis that but for the injunction Apotex would have sold in the United Kingdom an additional 3.6 million packs of perindopril erbumine tablets. The active ingredient would have been manufactured by Apotex Pharmachem Inc in Canada and sold at a 30% mark up to Apotex Inc. Apotex Inc would have formulated it into tablets, also in Canada, and sold the tablets to Apotex UK Ltd which would then have sold them on the UK market. Under the terms of the sale to Apotex UK Ltd, Apotex Inc would have received 90% of the profits arising from UK sales. The assessment was heard before Norris J in June 2008, and judgment was reserved. In July 2008, after Snider J had given judgment in Canada but before Norris J had given judgment on the assessment in England, Servier applied to Norris J to re amend their defence to plead two points arising out of Snider Js judgment. The first, which I shall call the illegality point was that it was contrary to public policy for Apotex to recover damages for being prevented from selling a product whose manufacture in Canada would have been illegal there as an infringement of Serviers Canadian patent. The second, which I shall call the cost of manufacture point was that in assessing Apotexs loss of profit the damages for infringement to which they would be entitled in the Canadian proceedings should be treated as an additional cost of manufacture, thereby reducing or eliminating the profit. On 9 October 2008, Norris J gave judgment on the assessment: [2009] FSR 220. He refused permission to amend, on the ground that the application came too late and would cause undue prejudice to Apotex. He then awarded Apotex 17.5 million damages plus interest of approximately 2.1 million, to be split 90/10 between Apotex Inc and Apotex UK. However, on 12 February 2010, the Court of Appeal allowed an appeal from the refusal of the amendment, and directed that Norris Js award of damages should be treated as an interim order pending determination of the new issues: [2010] EWCA Civ 279. Subsequently, Lewison J made an order staying the second of the new issues (the cost of manufacture issue) until damages had been assessed in Canada. 8. 7. The judgments below 9. The illegality point turns in this case on three issues: (1) Does the infringement of a foreign patent rights constitute a relevant illegality (turpitude) for the purpose of the defence? If so, is Apotex seeking to found its claim on it? Is Servier entitled to take the public policy point having given an undertaking in damages? (2) (3) 10. Arnold J gave judgment on these questions on 29 March 2011: [2011] RPC 574. He decided all three points in favour of Servier. On the first point, he held that a relevant illegality was one which was sufficiently serious in all the circumstances of the case, including in particular whether the illegal act was done with knowledge or deliberately. On the second point, he held that the claim was barred because Apotex could not make good its claim for damages without affirming that it would have manufactured the product in Canada, where it was illegal to do so. On the third point, he held that it was not inconsistent with the undertaking as to damages for Servier to raise the illegality defence. In the result, Arnold J held that the whole of Apotexs claim on the undertaking was barred, and ordered the repayment of the amount which they had received in satisfaction of Norris Js judgment. 11. Apotex appealed to the Court of Appeal. Shortly before the hearing of the appeal they conceded that any damages awarded in the Canadian proceedings should be deducted from Norris Js award irrespective of the fate of the public policy point. The Court of Appeal gave judgment on 3 May 2012 allowing the appeal: [2013] Bus LR 80. The leading judgment was given by Etherton LJ, with whom Laws LJ and Kitchin LJ agreed. The essential point on which he differed from the judge was issue (1). In his view, the infringement of Serviers Canadian patent was not a relevant illegality for the purposes of the defence. This was because (para. 73) in dealing with the illegality defence, the court was entitled, to take into account a wide range of considerations in order to ensure that the defence only applies where it is a just and proportionate response to the illegality involved in the light of the policy considerations underlying it. Etherton LJ considered that this test was not satisfied because (i) Apotex honestly and reasonably believed the Canadian patent to be invalid; (ii) it was important as a matter of principle that Servier, having enjoyed a monopoly by virtue of the injunction, should have to pay when it was found not to be entitled to it; (iii) the sale of the tablets in the United Kingdom was not an infringement of the Canadian patent, whose effect was limited to Canada; (iv) the Canadian court had refused to grant an interlocutory injunction restraining the manufacture of the active ingredient or its formulation into tablets in Canada; and (v) any public policy arising from the illegality of the manufacture and formulation of the product in Canada was sufficiently addressed by Apotexs concession that credit had to be given for the damages payable in the Canadian proceedings for the infringements committed there. If Etherton LJ had been satisfied that the infringement of the Canadian patent was a relevant illegality, he would have upheld the illegality defence. This was because like the judge he considered that there was a sufficiently close causal relationship between the patent infringement and the loss suffered by virtue of the injunction; and because, like the judge again, he was not impressed by the suggestion that the taking of the illegality defence was inconsistent with the undertaking in damages. 12. The Court of Appeal approved the concession made by Apotex about the credit to be given for the damages for infringement payable in Canada. It followed that the financial consequences of its decision must depend on what happens on the assessment of damages in Canada. The illegality defence: a rule of law 13. English law has a long standing repugnance for claims which are founded on the claimant's own illegal or immoral acts. The law on this point was already well established when Lord Mansfield CJ articulated it in his celebrated statement of principle in Holman vs Johnson (1775) 1 Cowp. 34l, 343: No court will lend its aid to a man who founds his cause of action on an immoral or an illegal act. If, from the plaintiffs own stating or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, there the court says that he has no right to be assisted. It is upon that ground the court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. So if the plaintiff and defendant were to change sides, and the defendant was to bring his action against the plaintiff, the latter would then have the advantage of it; for where both are equally in fault, potior est condition defendentis. The doctrine necessarily operates harshly in some cases, for it is relevant only to bar claims which would otherwise have succeeded. For this reason it is in the nature of things bound to confer capricious benefits on defendants some of whom have little to be said for them in the way of merits, legal or otherwise. Lord Mansfield acknowledged this when he pointed out: The objection, that a contract is immoral or illegal as between plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff . Lord Mansfields formulation begs many questions. But as these citations show, two features of this area of law have been characteristic of it from the outset. First, it is a rule of law and not a mere discretionary power. Secondly, it is based on public policy, and not on the perceived balance of merits between the parties to any particular dispute. 14. The question what is involved in founding on an immoral or illegal act has given rise to a large body of inconsistent authority which rarely rises to the level of general principle. The main reason for the disordered state of the case law is the distaste of the courts for the consequences of applying their own rules, consequences which Lord Mansfield had pointed out two centuries ago. The only rational way of addressing this problem, if these consequences are regarded as intolerable, is to transform the rule into a mere power whose actual exercise would depend on the perceived equities of each case. The most notable modern attempt to achieve this transformation was made by the Court of Appeal in Euro Diam v Bathurst Ltd [1990] 1 QB 1, in which the illegality defence was invoked in response to a claim on a property insurance. The Court of Appeal placed the reported cases in a number of distinct factual categories, united by a common principle. Kerr LJ, delivering the only reasoned judgment, expressed that principle at p 35 by saying that the test was whether in all the circumstances it would be an affront to the public conscience to grant the plaintiff the relief which he seeks because the court would thereby appear to assist or encourage the plaintiff in his illegal conduct or to encourage others in similar acts. That question, he suggested, needed to be approached pragmatically and with caution, depending on the circumstances. Under this public conscience test, the application of the illegality defence was not discretionary in law. But it was clearly discretionary in nature. In substance it called for a value judgment about the significance of the illegality and the injustice of barring the claimants claim on account of it. 15. This development had been foreshadowed by some earlier decisions of the Court of Appeal. But it was decisively rejected by the House of Lords in Tinsley v Milligan [1994] 1 AC 240. That appeal arose out of an agreement under which two ladies bought a house to live in out of jointly owned funds. They agreed to vest it in one of them alone so that the other could claim social security benefits on the fraudulent basis that she did not own her home and was paying rent. In the ordinary course, the joint purchase of property by two people in the name of one of them would give rise to an equitable proprietary interest in the other. The question was whether the assertion of this interest in a court of law was debarred by the dishonesty of the parties purpose. The Court of Appeal, by a majority, had applied the public conscience test. Ralph Gibson LJ dissented [1992] Ch. 310, observing in his judgment, at p 334, that in so far as the basis of the ex turpi causa defence, as founded on public policy, is directed at deterrence it seems to me that the force of the deterrent effect is in the existence of the known rule and in its stern application. Lawyers have long known of the rule and must have advised many people of its existence. 16. In the House of Lords, the committee was divided on the correct test as well as on the correct result. But it was unanimous in rejecting the public conscience test, on the ground that it was unprincipled. The leading speech on this point was that of Lord Goff. Like almost every court which has reviewed the question, he took as his starting point the statement of Lord Mansfield in Holman v Johnson. At p 355, he observed: That principle has been applied again and again, for over 200 years. It is applicable in courts of equity as well as courts of law: see, e.g., the notes to Roberts vs Roberts (1818) Dan. 143, 150 151 and Ayerst vs Jenkins (1873) L.R. 16 Eq. 275, 283, per Lord Selborne L.C. In 1869 Mellor J. said that the maxim in pari delicto potior est conditio possidentis is as thoroughly settled as any proposition of law can be: see Taylor vs Chester (1869) L.R. 4 Q.B. 309, 313. It is important to observe that, as Lord Mansfield made clear, the principle is not a principle of justice; it is a principle of policy, whose application is indiscriminate and so can lead to unfair consequences as between the parties to litigation. Moreover the principle allows no room for the exercise of any discretion by the court in favour of one party or the other. Lord Goff acknowledged (at p 364 D E) that [t]he real criticism of the present rules is not that they are unprincipled, but rather that they are indiscriminate in their effect, and are capable therefore of producing injustice. Indeed, in the case before him, he regarded the claimants misconduct as relatively minor and pointed out that she had already made amends for it by repaying the sums dishonestly obtained in social security benefits. However, he considered that the illegality defence was governed by established rules of law (p 364F). Endorsing the view of Ralph Gibson LJ in the passage from which I have cited above, he rejected the public conscience test as contrary to 200 years of authority, because it required the court to weigh, or balance, the adverse consequences of respectively granting or refusing relief. This is little different, if at all, from stating that the court has a discretion whether to grant or refuse relief. It is very difficult to reconcile such a test with the principle of policy stated by Lord Mansfield CJ in Holman v Johnson . or with the established principles to which I have referred. (p 358 E F). Its adoption, he said, would constitute a revolution in this branch of the law, under which what is in effect a discretion would become vested in the court to deal with the matter by the process of a balancing operation, in place of a system of rules ultimately derived from the principle of public policy enunciated by Lord Mansfield CJ in Holman v Johnson. (p 363B). As he pointed out (at p 362 G H), short of treating the application of the rule as discretionary, it is difficult to make a principled distinction between degrees of iniquity. 17. Lord Browne Wilkinson (p 369B) agreed with Lord Goff on this point, observing that the consequences of being a party to an illegal transaction cannot depend, as the majority in the Court of Appeal held, on such an imponderable factor as the extent to which the public conscience would be affronted by recognising rights created by illegal transactions. The other members of the committee all agreed with the speeches of Lord Goff and Lord Browne Wilkinson on this point. 18. The House was divided on the question what should be substituted for the public conscience test. Lord Keith and Lord Goff favoured a rule which would bar any claim tainted by a sufficiently close factual connection with the illegal purpose, and would have dismissed the claim to an equitable interest in the house on that ground. Lord Browne Wilkinson, with whom Lord Jauncey and Lord Lowry agreed, preferred the reliance test derived from the decision of the Court of Appeal in Bowmakers Ltd v Barnet Instruments Ltd [1945] KB 65 and of the Privy Council in Palaniappa Chettiar v Arunasalam Chettiar [1962] AC 294. The effect of this test was that the claim was barred only if the claimant needed to rely on (i.e. to assert, whether by way of pleading or evidence) facts which disclosed the illegality: see Lord Browne Wilkinson at pp 370C D, 375 376; cf. Lord Jauncy at p 366C G. Both are intended to exclude those consequences of an illegal act which are merely collateral to the claim. Neither makes the application of the illegality defence dependent on a value judgment about the significance of the illegality or the consequences for the parties of barring the claim. For present purposes, it is enough to point out that neither test is discretionary in nature. Neither of them is based on achieving proportionality between the claimants misconduct and his loss, a concept derived from public law which is not easily transposed into the law of obligations. On the contrary, Lord Goff recognised, as Lord Mansfield had before him, that the practical operation of the law in this field will often produce disproportionately harsh consequences. 19. The Court of Appeal was bound by Tinsley v Milligan, and we have not been invited to depart from it on this appeal. It was, however, suggested and accepted by Etherton LJ, that a wider view of the law was open to the courts in the light of Lord Hoffmanns observation in Gray v Thames Trains Ltd [2009] 1 AC 1339, para 30 that the maxim ex turpi causa expresses not so much a principle as a policy. Furthermore, that policy is not based upon a single justification but on a group of reasons, which vary in different situations. I do not think that this dictum will bear the weight that has been placed on it. A court will commonly examine the policy rationale of a rule of law in order to discover what the rule is. This is what Lord Hoffmann was doing in the passage cited, which introduces an extended discussion of the various rules which the courts had evolved to deal with the dilemma that the denial of relief to one party would confer an unjustified benefit on the other. These rules did not seek to deal with the dilemma by leaving the court to make a value judgment about the seriousness of the illegality and the impact on the parties of allowing the defence. As Lord Hoffmann explained them, they dealt with it by defining as a matter of law when the illegality defence applied and when it did not. In Lord Hoffmanns view two rules were relevant where the illegality defence was raised in answer to a claim for compensation. There was a narrower rule that you cannot recover damage which is the consequence of a sentence imposed upon you for a criminal act; and a wider rule that you cannot recover compensation for loss which you have suffered in consequence of your own criminal act. The former test operated automatically, once it was ascertained that the loss claimed was a penalty imposed by a criminal court or the necessary consequence of the sentence, such as loss of earnings during a period of imprisonment. The latter test was simply a question of causation. Neither the narrower nor the wider rule depended on the courts assessment of the significance of the illegality, the proportionality of its application or the merits of the particular case. Nor does anything else in the speeches justify a test which would include such an assessment. 20. Tinsley v Milligan has had its critics. The Law Commission in successive reports on the illegality defence made little secret of its preference for the approach of the Court of Appeal in Euro Diam. The Commission initially proposed the introduction of a statutory scheme adopting a discretionary approach to the application of the illegality defence, on the ground that the House of Lords decision in Tinsley v Milligan had ruled out the development of judge made law in that direction. They later withdrew that proposal, because recent decisions of judges at first instance and in the Court of Appeal suggested to them that the effect of that decision was being eroded by lower courts: see The Illegality Defence: A Consultative Report (2009) (Consultation Paper 189), at paras 3.104 3.105, 3.123 3.124. At para 3.140 of the latter report, the Commission observed that the public conscience test, although rejected in Tinsley v Milligan, was nevertheless useful in suggesting that the present rules should be regarded as no more than guidance that help the court to focus its attention on particular features of the case before it. What lies behind these rules is a set of policies. This is why the courts are sometimes required to bend the rules (if possible) to give better effect to the underlying policies as they apply to the facts of the case before them. I confess that I find this difficult to justify as an approach to authority or the proper development of the law. It is directly inconsistent with the decision of the House of Lords in Tinsley v Milligan and the whole of the reasoning which underlies it. It makes the law uncertain, by inviting the courts to depart from existing rules of law in circumstances where it is difficult for them to acknowledge openly what they are doing or to substitute a coherent alternative structure. The present position was to my mind accurately stated by Lord Walker of Gestingthorpe when commenting on the Commissions original proposals in Stone & Rolls Ltd v Moore Stephens (a firm) [2009] AC 1391 paras 130 and 131: These proposals, if enacted by Parliament, would introduce more flexibility into this area of the law (although without reintroducing a general public conscience discretion) . The present state of the law is as laid down by the majority of the House in Tinsley v Milligan [1994] 1 AC 340. Any legislative change is likely to widen the test, not to narrow it. 21. It follows that the disposition of this case by the Court of Appeal cannot possibly be justified by the considerations put forward by Etherton LJ. Etherton LJ rejected the illegality defence on the ground that the infringement of Serviers Canadian patent was not turpitude for the purpose of the illegality defence. However, he did not address the question in what, as a matter of principle, turpitude consisted. He rejected the argument of Servier that patent infringement was necessarily turpitude and also the argument of Apotex that it never was. Instead, he held (para 76) that it all depends on the precise circumstances. The circumstances to which he attached importance were the five factors to which I have referred above: see para 11. Of these factors the first (Apotexs honest belief in the invalidity of the Canadian patent) was an assessment of the moral culpability of Apotexs infringement. The other four were all part of a complex inquiry into how far the infringement of the Canadian patent could be said to matter in the particular circumstances of this case. Arnold J had adopted much the same approach, although by reference to a narrower range of factors. The difference between them was essentially that Arnold J took a graver view of the infringements than Etherton LJ, partly because he was less impressed by the argument that Apotex genuinely believed that the Canadian patent was invalid, and partly because he attached more weight to the importance of respecting the Canadian patents. This difference encapsulates the vice of the test that they both applied. The answer depended not on the character of the illegality but on largely subjective judgments about how badly Apotex had behaved and how much it mattered. This was a process, discretionary in all but name, whose outcome would have been exceptionally difficult for either partys advisers to predict in advance. In my opinion, it was contrary to established legal principle. 22. However, it does not follow that the courts should be insensitive to the draconian consequences which the ex turpi causa principle can have if it is applied too widely. The starting point in any review of the modern law must be that we are concerned with a principle based on the application of general rules of law and not on fact based evaluations of the effect of applying them in each individual case. However, the content of the rules must recognise that within the vast and disparate category of cases where a party in some sense founds his claim upon an immoral or illegal act there are important differences of principle. The application of the ex turpi causa principle commonly raises three questions: (i) what acts constitute turpitude for the purpose of the defence? (ii) what relationship must the turpitude have to the claim? (iii) on what principles should the turpitude of an agent be attributed to his principal, especially when the principal is a corporation? Each of these questions requires a principled distinction to be made between different kinds of immoral or illegal act and different ways in which they may give rise to claims. For present purposes, we are concerned only with the question what constitutes turpitude for the purposes of the defence. The question what relationship it must have to the claim arises only if that question is answered in favour of Servier, and no question of attribution arises in this case at all. What is turpitude? 23. The paradigm case of an illegal act engaging the defence is a criminal offence. So much so, that much modern judicial analysis deals with the question as if nothing else was relevant. Yet in his famous statement of principle in Holman v Johnson Lord Mansfield spoke not only of criminal acts but of immoral or illegal ones. What did he mean by this? I think that what he meant is clear from the characteristics of the rule as he described it, and as judges have always applied it. He meant acts which engage the interests of the state or, as we would put it today, the public interest. The illegality defence, where it arises, arises in the public interest, irrespective of the interests or rights of the parties. It is because the public has its own interest in conduct giving rise to the illegality defence that the judge may be bound 24. to take the point of his own motion, contrary to the ordinary principle in adversarial litigation. In some contexts, notably the invalidity of contracts prohibited by law, the ex turpi causa principle can be analysed as part of the substantive law governing the parties rights. The contract is void, and any right derived from it is non existent. But in general, although described as a defence, it is in reality a rule of judicial abstention. It means that rather than regulating the consequences of an illegal act (for example by restoring the parties to the status quo ante, in the same way as upon the rescission of a contract) the courts withhold judicial remedies, leaving the loss to lie where it falls. This is so even in a contractual context, when the court is invited to determine the financial consequence of a contracts voidness for illegality. The ex turpi causa principle precludes the judge from performing his ordinary adjudicative function in a case where that would lend the authority of the state to the enforcement of an illegal transaction or to the determination of the legal consequences of an illegal act. In Lord Mansfields day, and for some time thereafter, this rule of abstention was sometimes expressed as a principle protecting the innocence or dignity of the court against defilement. In the notorious Highwaymens Case, Everet vs Williams (1725) (noted at (1893) 9 LQR 197), in which the court was invited to take an account between two highwaymen, it not only dismissed the claim as scandalous and impertinent but ordered the arrest of the plaintiffs solicitor and fined him. Two centuries later, in Parkinson v College of Ambulance Ltd and Harrison [1925] 2 KB 1, 13, Lush J said of a contract to procure an honour, that [n]o Court could try such an action and allow such damages to be awarded with any propriety or decency. Today, the same concept would be expressed in less self indulgent terms as a principle of consistency. This was the point made by McLachlin J in her much admired judgment in Hall v Hebert (1993) 101 DLR (4th) 129, 165: To allow recovery in these cases would be to allow recovery for what is illegal. It would put the courts in the position of saying that the same conduct is both legal, in the sense of being capable of rectification by the court, and illegal. It would, in short, introduce an inconsistency in the law. It is particularly important in this context that we bear in mind that the law must aspire to be a unified institution, the parts of which contract, tort, the criminal law must be in essential harmony. For the courts to punish conduct with the one hand while rewarding it with the other, would be to create an intolerable fissure in the laws conceptually seamless webWe thus see that the concern, put at its most fundamental, is with the integrity of the legal system. 25. The ex turpi causa principle is concerned with claims founded on acts which are contrary to the public law of the state and engage the public interest. The paradigm case is, as I have said, a criminal act. In addition, it is concerned with a limited category of acts which, while not necessarily criminal, can conveniently be described as quasi criminal because they engage the public interest in the same way. Leaving aside the rather special case of contracts prohibited by law, which can give rise to no enforceable rights, this additional category of non criminal acts giving rise to the defence includes cases of dishonesty or corruption, which have always been regarded as engaging the public interest even in the context of purely civil disputes; some anomalous categories of misconduct, such as prostitution, which without itself being criminal are contrary to public policy and involve criminal liability on the part of secondary parties; and the infringement of statutory rules enacted for the protection of the public interest and attracting civil sanctions of a penal character, such as the competition law considered by Flaux J in Safeway Stores Ltd v Twigger [2010] 3 All ER 577. 26. There are dicta which suggest that the ex turpi causa principle may be wider than this, that it may be engaged by a purely civil wrong such as a tort or breach of contract. The clearest and best known of them is that of Kennedy J in Burrows v Rhodes [1899] 1 QB 816, 828. He thought that no claim for damages could be founded on an act if the act is manifestly unlawful or the doer of it knows it to be unlawful as constituting either a civil wrong or a criminal offence. However, the only English case which he cited as supporting this proposition so far as it relates to civil wrongs, is Shackell v Rosier (1836) 2 Bing NC 634, which concerned a claim on a contract to indemnify the Plaintiff against damages and costs payable in consequence of having published a criminal libel: see Tindall CJ at 645 646. Weld Blundell v Stephens [1920] AC 956 concerned another libel action. The plaintiff had been successfully sued for a libel contained in a document which he had supplied to his accountant. The majority of the House of Lords held that he could not recover the damages he had had to pay to the defamed party from his accountant, who had negligently left the document about so that it came to the formers attention. The difficulty about this case is that its ratio has never been clear. Lord Dunedin proposed to dismiss the claim on the ground that the plaintiff was relying on his own wrong, namely the libel by which he had incurred liability. Lord Sumner decided the case on causation. He thought that the claim should be dismissed on the ground that the plaintiff had had to pay damages because of the libel, not the negligence. Lord Wrenbury thought that the claim should be dismissed on both grounds, and specifically approved the dictum of Kennedy J in Burrows v Rhodes. Viscount Finlay, who dissented, thought that a civil wrong was not to be equated to a criminal act for the purpose of the ex turpi causa principle: see p 971. Lord Parmoor, who also dissented, made the same distinction: pp 995 996. 27. In Columbia Picture Industries Inc. v Robinson [1987] Ch. 38, the plaintiff had obtained an Anton Piller order for an improper purpose and without full disclosure, against a defendant whose business consisted almost entirely in the manufacture and sale of pirated videos. Scott J declined to order an inquiry into damages under the plaintiffs undertaking because the losses had been incurred in a business which was illicit albeit not criminal under the law as it then stood. The point does not seem to have been argued in any detail, if at all, and the reasoning was both brief and cryptic. The judge appears to have reached his conclusion on two grounds. The first was that under the then law the pirated tapes which were the stock in trade of the defendants business belonged to the copyright owners, so that the defendants inability to sell them caused him no loss. The second was that the defendants business was dishonest (the judge thought the case analogous to the Highwaymens Case). By this I think that he must have meant that any sales that the defendant would have made but for the Anton Piller order would have been made by dishonestly misleading his customers about the origin of the videos. It is I think only on that footing the judges second reason can be justified. Scott J was not suggesting that a breach of copyright was in itself a sufficient basis on which to raise the illegality defence. 28. Apart from these decisions, the researches of counsel have uncovered no cases in the long and much litigated history of the illegality defence, in which it has been applied to acts which are neither criminal nor quasi criminal but merely tortious or in breach of contract. In my opinion the question what constitutes turpitude for the purpose of the defence depends on the legal character of the acts relied on. It means criminal acts, and what I have called quasi criminal acts. This is because only acts in these categories engage the public interest which is the foundation of the illegality defence. Torts (other than those of which dishonesty is an essential element), breaches of contract, statutory and other civil wrongs, offend against interests which are essentially private, not public. There is no reason in such a case for the law to withhold its ordinary remedies. The public interest is sufficiently served by the availability of a system of corrective justice to regulate their consequences as between the parties affected. It is right to add that there may be exceptional cases where even criminal and quasi criminal acts will not constitute turpitude for the purposes of the illegality defence. In Gray v Thames Trains Ltd at para 83, Lord Rodger of Earlsferry suggested that some offences might be too trivial to engage the defence. In general, however, the exceptional cases are implicit in the rule itself. This applies in particular where the act in question was not in reality the claimants at all. Leaving aside questions of attribution which arise when an agent is involved, and which are no part of the present appeal, there is a recognised exception to the category of turpitudinous acts for cases of strict 29. liability, generally arising under statute, where the claimant was not privy to the facts making his act unlawful: see Stone & Rolls Ltd v Moore Stephens (a firm) [2009] 1 AC 1391, paras 24, 27 (Lord Phillips of Worth Matravers). In such cases, the fact that liability is strict and that the claimant was not aware of the facts making his conduct unlawful may provide a reason for holding that it is not turpitude at all. This is the most satisfactory explanation of the decision of the Singapore Court of Appeal in United Project Consultants Pte Ltd v Leong Kwok Ong (trading as Leon Kwok Onn & Co) [2005] 4 SLR 214, where a taxpayer sought to recover from his accountant an administrative penalty under a statutory provision dealing with the innocent submission of an incorrect tax return: see paras. 55, 57. More generally, the wrong alleged against the defendant may consist precisely in causing an innocent claimant to commit an offence of strict liability. The leading case is Burrows v Rhodes [1899] QB 816, which arose out of the Jameson Raid of 1895. The plaintiff was induced to enlist in the raid, contrary to section 11 of the Foreign Enlistment Act 1870, by the defendants fraudulent representation that it had the sanction of the Crown (which would have made it lawful). In most cases of this kind the illegality defence would not arise, for there would be no criminal act, the element of mens rea being absent. But the pleadings in Burrows required the court to make the rather artificial assumption that the plaintiff would have been convicted under section 11 even without mens rea: see pp 830 832 (Kennedy J). The court held that even so, the defence was not available. This was because the plaintiff was not aware of the facts making enlistment illegal and on the assumption being made by the court he was criminally liable only because that liability was strict. As Kennedy J suggested at p 834, the exception would not necessarily have applied if Burrows had been claiming damages arising directly from the sentence of a criminal court or from some other penal sanction imposed on him by law. That situation would have engaged Lord Hoffmanns narrower rule, and in that context it must be assumed that the sentence was what the criminal court regarded as appropriate to reflect the personal responsibility of the accused for the crime that he had committed: Gray v Thames Trains Ltd [2009] 1 AC 1339, para 41 (Lord Hoffmann). Cf. Askey v Golden Wine Co Ltd [1948] 2 All ER 35, 38 (Denning LJ); State Railway Authority of New South Wales v Wiegold (1991) 25 NSWLR 500, 514 (Samuels JA). The application of the exception for cases of strict liability may require a court to determine whether the claimant was in fact privy to the illegality. To that extent, an inquiry into the claimants moral culpability may be necessary in such cases before his act can be characterised in law as turpitude. This may be a difficult question, but it is not a question of degree. The conclusion will be a finding that the claimant was aware of the illegality or that he was not. It is a long way from the kind of value judgment implicit in the search for a proportionate relationship between the illegality and its legal consequences of the claim. Conclusion 30. In my opinion, the illegality defence is not engaged by the consideration that Apotexs lost profits would have been made by selling product manufactured in Canada in breach of Serviers Canadian patent. A patent is of course a public grant of the state. But it does not follow that the public interest is engaged by a breach of the patentees rights. The effect of the grant is simply to give rise to private rights of a character no different in principle from contractual rights or rights founded on breaches of statutory duty or other torts. The only relevant interest affected is that of the patentee, and that is sufficiently vindicated by the availability of damages for the infringements in Canada, which will be deducted from any recovery under Serviers undertaking in England. There is no public policy which could justify in addition the forfeiture of Apotexs rights. In those circumstances, the second and third issues before the Court of Appeal do not arise. I would accordingly dismiss the appeal. LORD MANCE 33. The Court of Appeal approached the defence of illegality on the basis that it required in each case an intense analysis of the particular facts and of the proper application of the various policy considerations underlying the illegality principle so as to produce a just and proportionate response to the illegality, per Etherton LJ, para 75. This and the courts ensuing analysis of a number of the factors on which it relied fit uneasily with the clear cut, if potentially harsh, approach applicable on the basis of Tinsley v Milligan [1994] 1 AC 340. Nevertheless, I arrive at the same result as the Court of Appeal, but by different reasoning. I agree with Lord Sumption that this appeal should fail on the simple basis that the manufacture and supply of product in breach of the Canadian patent would, for the reasons he gives in paras 23 to 30, not have involved turpitude such as to engage the maxim ex turpi cause action non oritur. 34. 35. The second and third issues which Lord Sumption identifies in para 22 do not therefore arise. I note only that the second might on the face of it have arisen, 31. 32. 36. 37. had it not been for the parties agreement, noted by Lord Sumption in para 2, that each group should be treated as one entity. In fact, the European patent upon which the present proceedings are based was owned by the first appellant, Les Laboratoires Servier, a licence under it being granted to the second appellant, Servier Laboratories Ltd., while the Canadian patent, which would have been infringed by further manufacture but for the English injunction, was owned by another company in the group, ADIR, with a licence under it being granted to Servier Canada Inc. In the Apotex group, as Lord Sumption recounts in para 6, the active ingredient would have been manufactured by Apotex Pharmachem Inc, and then sold at a 30% mark up to Apotex Inc, which would have made it into tablets, which it would then have sold to Apotex UK Ltd for a price equivalent to 90% of Apotex UK Ltds profits on resale in the United Kingdom. 38. The English proceedings and the injunction were issued against all these three Apotex companies, as well as another, Apotex Europe Ltd. The injunction ordered that the Defendants must not dispose of, offer to dispose of, or import in the United Kingdom their generic perindopril erbumine product, on the basis of an undertaking that if the court later finds that this order has caused loss to the defendants, which shall include Apotex UK Ltd, and decides that the defendants should be compensated for that loss, the claimants [that is now, the two appellants] will comply with any order the court shall makes. 39. In the Canadian proceedings under the Canadian patent, Les Laboratoires Servier and Servier Laboratories were included as plaintiffs, but were struck out at trial as having no cause of action. The claim for infringement of the Canadian patent ultimately succeeded in the names of only ADIR and Servier Canada Inc against Apotex Inc and Apotex Pharmachem Inc. 40. The basis of the agreement that each group should in the present English proceedings be treated as one entity was not disclosed or explored. There may well have been some undisclosed legal basis for treating the individual group members as one entity or as having combined together. Subject to that, there might, on the face of it, have been an argument that it was only Apotex Inc and Apotex UK Ltd that would ever have disposed or, offered to dispose of, or imported the product into the United Kingdom or therefore were prevented from so doing by the injunction. Equally, there might have been an argument that the only companies which could have had any complaint under the Canadian patent would have been ADIR and Servier Canada Inc (the latter not party to the English proceedings) and that any complaint which they could have had would have been in respect of the products manufacture in and export from Canada, rather than in respect of importation into, or disposition in, England. 41. That might then perhaps have meant that (i) the companies with potential claims against Les Laboratoires Servier and Servier Laboratories Ltd under the undertaking were Apotex Inc and Apotex UK Ltd, which would exclude any claim in respect of Apotex Pharmachem Incs loss of profit, while (ii) the only relevant hypothetical cross claim would have been by ADIR against Apotex Pharmachem Inc. and Apotex Inc., for loss of the 30% mark up and the 90% profit that they would have made. The appellants liable under the undertaking not being the same as the claimants under the cross claim, no set off could then on the face of it have arisen. 42. This is all very tentative, since it was not explored. But it highlights a certain distance between the subject matter of the undertaking and the hypothetical cross claim, which could have had some bearing on the answer to the second question, had that arisen. 43. As to the third question, if the separate corporate identities of the members of each group had been insisted upon, then it seems not beyond all doubt that some point might have arisen under this question also. As it is, however, Lord Sumption correctly observes that no question of attribution arises. 44. This is not therefore the case in which to examine the difficult issues of attribution which may arise where a company acts through an agent whether that be an agent who is only capable of binding the company vicariously or whether the agent may, for some purposes at least, also be equated with the company (e.g. because he is its alter ego or its sole controlling owner) and so be capable of binding it personally. Such issues were discussed in Stone & Rolls Ltd v Moore Stephens (a firm) [2009] UKHL 30, [2009] 1 AC 1391, but do not require revisiting here. 45. Equally, this is not a case in which any question arises as to the correctness or otherwise of a decision such as that of the Court of Appeal in Safeway Stores Ltd v Twigger [2010] EWCA Civ 1492, which held that a company could not recover from directors or employees who had by involving the company in acts contravening the Competition Act 1998 caused it to incur a personal liability for penalties imposed under that Act. LORD TOULSON 46. In this appeal Servier is attempting to extend the doctrine of illegality beyond any previously reported decision in circumstances where I see no good public policy reason to do so. 48. 47. Apotexs claim arises under a cross undertaking in damages. The present proceedings were brought in England for alleged infringement of a UK patent. On 7 August 2006 Mann J granted Servier an interlocutory injunction restraining Apotex from importing and selling a chemical compound (generic perindopril erbumine) in the UK, upon Servier giving the usual cross undertaking in damages. On 11 July 2007 Serviers claim was dismissed and the injunction was discharged. In parallel Canadian proceedings Apotex was found liable for infringement of Serviers Canadian patent for the same chemical compound. An interlocutory injunction had been refused. Damages in the Canadian proceedings remain to be assessed. It is accepted that if the English interlocutory injunction had not been granted, Apotex would have imported and sold in the UK an additional 3.6 million packs of tablets. Apotex recognises that in calculating its damages under the cross undertaking for loss of profits from the lost UK sales it must offset not only the costs of manufacture but also the amount which it would have had to pay in the Canadian action as damages for manufacturing the tablets in breach of the Canadian patent. 50. On an inquiry into damages on a cross undertaking, as a matter of general principle the courts task is to put the party seeking to enforce the undertaking in the same position as if the injunction had not been granted. In Hoffmann La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295, 361, Lord Diplock said: [The court] retains a discretion not to enforce the undertaking if it considers that the conduct of the defendant in relation to the obtaining or continuing of the injunction or the enforcement of the undertaking makes it inequitable to do so, but if the undertaking is enforced the measure of the damages payable under it is not discretionary. It is assessed on an inquiry at which [the] principles to be applied are fixed and clear. The assessment is made upon the same basis as that upon which damages for breach of contract would be assessed if the undertaking had been a contract between the plaintiff and the defendant that the plaintiff would not prevent the defendant from doing that which he was restrained from doing by the terms of the injunction. 51. There has been no suggestion in this case that the conduct of Apotex in relation to the injunction was such as to make it inequitable for the court to enforce the undertaking. Arnold J did not proceed on that basis, nor has Servier argued that the court should refuse to enforce the cross undertaking on discretionary grounds. 52. The order made by the Court of Appeal accords with Lord Diplocks method of assessment. As Etherton LJ explained in his judgment at para 88, its effect is to place Apotex in precisely the position in which it would have been if there had been no UK interlocutory injunction, and it does not offend comity with Canada. Apotex will recover whatever sum may be left after deducting, from the proceeds of the lost sales, both the costs of the sales and the amount for which it would have had to account to Servier in the Canadian proceedings by way of damages for patent infringement. The result, Etherton LJ said, would neither be offensive to comity with Canada nor infringe English public policy. 53. By contrast, the order sought by Servier would potentially place it in a better position than if it had not obtained the English injunction for which it gave a cross undertaking. I use the word potentially, because it remains to be seen how the Canadian court will calculate damages for the infringement which led to UK sales by Apotex. It will be a simple matter to apply the same approach to the lost sales as the Canadian court will apply in relation to actual sales made by Apotex. The result may be that Apotex will be unable to establish any loss, after deduction of the damages which it would have had to pay in Canada, but that will depend on the outcome of the Canadian proceedings. 54. Servier argues that Apotexs claim under the cross undertaking is barred by the doctrine of illegality. It does not contend that the contracts for the lost sales would have been unlawful contracts under English law. It does not suggest, for example, that at the date when the Canadian court found that there had been a breach of the Canadian patent in the manufacture of the tablets, UK purchasers of the tablets who had not yet paid for them could have refused to make payment on the ground that the contracts of sale were unenforceable by Apotex because of illegality. Servier submits, however, that Apotexs claim under the cross undertaking for loss of payments which it would have received under contracts, lawful in themselves, is barred by illegality because performance of the contracts would have involved or resulted from breach of the Canadian patent. Etherton LJ said in his judgment, and his statement has not been challenged, that infringement of a Canadian patent constitutes a statutory wrong of strict liability under Canadian law. 55. Servier is unable to cite any precedent for saying that a claim for money otherwise payable under English law offends the doctrine of illegality if it arises from a contract involving the commission of a strict liability tort (whether as the object of the contract or in its performance). 56. There are very few reported cases in which the doctrine of illegality has been applied to tort. In Brown Jenkinson & Co Ltd v Percy Dalton (London) Ltd [1957] 2 QB 621, the Court of Appeal held a contract to be unenforceable which had as its object the commission of the tort of deceit, but in that case Pearce LJ qualified his judgment by saying, at p 640, that in none of the cases cited before the court had a plaintiff failed where he was not fraudulently minded. Fraud for the purposes of deceit includes a false statement made in reckless disregard whether it be true or false, but there is no precedent for applying the doctrine of illegality to a tort of strict liability. In this case the protagonists are pharmaceutical companies who were involved in a bona fide commercial dispute about the validity of certain patents. 57. Servier relies on the often quoted statement of Lord Mansfield in Holman v Johnson in which he said that The principle of public policy is this; ex dolo malo non oritur actio. That statement made in 1775 remains a succinct statement of broad principle, but, as the cases over the last 340 years demonstrate, it does not provide a simple measuring rod for determining the boundaries of the principle. The case law is notoriously untidy. In deciding whether the principle should be applied in circumstances not directly covered by well established authorities, it is right to proceed carefully on a case by case basis, considering the policies which underlie the broad principle. This has been said in the past by judges at the highest level. 58. In Vita Food Products Inc v Unus Shipping Co Ltd [1939] AC 277, 293, Lord Wright said: Each case has to be considered on its merits. Nor must it be forgotten that the rule by which contracts not expressly forbidden by statute or declared to be void are in proper cases nullified for disobedience to a statute is a rule of public policy only, and public policy understood in a wider sense may at times be better served by refusing to nullify a bargain save on serious and sufficient grounds. 59. In Gray v Thames Trains Ltd [2009] AC 1339, 1370, para 30, Lord Hoffmann said: The maxim ex turpi causa expresses not so much a principle as a policy. Furthermore, that policy is not based upon a single justification but on a group of reasons, which vary in different situations. 60. This observation was endorsed by Lord Phillips in Stone & Rolls Ltd v Moore Stephens (a firm) [2009] 1 AC 1391, para 25, where he said that it is necessary to give consideration to the policy underlying ex turpi causa in order to decide whether the defence was bound to defeat a claim. In Hounga v Allen [2014] 1 WLR 2889, [2014] UKSC 47, Lord Wilson said in the judgment of the majority, at para 42: 61. The defence of illegality rests upon the foundation of public policy. The principle of public policy is this said Lord Mansfield by way of preface to his classic exposition of the defence in Holman v Johnson (1775) 1 Cowp 341, 343. Rules which rest upon the foundation of public policy, not being rules which belong to the fixed or customary law, are capable, on proper occasion, of expansion or modification: Maxim Nordenfelt Guns and Ammunition Co Nordenfelt [1893] 1 Ch 630, 661 (Bowen LJ). So it is necessary, first, to ask What is the aspect of public policy which founds the defence? and, second, to ask But is there another aspect of public policy to which application of the defence would run counter? 62. I would therefore make no criticism of the Court of Appeal for considering whether public policy considerations merited applying the doctrine of illegality to the facts of the present case. In so doing it adopted a similar approach to that of the majority of this court in Hounga v Allen. 63. Cross undertakings are a standard and valuable feature of litigation, particularly but not only in commercial litigation. There is a public interest in their enforceability in bona fide disputes. It saves the court from having to make a more detailed and therefore time consuming and expensive assessment of the merits at an interlocutory stage than might otherwise be necessary, since the cross undertaking is designed to protect the defendant against the applicant gaining a financial advantage from obtaining an injunction which is later set aside on the claim failing. I cannot see a good public policy reason why Servier should be put in a better position than if the English injunction had not been granted, or why Apotex should be required to give greater credit to Servier on account of its breach of the Canadian patent than the amount assessed by the Canadian court as properly reflecting that breach. 64. There may come a case where it is necessary for this court to carry out a detailed re analysis of Tinsley v Milligan [1994] 1 AC 340, in the light of subsequent authorities and the consultative and final reports of the Law Commission (LCCP No 189 and Law Com No 320), in which the case has not for the first time been criticised; but nobody invited such a reconsideration in this case. The argument in this case was about whether the doctrine of illegality extends to the present case. I am satisfied that there is no good reason why it does or should do so, and I agree that the appeal should be dismissed. 49. |
On 2 December 2010 the Swedish Prosecution Authority (the Prosecutor), who is the respondent to this appeal, issued a European Arrest Warrant (EAW) signed by Marianne Ny, a prosecutor, requesting the arrest and surrender of Mr Assange, the appellant. Mr Assange was, at the time, in England, as he still is. The offences of which he is accused and in respect of which his surrender is sought are alleged to have been committed in Stockholm against two women in August 2010. They include sexual molestation and, in one case, rape. At the extradition hearing before the Senior District Judge, and subsequently on appeal to the Divisional Court, he unsuccessfully challenged the validity of the EAW on a number of grounds. This appeal relates to only one of these. Section 2(2) in Part 1 of the Extradition Act 2003 (the 2003 Act) requires an EAW to be issued by a judicial authority. Mr Assange contends that the Prosecutor does not fall within the meaning of that phrase and that, accordingly, the EAW is invalid. This point of law is of general importance, for in the case of quite a number of Member States EAWs are issued by public prosecutors. Its resolution does not turn on the facts of Mr Assanges case. I shall, accordingly, say no more about them at this stage, although I shall revert briefly to them towards the end of this judgment. Part 1 of the 2003 Act was passed to give effect to the Council of the European Union Framework Decision on the European arrest warrant and surrender procedures between Member States of the European Union 2002/584/JHA (the Framework Decision). I annexe a copy of the English version of the Framework Decision to this judgment. As can be seen, the phrase judicial authority is used in a number of places in the Framework Decision. In particular it is used in article 6, which provides: 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. It is Mr Assanges primary case, as presented by Miss Dinah Rose QC, that judicial authority bears the same meaning in the Framework Decision as it bears in the 2003 Act, so that the Prosecutor does not fall within the definition of issuing judicial authority within article 6 of the Framework Decision. Alternatively Miss Rose submits that, if judicial authority in article 6 of the Framework Decision has a meaning wide enough to embrace the Prosecutor, it has a different and narrower meaning in the 2003 Act. She seeks to support that meaning by reference to parliamentary material. The issue Miss Rose contends that a judicial authority must be a person who is competent to exercise judicial authority and that such competence requires impartiality and independence of both the executive and the parties. As, in Sweden, the Prosecutor is and will remain a party in the criminal process against Mr Assange, she cannot qualify as a judicial authority. In effect, Miss Roses submission is that a judicial authority must be some kind of court or judge. Miss Clare Montgomery QC for the Prosecutor contends that the phrase judicial authority, in the context of the Framework Decision, and other European instruments, bears a broad and autonomous meaning. It describes any person or body authorised to play a part in the judicial process. The term embraces a variety of bodies, some of which have the qualities of impartiality and independence on which Miss Rose relies, and some of which do not. In some parts of the Framework Decision the term judicial authority describes one type, in other parts another. A prosecutor properly falls within the description judicial authority and is capable of being the judicial authority competent to issue an EAW under article 6 if the law of the State so provides. Judicial authority must be given the same meaning in the 2003 Act as it bears in the Framework Decision. The approach to the interpretation of Part 1 of the 2003 Act Part 1 of the 2003 Act has unfortunately spawned more than its share of issues of law that have reached the highest level. In Office of the Kings Prosecutor, Brussels v Cando Armas [2005] UKHL 67; [2006] 2 AC 1 Lord Bingham of Cornhill remarked at para 8 that interpretation of Part 1 of the 2003 Act must be approached on the twin assumptions that Parliament did not intend the provisions of Part 1 to be inconsistent with the Framework Decision and that, while Parliament might properly provide for a greater measure of cooperation by the United Kingdom than the Decision required, it did not intend to provide for less. Lord Hope of Craighead at para 24 adopted what might appear to be a conflicting approach. He expressed the view that the task of interpreting Part 1 so as to give effect to the Framework Decision should be approached on the assumption that, where there were differences, these were regarded by Parliament as a necessary protection against an unlawful infringement on the right to liberty. Both Lord Bingham and Lord Hope in Dabas v High Court of Justice in Madrid, Spain [2007] 2 AC 31 returned to this topic after the Grand Chamber of the European Court of Justice had commented on it when giving a preliminary ruling in Criminal proceedings against Pupino (Case C 105/03) [2006] QB 83, to which I shall shortly refer. The House was concerned with the effect of section 64(2)(b) of the 2003 Act, which on its face appears to require an EAW to be accompanied by a separate certificate that the conduct in respect of which surrender is sought falls within the Framework list. The issue was whether it was sufficient that the warrant itself so certified. In holding, in agreement with the rest of the House, that it was, Lord Hope, after citing from Pupino, referred with approval to Lord Binghams statement in Cando Armas and remarked that the imposition of additional formalities not found in the Framework Decision by one member state to suit its own purposes would tend to frustrate the objectives of the Decision. Article 34.2(b) of the EU Treaty provides: Framework decisions shall be binding upon the Member States as to the result to be achieved but shall leave to the national authorities the choice of form and methods. They shall not entail direct effect. In Pupino the European Court of Justice held at para 43: When applying the national law, the national court that is called on to interpret it must do so as far as possible in the light of the wording and purpose of the framework decision in order to attain the result which it pursues and thus comply with article 34.2(b) EU. In a well reasoned written joint intervention Mr Gerard Batten MEP and Mr Vladimir Bukovsky comment on the uncertainty of the scope of the phrases result to be achieved, purpose of the framework directive and result which it pursues. They argue that these should be treated as referring to the specific objectives of the particular Framework Decision and not the wider objectives of the EU Treaty that the specific objectives may be designed to serve. I have concluded that their interesting discussion does not bear on the issue that this Court has to resolve. What is in issue in respect of the construction of the 2003 Act is not a suggestion that the English Court ought, when interpreting the 2003 Act, to follow some general objective that the Framework Decision is designed to advance. It is the narrow issue of whether the words judicial authority in section 2(2) of the 2003 Act should, if possible, be accorded the same meaning as those two words bear in the parallel requirement in article 6 of the Framework Decision. I have read with admiration Lord Mances analysis of the effect of the decision in Pupino and I accept, for the reasons that he gives, that it does not bind this Court to interpret Part 1 of the 2003 Act, in so far as this is possible, in a manner that accords with the Framework Decision. I consider, none the less that it is plain that the Court should do so. This is not merely because of the presumption that our domestic law will accord with our international obligations. As Lord Mance himself acknowledges at para 201 of his judgment Part 1 of the 2003 Act was enacted in order to give effect to the Framework Decision. The immediate objective of that Decision is to create a single uniform system for the surrender of those accused or convicted of the more serious criminal offences. That objective will only be achieved if each of the Member States gives the same meaning to judicial authority. If different Member States give different meaning to those two words, that uniformity will be destroyed. In these circumstances it is hard to conceive that Parliament, in breach of the international obligations of this country, set out to pass legislation that was at odds with the Framework Decision. It is even more difficult to conceive that Parliament took such a course without making it plain that it was doing so. For this reason it is logical to approach the interpretation of the words judicial authority on the presumption that Parliament intended that they should bear the same meaning in Part 1 of the 2003 Act as they do in the Framework Decision. Parliamentary material Counsel for both parties placed before us a substantial volume of parliamentary material without any close analysis as to whether this was admissible as an aid to interpretation of the 2003 Act under the doctrine of Pepper v Hart [1993] AC 593 or for any other reason. I add those last words because some of this material related to proceedings of the House of Commons European Scrutiny Committee and the House of Lords Select Committee on European Union which predated both the final Framework Decision and, of course, the Extradition Bill which became the 2003 Act. While this material may provide some insight into the approach of the United Kingdom in negotiations that preceded the Framework Decision and into the understanding of Members of Parliament as to the effect of that Decision, I do not see how it can be directly admissible under Pepper v Hart, save to the extent that it was referred to in parliamentary debate on the Bill. More generally it is open to question whether there is room for the application of Pepper v Hart having regard to the requirement to give the words judicial authority the same meaning in the Act as they bear in the Framework Decision. That requirement should resolve any ambiguity in the language of the statute. Having said this I shall summarise shortly the effect of the parliamentary material. It evidences a general understanding and intention that the words judicial authority would and should bear the same meaning in the Act as they bore in the Framework Decision. As to that meaning there are statements in debate in the House of Lords, on the part of both members and a minister, that appear to reflect an understanding that the judicial authority would be a court or judge. The clearest ministerial statement is, however, that of the Under Secretary of State, Mr Ainsworth, on 9 January 2003 to Standing Committee D (Hansard, col 48), referred to by the Divisional Court at para 26: We expect that European arrest warrants will be issued in future by exactly the same authorities as issue warrants under the current arrest procedures. We intend to do that in the United Kingdom. There is no reason to suppose that our intentions are different from those of any other European country. The Bill is drafted in such a way as to include all those authorities that currently issue arrest warrants, as issuing authorities. I have yet to hear an argument that says that we should change that. If the parliamentary material to which I have referred were admissible, I would find it inconclusive. For the reasons that I have given I approach the interpretation of the words judicial authority in Part 1 of the 2003 Act on the basis that they must, if possible, be given the same meaning as they bear in the Framework Decision. I turn to consider that meaning. The meaning of judicial authority in the Framework Decision It is necessary at the outset to decide how the task of interpreting the Framework Decision should be approached. Craies on Legislation, 9th ed (2008), remarks at para 31.1.21 that the text of much European legislation is arrived at more through a process of political compromise, so that individual words may be chosen less for their legal certainty than for their political acceptability. That comment may be particularly pertinent in the present context in that, as we shall see, an earlier draft of the Framework Decision left no doubt as to the meaning of judicial authority but a subsequent draft expunged the definition that made this clear. The reason for and effect of this change lies at the heart of the problem of interpretation raised by this appeal. How does one set about deciding on these matters? The approach to interpretation must be one that would be acceptable to all the Member States who have to strive to identify a uniform meaning of the Decision. Craies rightly comments at para 32.5.1 that one cannot simply apply the canons for construction or even the principles that apply to interpreting domestic legislation. In the next paragraph Craies identifies the approach of the European Court of Justice to interpreting European legislation as involving the following stages, to be followed sequentially in so far as the meaning has not become clear. Start with the terms of the instrument in question, including its preamble; Turn to preparatory documents; Consider the usual meaning of expressions used and [compare] different language texts of the instrument; Consider the purpose and general scheme of the instrument to be construed. While I shall consider these matters I propose to adopt a different order. The natural meaning As we are here concerned with the meaning of only two words, I propose at the outset to consider the natural meaning of those words. It is necessary to do this in respect of both the English words judicial authority and the equivalent words in the French text. Those words are autorit judiciaire. In the final version of the Framework Decision the same weight has to be applied to the English and the French versions. It is, however, a fact that the French draft was prepared before the English and that, in draft, in the event of conflict, the meaning of the English version had to give way to the meaning of the French. The critical phrase does not bear the same range of meanings in the English language as in the French and, as I shall show, the different contexts in which the phrase is used more happily accommodate the French rather than the English meanings. The first series of meanings of judicial given in the Oxford English Dictionary is: Of or belonging to judgment in a court of law, or to a judge in relation to this function; pertaining to the administration of justice; proper to a court of law or a legal tribunal; resulting from or fixed by a judgment in court. In the context of a judicial authority the more appropriate meanings are: having the function of judgment; invested with authority to judge causes; a public prosecutor would not happily fall within this meaning. Judiciaire is capable of bearing a wide or a narrow meaning. Vocabulaire Juridique (6th ed, 1996) states that it can be used (dans un sens vague). Qui appartient la justice, par opp legislative et administrative, or (dans un sens prcis). Qui concerne la justice rendue par les tribunaux judiciaires. A computer dictionary search discloses a number of examples of its use in the sens vague, for instance affaire judiciaire/legal case; aide judiciaire/legal aid; annonce judiciaire/legal notice; poursuite judiciaire/ legal proceedings and last but not least, autorit judiciaire/legal authority. Having regard to the range of meanings that autorit judiciaire is capable of embracing, it is no cause for surprise that the phrase often receives some additional definition. Examples of particular relevance in the present context are found in the Rapport explicatif of the 1957 European Convention on Extradition see para 26 below and in the definition of autorit judiciaire in article 3 of the first draft of the Framework Decision itself see para 46 below. Another example is found in article 18.7 of the 1990 European Convention on money laundering: soit autorise par un juge, soit par une autre autorit judiciaire, y compris le ministre public (my emphasis). Miss Rose in her written case referred to a further example, in the English version, in the definition of an issuing authority in respect of a European Evidence Warrant under article 2(c) of the relevant Framework Decision (2008/978/JHA), namely : (i) a judge, a court, an investigating magistrate, a public prosecutor; or (ii) any other judicial authority as defined by the issuing State and, in the specific case, acting in its capacity as an investigating authority in criminal proceedings (my emphasis) These definitions demonstrate the width of meaning that autorit judiciaire is capable of bearing and the fact that the ambit of the phrase can vary according to its context. Article 5.1(c) of the European Convention on Human Rights, in the English version, provides that deprivation of liberty may be lawful where it results from 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 The French version of legal authority is autorit judiciaire. Miss Rose submitted that a line of Strasbourg authority on the meaning of that phrase in the context of article 5 provided the key to its meaning in the context of the Framework Decision. That submission calls for a comparison of the functions of the autorit judiciaire in the two different contexts. I shall postpone that exercise to later in this judgment. First I propose to consider the purpose and the general scheme of the Framework Decision and then the preparatory documents and their genesis. The purpose of the Framework Decision The purpose of the Framework Decision is stated in recital (5) of its preamble: 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 judicial decisions, within an area of freedom, security and justice. What were the present extradition procedures that gave rise to complexity and potential for delay? They were those provided for by the European Convention on Extradition 1957. This was a Convention between members of the Council of Europe. As in the case of other post war European Conventions the United Kingdom played a major role in its negotiation. The general scheme under this Convention was one whereby, after an antecedent process to which I shall return at a later stage, the executive of a requesting State would make a request for extradition to the executive of the requested State. The Convention laid down the criteria that had to be satisfied if the requested State was to be obliged to comply with the request. As to the procedure for considering whether or not to comply with a request, which I shall call the process of execution, the Convention provided by article 22 that this should be governed solely by the law of the requested State. The complexities and potential for delay that the Framework Decision sought to avoid were those that arose out of the involvement of the executive in the extradition process. I do not believe that this had much relevance in this jurisdiction, for although the process of extradition had great potential for delay, this was seldom attributable to the fact that the decision to extradite was ultimately political. A hint of the delays that were endemic on the Continent is given by a comment in the Explanatory Memorandum dated 25 September 2001 that accompanied the first draft of the Framework Decision, at 4.5.4: The political phase inherent in the extradition procedure is abolished. Accordingly, the administrative redress phase following the political decision is also abolished. The removal of these two procedural levels should considerably improve the effectiveness and speed of the mechanism. Thus the Framework Decision did not set out to build a new extradition structure from top to bottom, but rather to remove from it the diplomatic or political procedures that were encumbering it. The objective was that the extradition process should involve direct co operation between those authorities responsible on the ground for what I have described as the antecedent process and those authorities responsible on the ground for the execution process. It is important for the purposes of this appeal, to consider the manner in which extradition used to work under the 1957 Convention and, in particular, to identify those who, under the operation of that Convention, were responsible for the antecedent process. The 1957 Convention Article 1 of the 1957 Convention provided that the contracting parties undertook to surrender to each other, subject to the provisions of the Convention, all persons against whom the competent authorities of the requesting party were proceeding for an offence or who were wanted by the said authorities for the carrying out of a sentence or detention order. I shall refer to such persons as fugitives. The Council of Europe Explanatory Report commented: Le terme competent authorities contenu dans le texte anglais correspond aux mots autorits judiciaires contenus dans le texte francais. Ces expressions visent les autorits judiciaires proprement dites et le Parquet lexclusion des autorits de police. Article 12.2 provided that a request for extradition should be supported by (a) the original or an authenticated copy of the conviction and sentence or detention order immediately enforceable or of the warrant of arrest or other order having the same effect and issued in accordance with the procedure laid down in the law of the requesting Party; (b) a statement of the offences for which extradition is requested. The time and place of their commission, their legal descriptions and a reference to the relevant legal provisions shall be set out as accurately as possible; and (c) a copy of the relevant enactments or, where this is not possible, a statement of the relevant law and as accurate a description as possible of the person claimed, together with any other information which will help to establish his identity and nationality. Thus, where the fugitive was someone accused of a crime, the Convention required that there should have been an antecedent process that resulted in a warrant of arrest or other order having the same effect. This had to be issued in accordance with the law of the requesting State. The Convention itself did not impose any specific requirement as to the status of the authority responsible for the warrant of arrest or other order. As to this, the Council of Europe Explanatory Report commented: Some of the experts thought that the warrant of arrest or any other order having the same effect should be issued by an authority of a judicial nature. This point arises from article 1, in which the Parties undertake to extradite persons against whom the competent authorities of the requesting Party are proceeding or who are wanted by them. During the discussion of article 12 it was found that most of the States represented on the Committee of Experts do not extradite a person claimed until after a decision by a judicial authority. It is noteworthy that there was no requirement under the 1957 Convention for a requesting State to adduce any evidence to support the allegation that the fugitive had committed the crime in respect of which he was accused. This had never been a requirement that European States imposed, perhaps because they were not prepared to countenance the extradition of their own nationals. In contrast, when concluding bilateral extradition treaties, this country had always insisted on evidence being produced that would have been sufficient to lead to a defendant within the jurisdiction being committed for trial. According to Jones on Extradition and Mutual Assistance, 2nd ed (2001) at 10 004 the lack of any evidence requirement in the Convention was one of the reasons why the United Kingdom allowed over 30 years to pass between signing the 1957 Convention and embodying its provisions in our domestic law. The 1957 Convention contained provisions for provisional arrest, which had always been a feature of English extradition law. This important procedure enabled a fugitive to be apprehended and detained before the diplomatic formalities of inter State extradition were implemented. Thus article 16 provided: 1. In case of urgency the competent authorities of the requesting Party may request the provisional arrest of the person sought. The competent authorities of the requested Party shall decide the matter in accordance with its law. 2. The request for provisional arrest shall state that one of the documents mentioned in article 12, paragraph 2(a), exists and that it is intended to send a request for extradition. It shall also state for what offence extradition will be requested and when and where such offence was committed and shall so far as possible give a description of the person sought. 3. A request for provisional arrest shall be sent to the competent authorities of the requested Party either through the diplomatic channel or direct by post or telegraph or through the International Criminal Police Organisation (Interpol) or by any other means affording evidence in writing or accepted by the requested Party. The requesting authority shall be informed without delay of the result of its request. In contrast to article 1, the French version of competent authorities was autorits comptentes. The United Kingdom acceded to the 1957 Convention in 1991. By the European Convention on Extradition Order 2001 (SI 2001/962), passed pursuant to section 3(2) of the Extradition Act 1989, it was incorporated into domestic law. Para 3 of this Order removed the requirement to produce evidence of the commission of the offence in respect of which extradition was sought. By way of reservation the United Kingdom required foreign documents supplied pursuant to article 12 to be authenticated by being signed by a judge, magistrate or officer of the State where they were issued and certified by being sealed by a Minister of State. Thus, when negotiations began in relation to the terms of the Framework Decision, the United Kingdom had given effect to a European Convention that required it to surrender fugitives on proof of an antecedent process, namely that there had been issued in the requesting State a warrant of arrest or other order having the same effect, notwithstanding that, at least in 1957 when the Convention was negotiated, this might not have resulted from a judicial process and where the authority initiating the request might be a court or a public prosecutor. It is worth pausing at this point to consider the nature of the antecedent process. In this country the liberty of the subject has long been recognised as a fundamental right, as demonstrated by the remedy of habeas corpus. Save in the limited circumstances where arrest without warrant is lawful, arrest of a person suspected of a criminal offence has required a warrant of arrest issued by a magistrate. After arrest the suspect has had to be brought before a court. Detention before charge is only permitted for a very short period and remand in custody after charge will be pursuant to a court order. These protections of the liberty of the subject did not exist in all Continental States and notably had not existed in those that were, or fell, under the domination of Germany before and during the Second World War. Article 5 of the European Convention of Human Rights was designed to make universal protections that already existed in this country. Article 5.1(c) permits the lawful arrest or detention of a person for the purpose of bringing him before the competent legal authority on reasonable suspicion of having committed an offence. Lawful arrest or detention is not defined. What this involves in other Member States was not explored in argument before us, but we were provided with Evaluation Reports in respect of the working of the EAW in 15 Member States prepared by the Commission pursuant to the requirement of article 34.4 of the Framework Decision. In the case of most of these the issue by a court of a domestic arrest warrant or a similar order, such as an order for detention in absentia, was a precondition to the issue of an EAW. It seems likely that these domestic procedures were in place when the Framework Decision was negotiated and that in the case of the majority of Member States, the power to arrest was subject to judicial safeguards similar to, or even more stringent than, our own. As I have shown above, in 1957 a minority of the parties to the European Convention on Extradition had no judicial involvement in the issue of an arrest warrant. It may well be that, as a consequence of the ECHR and the series of Strasbourg decisions to which I refer below, this minority had reduced by the time that the Framework Decision was negotiated. Public prosecutors As the issue on this appeal is whether a public prosecutor constitutes a judicial authority under Part 1 of the 2003 Act, it is appropriate to consider the nature of that office. Public prosecutors as their name suggests are public bodies that carry out functions relating to the prosecution of criminal offenders. On 8 December 2009 the Consultative Council of European Judges and the Consultative Council of European Prosecutors published for the attention of the Committee of Ministers a joint Opinion (2009) that consisted of a Declaration, called the Bordeaux Declaration together with an Explanatory Note. This comments at para 6 on the diversity of national legal systems, contrasting the common law systems with the Continental law systems. Under the latter the prosecutors may or may not be part of the judicial corps. Equally the public prosecutors autonomy from the executive may be complete or limited. Para 23 of the Note observes: The function of judging implies the responsibility for making binding decisions for the persons concerned and for deciding litigation on the basis of the law. Both are the prerogative of the judge, a judicial authority independent from the other state powers. This is, in general, not the mission of public prosecutors, who are responsible for bringing or continuing criminal proceedings. A recurrent theme of both the Declaration and the Note is the importance of the independence of the public prosecutors in the performance of their duties. Para 3 of the Declaration states that judges and public prosecutors must both enjoy independence in respect of their functions and also be and appear to be independent of each other. Para 6 states: The enforcement of the law and, where applicable, the discretionary powers by the prosecution at the pre trial stage require that the status of public prosecutors be guaranteed by law, at the highest possible level, in a manner similar to that of judges. They shall be independent and autonomous in their decision making and carry out their functions fairly, objectively and impartially. The Note comments at paras 33 and 34 that public prosecutors must act at all times honestly, objectively and impartially. Judges and public prosecutors have, at all times, to respect the integrity of suspects. The independence of the judge and the prosecutor is inseparable from the rule of law. Later the Note deals with the roles and functions of judges and public prosecutors in the pre criminal procedures: 48 At the pre trial stage the judge independently or sometimes together with the prosecutor, supervises the legality of the investigative actions, especially when they affect fundamental rights (decisions on arrest, custody, seizure, implementation of special investigative techniques, etc). Both the function and the independence of the prosecutor must be borne in mind when considering whether, under the Framework Decision, the term judicial authority can sensibly embrace a public prosecutor. The more recent genesis of the Framework Decision Stepping stones towards the Framework Decision were the Convention of 10 March 1995 on a simplified extradition procedure between Member States of the EU and the Convention of 27 September 1996 relating to extradition between the Member States. Of more relevance in the present context was the integration into the European Union under the Amsterdam Treaty of 1997 of the Schengen Agreement of 1985. Title 1V of the 1990 Convention implementing the Schengen Agreement established the Schengen Information System (SIS). Article 95 provided for the judicial authority of a Member State to issue an alert requesting the arrest of a person for extradition purposes. This had to be accompanied by, inter alia, information as to whether there was an arrest warrant or other document having the same legal effect. Article 98 made provision for the competent judicial authorities to request information for the purpose of discovering the place of residence or domicile of witnesses or defendants involved in criminal proceedings. Article 64 provided that an alert under article 95 should have the same force as a request for provisional arrest under article 16 of the 1957 Convention. We were not provided with any information as to the nature of the judicial authorities who sought provisional arrest under article 95. We were, however, provided with a Report dated 13 October 2009 of the Schengen Joint Supervisory Authority on an inspection of the use of article 98 alerts. This provided the following answer to the question which competent authorities may decide on an article 98 alert? While public prosecutors and judicial authorities obviously play a major role in the decision leading to article 98 alerts, in some Schengen States the police, security police, tax and customs authorities, border guard authorities and other authorities competent for criminal investigations are also competent to decide on article 98 alerts. It seems certain that public prosecutors must, in some Member States, have been responsible for initiating an article 95 alert and not unlikely that some of the other authorities competent to decide on an article 98 alert may have done so. On 15 and 16 October 1999 the European Council met at Tampere. Proposals made at this meeting under the heading of Mutual recognition of judicial decisions included that consideration should be given to fast track expedition procedures, without prejudice to the principle of fair trial. This led to the Commission submitting to the Council on 19 September 2001 a proposal for a Framework Decision. I shall call this the September draft. I propose to consider this in conjunction with the Explanatory Memorandum which accompanied it. The Preamble stated that the EAW aimed to replace the traditional extradition arrangements and had to have the same scope of application as the system of extradition built on the 1957 Convention (recital 5). The EAW was based on the principle of mutual recognition. If a judicial authority requested a person for the purpose of prosecution for an offence carrying a sentence of at least twelve months detention, the authorities of other Member States should comply with the request (recital 7). The decision on the execution of the EAW required sufficient controls and had, in consequence, to be taken by a judicial authority (recital 8). The role of central authorities was limited to practical and administrative assistance (recital 9). Article 1 of the September draft provided: The purpose of this Framework Decision is to establish the rules under which a Member State shall execute in its territory a European arrest warrant issued by a judicial authority in another Member State. Article 2 provided: A European arrest warrant may be issued for: (a) final judgments in criminal proceedings, and judgments in absentia, which involve deprivation of liberty or a detention order of at least four months in the issuing Member State; in criminal judicial decisions (b) other enforceable proceedings which involve deprivation of liberty and relate to an offence, which is punishable by deprivation of liberty or a detention order for a maximum period of at least twelve months in the issuing Member State. Thus, so far as a fugitive from prosecution was concerned, this article envisaged that before the issue of the EAW there would be an enforceable judicial decision involving deprivation of liberty. The issue of an arrest warrant is an obvious example of such a decision. Article 3 of the September draft included the following important definitions: (a) European arrest warrant means a request, issued by a judicial authority of a Member State, and addressed to any other Member State, for assistance in searching, arresting, detaining and obtaining the surrender of a person, who has been subject to a judgment or a judicial decision, as provided for in article 2; (b) issuing judicial authority means the judge or the public prosecutor of a Member State, who has issued a European arrest warrant; (c) executing judicial authority means the judge or the public prosecutor of a Member State in whose territory the requested person sojourns, who decides upon the execution of a European arrest warrant. In dealing with this article the Explanatory Memorandum made the following summary of the effect of the scheme (a) The European arrest warrant is a warrant for search, arrest, detention and surrender to the judicial authority of the issuing country. In the previous system, under the 1957 Convention as implemented by the Schengen Convention, the provisional arrest warrant and the extradition request were two separate phases of the procedure. Pursuant to the principle of mutual recognition of court judgments, it is no longer necessary to distinguish the two phases. The arrest warrant thus operates not only as a conventional arrest warrant (search, arrest and detention) but also as a request for surrender to the authorities of the issuing State. This provides an important insight as to the manner in which it was envisaged that the Framework Decision would alter the extradition process. The judicial authorities who were responsible for the article 95 alert requesting provisional arrest were those who might be expected to be responsible for the issue of the new EAW. As I have suggested above, it is not unlikely that in some Member States these included the police or other authorities who were responsible for article 98 alerts. If so, the definition of issuing judicial authority in article 3 of the September draft made it clear that this was not acceptable. As to this, the Explanatory Memorandum commented: The procedure of the European arrest warrant is based on the principle of mutual recognition of court judgments. State to State relations are therefore substantially replaced by court to court relations between judicial authorities. The term judicial authority corresponds, as in the 1957 Conventionto the judicial authorities as such and the prosecution services, but not to the authorities of police force. The issuing judicial authority will be the judicial authority which has authority to issue the European arrest warrant in the procedural system of the Member State. So far as the process of execution of the EAW was concerned, the Explanatory Memorandum made it plain that the nature of the judicial authority concerned would depend upon whether or not the fugitive was challenging extradition. If he was, the challenge would have to be resolved by a judge. If he was not, the judicial authority responsible for executing the warrant might be the prosecution service. Article 4 of the September draft provided: Each Member State shall designate according to its national law the judicial authorities that are competent to (a) issue a European arrest warrant The Explanatory Memorandum commented: The judicial authority having the power to issue a European arrest warrant is designated in accordance with the national legislation of the Member States. They will be able to entrust the decision either to the same authority as gave the judgment or the judgment referred to in article 2 or to another authority. The position in respect of the issue of an EAW can be summarised as follows. Before the EAW was issued there would be an antecedent process that would result in an enforceable judicial decision involving deprivation of liberty. In most, but not necessarily all, Member States this would involve a judge. The Swedish process in the present case, which I shall consider in due course, provides a good example of this. The subsequent issue of the EAW would have to be done by a judicial authority, but that term embraced both a judge and a public prosecutor. The judicial authority in question might or might not be that responsible for the antecedent process. Article 6 of the September draft dealt with the contents of the EAW. These included whether there is a final judgment or any other enforceable judicial decision, within the scope of article 2. The provisions of the September draft in relation to issue provided a degree of safeguard that the EAW would only be issued in a proper case, but further safeguards were provided in relation to the execution of the EAW. It was, of course, at that stage that the process would result in deprivation of liberty. The Preamble to the September draft provided: The decision 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 person has been arrested will take the decision whether to execute the warrant. Articles 10 to 23 of the September draft dealt with execution of the EAW. As the Explanatory Memorandum explained when commenting on article 4 and repeated when dealing with the various articles in section 3, the nature of the judicial authority involved in the execution of the EAW could depend upon whether or not the fugitive was challenging surrender. In some cases it might be the prosecuting authority, in others it would be a court. Thus article 18 provided: A court in the executing Member State shall decide on whether the European arrest warrant shall be executed after a hearing, held in accordance with the national rules of criminal procedure. (a) (b) if the requested person does not consent to his or her surrender; in cases referred to in articles 17(2) and (3). The issuing Member State may be represented or submit its observations before the court. In summary, under the September draft it was beyond doubt that judicial authority was a term that embraced both a court and a public prosecutor. It was a precondition to the issue of a valid EAW that there should have been an antecedent process leading to an enforceable judicial decision which would involve deprivation of liberty. The subsequent decision to issue the EAW might be taken by the same judicial authority responsible for the antecedent decision, or another. There was nothing to indicate that this could not be a public prosecutor. The scheme had much in common with the 1957 Convention, as implemented under Schengen, stripped of political involvement. Had the final Framework Decision followed the September draft, the issue that has led to this appeal could never have arisen. Article 3 expressly provided that the issuing judicial authority might be a public prosecutor. Elsewhere the judicial authority might or might not be a public prosecutor depending upon the function being performed. The September draft was, however, amended in a manner that obfuscated the position. The relevant changes appear to have been made in the course of discussion in the Council of Ministers. On 6 December the Presidency noted that fourteen delegations agreed on the new draft (the December draft), noting parliamentary scrutiny reservations from, inter alia, the United Kingdom. The December draft formed the basis of the final Framework Decision approved by the Council. I turn to consider the manner in which the Framework Decision differs from the September draft. Article 1 of the Framework Decision begins by stating that the EAW is a judicial decision issued by a Member State. The English version of the December draft read a court decision issued by a Member State. The words that I have emphasised were both translations of the French judiciaire in the original text. The French version was the original and is to be preferred. Thus I do not consider that the use of the word court in the English version of the December draft is of any assistance in determining the meaning of judiciaire. Most significantly, for present purposes, the definitions of issuing judicial authority and executing judicial authority in the final version no longer define these as being a judge or public prosecutor. The new definitions, now in article 6, are as follows: 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. With the exception of article 19.1, the articles dealing with execution make no reference to a hearing before a court. The phrase judicial authority is used throughout. Article 19.3 does, however, give a hint that more than one type of judicial authority may be involved. The article provides: The competent executing judicial authority may assign another judicial authority of its Member State to take part in the hearing of the requested person in order to ensure the proper application of this article and of the conditions laid down. It is to be noted that article 19.1 refers to requesting court. The French version of the word court is juridiction. The two versions replicate the words used in the French and English versions of the equivalent provision of the December draft. The French draft was the original and it is hard to see any justification for translating juridiction as court. In these circumstances, while the use of the phrase requesting court in the final version lend some support to Mr Assanges case on the meaning of issuing judicial authority it would not be safe to place much weight on that support. The overall scheme of the EAW did not change from that proposed in the September draft. In particular there remained a requirement for an antecedent process before the issue of the EAW. Article 2, under the heading Scope of the European arrest warrant set out the offences in respect of which an EAW could be issued. Article 8 specified the content of the warrant, which included (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. This simplified the description of the antecedent process in articles 2 and 6 of the September draft. It adopted the description of the antecedent process in the 1957 Convention. The critical question The critical question is whether the changes made to the draft Framework Decision between September and December altered the meaning of judicial authority so as to exclude a public prosecutor from its ambit. There would seem to be two possible reasons for removing the precise definition of judicial authority that had been included in article 3 of the September draft. The first was to restrict the meaning by excluding from its ambit the public prosecutor. The second was to broaden the meaning so that it was not restricted to a judge or a public prosecutor. For a number of reasons I have reached the firm conclusion that the second explanation is the more probable. In the first place, had the intention been to restrict the power to issue an EAW or to participate in its execution to a judge, I would expect this to have been expressly stated. The change would have been radical, and would have prevented public prosecutors from performing functions that they had been performing in relation to the issue of provisional arrest warrants since 1957. In the second place it is hard to see why the majority of Member States would have wished to restrict the ambit of the issuing judicial authority in this way. The significant safeguard against the improper or inappropriate issue of an EAW lay in the antecedent process which formed the basis of the EAW. If there had been concern to ensure the involvement of a judge in relation to the issue of an EAW, the obvious focus should have been on this process. The function of the issuing authority was of less significance. That fact is underlined by the only case outside the United Kingdom to which we have been referred where a challenge was made to the issue of an EAW by a public prosecutor. In Piaggio (Germany) (14 February 2007, Court of Cassation Sez 6 (Italy)) the appellant challenged the issue by the Hamburg Public Prosecutors Office of an EAW on the ground that it should have been issued and signed by a judge. The Court rejected this contention for the following reasons: The claim alleging breach of article 1(3) of Law no 69 of 2005 on the ground that the EAW was not signed by a judge is completely unfounded. The provision allegedly requiring signature by a judge does not refer to the EAW, as the appellant mistakenly claims, but to the precautionary measure on the basis of which the warrant was issued: in the present case, it is in fact the arrest warrant issued by the Hamburg District Magistrates Court on 24 August 2005, regularly signed by Judge Reinke. The guarantee specified in the aforesaid article1(3) does not relate to the act requesting the Member State to grant extradition but is directly connected with the custodial measure, that is to say it is a substantial guarantee concerned with the basic conditions underlying the EAW, which must be subject to jurisdiction. In this procedure, the true guarantee of personal freedom is not the fact that the EAW is issued by a judicial authority but the fact that the warrant is based on a judicial measure. Moreover, article 6 of the framework decision leaves to the individual Member State the task of determining the judicial authority responsible for issuing (or executing) a European Arrest Warrant, and the Italian implementing law, with regard to the active extradition procedure, provides for certain cases in which the Public Prosecutors office is to be responsible for issuing the EAW (article 28 of Law no 69/2005). Essentially, the alleged breach of the law in respect of the fact that the EWA was signed by the Hamburg Public Prosecutors Office, must be excluded. On 23 February 2009 this decision was acknowledged with approval in the Experts Evaluation Report on Italys procedures in relation to the EAW (5832/2/09 REV 2) The final comment made at 7.3.2.6 is of particular significance: Under article 1(3) of the Italian implementing law, Italy shall implement the EAW as long as the preventative remedy on the basis of which the warrant has been issued has been signed by a Judge and is adequately motivated. The expert team notes that this provision gave rise to at least two difficulties: the requirement that the domestic arrest warrant (a) must be signed by a judge could wrongly be interpreted in the sense that the Italian executing authority should refuse the execution of an EAW if the domestic arrest warrant on which it was based is issued by a judicial authority other than a judge, in particular by a prosecutor; the requirement that the domestic arrest warrant (b) must be adequately motivated could be interpreted in the sense that the Italian executing authority should proceed to a factual verification of the case it is not supposed to do. On this point, the requirement seems in contradiction with the principle of mutual recognition on which the Framework Decision is based. However, the Court of Cassation has given an interpretation of this provision in line with the Framework Decision (my emphasis). Miss Rose suggested that the issuing judicial authority had a role to play in ensuring that it was proportionate to issue the EAW. Since the EAW was introduced there has been concern that some EAWs are being issued in respect of trivial offences. The Council, in a note dated 28 May 2010 (8436/2/10 REV 2) commented on the need for Member States to conduct a proportionality check before issuing an EAW. It stated, however It is clear that the Framework Decision on the EAW does not include any obligation for an issuing Member State to conduct a proportionality check In the light of this statement it would not be right to infer that when the EAW was being negotiated Member States agreed to restrict its issue to a judge in order to ensure that proportionality received proper judicial consideration. In the third place I find it likely that the removal of the definition of judicial authority as being a judge or public prosecutor was not because Member States wished to narrow its meaning to a judge, but because they were not content that its meaning should be restricted to a judge or a public prosecutor. Member States had existing procedures for initiating an extradition request and for requesting provisional arrest in another Member State which involved their domestic arrest procedures. They also had existing procedures for giving effect to extradition requests. The authorities involved in these procedures were not restricted to judges and prosecutors. It seems to me likely that the removal of a precise definition of judicial authority was intended to leave the phrase bearing its sens vague so as to accommodate a wider range of authorities. In the fourth place aspects of the December draft suggest that the meaning of judicial authority was not restricted to a court or judge. The requirement that became article 6.3 of the final version to inform the General Secretariat of the Council of the competent judicial authority under its law makes more sense if there was a range of possible judicial authorities. And, as I have pointed out in para 58 above, article 19.3 of the final version suggests the co operation of different types of judicial authority in the execution process. In the fifth place the manner in which not merely the Member States but also the Commission and the Council acted after the Framework Direction took effect was in stark conflict with a definition of judicial authority that restricted its meaning to a judge. Article 31.3(b) of the 1969 Vienna Convention on the Law of Treaties permits recourse, as an aid to interpretation, to any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation. The EAW processes of the Member States were subject to Reports by the Commission and Evaluation Reports on the working of the EAW were prepared by experts and submitted to the Council (see below). The practices of the Member States in relation to those they appointed as issuing and executing judicial authorities coupled with the comments of the Commission and the Council in relation to these, provide I believe a legitimate guide to the meaning of those two words in the Framework Decision. Implementation of the Framework Decision by the Member States Had the omission of the definition of judicial authority in the final version of the Framework Decision reflected an intention on the part of the Member States that negotiated it that only a judge or court could act as an issuing or executing authority, I would have expected the Member States to have implemented that intention when giving effect to the Framework Decision. I would equally have expected Reports published by the Commission and the Experts Evaluation Reports for the Council to have commented critically on any failure by a Member State to appoint a court or judge as the issuing and executing judicial authority. This was far from the case. 11 Member States designated a prosecutor as the issuing judicial authority in relation to fugitives sought for prosecution and 10, not in every case the same, designated a prosecutor as the issuing judicial authority in respect of fugitives who had been sentenced. 10 Member States designated a prosecutor as the executing judicial authority. Some of these had designated a judge or court as the issuing judicial authority. A handful of Member States had designated the Ministry of Justice as the issuing or executing judicial authority Article 34 of the Framework Decision required the Commission to submit a report to the European Parliament and to the Council on the operation of the Framework Decision. We have been provided with two such reports, the First Report dated 24 January 2006 and the Second Report dated 11 July 2007. These Reports commented adversely on the appointment by a small minority of Member States of executive bodies as judicial authorities but made no adverse comment on the use of public prosecutors as judicial authorities. Mutual Evaluation Reports into the practical application of the European Arrest Warrant and corresponding surrender procedures between Member States were made to the Council by experts nominated by Member States. We have been provided with 15 Reports from the fourth round of these mutual evaluations. Once again, while the Reports contain adverse comment on the use of Ministries of Justice as issuing or executing judicial authorities, there is no adverse comment on the use of prosecutors in this role. Indeed, as I have pointed out in para.63 above, in the case of Italy the report commended this practice. On 28 May 2009 the Council published a Final Report on the fourth round of mutual evaluations. Its Conclusions included, in para 3.1, comments on the role of the judicial authorities. These commented that in some Member States non judicial central authorities continued to play a role in cardinal aspects of the surrender procedure. This was criticised as difficult to reconcile with the letter and the spirit of the Framework Decision. No criticism was made of the use of prosecutors as judicial authorities. The Council went on to call on Member States to provide judges, prosecutors and judicial staff with appropriate training on the EAW. There is once again a clear inference, this time in relation to the Council, that there was no objection to prosecutors performing the role of issuing judicial authorities. Conclusions on the Framework Decision I turn now to Miss Roses reliance on the meaning of autorit judiciaire (legal authority) in the context of article 5, to which I referred at para 21. I there set out article 5.1(c). Article 5.3 provides: Everyone arrested or detained in accordance with the provisions of paragraph 1(c) of this article shall be brought promptly before a judge or other officer authorised by law to exercise judicial power and shall be entitled to trial within a reasonable time Miss Rose referred us to a series of 17 decisions of the Strasbourg Court which establish that the competent legal authority referred to in article 5.1(c) is shorthand for the judge or other officer authorised by law to exercise judicial power in article 5.3. These start with Schiesser v Switzerland (1979) 2 EHRR 417 and finish with Medvedyev v France (2010) 51 EHRR 899. They are, for the most part, cases where prosecutors or those subject to their control, authorised the detention of suspects during pre trial investigations on the basis that they were competent legal authorities within the meaning of that phrase in article 5.1(c). The Strasbourg Court made it plain that those involved in the prosecution of a defendant lacked the necessary independence to qualify as competent legal authorities. In Medvedyev the Grand Chamber held at paras 123 124: Since article 5.1(c) forms a whole with article 5.3, competent legal authority in para 1 (c) is a synonym, of abbreviated form, for judge or other officer authorised by law to exercise judicial power in para 3. The judicial officer must offer the requisite guarantees of independence from the executive and the parties, which precludes his subsequent intervention in criminal proceedings on behalf of the prosecuting authority, and he or she must have the power to order release, after hearing the individual and reviewing the lawfulness of, and justification for, the arrest and detention. Miss Rose submitted that this line of authority conclusively established the meaning of judicial authority in the Framework Decision. This was coupled with the submission that those two words had to be given the same meaning wherever they appeared in the Decision. I consider that both submissions are unsound. The article 5 authorities apply to the stage of pre trial proceedings at which the suspect has to be afforded the opportunity to challenge his detention. They have direct application to the stage of the execution of an EAW for which articles 14, 15 and 19 of the Framework Decision make provision. At this stage the competent judicial authority must have the characteristics identified in the Strasbourg decisions relied upon. Those decisions do not, however, apply to the stage at which a request is made by the issuing State for the surrender, or as the English statute incorrectly describes it, the extradition, of the fugitive. That is not a stage at which there is any adversarial process between the parties. It is a stage at which one of the parties takes an essentially administrative step in the process. That is a step that it is appropriate for a prosecutor to take. When considering the meaning of a word or phrase that is used more than once in the same instrument one starts with a presumption that it bears the same meaning wherever it appears. That is not, however, an irrebuttable presumption. It depends upon the nature of the word or phrase in question and the contexts in which it appears in the instrument. In the Framework Decision the same phrase is used to describe different authorities performing different functions at different stages of the overall process. The phrase is capable of applying to a variety of different authorities. The contexts in which it is used in the Framework Decision do not require that all the authorities have the same characteristics. On the contrary the contexts permit the issuing judicial authority to have different characteristics from the executing judicial authority and, indeed, for the phrase judicial authority to bear different meanings at the stage of execution of the EAW dependent upon the function being performed. The purpose of the Framework Decision, its general scheme, the previous European extradition arrangements, the existing procedures of the Member States at the time that the Framework Decision was negotiated, the preparatory documents and the variety of meanings that the French version of the phrase in issue naturally bears, the manner in which the Framework Decision has been implemented and the attitude of the Commission and the Council to its implementation all lead to the conclusion that the issuing judicial authority bears the wide meaning for which Miss Montgomery contends and embraces the Prosecutor in the present case. All that weighs the other way is the narrower meaning that the English phrase naturally bears. That does not begin to tilt the scales in favour of Miss Roses submission. For this reason I conclude that the Prosecutor in this case fell within the meaning of issuing judicial authority in the Framework Decision. The 2003 Act It is necessary, if possible, to give judicial authority the same meaning in the 2003 Act as it bears in the Framework Decision. Is it possible? The manner in which the Act sets out to give effect to the Framework Decision has been vigorously criticised by Professor John Spencer in Implementing the European Arrest Warrant: A Tale of How Not to Do it (2009) 30(3) Statute Law Review 184. This appeal will afford him additional grounds of attack. The Act does not make clear the overall nature of the EAW scheme for which the Framework Decision provides. It does not make clear the vital part that the antecedent process plays in the scheme. The scheme is founded on the mutual recognition of the decision that is taken in that process. Article 8 of the Framework Decision provides that the EAW must contain evidence of an enforceable judgment, an arrest warrant or other enforceable judicial decision having the same effect. Section 2 of the 2003 Act requires the arrest warrant to give particulars of any other warrant issued in the category 1 territory for the persons arrest in respect of the offence (my emphasis). I am not surprised that this provision has given rise to some judicial confusion, as evidenced by the series of decisions that culminated in the decision of the House of Lords in Louca v Public Prosecutor, Bielefeld, Germany [2009] UKSC 4; [2009] 1 WLR 2550. Only in that case was it appreciated that the provision referred to any domestic warrant on which the European warrant is based per Lord Mance at para 15. Because the 2003 Act does not make clear the importance of the antecedent decision, it can give the impression that the decision to issue the EAW is the step in the procedure at which are considered all the matters that will be taken into account in the course of the antecedent process. This, in its turn, can lead to the conclusion that the decision to issue the EAW is of such importance that Parliament must have intended it to be taken by a judge, and that judicial authority must be interpreted as meaning a judge. As I have sought to demonstrate this reasoning is unsound. Under the scheme of the Framework Decision the safeguard against the inappropriate issue of an EAW lies in the process antecedent to the issue of the EAW. I have drawn attention to the uncertainty on the material before us as to whether a court is involved in that process in all Member States, though this material indicates that it is in at least most States. No material has been put before us that suggests that EAWs are being issued on the basis of an antecedent process that is unsatisfactory for want of judicial involvement. The scheme does not provide for a second judicial process at the stage of the issue of the EAW. To interpret issuing judicial authority as meaning a court or judge would result in a large proportion of EAWs being held to be ineffective in this country, notwithstanding their foundation on an antecedent judicial process. For these reasons I can see no impediment to according to judicial authority in Part 1 of the 2003 Act the same meaning as it bears in the Framework Decision. On the contrary there is good reason to accord it such meaning. I have concluded that the Prosecutor who issued the EAW in this case was a judicial authority within the meaning of that phrase in section 2 of the 2003 Act and that Mr Assanges challenge to the validity of the EAW fails. The Lord Advocates intervention The Lord Advocate for Scotland, in a written intervention, submitted that the 2003 Act did not permit the Court to look behind a designation of a judicial authority made by a Member State under article 6.3 of the Framework Decision and accepted by the certificate of the designated authority under section 2 of the 2003 Act. This submission challenged the finding of the Divisional Court in this case that neither the designation by Sweden of its issuing judicial authority nor the issue of a certificate under section 2 barred Mr Assange from contending that his EAW had not been issued by a judicial authority. This did not discourage Miss Montgomery from aligning herself with the Lord Advocates submission at the ninth hour. Miss Rose made written submissions after the hearing supporting the reasoning of the Divisional Court. While I found this reasoning persuasive, I was none the less impressed by the opposite view expressed in Sir Scott Bakers Report, to which I refer below. In the circumstances I think that it would be better not to express a final opinion on the point, leaving it open for oral argument on a future occasion. The facts of this case The point on the meaning of judicial authority taken in this case has been technical, in as much as there has been no lack of judicial consideration of whether there is a case that justifies the prosecution of Mr Assange for the offences in respect of which his extradition is sought. I shall give a bare outline of events in Sweden. The proceedings against Mr Assange are founded on complaints made by two women on 20 August 2010. A Preliminary Investigation conducted by the Chief Officer, in which Mr Assange co operated, concluded that there was no case against him in respect of the alleged rape. The complainants appealed against this decision to the Prosecutor, who re opened the full Preliminary Investigation. Mr Assange instructed counsel to represent him. He then left the country, which he was free to do. On 18 November the Prosecutor applied to the Stockholm District Court for a domestic detention order in absentia. The Stockholm District Court granted the order. The following day Mr Assange, by his counsel, appealed to the Svea Court of Appeal against the order on the grounds that the domestic arrest was not proportionate and was not based on sufficient evidence to give rise to probable cause. The Prosecutor informed the Court of Appeal that she intended to issue an EAW. The Court of Appeal dismissed Mr Assanges appeal on the papers and without an oral hearing on 24 November. On 26 November the Prosecutor issued an EAW. This was submitted to SOCA and rejected because it failed to specify the potential sentences in respect of the offences alleged. A replacement EAW was issued on 2 December 2010 and this was certified by SOCA under section 2(7) and (8) of the 2003 Act on 6 December 2010. Under Swedish law the issue of a domestic detention order in absentia was a precondition to the issue of an EAW. That order was issued by a court which, it seems, had to be satisfied that there was sufficient evidence giving rise to probable cause and that domestic arrest was proportionate. The only possible additional area of discretion so far as the issue of the EAW was concerned would seem to be whether this was proportionate. There does not appear to have been a requirement that this should receive judicial consideration. Proportionality On 30 September 2011 a Committee chaired by the Rt Hon Sir Scott Baker presented a report to the Home Secretary that reviewed the United Kingdoms extradition arrangements. At paras 5.106 to 5.119 the Report considers a criticism that it is possible for an EAW to be issued by non judicial authorities, most often by public prosecutors. It makes the following comment: The rationale which underpins both article 6 and section 2(7) is the obvious need for an internationalist or cosmopolitan approach to the interpretation of the term judicial authority: it is for the domestic law of each Member State to decide which body or authority is responsible for issuing warrants and it is not for other Member States to question the competence of the body in question, or the institutional arrangements for the issuing of warrants. The Report gave a number of reasons for concluding that this position was satisfactory, not least of which was the statement that the panel was not aware of any cases in which EAWs issued by designated prosecuting authorities had led to oppression or injustice. The Report went on, in considerably greater detail, to consider the importance of proportionality. This had been considered in the Councils Report to which I have referred at para 71 above. The 9th recommendation of this Report was that there should be continued discussion on the institution of a proportionality requirement for the issue of any EAW with a view to reaching a coherent solution at European Union level. The Scott Baker Report agreed that proportionality should be considered at the stage of issuing an EAW. It did not recommend that the question of proportionality should be reviewed as part of the process of execution. There are three principal areas of judgment that may be involved in issuing and executing an accusation EAW. The first involves consideration of whether there are reasonable grounds for arresting the fugitive for the purpose of prosecuting him. Under the scheme consideration of this question should form part of the antecedent process. It should not be repeated at the stage of execution. The second involves consideration of whether surrender of the fugitive will involve an infringement of his human rights. This issue will not often arise, and when it does it is likely to involve considering proportionality. Under the scheme of the EAW, consideration of any human rights issue should take place at the extradition hearing, which will necessarily involve a judge. The third area of judgment involves consideration of whether, quite apart from any discrete human rights issues, the alleged offence is sufficiently serious to justify the draconian measure of removing the fugitive from the country in which he is living to the country where he is alleged to have offended. The Framework Decision dealt with this to a degree in as much as it provides that an accusation EAW can only be issued where the offence for which the fugitive is to be prosecuted must carry a maximum sentence of at least 12 months. It has become clear that this is insufficient to prevent the issue of an EAW in respect of an offence that is too trivial to justify the process. It seems that EAWs are being issued in some cases for offences as trivial as stealing a chicken. This reflects the fact that in some States such as Poland, under a constitutional principle of legality, the prosecutor has an obligation to prosecute a person who is reasonably suspected of having committed a criminal offence, however trivial the offence. The scheme of the EAW needs to be reconsidered in order to make express provision for consideration of proportionality. It makes sense for that question to be considered as part of the process of issue of the EAW. To permit proportionality to be raised at the stage of execution would result in delay that would run counter to the scheme. It does not necessarily follow that an offence that justifies the issue of a domestic warrant of arrest will justify the issue of an EAW. For this reason the antecedent process will not necessarily consider the proportionality of issuing an EAW. There is a case for making proportionality an express precondition of the issue of an EAW. Should this be done, it may be appropriate to define issuing judicial authority in such a way as to ensure that proportionality receives consideration by a judge. At present there is no justification for such a course. For the reasons that I have given I would dismiss this appeal. 32002F0584 2002/584/JHA: Council Framework Decision of 13 June 2002 on the European arrest warrant and the surrender procedures between Member States Statements made by certain Member States on the adoption of the Framework Decision Official Journal L 190 , 18/07/2002 P. 0001 0020 on the European arrest warrant and the surrender procedures between Council Framework Decision of 13 June 2002 Member States (2002/584/JHA) THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on European Union, and in particular Article 31(a) and (b) and Article 34(2)(b) thereof, Having regard to the proposal from the Commission(1), Having regard to the opinion of the European Parliament(2), Whereas: (1) According to the Conclusions of the Tampere European Council of 15 and 16 October 1999, and in particular point 35 thereof, the formal extradition procedure should be abolished among the Member States in respect of persons who are fleeing from justice after having been finally sentenced and extradition procedures should be speeded up in respect of persons suspected of having committed an offence. (2) The programme of measures to implement the principle of mutual recognition of criminal decisions envisaged in point 37 of the Tampere European Council Conclusions and adopted by the Council on 30 November 2000(3), addresses the matter of mutual enforcement of arrest warrants. (3) All or some Member States are parties to a number of conventions in the field of extradition, including the European Convention on extradition of 13 December 1957 and the European Convention on the suppression of terrorism of 27 January 1977. The Nordic States have extradition laws with identical wording. (4) In addition, the following three Conventions dealing in whole or in part with extradition have been agreed upon among Member States and form part of the Union acquis: the Convention of 19 June 1990 implementing the Schengen Agreement of 14 June 1985 on the gradual abolition of checks at their common borders(4) (regarding relations between the Member States which are parties to that Convention), the Convention of 10 March 1995 on simplified extradition procedure between the Member States of the European Union(5) and the Convention of 27 September 1996 relating to extradition between the Member States of the European Union(6). (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. (7) Since the aim of replacing the system of multilateral extradition built upon the European Convention on Extradition of 13 December 1957 cannot be sufficiently achieved by the Member States acting unilaterally and can therefore, by reason of its scale and effects, be better achieved at Union level, the Council may adopt measures in accordance with the principle of subsidiarity as referred to in Article 2 of the Treaty on European Union and Article 5 of the Treaty establishing the European Community. In accordance with the principle of proportionality, as set out in the latter Article, this Framework Decision does not go beyond what is necessary in order to achieve that objective. (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. (10) The mechanism of the European arrest warrant is based on a high level of confidence between Member States. Its implementation may be suspended only in the event of a serious and persistent breach by one of the Member States of the principles set out in Article 6(1) of the Treaty on European Union, determined by the Council pursuant to Article 7(1) of the said Treaty with the consequences set out in Article 7(2) thereof. (11) In relations between Member States, the European arrest warrant should replace all the previous instruments concerning extradition, including the provisions of Title III of the Convention implementing the Schengen Agreement which concern extradition. (12) This Framework Decision respects fundamental rights and observes the principles recognised by Article 6 of the Treaty on European Union and reflected in the Charter of Fundamental Rights of the European Union(7), in particular Chapter VI thereof. Nothing in this Framework Decision may be interpreted as prohibiting refusal to surrender a person for whom a European arrest warrant has been issued when there are reasons to believe, on the basis of objective elements, that the said arrest warrant has been issued for the purpose of prosecuting or punishing a person on the grounds of his or her sex, race, religion, ethnic origin, nationality, language, political opinions or sexual orientation, or that that person's position may be prejudiced for any of these reasons. This Framework Decision does not prevent a Member State from applying its constitutional rules relating to due process, freedom of association, freedom of the press and freedom of expression in other media. (13) No person should be removed, expelled or extradited to a State where there is a serious risk that he or she would be subjected to the death penalty, torture or other inhuman or degrading treatment or punishment. (14) Since all Member States have ratified the Council of Europe Convention of 28 January 1981 for the protection of individuals with regard to automatic processing of personal data, the personal data processed in the context of the implementation of this Framework Decision should be protected in accordance with the principles of the said Convention, HAS ADOPTED THIS FRAMEWORK DECISION: CHAPTER 1 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 2 Scope of the European arrest warrant 1. A European arrest warrant may be issued for acts punishable by the law of the issuing Member State by a custodial sentence or a detention order for a maximum period of at least 12 months or, where a sentence has been passed or a detention order has been made, for sentences of at least four months. 2. The following offences, if they are punishable in the issuing Member State by a custodial sentence or a detention order for a maximum period of at least three years and as they are defined by the law of the issuing Member State, shall, under the terms of this Framework Decision and without verification of the double criminality of the act, give rise to surrender pursuant to a European arrest warrant: participation in a criminal organisation, terrorism, trafficking in human beings, sexual exploitation of children and child pornography, illicit trafficking in narcotic drugs and psychotropic substances, illicit trafficking in weapons, munitions and explosives, corruption, fraud, including that affecting the financial interests of the European Communities within the meaning of the Convention of 26 July 1995 on the protection of the European Communities' financial interests, laundering of the proceeds of crime, counterfeiting currency, including of the euro, computer related crime, environmental crime, including illicit trafficking in endangered animal species and in endangered plant species and varieties, facilitation of unauthorised entry and residence, murder, grievous bodily injury, illicit trade in human organs and tissue, kidnapping, illegal restraint and hostage taking, racism and xenophobia, organised or armed robbery, illicit trafficking in cultural goods, including antiques and works of art, swindling, racketeering and extortion, counterfeiting and piracy of products, forgery of administrative documents and trafficking therein, forgery of means of payment, illicit trafficking in hormonal substances and other growth promoters, illicit trafficking in nuclear or radioactive materials, trafficking in stolen vehicles, rape, arson, crimes within the jurisdiction of the International Criminal Court, unlawful seizure of aircraft/ships, sabotage. 3. The Council may decide at any time, acting unanimously after consultation of the European Parliament under the conditions laid down in Article 39(1) of the Treaty on European Union (TEU), to add other categories of offence to the list contained in paragraph 2. The Council shall examine, in the light of the report submitted by the Commission pursuant to Article 34(3), whether the list should be extended or amended. 4. For offences other than those covered by paragraph 2, surrender may be subject to the condition that the acts for which the European arrest warrant has been issued constitute an offence under the law of the executing Member State, whatever the constituent elements or however it is described. Article 3 Grounds for mandatory non execution of the European arrest warrant The judicial authority of the Member State of execution (hereinafter "executing judicial authority") shall refuse to execute the European arrest warrant in the following cases: 1. if the offence on which the arrest warrant is based is covered by amnesty in the executing Member State, where that State had jurisdiction to prosecute the offence under its own criminal law; 2. if the executing judicial authority is informed that the requested person has been finally judged by a Member State in respect of the same acts provided that, where there has been sentence, the sentence has been served or is currently being served or may no longer be executed under the law of the sentencing Member State; 3. if the person who is the subject of the European arrest warrant may not, owing to his age, be held criminally responsible for the acts on which the arrest warrant is based under the law of the executing State. Article 4 Grounds for optional non execution of the European arrest warrant The executing judicial authority may refuse to execute the European arrest warrant: 1. if, in one of the cases referred to in Article 2(4), the act on which the European arrest warrant is based does not constitute an offence under the law of the executing Member State; however, in relation to taxes or duties, customs and exchange, execution of the European arrest warrant shall not be refused on the ground that the law of the executing Member State does not impose the same kind of tax or duty or does not contain the same type of rules as regards taxes, duties and customs and exchange regulations as the law of the issuing Member State; 2. where the person who is the subject of the European arrest warrant is being prosecuted in the executing Member State for the same act as that on which the European arrest warrant is based; 3. where the judicial authorities of the executing Member State have decided either not to prosecute for the offence on which the European arrest warrant is based or to halt proceedings, or where a final judgment has been passed upon the requested person in a Member State, in respect of the same acts, which prevents further proceedings; 4. where the criminal prosecution or punishment of the requested person is statute barred according to the law of the executing Member State and the acts fall within the jurisdiction of that Member State under its own criminal law; 5. if the executing judicial authority is informed that the requested person has been finally judged by a third State in respect of the same acts provided that, where there has been sentence, the sentence has been served or is currently being served or may no longer be executed under the law of the sentencing country; 6. if the European arrest warrant has been issued for the purposes of execution of a custodial sentence or detention order, where the requested person is staying in, or is a national or a resident of the executing Member State and that State undertakes to execute the sentence or detention order in accordance with its domestic law; 7. where the European arrest warrant relates to offences which: (a) are regarded by the law of the executing Member State as having been committed in whole or in part in the territory of the executing Member State or in a place treated as such; or (b) have been committed outside the territory of the issuing Member State and the law of the executing Member State does not allow prosecution for the same offences when committed outside its territory. Article 5 Guarantees to be given by the issuing Member State in particular cases The execution of the European arrest warrant by the executing judicial authority may, by the law of the executing Member State, be subject to the following conditions: 1. where the European arrest warrant has been issued for the purposes of executing a sentence or a detention order imposed by a decision rendered in absentia and if the person concerned has not been summoned in person or otherwise informed of the date and place of the hearing which led to the decision rendered in absentia, surrender may be subject to the condition that the issuing judicial authority gives an assurance deemed adequate to guarantee the person who is the subject of the European arrest warrant that he or she will have an opportunity to apply for a retrial of the case in the issuing Member State and to be present at the judgment; 2. if the offence on the basis of which the European arrest warrant has been issued is punishable by custodial life sentence or life time detention order, the execution of the said arrest warrant may be subject to the condition that the issuing Member State has provisions in its legal system for a review of the penalty or measure imposed, on request or at the latest after 20 years, or for the application of measures of clemency to which the person is entitled to apply for under the law or practice of the issuing Member State, aiming at a non execution of such penalty or measure; 3. where a person who is the subject of a European arrest warrant for the purposes of prosecution is a national or resident of the executing Member State, surrender may be subject to the condition that the person, after being heard, is returned to the executing Member State in order to serve there the custodial sentence or detention order passed against him in the issuing Member State. 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. 2. The European arrest warrant must be translated into the official language or one of the official languages of the executing Member State. Any Member State may, when this Framework Decision is adopted or at a later date, state in a declaration deposited with the General Secretariat of the Council that it will accept a translation in one or more other official languages of the Institutions of the European Communities. CHAPTER 2 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. Article 10 Detailed procedures for transmitting a European arrest warrant 1. If the issuing judicial authority does not know the competent executing judicial authority, it shall make the requisite enquiries, including through the contact points of the European Judicial Network(8), in order to obtain that information from the executing Member State. 2. If the issuing judicial authority so wishes, transmission may be effected via the secure telecommunications system of the European Judicial Network. 3. If it is not possible to call on the services of the SIS, the issuing judicial authority may call on Interpol to transmit a European arrest warrant. 4. The issuing judicial authority may forward the European arrest warrant by any secure means capable of producing written records under conditions allowing the executing Member State to establish its authenticity. 5. All difficulties concerning the transmission or the authenticity of any document needed for the execution of the European arrest warrant shall be dealt with by direct contacts between the judicial authorities involved, or, where appropriate, with the involvement of the central authorities of the Member States. 6. If the authority which receives a European arrest warrant is not competent to act upon it, it shall automatically forward the European arrest warrant to the competent authority in its Member State and shall inform the issuing judicial authority accordingly. Article 11 Rights of a requested person 1. When a requested person is arrested, the executing competent judicial authority shall, in accordance with its national law, inform that person of the European arrest warrant and of its contents, and also of the possibility of consenting to surrender to the issuing judicial authority. 2. A requested person who is arrested for the purpose of the execution of a European arrest warrant shall have a right to be assisted by a legal counsel and by an interpreter in accordance with the national law of the executing Member State. Article 12 Keeping the person in detention When a person is arrested on the basis of a European arrest warrant, the executing judicial authority shall take a decision on whether the requested person should remain in detention, in accordance with the law of the executing Member State. The person may be released provisionally at any time in conformity with the domestic law of the executing Member State, provided that the competent authority of the said Member State takes all the measures it deems necessary to prevent the person absconding. Article 13 Consent to surrender 1. If the arrested person indicates that he or she consents to surrender, that consent and, if appropriate, express renunciation of entitlement to the "speciality rule", referred to in Article 27(2), shall be given before the executing judicial authority, in accordance with the domestic law of the executing Member State. 2. Each Member State shall adopt the measures necessary to ensure that consent and, where appropriate, renunciation, as referred to in paragraph 1, are established in such a way as to show that the person concerned has expressed them voluntarily and in full awareness of the consequences. To that end, the requested person shall have the right to legal counsel. 3. The consent and, where appropriate, renunciation, as referred to in paragraph 1, shall be formally recorded in accordance with the procedure laid down by the domestic law of the executing Member State. 4. In principle, consent may not be revoked. Each Member State may provide that consent and, if appropriate, renunciation may be revoked, in accordance with the rules applicable under its domestic law. In this case, the period between the date of consent and that of its revocation shall not be taken into consideration in establishing the time limits laid down in Article 17. A Member State which wishes to have recourse to this possibility shall inform the General Secretariat of the Council accordingly when this Framework Decision is adopted and shall specify the procedures whereby revocation of consent shall be possible and any amendment to them. Article 14 Hearing of the requested person Where the arrested person does not consent to his or her surrender as referred to in Article 13, he or she shall be entitled to be heard by the executing judicial authority, in accordance with the law of the executing Member State. Article 15 Surrender decision 1. The executing judicial authority shall decide, within the time limits and under the conditions defined in this Framework Decision, whether the person is to be surrendered. 2. If the executing judicial authority finds the information communicated by the issuing Member State to be insufficient to allow it to decide on surrender, it shall request that the necessary supplementary information, in particular with respect to Articles 3 to 5 and Article 8, be furnished as a matter of urgency and may fix a time limit for the receipt thereof, taking into account the need to observe the time limits set in Article 17. 3. The issuing judicial authority may at any time forward any additional useful information to the executing judicial authority. Article 16 Decision in the event of multiple requests 1. If two or more Member States have issued European arrest warrants for the same person, the decision on which of the European arrest warrants shall be executed shall be taken by the executing judicial authority with due consideration of all the circumstances and especially the relative seriousness and place of the offences, the respective dates of the European arrest warrants and whether the warrant has been issued for the purposes of prosecution or for execution of a custodial sentence or detention order. 2. The executing judicial authority may seek the advice of Eurojust(9) when making the choice referred to in paragraph 1. 3. In the event of a conflict between a European arrest warrant and a request for extradition presented by a third country, the decision on whether the European arrest warrant or the extradition request takes precedence shall be taken by the competent authority of the executing Member State with due consideration of all the circumstances, in particular those referred to in paragraph 1 and those mentioned in the applicable convention. 4. This Article shall be without prejudice to Member States' obligations under the Statute of the International Criminal Court. Article 17 Time limits and procedures for the decision to execute the European arrest warrant 1. A European arrest warrant shall be dealt with and executed as a matter of urgency. 2. In cases where the requested person consents to his surrender, the final decision on the execution of the European arrest warrant should be taken within a period of 10 days after consent has been given. 3. In other cases, the final decision on the execution of the European arrest warrant should be taken within a period of 60 days after the arrest of the requested person. 4. Where in specific cases the European arrest warrant cannot be executed within the time limits laid down in paragraphs 2 or 3, the executing judicial authority shall immediately inform the issuing judicial authority thereof, giving the reasons for the delay. In such case, the time limits may be extended by a further 30 days. 5. As long as the executing judicial authority has not taken a final decision on the European arrest warrant, it shall ensure that the material conditions necessary for effective surrender of the person remain fulfilled. 6. Reasons must be given for any refusal to execute a European arrest warrant. 7. Where in exceptional circumstances a Member State cannot observe the time limits provided for in this Article, it shall inform Eurojust, giving the reasons for the delay. In addition, a Member State which has experienced repeated delays on the part of another Member State in the execution of European arrest warrants shall inform the Council with a view to evaluating the implementation of this Framework Decision at Member State level. Article 18 Situation pending the decision 1. Where the European arrest warrant has been issued for the purpose of conducting a criminal prosecution, the executing judicial authority must: (a) either agree that the requested person should be heard according to Article 19; (b) or agree to the temporary transfer of the requested person. 2. The conditions and the duration of the temporary transfer shall be determined by mutual agreement between the issuing and executing judicial authorities. 3. In the case of temporary transfer, the person must be able to return to the executing Member State to attend hearings concerning him or her as part of the surrender procedure. Article 19 Hearing the person pending the decision 1. The requested person shall be heard by a judicial authority, assisted by another person designated in accordance with the law of the Member State of the requesting court. 2. The requested person shall be heard in accordance with the law of the executing Member State and with the conditions determined by mutual agreement between the issuing and executing judicial authorities. 3. The competent executing judicial authority may assign another judicial authority of its Member State to take part in the hearing of the requested person in order to ensure the proper application of this Article and of the conditions laid down. Article 20 Privileges and immunities 1. Where the requested person enjoys a privilege or immunity regarding jurisdiction or execution in the executing Member State, the time limits referred to in Article 17 shall not start running unless, and counting from the day when, the executing judicial authority is informed of the fact that the privilege or immunity has been waived. The executing Member State shall ensure that the material conditions necessary for effective surrender are fulfilled when the person no longer enjoys such privilege or immunity. 2. Where power to waive the privilege or immunity lies with an authority of the executing Member State, the executing judicial authority shall request it to exercise that power forthwith. Where power to waive the privilege or immunity lies with an authority of another State or international organisation, it shall be for the issuing judicial authority to request it to exercise that power. Article 21 Competing international obligations This Framework Decision shall not prejudice the obligations of the executing Member State where the requested person has been extradited to that Member State from a third State and where that person is protected by provisions of the arrangement under which he or she was extradited concerning speciality. The executing Member State shall take all necessary measures for requesting forthwith the consent of the State from which the requested person was extradited so that he or she can be surrendered to the Member State which issued the European arrest warrant. The time limits referred to in Article 17 shall not start running until the day on which these speciality rules cease to apply. Pending the decision of the State from which the requested person was extradited, the executing Member State will ensure that the material conditions necessary for effective surrender remain fulfilled. Article 22 Notification of the decision The executing judicial authority shall notify the issuing judicial authority immediately of Article 23 Time limits for surrender of the person 1. The person requested shall be surrendered as soon as possible on a date agreed between the authorities concerned. 2. He or she shall be surrendered no later than 10 days after the final decision on the execution of the European arrest warrant. 3. If the surrender of the requested person within the period laid down in paragraph 2 is prevented by circumstances beyond the control of any of the Member States, the executing and issuing judicial authorities shall immediately contact each other and agree on a new surrender date. In that event, the surrender shall take place within 10 days of the new date thus agreed. the decision on the action to be taken on the European arrest warrant. 4. The surrender may exceptionally be temporarily postponed for serious humanitarian reasons, for example if there are substantial grounds for believing that it would manifestly endanger the requested person's life or health. The execution of the European arrest warrant shall take place as soon as these grounds have ceased to exist. The executing judicial authority shall immediately inform the issuing judicial authority and agree on a new surrender date. In that event, the surrender shall take place within 10 days of the new date thus agreed. 5. Upon expiry of the time limits referred to in paragraphs 2 to 4, if the person is still being held in custody he shall be released. Article 24 Postponed or conditional surrender 1. The executing judicial authority may, after deciding to execute the European arrest warrant, postpone the surrender of the requested person so that he or she may be prosecuted in the executing Member State or, if he or she has already been sentenced, so that he or she may serve, in its territory, a sentence passed for an act other than that referred to in the European arrest warrant. 2. Instead of postponing the surrender, the executing judicial authority may temporarily surrender the requested person to the issuing Member State under conditions to be determined by mutual agreement between the executing and the issuing judicial authorities. The agreement shall be made in writing and the conditions shall be binding on all the authorities in the issuing Member State. Article 25 Transit 1. Each Member State shall, except when it avails itself of the possibility of refusal when the transit of a national or a resident is requested for the purpose of the execution of a custodial sentence or detention order, permit the transit through its territory of a requested person who is being surrendered provided that it has been given information on: (a) the identity and nationality of the person subject to the European arrest warrant; (b) the existence of a European arrest warrant; (c) the nature and legal classification of the offence; (d) the description of the circumstances of the offence, including the date and place. Where a person who is the subject of a European arrest warrant for the purposes of prosecution is a national or resident of the Member State of transit, transit may be subject to the condition that the person, after being heard, is returned to the transit Member State to serve the custodial sentence or detention order passed against him in the issuing Member State. 2. Each Member State shall designate an authority responsible for receiving transit requests and the necessary documents, as well as any other official correspondence relating to transit requests. Member States shall communicate this designation to the General Secretariat of the Council. 3. The transit request and the information set out in paragraph 1 may be addressed to the authority designated pursuant to paragraph 2 by any means capable of producing a written record. The Member State of transit shall notify its decision by the same procedure. 4. This Framework Decision does not apply in the case of transport by air without a scheduled stopover. However, if an unscheduled landing occurs, the issuing Member State shall provide the authority designated pursuant to paragraph 2 with the information provided for in paragraph 1. 5. Where a transit concerns a person who is to be extradited from a third State to a Member State this Article will apply mutatis mutandis. In particular the expression "European arrest warrant" shall be deemed to be replaced by "extradition request". CHAPTER 3 EFFECTS OF THE SURRENDER Article 26 Deduction of the period of detention served in the executing Member State 1. The issuing Member State shall deduct all periods of detention arising from the execution of a European arrest warrant from the total period of detention to be served in the issuing Member State as a result of a custodial sentence or detention order being passed. 2. To that end, all information concerning the duration of the detention of the requested person on the basis of the European arrest warrant shall be transmitted by the executing judicial authority or the central authority designated under Article 7 to the issuing judicial authority at the time of the surrender. Article 27 Possible prosecution for other offences 1. Each Member State may notify the General Secretariat of the Council that, in its relations with other Member States that have given the same notification, consent is presumed to have been given for the prosecution, sentencing or detention with a view to the carrying out of a custodial sentence or detention order for an offence committed prior to his or her surrender, other than that for which he or she was surrendered, unless in a particular case the executing judicial authority states otherwise in its decision on surrender. 2. Except in the cases referred to in paragraphs 1 and 3, a person surrendered may not be prosecuted, sentenced or otherwise deprived of his or her liberty for an offence committed prior to his or her surrender other than that for which he or she was surrendered. 3. Paragraph 2 does not apply in the following cases: (a) when the person having had an opportunity to leave the territory of the Member State to which he or she has been surrendered has not done so within 45 days of his or her final discharge, or has returned to that territory after leaving it; (b) the offence is not punishable by a custodial sentence or detention order; (c) the criminal proceedings do not give rise to the application of a measure restricting personal liberty; (d) when the person could be liable to a penalty or a measure not involving the deprivation of liberty, in particular a financial penalty or a measure in lieu thereof, even if the penalty or measure may give rise to a restriction of his or her personal liberty; (e) when the person consented to be surrendered, where appropriate at the same time as he or she renounced the speciality rule, in accordance with Article 13; (f) when the person, after his/her surrender, has expressly renounced entitlement to the speciality rule with regard to specific offences preceding his/her surrender. Renunciation shall be given before the competent judicial authorities of the issuing Member State and shall be recorded in accordance with that State's domestic law. The renunciation shall be drawn up in such a way as to make clear that the person has given it voluntarily and in full awareness of the consequences. To that end, the person shall have the right to legal counsel; (g) where the executing judicial authority which surrendered the person gives its consent in accordance with paragraph 4. 4. A request for consent shall be submitted to the executing judicial authority, accompanied by the information mentioned in Article 8(1) and a translation as referred to in Article 8(2). Consent shall be given when the offence for which it is requested is itself subject to surrender in accordance with the provisions of this Framework Decision. Consent shall be refused on the grounds referred to in Article 3 and otherwise may be refused only on the grounds referred to in Article 4. The decision shall be taken no later than 30 days after receipt of the request. For the situations mentioned in Article 5 the issuing Member State must give the guarantees provided for therein. Article 28 Surrender or subsequent extradition 1. Each Member State may notify the General Secretariat of the Council that, in its relations with other Member States which have given the same notification, the consent for the surrender of a person to a Member State other than the executing Member State pursuant to a European arrest warrant issued for an offence committed prior to his or her surrender is presumed to have been given, unless in a particular case the executing judicial authority states otherwise in its decision on surrender. 2. In any case, a person who has been surrendered to the issuing Member State pursuant to a European arrest warrant may, without the consent of the executing Member State, be surrendered to a Member State other than the executing Member State pursuant to a European arrest warrant issued for any offence committed prior to his or her surrender in the following cases: (a) where the requested person, having had an opportunity to leave the territory of the Member State to which he or she has been surrendered, has not done so within 45 days of his final discharge, or has returned to that territory after leaving it; (b) where the requested person consents to be surrendered to a Member State other than the executing Member State pursuant to a European arrest warrant. Consent shall be given before the competent judicial authorities of the issuing Member State and shall be recorded in accordance with that State's national law. It shall be drawn up in such a way as to make clear that the person concerned has given it voluntarily and in full awareness of the consequences. To that end, the requested person shall have the right to legal counsel; (c) where the requested person is not subject to the speciality rule, in accordance with Article 27(3)(a), (e), (f) and (g). 3. The executing judicial authority consents to the surrender to another Member State according to the following rules: (a) the request for consent shall be submitted in accordance with Article 9, accompanied by the information mentioned in Article 8(1) and a translation as stated in Article 8(2); (b) consent shall be given when the offence for which it is requested is itself subject to surrender in accordance with the provisions of this Framework Decision; (c) the decision shall be taken no later than 30 days after receipt of the request; (d) consent shall be refused on the grounds referred to in Article 3 and otherwise may be refused only on the grounds referred to in Article 4. For the situations referred to in Article 5, the issuing Member State must give the guarantees provided for therein. 4. Notwithstanding paragraph 1, a person who has been surrendered pursuant to a European arrest warrant shall not be extradited to a third State without the consent of the competent authority of the Member State which surrendered the person. Such consent shall be given in accordance with the Conventions by which that Member State is bound, as well as with its domestic law. Article 29 Handing over of property 1. At the request of the issuing judicial authority or on its own initiative, the executing judicial authority shall, in accordance with its national law, seize and hand over property which: (a) may be required as evidence, or (b) has been acquired by the requested person as a result of the offence. 2. The property referred to in paragraph 1 shall be handed over even if the European arrest warrant cannot be carried out owing to the death or escape of the requested person. 3. If the property referred to in paragraph 1 is liable to seizure or confiscation in the territory of the executing Member State, the latter may, if the property is needed in connection with pending criminal proceedings, temporarily retain it or hand it over to the issuing Member State, on condition that it is returned. 4. Any rights which the executing Member State or third parties may have acquired in the property referred to in paragraph 1 shall be preserved. Where such rights exist, the issuing Member State shall return the property without charge to the executing Member State as soon as the criminal proceedings have been terminated. Article 30 Expenses 1. Expenses incurred in the territory of the executing Member State for the execution of a European arrest warrant shall be borne by that Member State. 2. All other expenses shall be borne by the issuing Member State. CHAPTER 4 GENERAL AND FINAL PROVISIONS Article 31 Relation to other legal instruments 1. Without prejudice to their application in relations between Member States and third States, this Framework Decision shall, from 1 January 2004, replace the corresponding provisions of the following conventions applicable in the field of extradition in relations between the Member States: (a) the European Convention on Extradition of 13 December 1957, its additional protocol of 15 October 1975, its second additional protocol of 17 March 1978, and the European Convention on the suppression of terrorism of 27 January 1977 as far as extradition is concerned; (b) the Agreement between the 12 Member States of the European Communities on the simplification and modernisation of methods of transmitting extradition requests of 26 May 1989; (c) the Convention of 10 March 1995 on simplified extradition procedure between the Member States of the European Union; (d) the Convention of 27 September 1996 relating to extradition between the Member States of the European Union; (e) Title III, Chapter 4 of the Convention of 19 June 1990 implementing the Schengen Agreement of 14 June 1985 on the gradual abolition of checks at common borders. 2. Member States may continue to apply bilateral or multilateral agreements or arrangements in force when this Framework Decision is adopted in so far as such agreements or arrangements allow the objectives of this Framework Decision to be extended or enlarged and help to simplify or facilitate further the procedures for surrender of persons who are the subject of European arrest warrants. Member States may conclude bilateral or multilateral agreements or arrangements after this Framework Decision has come into force in so far as such agreements or arrangements allow the prescriptions of this Framework Decision to be extended or enlarged and help to simplify or facilitate further the procedures for surrender of persons who are the subject of European arrest warrants, in particular by fixing time limits shorter than those fixed in Article 17, by extending the list of offences laid down in Article 2(2), by further limiting the grounds for refusal set out in Articles 3 and 4, or by lowering the threshold provided for in Article 2(1) or (2). The agreements and arrangements referred to in the second subparagraph may in no case affect relations with Member States which are not parties to them. Member States shall, within three months from the entry into force of this Framework Decision, notify the Council and the Commission of the existing agreements and arrangements referred to in the first subparagraph which they wish to continue applying. Member States shall also notify the Council and the Commission of any new agreement or arrangement as referred to in the second subparagraph, within three months of signing it. 3. Where the conventions or agreements referred to in paragraph 1 apply to the territories of Member States or to territories for whose external relations a Member State is responsible to which this Framework Decision does not apply, these instruments shall continue to govern the relations existing between those territories and the other Members States. Article 32 Transitional provision 1. Extradition requests received before 1 January 2004 will continue to be governed by existing instruments relating to extradition. Requests received after that date will be governed by the rules adopted by Member States pursuant to this Framework Decision. However, any Member State may, at the time of the adoption of this Framework Decision by the Council, make a statement indicating that as executing Member State it will continue to deal with requests relating to acts committed before a date which it specifies in accordance with the extradition system applicable before 1 January 2004. The date in question may not be later than 7 August 2002. The said statement will be published in the Official Journal of the European Communities. It may be withdrawn at any time. Article 33 Provisions concerning Austria and Gibraltar 1. As long as Austria has not modified Article 12(1) of the "Auslieferungs und Rechtshilfegesetz" and, at the latest, until 31 December 2008, it may allow its executing judicial authorities to refuse the enforcement of a European arrest warrant if the requested person is an Austrian citizen and if the act for which the European arrest warrant has been issued is not punishable under Austrian law. 2. This Framework Decision shall apply to Gibraltar. Article 34 Implementation 1. Member States shall take the necessary measures to comply with the provisions of this Framework Decision by 31 December 2003. 2. Member States shall transmit to the General Secretariat of the Council and to the Commission the text of the provisions transposing into their national law the obligations imposed on them under this Framework Decision. When doing so, each Member State may indicate that it will apply immediately this Framework Decision in its relations with those Member States which have given the same notification. The General Secretariat of the Council shall communicate to the Member States and to the Commission the information received pursuant to Article 7(2), Article 8(2), Article 13(4) and Article 25(2). It shall also have the information published in the Official Journal of the European Communities. 3. On the basis of the information communicated by the General Secretariat of the Council, the Commission shall, by 31 December 2004 at the latest, submit a report to the European Parliament and to the Council on the operation of this Framework Decision, accompanied, where necessary, by legislative proposals. 4. The Council shall in the second half of 2003 conduct a review, in particular of the practical application, of the provisions of this Framework Decision by the Member States as well as the functioning of the Schengen Information System. publication in the Official Journal of the European Communities. Article 35 Entry into force This Framework Decision shall enter into force on the twentieth day following that of its Done at Luxembourg, 13 June 2002. For the Council The President M. Rajoy Brey LORD WALKER In agreement with Lord Phillips, Lord Brown, Lord Kerr and Lord Dyson, I would dismiss this appeal. The reasoning of the majority that I find most compelling is that on the application of the Vienna Convention (Lord Phillips paras 67 to 76; Lord Brown para 95; Lord Kerr paras 106 to 109; Lord Dyson paras 127 to 141) and on the non application of the principle in Pepper v Hart [1993] AC 593 (Lord Phillips paras 11 to 13; Lord Brown paras 96 to 98; Lord Kerr paras 114, 115, 118 and 119; Lord Dyson paras 160 to 170). The parliamentary material, as set out in paras 247 to 264 of Lord Mances powerful judgment, is certainly disturbing. But I consider that it would be at least one step too far, in constitutional terms, for this court to treat it as determinative. If the parliamentary material is disregarded, as I think it must be, the Vienna Convention point is to my mind determinative. It would serve no useful purpose for me to express my opinion on other points on which different members of the majority may take rather different views. LORD BROWN I too conclude, in common with the great majority of the Court, that the term judicial authority within the meaning of the Framework Decision is properly to be understood as including public prosecutors. Although, like some others, I am inclined to base this conclusion principally upon the fifth of Lord Phillips reasons (paras 67 71 of his judgment), I would certainly not discount entirely the various other strands of reasoning on which he relies. On this first (and, to my mind ultimately critical) issue in the appeal there is nothing more I wish to say. I do, however, wish to address Lord Mances judgment, in favour of allowing the appeal, on the second issue, the true construction of the Extradition Act 2003, much of the reasoning underlying which I confess that at one time I too found attractive. It rests above all on a close analysis of the parliamentary material surrounding the enactment of the 2003 Act and Lord Mances conclusion based on this material a conclusion with which I entirely agree firstly, that ministers repeatedly gave assurances or endorsed assumptions that an issuing judicial authority would have to be a court, judge or magistrate, and did so moreover in contexts where a judicial authority was being contrasted by other speakers with the police and prosecutors and, secondly, that ministers also gave these assurances with the understanding that the implementation of the Framework Decision by the 2003 Act would not in this respect lead to any change by comparison with previous practice (Lord Mance, paras 261, 262). Whereas, however, it is Lord Mances judgment that by operation of the rule in Pepper v Hart [1993] AC 593, this conclusion requires the uncertainty [and] ambiguity about what Parliament meant (Lord Mance, para 246) by the term judicial authority in the 2003 Act to be given a more restricted meaning than the majority of the Court (including in this instance Lord Mance himself) would give the term in the Framework Decision, I for my part have arrived clearly at the opposite conclusion. To my mind, once one recognises that a judicial authority within the meaning of the Framework Decision is properly capable of encompassing a public prosecutor, this Court, the parliamentary material notwithstanding, is inexorably bound to construe the identical term in the 2003 Act no less widely. Certainly the term in the 2003 Act can be regarded as uncertain and ambiguous. But the interpretative guide here is not, in the context of legislation implementing a Framework Decision, Pepper v Hart; rather it is Criminal proceedings against Pupino (Case 105/03) [2006] QB 83, a decision of the Court of Justice consistently applied in a series of later House of Lords decisions to construe the 2003 Act so as to attain the ends sought by the Framework Decision. Indeed, even were the Pupino imperative not in play (which now appears may well be the correct view), the general presumption that the United Kingdom legislates in compliance with its international obligations would produce the same result. True it is that on the Second Reading of the Bill on 1 May 2003 Lord Filkin confirmed that Parliament is indeed sovereign and so can if it wishes legislate inconsistently with the United Kingdoms treaty obligations (see para 204 of Lord Mances judgment). But it is not as if in the various exchanges relied upon by the appellant here ministers were saying to Parliament: whatever may be the true meaning of judicial authority in the Framework Decision, we are assuring you that in the 2003 Act it is to be confined to courts, judges and magistrates. There was here no hint of a suggestion by ministers that, in so construing the term judicial authority in the 2003 Act, the United Kingdom might not be fully implementing its obligations under the Framework Decision. The plain (and, if the Bill of Rights permits the Court to say so, regrettable) fact is that the ministers were mistaken about the true scope of the term in the Framework Decision (just as they were as to the practice which had operated throughout the earlier extradition regime). Where, as here, Parliament uses the very same term as appears in the Framework Decision, in my judgment that term could only legitimately be given a different and narrower meaning than it bears in the Framework Decision if it were absolutely plain that Parliament had intended to legislate inconsistently with the United Kingdoms international obligations. All that is plain here is that certain members of the respective Houses were at various times unintentionally misled as to just what those obligations were. I too would dismiss this appeal. LORD KERR The expression judicial authority, if removed from the extradition (or, more properly, surrender) context, would not be construed so as to include someone who was a party to the proceedings in which the term fell to be considered. A judicial authority must, in its ordinary meaning and in the contexts in which the expression is encountered in this jurisdiction other than that of surrender, be an authority whose function is to make judicial decisions. The essence of a judicial decision (in the normal use of that term) is that it should have the attributes of independence and impartiality. If one were approaching the question free from the terms of the Framework Decision and without the background that many civil law systems regard prosecutors as part of the judicial cadre (which must have been in the contemplation of those who drafted the Framework Decision), the question whether judicial authority meant someone who was neutral and disinterested in the outcome of the dispute would scarcely need to be asked. The central issues on this appeal are, therefore, 1. whether the Framework Decision in its use of the term must be taken to have intended that those who decided whether a European Arrest Warrant should be issued did not require to have the attributes of independence and impartiality; and 2. whether the 2003 Act can and must be read so as to reflect that intention. As Lord Phillips has pointed out, had the Framework Decision been made in the terms of the September 2001 draft, there could have been no debate as to whether public prosecutors came within the rubric, judicial authority. How is the removal of the definition from the final draft to be approached? Lord Phillips has concluded that the more probable explanation is that the removal of the definition was prompted by a desire to broaden the possible embrace of the expression so as to extend it beyond judges and prosecutors. If it were otherwise, it would have been, he has said, a radical change and would have prevented public prosecutors from carrying out functions that they had been performing in relation to the issue of provisional arrest warrants since 1957. Lord Dyson has suggested that the fundamental change in the system of extradition that had been introduced by the Framework Decision makes it difficult to reach any conclusion as to whether it was intended that the role for prosecutors of issuing extradition arrest warrants should be preserved or abandoned. Lord Mance felt that the Court of Justice of the European Union would be hesitant about speculating as to the reasons for the differences between the Commissions original proposal and the 10 December 2001 text. On that account, Lord Mance suggests, it is at least as likely that the removal of the definition reflected a lack of consensus and that it was intended to leave the matter open for subsequent decision by the Court of Justice. For the reasons given by Lord Mance, a decision by the Court of Justice as to the significance of the omission cannot be obtained at present and this court must therefore confront that question directly. I can see force in all three views as to the importance (or lack of it) to be attached to possible reasons for the alteration of the September draft. But the inescapable fact is that public prosecutors in many of the member states had traditionally issued arrest warrants to secure extradition for many years. This was a firmly embedded practice in many jurisdictions. To bring that practice to an end would indeed have wrought a radical change. A substantial adjustment to administrative practices in many countries would have been required. It may well be, as Lord Mance has suggested, that agreement on this intensely controversial subject could not be reached. But the consequence of that must surely be that there was no accord as to the removal of prosecutors from that role. Lord Mance has said that the Court of Justice would (in these circumstances) focus on the final Framework Decision and seek to make sense of its text in the light of its purpose, the principles underlying it and general principles of European law (para 233). I respectfully agree but would add that the court would surely not ignore what had gone before or the major modification of the hitherto well entrenched arrangements in many jurisdictions that would be required to bring about an end to the issue of arrest warrants by prosecutors. If it had been intended that those arrangements were to be swept away, one would have expected that this would have been more explicitly stated. I accept, of course, that the absence of such an explicit statement does not finally determine the question but it would be incongruous that it be left to member states under article 6 of the Framework Decision to determine which body or person should constitute a judicial authority within its legal system for the purpose of issuing a European arrest warrant. I agree with Lord Mance that the object of this provision is to require member states to identify which judicial authority is competent, rather than to confer on them the power to assign judicial status to persons or bodies that would not otherwise possess it. But if the effect of the Framework Decision were to be that only persons or bodies possessed of the attributes of impartiality and independence were to be considered as eligible judicial authorities, the need for the article 6 power is not easy to find. If only an independent and impartial body or person could fulfil that role, the purpose in allowing member states to identify such a person or body seems otiose. It seems to me likely, therefore, that the Court of Justice would find that the role of prosecutors in issuing arrest warrants for those whose extradition was sought, traditional in many member states before the introduction of the Framework Decision, was not extinguished by its provisions. That preliminary conclusion is strongly fortified by the consideration that a significant number of member states have nominated public prosecutors as issuing judicial authorities since the Framework Decision has come into force. Once again I agree with Lord Mance that, alone, this is not a conclusive factor. Article 31.3(b) of the Vienna Convention on the Law of Treaties requires that subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation (emphasis supplied) is to be taken into account. In the passage from Villiger in Commentary on the 1969 Vienna Convention on the Law of Treaties, (Leiden, 2009) quoted by Lord Dyson at para 130 of his judgment, it is suggested that what is required to establish the agreement of the parties is that there should be active practice on the part of at least some of the parties to the treaty; that this should not be haphazard; and it must have been acquiesced in or at least not objected to by the other parties. Lord Dyson considered that the practice of appointing prosecutors as judicial authorities was sufficiently widespread and free from objection to meet these criteria and, in so far as this conclusion relates to judicial authorities who issue European Arrest Warrants, I agree. Lord Mance has suggested, however, that the appointment by some member states of prosecutors to the role of executing judicial authorities is suspect and that therefore the requirements of article 31.3(b) had not been fulfilled so far as those appointments are concerned. It is, I think, unnecessary for the purposes of this appeal to decide whether the nomination of prosecutors as competent to perform some of the functions of the executing judicial authorities is capable of prompting the invocation of article 31.3(b). I certainly agree with Lord Mance that some of those functions could only be discharged by a judicial figure or body such as a judge or a court. The appointment of a prosecutor as the exclusive executing judicial authority is, therefore, of dubious validity. That does not mean (or, at least, does not necessarily mean) that the fact that some member states have included prosecutors among the judicial authorities that could discharge some of the executing functions is irrelevant to the possible use of article 31.3(b) in relation to those functions which need not be carried out by a judge or court. But that does not need to be decided now. The critical question in the present appeal is whether there is a sufficiently widespread and uncontroversial practice in relation to issuing authorities to allow that provision to come into play in the case of prosecutors who issue European Arrest Warrants. As I understand it, Lord Dysons conclusion that there is has been accepted by Lord Mance and I agree with both. Even if I had been of the view that the necessary pre conditions for the activation of article 31.3(b) were not present, the possible relevance of such practice as exists would not have ended there. As Lord Mance has pointed out, Brownlie in Principles of Public International Law, 7th ed (2008), suggests that subsequent practice by individual parties, falling short of showing that there has been universal agreement as to the propriety of the nomination of judicial authorities, is nevertheless of some probative value. The continuing widespread use of prosecutors as issuing judicial authorities, without demur from the European Commission, and with apparent acceptance by member states who have nominated only judges or courts as their own issuing judicial authorities must, on any showing, indicate strongly that the Framework Decision does not exclude prosecutors from the category of issuing judicial authorities. Lord Mance has concluded that the European legal answer is obscure. The legal answer in this context is, presumably, that to be given to the question, may a prosecutor be an issuing judicial authority for the purposes of the Framework Decision. While I am prepared to accept that the answer to that question is not immediately obvious, I would certainly not be disposed to agree that the answer is obscure, if by that term it is meant that its meaning is uncertain or doubtful. In my view there really can be no doubt that the Framework Decision permits prosecutors to be issuing judicial authorities for European Arrest Warrants and must therefore be taken as having intended that prosecutors should fulfil that role. That being the case, must the Extradition Act 2003 be interpreted in a way that will accord with that intention? In Office of the Kings Prosecutor, Brussels v Cando Armas [2005] UKHL 67, [2006] 2 AC 1, Lord Bingham said that the interpretation of the 2003 Act must be approached on the twin assumptions that Parliament did not intend the provisions of Part 1 [of the Act] to be inconsistent with the Framework Decision and that, while Parliament might properly provide for a greater measure of co operation by the United Kingdom than the Decision required, it did not intend to provide for less. Lord Mance has identified a possible tension between this approach and that of Lord Hope in the same case where the latter said, at paras 20, 24, that the introduction of the European arrest warrant system was highly controversial and that there were limits to the principle that extradition treaties and statutes should receive a broad and generous construction, because the liberty of the subject was at stake. These considerations led Lord Hope to the view that where there were differences between the Framework Decision and the 2003 Act, it was to be assumed that Parliament had introduced those differences in order to protect against unlawful interference with the right to liberty. It had been assumed that the decision of the Court of Justice of the European Union in Criminal proceedings against Pupino (Case C 105/03) [2006] QB 83 would require national courts, in applying national law which purported to give effect to the Framework Decision, to do so in a manner that will attain the result which it pursues (para 43), Lord Mance has now authoritatively demonstrated that this is not the case. But of the proposition that the 2003 Act was enacted in order to give effect to the Framework Decision there can be no doubt. The domestic law presumption that Parliament did not intend to legislate contrary to the United Kingdoms international obligations under the Framework Decision may not be as strong in terms of injunctive force as the Pupino prescription but it is nevertheless a factor of considerable potency in determining the proper interpretation to be given to the 2003 Act. This is particularly so in light of the scheme of surrender that the Framework Decision introduced. As Lord Dyson has pointed out, the twin assumptions referred to by Lord Bingham in Cando Armas did not depend on the Pupino principle. Importantly, Lord Bingham considered it clear that Parliament must be taken to have intended that the 2003 Act would provide a measure of co operation by the United Kingdom which at least matched that provided for in the Framework Decision. To give the expression judicial authority a different meaning and scope for the purpose of the 2003 Act from that in the Framework Decision would reduce significantly the level of co operation by the United Kingdom from that intended by the Framework Decision. This would, at a stroke, prevent extradition to the significant number of member states who have nominated public prosecutors as issuing judicial authorities. Lord Mance has painstakingly analysed much of the legislative history of the 2003 Act and has concluded that ministers gave repeated assurances or allowed assumptions to be made that an issuing judicial authority would have to be a court, judge or magistrate before a surrender warrant could be executed in the United Kingdom. I agree with Lord Dyson that the various utterances and statements made by ministers do not partake of the clear and unequivocal character that would permit a confident view to be performed that it was Parliaments intention (as opposed to an individual ministers aspiration) that an issuing judicial authority must be a court. Quite apart from this, however, there are compelling reasons for concluding that, whatever may have exercised individual ministers or members during the passage of the Bill which became the 2003 Act, Parliament cannot be taken as having intended to legislate in a way that confined judicial authority to the scope of application for which the appellant contends. For this to be the parliamentary intention, rather than the hope and expectation of some Members of Parliament or even ministers, an unambiguous intent would have had to be formed that the new surrender scheme would be severely curtailed in terms of its operation in the United Kingdom. It would be surprising, not to say astonishing, if it was considered that such a radical circumscription of the operation of the new scheme could be achieved by using the same term as was employed in the Framework Decision, judicial authority. This would involve giving the term a significantly more restricted meaning than that it enjoyed in the Framework Decision context. Why would precisely the same expression be used by Parliament if it was meant to have a markedly different connotation? If it was intended that judicial authority should mean a court, why should that not be made unmistakably clear? Finally, Parliaments intention to depart from the Framework Decisions meaning of the term judicial authority would involve a rebuttal of the strong presumption that it would legislate in a way that would fulfil its international obligations. It cannot have been lost on legislators here that, if the United Kingdom was prepared only to execute warrants from judicial authorities that were courts or the like, there was at least a distinct possibility that warrants from a significant number of countries would not be executed. I cannot believe that Parliament could have intended to espouse an interpretation which would effectively debar extradition from a number of the subscribing states to the Framework Decision. Returning to the theme of the possible tension between the views of Lord Bingham and Lord Hope on the possible significance in differences between the 2003 Act and the Framework Decision, it is true , as Lord Mance has pointed out in para 205 of his judgment, that Lord Hope repeated what he had said in Cando Armas in para 35 of his speech in Dabas but this must be viewed in light of the subsequent case of Caldarelli v Judge for Preliminary Investigations of the Court of Naples, Italy [2008] UKHL 51, [2008] 1 WLR 1724 in which Lord Hope expressed unqualified agreement with the opinion of Lord Bingham. At para 23 of Lord Binghams speech he said: Providing as they do for international co operation between states with differing procedural regimes, the Framework Decision and the 2003 Act cannot be interpreted on the assumption that procedures which obtain in this country obtain elsewhere. The evidence may show that they do not. Such was the case in In re Coppin LR 2 Ch App 47, where Lord Chelmsford LC considered a form of judgment unknown in this country, and in R v Governor of Brixton Prison, Ex p Caborn Waterfield [1960] 2 QB 498, where the court examined and contrasted the legal effect, in France, of on the one hand a jugement par dfaut and an arrt de contumace and on the other a jugement itratif dfaut: the latter was final, the former were not. The need for a broad internationalist approach signalled by Lord Steyn in In re Ismail [1999] 1 AC 320, 326 327 is reinforced by the need to pay close attention to whatever evidence there is of the legal procedure in the requesting state. It would be destructive of the international co operation between states to interpret the 2003 Act in a way that prevented prosecutors from being recognised as legitimate issuing judicial authorities for European Arrest Warrants, simply because of the well entrenched principle in British law that to be judicial is to be impartial. Lord Mance has suggested that Parliament had correctly identified that the Framework Decision was not conclusive. This was a reference to general observations by the minister, Lord Filkin, during the passage of the Bill through the House of Lords, to the effect that Parliament had the power to amend laws, notwithstanding the expectation that, where the government had been a party to a framework agreement, it would give effect to this in national law. Lord Filkins comments do not provide the basis for a conclusion that the meaning of the Framework Decision is obscure or that there is any ambiguity as to the meaning of judicial authority in this instrument and the 2003 Act. If, as I consider it to be, the purpose of the Framework Decision is to sanction the issue of European Arrest Warrants by persons who did not possess the attributes of impartiality and independence by recognising that they may qualify as judicial authorities, there is no difficulty as a matter of textual analysis in ascribing the same meaning to section 2(2). As Lord Filkin said, Parliament is sovereign. As a matter of constitutional theory, it could decide to restrict the meaning of judicial authority to a narrower compass than that intended by the Framework Decision. In my view, there is no reason to conclude that it did so. I would therefore dismiss the appeal. LORD DYSON Introduction On 27 September 2010, the Swedish Prosecution Authority ordered the arrest of Mr Assange in respect of complaints by two women of rape and sexual molestation. The lawfulness of the order was challenged Mr Assange in the Svea Court of Appeal in Sweden. The Court of Appeal upheld the arrest warrant and on 2 December 2010 a European Arrest Warrant (EAW) was issued by Marianne Ny, a Director of Public Prosecutions with the Swedish Prosecution Authority, seeking the arrest and surrender of Mr Assange who was in England at the time. The EAW described four offences of rape and sexual assault alleged to have been committed by him. The issue that arises in these proceedings is whether an EAW issued by a public prosecutor is a valid warrant issued by a judicial authority within the meaning of sections 2(2) and 66 of the Extradition Act 2003 (the EA). The Divisional Court (Sir John Thomas P and Ouseley J) held that it was. The aim and objective of the Framework Decision It is common ground that the EA was enacted in order to give effect to the Framework Decision on the European Arrest Warrant 2002/584/JHA (the Framework Decision). I agree with Lord Mance that, for the reasons that he gives at paras 207 217 below, the duty of conforming interpretation under European law, which the European Court of Justice held in Criminal proceedings against Pupino (Case C 105/03) [2006] QB 83 to exist in the context of framework decisions, does not apply in relation to the Framework Decision. But there is no doubt that there is a strong presumption in favour of interpreting an English statute in a way which does not place the United Kingdom in breach of its international obligations: see, for example, per Lord Hoffmann in R v Lyons [2003] 1 AC 976, para 27. It is worth repeating what Lord Bingham said in Office of the Kings Prosecutor, Brussels v Cando Armas [2006] 2 AC 1 at para 8, because his comments about the correct approach to the interpretation of the EA do not seem to have been influenced by the Pupino principle. He said: Part 1 of the 2003 Act did not effect a simple or straightforward transposition, and it did not on the whole use the language of the Framework Decision. But its interpretation must be approached on the twin assumptions that Parliament did not intend the provisions of Part 1 to be inconsistent with the Framework Decision and that, while Parliament might properly provide for a greater measure of cooperation by the United Kingdom than the Decision required, it did not intend to provide for less. I would approach the correct interpretation of the EA in the same way. But before I reach the EA, I need to consider the meaning of the issuing judicial authority in article 6.1 of the Framework Decision. It is important to start with the background to the Framework Decision which Lord Phillips has set out at paras 26 to 35 and 39 to 42. Its object was to replace the existing political state to state process of extradition with a simplified system of surrender involving judicial authorities. The new scheme was based on the principle that the Member States had mutual trust and confidence in the integrity of their legal and judicial systems and would therefore respect and recognise each others judicial decisions. The preamble to the Framework Decision makes this clear: (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. The nature of the change was described well by Adv Gen Ruiz Jarabo Colomer in his opinion in Advocaten voor de Wereld VZW v Leden van de Ministeraad (Case C 303/05) [2007] ECR I 3633, 3651 3652: 41. The move from extradition to the European arrest warrant constitutes a complete change of direction. It is clear that both concepts [extradition and surrender under an EAW] serve the same purpose of surrendering an individual who has been accused or convicted of an offence to the authorities of another State so that he may be prosecuted or serve his sentence there. However, that is where the similarities end. 42. In the case of extradition, contact is initiated between two sovereign States, the requester and the requested, each of which acts from an independent position. One state asks for the cooperation of the other State which decides whether to provide that cooperation on a case by case basis, having regard to grounds which exceed the purely legal sphere and enter into the scope of international relations, where the principle of opportuneness plays an important role. Accordingly, the intervention of politicians and criteria such as reciprocity and double criminality are justified because they have their origins in different spheres. 43. The nature of the situation changes when assistance is requested and provided in the context of a supranational, harmonised legal system where, by partially renouncing their sovereignty, States devolve power to independent authorities with law making powers. The meaning of judicial authority in article 6.1 With this introduction, I can turn to the question of interpretation: what does the phrase judicial authority in article 6.1 of the Framework Decision mean? Clearly, it includes a judge. But is it limited to a judge? In answering these questions, it is necessary to bear in mind that the Framework Decision is a European instrument which was agreed by states which have different legal systems and traditions. As the Divisional Court pointed out, we should be careful not to be overly influenced by the legal systems and traditions of the United Kingdom with its long established and deeply rooted common law ideas of the essential characteristics of a judicial authority. The language of the text is the correct starting point. But one immediately runs into the problem that the phrase judicial authority in the French version is autorit judiciaire and that judiciaire is capable of bearing a narrow meaning (which would coincide with the English common law idea of judicial) and a wider meaning (pertaining to law or the legal system): see para 18 above. It follows that the use of the phrase judicial authority does not of itself provide the answer to the question of interpretation. It is necessary to look elsewhere. Article 3(b) of the September 2001 draft Framework Decision provided that an issuing judicial authority means the judge or the public prosecutor of a Member State, who has issued a[n EAW]. Lord Phillips suggests that there are two possible explanations for the decision to exclude the definition from the final version of the Framework Decision. The first is that it was to restrict the meaning of the phrase by removing the public prosecutor from the definition. The second is that it was to enlarge its meaning so as not to restrict it to a judge or public prosecutor. We have seen no material which explicitly shows why the Member States agreed to make the change. Lord Phillips has given a number of inferential reasons for concluding that the second explanation is the more probable. Rather than seeking to infer the reason why the Member States changed the definition, I prefer to concentrate on how the relevant part of the Framework Decision has been applied and viewed in practice. I agree with Lord Phillips that the manner in which the Member States, the Commission and the Council acted after the Framework Decision took effect was in stark conflict with a judicial authority being restricted to a judge. The statistics are that in relation to accusation EAWs, in 11 Member States the issuing authority is a public prosecutor, in 17 it is a judge and in 2 it is the Ministry of Justice. In relation to conviction EAWs, in 10 Member States the issuing authority is a public prosecutor, in 14 it is a judge and in 6 it is the Ministry of Justice or National Police Board. Article 31.3 of the Vienna Convention on the Law of Treaties provides that, in interpreting a treaty, there shall be taken into account, together with the context:. (b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation. In his Commentary on the 1969 Vienna Convention on the Law of Treaties,(Leiden, 2009) Villiger states of article 31.3(b): it requires active practice of some parties to the treaty. The active practice should be consistent rather than haphazard and it should have occurred with a certain frequency. However, the subsequent practice must establish the agreement of the parties regarding its interpretation. Thus, it will have been acquiesced in by the other parties; and no other party will have raised an objection. The fact that it is only in the majority (and not all) of the Member States that the issuing judicial authority is a judge is not inconsistent with the existence of an agreement established by subsequent practice that a public prosecutor may be a judicial authority within the meaning of the Framework Decision. There is nothing to suggest that Member States which do not have public prosecutors as their issuing judicial authorities criticise those that do. More particularly, we have been shown no evidence that, until the present case, any executing state objected to surrendering a person on the grounds that the EAW was issued by a public prosecutor. In my view, this is powerful evidence that even those Member States whose issuing judicial authorities are judges acquiesce in EAWs being issued in other Member States by public prosecutors. That is a sufficient practice to establish agreement by the Member States. As regards the Council, article 34.4 of the Framework Decision requires it to conduct a review of the practical application of the provisions of the Framework Decision by the Member States. The fourth round of mutual evaluations was assigned to the practical application of the European Arrest Warrant and corresponding surrender procedures between Member States. The evaluation process was conducted between March 2006 and April 2009. It is a striking feature of the evaluation reports that they contain no criticism of those states that have designated prosecutors as competent to issue EAWs; and the article 34 reports dated 24 January 2006 and 11 July 2007 contain no criticism of the use of public prosecutors as judicial authorities either. They do, however, find regrettable the fact that an executive body has been appointed as the competent judicial authority by a number of Member States. This is clearly a reference to the designation of their Ministry of Justice by those states. The Councils Final Report on the fourth round of mutual evaluations dated 28 May 2009 contains a complaint that in some Member States non judicial central authorities continue to play a role in cardinal aspects of the surrender procedure far beyond the administrative tasks assigned in the Framework Decison. This is clearly a reference to those states where the role of the judicial authority is assigned to the Minister of Justice or some emanation of the police. But I agree with Lord Phillips that there is no indication in this report either that it was objectionable for a public prosecutor to issue an EAW. Denmark, Estonia, Finland, Germany and Lithuania all designated their Ministry of Justice as the issuing judicial authority. The evaluation reports on Denmark, Germany and Lithuania criticised these designations, although the reports did not criticise the Estonian or Finnish designations. Miss Rose QC submits that these omissions suggest that caution should be exercised in attaching too much significance to what is not stated in evaluation reports. The reports cover a great deal of ground and their main concern is to see what problems are occurring in relation to the application of the EAW system as a whole. It can also be said that these reports contain little criticism of those states that have designated prosecutors to execute EAWs either. And yet, as was recognised by the Divisional Court and as is common ground, only a judge is a judicial authority for the purpose of executing an EAW. I would, therefore, accept that the evaluation reports and the article 34 reports should be treated with some caution. They do not purport to be authoritative rulings on the implementation of the Framework Decision. But they do contain some criticisms of the practice of the Member States. It is striking that there is no criticism of the use of public prosecutors as judicial authorities. In my view, they provide support for the view that a public prosecutor can be an issuing judicial authority within the meaning of article 6.1 of the Framework Decision. A further point made by Miss Montgomery QC is that in Criminal proceedings against Leymann and Pustovarov (Case C 388/08) [2008] ECR I 8983, the ECJ made no adverse comment on the fact that the case concerned proceedings in Finland resulting from the issue of an EAW by the Helsinki District Public Prosecutor. But in my view, it would be wrong to make too much of this point, since it is not discussed in the judgment of the court. Apart from the way in which the relevant provision of the Framework Decision has been applied in practice by the Member States and viewed by the Council and the Commission, there is further support for the view that the Member States considered that a public prosecutor could be an issuing judicial authority. First, as we have seen, an issuing judicial authority was defined in the September 2001 draft as meaning the judge or the public prosecutor of a Member State. Miss Rose submits that the withdrawal of this definition shows that the Member States decided that a public prosecutor would not be included in the definition of an issuing judicial authority. As I have said, there is no evidence as to why they decided to abandon this definition. But more important for present purposes is the fact that, at one stage in the negotiations, the Member States were willing to countenance the idea that an issuing judicial authority should include a public prosecutor. If they had been of the view that a judicial authority could not in any circumstances be a public prosecutor, it is remarkable that they were willing to include a public prosecutor in the definition at any stage of the negotiations. In my view, the inclusion of a public prosecutor in the definition of a judicial authority in the September 2001 draft shows that the Member States did not regard it as objectionable in principle to treat a public prosecutor as a judicial authority. Secondly, it is instructive to consider other instances where the term judicial authority has been adopted in other analogous EU instruments which (like the Framework Decision) seek to further a system of free movement of judicial decisions within an area of freedom, security and justice: see recital 5 of the preamble to the Framework Decision. Among the other Framework Decisions based on the Tampere Proposals (to which Lord Phillips refers at para 42 above) is the Council Framework Decision 2008/978/JHA of 18 December 2008 on the European Evidence Warrant (EEW) for the purpose of obtaining objects, documents and data for use in proceedings in criminal matters. Recital 8 of the preamble sets out the meaning of judicial authority in these terms: The principle of mutual recognition is based on a high level of confidence between Member States. In order to promote this confidence, this Framework Decision should contain important safeguards to protect fundamental rights. The EEW should therefore be issued only by judges, courts, investigating magistrates, public prosecutors and certain other judicial authorities as defined by Member States in accordance with this Framework Decision. It goes on to provide at article 2: (c) issuing authority shall mean: (i) a judge, a court, an investigating magistrate, a public prosecutor or (ii) any other judicial authority The Explanatory Memorandum to the proposal for the EEW Framework Decision explained at para 47: In the issuing State, the issuing judicial authority is limited to judges, investigating magistrates or prosecutors. Similarly, the Council Framework Decision 2006/960/JHA of 18 December 2006 on simplifying the exchange of information and intelligence between law enforcement agencies of the Member States in defining a criminal investigation refers to a procedural stage within which measures are taken by competent law enforcement or judicial authorities, including public prosecutors. There are other examples to similar effect, but it is unnecessary to refer to any more. Miss Rose submits that these examples show that, where an EU mutual recognition instrument intends to empower a public prosecutor to exercise functions that are to be mutually recognised, it says so. By way of contrast, she points to other Framework Decisions where the term judicial authority is not defined, for example, the Framework Decision on the execution in the European Union of orders freezing property or evidence, 22 July 2003 (2003/577/JHA) and the Framework Decision on the application of the principle of mutual recognition to confiscation orders, 6 October 2006 (2006/783/JHA). She submits that the scheme of these instruments (and others like the Framework Decision), where the judicial authority is not defined, is that Member States may select from within their pool of judicial authorities, as defined by human rights norms and jurisprudence, the subset which are competent to perform the allotted task. But the important point for present purposes is that it can be seen that there are EU instruments, whose aim is to promote co operation and mutual recognition by Member States in criminal matters within the EU area, which define a judicial authority as including a public prosecutor. This is further evidence that there is a common understanding among the Member States that, at any rate in the context of instruments whose purpose is to promote such an aim, a public prosecutor may be a judicial authority. In my view, the material that I have set out at paras 129 to 140 above provides formidable support for the respondents case. The principal argument that Miss Rose advances the other way is that, since there is no definition of judicial authority in the Framework Decision, the expression should be construed in accordance with established EU law norms. She argues as follows. All EU Member States are High Contracting Parties to the European Convention on Human Rights (ECHR) and it is a fundamental norm of EU law that EU measures should not be construed in a manner which is inconsistent with the ECHR: see, for example, Elliniki Radiophonia Tileorassi AE v Dimotiki Etairia Pliroforasiss (Case C 260/89) [1991] ECR I 2925. Article 6 of the Treaty on European Union (TEU) provides: (1) The Union recognises the rights, freedoms and principles set out in the Charter of Fundamental Rights of the European Union of 7 December 2000, as adapted at Strasbourg on 12 December 2007, which shall have the same legal value as the Treaties. (2) The Union shall accede to the European Convention for the Protection of Human Rights and Fundamental Freedoms. (3) Fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States, shall constitute general principles of the Unions law. I accept that the EAW system was always intended to comply with the ECHR. Thus recital 12 to the preamble to the Framework Decision provides that This Framework Decision respects fundamental rights and observes the principles recognised by article 6 of the [TEU] and reflected in the Charter of Fundamental Rights of the European Union. . Article 1.3 of the Framework Decision states: 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 [TEU]. The importance of upholding fundamental rights has been repeatedly emphasised by the Commission. It is sufficient to refer to its Green Paper on Strengthening mutual trust in the European judicial area (2011) COM/2011/ 0327 which confirms at para 3.1: While the EAW has proved to be a very useful tool to ensure that criminals cannot use borders to evade justice, particularly in relation to serious and organised crime with a cross border dimension, its implementation, including the core principle of mutual recognition on which it is based, must respect fundamental rights. Moving from the general to the particular, Miss Rose relies on the jurisprudence of the European Court of Human Rights (the ECtHR) to support the proposition that public prosecutors cannot be officer[s] authorised by law to exercise judicial power within the meaning of article 5(3) of the ECHR. There is no doubt that this proposition is correct. The leading authority is Schiesser v Switzerland (1979) 2 EHRR 417. An officer authorised by law to exercise judicial power must be independent of the executive and of the parties. This principle was applied in Skoogstrm v Sweden (1983) 6 EHRR 77 where it was held that a Swedish prosecutor could not be a judge or other officer authorised by law to exercise judicial power. This was not because the prosecutor was part of the executive. That fact alone did not mean that the public prosecutor was not independent for the purposes of article 5.3, because the public prosecutor enjoyed a personal independence. But the court held that the Swedish public prosecutor did not satisfy the requirements of article 5.3 because he or she was not independent of the parties. Miss Rose places particular reliance on Skoogstrm because it is a decision about the Swedish public prosecutor. In short, therefore, she submits that a construction of judicial authority in the Framework Decision which conforms to ECHR principles must lead to the conclusion that a public prosecutor does not satisfy the definition. The decisions of the ECtHR on article 5.3 are determinative. I cannot accept this argument. As we have seen, the Framework Decision respects fundamental rights and shall not have the effect of modifying the obligation to respect fundamental rights. But as Miss Montgomery points out, there is no principle of ECHR law which requires decisions to arrest to be made by an impartial judge. Arrests may be ordered and effected by persons (such as police officers) who are not judges and who are not impartial. The lawful arrest or detention of a person effected for the purpose of bringing him before a competent legal authority on reasonable suspicion of having committed an offence is specifically authorised by article 5.1(c) of the ECHR. There is no requirement that the person authorising the arrest should be a judge or be impartial. The protection provided by article 5 is that the individual arrested is brought promptly before a judge or other officer authorised by law to exercise judicial power and that he is able to take proceedings by which the lawfulness of his detention is decided quickly by a court and his release ordered if the detention is not lawful. It can, therefore, be seen that the premise on which the appellants argument is based, namely that article 5.3 of the ECHR applies to the issue of an EAW, is without foundation. Article 5.3 of the ECHR cannot be used as a basis for the argument that judicial authority in article 6 of the Framework Decision should be interpreted as limited to a judge. That is not to say that the rights protected by the ECHR are irrelevant to the Framework Decision. That would be quite wrong: see para 144 above. It is unnecessary to explore the reach of the ECHR as regards the implementation of the Framework Directive. It is sufficient to say that article 5.3 sheds no light on the meaning of judicial authority. The other argument advanced by Miss Rose is that judicial authority in article 6.1 must be given the same meaning as it bears in article 6.2 and that, since in article 6.2 it is limited to a judge, it must similarly be limited in article 6.1. I would reject this argument for the reasons given by Lord Phillips at para 75 above. I would, therefore, dismiss this appeal. To interpret an issuing judicial authority as including a public prosecutor gives a meaning to that phrase which (i) accords with the interpretation repeatedly applied and acquiesced in by the Member States and approved by the Council and the Commission, (ii) is supported by other analogous texts and (iii) promotes rather than frustrates the principle of mutual recognition and trust which underpins the Framework Decision. On the other hand, the only arguments advanced by Miss Rose in support of the contrary interpretation are, for the reasons that I have given, without foundation. There was some discussion before us as to the essential characteristics of an issuing judicial authority. Miss Montgomery suggested that it is sufficient that the person or body is authorised to perform some function in the judicial process. But that is too wide. Without descending to the absurdity of including court ushers and other similar court officials, it seems to me that this definition would certainly be wide enough to include the police and officials employed by a Ministry of Justice. And yet it seems to be accepted (at any rate as revealed by the Council reports) that neither the police nor a Ministry of Justice official can be an issuing judicial authority, although, so far as I am aware, the reasons for this have not been articulated. The Divisional Court said at para 47 of its judgment that a warrant issued by a Ministry of Justice which the Member State had designated as an authority under article 6 would not be a valid EAW. Such a warrant would self evidently not have been issued by a body which, on principles universally accepted in Europe, was judicial. They did not, however, explain what these principles are or why, notwithstanding that in a number of Member States the Ministry of Justice has been designated as their judicial authority, these designations are of no effect. I think that the Divisional Court were wise not to attempt a comprehensive definition. I am 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. As we have seen, the fundamental objective of the Framework Decision was to replace a political process with a non political process. This could only be achieved if the new judicialised system was operated by persons who de facto operated independently of the executive. But it is not necessary to explore this question further, since, for the reasons that I have given, I am satisfied that a public prosecutor is an issuing judicial authority within the meaning of article 6.1. The reasons that I have given coincide with the fifth reason given by Lord Phillips (paras 67 to 71). I would, however, like to comment on the other reasons given by Lord Phillips for dismissing the appeal. Lord Phillipss other reasons Lord Phillipss first reason (para 61) is that, if it had been intended to restrict the power to issue an EAW to a judge, he would have expected this to be expressly stated. It would have been a radical change and would have prevented public prosecutors from performing functions that they had been performing in relation to the issue of provisional arrest warrants since 1957. As we have seen, the Framework Decision ushered in a fundamentally different regime from its predecessor. Under the European Convention on Extradition 1957 (the ECE), the act of extradition was an inter governmental act. The judicialisation of the extradition process was accompanied by a number of substantive changes whereby the circumstances in which surrender could take place were expanded. Thus, for example, a substantial number of serious offences (defined in article 2 of the Framework Decision) would give rise to surrender pursuant to an EAW without verification of the double criminality of the act. This was an important relaxation of the conditions for surrender. I acknowledge that article 16.1 of the ECE provided that in case of urgency, the competent authorities of the requesting Party may request the provisional arrest of the person sought and that the term competent authorities included public prosecutors (see para 26 above). But I doubt whether much can be made of this. The point can also be made that in some Schengen States, the police, security police, tax and customs authorities are competent to decide on article 98 alerts (see para 40 above). And yet nobody suggests that this means that these authorities may be judicial authorities within the meaning of the Framework Decision. In my view, the fact that the two regimes were so different means that the arrangements that were made pursuant to the ECE cast little light on the proper interpretation of the Framework Decision. I do not consider that there is any real significance in the fact that the Framework Decision did not explicitly state that only a judge had the power to issue an EAW. Lord Phillipss second reason (paras 62 to 64) is that there was no need to restrict the ambit of the issuing judicial authority. This is because the significant safeguard against the improper or inappropriate issue of an EAW lay in the antecedent process which formed the basis of the EAW. The EAW was of less significance than the enforceable judgment, arrest warrant or other enforceable judgment having the same effect on which the EAW is based: see article 8.1(c) of the Framework Decision. But an EAW is defined by article 1.1 as a judicial decision and article 8.1(c) requires 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 (emphasis added). As Miss Rose pointed out in her reply, if an EAW is a judicial decision which may be issued by a public prosecutor, then so may an arrest warrant or other enforceable judicial decision be issued or made by a public prosecutor. It is impossible to give the phrase judicial decision different meanings in article 1.1 and article 8.1(c). In any event, even if the antecedent warrant or other judicial decision is issued or made by a judge, I would not agree that the subsequent issue of an EAW is or should be regarded as an essentially administrative step in the process (para 74 above). Of course, the issue of a domestic arrest warrant is a serious matter. But a person who is arrested will often be able to apply for bail so that the consequences for him of the arrest may be limited. He may be able to continue in his employment and to live in his home. The implications of an EAW are likely to be more serious. Unless he can rely on the limited grounds for resisting surrender in the executing state, he will be removed to a different state, possibly many hundreds of miles away. In short, I do not think that the nature of the antecedent process provides support for the view that a public prosecutor is an issuing judicial authority. The third reason given by Lord Phillips (para 65) is that the removal of the definition of a judge or public prosecutor was not because Member States wished to narrow its meaning to a judge, but because they were not content that its meaning should be restricted to a judge or public prosecutor. There is nothing in the considerable documentation that has been placed before us which indicates that the Member States decided to enlarge the scope of an issuing judicial authority or why they should have wished to do so. We know that the definition of an executing judicial authority in the Framework Decision (ie limited to a judge) was narrower than that contained in the September 2001 draft. But our knowledge of that fact is based solely on an examination of the wording of the two documents. We do not know why the Member States made this change either. In my view, there is no secure basis for reaching any conclusion as to the reasons why the definition of issuing and executing judicial authorities was changed. The fourth reason given by Lord Phillips (para 66) is that the requirement in article 6.3 of the Framework Decision to inform the General Secretariat of the Council of the competent judicial authority under its law makes more sense if there is a range of possible judicial authorities. I agree that article 6.3 envisages the possibility of a range of different judicial authorities. But I do not see how this sheds light on whether a public prosecutor may be one of them. A Member State may choose to give the power to issue an EAW to a particular judge or a judge of a particular court. It makes perfectly good sense for it to be known by the executing state which judge or which court is authorised to issue an EAW. In short, I consider that article 6.3 is consistent with either of the two competing interpretations. The meaning of issuing judicial authority in the EA The strong presumption to which I have referred at para 122 above suggests that the phrase judicial authority should bear the same meaning in section 2(2) of the EA as it does in article 6.1 of the Framework Decision. In my view, the presumption is all the stronger where (as here) the language of the implementing national law is the same as that of the corresponding provision of the international instrument to which it gives effect. There is nothing in the language of the EA itself which indicates that Parliament intended that an issuing judicial authority in section 2(2) should bear a different meaning from the counterpart phrase in article 6.1. Lord Mance appears to accept this. But he has subjected certain ministerial pre enactment statements to close scrutiny and has concluded that ministers repeatedly gave assurances or endorsed assumptions that an issuing judicial authority would have to be a court, judge or magistrate (para 261) and that these assurances should control [the] meaning [of the phrase judicial authority] (para 264). I would not go so far as to say that it is impossible to invoke the doctrine of Pepper v Hart [1993] AC 593 in a context such as this. But at first sight, it seems extraordinary to do so if the consequence is that a phrase in an implementing national law bears a different meaning from the same phrase in the international instrument to which it gives effect. The suggestion that the phrase in the implementing law bears a different meaning invites the obvious comment that, if the same meaning had not been intended, surely different language would have been used. I accept that there are some passages in the parliamentary exchanges in relation to what was to become the EA in which ministerial assurances were given that an issuing judicial authority would be a court. But some of the statements were by no means entirely clear. On 10 December 2001, Mr Ainsworth, when pressed by Mrs Dunwoody, said that the only people who would be allowed to issue an arrest warrant would be a judicial authority as recognised normally within either the issuing or the executing state. . In [countries other than this country], there are various different authorities such as magistrates and judges who normally issue extradition warrants. Those are the people who will execute a European arrest warrant (emphasis added). As I have already said, in a substantial number of these other countries, public prosecutors had been issuing provisional arrest warrants since 1957. On 9 January 2002, Mr Ainsworth said that the issuing authority will have to be that, a judicial authority and a court, so it will not be for the British authorities to say what is and what is not a court in another European state, but it will not be possible for authorities that clearly are not courts, that are not judicial authorities to issue requests. (emphasis added). Later, he said that a warrant shall be a court decision and it cannot be a police authority, but it must be a court, a judicial authority. Later still, he said: there are different legal systems that apply in different parts of the European Union, but there are clear judicial authorities who apply for extradition and who will be the authorities that have the power to apply for a European arrest warrant. Two points emerge from these statements: (i) a police authority was not a judicial authority, but some European systems were different from ours and it was not for the United Kingdom to say what was a court in other countries (although an authority that was clearly not a court was not a judicial authority); and (ii) the judicial authorities who issued warrants under the existing system would issue European arrest warrants under the new one. On 9 January 2003, Mr Ainsworth made the important statement which is set out by Lord Mance at para 253 of his judgment. The minister said We expect that European arrest warrants will be issued in future by exactly the same authorities as issue warrants under the current arrest procedures. The Bill is drafted in such a way as to include all those authorities that currently issue arrest warrants, as issuing authorities. I have yet to hear argument that says that we should change that. He went on to say that extradition requests come from a variety of sources and that there would be no change: the framework document insists on no widening outwith the judicial authorities in the Part 1 countries. .The current system works well and has not given rise to any problems in the recent past stemming from an inappropriate request from a European partner for extradition. I see no reason to change the system. On 9 June 2003, Lord Wedderburn said that he understood that the Government did not intend that a public prosecutor should just be able to demand of someone who is on the list of designated judicial authorities that an arrest warrant be issued and, if that was so, this should be made clear in the Bill. The ministers response was that he could not see what this would add, since, as he had already explained, all warrants will have to be issued by a judicial authority. A little later, Lord Bassam said that he expected the judicial process in other countries to be very similar to ours and as robust as ours (Hansard (HL Debates) (GC) cols 34 37). What is one to make of all these exchanges? In my view, the assurances that an issuing judicial authority would be a court did not clearly rule out the possibility that a judicial authority could include a public prosecutor. First (and crucially), the minister stated several times that European arrest warrants would be issued by the same authorities as issued arrest warrants under the existing system and that it was not intended to change that. I cannot agree with Lord Mance (para 262) that this does not undermine the force of the assurances given in relation to the new and more radical procedures being introduced by the EA. The statements that European arrest warrants would be issued by the same authorities as issued arrest warrants under the existing regime were inconsistent with an assurance that they could not be issued by public prosecutors. I do not see how these statements can be swept aside as Lord Mance seeks to do. Secondly and in any event, it is not at all clear precisely what Mr Ainsworth meant by a court in his statement on 9 January 2002, except that it did not include a police authority. He said nothing about public prosecutors. But he did say that there were different European court systems and it was not for the United Kingdom to say what a court was; and that it would not be possible for any authority that was clearly not a court (in the eyes of the relevant European state) to be a judicial authority. It is at least uncertain whether a public prosecutor was a court in the eyes of some European states. At the very least, I find it impossible to spell out of what was said by Mr Ainsworth in the passages to which I have referred at paras 161 to 163 a clear assurance that an issuing judicial authority could only be a court (as we understand that word), judge or magistrate. Was this changed by what was said on 9 June 2003 and the subsequent amendments to which Lord Mance refers? It is clear that Lord Wedderburn was of the view that an issuing judicial authority should not include a public prosecutor and asked for it to be clarified in the Bill that a public prosecutor could not insist that a judicial authority issue an arrest warrant. I have referred to the ministers response which was merely that all warrants wild have to be issued by a judicial authority. In the light of all the exchanges during the preceding 18 months, I do not consider that this answer (or the subsequent amendments to which Lord Mance has referred) amounted to a clear assurance that, even if a public prosecutor was an issuing judicial authority within the meaning of the Framework Decision, it was not an issuing judicial authority in the corresponding provision in the EA. I would, therefore, hold that the strong presumption that the phrase judicial authority bears the same meaning in section 2(2) of the EA as it does in article 6.1 of the Framework Decision was not rebutted by any assurances given by the minister during the progress of the Bill through Parliament. Taken as a whole, the ministers statements did not amount to assurances that were sufficiently clear to justify the conclusion reached by Lord Mance. Conclusion It follows that, for the reasons that I have given earlier (which coincide with Lord Phillipss fifth reason), I would dismiss this appeal. DISSENTING JUDGMENTS LADY HALE I would allow this appeal for the reasons given by Lord Mance. My reasons for preferring his view to that of the majority can be briefly stated. We are construing an Act of the United Kingdom Parliament. It is that Act which gives the courts the power to order the arrest, remand, and eventual extradition of an individual named in a European Arrest Warrant (EAW). Without the authority of an Act of Parliament it would not be possible to employ the coercive power of the state to deprive an individual of his liberty in this way. We are not here concerned with the reverse situation, where European law may have direct effect, irrespective of United Kingdom law, to confer rights against the state upon individuals or entities. Direct effect is expressly precluded by article 34.2(b) of the Treaty on European Union. But community law goes further than that. It imposes an obligation on member states to interpret legislation in conformity with community law, even if on ordinary principles of statutory interpretation, this would not be possible. In Criminal proceedings against Pupino (Case C 105/03) [2006] QB 83, the Court of Justice made it clear that the principle of interpretation in conformity with Community law applies to the interpretation of framework decisions adopted under Title VI of the Treaty on European Union (para 43). But this obligation is limited by general principles of law (para 44). These include the principle that criminal liability cannot be determined or aggravated on the basis of a framework decision, independently of an implementing law (para 45). Further, the obligation ceases when national law cannot be applied compatibly with the result envisaged by the framework decision. In other words, the principle cannot serve as the basis for an interpretation of national law contra legem (para 47). As Paul Craig puts it, the domestic court is not required to give the legislation an interpretation it cannot bear (Craig and De Burca, EU Law: Text, Cases and Materials, 5th ed (2011), p 203). In Dabas v High Court of Justice in Madrid, Spain [2007] UKHL 6, [2007] 2 AC 31 and Caldarelli v Judge for Preliminary Investigations of the Court of Naples, Italy [2008] UKHL 51, [2008] 1 WLR 1724, it was assumed without argument that Pupino applied to the construction of the provisions of the Extradition Act 2003 implementing the Framework Decision on the European Arrest Warrant in United Kingdom law. However, as Lord Mance has convincingly shown, the source of that obligation in United Kingdom law lies in section 2(1) of the European Communities Act 1972. This refers to obligations created or arising by or under the Treaties as defined in section 1 of the 1972 Act and it is now common ground between the parties that the Framework Decision falls outside this definition for the reasons explained by Lord Mance. Nor can section 3 of the 1972 Act affect the matter, again for the reasons given by Lord Mance. Section 3 is about the way in which the rule established in section 2 is to be put into effect, not about the extent of that rule. It follows that the Framework Decision and the Courts decision in Pupino are not part of United Kingdom law. The principle of conforming interpretation does not apply. The Framework Decision is, of course, an obligation undertaken by the United Kingdom in international law. There is a long standing presumption in common law that Parliament intends to give effect to the United Kingdoms obligations in international law. It has also been said that extradition treaties, and extradition statutes, ought . to be accorded a broad and generous construction so far as the texts permit it: In re Ismail [1999] 1 AC 320, 327, per Lord Steyn. But that is only one among many canons of statutory construction. As Lord Hope pointed out in Office of the Kings Prosecutor, Brussels v Cando Armas [2005] UKHL 67, [2006] 2 AC 1, para 24, the liberty of the subject is at stake here, and generosity must be balanced against the rights of the persons who are sought to be removed under these procedures. This is not, as he explained, an easy task, as the wording of Part I of the Extradition Act 2003 does not match that of the Framework Decision in every respect. He had earlier pointed out that the language of extradition is inappropriate to what is, in reality, a system of backing of warrants (para 22). But he concluded that the task has to be approached on the assumption that, where there are differences, these were regarded by Parliament as a necessary protection against an unlawful infringement of the right to liberty (para 24). In this case, we have a situation where Parliament did use the same wording as the Framework Decision (judicial authority). But we also have a situation where the words in the Act of Parliament have (at least in my view) a clear meaning in United Kingdom law, while the words of the Framework Decision do not (at least in my view) have a clear meaning in Community law. Are we to disregard the clear meaning of the United Kingdom statute in order to conform to some unclear meaning of a European instrument which is only part of United Kingdom law to the extent that the 2003 Act makes it so? Given that we are concerned with a serious interference with the right to liberty, I take the view that we should apply the clear intention of the United Kingdom legislature. I regard the point at issue in this case very differently from the points at issue in some of the other cases under this legislation. If a foreign judicial authority has faithfully followed the wording of the European Arrest Warrant annexed to the Framework Decision, we should do our utmost to hold that it complies with our legislation. That authority cannot reasonably be expected to know what our legislation says. Furthermore, it is issuing a warrant which might be executed anywhere within the territories of the member states, so it cannot pander to the peculiar demands of one of those states. But the question of who is to issue a warrant which we are bound to execute is in a different category. This goes to the heart of the protection given to the individual against unwarranted interference with his right to liberty. There is no authoritative interpretation of judicial decision or judicial authority in Community law. The United Kingdom has not accepted the jurisdiction of the Court of Justice in relation to the Framework Decision on the European Arrest Warrant so we cannot refer the question to the Court. Nor can the Commission take enforcement proceedings against the UK in respect of a perceived failure to implement it. The Court of Justice would not give much weight to the travaux prparatoires (non papers). In any event they are inconclusive. As Lord Mance points out, dropping the proposed definition of a judicial authority which included public prosecutors is consistent with (a) narrowing it so as to exclude prosecutors, (b) widening it so as to include others, or (c) a lack of consensus thus leaving it to the ECJ to interpret as a matter of principle. As a matter of principle, it is apparent that prosecutors do enjoy a special status in many European countries. In particular they are expected to take their decisions independently of the executive. However, even in countries where they do enjoy such status, a principled distinction could be drawn between a prosecutor who is independent of the prosecution in the particular case and a prosecutor who is in fact a party to the case in question. The Framework Decision defines a European Arrest Warrant as a judicial decision and by no stretch of language could a decision taken by a party to the case be termed judicial. There are also several good reasons to conclude that it was not intended that judicial authority should bear the much wider meaning contended for by Miss Montgomery on behalf of the prosecutor in this case. First, objection has been taken both by the Commission and the Council to the police and the Ministry of Justice being designated as competent judicial authorities. But if it is permissible to go beyond a court, tribunal, judge or magistrate, on what principled basis does one stop at prosecutors rather than any other public official who is in some way associated with the administration of justice? Would it include prosecutors in this country, where they do not enjoy the special status of prosecutors in some (but by no means all) European countries, or would it depend upon their particular status in the country in question? If so, what would the characteristics of that status be? Second, it is clear that many of the functions of an executing authority are only appropriate to a court, yet article 6.1 and 6.2 use the same phrase judicial authority in relation to both. It does contemplate different authorities being designated as competent in relation to the different functions, but both must be a judicial authority. Are we to take it that a different definition of judicial is appropriate to the choice of issuing authority than is appropriate to the choice of executing authority? Why should the meaning of judicial be different in each case? Thirdly, in the initial draft it was possible to see the issue of an EAW as an administrative step following an earlier court decision. There had to be a prior judgment or enforceable judicial decision, after which a request for assistance was issued by a judicial authority in one member state and addressed to any other member state. The structure is different in the eventual Framework Decision. 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 (article 1.1). The warrant has to contain evidence of an enforceable judgment, an arrest warrant or any other enforceable judicial decision having the same effect (article 8.1(c)). Thus the underlying process has been widened and cannot be read as requiring greater independence or affording greater protection than the judicial decision to issue the European arrest warrant. In those circumstances it is difficult to predict what the Court of Justice would decide if the point were to be raised with them. It may be right that they would recognise some prosecutors as judicial authorities but if so it is not clear on what basis they would distinguish between those prosecutors and others or between prosecutors and other bodies. Nor is it clear whether they would distinguish between a prosecutor with conduct of the case and a prosecutor who is independent of it. It is difficult, therefore, to know how we are to interpret the Act consistently with Community law when it is not clear and under the present arrangements cannot be made clear to us what Community law is on this point. Lord Phillips gives five reasons for concluding that the changed draft Framework Decision was intended to broaden the meaning from judge or prosecutor (para 60). Lord Dyson (with whom Lord Walker agrees) disagrees with four of them. First, Lord Phillips would have expected the restriction to a judge to be expressly stated because it was a radical change from the position under the European Convention on Extradition, where prosecutors had been able to issue provisional arrest warrants (para 61). Lord Dyson rejects this reason as the two regimes are so different and the European arrest warrant regime is notably wider in scope than the earlier Convention (doing away with double criminality for framework offences and, I would add, requiring states to extradite their own nationals) (para 155). Furthermore it does little to support the suggestion that it was intended to go further than prosecutors. I agree. Second, why would they wish to limit the issue of the European arrest warrant when the significant safeguard against improper issue lies in the antecedent process (paras 62 to 64)? Lord Dyson rejects this as article 8.1(c) refers to an enforceable judgment, an arrest warrant or any other enforceable judicial decision and judicial decision cannot mean something different in articles 1.1 and 8.1(c) (paras 156 157). I agree with that, but observe that both are happy to give judicial authority a different meaning in article 6.1 and 6.2. Third, it was likely that they removed the definition because they were not content to limit it to judges and prosecutors (para 65). That is not a reason independent of his conclusion. Lord Dyson rejects it because we do not know why the change was made (para 158). Furthermore, it is difficult to reconcile the even broader meaning with the objections taken to other authorities being designated competent authorities. Again, I agree. Fourth, the requirement to notify the Council which are the competent judicial authorities under the law of the member state makes more sense if there is a range (para 66). But as Lord Dyson points out (para 159) it also makes perfect sense if a member state wishes to designate a particular court as the competent authority. For England and Wales, of course, the competent judicial authority is a district judge sitting in the Westminster Magistrates Court. The executing state will need to be able to check whether the issuing authority is competent to issue. It says nothing about the nature of that authority. Again, I agree. However, Lord Dyson does agree with Lord Phillips fifth reason: that the manner in which member states, the Commission and the Council acted after the Framework Decision took effect is in stark conflict with restricting a judicial authority to a judge (para 67). What this amounts to is that some member states have designated prosecutors and sometimes other bodies for the purpose of article 6.1 and/or 6.2. No objection has been taken by the Council or the Commission to designating prosecutors but objection has been taken to designating the police or the Ministry of Justice. This is an odd reason to conclude that the change was intended to broaden the scope of judicial authority beyond prosecutors. It is more plausibly a reason for concluding that no change was intended. The real relevance, as Lord Kerr and Lord Dyson see it, is as evidence of subsequent state practice. Article 31.3(b) of the Vienna Convention on the Law of Treaties provides that there shall be taken into account, along with the context, any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation. While the practice need not be that of all the parties to the treaty (as in this case it obviously is not) the practice has to be such as to establish the agreement of all the parties as to its interpretation. Given the lack of common or concordant practice between the parties, is the failure to date of those countries which do not authorise prosecutors and other bodies to object to those who do sufficient to establish their agreement? Nobody in this country seems to have addressed their mind to the issue until it arose in this case. Failure to address minds to an issue is not the same as acquiescence in a particular state of affairs. Subsequent practice does not give support to the respondents extreme position and there has been no consideration of the principles which might distinguish some prosecutors from others. This seems to me to be a rather flimsy basis on which to hold that we are obliged to construe a United Kingdom statute contrary both to its natural meaning and to the clear evidence of what Parliament thought that it was doing at the time. We have to interpret the Act of Parliament. Even without reference to the parliamentary materials, it seems clear that the term judicial authority is restricted to a court, tribunal, judge or magistrate. First, that is the natural meaning of judicial in United Kingdom law. We may talk about the legal system or the justice system when we mean, not only the courts, but those involved in the administration of justice. But when we use the word judicial we mean a court, tribunal, judge or magistrate. Second, the Act uses the same term in relation to both the issuing and executing judicial authority. The executing judicial authority undoubtedly has to be a court. There is a strong presumption that the same words in the same statute especially in the same place mean the same thing. Third, the point about the European Convention on Human Rights is not that article 5.3 applies to the issue of a European arrest warrant. It clearly does not. The point is that it uses the word judicial (other officer authorised by law to exercise judicial power) in a sense which is clearly only compatible with a court, tribunal, judge or magistrate who is independent of the parties to the case. It could not include the prosecutor who is conducting the case. This indicates a European understanding of the word judicial which coincides with ours. It is also quite clear from the parliamentary history detailed by Lord Mance that judicial was deliberately inserted into the Bill in order to limit the authorities who could issue European arrest warrants to bodies which we would recognise as judicial. In this respect, I would place more weight on the parliamentary history in terms of the changes made to the Bill during its passage through Parliament than on the assurances given by ministers. Why make the amendments eventually made unless to make the matter clear? As Lord Filkin said to the House of Lords (Hansard (HL Debates), 1 May 2003, col 858), Parliament is sovereign. This is not a case where Parliament has told us that we must disregard or interpret away the intention of the legislation. I would therefore have allowed this appeal. LORD MANCE Introduction The appellant, Mr Assange, is wanted in Sweden on allegations of sexual molestation and rape being pursued against him by the respondent, the Swedish Prosecution Authority. Mr Assange is in England. On 18 November 2010 Marianne Ny, the prosecutor handling the case against Mr Assange, obtained from the Stockholm District Court a domestic detention order against Mr Assange in absentia, and on 24 November 2010 this was upheld by the Svea Court of Appeal, following written argument as to whether it was proportionate and based on sufficient evidence. On 2 December 2010 Mrs Ny herself then issued on the respondents behalf a warrant seeking Mr Assanges surrender pursuant to the arrangements put in place under the Council Framework Decision of 13 June 2002 on the European arrest warrant and the surrender procedures between Member States (2002/584/JHA). In the United Kingdom, these arrangements are found in Part 1 of the Extradition Act 2003. Under section 2(2) of that Act: A Part 1 warrant is an arrest warrant which is issued by a judicial authority of a category 1 territory . Sweden and other Member States are all category 1 territories. Section 2(7) to (9) further provide that a designated authority (in England, SOCA, the Serious Organised Crime Agency) may, if it believes that the authority which issued the Part 1 warrant has the function of issuing arrest warrants in the category 1 territory issue a certificate that that authority has that function. SOCA issued a corresponding certificate in respect of the respondent. Under Swedish law the respondent is the only authority authorised to issue a European arrest warrant seeking surrender for trial. Under section 3 of the 2003 Act, the issue of a (valid) certificate under section 2 brings the remaining machinery of Part 1 into play. The issue which the Administrative Court rightly identified as being of general public importance for the purposes of an appeal to the Supreme Court is whether a warrant of this nature issued by a public prosecutor is a valid Part 1 warrant issued by a judicial authority within the meaning of sections 2(2) and 66 of the Extradition Act 2003. On appeal, a preliminary issue has also been raised, whether it is open to Mr Assange to question the warrants validity having regard to section 2(7) to (9) and SOCAs certificate. The status of the Framework Decision The Framework Decision on the European arrest warrant was a third pillar measure agreed under Title VI of the Treaty on European Union (TEU) in the form that Treaty took before the Treaty of Lisbon. Third pillar measures in the criminal area required unanimity, and article 34.2(b) of the Treaty on European Union provided that they were binding as to the result to be achieved but shall leave to the national authorities the choice of form and methods and that [t]hey shall not entail direct effect. Member States were not obliged to accept the jurisdiction of the European Court of Justice or the preliminary ruling system in regard to them, and the United Kingdom did not do so. The European Commission had and has no power to take enforcement measures against Member States in respect of any perceived failure to implement domestically the requirements of a Title VI measure. Under Protocol No 36 to the Treaty of Lisbon this position continues. The relevant text of this protocol is, for convenience, set out in an annex to this judgment. Article 9 provides that the legal effects of agreements concluded between Member States on the basis of the TEU prior to the entry into force of the Treaty of Lisbon shall be preserved until such agreements are repealed, annulled or amended in implementation of the Treaties. Article 10 provides that, as a transitional measure and with respect to acts of the Union in the field of police co operation and judicial co operation in criminal matters which have been adopted before the entry into force of the Treaty of Lisbon, the powers of the Commission and Court of Justice remain the same, unless and until the relevant Title VI measure is by agreement repealed, annulled or amended or a period of five years has elapsed after the date of entry into force of the Treaty of Lisbon (ie until 1 December 2014). This transitional provision was designed to give the opportunity for any textual, institutional and procedural adjustments necessary at a European and/or national level, on moving from an inter governmental framework to a harmonised and enforceable European system. The present appeal highlights points that could deserve attention in that context. When the House of Lords European Union Committee wrote its 10th Report of Session 2007 2008 entitled The Treaty of Lisbon: an impact assessment, the expectation was that the European Commission would introduce measures to convert some of the more significant Title VI instruments, such as the European Arrest Warrant, soon after the Treaty of Lisbon enters into force (para 6.323). This has evidently not occurred, at least so far, in relation to the Framework Decision on the European arrest warrant. Failing their repeal, annulment or amendment, the position in respect of Title VI measures remaining in force unamended at the end of the five year period is that the United Kingdom has, under article 10.3 to 10.5 of Protocol No 36, an option to notify a blanket opt out as from 1 December 2014, with an accompanying right to apply to opt back in selectively to individual measures. If the United Kingdom decides not to notify the blanket opt out or if, having notified one, it applies successfully to opt back in to the Framework Decision on the European arrest warrant, it must accept the jurisdiction of the Court of Justice and the Commissions right of enforcement. The proper interpretative approach and the status of Pupino The issues on the present appeal thus involve consideration of the interface between the European Framework Decision operating at an inter government level and the United Kingdoms domestic legislation in the form of the Extradition Act 2003. The Act was introduced to give effect to the Framework Decision. There are two different bases upon which this may be relevant. The first basis is the common law presumption that the Act gave effect to the United Kingdoms international obligations fully and consistently (see Bennions Statutory Interpretation, 5th ed (2008), sections 182 and 221). However, the Act was and is in noticeably different terms, and it is not axiomatic that it did so in every respect. The presumption is a canon of construction which must yield to contrary parliamentary intent and does not exclude other canons or admissible aids. As Lord Bridge of Harwich said in R v Secretary of State for the Home Department, Ex p Brind [1991] 1 AC 696, 748B C: When confronted with a simple choice between two possible interpretations of some specific statutory provision, the presumption whereby the courts prefer that which avoids conflict between our domestic legislation and our international treaty obligations is a mere canon of construction which involves no importation of international law into the domestic field. The second basis upon which the Framework Decision may be relevant is the duty of conforming interpretation, which the Court of Justice in Criminal proceedings against Pupino (Case C 105/03) [2006] QB 83 held to be incumbent on domestic courts in the context of framework decisions. It did so in these terms: 43 In the light of all the above considerations, the court concludes that the principle of interpretation in conformity with Community law is binding in relation to framework decisions adopted in the context of Title VI of the Treaty on European Union. When applying national law, the national court that is called on to interpret it must do so as far as possible in the light of the wording and purpose of the framework decision in order to attain the result which it pursues and thus comply with article 34.2(b) EU. 47 The obligation on the national court to refer to the content of a framework decision when interpreting the relevant rules of its national law ceases when the latter cannot receive an application which would lead to a result compatible with that envisaged by that framework decision. In other words, the principle of interpretation in conformity with Community law cannot serve as the basis for an interpretation of national law contra legem. In relation to European Treaty law falling within the scope of the European Communities Act 1972, the European legal duty of conforming interpretation has been understood by United Kingdom courts as requiring domestic courts where necessary to depart from a number of well established rules of construction: Pickstone v Freemans plc [1989] AC 66, 126B, per Lord Oliver of Aylmerton; and to go beyond what could be done by way of statutory interpretation where no question of Community law or human rights is involved: Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2010] EWCA Civ 103, [2010] STC 1251, paras 97 and 260, per Arden LJ. See also Litster v Forth Dry Dock Co Ltd [1990] 1 AC 546, 576H 577A, per Lord Oliver; R ( IDT Card Services Ireland Ltd) v Customs and Excise Comrs [2006] EWCA Civ 29, [2006] STC 1252, paras 67 92, per Arden LJ. An analogy has been drawn between the positions under the European Communities Act 1972 and under section 3 of the Human Rights Act 1998: see the IDT Card Services case, paras 85 90, per Arden LJ and Vodafone 2 v Revenue and Customs Comrs [2009] EWCA Civ 446; [2010] Ch 77; [2009] STC 1480, paras 37 38, per Sir Andrew Morritt C. Pursuant to the resulting duty, domestic courts may depart from the precise words used, eg by reading words in or out. The main constraint is that the result must go with the grain or be consistent with the underlying thrust of the legislation being construed, that is, not be inconsistent with some fundamental or cardinal feature of the legislation: Vodafone 2, para 38, per The Chancellor and Test Claimants in the FII Group Litigation, para 97, per Arden LJ, in each case citing Ghaidan v Godin Mendoza [2004] 2 AC 557. In this light, considerable significance may attach to whether the European legal duty of conforming interpretation applies or whether the case is subject only to the common law presumption that Parliament intends to give effect to the United Kingdoms international obligations. The force of the common law presumption in the context of the Extradition Act 2003 has itself been addressed with differing emphases. In Office of the Kings Prosecutor, Brussels v Cando Armas [2005] UKHL 67, [2006] 2 AC 1, Lord Bingham said that the interpretation of the 2003 Act must be approached on the twin assumptions that Parliament did not intend the provisions of Part 1 [of the Act] to be inconsistent with the Framework Decision and that, while Parliament might properly provide for a greater measure of co operation by the United Kingdom than the Decision required, it did not intend to provide for less (para 8). In contrast, Lord Hope, recognising that the introduction of the European arrest warrant system was highly controversial (para 20), noted that there were limits to the principle that extradition treaties and statutes should receive a broad and generous construction, in so far as the liberty of the subject is at stake here, and said that the task of giving effect to Part 1 of the 2003 Act in the light of the Framework Decision had to be approached on the assumption that where there are differences, these were regarded by Parliament as a necessary protection against an unlawful infringement of the right to liberty (para 24). In Dabas v High Court of Justice in Madrid, Spain [2007] UKHL 6, [2007] 2 AC 31, Lord Hope, with whose speech the three other members of the majority agreed, repeated at para 35 what he had said in para 24 in Cando Armas. However, in common with the majority he found on examination that the defendants argument in that case (that the Act required a separate certificate as to the category of offence involved) was much more about form than it was about substance, and rejected it. More recently still, in Caldarelli v Judge for Preliminary Investigations of the Court of Naples, Italy [2008] UKHL 51, [2008] 1 WLR 1724, Lord Bingham, with whose speech Lord Hope, Lady Hale and Lord Carswell all agreed, noted, at para 23, that Providing as they do for international co operation between states with differing procedural regimes, the Framework Decision and the 2003 Act cannot be interpreted on the assumption that procedures which obtain in this country obtain elsewhere. The evidence may show that they do not. The need for a broad internationalist approach signalled by Lord Steyn in In re Ismail [1999] 1 AC 320, 326 327 is reinforced by the need to pay close attention to whatever evidence there is of the legal procedure in the requesting state. While the common law presumption will therefore readily overcome apparent formal or procedural inconsistencies, it does not exclude the possibility that Parliament may deliberately have intended a result differing from that inherent in the United Kingdoms international obligations. Lord Hoffmann described the legal position as follows in R v Lyons [2002] UKHL 44; [2003] 1 AC 976, para 27: Parliament may pass a law which mirrors the terms of the treaty and in that sense incorporates the treaty into English law. But even then, the metaphor of incorporation may be misleading. It is not the treaty but the statute which forms part of English law. And English courts will not (unless the statute expressly so provides) be bound to give effect to interpretations of the treaty by an international court, even though the United Kingdom is bound by international law to do so. Of course there is a strong presumption in favour of interpreting English law (whether common law or statute) in a way which does not place the United Kingdom in breach of an international obligation. Returning to the duty of conforming interpretation under European law, the Court of Justices decision in Pupino was not cited in Cando Armas, although Cando Armas was decided some five months after Pupino. But Pupino was extensively relied upon in Dabas and Caldarelli. It was assumed without argument in each case that Pupino was directly applicable and binding under domestic law in the United Kingdom: see in particular Dabas, para 5 per Lord Bingham, paras 38 40 per Lord Hope, para 69 per Lord Scott, para 75 79 per Lord Brown (referring to it as of considerable importance and as the decision on which the respondent authority principally relied on that appeal) and para 81 per Lord Mance (agreeing with the other speeches), and Caldarelli, para 22 per Lord Bingham, with whose reasoning Lord Hope, Lady Hale and Lord Carswell agreed. Whether the assumption made in Dabas and Caldarelli was correct has, however, been examined at the Supreme Courts instance in submissions invited and received after the hearing of the present appeal. This involves considering the history of the European Treaties, and the extent to which they and instruments under them have been incorporated or referred to in domestic law under the European Communities Act 1972 and the European Union (Amendment) Act 2008. Title VI measures in the field of criminal law were introduced under the third pillar of the Treaty of Maastricht 1992. Amendments to the scope and terms of the third pillar were made by articles 1 of, successively, the Treaty of Amsterdam 1997 and the Treaty of Nice 2001. Section 2 of the 1972 Act provides that: (1) 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, and the expression enforceable EU right and similar expressions shall be read as referring to one to which this subsection applies. Section 1 of the 1972 Act defines the Treaties for present purposes as including in relation to the Treaty of Maastricht 1992 only Titles II, III and IV, and in relation to the Treaties of Amsterdam 1997 and Nice 2001 various articles other than article 1. The definition also includes the Treaty of Lisbon 2007 together with its Annex and Protocols with a presently immaterial exception relating to the Common Foreign and Security Policy. Having regard to this, and to article 9 of Protocol No 36 to the Treaty of Lisbon, the Framework Decision on the European Arrest Warrant remains to be regarded as a Title VI measure and as falling outside the definition of the Treaties or the Community Treaties contained in section 1 of the European Communities Act 1972, and so outside the scope of section 2 of that Act. This is now, rightly, common ground between all parties to the present appeal. It is a constitutional point (see Thomas v Baptiste [2000] 2 AC 1, 23A C) and it has been overlooked in the previous case law. Although Title VI measures in the criminal law field are outside the scope of the the Treaties for the purposes of the 1972 Act, the respondent submits that instruments under them have become part of domestic law under section 3 of the 1972 Act. Since 1 December 2009, section 3 reads: Decisions on, and proof of, Treaties and EU instruments etc. (1) For the purposes of all legal proceedings any question as to the meaning or effect of any of the Treaties, or as to the validity, meaning or effect of any EU instrument, shall be treated as a question of law (and, if not referred to the European Court, be for determination as such in accordance with the principles laid down by and any relevant decision of the European Court. (2) Judicial notice shall be taken of the Treaties, of the Official Journal of the European Union and of any decision of, or expression of opinion by, the European Court on any such question as aforesaid; and the Official Journal shall be admissible as evidence of any instrument or other act thereby communicated of the EU or of any EU institution . (3) Evidence of any instrument issued by a EU institution, including any judgment or order of the European Court , or of any document in the custody of a EU institution, or any entry in or extract from such a document, may be given in any legal proceedings by production of a copy certified as a true copy by an official of that institution; and any document purporting to be such a copy shall be received in evidence without proof of the official position or handwriting of the person signing the certificate. (4) Evidence of any EU instrument may also be given in any legal proceedings (a) by production of a copy purporting to be printed by the Queens Printer; (b) where the instrument is in the custody of a government department (including a department of the Government of Northern Ireland), by production of a copy certified on behalf of the department to be a true copy by an officer of the department generally or specially authorised so to do; and any document purporting to be such a copy as is mentioned in paragraph (b) above of an instrument in the custody of a department shall be received in evidence without proof of the official position or handwriting of the person signing the certificate, or of his authority to do so, or of the document being in the custody of the department. (5) In any legal proceedings in Scotland evidence of any matter given in a manner authorised by this section shall be sufficient evidence of it. The respondent submits that, although Title VI framework decisions continue to fall outside the Treaties, United Kingdom courts are under section 3 bound, since 1 December 2009, by Court of Justice decisions on their validity, meaning or effect. The submission is in my judgment incorrect for several reasons. First, it is section 2, read with section 1, that defines the extent to which European law has domestic effect. Section 3, as its heading and text indicate, regulates the manner in which and principles by which European law is to be given effect, not the extent to which European law applies. Secondly, although section 3 refers since 1 December 2009 to any EU instrument or EU institution, before that date it referred to any Community instrument or Community institution. It had therefore no relevance to decisions on or proof of framework decisions, which were not European Community instruments. The reference to any EU instrument or institution as from 1 December 2009 was to give effect to the unified terminology introduced by the Treaty of Lisbon, amalgamating for the future the previously separate pillars. However, article 9 of Protocol No 36, which is part of domestic law under section 1 of the 1972 Act, provides that for the time being the legal effects of measures adopted on the basis of the old TEU shall be preserved. Title VI measures such as the framework decision remain therefore for the time being Title VI measures and not EU instruments within section 3. Thirdly and more generally, it would be inconsistent with the carefully limited scope of sections 1 and 2 of the 1972 Act and with the whole thrust of Protocol No 36 to treat Title VI measures or Court of Justice decisions in respect of them as acquiring with effect from 1 December 2009 a domestic force which they never had before. It would bizarre to provide that Title VI should not be domestically binding, but that instruments enacted under it should be. It would be equally bizarre to provide for United Kingdom courts to be bound by principles established and any decision reached by the Court of Justice in cases which happened to be referred by courts of other member states, but to have no power to refer themselves: see article 10 of the Protocol. (Indeed, the reference in section 3 to questions of law if not referred to the European Court being for determination in accordance with such principles and any such relevant decision is itself another indication that section 3 was not conceived with the intention of covering Title VI measures which could not be so referred.) The respondent submits, further or alternatively, that the principle of conforming interpretation established in Pupino finds domestic force through the duty of sincere co operation found in article 10 of the former Treaty on the European Community (TEC). Article 10 TEC was mentioned by Lord Hope in Dabas, para 38. But it is a duty on the United Kingdom as a state, not on its courts, and in any event it can have had no application, prior to 1 December 2009, to Title VI measures agreed under the former TEU, rather than under the European Community Treaty. Post Lisbon, the duty of co operation is found in article 4(3) TEU. But again it is not a principle of domestic interpretation, and again it would be contrary to Protocol No 36 to treat Title VI measures as being in a different position now to that in which they were before 1 December 2009. Finally, the respondent notes that, unless United Kingdom courts interpret domestic legislation to match precisely the true European legal interpretation of any relevant Title VI measure, there will exist a discrepancy which would involve the United Kingdom in breach of its international obligations. That is so. But it is a position which even the Court of Justice in Pupino accepted could in some circumstances occur. The risk is one which, even on the respondents case, must always have existed prior to 1 December 2009. In preserving the existing legal effect of Title VI measures by article 9 of Protocol No 36, the United Kingdom preserved that possibility, if and when it had any reality. In fact, the risk of infraction proceedings by the Commission under article 258 TFEU (ex article 226 TEC) to which the respondent refers is effectively non existent, since under article 10 of Protocol No 36 the Commission continues for the time being to have no power to bring any such proceedings. The framework decision, the Court of Justices decision in Pupino and the European legal principle of conforming interpretation are not therefore part of United Kingdom law under the 1972 Act. The only domestically relevant legal principle is the common law presumption that the Extradition Act 2003 was intended to be read consistently with the United Kingdoms international obligations under the framework decision on the European arrest warrant. But this presumption is subject always to the will of Parliament as expressed in the language of the Act read in the light of such other interpretative canons and material as may be relevant and admissible. In this light, it is also relevant to record the basis upon which the British Government promoted the Bill leading to the Extradition Act. Asked by Lord Lamont on its second reading on 1 May 2003 to confirm that it was open to the House to amend the provisions of the Bill and arrest warrant, the minister, Lord Filkin, replied (Hansard (HL Debates), col 858): My Lords, the constitutional position is clear. On framework agreements to which the Government have been a party and have signed with other member states, there is an expectation that member states will put them into effective law in their own countries. However, as I am sure the noble Lord, Lord Lamont, knows, the position is that Parliament is sovereign and Parliament can do what it wishes in this respect. Clearly, if there were to be a discontinuity between our treaty obligations and our own law, that is another issue that goes further. But Parliament is sovereign. That also reflects my view of the domestic legal position. The Framework Decision and its interpretation under European law On this basis, I turn to the Framework Decision. Article 1 provides: 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 provides: 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. Both the Framework Decision and the 2003 Act provide that a European arrest warrant is to be issued by a judicial authority. Under both, the question arises what is meant by a judicial authority. For Mr Assange, Ms Dinah Rose QC submits that the phrase refers under both to an authority which is not only vested with responsibility for issuing such a warrant, but is independent of the executive and of the parties and impartial in the same sense as the competent legal authority or the court referred to in article 5.1(c) and 5.4 of the European Convention on Human Rights. For the Swedish Prosecution Authority, Miss Clare Montgomery QC submits that it means no more than an authority which is vested with responsibility for issuing such a warrant and which the issuing Member State has notified to the General Secretariat of the Council of Ministers under article 6 of the Framework Decision as competent to do this under its own domestic law. A second point is that, on Ms Roses case, it is for the courts of the executing state to determine whether the criteria of independence which she advances have been met. On Miss Montgomerys case, the courts of the executing state have no role to play, save, under sections 2 and 3 of the United Kingdoms 2003 Act, to check that SOCA has in fact issued a certificate in the terms required by section 2(8); the only possible qualification, again under domestic law, is that a defendant might be able to seek judicial review of SOCAs conduct in issuing a certificate, if it could be shown that SOCA had no rational basis for believing that the issuing authority had the function of issuing warrants in the issuing state. Each interpretation faces problems. Ms Roses interpretation of the phrase judicial authority has the merit, noted by Lord Phillips at para 76, that it corresponds naturally to expectations derived from the English text. But the position may be cloudier if one looks behind the language of the English statute and the English version of the framework decision to other language texts of the framework decision, particularly the French (autorit judiciaire) and German (Justizbehrde). The parallel that Ms Rose draws with article 5.1(c) and 5.4 of the Convention on Human Rights also faces a difficulty. It is well established that the competent legal authority and court there mentioned must have the qualities on which Ms Rose relies: see eg Schiesser v Switzerland (1979) 2 EHRR 417, Skoogstrm v Sweden (1983) 6 EHRR 77 and Medvedyev v France (2010) 51 EHRR 899. In Skoogstrm v Sweden the court was, as in the present case, concerned with the position of a Swedish prosecutor. The court noted, at paras 77, 78, that there was in Sweden no question of a distinction between investigating and prosecuting authority, and that the organisation of the prosecuting functions was hierarchical; the public prosecutor was responsible for investigating a matter, for deciding whether to institute a prosecution, for drawing up an indictment and for pursuing the prosecution in the courts and was not independent of the parties. But the cases on article 5.1(c) and 5.4 concern the competent legal authority and court before which a person must be brought after arrest, not the authorities by which an arrest may be authorised. In the present context, their most natural analogues are the magistrates court responsible for executing the warrant in England, before which Mr Assange has been brought, and/or the Swedish court, before which Mr Assange would have to be brought following any surrender to Sweden. A domestic arrest, for the purpose of bringing a defendant before such a court, is commonly made at the instance of the police or a prosecution service not possessing the full qualities of independence and impartiality which Ms Rose invokes. Despite this and despite the principle of mutual recognition which underpins the Framework Decision, Ms Rose is correct to question whether there is a complete equation between domestic arrest and international surrender. A European arrest warrant seeking the surrender of a defendant by one state to another to face charges is a generally speaking more intrusive measure than a domestic warrant. In many cases (though not the present) surrender between European Union member states will uproot a defendant from his or her familiar and personal environment. It may therefore engage human rights issues, eg under article 8 of the European Convention on Human Rights (as indeed section 21 of the 2003 Act recognises from the point of view of the United Kingdom as an executing state). If (again, unlike Mr Assange) the defendant is a national of the executing state, then such a warrant may also deprive him or her of the customary international right to remain within the jurisdiction of that state. Lord Hopes statement in Cando Armas that the liberty of the subject is at stake here (para 204 above) reflects such considerations. The Framework Decisions insistence in articles 1 and 6 that a European arrest warrant should be a judicial decision taken by an issuing judicial authority can only have been intentional, designed to allay fears that the measure might be excessively or inappropriately deployed. But there is as yet no authority, in Strasbourg or in Luxembourg, as to the precise nature of the judicial decision and judicial authority to which these articles refer. Miss Montgomerys submission that these words refer to no more than an authority which is, and which a state notifies to the Council as being, vested with responsibility for issuing such a warrant is also open to objection. It means that any member state could notify any body or person to the Council as the authority responsible for issuing an European arrest warrant, and thereby clothe that body or person with the mantle of a judicial authority making a judicial decision. Miss Montgomery does not shrink from this conclusion: she submits that judicial means no more than appertaining to the administration of justice, and that the mere assignation to an authority of the role of issuing a European arrest warrant makes that authority judicial. Accordingly, it was and is, she submits, perfectly permissible for countries to assign as their relevant judicial authority their Ministry of Justice or their police. A number of states have indeed taken this view: eg in relation to the issue of both accusation and conviction warrants, Denmark where the Ministry of Justice is the only relevant authority and Germany where the Ministry is a relevant authority alongside the State prosecution service (Staatsanwaltschaft) and courts and in relation to the issue of conviction warrants, Estonia, Finland and Lithuania, where the Ministry is the only relevant authority and Sweden, where the National Police Board is the only relevant authority. The background to the proposal for the Framework Decision can be shortly stated. Under the European Convention on Extradition 1957 (to which the United Kingdom adhered on 14 May 1991 and to which effect was given domestically in the Extradition Act 1989), extradition was effected by and between states in respect of persons against whom the competent authorities of the requesting state were proceeding or who they wanted for the carrying out of a sentence or detention order. There was a requirement of double criminality and states had the right to refuse extradition of their nationals. The 1957 Convention was supplemented by a Council Act of 27 September 1996 (96C 313/02). This retained the requirement of double criminality with modifications (articles 2 and 3), and it provided for the extradition of nationals, but at the same time it gave states the right not to extradite their own nationals by successive five year reservations (article 7). States were also given the right to provide on a mutual basis for requests for supplementary information to be handled directly between judicial authorities or other competent authorities which they authorised and specified for that purpose (article 14). Various authorities, including prosecutors, the Ministry of Justice and police, were specified for this limited purpose by some countries. The third instrument requiring mention is the Schengen Convention of 19 June 1990, which implemented the Schengen Agreement of 14 June 1985 between the Benelux countries, Germany and France and to some parts of which, including article 95, the United Kingdom later acceded by 2003. Articles 39 and 53 of the Schengen Convention distinguish between on the one hand the police and Ministries of Justice and on the other judicial authorities in the context of mutual assistance. Article 95 provides for data on persons wanted for arrest for extradition purposes to be entered at the request of the judicial authority of the requesting state, and for such alert to be sent by the quickest means possible to the requested state with information as to the authority issuing the request for arrest, as to whether there is an arrest warrant or other document having the same legal effect, or an enforceable judgment and as to the nature, circumstances and consequences of the offence. Unless the requested state refused on exceptional grounds, or because the person wanted was one of its nationals, article 95 alerts would lead to arrest of the wanted person in the requested state, to enable extradition proceedings to take place. Otherwise, they would be treated as a request for information as to that persons place of residence (article 95(5)). Article 98 also addressed the provision at the request of the competent judicial authorities of information as to place of residence of a wanted person. A report dated 13 October 2009 by the Joint Supervisory Authority of Schengen states that: [w]hile public prosecutors and judicial authorities obviously play a major role in the decision leading to article 98 alerts, in some Schengen States the police, security police, tax and customs authorities, border guard authorities and other authorities competent for criminal investigations are also competent to decide on article 98 alerts (para V.I.A.1). If the same applied or applies to the more coercive article 95 alerts, that, as will appear, was certainly not what Parliament understood when it passed the Extradition Act 2003, incorporating section 212 (see para 258 below). The Framework Decision was designed to introduce a new era. First, the surrender of requested persons between member states was to become entirely or basically judicial. So the Commission wrote in a first report on the Framework Decision, although noting that certain states including Sweden had designated an executive body as the relevant authority for all or some aspects. Second, the requirement of double criminality was to go. Third, the surrender of nationals was now to be required a major innovation as the Commission described it in its report. The correct interpretation of the Framework Decision is a matter of European Union law. The Court of Justice may one day have to adjudicate upon it, either at the instance of a member state which has already accepted the courts jurisdiction in respect of third pillar instruments or, after 1 December 2014, at the instance of a state remaining party to the Framework Decision. The Court of Justices general interpretational approach has been described by Professor Anthony Arnull of the University of Birmingham, as teleological and contextual: The European Union and its Court of Justice, 2nd ed (2006), pp 612 and 621; Professor Arnull goes on to note that the recourse to travaux prparatoires contemplated as a secondary source of assistance in other international contexts under article 32 of the Vienna Convention on the Law of Treaties is not a method which has in the past commended itself to the Court in cases concerning the interpretation of the Treaties themselves: p 614. This is for a good reason, which applies in the present context. Such travaux (or, in the European jargon, non papers) relating to matters decided in preparatory working groups, are not made generally available (although a facility to seek access to them under certain conditions is available in Council Regulation (EC) No 1049/2001). This is relevant because of the striking differences between the original Commission proposal of 25 September 2001 (COM(2001) 522 final/2) and the redraft which was agreed by the Council of Ministers at a meeting of 6 7 December 2001, recorded on 10 December 2001 as Council document 14867/1/01 Rev 1 and agreed by the European Parliament on 6 February 2002. Article 3 of the original Commission proposal defined a European arrest warrant as a request, issued by a judicial authority in a Member State, and addressed to any other Member State, for assistance in searching, arresting, detaining and obtaining the surrender of a person, who has been subject to a judgment or a judicial decision, as provided for in article 2. It defined issuing judicial authority as the judge or the public prosecutor of a Member State, who has issued a European arrest warrant and executing judicial authority as the judge or the public prosecutor of a Member State who decides upon the execution of a European arrest warrant. Article 4 provided that each member state shall designate according to its national law the judicial authorities that are competent to (a) issue a European arrest warrant and (b) take decisions under the provisions dealing with execution of such a warrant. Article 2 provided that a European arrest warrant may be issued for (a) final judgements in criminal proceedings, and judgements in absentia which involve deprivation of liberty or a detention order of at least four months or (b) other enforceable judicial decisions in criminal proceedings which involve deprivation of liberty and relate to an offence punishable by a sentence or detention order of at least twelve months. Any European arrest warrant had under article 6 to contain information as to whether there is a final judgement or any other enforceable judicial decision, within the scope of article 2. Under this scheme, there would have been no doubt that a member state could designate either a court or a public prosecutor as competent to issue a European arrest warrant. But it would have been open to doubt in accusation cases what sort of enforceable judicial decision taken by whom would have had to precede the issue of such a warrant. And enforceable judicial decision in that context might or might not have been limited to a court decision. The Council redraft of 10 December 2001 elevated to article 1 the description of a European arrest warrant as (in the original French text) une dcision judiciaire mise par un tat membre en vue de larrestation et de la remise par un autre tat membre dune personne recherche pour lexercice de poursuites pnales ou pour lexcution dune peine ou dune mesure de surt privatives de libert. The English and German versions, described as liable to revision in the light of the French original, spoke of a court decision and (the German text being in this respect consistent with the English) eine gerichtliche Entscheidung. Article 2(1) followed the same scheme as article 2 of the September draft, but article 2(2) introduced a long list of offences punishable by sentences of at least three years which were to give rise to surrender without verification of double criminality. Article 6 was in substantially the terms that became article 6 of the Framework Decision, but the Council redraft did not attempt to define judicial authority. Article 9 required the European arrest warrant to contain evidence of an enforceable judgment, an arrest warrant or any other enforceable judicial decision having the same effect, within the scope of articles 1 and 2. This redraft left unclear both what was meant by judicial authority and whether the prior domestic arrest warrant or any other enforceable judicial decision on which a European arrest warrant was to be based had to involve a court decision. The Framework Decision recites the Commission proposal and the European Parliaments opinion, but is closely based on the Council redraft. The Council redraft must, in the ordinary course, have followed the circulation, under the aegis of the Belgian presidency of the Council, of non papers which could, if available, shed light on the drafting history. The United Kingdom government made a preliminary presidency text of this nature available to the House of Lords European Union Committee: see Lord Brabazon of Taras letter to the minister at Appendix 3 to the committees 6th Report of Session 2001 02. Lord Brabazons letter records that the preliminary presidency text included an article 24 (left blank in the version of 10 December 2001) enabling a member state to suspend the application of the Framework Decision in relation to states not complying with article 6.1 TEU, that the minister had also stated that it was implicit that national authorities would apply the European Convention on Human Rights, and that the committee inferred but wished to have expressly stated that an executing authority could refuse execution in the case of a request which came from a judicial authority not possessing the degree of independence needed to satisfy article 5 ECHR. That latter thought, that a judicial authority should have that independence, is reflected in Ms Roses current submissions. For present purposes, the content and thinking of any non papers remain (in the absence of any request to see them under Regulation (EC) No 1049/2001 of 30 May 2001) unknown. Even if they were now known, it seems unlikely that the Court of Justice would attach any weight to them. Equally, the Court would I think be hesitant about speculating in their absence as to the reasons for the differences between the Commissions original proposal, on the one hand, and the 10 December 2001 text and the final Framework Decision, on the other. Lord Phillips suggests two possible reasons for the absence from the Council redraft of any definition of judicial authority: one, to restrict the meaning to a judicial authority in the strict court sense; the other, to broaden it beyond judge or prosecutor. He favours the latter (paras 60 and 65). But it is also possible that there was no consensus, and that the removal of any definition left the matter open, in effect for whatever the Court of Justice might decide. In any event, I doubt whether the Court of Justice would speculate in this area either. Rather, it would focus on the final Framework Decision and seek to make sense of its text in the light of its purpose, the principles underlying it and general principles of European law. Under article 6.3 of the Treaty on European Union in its current form, these include [f]undamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States. In this connection, it is notable that the Framework Decision draws no explicit distinction between the qualities which must be possessed by an issuing and an executing judicial authority. Nor in fact did either the Commission proposal or the Council redraft draw any such distinction the former contemplated that a judge or a prosecutor could fulfil either role, the latter is silent as to the qualities required. Yet it seems clear that executing authorities have adjudicative responsibilities which can only be fulfilled by a judicial authority in the strict court sense in other words, complying with the requirements laid down by the Strasbourg court in the cases cited in para 223 above. Adjudicative responsibilities of this nature can arise for example under each of articles 11, 12, 13 (where the words before the executing judicial authority underline the point), 14, 15, 16, 17, 18 and 19 of the Framework Decision. One very possible reason for the removal from the Council redraft of any definition is that it was appreciated that the Commission definition was, at least in this respect, inappropriately wide. That does not necessarily mean that the meaning of judicial authority in the Council redraft was itself narrowed it may simply have been left to member states, pursuant to article 1.3, to comply with their Convention obligations by nominating appropriately independent and impartial courts as executing authorities. But it does mean that it is unsafe to approach the present appeal on the basis that the absence of a definition of judicial authority was intended to broaden or relax, rather than tighten, the meaning of a judicial authority (compare Lord Phillips, para 60). What is striking is in my view the emphasis placed in article 1 of the Framework Decision on a European arrest warrant being a judicial decision. Returning to the Commission proposal and Council redraft, it was the Council redraft that insisted on a judicial decision by the issuing judicial authority to issue such a warrant. The Commission proposal had spoken simply of a request issued by a judicial authority for assistance in respect of a person subject to a domestic sentence or other enforceable judicial decisions in criminal proceedings which involve deprivation of liberty and relate to an offence, which is punishable by deprivation of liberty or a detention order for a maximum period of at least twelve months. Under the Commission proposal a European arrest warrant could be requested without more, once there was a domestic sentence or judicial decision of this nature. Under the Council redraft and the Framework Decision, there are two separate stages, and the focus is on the first, the judicial decision involved in the issue of the European arrest warrant. The prior stage, at which there must exist an enforceable judgment, an arrest warrant or any other enforceable judicial decision on which the European arrest warrant is based is no more than additional information to be mentioned in the European arrest warrant: see article 8 of and Annex (b) to the Framework Decision and Louca v Public Prosecutor, Bielefeld, Germany [2009] UKSC 4; [2009] 1 WLR 2550. Lord Phillips describes the second stage as involving an essentially administrative step in the process and the first stage as the significant safeguard against the improper or inappropriate issue of an EAW (paras 62, 74 and 79). To my mind, this considerably downplays the significance which must have been attached to the introduction of the requirement of a judicial decision by an issuing judicial authority to issue a European arrest warrant. Further, in so far as it is implicit in his description and Miss Montgomerys case that there must have been a judicial decision by a court at the first stage, there is no basis for this assumption in the Framework Decision, or in practice. As Lord Phillips acknowledges in para 32, under prior practice followed in relation to the European Convention on Extradition 1957, states were able to issue requests for extradition based on domestic arrest warrants that might not have resulted from any judicial (in the sense of court) process. Nothing in the Framework Decision expressly requires any prior arrest warrant to be the result of a court process, nor do the to consider judicial authority ought evaluation reports attach importance to this being so, or establish that it is so, in practice in relation to a number of member states. The argument that the words in article 8.1(c) an enforceable judgment, an arrest warrant or any other enforceable judicial decision having the same effect imply that any such domestic arrest warrant will have been issued by a court would, if correct, support Ms Roses submission that judicial in articles 1 and 6 also means by a court. The parties are also at issue with regard to the nature of the judicial decision to be taken by a judicial authority issuing a European arrest warrant. On any view, the phrase must have been introduced with a protective purpose: see para 224 above. The issuing judicial authority must have been seen as a body or person applying an open and objective mind to the question whether circumstances existed justifying the issue of such a warrant. It is also clear, and the word may in article 2(1) of the Framework Decision confirms, that no duty is imposed on any state to issue a European arrest warrant. The Framework Decision confers a power. In these circumstances, Ms Rose submits that, before issuing such a warrant, an issuing the appropriateness (or proportionality) of doing so. Miss Montgomery submits that there is no such requirement. The evaluation reports on the implementation of the Framework Decision show that, while a number of states undertake such an exercise, the issue of a European arrest warrant is currently obligatory under the domestic law of several other states. The Council has urged states to change their domestic law to ensure that a proportionality check is undertaken in all before the issue of any European arrest warrant: para 3 of its European Handbook on how to issue a European Arrest Warrant (set out in 8216/2/08 Rev 2 COPEN 70 EJN 26 EUROJUST 31). However, the Council takes the same view of the current legal situation as Miss Montgomery, stating in its Handbook, para 3, that It is clear that the Framework Decision does not include any obligation for an issuing Member State to conduct a proportionality check. It will be the legislation and judicial practice of the Member States that will ultimately decide this question. Notwithstanding the respect due to the Councils legal service which may have endorsed this passage, it does not follow that the Court of Justice would necessarily take the same view. It seems to me quite possible that the Court would hold that it was inherent in the creation of the discretionary power conferred by article 2, to be exercised under articles 1 and 6 by judicial decision taken by an issuing judicial authority, that some consideration should be paid to the appropriateness in all the circumstances of the issue of a European arrest warrant. Whether this would be so or not, the protective emphasis in the Framework Decision on a judicial decision by a judicial authority lends some impetus to Ms Roses case that a body independent of the parties should undertake this role. If and when it had to address the present issues, the Court of Justice would have to address at the outset Miss Montgomerys submission that article 6 leaves it to each member state to determine which body, bodies or person(s) constitute judicial authorities within its legal system for the purpose of issuing a European arrest warrant, with the effect that any decision by such a body or person constitutes a judicial decision within article 1. This submission deprives the words judicial authority of any autonomous or objective meaning. It makes states their master. Alice would have been right to question whether you can make words mean so many different things (Through the Looking Glass). The alternative and to my mind more natural way of reading article 6 is that it requires each member state to identify which judicial authority is competent, but does not authorise a member state to assign judicial status to take judicial decisions to bodies which or persons who obviously do not possess it. In my view, the Court of Justice would be likely to conclude that the concepts of a judicial decision by a judicial authority cannot be stripped of all objective or autonomous content in the manner that Miss Montgomerys submission suggests. However this conclusion leaves open the question whether a judicial decision by a judicial authority must under the Framework Decision be taken by a body possessing all the characteristics of independence of the executive and the parties for which Ms Rose submits. It is at this point that I have greater difficulty in accepting the case she advances on European law. I do not accept much of the reasoning involved in the five points made by Lord Phillips in his paras 60 to 67, and I am in substantial agreement with all Lord Dysons comments in paras 155 to 159 on the first four of those points. I do however see force in the general point Lord Phillips makes in paras 16 to 20 of his judgment. The words judicial authority, and all the more so their homologues autorit judiciaire and Justizbehrde, have a degree of flexibility about them that a reference to a court or judge would not have had. To this, one may add the knowledge that in some civil law countries (France, Greece, for example), public prosecutors (le parquet) are described as an arm of the judiciary. F H Bridges French English Legal Dictionary published by the Council of Europe in 1994 defines autorit judiciaire as court; judicial authorities; judiciary; (occasionally) legal authorities and fonction judiciaire as judicial office; legal office; legal functions. (The term includes the office of prosecutor as well as that of judge in certain contexts). In Sweden the public prosecutor is not regarded as part of the judiciary. Nevertheless, it is recognised throughout Europe that public prosecutors have a special status in the administration of justice, which requires them to be independent and autonomous in their decision making and carry out their functions fairly, objectively and impartially: para 6 of the Bordeaux Declaration Judges and Prosecutors in a Democratic Society, issued jointly by the Consultative Council of European Judges and Consultative Council of European Prosecutors as part of their Opinions numbered respectively 12 (2009) and 4 (2009). It is right, however, to add that para 7 of the same Declaration goes on to add, after reference to the case law to which mention has already been made in para 223 above, that: Any attribution of judicial functions to prosecutors should be restricted to cases involving in particular minor sanctions, should not be exercised in conjunction with the power to prosecute in the same case and should not prejudice the defendants right to a decision on such cases by an independent and impartial authority exercising judicial functions. That passage favours Ms Roses case, because, even on a broad view of judicial, it means that a public prosecutor should not be taking judicial decisions in a case which she or he is prosecuting. In support of his view that the phrase judicial authority must have been used without definition in order to open the concept still wider than the Commission proposed in September 2001, Lord Phillips refers to subsequent state practice, already touched on in para 225 above. In fact, the practice of nominating a Ministry of Justice or the police has been criticised, though it appears without avail, both by the Commission, eg in its first report on the Framework Decision (COM (2006)8 final of 24 January 2006, and in various Council evaluation reports on the operation of the Framework Decision, as summarised in the Councils overall Final report on the fourth round of mutual evaluations The practical application of the European Arrest Warrant and corresponding surrender procedures between Member States (8302/4/09 REV 4CRIMORG55 COPEN 68 EJN24 EUROJUST20): The findings of the evaluation demonstrate, however, that in some Member States non judicial central authorities continue to play a role in cardinal aspects of the surrender procedure far beyond the administrative tasks assigned in the Framework Decision. As a matter of principle, this situation seems difficult to reconcile with the letter and the spirit of the Framework Decision, irrespective of how understandable it may be in view of the specificities of the national system or associated practical advantages. Recommendation 1: The Council calls on those Member States that have not done so to consider restricting the mandate of non judicial authorities, or to put equivalent measures in place so as to ensure compliance with the Framework Decision with regard to the powers of judicial authorities. For subsequent practice in the application of the parties to be relevant to be taken into account in the interpretation of the Framework Decision, it must under article 31.3 be practice which establishes the agreement of the parties regarding its interpretation. It must be practice which clearly establishes the understanding of all the parties regarding its interpretation, although subsequent practice by individual parties also has some probative value: Brownlie, Principles of Public International Law, 7th ed (2008) pp 633 634. Evidently suspect practice consisting of the use and nomination of executive authorities by a few states cannot come near establishing the agreement of the parties regarding [the] interpretation of the Framework Decision within the meaning of article 31.3 of the Vienna Convention on the Law of Treaties. On this I disagree with Lord Phillips in paras 60 and 67. However, a greater number of the member states of the European Union have nominated public prosecutors as issuing judicial authorities (eleven, it appears in relation to accusation warrants and ten in relation to post conviction warrants) without this receiving the same disapproval, and this is at least a factor to be taken into account in attempting to understand the parameters at a European level of the concept of judicial authority. A countervailing factor is, however, that ten states have nominated public prosecutors as an executing judicial authority, in the case of three of them as the only executing judicial authority, in circumstances where it is clear that only a court could properly fulfil a large number of the duties of such an authority: see para 234 above. Another factor mentioned in argument is the existence of other third pillar measures, containing various different references to judicial authorities such as those cited by Lord Phillips in para 19. I find these of little assistance, except to show that words can mean whatever they are defined to mean. Further, there is no reason to regard the 1990 European Convention on money laundering as background to the Framework Decision, and the European Arrest Warrant 2008/978/JHA cannot support an argument of state practice under the Framework Decision. My examination of the Framework Decision leads to a conclusion that it is far from easy to predict what the attitude of the Court of Justice might be on the question whether a public prosecutor can qualify as an issuing judicial authority for the purposes of reaching a judicial decision to issue a European arrest warrant in a case in which he or she is conducting the criminal prosecution. There are strong arguments each way. However, if a prediction has to be made as to what would be likely now to be held by the Court of Justice to be the legal position under the Framework Decision, I would come down on balance on the same side as Lord Phillips, though for somewhat different reasons. I would be prepared to accept, in the light of the special role and responsibilities to the fair administration of justice of a public prosecutor and in the light of the subsequent use, without apparent criticism, by a not inconsiderable number of states, of public prosecutors as an issuing judicial authority (and despite the highly questionable designation of public prosecutors as an executing authority), that a public prosecutor may, even in relation to a case which he or she is prosecuting, constitute a judicial authority taking a judicial decision to issue a European arrest warrant. I would not however accept that either the police or a Ministry of Justice could or would properly be regarded as constituting such an authority under the Framework Decision. The Extradition Act 2003 and its interpretation under domestic law I turn in this light to consider whether it follows from this conclusion that the Extradition Act 2003 recognises and gives effect to the concept of a judicial decision by a judicial authority in the same sense as that in which I am prepared to accept that the Court of Justice probably would. For the reasons given in paras 204 to 206 and 217 above, and especially because both the Framework Decision and the Act use the phrase judicial authority, there is a strong presumption that it does, but this does not follow automatically. A question arises here as to the proper starting point. The natural meaning of the English phrase judicial authority favours Ms Roses case. But Lord Phillips (para 10) takes the view, as I read him, that once one has determined what the Court of Justice is likely now to regard as the proper European legal meaning, that dictates the proper meaning of the domestic Act. Lord Phillips postulates that Parliament can only have intended a different meaning if it set out deliberately to breach this countrys European obligations, and that it would in that event also have made it plain that it was doing this, and Lord Kerr at para 115 and Lord Dyson at para 161 make similar comments. I do not regard this reasoning as sustainable. It pre supposes that the correct European legal answer has always been clear in the sense now considered correct or probable by the Supreme Court, so that Parliament can only have differed from it deliberately. On no view is that the case. Even looking at the matter now, after a long hearing, in my view the European legal answer remains obscure in part as a result of a deliberate choice by the Council to exclude any definition of a judicial authority. Further, to the extent that there is any clarity about the current European legal position, it arises in part from subsequent state practice, whereas the primary focus in construing the 2003 Act must be on the parliamentary intention in 2003. As I see it, the natural assumption is either that Parliament meant the phrase judicial authority in its ordinary English meaning, or, in the light of the uncertainty at all times about the position under European law, there is at lowest ambiguity about what Parliament meant. The Framework Decision is an important potential source of guidance, but it is obscure. The Supreme Court is concerned with the construction of a British statute, and our role is to elicit the true parliamentary intention in passing it. Parliament in 2003 may well have thought that the concept of a judicial authority (taking a judicial decision) in the Framework Decision meant the same as its natural English meaning. If so, we should give effect to Parliaments intention. The parliamentary history and material as an aid to interpretation In these circumstances, it is appropriate to consider whether any guidance is properly to be obtained from parliamentary material. Under the rule in Pepper v Hart [1993] AC 593 reference is permissible to parliamentary material as an aid to statutory construction where (a) legislation is ambiguous or obscure or leads to absurdity, (b) the material relied upon consists of one or more statements by a minister or other promoter of the relevant Bill together if necessary with such other parliamentary material as necessary to understand such statements and their effect and (c) the statements relied upon are clear. It may also be necessary or relevant to consider whether any such statements were made against the interest of the executive. From the very outset the Commissions proposal for a European arrest warrant and the Councils redraft were the subject of close parliamentary scrutiny. In relation to the Commission proposal and presidency redraft, concern was expressed by the House of Lords European Union Committee in its 6th report dated 12 November 2001. On 10 December 2001 the responsible minister was also being pressed by European Standing Committee B of the House of Commons and gave assurances as the following exchange shows (Hansard (HC Debates), cols 25 52): Mrs Dunwoody: What does judicial authority mean to Her Majesty's Government? Mr Ainsworth: I tried to give my hon Friend that assurance last week. The only people who will be allowed to issue or execute an arrest warrant will be a judicial authority as recognised normally within either the issuing or the executing state. Mrs Dunwoody: With respect, I ask again, what is the definition of judicial authority? An answer in any language that I can vaguely understand will do, and I speak five. Mr Ainsworth: The definition of a judicial authority is exactly that. In this country, it is the Bow Street magistrates court. In other countries, there are various different authorities such as magistrates and judges who normally issue extradition warrants. Those are the people who will execute a European arrest warrant. In the course of what Mr David Cameron described as a knock about finish, Mr Ainsworth ended the debate by saying: [Mrs Dunwoody] asked me for a definition of a judicial authority. Having listened to the comments of Opposition Members, I imagine that they must be advising their friends and relatives not to travel abroad. I would not want to go to any of the countries that the hon Member for Surrey Heath describes, where he says that we are likely to be locked up on trumped up charges by corrupt and politically motivated judiciaries. Where are those countries? Does the hon Gentleman go back to his constituency and advise his constituents not to travel abroad? I feel guilty now, because during the short time in which I have had the privilege of holding my current position I have been responsible for signing extradition warrants to send people back to these dreadful places. I have sent people back to the examining magistrate in Liege, to the magistrate at the public prosecutor's office in Amsterdam, to the court of Brescia, to the county tribunal of Bobigny, to Judge Weber of Saarbrucken, and to magistrate Judge Maria Teresa Palacios Criado of central trial court No 3 in Madrid. That is in southern Europe; what on earth have I done? God knows what happened to the person concerned, or whether they are even still alive. It is clear that the only people who the minister had in mind as making requests under the existing system were courts, judges or magistrates, of one sort or another. Subsequently, an English language version of the Council redraft became available, containing in article 1 a reference to a court decision. This led to the following further exchange with the minister, Mr Ainsworth, on 9 January 2002, recorded by the House of Commons European Scrutiny Committee in its 17th Report (Session 2001 2002): 5. The minister was asked on 9 January if it followed from article 1 that the courts of this country would not be obliged to recognise and enforce a warrant if it came from a body which they did not recognise as a court. In reply, the minister said that: The judicial authority will be designated by the issuing State, but it will have to be that, a judicial authority and a court, so it will not be for the British authorities to say what is and what is not a court in another European State, but it will not be possible for authorities that clearly are not courts, that are not judicial authorities to issue requests for European arrest warrants as they will not be recognised. 6. When asked if this matter would be made clear in the Extradition Bill, the minister replied that it would need to be spelt out in the Bill, but that he was not certain that any further clarification was needed, since article 1 stated that the European arrest warrant was to be a court decision. The Minister later confirmed that judicial authorities in the United Kingdom: will not only have the ability but will certainly not execute a European arrest warrant that comes from anything other than a judicial authority in another European State. The Committee continued: 7. We think it regrettable that the term judicial authority is not defined, given its central importance to the scheme of mutual recognition and enforcement established by the Framework Decision. However, we welcome the ministers acceptance of the principle that a warrant which is not a court decision within the meaning of article 1 will not be recognised in this country. It is also worth quoting more fully the words following the ministers assurance that the position would have to be spelt out in the Bill. He went on: I think that it is now clear within the Framework Decision where you will see in later articles that it says that the requirement is between the judicial authority in the issuing State to the judicial authority in the executing State and quite rightly article 1 says that the European arrest warrant shall be a court decision. I am not certain there is any further clarification and I am happy to try and understand concerns that there may be remaining, but it appears to me that it is very clear that this cannot be a police authority, but it must be a court, a judicial authority, At a later point, the minister said: Yes, there are different legal systems that apply in different parts of the European Union, but there are clear judicial authorities who apply for extradition and who will be the authorities that have the power to apply for a European arrest warrant. Those judicial authorities will be reported under the Framework Agreement, they are the judicial authorities that will have that power and it is clearly stated in the Framework Decision that it will be a court decision. The minister may not have been accurately informed about the nature of the foreign authorities at whose behest states had up to 2002 been acting when requesting extradition. All these statements show the importance attached on all sides to any European arrest warrant being issued by a court. The Framework Decision was agreed on 13 June 2002. As set out more fully in paras 219 to 220 above, articles 2 and 6 used the terminology of judicial decision (dcision judiciaire or justizielle Entscheidung) and judicial authority (autorit judiciaire or Justizbehrde). In contrast, the Extradition Bill introduced on 14 November 2002 was phrased simply to apply if the designated authority (in the event SOCA) receives a Part 1 warrant in respect of a person (clause 2(1)) stating, in summary, that the person was either accused of and wanted for trial on an offence or was unlawfully at large after conviction. Clause 2(5) to (7) were in similar form to those which ultimately became section 2(7) to (9) (see para 196 above). Not surprisingly, these provisions attracted immediate parliamentary criticism. In its 1st report (Session 2002 2003) dated 5 December 2002 the House of Commons Home Affairs Committee recited the parliamentary history to that date as follows: 59. At the time at which the European Scrutiny Committee first considered the draft framework decision, the draft provided for the European Arrest Warrant to be issued and executed by a judicial authority. The Committee was concerned that, without an agreed definition of judicial authority, it was not possible to ensure that orders made by police forces, with no recognisably judicial involvement in the making or approval of such orders, would be excluded from recognition and enforcement under the framework decision. Article 1 of the draft framework decision was subsequently amended to refer to the European Arrest Warrant as being a court decision issued by a member state. The Committee inferred from this reference that the judicial authority would have to exercise recognisably judicial functions in an independent manner. 60. The European Scrutiny Committee asked the Parliamentary Under Secretary if it followed from article 1 that the UK courts would not be obliged to recognise and enforce a warrant if it came from a body which they did not recognise as a court. He responded that it will not be possible for authorities that clearly are not courts, that are not judicial authorities to issue requests for European Arrest Warrants as they will not be recognised, although he pointed out that it will be for each member state to designate a judicial authority competent to issue such warrants. He later confirmed that, under the Extradition Bill, the UK judicial authority will not only have the ability but will certainly not execute a European Arrest Warrant that comes from anything other than a judicial authority in another European state. The Parliamentary Under Secretary also stated that the whole thing will need to be spelt out within the Bill. He gave similar assurances to European Standing Committee B. The Committee concluded: 63. We agree with the European Scrutiny Committee that the European Arrest Warrant should be able to be issued only by a judicial authority exercising recognisably judicial functions in an independent manner. We consider that this requirement should apply to all Part 1 warrants. We therefore recommend that clause 2(5) be amended to provide that the UK judicial authority may not issue a clause 2 certificate unless it believes that the Part 1 warrant was issued by such a judicial authority. The Bill was considered in Standing Committee in the House of Commons on 9 January 2003, when the shadow minister took up the same points, referring back once again to the assurances given in January 2002. Amendments were proposed and (at that stage) lost. One was to add judicial into the requirement that an arrest warrant be issued by an authority of a category 1 territory (Hansard (HC Debates), cols 42 45). As will appear, an amendment to this effect was ultimately accepted on 22 October 2003. Another was that only European arrest warrants issued abroad by the equivalent of a High Court judge should be recognised in the United Kingdom. The minister, Mr Ainsworth, said in debate in response, at col 47, that: There is no attempt to renege on any commitments that were given in previous Committees. The framework document could not be clearer. We sought safeguards during the negotiation of the document to ensure that we protected rights in the way the hon Gentleman suggests we should. Mr. Maples interposed: A British court dealing with an application for the extradition of someone under Part 1 would read the Bill, not the framework document. If the Government took the trouble to get judicial inserted into the framework document, why cannot they simply put it in the Bill? Subsection (5) is ambiguous. It says that the authority has the function of issuing arrest warrants in the category 1 territory. A police officer may well be one of the people or organisations that have a function of issuing arrest warrants in another territory. If the arrest warrant is acted on under this legislation, it should be issued by a judicial authority. The question of the presumption of innocence is different, but the insertion of judicial in these two places could solve the problem. I am not sure why the minister resists it. Mr Ainsworth replied, at col 48: Let us discuss how we deal with extradition warrants currently and how we expect them to be dealt with under the European arrest warrant framework. If hon. Members are still not satisfied at the end of the debate they can make their views known. We expect that European arrest warrants will be issued in future by exactly the same authorities as issue warrants under the current arrest procedures. We intend to do that in the United Kingdom. There is no reason to suppose that our intentions are different from those of any other European country. The Bill is drafted in such a way as to inc1ude all those authorities that currently issue arrest warrants, as issuing authorities. I have yet to hear an argument that says that we should change that. The Committee is well aware that we have enjoyed extradition arrangements with all EU member states for many years. Extradition requests come from a variety of sources. Any Member who read the proceedings of European Standing Committee B would be aware of the wide variety of sources for current extradition requests the examining magistrate in Liege, the magistrate at the public prosecutors office in Amsterdam, the Court of Brescia, the county tribunal of Bobigny or even the magistrate judge Maria Teresa Palacios Criado in Madrid. That gives an idea of the span of arrangements used by our European partners and the sort of people who make arrest warrants today. We do not believe that that will or can change: the framework document insists on no widening outwith the judicial authorities in the Part 1 countries. We receive extradition requests from a variety of sources throughout the UK and, we should recognise that other EU countries do not have exactly the same structure of criminal justice system as our own. As the hon Member for Orkney and Shetland rightly pointed out, our system is structured in two different ways .The current system works well and has not given rise to any problems in the recent past stemming from an inappropriate request from a European partner for extradition. I see no reason to change the system. The Government responded formally on 12 February 2003 to the House of Commons Home Affairs Committees Report of 5 December 2002 (para 252 above), the response being published in by a further first special report on 3 March 2003. In response to para 63 of the Report of 5 December 2002 the Government recognised that there is very real concern about this point and said that it therefore intended to bring forward further amendments to make clear that any incoming European arrest warrant must have been issued by a judicial authority, but to disapply this requirement to requests for arrest already in the pipeline under the Schengen information system prior to 1 January 2004 (the date when the European arrest warrant was due to come into force), since it was appreciated that Schengen requests could be entered into the system at the request of police officers. The Bill had its third reading in the Commons on 25 March 2003, when the minister introduced amendments Nos 35 and 36 to insert into clauses 2(7) and (8) (the differently worded precursors of the eventual section 2(7) and (8)) a requirement that the designated authority should only certify if it believes that the authority which issued the Part 1 warrant (a) is a judicial authority of the category 1 territory and (b) has the function of issuing arrest warrants in the category 1 territory. The minister explained that these amendments: . respond to a point raised by representatives of both parties in Committee. members of the Select Committee on Home Affairs should also welcome them because they raised the same concern. The amendments will make a European arrest warrant acceptable only if it is issued by a judicial authority in a requesting state. If the warrant came from any other source, the UK designated authority would be unable to certify it and no further action could be taken on it. The stipulation that the warrant must be issued by a judicial authority is already in the framework document, so the amendments will make little difference in practice. Nevertheless, we thought it right to respond to the wishes of those who raised the issue and to make the guarantee explicit in the Bill. (Hansard (HC Debates), cols 166 167). On 1 May 2003 the Bill had its second reading in the House of Lords, where the minister, Lord Filkin, explained the constitutional position, in the passage I have set out in para 218 above. The Bill was referred to a Grand Committee, where three main areas of concern was raised on 9 June 2003, by the speakers on both sides of the House, particularly Baroness Anelay and Lord Wedderburn. First, they proposed an amendment to insert judicial in the first line of clause 2, to make clear, as Lord Wedderburn put it: that, right from the outset there should be absolutely no doubt that a judicial authority I believe a ministerial statement once indicated that that means a court must be the source of the Warrant (Hansard (HL Debates)(GC) col 11). The ministers response, at col 13, was to agree to consider this: Lord Filkin: As ever, I shall reflect on what my noble friend says. If, on reflection, there are better ways of dealing with the issue, we shall not be churlish or obdurate for the sake of it in resisting such amendment. But clause 2 is quite clear as it stands. A warrant is valid only if it is certified by the UK certifying authority. The UK authority can certify the warrant only if it comes from a judicial authority, as set out in subsections (7) and (8) of clause 2. Lord Stoddart of Swindon: Then why not say so!? Lord Filkin: That stipulation could hardly be closer to the beginning of the Bill. Nevertheless, I shall not be churlish, 1 shall consider and reflect. I do not believe that there is any issue of principle here. We are absolutely clear about that, and I have been happy to respond positively to the request of the Official Opposition in this respect. Second, Lord Wedderburn, at col 28, proposed an amendment to omit from clause 2(7) (in its form set out in para 255 above) the words it believes that. Lord Bassam, now speaking for the government, acknowledged, at col 32, that the Bill was for many . a controversial piece of legislation and agreed to consider this amendment also. Finally, Lord Wedderburn moved an amendment to insert into clause 2(7)(b) after the words the phrase the function of issuing arrest warrants the phrase after a judicial decision. He said, at cols 33 34: As we understand it, a judicial authority must, if it is a court, act judicially. If it were found that a particular court had acceded to requests without a judicial examination of the case, I suggest that the court's action would not fall within the spirit of what we intend. Therefore, we should make it clearas it is in article 1 of the framework decision that it is not just a matter of a judicial authority, but of a judicial authority exercising a procedure which amounts to a judicial decision. A case in point might be that a body which was a judicial authority acted as a matter of courseas a matter of formalityon the request of a public prosecutor. If that could be shownat least beyond reasonable doubtI apprehend that such procedure would fall outwith the spirit of what the Government intend. The Government do not, as I understand it, intend that a public prosecutor should just be able to demand of someone who is on the list of designated judicial authorities that an arrest warrant be issued. If that is so, perhaps we should make that understanding clear in the Bill . The ministers response was that he could not see what that would add, that, as he had already explained, all warrants will have to be issued by a judicial authority, and that I think that it is reasonable to argue that any decision taken on a matter of law or procedure by a person holding judicial office such as a judge or magistrate is a judicial decision (col 36). He then expressed concern that the amendment was aimed at requiring that the decision to issue a warrant should be taken in court with some kind of official procedure or hearing. After Baroness Anelay and Lord Stoddart had intervened to assure him of the seriousness with which she and other magistrates took the issue of any warrant, the minister said, at col 37: That is exactly what we expect to happen outwith our own jurisdiction. However, we see no need to impose requirements on foreign judicial authorities that we do not impose on our own judicial authorities. We expect that the process will be similar to that in the United Kingdom and that it will be of similar veracity [sic]. After further concern had been expressed that it might be an administrative, rather than a judicial process, the minister responded: It is absolutely correct, that, regardless of the location . , we expect the judicial process to be very similar to ours and as robust as ours. It should be considered in exactly the same way. The debate on this amendment concluded with Lord Wedderburn saying, at cols 38 39, that it must be a judicial authority and urging the government to think again. On 22 October 2003 Lord Bassam moved an amendment to introduce into the first line of clause 2(2) a requirement that a Part 1 warrant is an arrest warrant which is issued by a judicial authority . (Hansard (HL Debates), col 1657). He thereby accepted Baroness Anelays first proposed amendment and the second and third amendments of 9 June 2003 became otiose. The minister explained that the governments change of stance arose from strongly put points raised in Grand Committee (ie on 9 June 2003) by Lord Stoddart and Lord Wedderburn and by the principal spokespersons from the Liberal Democrats and Conservatives. It seems clear from the number and identity of the speakers he named that he was referring compendiously to the debate on all three associated amendments on 9 June 2003. Clauses 2(7) and (8) were thereafter consequentially amended to delete the previously introduced requirements of belief and a certificate on the part of the designated authority that the issuing authority was a judicial authority. That point was now covered more directly by the amendment to the first line of clause 2(2). Meanwhile on 10 September 2003 the minister had introduced a new clause, which became section 212 of the Act. The reason for it, he explained, was that while requests on the SIS (Schengen information system) require there to be a previous judicially issued domestic warrant, they may, on rare occasions, be placed on the SIS at the instigation of police officers (Hansard (HL Debates) (GC), col 34. His purpose in introducing section 212 was thus, he said, to forestall any argument that any such requests might not be regarded as coming from a judicial source. In consequence, in the Act as finally passed, section 2(2) was qualified by section 212 as regards Schengen alerts issued before 1 January 2004, so that the reference in section 2(2) to an arrest warrant issued by a judicial authority was to be read in that context as if it were a reference to the alert issued at the request of the authority. Section 212 was a temporary measure. It was clearly understood that the police officer would only be acting at the request of a true judicial source and that, under Part 1 of the Bill, any European arrest warrant would in future have itself to come from such a source. Conclusions What if any admissible guidance does one gain from this parliamentary history? I have already concluded that the concept of judicial authority in the Framework Decision should be seen as having autonomous limits in European law. It would follow, on any view, that the concept in section 2(2) must also have objective limits, rather than depend for example upon the grant of a certificate by SOCA. But even if the Framework Decision were not to be understood in this sense, I regard the clear language of section 2(2) of the Act, read with the limited requirement of certification in section 2(7) and (8), as pointing towards an objective domestic conception of judicial authority in section 2(2). At the very least, the position under the Act would be ambiguous. If that is so, then consideration of the parliamentary history makes it inconceivable that the 2003 Act can or should be construed domestically as leaving it to each state to define what is a judicial authority. The only sensible interpretation of section 2(2) in its final form and in the light of the parliamentary history is that it constitutes a self standing independent requirement, which British courts have to be satisfied is met. It would be circular and undermine the parliamentary process and clear intention if all that it meant was that British courts had to be satisfied that the issuing authority had the function of issuing a European arrest warrant under its domestic law and that the relevant state had notified the issuing authority to the Council as having that function. That might have been the effect of clauses 2(2) and (7) to (9) before they were amended as a result of the proceedings on 9 June and 22 October 2003. It cannot have been their effect after such amendment, or the amendment would achieve nothing. The second question is whether there is any sufficiently clear ministerial statement, read in context, to determine whether or not a public prosecutor can under the 2003 Act constitute a judicial authority. This question is relevant on the assumption that a public prosecutor can under European law constitute a judicial authority for the purposes of the Framework Decision. If a public prosecutor cannot be a judicial authority under European law, then she or he certainly cannot be under the 2003 Act. The direct answer to the second question is, in the light of the material which I have set out extensively, that ministers repeatedly gave assurances or endorsed assumptions that an issuing judicial authority would have to be a court, judge or magistrate. They did so moreover in contexts where a judicial authority was being contrasted by other speakers with the police and prosecutors: see the course of events set out and the passages quoted in paras 248 to 259 above, especially those relating to the parliamentary proceedings on 10 December 2001, 9 January 2002, 9 January, 9 June, 10 September and 22 October 2003. It is true that ministers also gave these assurances with the understanding that the implementation of the Framework Decision by the 2003 Act would not in this respect lead to any change by comparison with previous practice. But, even though it be the case that bodies and persons other than courts, judges or magistrates were involved in decisions by states to request extradition under the arrangements in place prior to the Framework Decision, this cannot, in my view, undermine the force of the assurances given in relation to the new and more radical procedures being introduced by the Extradition Act 2003, to the effect that the new Act would require the intervention of an issuing judicial authority in the sense of a court, judge or magistrate. Third, I do not consider that the answer given to the second question can be diluted by reference to subsequent state practice. I accept the potential relevance of subsequent state practice to the interpretation of the Framework Decision (paras 242 and 244 above and see Lord Phillipss judgment, para 67, Lord Dysons judgment, paras 127 to 140 and 152 and Lord Walkers judgment). But this cannot affect the guidance as to Parliaments actual intention in 2003 which is to be gained from the course of the parliamentary debates and amendments in 2003. To treat Parliament as having intended that the words issuing judicial authority should bear whatever meaning subsequent state practice might attach to them, would undervalue the significance of the parliamentary process and the seriousness of the concerns expressed, the assurances delivered and the amendments made during that process. Fourth, I consider that the force and quality of the assurances given must outweigh any conclusion as to what may or would be likely to be the European legal position, if that could or were to be established now with any certainty. The Bill was seen, rightly, as affecting liberty and freedom to reside or remain within the jurisdiction of persons who might very well be citizens of the United Kingdom, although Mr Assange is not. It was controversial, and ministers assurances as to the scope of the phrase judicial authority should control its meaning in circumstances where the power of the state is now sought to be deployed to extradite a person at the instance of a public prosecutor. The assurances were in that respect and should bind the executive interest, including that of the respondent which is seeking the assistance of the British state to extradite Mr Assange. Lord Brown takes a contrary view, because, in effect, there cannot be found in the parliamentary exchanges any ministerial statement that the assurances were only given so long as they complied with whatever was (or might prove to be) the European legal position. But that puts the cart before the horse. First, such clarity as now exists about the likely European position only really results from subsequent state practice. But secondly and more importantly, Lord Browns approach reads into clear parliamentary assurances about the meaning of the Act an unstated qualification that such assurances should not bind if the minister should prove mistaken (Lord Browns word) about the true scope of the Framework Decision. Both Parliament and the courts can and should, in my opinion, take ministers at their word as to the meaning of the Act they were promoting, and not question unqualified assurances which they have given. Finally, if this means that there can now be seen to be a possible or likely discrepancy between the United Kingdoms international obligations and the domestic legal system or between the meaning of the phrase judicial authority in the framework decision and in the Extradition Act 2003, that is in no way impossible: see per Lord Hoffmann in R v Lyons, cited in para 206 above. It is the consequence of the United Kingdoms dualist system, of parliamentary sovereignty and of the clear limitations on the domestic implementation of European law which Parliament intended, for the time being, by the European Communities Act 1972 and the European Union (Amendment) Act 2008, read with Protocol No 36 of the Treaty of Lisbon. As a domestic court, and in the absence of any European Treaty or instrument falling within section 2 of the European Communities Act 1972, our loyalty must be to Parliaments intention in enacting the Extradition Act 2003. The implications of this in the present context are in my view clear. the effect of the Extradition Act 2003 was to restrict the recognition by British courts of incoming European arrest warrants to those issued by a judicial authority in the strict sense of a court, judge or magistrate. It would follow from my conclusions that the arrest warrant issued by the Swedish Prosecution Authority is incapable of recognition in the United Kingdom under section 2(2) of the 2003 Act. Parliament could change the law in this respect and provide for wider recognition if it wished, but that would of course be for it to debate and decide. I would therefore allow this appeal, and set aside the order for Mr Assanges extradition to Sweden. Annex to judgment of Lord Mance (para 199) Relevant text of Protocol No 36 to the Treaty of Lisbon TRANSITIONAL PROVISIONS CONCERNING ACTS ADOPTED ON THE BASIS OF TITLES V AND VI OF THE TREATY ON EUROPEAN UNION PRIOR TO THE ENTRY INTO FORCE OF THE TREATY OF LISBON Article 9 The legal effects of the acts of the institutions, bodies, offices and agencies of the Union adopted on the basis of the Treaty on European Union prior to the entry into force of the Treaty of Lisbon shall be preserved until those acts are repealed, annulled or amended in implementation of the Treaties. The same shall apply to agreements concluded between Member States on the basis of the Treaty on European Union. Article 10 1. As a transitional measure, and with respect to acts of the Union in the field of police cooperation and judicial cooperation in criminal matters which have been adopted before the entry into force of the Treaty of Lisbon, the powers of the institutions shall be the following at the date of entry into force of that Treaty: the powers of the Commission under Article 258 of the Treaty on the Functioning of the European Union shall not be applicable and the powers of the Court of Justice of the European Union under Title VI of the Treaty on European Union, in the version in force before the entry into force of the Treaty of Lisbon, shall remain the same, including where they have been accepted under Article 35(2) of the said Treaty on European Union. 2. The amendment of an act referred to in paragraph 1 shall entail the applicability of the powers of the institutions referred to in that paragraph as set out in the Treaties with respect to the amended act for those Member States to which that amended act shall apply. 3. In any case, the transitional measure mentioned in paragraph 1 shall cease to have effect five years after the date of entry into force of the Treaty of Lisbon. 4. At the latest six months before the expiry of the transitional period referred to in paragraph 3, the United Kingdom may notify to the Council that it does not accept, with respect to the acts referred to in paragraph 1, the powers of the institutions referred to in paragraph 1 as set out in the Treaties. In case the United Kingdom has made that notification, all acts referred to in paragraph 1 shall cease to apply to it as from the date of expiry of the transitional period referred to in paragraph 3. This subparagraph shall not apply with respect to the amended acts which are applicable to the United Kingdom as referred to in paragraph 2. The Council, acting by a qualified majority on a proposal from the Commission, shall determine the necessary consequential and transitional arrangements. The United Kingdom shall not participate in the adoption of this decision. A qualified majority of the Council shall be defined in accordance with Article 238(3)(a) of the Treaty on the Functioning of the European Union. The Council, acting by a qualified majority on a proposal from the Commission, may also adopt a decision determining that the United Kingdom shall bear the direct financial consequences, if any, necessarily and unavoidably incurred as a result of the cessation of its participation in those acts. 5. The United Kingdom may, at any time afterwards, notify the Council of its wish to participate in acts which have ceased to apply to it pursuant to paragraph 4, first subparagraph. In that case, the relevant provisions of the Protocol on the Schengen acquis integrated into the framework of the European Union or of the Protocol on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice, as the case may be, shall apply. The powers of the institutions with regard to those acts shall be those set out in the Treaties. When acting under the relevant Protocols, the Union institutions and the United Kingdom shall seek to re establish the widest possible measure of participation of the United Kingdom in the acquis of the Union in the area of freedom, security and justice without seriously affecting the practical operability of the various parts thereof, while respecting their coherence. NOTE The appellants application to reopen this judgment was refused for the following reasons: Mr Assange applies to set aside the judgment that has been given against 1. him and to re open the appeal. The grounds of the application are that the majority of the Court decided the appeal on a ground that Miss Rose QC, Mr Assanges counsel, had not been given a fair opportunity to address. That ground was that article 31(3)(b) of the Vienna Convention on the Law of Treaties (the Convention) and the principle of public international law expressed in that article rendered admissible State practice as an aid to the interpretation of the Framework Decision. At the outset of her address to the Court Miss Rose gave five headings 2. for the submissions that she proposed to make. The third of these was the relevance of subsequent events, other EU Instruments and the practice of EU States. A considerable volume of documentary material that had been placed before the Court related to these matters. In the course of her submissions under her third heading, as she has 3. accepted, Lord Brown expressly put to her that the Convention applied to the interpretation of the Framework Decision. That Convention, as Miss Rose has recognised, sets out rules of customary international law. Had Miss Rose been minded to challenge the applicability of the Convention, or the applicability of State practice as an aid to the construction of the Framework Decision, or the relevance and admissibility of the material relating to State practice, she had the opportunity to do so. She made no such challenge. Her submissions were to the effect that caution should be exercised when considering the effect of State practice. 4. merit and it is dismissed. For these reasons the Court considers that this application is without In the result, I conclude that, whatever may be the meaning of the Framework Decision as a matter of European law, the intention of Parliament and |
This is another appeal which concerns the doctrine against restraint of trade. If a covenant falls within what I will simply call the doctrine, it is unenforceable against the covenantor unless it is reasonable. Last year, in Egon Zehnder Ltd v Tillman [2019] UKSC 32, [2020] AC 154, the court was required to address aspects of the doctrine. In para 29 it considered what it called the outer reaches of the doctrine, by reference in particular to the decision of the House of Lords in Esso Petroleum Co Ltd v Harpers Garage (Stourport) Ltd [1968] AC 269. But, as it explained in para 30, there was no need for any closer study of those outer reaches in the light of the facts of that case. The present appeal permits no such escape. A developer of a shopping centre leases part of it to a well known retailer. He covenants with the retailer that he will not allow any substantial shop to be built on the rest of the centre in competition with the retailer. In due course he assigns his interest in the centre to a company. The company considers that the centre is ailing and that the covenant is stunting its ability to revive it. In these proceedings brought against the retailer, the company seeks a declaration that the covenant by which it is currently bound engages the doctrine; that it is unreasonable; and that it is therefore unenforceable. To date the courts have addressed only the first question raised by the companys claim: does the covenant engage the doctrine? Yes, ruled the Court of Appeal in Northern Ireland (Stephens LJ, who delivered the judgment of the court, Sir Ronald Weatherup and Sir Richard McLaughlin) on 9 February 2018, [2018] NICA 7, when proceeding to remit the case to the High Court to consider whether the covenant was reasonable. So it is the retailer which now appeals to this court against that ruling. Mr Shortall is a property developer. In 1979, in his own name, he bought land in Springtown, Londonderry, which, for planning purposes, had been zoned for retail use. At that time Londonderry was, in his own words, an economic and political wasteland. The site comprised about five and a half acres, defined, for land registry purposes, as Folio 25992 County Londonderry. In 1980 he obtained planning permission to develop the site so as to yield 32,000 square feet of gross retail space. Mr Shortall sought an anchor tenant, a substantial and prestigious retail company which would lease a significant part of the site and whose presence would persuade other retailers to lease other parts of it, thus making the proposed centre as attractive as possible to shoppers. To this end, he approached Dunnes Stores (Dunnes), which comprised a group of companies based in Dublin and which operated a number of substantial retail outlets of high repute throughout Ireland. Early in 1980 Mr Ben Dunne met Mr Shortall at the site and expressed reservations about the economic viability of establishing a retail unit there. But at a further meeting in about May 1980 they orally agreed outline terms. These were that Mr Shortall would grant Dunnes a long lease of part of the site in consideration of its payment to him of a premium of 50,000 and a nominal ground rent. But Mr Dunne required Mr Shortall to promise not to cause or permit the establishment on any other part of the site of a unit measuring more than about 3,000 square feet for the sale of food or textiles. Mr Shortall agreed. In his evidence he said: I had little or no choice but to grab the offer made by Mr Dunne with both hands, as it was the only deal in town. In November 1980 Mr Shortall and Dunnes signed Heads of Agreement. Dunnes decided that its Belfast company, Dunnes Stores (Bangor) Ltd, which is the appellant in this appeal, should sign the Heads and take the proposed lease. The main terms recorded in the Heads were that Dunnes should take a lease of the part of the site there delineated; that it should bear the cost of building its retail unit there; that Mr Shortall should construct at least six units on the rest of the site; and that Dunnes should contribute one third of the cost of constructing the roads, footpaths and car park on the site. Nothing turns on the omission from the Heads of Mr Shortalls promise not to establish on the rest of the site any substantial unit in competition with Dunnes. On 2 February 1981 the proposed lease was duly executed. Attached to it was a map of the land in Folio 25992, on which the area subject to the lease was edged in red. The area was said to comprise just in excess of an acre so the rest of the site will have comprised about four and a half acres. The lease was for 999 years in consideration of a premium of 50,000 (which Dunnes paid) and of an annual ground rent of 100. It was Mr Shortall, by his solicitors, who had proposed a term of that length. Upon the area subject to the lease Dunnes covenanted to erect a retail unit measuring at least 15,000 square feet at ground floor level within two years of the grant of detailed planning permission. As provided in the Heads of Agreement, it also covenanted to contribute one third of the cost of the construction of the common areas, in particular of the car park. In the lease, as also foreshadowed in the Heads of Agreement, Mr Shortall covenanted to construct at least six shop units in an enclosed mall in a specified location adjoining the area subject to the lease. He also entered into the restrictive covenant which is the subject of these proceedings. The covenant, as I will call it, is in the following terms: That any development on the Lessors lands comprised in the Lessors folio and on his other lands adjoining the premises shall not contain a unit in size measuring three thousand square feet or more for the purpose of trading in textiles Provisions or groceries in one or more units. The reference to Mr Shortalls other lands adjoining the premises is a reference to a small, rectangular piece of land which adjoins the western end of the area leased to Dunnes but which for some reason was not comprised in Folio 25992. In what follows it can be ignored. Mr Shortall also covenanted that, were he to assign any interest in any part of the land in Folio 25992, he would ensure that the assignee would, for the benefit of Dunnes, covenant to observe all his covenants in the lease. Dunnes duly constructed its store. Acting through one of his companies, Mr Shortall duly constructed the shop units in the mall; and he found tenants for them. He also constructed the car park, to the cost of which Dunnes duly contributed. In October 1982 the shopping centre opened. At first it was a great success. Peninsula Securities Ltd (Peninsula), the respondent to this appeal, is another of Mr Shortalls companies. Of the 100 issued shares in it, he holds 99 and his wife holds the other. He is also its managing director. It is a property holding company. By transfer registered on 27 April 1983, Mr Shortall assigned to Peninsula his freehold interest in all the land in Folio 25992, thus including not only his reversionary interest in the land leased to Dunnes but also his interest in all the other land in the folio which was subject to the covenant. The success of the shopping centre at Springtown has declined. The reasons for its decline are disputed and, at any rate at this stage, are irrelevant. Peninsula blames the covenant for causing the decline and for stunting its ability to reverse it. Dunnes disagrees. Proceedings In 2010 Peninsula made a reference to the Lands Tribunal pursuant to the Property (Northern Ireland) Order 1978 (SI 1978/459) (the 1978 Order). It asked the tribunal to declare under article 4 of the order that the covenant represented an impediment to enjoyment of its land and, in that (so Peninsula said) the impediment was unreasonable, to order under article 5 that it should be modified or extinguished. The suggested modification was to substitute for the reference in the covenant to 3,000 square feet a reference to 55,000 square feet. But Peninsula also included in its reference to the tribunal a claim for a declaration that the covenant was unenforceable at common law as being in unreasonable restraint of trade. In due course Peninsula accepted that the tribunal lacked jurisdiction to determine its common law claim. So instead it made the claim in proceedings which it brought in the Queens Bench Division of the High Court of Justice in Northern Ireland. By successive amendments to its statement of claim, it added two further claims to the court proceedings. The first was a claim that the covenant was void under section 2 of the Competition Act 1998. On receipt of Dunnes expert evidence in answer, Peninsula withdrew that claim and substituted its claim, already made to the Lands Tribunal, under the 1978 Order, which accordingly had to be recast so as to fall within article 6 of it. But Peninsula there made clear that it relied on its claim under the 1978 Order only in the event of the failure of its common law claim. By its amended Defence, Dunnes disputed both claims and counterclaimed that, in the event of any modification or extinguishment of the covenant under the 1978 Order, it should be awarded compensation. The proceedings in the Lands Tribunal have therefore come to an end. It was therefore agreed that Peninsulas claim at common law should be determined in advance of its claim under the 1978 Order. In relation to the common law claim, it seems that it was McBride J herself, at first instance ([2017] NIQB 59), who raised the question whether, in particular in relation to an assignee such as Peninsula, the covenant engaged the doctrine at all. Such was the only question which she proceeded to address and which therefore the Court of Appeal addressed. No court has yet addressed the question whether, if the covenant engages the doctrine, the restraint is unreasonable and is therefore unenforceable by Dunnes against Peninsula. It follows that, were it to be determined on this appeal either that the covenant did not engage the doctrine even at the time when Mr Shortall entered into it or that, although it initially engaged the doctrine, it ceased to engage it when Peninsula became subject to it, the High Court would proceed to hear the claim and counterclaim under the 1978 Order. In her judgment dated 25 May 2017, [2017] NIQB 59, McBride J sought faithfully to apply the decision in the Esso case, cited (as there will be no need to repeat) in para 1 above. She correctly took the view that, in the opinion of a majority in the appellate committee, a covenant restrictive of the use of land engaged the doctrine only if the covenantor had, by entry into it, surrendered a pre existing freedom to use the land as he wished. She reasoned that, from the date in 1979 of his purchase of the land in the folio until the date in 1981 of the lease to Dunnes, Mr Shortall had, subject only to planning permission, been free to build retail units of any size on the land and therefore that he had, by entry into the covenant, surrendered a pre existing freedom. She therefore concluded that, while the land had been held by Mr Shortall, the covenant had engaged the doctrine. She noted however that Peninsula had become bound by the covenant at the same time as it had begun to hold the land and she therefore concluded that it had not, by subjecting itself to the covenant, surrendered a pre existing freedom. She therefore held that from then onwards the covenant had no longer engaged the doctrine. On Peninsulas appeal, the Court of Appeal, at para 56, agreed with McBride J that Mr Shortall had surrendered a pre existing freedom and therefore, in accordance with the decision in the Esso case, that, while the land had been held by him, the covenant had engaged the doctrine. But at para 45 it disagreed with her conclusion that, upon the assignment of the land to Peninsula, the covenant had ceased to engage the doctrine. It conceded at para 43 that a literal application of the decision in the Esso case would yield her conclusion. But it questioned why in logic the doctrine should at the point of assignment no longer be engaged. It asked at para 44 whether, and if so why, it would no longer be engaged if, instead of assigning the covenant, the original covenantor died or became bankrupt. The court had reminded itself at para 37 that the doctrine was based on public policy; and, observing at para 45 that public policy was a surer foundation for inquiry into the continuing engagement of the doctrine following the assignment of the covenant to Peninsula, it held that there was no reason of public policy why it should not have continued to be engaged. In this court our duty is to look more closely at the decision in the Esso case in the light of the questions of logic and public policy on which the Court of Appeal touched. That court applied its questions only to the later part of the history: why, in terms of logic and public policy, should Peninsula not have continued to enjoy the benefit of the doctrine just because it had surrendered no pre existing freedom? But we are required also to ask: why, in terms of logic and public policy, should Mr Shortall have enjoyed the benefit of the doctrine in the first place just because he had surrendered a pre existing freedom? So we confront an awkward question: is the surrender of a pre existing freedom an acceptable criterion for engagement of the doctrine? At the hearing before us, no doubt fortified by early judicial encouragement, Mr Humphreys QC on behalf of Dunnes presented a preliminary argument. It was founded on the fact that Mr Shortall was and is a property developer and that Peninsula was and is a property holding company. Neither of them was or is a trader. How then, ran the argument, could any restraint on them amount to a restraint of trade? On analysis, however, the argument appears to be too narrow. In para 64 below Lord Carnwath argues persuasively that, notwithstanding its conventional description, the doctrine extends to restraints not only of trade but also, more generally, of business, thus including that of a developer. In any event, however, the covenant does restrain trade because it restrains Peninsula (and still also Mr Shortall under the law of contract) from causing or permitting a trade in specified goods in a retail unit of a specified size on the site. In, for example, The British Motor Trade Association v Gray 1951 SC 586 the Inner House of the Court of Session addressed a covenant which the petitioning association required its trade members to extract from all purchasers of new cars. Following the Second World War there was a shortage of new and nearly new cars; and speculators were operating a black market in them. In an attempt by the trade association to combat it, the requisite covenant obliged ordinary members of the public who purchased a new car not to sell it for the first two years. But ordinary members of the public were not traders in cars. So one question was whether their covenant was in restraint of trade. Lord Russell at p 602 expressed the opinion, with which Lord Keith at p 604 was inclined to agree, that the covenant did restrain the trade of dealers in second hand cars; but, forming the majority, they proceeded to hold that it was in any event reasonable. Petrofina The prelude to the Esso case was the decision of the Court of Appeal in Petrofina (Gt Britain) Ltd v Martin [1966] Ch 146. The owners of a petrol filling station in Chesterfield had entered into a covenant to buy from Petrofina all the petrol to be sold at the station (a solus agreement) and to require any purchaser of the site to covenant likewise. They agreed to sell the site to Mr Martin, who proposed to form a company to own it and to operate the filling station. He entered into an identical covenant with Petrofina and began to operate the station. Within less than two months, however, he had begun to sell petrol which instead he had bought from Esso. Once his company was incorporated, he agreed to sell the site to it. Petrofinas claim for an injunction against Mr Martin and his company failed on the ground that the covenant was in restraint of trade and that Petrofina had failed to establish that it was reasonable. It is not easy to identify within the three judgments a common basis for the courts conclusion that Mr Martins covenant engaged the doctrine. But the law reporter was probably correct to suggest in the headnote that its basis was that the covenant restricted the ability to trade on land in which Petrofina had no interest by way of mortgage, lease or sale. That such was the basis of the decision seems to follow in particular from passages in the judgment of Harman LJ at p 177 (where he also explained that a reference to the covenantees interest in the case of a sale related only to a situation in which the vendor retained other land which could benefit from the restraint) and at p 178; and in the judgment of Diplock LJ at pp 179 and 187. We should note therefore that, in the case of a restriction on the use of land, the focus of the decision was on the covenantee, namely whether Petrofina retained an interest in the use of the land; and also that the doctrine was held to apply to the covenant even though neither Mr Martin nor his company had enjoyed any pre existing freedom to trade at the site. In the Esso case Mr Harper (or possibly Mr and Mrs Harper) owned the site of a filling station in Stourport. At first Mr Harper himself operated the trade in petrol there; and in due course he entered into a solus agreement with Esso. Later he allowed the respondent company, which he and his wife owned, to operate it; and so the company entered into the solus agreement. In 1962 the company entered into a revised agreement with Esso for the supply, at a price to be fixed by Esso, of all petrol to be sold there for 21 years. One term of it, similar to a term of the agreement in the Petrofina case, was that the company should keep the filling station open at all reasonable hours throughout the period of the agreement; the effect of it was that, even if it was trading at a loss, the company had to continue to trade there unless it found a purchaser willing to assume its obligations under the agreement. Mr Harper wanted to sell the site to the company. Esso lent to the company funds which enabled it to make the purchase; and the company granted to Esso a mortgage over the site, in which the terms of the solus agreement were repeated. In 1963 the company bought both the site and the business of a second filling station, which was near Kidderminster. The vendor had entered into a solus agreement with Esso on similar terms. At the time of the companys purchase the agreement was to subsist for about five further years; and the company agreed to be bound by it for that remaining period. The company soon repudiated the solus agreements in respect of both filling stations and Esso sought an injunction to require it to abide by them. The trial judge held that the doctrine was not engaged by covenants which restrained the use of land and he granted the injunction. The Court of Appeal, constituted by the three judges who had decided the Petrofina case, allowed the companys appeal. It reasoned that, apart from the incorporation of the terms of the solus agreement in the mortgage on the Stourport property, which, so it held, should not affect its conclusion, such a result was mandated by its earlier decision. Upon Essos appeal the appellate committee of the House of Lords agreed with the Court of Appeal that the companys covenants engaged the doctrine. But it held that, whereas the restraint for 21 years on the Stourport property had not been shown to be reasonable and was therefore unenforceable, the restraint for about five years on the Kidderminster property had been shown to be reasonable and that, to that extent, the trial judges injunction should therefore be restored. Counsel for Esso submitted to the appellate committee that the trial judge had been correct to rule that restraints on the use of land did not engage the doctrine. It was a powerful argument because counsel were able to point to the long history whereby, in the interests of other land which they retained, vendors of land had required their purchasers to covenant not to use it for a specified purpose, including not to trade there whether in specified respects or indeed at all; and whereby lessors had required lessees to enter into analogous covenants. It was common ground that such covenants did not engage the doctrine. But their argument went further. For they were able to cite a common situation somewhat akin to the solus agreements in issue: it was that of the tied public house, in which a brewery company leased, or occasionally sold, premises to the publican on terms which disabled him from selling any beer there other than beer which it had sold to him itself. It was, again, common ground that the tie of a public house did not engage the doctrine. It is clear that, because of what it perceived to be the oppressive nature of the restraints in many solus agreements relating to the sale of petrol, including in the agreement relating to the Stourport property, the appellate committee was minded to hold that they engaged the doctrine and therefore that, unless they were reasonable, they were unenforceable. But how was the committee to rationalise their engagement of the doctrine in circumstances in which restrictive covenants on the part of purchasers and lessees of land, and in particular the ties to which publicans bound themselves when leasing or buying pubs, did not engage it? In the Petrofina case the Court of Appeal had focussed upon the position of the covenantee: it was when he retained an interest in the land that the doctrine was not engaged. the position of the covenantor. Lord Reid said at p 298: In the Esso case, by contrast, the majority of the committee focussed upon It is true that it would be an innovation to hold that ordinary negative covenants preventing the use of a particular site for trading of all kinds or of a particular kind are within the scope of the doctrine of restraint of trade. I do not think they are. Restraint of trade appears to me to imply that a man contracts to give up some freedom which otherwise he would have had. A person buying or leasing land had no previous right to be there at all, let alone to trade there, and when he takes possession of that land subject to a negative restrictive covenant he gives up no right or freedom which he previously had. I think that the tied house cases might be explained in this way, apart from Biggs v Hoddinott [1898] 2 Ch 307, where the owner of a freehouse had agreed to a tie in favour of a brewer who had lent him money In the present case the respondents before they made this agreement were entitled to use this land in any lawful way they chose, and by making the agreement they agreed to restrict their right by giving up their right to sell there petrol not supplied by the appellants. So the criterion favoured by Lord Reid for distinguishing between restraints on land which engage the doctrine and those which do not do so has come to be called the pre existing freedom test. It is clear that this is the test which enjoyed majority support within the committee and so constitutes the basis of its decision. Lord Morris of Borth y Gest said at p 309: There is a clear difference between the case where someone fetters his future by parting with a freedom which he possesses and the case where someone seeks to claim a greater freedom than that which he possesses or has arranged to acquire. As examples of the latter case Lord Morris referred to incoming lessees and to purchasers of part of a vendors land. Lord Hodson said at pp 316 317: All dealings with land are not in the same category; the purchaser of land who promises not to deal with the land he buys in a particular way is not derogating from any right he has, but is acquiring a new right by virtue of his purchase. The same consideration may apply to a lessee who accepts restraints upon his use of land; on the other hand, if you subject yourself to restrictions as to the use to be made of your own land so that you can no longer do what you were doing before, you are restraining trade and there is no reason why the doctrine should not apply. In the Esso case what criterion did Lord Pearce favour? In Cleveland Petroleum Co Ltd v Dartstone Ltd [1969] 1 WLR 116, decided less than two years after the decision of the appellate committee, the Court of Appeal of England and Wales, at pp 118 119, regarded Lord Pearce as having subscribed to the pre existing freedom test, which that court then proceeded loyally to apply. It may be, however, that his subscription to it was less than comprehensive. It is true that he said at p 325: It seems clear that covenants restraining the use of the land imposed as a condition of any sale or lease to the covenantor (or his successors) should not be unenforceable. But it seems that Lord Pearce was less confident that the converse applied when the covenantor surrendered a pre existing freedom to use the land. For he added, also at p 325: It may be, however, that when a man fetters with a restraint land which he already owns or occupies, the fetter comes within the scrutiny of the court. In the case of a surrender by covenant of a pre existing freedom, Lord Pearce appears to have favoured a further test. For he said at p 328: The doctrine does not apply to ordinary commercial contracts for the regulation and promotion of trade during the existence of the contract, provided that any prevention of work outside the contract, viewed as a whole, is directed towards the absorption of the parties services and not their sterilisation. So the criterion probably favoured by Lord Pearce has come to be called the sterilisation of capacity test. In the Esso case Lord Wilberforce gave the fifth and final speech. It is clear that he did not subscribe to the pre existing freedom test. He said at p 331 that the common law had often thrived on ambiguity; that, even if it were possible, it would be mistaken to try to crystallise the rules of the doctrine into neat propositions; and that the doctrine had to be applied to factual situations with a broad and flexible rule of reason. He observed at pp 332 333 that provisions of contracts which reflected the accepted and normal currency of commercial relations had come to fall outside the scope of the doctrine because, moulded under the pressures of negotiation, competition and public opinion, they had assumed a form which satisfied the test of public policy as understood at that time. Then, adverting to restrictive covenants imposed on the sale or lease of land, and in particular to the ties imposed on publicans, he said at p 335: I think one can only truly explain them by saying that they have become part of the accepted machinery of a type of transaction which is generally found acceptable and necessary, so that instead of being regarded as restrictive they are accepted as part of the structure of a trading society. So the criterion favoured by Lord Wilberforce has come to be called the trading society test. Since the covenant in issue in this court today was made by a lessor, it is worthwhile to note that, in his analysis of covenants in relation to land which had generally been found acceptable and necessary, Lord Wilberforce referred at pp 334 335 to covenants by lessors, and by vendors in relation to land retained by them, as well as by lessees and purchasers in relation to the land leased or conveyed to them. Indeed, as an example of a lessors covenant, he cited Hinde v Gray (1840) 1 Man & G 195. There the defendant leased a brewery in Sheffield to the claimants. The defendant, who also owned and operated a public house in Sheffield called The Punch Bowl, covenanted that he would not sell beer in that pub other than as supplied to him by the claimants; and, when later he granted a lease of the pub, he caused the lessee to covenant likewise. One of the claims made in an action brought by the claimants in the Court of Common Pleas was of a breach of that covenant. That claim was rejected because the claimants had failed to establish that the beer sold in The Punch Bowl had not been supplied by them at least indirectly even if not directly. There was no suggestion that the covenant engaged the doctrine and so was required to be reasonable. There is nothing in the jurisprudence, ancient or modern, to indicate that covenants by lessors, and by vendors in relation to retained land, engage the doctrine by reference to any criterion different from that which applies to covenants by lessees and purchasers. An intriguing question, irrelevant to the search for legal principle, is why, by reference to the criteria which they favoured, their lordships in the Esso case unanimously held that both of the solus agreements entered into by the company engaged the doctrine. In relation to the Kidderminster property, what was the basis on which the majority considered that the company had enjoyed a pre existing freedom to trade there? In relation to the Stourport property, what was the basis on which they considered that the company had enjoyed a pre existing freedom to trade there or, if such was their thinking, that it sufficed that Mr Harper had enjoyed that freedom? Indeed, when Lord Reid observed at p 304 that, while he did not subscribe to all of the Court of Appeals reasoning, its decision in the Petrofina case had been correct, what was the basis on which he considered that either Mr Martin or his company had enjoyed a pre existing freedom to trade at the Chesterfield property? How did Lord Pearce persuade himself that the effect of the solus agreements in favour of Esso had been not to absorb the companys services but, rather, to sterilise them? And, in the light of the evidence, noted by Lord Hodson at p 315, that, out of 36,000 filling stations in the UK, 35,000 had become subject to solus agreements with oil companies, how did Lord Wilberforce feel able to conclude that, on balance (as he said at p 337), the agreements in issue had not become acceptable and necessary as part of the structure of a trading society? Our task in this court is, however, to analyse the validity in principle of the pre existing freedom test favoured by the majority of our distinguished predecessors. They had alighted upon a distinction which served their purpose: for its effect was, for example, that a tie accepted by a publican upon entry into a lease remained excluded from the doctrine but that a solus agreement with which the operator of a filling station burdened his premises was brought within it. But was the distinction consonant with the doctrine? Or did it mask an attempt to square a circle? The trouble is that the majority did not explain why a covenant restrictive of the use of land is more likely to offend public policy when the covenantor enjoyed a pre existing freedom in relation to its use than when he enjoyed no such freedom. It is an explanation for which we must therefore search. Is there a ground for concluding, for example, that a covenantors pre existing freedom places him in a weaker bargaining position than otherwise or in some other way renders his covenant more deserving of legal intervention? Reaction to Esso Less than two years after the decision of the appellate committee in the Esso case, Mr J D Heydon, then a lecturer at Oxford University, wrote a coruscating criticism of it in an article entitled The Frontiers of The Restraint of Trade Doctrine (1969) 85 LQR 229. Later the author, who ultimately became a justice of the High Court of Australia, wrote a book entitled The Restraint of Trade Doctrine, now in its 4th ed published in 2018, in which he has consistently repeated much of what he said in the article. At p 281 of the article he suggested that the pre existing freedom test reflected a distinction based purely on form and not on substance at all. He developed his suggestion as follows: If all the landowners in Yorkshire agree not to trade on their Yorkshire land, the restraint of trade doctrine would apply because the landowners are fettering a pre existing freedom, and the agreement would certainly be held unenforceable. But if X buys all the land in Yorkshire, covenanting with each seller not to trade on the land, the Esso test prevents the doctrine applying, so that the covenants are all enforceable. In each case the public and the parties restricted are equally damaged. Why should the common law be prevented from controlling this in the second case? Again, if X, who owns two shops, sells one to A and A and X mutually covenant that neither shop shall be used as a butcher shop, the restraint of trade doctrine will apply to Xs obligations but not to As; Xs may be held unenforceable but not As. The majority test thus leads to gross anomalies. Mr Heydon thereupon undertook an analysis of the criterion favoured by Lord Pearce, which he described at p 245 as mystical. He then turned to that favoured by Lord Wilberforce, which he described at p 246 as reflecting a relatively inert acceptance by the courts of the status quo. In that connection he observed that public opinion may be incapable of seeing the evils of the restrictions and that commercial men may all be interested in keeping the system going. Mr Heydon concluded at pp 250 251 with the controversial suggestion that it would be preferable for the doctrine to have universal application to all restraints of trade in order to address a wide range of evils. Until today neither the appellate committee nor, more recently, this court has had an opportunity to reconsider the committees decision in the Esso case. Indeed, apart from in the Cleveland Petroleum case, cited in para 25 above, it has received little attention even in the intermediate appeal courts of the UK. As so often, however, contributions of real value to us in this court are to be found in the judgments of other senior courts in the common law world. New Zealand and Ireland The early decision of the Court of Appeal of New Zealand in Robinson v Golden Chips (Wholesale) Ltd [1971] NZLR 257 and the decision of the Supreme Court of Ireland in Sibra Building Co Ltd v Ladgrove Stores Ltd [1998] 2 IR 589 suggest that the pre existing freedom test has been adopted in the law of both jurisdictions. Canada There are two Canadian decisions of great relevance. They even replicate the circumstances of the case before us, namely a covenant by the owner of a shopping centre in favour of a lessee of part of it. In Russo v Field [1973] SCR 466 the third defendant company was the owner of a shopping centre in Toronto. It leased part of it to the claimants. In consideration of their covenant to conduct business as a hairdresser and beauty salon at those premises, the company covenanted not to permit any other store in the centre to conduct that business. The company then leased adjoining premises to the second defendant, Mrs Field, who had notice of the covenants and who commenced a business (which she ultimately discontinued) of selling wigs. In a judgment of the court delivered by Spence J, the Supreme Court of Canada held that the trial judge had been entitled to find that the sale of wigs had become an integral part of the business of a hairdresser and beauty salon; that he had rightly awarded damages to the claimants against both the company and Mrs Field; and, in that she had discontinued the business only later, he had also rightly enjoined her from continuing it. Spence J addressed the doctrine against restraint of trade at pp 486 487 as follows: It has been said that covenants such as those under consideration in this action are covenants in the restraint of trade and therefore must be construed restrictively. I am quite ready to recognize that as a general proposition of law and yet I am of the opinion that it must be considered in the light of each circumstance in each individual case. The mercantile device of a small shopping centre in a residential suburban area can only be successful and is planned on the basis that the various shops therein must not be competitive if the limited number of prospective purchasers are faced in the same small shopping centre with several prospective suppliers of the same kind of goods or service then there may not be enough business to support several suppliers. They will suffer and the operator of the shopping plaza will suffer. I am therefore of the opinion that the disposition as a matter of public policy to restrictively construe covenants which may be said to be in restraint of trade has but little importance in the consideration of the covenants in the particular case. Although the passage is equivocal, I incline to the view that the Supreme Court was there holding that for practical purposes the companys covenant did not engage the doctrine rather than holding that, although it did engage it, the covenant was reasonable. In F W Woolworth Co Ltd v Hudsons Bay Co, Zellers Inc and Burnac Leaseholds Ltd (1985) 61 NBR (2d) 403 the developer of a shopping mall in New Brunswick had, in the course of granting a lease of premises in it to Woolworths, covenanted that no other premises in the mall would be used as a junior department store, which meant a low price value store such as Woolworths itself. Zellers, a junior department store in competition with Woolworths, took an assignment of premises in the mall. The New Brunswick Court of Appeal held that the developers covenant should be enforced by injunction against both it and Zellers. Hoyt JA, giving judgment on behalf of the court, quoted at para 31 from the speech of Lord Wilberforce in the Esso case and at para 35 the passage set out above in the judgment of Spence J in the Russo case. Hoyt JA continued as follows: 39. In the present case there was no inequality of bargaining power nor was there evidence of bad faith on the part of Woolworth All the evidence touching on the point indicated that such covenants are common, if not universal, in leases for space in such developments or, to use Lord Wilberforces words at p 337 in Esso, the provision is one which by the pressure of negotiation and competition, has passed into acceptance or into a balance of interest between the parties and their customers . 40. In my view, the restriction in the Woolworth lease does not, in these circumstances, fall within the category of contract known as one in restraint of trade. Had he applied the pre existing freedom test, to which he also referred, Hoyt JA would have been required to conclude, by contrast, that the developers covenant did engage the doctrine. Australia Five Australian authorities will help us; and we should address them in chronological order. The first is the decision of the High Court in Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288. By a majority the court held that a solus agreement entered into by the owner of a proposed filling station in favour of Amoco engaged the doctrine and was unreasonable and so unenforceable. When entering into the agreement, the owner had leased the property to Amoco and had taken back an underlease of it. The majority rejected Amocos contention that the owner had therefore enjoyed no pre existing freedom to trade. In concluding that the covenant engaged the doctrine the majority therefore applied Lord Reids test in the Esso case. Nevertheless there were murmurs of doubt about it. Walsh J at p 304 expressed reluctance to accept that it provided a valid criterion for excluding covenants from engagement with the doctrine; and Gibbs J at p 313 expressly left that question open. The second is the decision of the High Court in Quadramain Pty Ltd v Sevastapol Investments Pty Ltd [1975 1976] 133 CLR 390. X owned adjacent parcels of land in New South Wales. On the first parcel it operated a hotel. It sold the second parcel to Y for use as part of a shopping centre. Y covenanted on behalf of itself and its successors not to apply for a liquor licence there. X assigned the first parcel to Quadramain, which continued to operate the hotel. Sevastapol became the lessee of the second parcel and it applied for a liquor licence there. By a majority the court held that Ys covenant did not engage the doctrine and should be enforced against Sevastapol. Y had surrendered no pre existing freedom to use the second parcel; and the majority was willing to reach its conclusion by reference to Lord Reids test. But there were further murmurs of discontent about it, louder than in the Amoco case. Gibbs J, with whom Stephen and Mason JJ agreed, observed at p 401 that Lord Wilberforces test was more flexible than the pre existing freedom test and might in time come to be preferred; and, in a dissenting judgment with which Murphy J agreed, Jacobs J suggested at p 414 that the distinction which formed the basis of the pre existing freedom test presented difficulties unmatched in Lord Wilberforces test. The third is the decision of the Full Federal Court of the Australian Capital Territory in Australian Capital Territory v Munday [2000] FCA 653. Mr Munday traded in articles of waste. The public authority which operated a waste disposal tip changed the contractual terms of his admission to the tip so as to rescind his licence to solicit members of the public to give articles to him before they abandoned them there. The court rejected his claim that the rescission was in restraint of trade and unenforceable. Application of the pre existing freedom test might well have yielded a conclusion that the doctrine was engaged. But, in a careful judgment with which the other members of the court agreed, Heerey J, after addressing the Amoco and Quadramain cases and also the Woolworth case in Canada, concluded at para 105 that the trading society test should be adopted; and that it yielded a conclusion that the term which prohibited Mr Munday from soliciting for articles did not engage the doctrine. The fourth is the decision of the High Court in Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126. The respondents, which manufactured ice cream across Australia, sold their business in Western Australia to the appellant. They covenanted not to sell any ice cream in Western Australia which they had manufactured. The court upheld a ruling that the covenant was in restraint of trade and unenforceable. Although the covenant did not relate to the use of land, the decision is interesting. For the appellant argued that the covenant absorbed, rather than sterilised, the respondents capacity to service the market for ice cream and that, by application of Lord Pearces test in the Esso case, it therefore failed to engage the doctrine. In a joint judgment Gleeson CJ and Gummow, Kirby and Hayne JJ held at para 35 that Lord Pearces test involved the application of criteria of particular indeterminacy and at para 39 that it should not be accepted in Australian common law. In passing the judges had also, at para 22, noted criticisms of the pre existing freedom test, including in Treitel on The Law of Contract, 10th ed (1999), p 434. Indeed four months later, in Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181, three of those four judges, in the course of holding that a confidentiality agreement had been in restraint of trade, suggested at para 55 that the court in the Peters case had gone so far as to reject the pre existing freedom test. The fifth is the decision of the Supreme Court of Victoria, Court of Appeal, in Specialist Diagnostic Services Pty Ltd v Healthscope Ltd (2012) 41 VR 1. The case is of particular interest because its subject was a covenant by a lessor of part of its premises in relation, among other things, to the use of other parts of them. The appellant conducted a pathology business. It took a lease of premises within two hospitals owned by the predecessors of the first respondent and within a third hospital owned by the second respondent. In granting the leases the owners of the hospitals covenanted (a) not to be concerned in a business similar to that which the appellant was to conduct in the hospitals and (b) not to grant any right to occupy any other part of the hospitals to any third party for the conduct of such business. The respondents breached the covenants. In upholding the appeal the court found that the covenants were reasonable and should be enforced against the respondents. But, perhaps unnecessarily in the light of that finding, the court proceeded to consider whether the covenants engaged the doctrine. By reference to the Australian jurisprudence it resolved to assume that the issue fell to be decided by application of the trading society test. It held as follows: 64. It may be accepted that, ordinarily, the alienor of part of the land may be able to bind himself or herself with respect to the use of the balance of the land retained after a partial alienation. As [the appellant] submits, such provisions are common in leases of individual retail premises within shopping centres or other stand alone facilities. 65. We were not, however, referred to any persuasive authority which extends the postulated exception from the restraint of trade doctrine to all covenants in restraint of trade made by a landlord. 72. As his honour recorded, there was no evidence before him of accepted practice relating to restraint of trade provisions in tenancy agreements concerning pathology facilities within hospitals. Further, his Honour was correct to conclude that no simple analogy should be drawn between exclusivity provisions in shopping centre leases and the case with which he was concerned. Thereupon the court identified four reasons why the covenants engaged the doctrine, of which the first was that those at (a) extended beyond the land retained by the respondents. Discussion The passage of half a century since the appellate committee in the Esso case established the pre existing freedom test has not generated a reasoned defence of it. Mr Heydons early criticisms of it remain unrebutted. The commentary on it in the 10th ed (1999) of Treitel on The Law of Contract, quoted in the judgment of the majority in the Peters case cited at para 41 above, is replicated, almost word for word, in the 15th ed (2020) of the book at para 11 151, which reads as follows: it is submitted that the reasoning is hard to reconcile with the emphasis placed on the Esso case itself on the element of public interest; for restrictions on the use of land may cause harm to the public where they are imposed at the time when the land is acquired, no less than where they are imposed later. The analysis of the Australian jurisprudence in paras 38 to 42 above demonstrates that there the early murmurs of concern about the test have reached a crescendo at which Australia can be heard to have rejected it. In terms of public policy, which is the foundation of the doctrine, there is no explanation why a restraint should engage the doctrine if the covenantor enjoyed a pre existing freedom but why an identical restraint should not engage it if he did not do so. Surely our conclusion, respectful to our predecessors yet also firm, has to be that the test does not deserve its place in the doctrine. But is the trading society test any more defensible? At first sight it appears unattractive. It seems to concede that the law follows where many might expect it to lead. Is the law (one might ask) to be determined as if by a weathercock which answers only to the direction of the wind? But such criticisms fail to recognise the nature of the common law. It is a law built by the judges on behalf of the people over seven centuries. It has been generated from below, not imposed from above. Over time bits have been added here, discarded there; enlarged here, confined there; strengthened here, diluted there. Bits have been re interpreted; bits have withered away as a result of disuse; and bits have been abrogated by statute. In Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 Lord Goff of Chieveley said at p 377: the common law is a living system of law, reacting to new events and new ideas, and so capable of providing the citizens of this country with a system of practical justice relevant to the times in which they live. In these circumstances the common law is inevitably a patchwork; and in it we will search in vain for perfect congruity. This is a truth which Lord Wilberforces pragmatic test recognises. Although criticised, the phrase trading society aptly describes the test. For it reflects the importance attached on the one hand to freedom to trade and on the other to the enforceability of contracts in the interests of trade. It is the former which generates the doctrine and the latter which keeps it within bounds. Under the trading society test a covenant which restrains the use of land does not engage the doctrine if, in the words of Lord Wilberforce in the Esso case at p 333, it is of a type which has passed into the accepted and normal currency of commercial or contractual or conveyancing relations and which may therefore be taken to have assumed a form which satisfies the test of public policy. But the proper rooting of Lord Wilberforces test in public policy itself generates a need to qualify it. In giving the judgment of the Judicial Committee of the Privy Council in Vancouver Malt and Sake Brewing Co v Vancouver Breweries Ltd [1934] AC 181 Lord Macmillan observed at p 189: It is no doubt true that the scope of a doctrine which is founded on public policy necessarily alters as economic conditions alter. Public policy is not a constant. More especially is this so where the doctrine represents a compromise between two principles of public policy; in this instance, between, on the one hand, the principle that persons of full age who enter into a contract should be held to their bond and, on the other hand, the principle that every person should have unfettered liberty to exercise his powers and capacities for his own and the communitys benefit. Lord Wilberforce himself recognised, also at p 333, that a change in societys circumstances might precipitate a change in public policy which would require re examination of whether a type of covenant should continue not to engage the doctrine or (I would add) whether, by contrast, it should continue to engage it. I conclude that, unlike the pre existing freedom test, the trading society test is consonant with the doctrine. This conclusion places this court in an acutely uncomfortable position. In 1966 the appellate committee recognised a facility for it to depart from one of its previous decisions: Practice Statement (Judicial Precedent) [1966] 1 WLR 1234. This court has inherited the facility to do so. Nevertheless in the Practice Statement Lord Gardiner, the Lord Chancellor, stressed the importance of certainty in the law. A sudden change in the law is likely to destabilise it. Negotiations for contractual restraints on the use of land may well have been conducted with the pre existing freedom test in mind. Past litigants, actual or potential, whose contentions failed or would have failed by virtue of that test would rightly resent a departure from it which would have given them saliency. Future such litigants, whose contentions would fail by virtue of departure from it, would resent it in equal measure. Subsequent opinions of the appellate committee stressed the high degree of caution with which it should address a request for departure. In Horton v Sadler [2007] 1 AC 307 Lord Bingham of Cornhill said at para 29: Over the past 40 years the House has exercised its power to depart from its own precedent rarely and sparingly. It has never been thought enough to justify doing so that a later generation of Law Lords would have resolved an issue or formulated a principle differently from their predecessors. The form to be used as a Notice of Appeal to this court asks in particular: Are you asking the Supreme Court to depart from one of its own decisions or from one made by the House of Lords? The purpose of the question is to enable the court, if granting permission to appeal, to decide in particular whether the appeal should be heard by a panel of more than the conventional number of five justices. But, in its Notice, Dunnes ticked no. It was only when at a late stage it filed its written case, and in particular when Mr Humphreys presented its oral argument, that it became clear that Dunnes was inviting the five of us to depart from the pre existing freedom test which had formed the basis of the decision in the Esso case. It is therefore with appropriate hesitation that I propose that this court should depart from the test favoured by the majority in the Esso case. To adapt Lord Binghams words, the objection to it is not just that the issue in the Esso case should have been resolved differently or the principle formulated differently there. Apart from the fact that even at the time Lord Wilberforce chose not to associate himself with it, the objections to the test are that it has no principled place within the doctrine; that it has been consistently criticised for over 50 years and, although in some quarters loyally applied, the reasoning behind it has, to the best of my knowledge, scarcely been defended; and that the common law has been limping between the continuing authority of the test in our jurisdiction and its rejection in Australia and in parts of Canada. The application of the trading society test to the facts of the present case is straightforward; there is no need to remit the case for inquiry into it. At para 39 of her judgment McBride J addressed the evidence of Mr Crothers, the chartered surveyor who gave evidence on behalf of Dunnes. She said: He set out the difficult marketing conditions which prevailed in Northern Ireland in the 1970s and described the bringing of Dunnes to Derry as a great achievement as Dunnes was a highly sought after anchor tenant. In his view it was not uncommon to find negative covenants in leases in favour of anchor tenants. This was especially so in long leases as the landlord, having received a premium, had no financial interest thereafter in how the centre traded. It was therefore the tenant who had everything to lose if the landlord put in competition. In this case he stated it would have been unpalatable and commercially offensive for the landlord to put direct competition on Dunnes doorstep as Dunnes had come to an untested location and had invested significant sums in buying the site, building the store and contributing to the costs of the car park. It is not obvious that Peninsula even called evidence to the contrary. And, from the study in paras 35 and 36 above of the Russo case and of the Woolworth case in Canada, and in para 42 above of the Specialist Diagnostic Services case in Australia, we derive confirmation that across the common law world it has long been accepted and normal for the grant of a long lease in part of a shopping centre to include a restrictive covenant on the part of the lessor in relation to the use of other parts of the centre. There is no ground for considering that social changes require re examination of the conclusion that, by reference to the trading society test, the covenant has at no time engaged the doctrine. It will be recalled that an interesting question caused division between McBride J and the Court of Appeal. It was whether, if a covenant were to engage the doctrine because the covenantor (Mr Shortall) enjoyed a pre existing freedom, it would continue to engage it following an assignment of the burden of the covenant to an assignee (Peninsula) which enjoyed no such freedom. It follows that, were my colleagues to agree with this judgment, the question would no longer arise. common law claim should be dismissed. I propose that Dunnes appeal should be allowed and that Peninsulas Postscript: The 1978 Order The possible availability to Peninsula of an alternative remedy in relation to the covenant has played no part in the conclusion that it has at no time engaged the doctrine. But the conclusion is fortified by the possibility of relief pursuant to Peninsulas alternative claim under the 1978 Order, which should now proceed to be heard. Nothing in this judgment should be taken to influence the determination of any issue which will then arise. The 1978 Order is loosely based on section 84 of the Law of Property Act 1925 which, by section 209(3), extends only to England and Wales. Section 84 is entitled Power to discharge or modify restrictive covenants affecting land. In its report entitled Making Land Work: Easements, Covenants and Profits Prendre (2011) (Law Com No 327) the Law Commission of England and Wales explained the background to section 84 as follows: 7.3 In the 19th century, and well into the 20th, land was sold off from large estates so as to facilitate urban expansion, but frequently subject to extensive restrictive covenants. These covenants had an important social function in the era before public planning control and often served to preserve the amenity of an area, controlling building and land use and ensuring consistent development. However, social needs change over time Landowners and developers may wish to discharge, or at least modify, covenants on the basis that they are no longer serving a useful purpose but their presence on the title to the land is impeding a change of use or a development. It seems that the lack of jurisdiction in the court prior to 1925 to modify or extinguish such a covenant enabled a covenantee to hold a covenantor to ransom even when the covenant was for practical purposes obsolete. The 1978 Order confers a wider, more flexible, jurisdiction than that conferred by section 84 even as amended. If Peninsula were to establish that the covenant represents an impediment to the enjoyment of land under article 3 and that the impediment was unreasonable under article 5(1), the court under article 6(2)(a), like the Lands Tribunal under article 5(1), would have a wide discretion whether to make an order modifying or extinguishing the impediment and, if so, whether under article 5(6) to substitute a different impediment and/or to award compensation to Dunnes. Article 5(5) requires the discretion whether to make the order to be exercised by reference to seven specified factors and to any other material circumstances. It would be absurd to consider that the doctrine against restraint of trade would have represented a vehicle for the resolution of the issues between Peninsula and Dunnes as satisfactory as that represented by the 1978 Order. It is this Order which properly reflects modern public policy in relation to the covenants to which it applies. LORD CARNWATH: I begin by paying tribute to Lord Wilsons characteristically compelling judgment, tinged with regret that this is likely to be his last substantive contribution to the jurisprudence of this court. It has been a privilege to work with him. I adopt with gratitude his clear and concise exposition of the legal and factual background, and of the relevant authorities. This enables me to express my own views relatively briefly. I do so in recognition of the importance of the case, and out of respect for the Court of Appeal whose decision we will be reversing. I agree entirely with his analysis of the Esso Petroleum Company Ltd v Harpers Garage (Stourport) Ltd [1968] AC 269 case, and that, for the reasons he gives, we should finally discard the much criticised pre existing freedom test. I also agree with his reasons for considering that this departure is within the scope and spirit of the 1966 Practice Statement. I note that many of the later criticisms had been foreshadowed at the time in the powerful reply of Robert Megarry QC before the House (pp 288 289). He had observed that the test now put forward by the respondents was wholly novel: It appears in no previous case, and was not argued below, but appeared for the first time in the course of the respondents argument here This test draws a sharp distinction between covenants made by the grantor and those made by the grantee, with highly capricious results. He illustrated those capricious results by reference to cases of lease and lease back and other examples, similar to those cited in later commentaries. It is unfortunate that these criticisms were not effectively addressed in any of the majority speeches. I also agree with Lord Wilson in preferring Lord Wilberforces so called trading society approach: whether the restrictive covenants in question have become part of the accepted machinery of a type of transaction which is generally found acceptable and necessary. (p 335C) In a later passage he referred to such restrictions being upheld where they have become part of the accepted pattern or structure of a trade, as encouraging or strengthening trade, rather than as limiting trade. (p 336B) It is true that this formulation is no more than an imprecise guide; and, as Lord Wilson observes (para 28), it raises the question why Lord Wilberforce did not think the test to be satisfied on the facts of the case. On the evidence the vast majority of filling stations in the UK were subject to solus agreements with oil companies. Lord Wilberforces answer seems to have turned both on the nature of the agreements and the fact that the restrictions were not sufficiently well established in form or time. Thus, in giving his reasons for holding that the agreements were on balance within the category of restraints which required justification, he noted (at p 337C G): This is not a mere transaction in property, nor a mere transaction between owners of property: it is essentially a trade agreement between traders. Having discussed the various restrictive elements he concluded: Finally the agreement is not of a character which, by the pressure of negotiation and competition, has passed into acceptance or into a balance of interest between the parties or between the parties and their customers; the solus system is both too recent and too variable for this to be said. (Emphasis added) One may detect an implicit contrast with the brewery cases, where, as he had explained, contractual clauses tying a leased public house to the lessors beers had been known, and commonly current, at least since the early 19th century (p 333G), and with other forms of restrictive covenants treated as acceptable more than a century before that (p 334G). Lord Wilson (para 51) regards the application of Lord Wilberforces trading society test in the present case as straightforward, having regard to the unchallenged evidence of their not infrequent use in leases in favour of anchor tenants. On the other hand the parallels discussed by Lord Wilberforce might appear to suggest that he had in mind the need for a longer historical pedigree than that implied by the limited evidence in this case. However, as the passage cited above makes clear, the practice had to be looked at in the context of what was essentially a trade agreement between traders, rather than a transaction in property. Less important than history is whether, in the light of established practice, there is in the relevant context any public policy reason for interfering in the free process of negotiation between the parties, or seeking to redress the balance of interests between them. The doctrine is an exception to the ordinary principles of freedom of contract, and should not be extended without good justification beyond those categories already established by the case law, or indistinguishable in principle from them. That approach is also consistent with the underlying approach of the majority in the Esso case. The case itself establishes no more than that a restraint may attract the doctrine even if it relates to the use of land. According to the majority in Esso, if the trader is giving up an existing freedom to trade, it matters not whether the covenant is a purely personal restraint or a restraint on the use of a particular piece of land. As Lord Reid explained (at pp 297G 298A), dismissing the argument that the respondents were left free to trade anywhere else: But in many cases a trader trading at a particular place does not have the resources to enable him to begin trading elsewhere as well, and if he did he might find it difficult to find another suitable garage for sale or to get planning permission to open a new filling station on another site. As the whole doctrine of restraint of trade is based on public policy its application ought to depend less on legal niceties or theoretical possibilities than on the practical effect of a restraint What matters therefore is the practical effect of the restriction in the real world, and its significance in public policy terms. The present case is quite different from Esso, or any of the other trading cases. The agreement is not in essence an agreement between traders, but a transaction in land. The only trade which might be inhibited is that of a potential future occupier, seeking to trade in textiles, provisions or groceries in some other part of the development. None of the authorities suggest that there is any public policy reason or legal basis for protecting that mere possibility. I accept, as Lord Wilson says (paras 17 18), that the mere fact that the Peninsula is a developer, rather than a trader in the conventional sense, is not necessarily determinative. Common formulations of the doctrine refer to any restraints on the free exercise of (a persons) trade or business (see eg Petrofina (Great Britain) Ltd v Martin [1966] Ch 146, 169C per Lord Denning MR). So it is necessary to focus on the nature of any restriction on Peninsulas own business as a developer. We have been referred to no case in which the doctrine has been held to apply to a restriction accepted by a developer as part of a development scheme such as the present. This is not surprising. The business of developing a shopping centre as in this case inevitably involves doing deals to regulate the use of the relevant land, and balance the competing interests, to advance the success of the centre as a whole. That was rightly recognised in the Canadian cases to which Lord Wilson has referred (paras 35 36). As is shown by those cases, along with the evidence in this case, there is nothing unusual in special terms being required to secure an appropriate anchor tenant. Indeed, if Dunnes had had reason to think that the covenant would prove unenforceable in law, the likely result would have been its withdrawal from the development, and the failure of the scheme. Thus, the ability to offer such terms does not restrict, but rather facilitates, the developers business. It can be seen, in Lord Wilberforces words, as encouraging or strengthening , rather than as limiting that business. There is no public policy reason for interfering with such an arrangement. There is a parallel between Mr Shortalls position and that of the prospective lessee faced with choice of taking premises subject to a covenant, as Lord Morris explained it in the Esso case. He said at p 309B C: If one who seeks to take a lease of land knows that the only lease which is available to him is a lease with a restriction, then he must either take what is offered (on the appropriate financial terms) or he must seek a lease elsewhere. No feature of public policy requires that if he freely contracted he should be excused from honouring his contract. In no rational sense could it be said that if he took a lease with a restriction as to trading he was entering into a contract that interfered with the free exercise of his trade or his business or with his individual liberty of action in trading. Like that hypothetical lessee, Mr Shortall was faced with a free but limited choice: to take Dunnes on the terms offered, or not to have an anchor tenant at all. As in the case of the lessee, in no way could it be said that the exercise of that choice interfered with the free exercise of his business as a developer or with his individual liberty of action. It was rather an intrinsic part of that business. In Lord Morris words: No feature of public policy requires that if he freely contracted he should be excused from honouring his contract. For these reasons, I agree with Lord Wilson that the appeal should be allowed, and Peninsulas common law claim dismissed. I do so the more readily having regard to the existence in the 1978 Order, of an alternative, and in many ways more satisfactory, vehicle for the resolution of the issues between the parties. |
The issue in this appeal is about the proper construction of an option clause in a lease of land at Cumbernauld. The lease was entered into between the appellants, Multi Link Leisure Developments Limited, (the tenants) and the respondents, North Lanarkshire Council, (the landlords). It granted to the tenants an option to purchase the leased subjects. This was to be at a price to be determined by the landlords according to an agreed formula if the option to purchase was exercised subsequent to the first year of let. The tenants have exercised the option, but they disagree with the landlords as to the price that must be paid for its exercise according to that formula. They contend that the effect of the option clause is that the price is to be determined without reference to any increase in value that may be attributed to the subjects on the ground that it is likely that planning permission will be granted for housing development. The landlords, on the other hand, contend that the option clause, properly construed, does not envisage that there should be any discount of any element attributable to the potential of the subjects for development. The difference between these two approaches as to the meaning of the option clause is very substantial. The tenants say that the full market value of the subjects, for the purposes of the option clause, is 500,000. They seek declarator that this is the price that is payable for the purchase of the subjects by the tenants to the landlords. The landlords say that the full market value of the subjects, taking account of their potential for development, is 5.3 million and that, as the tenants have exercised the option, this is the price that must be paid. The tenants have refused to pay any more than 500,000, so the answer to the question which approach is right will determine whether the option contract remains in force. The parties are agreed that, if the tenants are right, the contract remains in force and the landlords will require to value the subjects anew on the basis of the construction of the clause contended for by the tenants. They are also agreed that, if the landlords are right, the option is spent and can no longer be exercised during the remaining term of the lease. The factual background The case was argued in the Court of Session on the basis of the parties pleadings and various documents which had been lodged in process. No oral evidence was led as to the surrounding circumstances. The only facts that were before the Lord Ordinary were those that could be ascertained from the parties averments. The argument concentrated for the most part on the wording of the option clause itself. Reference was also made to some other provisions in the lease which might assist as to the meaning of the option clause. The lease is dated 18 January and 11 February 2000. It was varied by a minute of variation of lease dated 13, 24 and 29 November 2001, by which an error in the extent of the ground leased was corrected and a new plan relative to the lease was substituted. The subjects comprise an area of ground extending to about 34.32 hectares located at East Waterhead Farm about a mile east of the town centre of the Cumbernauld. It had previously been in use for agricultural purposes. In terms of clause 2 of the lease the date of entry was 1 June 1999. The lease was to endure for 50 years until 31 May 2049. Clause 5 of the lease provided for rent reviews every five years. In the event of the parties failing to agree, the amount of the revised rent was to be referred to arbitration. The arbiter was to be instructed to assess the rent on the basis of the open market rent, no account being taken of works effected by the tenants or on their behalf. By clause 9 it was provided that the tenants were to occupy and use the subjects for the development of a pay and play golf course and ancillary activities incidental to that use, and for no other purpose whatever without the prior express written consent of the landlords. It was also provided that if the golf course was not developed within five years of the date of entry, or if the subjects of lease were to cease to be used for that purpose, the lease was to terminate with immediate effect. By clause 12 it was provided that the tenants were bound at their own expense to provide an efficient drainage system for the subjects and to bear the whole expense of maintaining it in efficient working order. It is agreed that a golf course was duly developed within five years of the date of entry, and that the land is still being used as a pay and play golf course. By clause 18.1 the tenants were given an option to purchase the subjects during the currency of the lease. No period of notice was required if the tenants decided to exercise the option to purchase during the first year of the period of let. In that event the option price was to be the sum of 130,000. Thereafter the tenants had to give the landlords not less than twelve months notice in writing prior to the proposed date of entry for the purchase if they wished to exercise it. The dispute between the parties is as to the effect of clause 18.2, which is in these terms: The price to be paid by Multi Link in terms of this clause (the option price) shall, if the option to purchase is exercised within the first year of the period of let, be the sum of ONE HUNDRED AND THIRTY THOUSAND POUNDS (130,000) STERLING. The option price, if the option to purchase is exercised subsequent to the first year of let, shall be equal to the full market value of the subjects hereby let as at the date of entry for the proposed purchase (as determined by the landlords) of agricultural land or open space suitable for development as a golf course but, for the avoidance of doubt, shall be not less than the sum of ONE HUNDRED AND THIRTY THOUSAND POUNDS (130,000) STERLING. In determining the full market value (i) the landlords shall assume (a) that the subjects hereby let are in good and substantial order and repair and that all obligations of the landlords and the tenants under this lease have been complied with, and (b) that the subjects hereby let are ready for occupation, and (ii) the landlords shall disregard (a) any improvements carried out by the tenants during the period of this lease otherwise than in pursuance of an obligation [to] the landlords, and (b) any damage to or destruction of the subjects hereby let. By clause 18.6 it was provided, for the avoidance of doubt, that the option to purchase was personal to Multi Link and that it was to be exercisable only so long as they were tenants under the lease. The tenants first expressed an interest in exercising the option to purchase in 2005. On 14 March 2005 their solicitors wrote to the landlords seeking to know the price that they would seek for the subjects. By letter dated 29 June 2005 the landlords proposed a price of 500,000, subject to the tenants entering into a minute of agreement, fortified by a standard security, to the effect that an additional sum, to be agreed, would be payable in the event of a change of use generating a higher value for the land. The tenants were not willing to agree to this proposal. In 2006 the prospect of a change of use generating a higher value was confirmed by the publication in 2006 of the Glasgow and Clyde Valley Joint Structure Plan which identified as one of three priorities for development in the South Cumbernauld Community Growth area, within which the subjects of the lease are situated. In 2008 the North Lanarkshire Finalised Draft Local Plan identified the area as a potential area for housing led urban expansion. The landlords position, as explained in their averments, is that it would be unreasonable for them to fail to have regard to this planning background when determining the price payable under clause 18.2. By letter dated 8 October 2007 the tenants solicitors served on the landlords notice of their decision to exercise the option, with entry one year later on 8 October 2008. They invited the landlords to provide them with their views as to the full market value of the subjects as defined by clause 18.2. By letter dated 4 November 2008 the landlords solicitors intimated that they fixed the price at 5.3 million. The tenants made further proposals as to the option price, but they were rejected by the landlords. By a letter dated 22 January 2009 the landlords served formal notice on the tenants requiring them within 28 days to pay 5.3 million in exchange for a valid marketable title, failing which the landlords would be entitled to rescind the contract resulting from the exercise of the option in clause 18. The tenants did not comply with these conditions. So by letter dated 25 February 2009 the landlords served on the tenants a formal notice of rescission of the option contract and the purchase and sale of the subjects resulting from the notice of 8 October 2007. The tenants then raised the present action in which they seek declarator that their option to purchase has not validly been rescinded and that on a proper construction of clause 18.2 the landlords are bound to determine the full market value of the subjects as agricultural land or open space suitable for a golf course, without reference to any increase in value which may be attributable to the fact that is likely that planning permission will be granted for housing development there. The Lord Ordinary, Lord Glennie, held on 31 July 2009 that the obvious meaning of the words used in clause 18.2 was that the full market value was to be assessed by reference only to the use of the subjects as a golf course, and he made the declarations that the tenants had asked for: [2009] CSOH 114, 2009 SLT 1170. The landlords reclaimed, and on 30 December 2009 an Extra Division (Lords Carloway and Hardie and Sir David Edward QC) allowed the reclaiming motion: [2009] CSIH 96, 2010 SC 302. It held that the words full market value were to be construed as meaning what they said and that considerations that might be relevant to market value were not to be ignored unless there were express words to that effect: para 28. Decree was pronounced in terms of the conclusion to the landlords counterclaim. This was to the effect that the contract resulting from the exercise of the option clause had been rescinded, the option was spent and it could not be exercised during the remaining term of the lease. The option clause The courts task is to ascertain the intention of the parties by examining the words they used and giving them their ordinary meaning in their contractual context. It must start with what it is given by the parties themselves when it is conducting this exercise. Effect is to be given to every word, so far as possible, in the order in which they appear in the clause in question. Words should not be added which are not there, and words which are there should not be changed, taken out or moved from the place in the clause where they have been put by the parties. It may be necessary to do some of these things at a later stage to make sense of the language. But this should not be done until it has become clear that the language the parties actually used creates an ambiguity which cannot be solved otherwise. The option clause can, for the purposes of analysis, be broken down into the following parts: (1) the opening words, which state that the option price shall be equal to the full market value of the subjects hereby let; (2) the direction that the option price is to be determined as at the date of entry for the proposed purchase; (3) the words as determined the landlords which then follow in parenthesis, indicating by whom the option price as at the date of entry is to be determined; (4) the direction that the full open market value is to be of agricultural land or open space suitable for development as a golf course but, for the avoidance of doubt shall be not less than the sum of one hundred and thirty thousand pounds (130,000) sterling. (5) the direction that in determining the full market value the landlords shall assume (a) that the subjects hereby let are in good and substantial order and repair and that all obligations of the landlords and the tenants under this lease have been complied with, and (b) that the subjects hereby let are ready for occupation; and (6) the direction that in determining the full market value the landlords shall disregard (a) any improvements carried out by the tenants during the period of this lease otherwise than in pursuance of an obligation [to] the landlords, and (b) any damage to or destruction of the subjects hereby let. [The word to is inserted to make good an obvious omission from this part of the clause as printed in the lease.] The problem The Lord Ordinary said that there were certain parts of the clause that could safely be disregarded: para 5. He omitted the provision that the option price should be not less than 130,000. He also omitted the reference to the date of entry. It was agreed before him that the words as determined by the landlords were misplaced as that they should be in close proximity to the words full market value. So he decided to omit those words too. This left him with the words in parts (1) and (4) to (6) of the foregoing analysis, less the reference to the figure of 130,000. He then said, in his summary of counsel for the pursuers argument in para 8, that the valuer was being asked to assume that the purchase was for development as a golf course [the emphasis is mine]. In para 9 he said that he accepted that the option price was to be equal to the full market value, but that when one asked oneself of what the answer was the full market value of the subjects for the proposed purchase of land suitable for development as a golf course. He said that this was a clear pointer to the sole use to which the valuer must have regard when assessing the full market value of the subjects. The purpose in inserting in clause 18(2) that the proposed purchase was for development as a golf course, as he saw it, was to restrict the assumed use by reference to which the subjects were to be valued [again, the emphasis is mine]. He found support for this approach in the assumptions set out in part (5) of the foregoing analysis. I have italicised the words for development in my quotations from the Lord Ordinarys opinion in the previous paragraph to draw attention to the fact that when he was construing the option clause he departed from the words that the parties themselves had used. The words in the relevant part of the clause, which is part (4) of the foregoing analysis, are of agricultural land or open space suitable for development as a golf course [again, my emphasis]. Taking the words that the parties themselves used, this is a description of the state of the subjects as they are to be taken to be in as at the date of entry. It is not a direction about the purpose for which they are being purchased. If it had been, it would have been an easy step to conclude that the full market value must be taken to be restricted by the assumed use. That is how one would construe the words open market rent for the purposes of the rent reviews referred to in clause 5, as the open market rent must be determined by reference to the use of the subjects that is permitted by the lease. In Arthur Bell & Sons v Assessor for Fife [1965] RA 535, 540 541 Lord Avonside said, with reference to the estimation of the annual value of subjects under the Valuation and Rating (Scotland) Act 1956, that it was notorious that one must take a building according to its use at the time of the valuation. But the insertion of a description as to the assumed state of the subjects as at the date of entry for the proposed purchase under the option clause does not have that effect. It permits account to be taken of the way land in that state might be expected to be used in the future, including its being used for development. The Lord Ordinarys omission of the words as at the date of entry for the proposed purchase (as determined by the landlords) made it easier for him to conclude, wrongly in my opinion, that this was a direction about the purpose for which the subjects were being purchased. These departures from the words the parties themselves used were crucial to the Lord Ordinarys reasoning, and I do not think that his interpretation of the option clause can be accepted. The Extra Division, for its part, based its conclusion as to the meaning of the option clause on the weight which is said should be given to the words full market value: paras 27, 28. The problem with this approach, however, is that it pays no regard to the words which follow, especially to the assumptions and disregards in parts (5) and (6) of the foregoing analysis. Had the words full market value stood alone, it would have been plain that the value was to be determined by reference to the uses to which the land was reasonably capable of being put in the future: Raja Vyricherla Narayana Gajapatiraju v The Revenue Divisional Officer, Vizagapatam [1939] AC 302, 313; see also Griffiths v WE & DT Cave Ltd (1998) 78 P&CR 8, 14. It is the words which follow that give rise to difficulty, when an attempt is made to construe the clause as a whole. Parts (1) to (4), taken by themselves and read according to the words used, tell the valuer what the subjects are to be assumed to be and how they are to be valued. The subjects are assumed to be agricultural land or open space suitable for use as a golf course, and they are to be valued at their full market value. This approach to the option price makes commercial sense. The assumption describes the land as it was at the date of entry to the lease. But once the option is exercised all restrictions on the use of the land fly off. The tenants will become the owners of the land. They will be free to sell it on to a third party at its full market value or to use it themselves for any use whatever that will get planning permission. Both parties to the lease, if they had applied business commonsense, would have been aware of the advantages that ownership would confer on the tenant in the event of the option clause being exercised. This suggests that, if it had been their intention to restrict the option price to the value of the subjects as a golf course and to exclude any value attributable to their potential for development, they would have said so. The problem, however, is that they then added the assumptions and disregards set out in parts (5) and (6). Their function is not hard to understand if the full market value is to be determined simply on the basis that the subjects are to be assumed to be agricultural land or open space suitable for development as a golf course. What they require the valuer to do is to make further assumptions which tend to indicate that he is to value the subjects strictly according to their actual state and existing use as at the date of entry for the proposed purchase, disregarding tenants improvements and any damage to or destruction of the subjects. Yet these assumptions and disregards are introduced by the words in determining the full market value, which in themselves contain no hint of any restriction on the nature of the market to which the valuer may look when he is conducting this exercise. This part of the clause looks as if it has been borrowed from a different lease without regard to the context. But the words are there as part of the option clause. So it is not possible simply to ignore them. Lord Rodger says that it is helpful to start with the assumptions and disregards that the landlords are to apply when determining the full market value: para 28. I do not disagree with this approach, which is both logical and helpful. Of course, it all depends on what the question is that one is trying to answer. If this was a case where there was no question of any development value, the assumptions and disregards would indeed be central to a proper understanding of the approach to value. Contrary to what the landlords valuer in this case thought, and the parties accepted in the Inner House, they do not indicate that all capital expenditure by the tenants is to be disregarded. The disregard extends only to improvements carried out by the tenants otherwise than in pursuance of an obligation to the landlords. But the inquiry cannot end there. As the valuer himself said at the end of para 3.0 of his report, use as a golf course might not represent the full market value in view of the planning assumptions that he addressed in para 4.0. Development value was likely to completely eclipse any value that might be attributed to the subjects in their existing use. The question whether the planning assumptions can be taken into account too is the crucial question in this case. The assumptions and disregards do not mention this point, so one has to look at the whole clause to see what it means. The solution I do not think that it is possible to reconcile the assumptions and disregards with the earlier parts of the option clause. They seem to me to be approaching the question of value on different bases. The assumptions and disregards are designed to settle the basis for a purchase of subjects in their existing use. The earlier parts of the clause are designed to settle the price for the purchase of subjects that will have a value in the open market that takes account of their potential for development. In this situation the solution must be found by recognising the poor quality of the drafting and trying to give a sensible meaning to the clause as a whole which takes account of the factual background known to the parties at the time when the lease was entered into. Support for this approach is to be found in the following passage from the judgment of Lord Bridge of Harwich in Mitsui Construction Co v Attorney General of Hong Kong (1986) 33 BLR 1, 14, where he said: The poorer the quality of the drafting, the less willing any court should be to be driven by semantic niceties to attribute to the parties an improbable and un businesslike intention, if the language used, whatever it may lack in precision, is reasonably capable of an interpretation which attributes to the parties an intention to make provision for contingencies inherent in the work contracted for on a sensible and businesslike basis. In Ravennavi SpA v New Century Shipbuilding Co Ltd [2007] 2 Lloyds Rep 24, para 12 Moore Bick LJ said: Unless the dispute concerns a detailed document of a complex nature that can properly be assumed to have been carefully drafted to ensure that its provisions dovetail neatly, detailed linguistic analysis is unlikely to yield a reliable answer. It is far preferable, in my view, to read the words in question fairly as a whole in the context of the document as a whole and in the light of the commercial and factual background known to both parties in order to ascertain what they were intending to achieve. It has, of course, long been recognised that the commercial or business object of the provision in question may be relevant: Prenn v Simmonds [1971] 1 WLR 1381, 1385 per Lord Wilberforce; see also Aberdeen City Council v Stewart Milne Group Ltd [2010] CSIH 81, para 11, although I think that the way this issue should be approached is less clearly explained in the 19th century Scottish cases referred to by the Extra Division in that paragraph (Mackenzie v Liddell 1883 10 R 705, Bank of Scotland v Stewart 1891 18 R 957, Jacobs v Scott & Co 1899 2 F (HL) 70). In Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191, 201, Lord Diplock said that if detailed and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must yield to business commonsense; see also Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 913 where Lord Hoffmann included this as the fifth of his common sense principles. In Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, 771 Lord Steyn, making the same point, said that words are to be interpreted in the way in which a reasonable commercial person would construe them, and that the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language; see also Bank of Scotland v Dunedin Property Investment Co Ltd 1998 SC 657, 661 per Lord President Rodger. In Deutsche Genossenschaftsbank v Burnhope [1995] 1 WLR 1580, 1587, however, Lord Steyn reminded us that our law of construction is based on an objective theory, and he emphasised the objective nature of the exercise of searching for meaning of language in its contractual setting: The court must not try to [divine] the purpose of the contract by speculating about the real intention of the parties. It may only be inferred from the language used by the parties, judged against the objective contextual background. What then of the objective commercial background in this case? The landlords are a local authority. They were under a statutory duty not to dispose of land for a consideration less than the best that could reasonably be obtained: Local Government (Scotland) Act 1973, section 74(2). The tenants are a commercial organisation. They are in business to make money. They undertook to use the subjects during the period of the lease for the development of a pay and play golf course and for no other purpose without the prior express written consent of the landlords. But a successful exercise of the option would transfer to them all the rights of ownership, which they could be expected to turn to their financial advantage if the opportunity of doing so were to present itself. The land itself was in use as grazing land when the lease was entered into. It was situated about a mile from the town centre and the lease was entered into for a period of fifty years. It can be inferred from the price that was agreed for the exercise of the option within the first twelve months that at that stage there was no evidence that it had any hope value and that it was thought to be suitable only for recreational activities. But much can change within a period of fifty years, and there has been no indication that there were any planning constraints such as a designation of the land as part of a green belt that would inhibit its potential for development. The land has now been identified as lying within a potential area for housing led urban expansion. If the tenants are right, acquiring the land at a price which ignores its potential for development will provide them with a very substantial windfall at the expense of the landlords. This was something that the wording of the option clause might have been expected to guard against. The tenants, on the other hand, did not ensure that the opportunity to obtain a windfall in circumstances such as have now arisen was expressly provided for. I do not think that the assumptions and disregards at the end of the option clause, which sit uneasily with the clause when read as a whole, carry sufficient weight to overcome the message conveyed by its opening words by attributing to them the meaning that the tenants contend for. They indicate that the parties were agreed that the option price was to be determined by the full market value of the land as described, taking full account of its potential, if any, for development. That is what reasonable commercial men would have agreed to when the lease was entered into, if they had applied their minds to the benefits that would accrue to the tenants if they were to exercise the option to purchase. I would hold that it must be taken to be what the parties agreed to in this case. Conclusion Although I prefer not to endorse the Extra Divisions reasoning, I consider that it arrived at the right result. I would dismiss the appeal and affirm the Extra Divisions interlocutor. LORD RODGER Lord Hope has set out the background and the wording of the clause which the Court has to interpret. I can accordingly explain my approach very briefly. As their name suggests, Multi Link Leisure Developments (Multi Link) are a commercial company operating in the leisure field. They leased land near Cumbernauld from the North Lanarkshire Council to construct a golf course. This was a commercial venture: the course was to be a pay and play course. In these circumstances it is appropriate to treat the lease as a commercial agreement which is to be construed accordingly. It is therefore noteworthy that Multi Links interpretation of the disputed clause of the lease produces a result whether or not appropriately described as a windfall which it seems unlikely that the parties to a commercial agreement would ever have intended: that Multi Link should be able to buy the land for a sum that takes no account of its (substantial) hope value. That result is even more surprising when the clause provides that, in the circumstances which have occurred, the price is to be the full market value of the subjects. Nevertheless, something has gone wrong with the drafting of the relevant clause, Clause 18.2. So no construction is ever going to produce perfect harmony among all its elements. The Lord Ordinary proceeded by stripping out various pieces of the text, including the reference to the date of entry. As a result he produced a version which included the phrase for the proposed purchase of agricultural land or open space suitable for development as a golf course: Multi Link Leisure Developments Ltd v North Lanarkshire Council 2009 SLT 1170, 1172, para 5. But, as Sir John Dyson pointed out in the course of argument, words in Clause 18.1 (prior to the proposed date of entry for the purchase) show that the words for the proposed purchase in Clause 18.2 are actually part of the description of the date of entry, which the Lord Ordinary had omitted. It is therefore not easy to use them to construct the phrase to which the Lord Ordinary attached so much importance. When translating a document written in a foreign language, it often makes sense to start with the parts whose meaning is clear and then to use those parts to unravel the meaning of the parts which are more difficult to understand. The same applies to interpreting contracts or statutes. Here, since their meaning is not really in doubt, I find it helpful to start with the assumptions and disregards that the landlords are to apply when determining the full market value. First, the landlords are to assume that the subjects are in good and substantial order and repair and that all the obligations of the landlords and tenants under the lease have been complied with. Since more than five years have passed, this means, in particular, that the landlords are to proceed on the basis that the golf course, which the tenants were obliged to construct in terms of Clause 9, has indeed been constructed and is in good order and repair. In fact, the golf course has been duly created. So Multi Link are to pay for the golf course on the assumption that it is in good condition. The Extra Division, who did not refer to this part of Clause 18.2, proceeded on the basis that, in assessing the full market value, the landlords were to ignore anything done by the tenants to develop the golf course: Multi Link Leisure Developments Ltd v North Lanarkshire Council 2010 SC 302, para 26. This was understandable, since, curiously enough, it was the basis upon which both parties proceeded in the Inner House and in the face of some resistance in this Court. Nevertheless, I am quite unable to approach the interpretation of the clause on that basis since it is inconsistent with the specific direction in the later part of the clause. The suggestion seemed to be that the words of agricultural land or open space suitable for development as a golf course meant that the landlords were to value the subjects as if the golf course had not been developed and that this was justified because, otherwise, Multi Link would be paying twice over for the development of the course. But that approach is utterly inconsistent with the assumption that is spelled out in the later part of the clause. And that assumption itself is entirely consistent with Clause 21, which provides that, at the expiry or termination of the lease, the tenants are to yield up the subjects with any buildings and others thereon well and substantially maintained in accordance with the obligations hereinbefore specified and that without any compensation being paid therefor. Since, on its expiry or termination, Multi Link are not to be paid for the buildings etc which they may have constructed in accordance with their obligations under the lease, it would make no sense whatever if they could buy the subjects under the option without paying for the same buildings etc. In effect, the cost of constructing the golf course in terms of Clause 9 is treated as part of the consideration which Multi Link provide in return for the lease of the land. Therefore, as the assumption makes clear, if Multi Link want to buy a completed golf course, they have to pay for it. On the other hand, the landlords are to disregard any improvements which the tenants may have carried out otherwise than in pursuance of an obligation [to] the landlords. Again, this makes sense, since those improvements form no part of the consideration for the lease. So, having paid to make these improvements which they were not obliged to make, the tenants should not have to pay again if they buy the land. In my view the problematical words of agricultural land or open space suitable for development as a golf course cannot be construed in a manner that is inconsistent with the clear directions as to the assumptions which the landlords are to adopt in assessing the full market value. In the circumstances of this case they have to value the golf course which has been laid out and they have to do so on the basis that it is in good and substantial order and repair. If Multi Link have carried out other improvements which they were not obliged to carry out, these are to be ignored. If the landlords proceed in this way, they will comply with the instructions in the clause. And, if there were no other elements in the picture, no doubt they would be able to assess what someone wanting to buy a golf course would pay for this course in this area. But the instructions in the clause do not tell the landlords to ignore any other factor which might be relevant to the value of the golf course. And there is indeed a further, very significant, factor: in 2006 the Glasgow and Clyde Valley Joint Structure Plan identified the area where the land lies as a community growth area for an indicative capacity of 2,000 houses. In addition, in 2008 the final draft of the relevant Local Plan identified that community growth area as a suitable location for medium term housing development. Obviously, these changes mean that the possible purchasers of the golf course would now include developers who were interested in acquiring the land, not as a golf course, but as a site for a possible housing development. So the potential value of the golf course on the open market will have increased accordingly. Multi Link contend, however, that the words of agricultural land or open space suitable for development as a golf course show that this factor and this increase in value are to be ignored. The valuation is to proceed on the basis that the land is to be used as a golf course and nothing else. Given that apart from planning considerations there is no limit on the use to which the land could be put if Multi Link successfully exercised their option to purchase it, that would be a highly unusual and artificial approach to valuation far less to determining the full market value of the land. Construing Clause 18.2 as a whole and as part of a commercial agreement, I am satisfied that the words in question are not to be interpreted as requiring the landlords to adopt this unusual approach and to ignore the hope value. Had the parties intended the landlords to assume that the land was to be used only as a golf course, I would have expected to find that assumption included among the others at the end of the clause. For these reasons the landlords are entitled to have regard to the hope value of the golf course when assessing its full market value. Although my reasoning is different, I agree with the result reached by the Extra Division. I would accordingly dismiss the appeal. It will be up to the parties to work out how, if at all, they are to arrange for the lease to be terminated and the hope value to be unlocked. LADY HALE We are required to construe the following words: The Option price, if the Option to purchase is exercised subsequent to the first year of let, shall be equal to the full market value of the subjects hereby let as at the date of entry for the proposed purchase (as determined by the Landlords) of agricultural land or open space suitable for development as a golf course but, for the avoidance of doubt, shall be not less than the sum of ONE HUNDRED AND THIRTY THOUSAND POUNDS (130,000) STERLING. In determining the full market value (i) the Landlords shall assume (a) that the subjects hereby let are in good and substantial order and repair and that all obligations of the Landlords and the Tenants under this Lease have been complied with, and (b) that the subjects hereby let are ready for occupation, and (ii) the Landlords shall disregard (a) any improvements carried out by the Tenants during the period of this Lease otherwise than in pursuance of an obligation the Landlords, and (b) any damage to or destruction of the subjects hereby let. (emphasis supplied) The puzzle is what those italicised words are meant to mean. There are at least four possible meanings of the term taken as a whole: (i) the value of the land as agricultural land or open space suitable for development as a golf course, without any hope value; (ii) the same but with any hope value; (iii) the value of the land with the golf course which has now been constructed on it, without any hope value; and (iv) the same but with any hope value. The appellant tenants argued primarily for (i) but would accept (iii) as second best. Their point was that it is otherwise difficult to ascribe any meaning at all to the italicised words and that (iii) would mean that they had to pay twice for the golf course. But their main aim was to avoid having to pay any hope value. The Lord Ordinary opted for (iii) on the basis that the assumptions required the valuer to assume that the golf course had indeed been constructed but the italicised words restricted the possible uses to which the valuer had to have regard. The respondent landlords argued for (ii) before the Inner House and the Inner House agreed with them. The reality is that it made no difference whether the right answer was (ii) or (iv) because in either case the contract to purchase had been validly rescinded and the option was now spent. I do not regard the tenants position as quite as fanciful as others might. Local authorities are not commercial organisations. They are there to serve the local population, not to make money. In 1999, it appears that no one was thinking about the potential for residential development. The Council, no doubt conscious of their responsibility to provide facilities for healthy recreation for the inhabitants of Cumbernauld, wanted a pay and play golf course which all could enjoy. The tenants were prepared to take the commercial risk of developing the land as a golf course. The Council were happy to tie up the land for that purpose for fifty years. On the Lord Ordinarys view of the matter, if the option were exercised they would not only have had the course built but would also have been paid for it. Had it not been for the possibilities opened up by the regional development plan, that might have seemed a good deal to them. As things now stand, unless the parties can come to some sensible agreement to unlock both the land and its development value, the Council are going to be no better off than they were at the outset. All of that is by the by. We have to try and make sense of the words the parties used. The problem with the italicised words is that they begin with of with no clear indication of what they belong to. It would be ungrammatical to link them to full market value as that is already followed by another genitive. It appears, therefore, that they must be linked to the proposed purchase but there is no need for them there and indeed they are now inaccurate as a statement of fact. Faced with that conundrum, I have found comfort in Lord Rodgers approach: construe the words you can understand and see where that takes you. Even here we have to insert the word to between obligation and Landlords in disregard (ii)(a). But after that the assumptions clearly take us at least as far as solution (iii). The valuer is to assume that the Tenant has complied with the obligation to build the golf course: assumption (i)(a). That improvement is not to be disregarded: cf disregard (ii)(a). By itself, that does not tell us whether the answer is (iii) or (iv). But it does tell us that the italicised words do not mean that the land is to be valued as if the golf course had never been built. This also suggests that they are not meant to limit the ordinary meaning of full market value. This is reinforced by their grammatical ineptitude: if they were meant to limit it, they would have come immediately after full market value and been preceded by as rather than of. Finally, if the parties had meant anything other than the ordinary sense of full market value they could so easily have used a different phrase. Thus, by a route mapped out by Lord Rodger, I too arrive at the conclusion that this appeal should be dismissed. LORD CLARKE I agree that this appeal should be dismissed. I detect no difference between the principles applicable to the construction of a lease in Scotland and in England. The true construction of clause 18.2 of the lease depends upon the language of the clause construed in the context of the lease as a whole, which must in turn be considered having regard to its surrounding circumstances or factual matrix. I do not think that the parties can have given express consideration to the question that has arisen in this case. If they had, they would surely have expressly provided that, if the tenants exercised the option to purchase in clause 18 of the lease, they must pay the full market value of the land as described, taking full account of its potential, if any, for development. Any other conclusion would flout business commonsense because it would give the tenants an unwarranted windfall. Applying the principles stated by Lord Hope in his para 20, I would construe the reference to full market value in clause 18.2 of the lease as meaning the full market value of the land, including its potential development value. SIR JOHN DYSON SCJ I agree that this appeal should be dismissed. To the extent that there is any difference between the reasoning of Lord Hope and Lord Rodger, I prefer that of Lord Rodger. |
This appeal raises two important and controversial questions of commercial law. The first is: in what circumstances will the law treat the authority of an agent as irrevocable. The other is whether the receipt of money at a time when the recipient knows that imminent insolvency will prevent him from performing the corresponding obligation, can give rise to liability to account as a constructive trustee. Introduction Angoves Pty Ltd is an Australian winemaker, which for many years employed an English company called D&D Wines International Ltd as its agent and distributor in the United Kingdom. D&D acted in both capacities. It bought wines from Angoves in its own right and it sold wines on Angoves behalf to UK customers, generally retailers. Both activities were governed at the relevant time by an Agency and Distribution Agreement (or ADA) dated 1 December 2011. Under clause 34, the ADA was terminable by either side on six months notice, or, under clause 36, by notice with immediate effect in a number of events, including the appointment of an administrator or liquidator. On 21 April 2012, D&D went into administration, and on 10 July 2012 moved into creditors voluntary liquidation. At the commencement of the administration, there were outstanding invoices amounting altogether to A$874,928.81, representing the price of wine which D&D had sold to two UK retailers, but which the latter had not yet paid. On 23 April 2012, Angoves gave written notice terminating the ADA and any authority of D&D to collect the price from these two customers. The notice declared that Angoves proposed to collect the price directly from the customers and would account separately to D&D for their commission. In due course, the liquidators objected to this course. They claimed to be entitled to collect on the outstanding invoices, deduct commission due to D&D, and leave Angoves to prove in the winding up for the rest of the price. The liquidators have never denied that Angoves was entitled to terminate the ADA or that their notice of 23 April 2012 had that effect. But they contended that the relationship between D&D and Angoves in relation to the transactions covered by the invoices was that of buyer and seller, not agent and principal, and that accordingly the companys liability to Angoves at the commencement of the administration was a simple debt for goods sold and delivered. Angoves disputed this contention. They also argued that any moneys held by D&D for their account were held in trust for them. By agreement between the parties, the sums paid to D&D on the invoices after the notice of termination were held by the liquidators in an escrow account pending the resolution of the dispute, and the sums paid directly to Angoves were held in their solicitors client account on the same terms. The matter came before His Honour Judge Pelling QC, sitting as a judge of the High Court, on an application under section 112 of the Insolvency Act 1986 [2013] EWHC 215 (Ch). He held that in the relevant respects the relationship between Angoves and D&D was that of principal and agent only, and that D&Ds authority to collect the price from customers came to an end upon service of Angoves termination notice. In the Court of Appeal, the liquidators did not challenge the judges finding that D&D acted as agents. Their case was that if D&D acted in the relevant respects as agents, their authority to collect the price of goods which they had sold on Angoves behalf survived the termination of the ADA because they needed it in order to recover their commission. The Court of Appeal (Patten, Lewison and Sharp LLJJ) accepted this argument and allowed the appeal on that basis [2014] EWCA Civ 215; [2014] 2 BCLC 129; Angoves alternative case that the proceeds of the invoices were held in trust for them failed at both stages, although for different reasons. The revocability of an agents authority The general rule is that the authority of an agent may be revoked by the principal, even if it is agreed by their contract to be irrevocable. The revocation is effective to terminate the agents authority, but gives rise to a claim for damages. Powers of attorney were said by Lord Kenyon to be revocable from their nature: Walsh v Whitcomb (1797) 2 Esp 565, 566. In Storys Law of Agency, 2nd ed (1864), p 598, at para 463, the rule was said to be so plain a doctrine of common sense and common justice that it requires no illustration or reasoning to support it. Nonetheless, its basis has never really been in doubt. An agent is empowered to commit his principal within the limits of his authority as if the principal had agreed personally. This is a confidential relationship importing a duty of loyalty, and normally of undivided loyalty, on the part of the agent. As Lord Atkinson observed, delivering the advice of the Privy Council in Frith v Frith [1906] AC 254, 261, to allow the agent to exercise his authority after it has been revoked would amount to the specific enforcement of a relationship which is by its nature not specifically enforceable. The main exception to the general rule is the case where the agent has a relevant interest of his own in the exercise of his authority. The exception applies if two conditions are satisfied. First, there must be an agreement that the agents authority shall be irrevocable. Secondly, the authority must be given to secure an interest of the agent, being either a proprietary interest (for example a power of attorney given to enable the holder of an equitable interest to perfect it) or a liability (generally in debt) owed to him personally. In these cases, the agents authority is irrevocable while the interest subsists. Both conditions are now reflected in section 4(1) of the Powers of Attorney Act 1971, as regards authority conferred by a power of attorney. The first condition is perhaps self evident, but so far as authority is required, it is supplied by the decisions of the Privy Council in Esteban de Comas v Prost and Kohler (1865) 3 Moo PC NS 158 and Frith v Frith [1906] AC 254. The second condition was established in Walsh v Whitcomb, supra, where the exception was said to apply in every case where a power of attorney is necessary to effectuate any security. In Smart v Sandars (1848) 2 CB 895, 917 918, commonly regarded as the leading case, Wilde CJ, delivering the judgment of the Court of Common Pleas, declared that: where an agreement is entered into on a sufficient consideration, whereby an authority is given for the purpose of securing some benefit to the donee of the authority, such an authority is irrevocable. This is what is usually meant by an authority coupled with an interest, and which is commonly said to be irrevocable. But we think this doctrine applies only to cases where the authority is given for the purpose of being a security, or, as Lord Kenyon expresses it, as a part of the security; not to cases where the authority is given independently, and the interest of the donee of the authority arises afterwards, and incidentally only. These cases demonstrate that an agreement that the agents authority is to be irrevocable may be inferred, but not from the mere co existence of the agency and the interest. It is necessary that the one should be intended to support the other. The exception thus stated follows from the logic of the rule. Where the parties agree that the agent is to have a personal financial interest in the performance of his agency, over and above the receipt of his remuneration, his duty of loyalty is to that extent compromised. The reason for declining to enforce his right to act for the principal therefore falls away. The ambit of the exception for authority coupled with an interest is more narrowly defined by the editors of Bowstead and Reynolds on Agency, 20th ed (2014), para 10 007. They say that it applies where the notion of agency is employed as a legal device for a different purpose from that of normal agency, to confer a security or other interest on the agent. In such a case it is intended that the agent use the authority not for the benefit of his principal but for his own benefit, to achieve the objects of the arrangement. This would appear to confine the exception to cases where the authority exists solely in order to secure the agents financial interest, and is in reality no more than the commercial equivalent of an assignment. In such a case, the editors suggest, the law of agency is not really engaged at all, because the beneficiary of the authority is only nominally an agent. In my opinion, this is too narrow. It is no doubt a fair description of the simplest cases, but I do not accept that it can be a general principle of law. At one extreme lie cases such as Walsh v Whitcomb, supra, where a power of attorney was granted solely to enable the grantee to satisfy a pre existing debt owed to the agent, or Gaussen v Morton (1830) 10 B&C 731, where an owner of land gave a power of attorney to a creditor to sell the land to satisfy the debt. No one doubts that the exception applies in such cases. At the opposite extreme, it does not apply where the agents only interest is a commercial interest in being able to earn his commission. The reason is that in that case, the authority is not properly speaking a security at all: Doward, Dickson & Co v Williams & Co (1890) 6 TLR 316; Temple Legal Protection Ltd v QBE Insurance (Europe) Ltd [2009] Lloyds Rep IR 544, at para 50. But there are situations lying between these polar positions where the relationship of principal and agent is broader than the mere collection of money to satisfy the agents debt, so that the agent may be said to act both for himself and his principal. In Smart v Sandars, supra, for example, the agent was a grain factor and the advances said to be secured by the agents authority were made against the proceeds of sale of unsold grain. It is clear that the agent would have succeeded but for the fact that the advances had been made after and independently of the agency agreement so that the latter could not be construed as securing them. There is no principled reason why a true agent employed on his principals affairs should not also be regarded as having a personal interest in the exercise of his authority sufficient to make it irrevocable. Thus although, as I have said, the agents commercial interest in continuing to act in order to earn commission is not enough to make his authority irrevocable, his interest in recovering a debt in respect of commission already earned may well be. There is no reason to distinguish a debt arising in this way from any other debt, provided that it is sufficiently clear that the parties intended that the agents authority should secure it. There are a number of special cases in which the authority of an agent has been held to be irrevocable on what appears to be a wider basis. They include the irrevocable authority conferred on the promoter of a public share offering to subscribe for shares (In re Hannans Express Gold Mining and Development Co; Carmichaels Case [1896] 2 Ch 643), the irrevocable authority conferred by a bidder on an auctioneer of land to execute the memorandum of sale if it is knocked down to him (Van Praagh v Everidge [1902] 2 Ch 266, reversed on other grounds [1903] 1 Ch. 434), and the irrevocable authority conferred by a Lloyds name on his managing agent to underwrite (Daly v Lime Street Underwriting Agencies [1987] 2 FTLR 277, Society of Lloyds v Leighs [1997] CLC 759 decided on other grounds in the Court of Appeal The Times, 11 August 1997). The result in these cases was undoubtedly convenient, but they do not lend themselves to analysis along the lines discussed above. Nothing that I have said should therefore be taken to refer to them. Application to the present case At this point, it is necessary to look more closely at the terms of the ADA. Clause 10 provided that where D&D took Angoves products as their agents for sale, the terms of any sale should be the standard terms set out at Annexure A. These were drafted on the footing that the parties to the contract of sale were Angoves and the customer, defined as the person who acquires goods from Angove. They provided for the purchaser to pay the price within 90 days of the bill of lading date. D&Ds right to commission is governed by clause 21: 21. Angove will pay to D&D commission: (a) in such amounts as shall be agreed between Angove and D&D based on the Net Selling Price of every sale of Products or Angove PBPs to a customer in D&Ds allocated sectors within the Territory arranged by D&D during the term of this Agreement (other than on its own account); and (b) on any Bulk Wine supplies made by Angove, or by any company or entity wholly owned by Angove pursuant to clause 17 during the term of this Agreement. Clauses 20 and 22 deal with the procedure for the payment of the price: 20. Payment for Products ordered by or on behalf of D&D must be made, whether by D&D or the customer, on or before 90 days from the date of bill of lading, or otherwise as may be agreed, by direct credit in Australian dollars into the bank account nominated from time to time by Angove. 22. Commission due under clause 21(a) shall be paid to D&D as follows: (a) Angove will issue an invoice addressed to D&D (identifying the customer as consignee) for the relevant goods, together with a credit note for the amount of D&Ds commission on that sale; (b) D&D will be responsible for collecting payment of the amount of Angoves invoice from the customer; (c) D&D will pay the amount of Angoves invoice, less the amount of the credit note, on or before the due date in accordance with clause 23. It is common ground that the combined effect of clauses 20 and 22(c) was to require D&D to account to Angoves within 90 days of the bill of lading date for the price of the goods sold to customers on Angoves behalf, whether or not the price had by then been received from the customers. Finally, it is necessary to refer to clause 37, which deals with certain of the consequences of termination. This provides, so far as relevant: 37. Upon termination of this Agreement for any reason whatsoever: (a) each party must pay to the other all money owing up to and including the date of termination in respect of the sale of Products and Angove PBPs and/or commission thereon, without any deduction, withholding or set off for any reason whatsoever; Termination of this Agreement does not affect the accrued rights or remedies of either party. Obligations expressed to arise or continue on or after termination of this Agreement survive its termination. The Court of Appeal held that D&Ds authority was irrevocable because the general rule that authority can be revoked must yield to what the parties have agreed should be their respective legal rights and obligations on the termination of the agency (para 25). Construing the ADA, they held that a continuing right to collect the price from the customer was implicit in (i) D&Ds right to deduct commission from the price before remitting it to Angoves, and (ii) D&Ds obligation to account to Angoves for the price within 90 days of the bill, whether or not it had by then been received from the customer. This was because these features of the agreement gave rise to liabilities of Angoves to D&D, which could be set off against sale proceeds in D&Ds hands. It will be apparent from this that the Court of Appeal applied only part of the test. The general rule is that an agents authority is revocable even if it is agreed to be irrevocable. It cannot therefore be enough to exclude the general rule that the authority is agreed to be irrevocable. What has to be agreed is not just that the authority is to be irrevocable but that it is intended to secure the financial interest of the agent. Both are questions for the construction of the agreement. The Court of Appeal did not address the latter criterion. of them was satisfied, for the following reasons: It is convenient to deal with both conditions together. In my opinion, neither (1) D&D had express authority to collect from the customer under clause 22(b), and it would have been simple enough to provide in terms that it was irrevocable. But it is not expressed to be irrevocable or to survive the termination of the agreement. So far as the language offers any indication, it is to the opposite effect. By virtue of the final paragraph of clause 37, authority to collect the price would survive the termination of the agreement only if it constituted an accrued right or remedy of the agent. But it is described in clause 22(b) as a responsibility, not a right. I would accept that for the purpose of clause 37 a provision may be expressed to survive termination if, although not spelled out in so many words, it is nevertheless a sufficiently clear implication from the express terms. But for the following reasons I consider that no such implication is possible. (2) The first point to be made is that while D&D assume the responsibility of collecting payment from customers to whom they sell as Angoves agent, there is nothing to stop the customer from paying Angoves directly. Under the standard terms required to be agreed with the customer the price is payable to Angove, which means Angove Pty Ltd, and includes D&D Wines International Ltd, where it acts as agent for Angove Pty Ltd. This is consistent with clause 20, which envisages that payment may be made to Angoves by D&D or directly by the customer. This makes it, as it seems to me, difficult to regard collection from the customer as a right, as opposed to a function of D&D, and even more difficult to regard it as a security. (3) It is correct that D&Ds right to commission under clause 21 survives the termination of the agreement, because it accrues unconditionally when the sale is made, therefore before termination. But the question is whether the right to deduct it from the price under clause 22(c) is a mere procedural mechanism or a security. It is not the only way of recovering it. If the price is paid directly by the customer to Angoves, the commission is payable by Angoves directly. In that event D&D would lose the ability to set off the commission against any sale proceeds in their hands. But the irrevocability of D&Ds authority cannot be inferred from the mere fact that D&D would to some extent and in some circumstances benefit if it was so. (4) Much the same point may be made about D&Ds obligation under clauses 20 and 22(c) to account to Angoves for the price within 90 days of the bill of lading date. This was a right of Angoves. It accrued when the goods were shipped, albeit that payment would not be due until later. It follows, as the Court of Appeal held, that in relation to goods shipped before the termination of the ADA it survived that event, just as it would have done if D&D had bought the goods in their own right. Clause 20 applies in both cases. It does not, however, follow that D&D had the continuing authority of Angoves to collect the price from the customer. Once they had paid the price to Angoves, they were entitled at common law to collect it from the customer on the ground that they had compulsorily discharged the customers liability for the price: Moule v Garrett (1872) LR 7 Ex 101; Ibrahim v Barclays Bank Plc [2013] Ch 400. The source of this right is the law of unjust enrichment. It is not the authority of Angoves, who have no further standing in the matter once they have been paid. (5) It is inherently improbable that the parties should have intended the authority to be irrevocable. They had expressly envisaged the possibility of insolvency and provided for a mutual right of termination in that event. For an exporter in particular, there are particular problems associated with financial dealings with an insolvent agent for sale, which Angoves clearly wished to avoid. If the agents authority to collect money from third parties survives termination the effect would be to secure D&Ds right to 5% commission in the event of the insolvency of Angoves, but at far greater cost to Angoves in the event of the insolvency of D&D. They would have to prove as unsecured creditors in the liquidation for the remaining 95%. I conclude that Angoves notice of 23 April 2012 was immediately effective to terminate D&Ds authority to collect on the outstanding invoices. This means that it is strictly speaking unnecessary to deal with the second point, namely whether the funds paid by customers to D&D since the commencement of the administration are held in trust for Angoves. But since the point is of some general importance and has been fully argued before us, I think it right to deal with it. I do so on the assumption that (contrary to the conclusion that I have reached) Angoves notice of termination was not effective to terminate D&Ds authority to collect on the invoices. An agent has a duty to account to his principal for money received on his behalf. It is, however, well established that the duty does not necessarily give rise to a trust of the money in the agents hands. That depends on the intentions of the parties derived from the contract, or in some cases from their conduct. As a broad generalisation, the relations between principal and agent must be such that the agent was not at liberty to treat as part of his general assets money for which he was accountable to his principal. This will usually, but not invariably, involve segregating it from his own money. The editors of Bowstead and Reynolds on Agency, 20th ed (2014), 219, para 6 041, put the matter in this way: the present trend seems to be to approach the matter more functionally and to ask whether the trust relationship is appropriate to the commercial relationship in which the parties find themselves; whether it was appropriate that money or property should be, and whether it was, held separately, or whether it was contemplated that the agent should use the money, property or proceeds of the property as part of his normal cash flow in such a way that the relationship of debtor and creditor is more appropriate. The judge held that in principle any liability of D&D to account for money collected from customers under the ADA gave rise to a purely personal liability sounding in debt, and not to a proprietary claim; whereas money collected outside the ADA, after their authority had been terminated, would be held in trust for Angoves. However, he concluded that none of this mattered because the proceeds of the invoices fell to be dealt with in accordance with the escrow arrangements. There is no longer any issue on these points. In the Court of Appeal matters took a different turn. Before the hearing of the appeal the court wrote to the parties drawing their attention to a passage from the 18th edition of Lewin on Trusts (2006), which suggested that the proceeds of the invoices might be held on a constructive trust for Angoves even if there was a continuing authority to collect it. In the 19th ed (2015), the corresponding passage reads: Unconscionable assertion of title to money payments by agents Money received by an agent, though not held on an express trust for his principal, nor on a Quistclose trust, may be held on a constructive trust for his principal on the ground that it would be unconscionable for the agent to assert a title to the money having regard to the circumstances of the agent at the time of receipt. Such a constructive trust has been held to arise where the agent receives money from his principal for application by the agent under a contract which the agent will be unable to perform because of his pending insolvency, or where the agent receives money from a third party for onward transmission to his principal which he is unable to do in view of his insolvency, even though the contract with the principal negatives an express trust. The authorities cited for these propositions are the decisions of Bingham J in Neste Oy v Lloyds Bank Plc [1983] 2 Lloyds Rep 658 and Nicholas Warren QC, sitting as a deputy High Court Judge in In re Japan Leasing Europe Plc [1999] BPIR 911. Neste Oy v Lloyds Bank Plc concerned the right of the bank to combine the accounts of an insolvent shipping agent called Peckston Shipping Ltd (or PSL). PSL settled on behalf of their shipowner clients bills payable to harbour authorities, pilots, fuel merchants, and other providers of goods and services. The shipowners sometimes put them in funds in advance and sometimes reimbursed them in arrears. The plaintiff shipowners claimed that the unspent balance of six payments made by them to a general account of PSL were held for them in trust. Their primary case was that the payments were subject to an implied trust to pay the money to the suppliers. This arose either by virtue of the agency relationship or as a special purpose (or Quistclose) trust: see Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567. Bingham J rejected this, but held that there was a constructive trust of the sixth payment, which had been received after the directors of PSL had concluded that their company was insolvent. The judge took as his starting point a quotation from Storys Commentaries on Equity Jurisprudence, 2nd ed (1839), vol 2, para 1255, which had been cited by Goulding J in Chase Manhattan Bank NA v Israel British Bank (London) Ltd [1981] Ch 105, 117 118 as being in accord with the general principles of equity as applied in England: the receiving of money which consistently with conscience cannot be retained is, in equity, sufficient to raise a trust in favour of the party for whom or on whose account it was received. This is the governing principle in all such cases. And therefore, whenever any controversy arises, the true question is, not whether money has been received by a party of which he could not have compelled the payment, but whether he can now, with a safe conscience, ex aequo et bono, retain it. Applying this statement to the facts before him, he held, at p 666: Given the situation of PSL when the last payment was received, any reasonable and honest directors of that company (or the actual directors had they known of it) would, I feel sure, have arranged for the repayment of that sum to the plaintiffs without hesitation or delay. It would have seemed little short of sharp practice for PSL to take any benefit from the payment, and it would have seemed contrary to any ordinary notion of fairness that the general body of creditors should profit from the accident of a payment made at a time when there was bound to be a total failure of consideration. Of course it is true that insolvency always causes loss and perfect fairness is unattainable. The bank, and other creditors, have their legitimate claims. It nonetheless seems to me that at the time of its receipt PSL could not in good conscience retain this payment and that accordingly a constructive trust is to be inferred. In re Japan Leasing Europe Plc [1999] BPIR 911 concerned what was in effect a hire purchase agreement for an aircraft between four leasing companies and Olympic Airways. The contract documentation provided for the payment of the price in instalments to designated accounts in various currencies of one of the lessors, Japan Leasing. Japan Leasing was to receive the money on behalf of itself and the other three lessors. Japan Leasing went into administration, and a month later received an instalment into the designated accounts. The issue was whether the money was held in trust to pay their shares to the three other lessors. The deputy judge rejected the primary argument of the three solvent lessors that there was an express trust, but held that the last instalment was held on a constructive trust for the other lessors. The judge referred to an observation of the editors of Bowstead and Reynolds (currently the 20th ed (2014), at p 219) immediately after the passage which I have quoted above: a central question, really one of policy, is whether the rights of the principal are sufficiently strong and differentiable from other claims, for him to be given priority in respect of them in the agents bankruptcy. This had been quoted with apparent approval by Lord Goff of Chieveley in Lord Napier and Ettrick v Hunter [1993] AC 713, 744, although it was not the ground on which he decided that case. The deputy judge then referred, at pp 922 923, to Bingham Js decision in Neste Oy. He was invited to distinguish it on the ground that in Neste Oy the agent had no contractual right to the sixth payment. The money had been destined for the payment of service providers who were not beneficiaries of the trust. The only consideration which the agent gave was its performance of its general obligations as a shipping agent, and that was the consideration for its charges, not for the sixth payment. Japan Leasing, by comparison, was contractually entitled to receive the money. Although it was accountable for most of it to the other three lessors, it had given consideration for its share of the instalments. The deputy judge rejected this distinction because it was irrelevant to Bingham Js reasoning: The constructive trust is imposed because it would be unconscionable for the company, as agent, to receive money as agent knowing that it could not account for it to its principal. In this context, the passage from Bowstead quoted in Napier (see above) is relevant and in my judgment the only answer which could be given to the question there posed is that the rights of the vendors are sufficiently strong, and differentiable from other claims, for the vendors to be entitled to a prior position in respect of them on the companys insolvency (whether the question arises in an administration, a voluntary arrangement or a liquidation). The joint administrators have not, of course, acted unconscionably: they have, quite properly, brought the matter before the court. But it would, in my judgment, be unconscionable for them to continue to assert any claim to the moneys. The distinction which Nicholas Warren QC rejected was, however, accepted by the Court of Appeal in the present case. They justified the result in Neste Oy on the ground that the payments to PSL were essentially gratuitous, and that the treatment of the sixth payment as part of the insolvent estate would have been a real windfall for the creditors. The position in Japan Leasing, they thought, was different, for the reason unsuccessfully submitted to Nicholas Warren QC. The Court of Appeal therefore doubted whether the decision was right. On the footing that D&D had a contractual right to collect the proceeds of the invoices in order to recover their commission on the sales, they thought that it could not have been unconscionable for D&D to retain the money and that there was no constructive trust. I agree with the Court of Appeal that there was no constructive trust in this case. But this conclusion does not in my view depend on whether D&D gave consideration for the money. There are, I think, more fundamental objections to the constructive trust proposed by Angoves. At the time when the money was paid by the customers to D&D it was not impressed with any trust in favour of Angoves. If, therefore, a constructive trust came into being, it did so for the first time upon its reaching the hands of the payee. The money would thereafter be traceable for as long as it remained identifiable in the hands of any third party other than a bona fide purchaser for value without notice. It would not form part of the insolvent estate, thereby conferring priority on Angoves over other creditors, including many whose position would otherwise be no different from theirs. This is elementary, and fundamental. The statutory rules for the distribution of insolvent estates represent an important public policy designed to achieve a pro rata distribution of the companys estate between its creditors. For that purpose it is necessary to assess claims as at a fixed and common point of time, namely when the company went into liquidation. The arbitrary character of any cut off date is to some extent mitigated by statutory provisions for adjusting prior transactions prejudicial to creditors, such as preferences and transactions at an undervalue, and imposing liabilities for fraudulent or wrongful trading, but these provisions operate in their current form to restore the insolvent estate for the benefit of creditors as a whole. It is inherent in the statutory scheme of distribution in an insolvency that apparently arbitrary results may follow from the adventitious timing of the commencement of the liquidation, especially in the case of deferred obligations. In principle, an advance payment to a company made before the commencement of the liquidation for an obligation performable afterwards will form part of the companys estate, notwithstanding that its supervening insolvency means that the obligation will not be performed, at any rate in specie. The payer must prove in the liquidation for damages for the breach of contract. Likewise, a contractor providing goods or services on credit will have to prove in the liquidation for the price if the other party becomes insolvent before paying. The rule is the same for money received for his principals account by an agent who becomes insolvent before accounting for it, unless (contrary to the unchallenged finding of the judge in this case) the relations between the parties were such as to make the agent an express trustee of money in his hands. The money will form part of the agents insolvent estate, and the principal must prove in the liquidation. In the nature of things, these consequences involve a detriment for the payer, attributable to the timing of the companys insolvency; and a windfall for the general creditors, since the estate available for distribution will be increased by the payment without being reduced by the cost of performance. As Professor Goode has remarked, It is when [scholars] seek to argue for a proprietary right when there is no proprietary base that the line is crossed between what is fair and what is not, for it is the defendants unsecured creditors who are then at risk. If the court wishes to show its disapproval of the defendants conduct by making a personal restitutionary order, no harm is done. If the defendant is not in bankruptcy the order will be complied with and enforced for the plaintiffs benefit, if the defendant does become bankrupt before then, the plaintiff is properly required to compete with other unsecured creditors. To accord the plaintiff a proprietary right to the benefit obtained by the defendant, and to any profits or gains resulting from it, at the expense of the defendants unsecured bankruptcy creditors seems completely wrong, both in principle and in policy, because the wrong done to the plaintiff by the defendants improper receipt is no different in kind from that done to creditors who have supplied goods and services without receiving the bargained for payment: Goode, Ownership and Obligation in Commercial Transactions (1987) 103 LQR 433, 444. What in effect Bingham J decided in Neste Oy was that the position was different where at the time of the receipt of the money the payee knew that there was bound to be a total failure of consideration. In that event, he would have not just a personal but a proprietary restitutionary claim for the money. English law is generally averse to the discretionary adjustment of property rights, and has not recognised the remedial constructive trust favoured in some other jurisdictions, notably the United States and Canada. It has recognised only the institutional constructive trust: Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, 714 715 (Lord Browne Wilkinson), FHR European Ventures LLP v Cedar Capital Partners LLC [2015] AC 250, at para 47. In the former case, the difference was explained by Lord Browne Wilkinson in the following terms: Under an institutional constructive trust, the trust arises by operation of law as from the date of the circumstances which give rise to it: the function of the court is merely to declare that such trust has arisen in the past. The consequences that flow from such trust having arisen (including the possibly unfair consequences to third parties who in the interim have received the trust property) are also determined by rules of law, not under a discretion. A remedial constructive trust, as I understand it, is different. It is a judicial remedy giving rise to an enforceable equitable obligation: the extent to which it operates retrospectively to the prejudice of third parties lies in the discretion of the court. Bingham Js point of departure in Neste Oy was that the recipient of money may be liable to account for it as a constructive trustee if he cannot in good conscience assert his own beneficial interest in the money as against some other person of whose rights he is aware. As a general proposition this is plainly right. But it is not a sufficient statement of the test, because it begs the question what good conscience requires. Property rights are fixed and ascertainable rights. Whether they exist in a given case depends on settled principles, even in equity. Good conscience therefore involves more than a judgment of the relative moral merits of the parties. For that reason it seems to me, with respect, that Bingham Js observation in Neste Oy that any reasonable and honest director would have returned the sixth payment upon its receipt begs the essential question whether he should have returned it. It cannot be a sufficient answer to that question to say that it would be contrary to any ordinary notion of fairness for the general creditors to benefit by the payment. Reasoning of this kind might be relevant to the existence of a remedial constructive trust, but not an institutional one. The observation of the editors of Bowstead and Reynolds and of Nicholas Warren QC in Japan Leasing that a proprietary claim should be recognised whenever the claim is sufficiently strong and differentiable from other claims to warrant giving it priority over other claims in an insolvency, seems to me to be open to the same objection. In English law, one of the essential requisites for a trust of whatever kind is that there must be identifiable trust property (or its traceable proceeds) in the hands of the recipient which are not available to him as part of his general assets: see Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, 705. The only true exception to this (which did not arise in Neste Oy) is the case of a person liable to account as a constructive trustee on the ground of his dishonest assistance in a breach of trust. The difficulty about the decision in Neste Oy concerning the sixth payment is that Bingham J had rejected the argument that the agency relationship between the shipowners and PSL was such as to impose the status of a trustee on the agents, and had declined to find that the payments were subject to a special purpose trust. He had rejected these submissions mainly because the agent was not expected to keep the funds remitted to it by the shipowners separate from its own, but was entitled to treat them as part of its general assets: see pp 664 665. It follows that in paying money to PSL the shipowners intended to part with any interest in the money, subject only to a purely personal obligation of PSL to account to them for what they had done with it and to repay any balance due as a debt. The judge made a similar finding in the present case. The exact circumstances in which a restitutionary proprietary claim may exist is a controversial question which has given rise to a considerable body of judicial comment and academic literature. For present purposes it is enough to point out that where money is paid with the intention of transferring the entire beneficial interest to the payee, the least that must be shown in order to establish a constructive trust is (i) that that intention was vitiated, for example because the money was paid as a result of a fundamental mistake or pursuant to a contract which has been rescinded, or (ii) that irrespective of the intentions of the payer, in the eyes of equity the money has come into the wrong hands, as where it represents the fruits of a fraud, theft or breach of trust or fiduciary duty against a third party. One or other of these is a necessary condition, although it may not be a sufficient one. Neither of them was satisfied in Neste Oy. In particular, the prospect of a total failure of consideration, however inevitable, is not a circumstance which could have vitiated the intention of the shipowner to part with its entire interest in the money. The right to the restitution of money paid on a consideration which has wholly failed is simply a process of contractual readjustment, giving rise like the contract itself to purely personal obligations. If an actual total failure of consideration does not give rise to a proprietary restitutionary right, I do not see how a prospective one can do so. In my view, the decision in Neste Oy cannot be justified, at any rate on the ground on which it was decided. Japan Leasing was in my view wrongly decided, not just for that reason, but for the reason given by the Court of Appeal, namely that the recipient having a contractual right to the money, it could not be unconscionable for them to receive it into their account. Mistake was not argued in Neste Oy. Bingham J had refused to allow the shipowners to rely on it because they took the point too late. But it has subsequently been suggested that since the shipowners presumably paid the money in the belief that PSL was in a position to disburse it to the service providers, mistake would have been a better basis for the decision: In re Farepak Food and Gifts Ltd [2008] BCC 22, at paras 39 40 (Mann J). Whether that is correct is not a question which arises on this appeal. The money was paid to D&D by the customers, not by Angoves. They no doubt paid it in the belief that D&D was authorised to collect it, or at least that payment to them would discharge their liability for the price. The question of trust arises on the hypothesis that D&D was authorised to collect the proceeds of the invoices, and on that hypothesis their belief was not mistaken. Conclusion I would allow the appeal and declare that the fund representing the proceeds of the invoices is payable to Angoves. |
This case raises important issues about the meaning and application in practice of section 115(7) of the Police Act 1997 as to the information that is to be provided by the chief officer of a police force to the Secretary of State for inclusion in an enhanced criminal record certificate (ECRC). The section in which this subsection appears provides for enhanced criminal record checks to be carried out in various specified circumstances, such as where people are applying to work with children or vulnerable adults, for various gaming and lotteries licences, for registration for child minding and day care or to act as foster parents or carers. The check is enhanced in the sense that it will involve a check with local police records as well as the centralised computer records held by the Criminal Records Bureau. As well as information about minor convictions and cautions, it will reveal allegations held on local police records about the applicants criminal or other behaviour which have not been tested at trial or led to a conviction. If the information satisfies the tests that section 115(7) lays down, it must be given to the Secretary of State and the Secretary of State for his part must include it in the ECRC. The question is whether, as it has been interpreted, section 115(7) of the 1997 Act is compatible with the applicants right to respect for his or her private life under article 8 of the European Convention on Human Rights. The leading authority on the meaning and effect of the subsection is R (X) v Chief Constable of the West Midlands Police [2004] EWCA Civ 1068; [2005] 1 WLR 65. Lord Woolf CJ said in para 36 that, having regard to the language of section 115(7), the Chief Constable was under a duty to disclose if the information might be relevant, unless there was some good reason for not making such disclosure. In para 37 he added these words: This was obviously required by Parliament because it was important (for the protection of children and vulnerable adults) that the information should be disclosed even if it only might be true. If it might be true, the person who was proposing to employ the claimant should be entitled to take it into account before the decision was made as to whether or not to employ the claimant. This was the policy of the legislation in order to serve a pressing social need. In para 41 he said that, as long as the chief constable was entitled to form the opinion that the information might be relevant, it was difficult to see that there could be any reason why the information that might be relevant ought not to be included in the certificate. The problem with this approach, it is said, is that it involves a disproportionate interference with the article 8 right, bearing in mind the damaging effects to the applicant that the disclosure of such information might give rise to. It goes further than is reasonably necessary for the legitimate object of protecting children and vulnerable adults, and it fails to strike a reasonable balance between the interests of the applicant and the wider social interests that the system was designed to serve. The appellant seeks the quashing of the respondents decision to disclose information about her on her ECRC, and a declaration that section 115(7) is incompatible with article 8. Alternatively she submits that section 115(7) should be read down so as to avoid the incompatibility. The legislation Part V of the Police Act 1997 introduced a legislative framework for the disclosure of criminal records to meet a growing need for the release of such information for employment and other purposes. Previously the arrangements were governed by a series of Home Office Circulars on the Disclosure of Criminal Records. It was designed to implement proposals contained in the White Paper On the Record: The Governments Proposals for Access to Criminal Records for Employment and Related Purposes in England and Wales (1996) (Cm 3308) following an earlier Home Office Consultation Paper Disclosure of Criminal Records for Employment Vetting Purposes (1993) (Cm 2319). Among these proposals was one for enhanced criminal record checks, the details of which were set out in Part VI of the White Paper. It was already the practice, in certain particularly sensitive areas of work or licensing where vetting took place, for additional information to be provided from local police records. In the light of responses to the consultation paper it was proposed that information from local police records would be available for prospective employees, trainees and volunteers having regular, unsupervised, contact with children and young people under 18, and those applying for gaming, betting and lottery licences. It was noted in para 29 that the local records held by most police forces contain a range of information about individuals, including convictions and cautions for minor offences as well as information going beyond the formal particulars of convictions but which might nonetheless be of legitimate interest to those considering employing individuals for particularly sensitive posts. Para 30 of the White Paper was in these terms: After very careful consideration the Government has concluded that it is right for such information to continue to be disclosed where there are particularly strong grounds for it, such as to combat the risk of paedophile infiltration of child care organisations. It accepts that stricter guidelines on what may be disclosed would provide reassurance to those subject to checking in this way and that they should normally be able to see any information of this kind which may be made available on them. Part V of the 1997 Act provided for the issue of three types of certificates. Section 112 dealt with the issue of a criminal conviction certificate. This is a certificate which gives prescribed details of every conviction of the applicant which is recorded on central records, or states that there is no such conviction. Section 113 dealt with the issue of a criminal record certificate. This is a certificate which gives the prescribed details of every conviction within the meaning of the Rehabilitation of Offenders Act 1974 and a caution, or states that there is no such matter. A certificate of this kind may only be issued where the application is countersigned by a registered person and is accompanied by a statement by that person that the information is required for a question in relation to which section 4(2)(a) or (b) of the Rehabilitation of Offenders Act 1974 has been excluded by an order of the Secretary of State. Section 115 dealt with the issue of an enhanced criminal record certificate. Sections 113 and 115 were repealed with effect from 6 April 2006 and replaced by sections 113A and 113B, inserted in the 1997 Act by section 163(2) of the Serious Organised Crime and Police Act 2005. This case concerns an ECRC that was issued under section 115 before it was repealed. To avoid confusion I shall concentrate on the wording of that section. Section 115, as amended by the Criminal Justice Act 2003 and so far as material for present purposes, provided: (1) The Secretary of State shall issue an enhanced criminal record certificate to any individual who (a) makes an application under this section in the prescribed manner and form countersigned by a registered person (2) An application under this section must be accompanied by a statement by the registered person that the certificate is required for the purposes of an exempted question asked (a) in the course of considering the applicants suitability for a position (whether paid or unpaid) within subsection (3) or (4), or (b) for a purpose relating to any of the matters listed in subsection (5) (3) A position is within this subsection if it involves regularly caring for, training, supervising or being in sole charge of persons aged under 18. (4) A position is within this subsection if (a) it is of a kind specified in regulations made by the Secretary of State, and (b) it involves regularly caring for, training, supervising or being in sole charge of persons aged 18 or over. In subsection (5) a list was given of applications for various gaming and lotteries licences, for registration for child minding or providing day care and the placing of children with foster parents. This list has been extended by subsequent amendments to include, among others, applications for registration as a social worker or a social service worker and registration as a teacher under section 3 of the Teaching and Higher Education Act 1998. Section 115(10) provided that the expressions central records, exempted question and relevant matter had the same meaning as in section 113, subsection (5) of which was in these terms: Sections 115(6) and 115(7) provided as follows: In this section central records means such records of convictions and cautions held for the use of police forces generally as may be prescribed; exempted question means a question in relation to which section 4(2)(a) or (b) of the Rehabilitation of Offenders Act 1974 (effect of rehabilitation) has been excluded by an order of the Secretary of State under section 4(4); relevant matter means (i) the the meaning of a conviction within Rehabilitation of Offenders Act 1974, including a spent conviction, and a caution. (ii) (6) An enhanced criminal record certificate is a certificate which gives (a) (i) the prescribed details of every relevant matter relating to the applicant which is recorded in central records, and (ii) any information provided in accordance with subsection (7), or states that there is no such matter or information. (b) (7) Before issuing an enhanced criminal record certificate the Secretary of State shall request the chief officer of every relevant police force to provide any information which, in the chief officers opinion (a) might be relevant for the purpose described in the statement under subsection (2), and (b) ought to be included in the certificate. These provisions have been re enacted in virtually the same terms by sections 113B(3) and 113B(4) which were inserted into the 1997 Act by section 163(2) of the Serious Organised Crime and Police Act 2005. Section 124 provides that it is an offence for information provided for criminal record checks and enhanced criminal record checks to be disclosed by members and staff of registered bodies and by members and staff of unregistered bodies and individuals and their employees who receive the information following an application which those bodies or individuals have countersigned, unless the disclosure is made in the course of their duties for the purposes authorised by that section. The facts The appellant L is the mother of X who was born on 21 April 1989. He has a much older sister. The family has come to the attention of both the police and social services. Due to concerns about X the local authority arranged a child protection conference which took place on 29 January 2002. At that time X was living with his father and not with the appellant. At that conference a number of concerns were expressed about Xs behaviour. The social worker reported concerns that X might be exposed to drugs and that the appellant was not prepared to work with social services. She said that the general view of all the professionals was that X was at risk within his family because the appellant had very little control of his behaviour and knowledge of his whereabouts for the large part of the day. The conference also received detailed reports from his school of his poor attendance and his poor behaviour at school. It was told that he was currently excluded from school for having assaulted his learning support teacher. The police child protection officer said that there had been a lot of police involvement with X due to his offending and because he had been reported missing on numerous occasions by the appellant. The police felt that many of the issues stemmed from Xs older sister Y who was involved in drugs and prostitution, as X was a frequent visitor to Ys home. As for the appellants contribution to the discussion, the minutes recorded that she refused to accept that Xs behaviour was a concern and targeted the social worker as the cause of all her problems. The decision of the conference was that Xs name should be placed on the child protection register, under the category of neglect. The conference made fourteen recommendations for further action by the authorities, most of which were not implemented. A review conference took place on 26 April 2002, and on 22 November 2002 there was a second review conference. Further recommendations were made, again mostly not implemented, and it was confirmed that X should remain on the child protection register. It was noted at the conference on 22 November 2002 that X was assaulted by his father on 25 September 2002 and that he had returned to live with the appellant. On 27 September 2002 he was arrested for a robbery that was carried out on 12 September 2002. He was charged with this offence on 2 October 2002, and on 31 March 2003 he was convicted and sentenced to three years detention in a young offender institution. In June 2003 his name was removed from the child protection register as he was in detention. He was released on 28 February 2004. From February to December 2004 the appellant was employed by an employment agency, Client Services Education, which provides staff to schools. Between March and July 2004 she worked as a midday assistant at a secondary school. Her job involved supervising children in the lunchtime break both in the canteen and in the playground. She was required to ensure that the children did not go outside the school gates, hurt themselves and get into fights. She shared these responsibilities with four other assistants. At the start of her employment the agency applied for an ECRC in accordance with section 115 of the 1997 Act. The application was countersigned by Isabelle Logerot of the Registered Body Education (Waltham Forest Ltd), which was the registered person for the purposes of that section. The position that the appellant had applied for was described in the application as a casual midday assistant. The police were not given any other details about the work that this post would involve. The appellant signed the application to indicate her consent. Having done so, she returned it to the agency so that they could apply for the police check. On 16 December 2004 the ECRC was issued in response to the police check. It recorded that the appellant had no criminal convictions and that no information on her was recorded either on the list held under section 142 of the Education Act 2002 or on the Protection of Children Act 1999 list. But in the box entitled Other relevant information disclosed at the Chief Police Officers discretion the Secretary of State disclosed the following information as having been supplied by the Metropolitan Police Service: [L], born [date], came to police notice in January 2002 when her son, aged 13, was put on the child protection register under the category of neglect. It was alleged that the applicant had failed to exercise the required degree of care and supervision in that her son was constantly engaged in activities including shoplifting, failing to attend school, going missing from home, assaulting a teacher at school and was excluded from school. Additionally, it was alleged that during this period the applicant had refused to co operate with the social services. Her son was removed from the child protection register in June 2003 after he had been found guilty of robbery and receiving a custodial sentence. Shortly afterwards the appellant was informed by the agency that her services were no longer required. The appellant then sought judicial review of the Commissioners decision to disclose the information contained in the ECRC. Her application was dismissed by Munby J on 19 March 2006: [2006] EWHC 482. The Court of Appeal granted leave to appeal on 14 July 2006, and on 21 August 2006 the Secretary of State made an application to intervene which was granted on 18 September 2006. On 1 March 2007 the Court of Appeal (Longmore, Smith and Moore Bick LJJ) dismissed the appeal: [2008] 1 WLR 681. On 5 March 2008 the appellants solicitors wrote to the Commissioner to enquire whether he would consider removing the records which were the subject of the appeal from the information held by the Criminal Records Bureau. The Commissioner replied on 13 March 2008 in these terms: We have only one record of an application from your client and that was in 2004. The disclosure that was made then will be made in the future if she applies for a job that requires a CRB enhanced criminal record certificate. The disclosure could only change if new information concerning your client came to light. We cannot accede to your request to remove the information we hold in our records. I accept that the nature of the disclosure effectively cuts your client off from working with children and vulnerable adults, but this does not necessarily affect her employment prospects. The vast majority of jobs available do not require enhanced disclosure. The issue As the appellants exchange of correspondence with the Commissioner shows, the current approach to the disclosure follows the guidance that was given in R (X) v Chief Constable of the West Midlands Police [2005] 1 WLR 65. It gives priority to the interests of children and vulnerable adults. The appellants complaint is that it gives insufficient weight to the interests of the applicant, for whom disclosure will not infrequently lead to loss of employment and to long term inability to work in any form of employment involving care for or contact with children or vulnerable adults. The reality will often be, as Baroness Hale of Richmond said in R (Wright) and others v Secretary of State for Health [2009] UKHL 3; [2009] 2 WLR 267, para 22, that the particular job will be lost to the applicant for good and that she will be most unlikely to be able to obtain any other job of that kind. The way the system is operated ensures that the same information will always be disclosed whenever she applies for one. This has all the hallmarks of a rather rigid, mechanistic system, that pays too little attention to the effects of disclosure on the applicant. In R (Wright) and others v Secretary of State for Health the statutory provisions that were under scrutiny related to a list, known as the POVA list, which the Secretary of State was required to keep of persons who were considered unsuitable to work with vulnerable adults under section 81 of the Care Standards Act 2000. If a care workers case was referred to the Secretary of State together with information from which it appeared that it might be appropriate for her to be included on that list, the Secretary of State was required by section 82(4)(b) of the Act to include her name on the list provisionally pending the determination of the reference. The effect of listing was to prevent any new employer from employing the listed person in a care position or to deprive her of such a position if she already had one. By reason of section 92 of the Act the worker was also listed provisionally on the list, known as the POCA list, of persons considered to be unsuitable to work with children. No provision was made for the worker to be accorded a hearing before she was provisionally listed, and once the worker was provisionally listed it could take months before a decision whether or not to confirm that person on the list was made. The result was that the care worker might suffer irreversible damage to her right to work in her chosen profession, as a result of allegations which might turn out to be unfounded or at the very least blown out of all proportion. The House held that the denial of an opportunity to make representations before her name was included in the list was incompatible with the care workers rights under article 6(1). It also held that the low threshold for provisional listing was a disproportionate interference with her article 8 rights. Baroness Hale explained the basis for this finding in para 36: There will be some people for whom the impact upon personal relationships is so great as to constitute an interference with the right to respect for private life and others for whom it may not. The scope of the ban is very wide, bearing in mind that the worker is placed on both the POVA and POCA lists. The ban is also likely to have an effect in practice going beyond its effect in law. Even though the lists are not made public, the fact is likely to get about and the stigma will be considerable. The scheme must therefore be devised in such a way as to prevent possible breaches of the article 8 rights. A declaration was made that section 82(4)(b) was incompatible with the appellants rights under article 6 and article 8 of the Convention. The appellant does not suggest that her rights under article 6(1) are in issue in this case. The scheme that section 115 of the 1997 Act provides for is not directly comparable with that under the 2000 Act. Unlike the scheme for provisional listing under the 2000 Act, the provision of information in an ECRC does not automatically lead to the loss or denial of employment. The issue as to its effect is left to the judgment of the employer. The statute does not prevent the applicant from making representations at any stage to the police or to a prospective employer. Section 117 provides that an applicant who believes that the information contained in a certificate is inaccurate may make an application in writing to the Secretary of State for a new certificate. Nevertheless she submits that, for the same reasons that provisional listing under the scheme established under the Care Standards Act 2000 was capable of causing a breach of article 8 rights, so too is disclosure of information about an applicant on an ECRC. As Mr Cragg put it, the state has a duty to provide a scheme which complies with article 8(2). Section 115 was enacted for a legitimate purpose. But he submitted that, as currently interpreted, it is not a measure which can be regarded as proportionate. The threshold for disclosure is too low, the description of the information that can be disclosed is too broad and there are insufficient protections in the scheme. Article 8(1) Article 8(1) provides that everyone has the right to respect for his private life, his home and his correspondence. The right that the appellant invokes in this case is her right to respect for her private life. Ms Barton for the Commissioner submitted that the appellants rights under article 8 were not engaged at all by the scheme that section 115 sets out. This was because much of the information that was included in an ECRC was quite properly in the public domain anyway, and because it was the appellant herself who had applied for the certificate. Mr Eadie QC for the Secretary of State adopted a more nuanced approach to these issues. He said that the answer to the question whether there was an interference with the applicants article 8 rights had to take account of the fact that the system was not dealing wholly with the private sphere and of the nature and type of the information that was made available. He did not suggest that the applicants consent on its own provided an answer to it. But account had to be taken of the fact that the regime left it to the police to judge what was relevant, that the final decision on relevance was left to the employer, that the system was less draconian than that which was under consideration in R (Wright) and others v Secretary of State for Health and that there were strict controls on what could be done with the information in the hands of the employer as further disclosure was prohibited. The word engaged, which Ms Barton used when she said that article 8 was not engaged in this case at all, requires to be examined with some care. It does not form part of the vocabulary of the European Court and, as Laws LJ said in Sheffield City Council v Smart [2002] EWCA Civ 04, [2002] HLR 639, para 22, its use is liable to be misleading and unhelpful. In Harrow London Borough Council v Qazi [2003] UKHL 43, [2004] 1 AC 983, para 47 I said that I would not for my part regard its use as objectionable, so long as there was no doubt what it means in this context. I drew attention to the words of Sir Gerald Fitzmaurice in his dissenting opinion in Marckx v Belgium (1979) 2 EHRR 330, in which he said that the question was whether the provision was applicable a concept which is juridically distinct from that of whether the provision has been breached. In other words, the question is whether the issue that has been raised is within the scope of the article. If it is not within its scope, the question of a possible breach of it does not arise at all. If it is, the question whether there is an interference with it which requires to be justified under article 8(2) is a separate question. The question whether something falls within the ambit of any of the rights or freedoms set forth in the Convention for the purpose of the prohibition of discrimination in article 14 reflects this approach. The issue as to what does and does not lie within the scope of the article 8 right to respect for private life has been examined in some detail in R (Wright) v Secretary of State for Health, paras 30 32 and in In re British Broadcasting Corporation [2009] UKHL 34, [2009] 3 WLR 142, paras 18 20. In the context of this case it is sufficient to note that it has been recognised that respect for private life comprises, to a certain degree, the right to establish and develop relationships with other human beings: X v Iceland (1976) 5 DR 86; Niemietz v Germany (1992) 16 EHRR 97, para 29. Excluding a person from employment in her chosen field is liable to affect her ability to develop relationships with others, and the problems that this creates as regards the possibility of earning a living can have serious repercussions on the enjoyment of her private life: see Sidabras v Lithuania (2004) 42 EHRR 104, para 48. She is entitled also to have her good name and reputation protected: see Turek v Slovakia (2006) 44 EHRR 861, para 109. As Baroness Hale said in R (Wright) v Secretary of State for Health, para 36, the fact that a person has been excluded from employment is likely to get about and, if it does, the stigma will be considerable. There is another aspect of the right to respect for private life that needs to be brought into account, as it is directly relevant to the effect on a persons private life of the release of information about him that is stored in public records. In R v Chief Constable of the North Wales Police, Ex p AB [1999] QB 396 Lord Bingham of Cornhill CJ said in the Divisional Court that he was prepared to accept (without deciding) that disclosure of personal information that the applicants wished to keep to themselves could in principle amount to an interference with the right protected by article 8: [1999] QB 396, 414. At p 416 Buxton J put the point more strongly when he said: I do however consider that a wish that certain facts in ones past, however notorious at the time, should remain in that past is an aspect of the subjects private life sufficient at least to raise questions under article 8 of the Convention. Buxton Js observations were endorsed by Lord Woolf MR, delivering the judgment of the Court of Appeal: [1999] QB 396, 429. The Convention was not, of course, then part of domestic law and Buxton Js observations in Ex p AB were not supported by reference to any decisions in Strasbourg. But subsequent decisions by the European Court do, I think, provide support for them. In Rotaru v Romania, (2000) 8 BHRC 449 Application no 28341/95, 4 May 2000, the applicant who was a lawyer by profession complained of a violation of his right to respect for his private life on account of the use against him by the Romanian Intelligence Service of a file which contained information about his conviction for insulting behaviour because, when he was a student, he had written two letters of protest against the abolition of freedom of expression when the communist regime was established in 1946. In para 43 the court, referring to its judgment in Leander v Sweden (1987) 9 EHRR 433, para 48, said that the storing of information relating to an individuals private life in a secret register and the release of such information come within the scope of article 8(1): Moreover, public information can fall within the scope of private life where it is systematically collected and stored in files held by the authorities. This is all the truer where such information concerns a persons distant past. In Segerstedt Wiberg and others v Sweden, Application no 62332/00, 6 June 2006, para 72 and Cemalettin Canli v Turkey, Application no 22427/04, 18 November 2008, para 33, referring to its previous decision in Rotaru, the court again said that public information can fall within the scope of private life when it is systematically collected and stored in files held by the authorities. This line of authority from Strasbourg shows that information about an applicants convictions which is collected and stored in central records can fall within the scope of private life within the meaning of article 8(1), with the result that it will interfere with the applicants private life when it is released. It is, in one sense, public information because the convictions took place in public. But the systematic storing of this information in central records means that it is available for disclosure under Part V of the 1997 Act long after the event when everyone other than the person concerned is likely to have forgotten about it. As it recedes into the past, it becomes a part of the persons private life which must be respected. Moreover, much of the other information that may find its way into an ECRC relates to things that happen behind closed doors. A caution takes place in private, and the police gather and record information from a variety of sources which would not otherwise be made public. It may include allegations of criminal behaviour for which there was insufficient evidence to prosecute, as in R v Local Authority and Police Authority in the Midlands, Ex p LM [2000] 1 FLR 612 where the allegations of child sexual abuse were unsubstantiated. It may even disclose something that could not be described as criminal behaviour at all. The information that was disclosed on the appellants ECRC was of that kind. The ECRC disclosed that the appellants son X was put on the child protection register and that he was removed from it after he had been found guilty of robbery and received a custodial sentence. His conviction could be seen as public information because his trial was held in public. But the fact that the appellant was the mother of the person who had been convicted and sentenced to detention was private information. So too was information about the proceedings in which it was alleged that she failed to exercise the required degree of care and supervision of her son and that she had refused to co operate with the social services. They were recorded in the minutes of the child protection conference on 29 January 2002. But the conference did not take place in public, nor were the minutes open to public scrutiny. These were aspects of her private life which had to be respected when the decision was taken as to whether or not details which had been stored in the police files should be released For these reasons I would reject Ms Bartons submission that article 8(1) is not engaged in this case. It seems to me that the decisions which the chief officer of police is required to take by section 115(7) of the 1997 Act are likely to fall within the scope of article 8(1) in every case, as the information which he is considering has been stored in files held by the police. It follows that its disclosure is likely to affect the private life of the applicant in virtually every case. The question in these cases will be whether the interference with her private life can be justified. How the system works in practice The evidence that was before the judge included statements by Detective Chief Inspector Stuart Gibson and by Chief Superintendent Graham Morris. The notes on the relevant case management system (known as CEC) attached to DCI Gibsons statement show that information that the police held in the appellants case was passed to him by a team leader at the end of September 2004 so that he could make a recommendation as to whether any of its contents should be included in the ECRC. He had available to him notes of guidance as to the approach which he was expected to follow. Among other things such as the quality and age of the information, he was expected to have regard to human rights issues. For this purpose he had available to him the guidance that was given in a document headed MP9 Human Rights Guidelines. MP9 sets out the steps that the police officer is expected to take to establish whether or not he believes that the impact of disclosure on the applicants private life outweighs the potential impact on the vulnerable group if the information was not disclosed. Those steps are the subject of a risk/human rights rating table, in which four human rights categories are compared with three risk categories. The human rights categories are graded according to the extent to which disclosure would cause disruption to the private life of the applicant or a third party: none, little, moderate or severe. The risk categories are graded according to the degree of risk that failure to disclose would cause to the vulnerable group: severe, moderate or little. The first task is to determine the human rights category of the statement that is being considered for disclosure. The second is to determine its risk category. The third and crucial stage is to check the content of the cell on the table which forms the intersection of the risk and human rights categories. These cells contain either a tick, which indicates that in such a case the information will always be disclosed, or the words carefully consider which indicate that careful consideration is needed to ensure that the rationale for disclosure makes it very clear why the human rights infringement outweighs the risk posed to the vulnerable group. A striking feature of the rating table is that a tick appears in every cell where it is said that a failure to disclose would cause a severe risk to the vulnerable intersects with a human rights category, however severe the disruption that disclosure in that category would cause to the private life of anyone. Where the risk that a failure to disclose would cause is moderate, careful consideration is only required if the disruption to the private life of anyone would be one grade higher: severe. It is only where the risk that a failure to disclose would cause little quantifiable risk to the vulnerable group that careful consideration is required if the corresponding human rights category of little disruption to private life applies. In all other cases the corresponding human rights category is trumped by an equivalent risk category. On 30 November 2004 DCI Gibson wrote a minute to Det.Supt. Morris (as he then was) on the CEC notes informing him that, having considered what he described as a mountain of information a large part of which was rumour, conjecture and uncorroborated allegations, the only part of it that he considered it safe to disclose was that surrounding the appellants son being the subject of inclusion on the child protection register under the category of neglect. He said that he considered this to be highly relevant as the appellant had consistently displayed a lack of ability to adequately care for and supervise her own child and the registered body should be made aware of her history when considering her employment application. On 2 December 2004 Det.Supt. Morris entered a minute on the CEC agreeing with DCI Gibson. It included the following determination of the human rights issue: The HRA requires a balance to be struck between the right to private life and protecting the vulnerable from moral harm, mental or physical abuse. While individuals should not be at the risk of being for ever hounded, if a person chooses to seek this kind of employment then they put themselves forward into public life and by that choice accept that information may be released. The impact of disclosure may result in his not being employed. While it would not be in societys interest to exclude an applicant from employment, social outlets, etc as this may be a moderating factor on behaviour, the welfare of the vulnerable in respect of whom the risk may exist is of paramount importance, as is their rights that legislation seeks to protect. The decision is one for police and there is no presumption against disclosure, the position is more in favour of disclosure unless there is a good reason for not doing so. (X v WM) It is plain, both from the terms of Det.Supt. Morriss minute and the way the rating table is set out, that the treatment of the human rights issue by the police has been closely modelled on what Lord Woolf CJ said in R (X) v Chief Constable of the West Midlands Police [2005] 1 WLR 65. This impression is reinforced by the approach to this issue of the Home Office circular 5/2005 Criminal Records Bureau: Local Checks by Police Forces. In para 6 it states that a decision on whether information should be disclosed will turn to a large extent on considerations of relevancy, although other facts need to be weighed too, in particular whether the nature of the information and its degree of relevance to the case in hand are such that its disclosure would be reasonable and proportionate, having regard to the applicants right to respect for his or her private life. Para 55 states, under the heading Case Law, that forces and their solicitors will be aware of the Court of Appeals judgment in that case. So it is now necessary to look more closely at that case, and to consider whether the Court of Appeal struck the balance in the right place as proportionality requires if section 115(7) is to be applied compatibly with article 8. R (X) v Chief Constable of the West Midlands Police This was a case where a man who applied for a job as a social worker had no previous convictions. He had been charged with indecent exposure, but the proceedings were discontinued when the alleged victim failed to identify him. The social work agency which was dealing with his job application applied for an ECRC. The Chief Constable, as he was required to do, issued an ECRC to the agency relating to the applicant. It contained details of the allegations of indecent exposure under the heading of other relevant information. When the Chief Constables decision to disclose this information came before him for judicial review, Wall J held that the duty to act fairly required the Chief Constable to permit the claimant to make representations as to what was proposed to be disclosed and that, on the facts, there had not been a pressing need for disclosure: [2004] EWHC 61 (Admin), [2004] 1 WLR 1518. Wall J referred in paras 71 to 80 of his judgment to what was said R v Chief Constable of the North Wales Police, Ex p AB [1999] QB 396 by Lord Bingham of Cornhill CJ in the Divisional Court where at p 410 he stressed the importance of considering each case carefully on its own facts and by Lord Woolf MR in the Court of Appeal where at p 428 he too said that each case must be judged on its own facts. He referred also to Dyson Js judgment in R v Local Authority and Police Authority in the Midlands, Ex p LM [2000] 1 FLR 612 in which the approach that was to be taken to section 115(7) of the 1997 Act was directly in issue, where he said at p 622: In my view, the guiding principles for the exercise of the power to disclose in the present case are those enunciated in R v Chief Constable of the North Wales Police, Ex p AB. Each of the respondent authorities had to consider the case on its own facts. A blanket approach was impermissible. Having regard to the sensitivity of the issues raised by the allegations of sexual impropriety made against LM, disclosure should only be made if there is a pressing need. Disclosure should be the exception, and not the rule. In para 84 Wall J said that, while section 115(7) defined the parameters of the Chief Constables discretion, it did not exclude the operation of the common law principles as to its exercise. In para 85 he said that, as all parties in those proceedings accepted, the discretion must also be exercised in compliance with article 8(2) of the Convention and that it seemed to him to be only a very short step to an acceptance that the common law principles set out in Ex p AB as accepted by Dyson J in Ex p LM also applied. In para 89 he said: The disclosure of information which (as here) has not been the subject of judicial adjudication, which is highly contentious and which, if disclosed is likely to render the claimant permanently unemployable in his chosen profession plainly requires what the European court described as a pressing need to made disclosure appropriate. In para 90, however, he accepted that the need to protect children and vulnerable adults from abuse by those employed to care for them is a pressing social need and in para 91, having noted that it was at least highly arguable that the effect of section 115(7) was to displace the common law presumption against disclosure, he said that he proposed to approach the question on the basis that there was no presumption against disclosure and that the circumstances identified in section 115(7) did identify a pressing need: As will become apparent, however, this does not mean that disclosure of additional, non conviction information under section 115 is automatic, or that it is not surrounded by the stringent conditions of natural justice and procedural fairness. He held that there had been no proper assessment of the effect on the claimant of disclosure being given, and that the information ought not to have been disclosed. Wall Js decision was reversed in the Court of Appeal: [2005] 1 WLR 65. In para 36 Lord Woolf CJ said that the position was more in favour of disclosure than Wall J had indicated: Having regard to the language of section 115, the Chief Constable was under a duty to disclose if the information might be relevant, unless there was some good reason for not making such a disclosure. In para 37, as I noted in para 2 above, he then added these words: This was obviously required by Parliament because it was important (for the protection of children and vulnerable adults) that the information should be disclosed even if it only might be true. If it might be true, the person who was proposing to employ the claimant should be entitled to take it into account before the decision was made as to whether or not to employ the claimant. This was the policy of the legislation in order to serve a pressing social need. In my judgment it imposes too heavy an obligation on the Chief Constable to require him to give an opportunity for a person to make representations prior to the Chief Constable performing his statutory duty of disclosure. In para 41 he considered the effect of article 8(2), on the assumption that article 8 had a role to play in the decision of the Chief Constable: on that assumption, how can the Chief Constables decision to disclose be challenged under article 8. As already indicated, the Chief Constable starts off with the advantage that his statutory role is not in conflict with article 8, because the statute meets the requirements of article 8(2). It follows also, that as long as the Chief Constable was entitled to form the opinion that the information disclosed might be relevant, then absent any untoward circumstance which is not present here, it is difficult to see that there can be any reason why the information that might be relevant, ought not to be included in the certificate. I accept that it is possible that there could be cases where the information should not be included in the certificate because it is disproportionate to do so; the information might be as to some trifling matter; it may be that the evidence made it so unlikely that the information was correct, that it again would be disproportionate to disclose it. These were not, in my judgment, the situations on the facts before the Chief Constable. It is plain that the effect of this approach is to encourage disclosure of any information that might be relevant, and to give priority to the social need that favours disclosure over respect for the private life of the applicant and of any third party who may be affected by the disclosure. It was also a significant departure from the way the White Paper envisaged the scheme would be operated: see para 5, above. Discussion Section 115(7) requires the Chief Constable to form an opinion as to whether any information (a) might be relevant for the purpose described in the statement under subsection (2), and (b) ought to be included in the certificate. The question whether the information is relevant will depend on the facts of the case. As Richards LJ said in R (Pinnington) v Chief Constable of Thames Valley Police [2008] EWHC 1870 (Admin), para 47, by the terms of the statute it is for the chief constable or his delegate to form an opinion on that issue. In forming his opinion on relevance, the officer must ask himself whether the information might be true, and if it might be true he must consider the degree of connection between the information and the purpose described. It has not been suggested that DCI Gibson and Det.Supt. Morris, who undertook their task with commendable care, were not entitled to conclude that the information that was disclosed on the appellants ECRC might be relevant for the purpose disclosed in the statement that the employment agency provided under section 115(2). The question whether the information might be relevant is not, however, the end of the matter. An opinion must also be formed as to whether it ought to be included in the certificate. It is here, as the guidance that is available to the police correctly recognises, that attention must be given to the impact that disclosure may have on the private lives of the applicant and of any third party who is referred to in the information. For the reasons I have already given (see paras 22 29), I consider that the decisions which the chief officer of police is required to take by section 115(7) of the 1997 Act will fall within the scope of article 8(1) in every case. So in every case he must consider whether there is likely to be an interference with the applicants private life, and if so whether that interference can be justified. This raises the question whether in R (X) v Chief Constable of the West Midlands Police [2005] 1 WLR 65, paras 36 and 37 and especially in para 41, Lord Woolf CJ struck the balance in the right place. Before he addressed himself to this issue, however, Lord Woolf noted in para 20 of the judgment that it had not been suggested in that case that the legislation itself contravenes article 8: No doubt this is because disclosure of the information contained in the certificate would be in accordance with the law and necessary in a democratic society, in the interests of public safety and for the prevention of crime and for the protection of the rights and freedoms of others. This country must, through its legislature, be entitled to enable information to be available to prospective employers, where the nature of the employment means that particular care should be taken to ensure that those who are working with the appropriate categories of persons can be relied on to do so, without those in their care coming to harm if they are under the age of 18 or vulnerable adults. I would respectfully endorse those remarks. Here too it was not suggested by Mr Cragg that the legislation itself contravened article 8, so long as it was interpreted and applied in a way that was proportionate. So the issue is essentially one of proportionality. On the one hand there is a pressing social need that children and vulnerable adults should be protected against the risk of harm. On the other there is the applicants right to respect for her private life. It is of the greatest importance that the balance between these two considerations is struck in the right place. As the many additions that have been made to the list of matters in section 115(5) show, the use that is being made of the requirement to obtain an ECRC has increased substantially since the scheme was first devised. The number of disclosures of information by means of ECRCs has exceeded 200,000 for each of the last two years (215,640 for 2007/2008; 274,877 for 2008/2009). Not far short of ten per cent of these disclosures have had section 115(7) information on them (17,560 for 2007/2008; 21,045 for 2008/2009). Increasing use of this procedure, and the effects of the release of sensitive information of this kind on the applicants opportunities for employment or engaging in unpaid work in the community and their ability to establish and develop relations with others, is a cause of very real public concern as the written intervention submitted by Liberty indicates. As Liberty also point out, it is no answer to these concerns that the ECRC is issued on the application of the persons concerned. It is true that they can choose not to apply for a position of the kind that requires such a certificate. But they have, in reality no free choice in the matter if an employer in their chosen profession insists, as he is entitled to, on an ECRC. The answer to the question whether there is any relevant information is likely to determine the outcome of their job application. If relevant information is disclosed they may as a result be cut off from work for which they have considerable training and experience. In some cases they could be excluded permanently from the only work which is likely to be available to them. They consent to the application, but only on the basis that their right to private life is respected. In my opinion the effect of the approach that was taken to this issue in R (X) v Chief Constable of the West Midlands Police has been to tilt the balance against the applicant too far. It has encouraged the idea that priority must be given to the social need to protect the vulnerable as against the right to respect for private life of the applicant. This is clearly shown by the way the rating table in MP9 is constructed and by Det.Supt. Morriss minute of 2 December 2004. The words ought to be included in section 115(7)(b) require to be given much greater attention. They must be read and given effect in a way that is compatible with the applicants Convention right and that of any third party who may be affected by the disclosure: Human Rights Act 1998 Act, section 3(1). But in my opinion there is no need for those words to be read down or for words to be added in that are not there. All that is needed is to give those words their full weight, so that proper consideration is given to the applicants right to respect for her private life. The correct approach, as in other cases where competing Convention rights are in issue, is that neither consideration has precedence over the other: Campbell v MGN Ltd [2004 ] UKHL 22, [2004] 2 AC 457, para 12, per Lord Nicholls of Birkenhead. The rating table in MP9 should be restructured so that the precedence that is given to the risk that failure to disclose would cause to the vulnerable group is removed. It should indicate that careful consideration is required in all cases where the disruption to the private life of anyone is judged to be as great, or more so, as the risk of non disclosure to the vulnerable group. The advice that, where careful consideration is required, the rationale for disclosure should make it very clear why the human rights infringement outweighs the risk posed to the vulnerable group also needs to be reworded. It should no longer be assumed that the presumption is for disclosure unless there is a good reason for not doing so. In cases of doubt, especially where it is unclear whether the position for which the applicant is applying really does require the disclosure of sensitive information, where there is room for doubt as to whether an allegation of a sensitive kind could be substantiated or where the information may indicate a state of affairs that is out of date or no longer true, chief constables should offer the applicant an opportunity of making representations before the information is released. In R (X) v Chief Constable of the West Midlands Police Lord Woolf CJ rejected Wall Js suggestion that this should be done on the ground that this would impose too heavy an obligation on the Chief Constable [2005] 1 WLR 65, para 37. Here too I think, with respect, that he got the balance wrong. But it will not be necessary for this procedure to be undertaken in every case. It should only be resorted to where there is room for doubt as to whether there should be disclosure of information that is considered to be relevant. The risks in such cases of causing disproportionate harm to the applicant outweigh the inconvenience to the chief constable. Conclusion In my opinion it is possible for section 115(7) to be read and given effect in the way that I have indicated so that decisions are taken which are compatible with the applicants article 8 right. It must follow that it would not be appropriate for a declaration to be made under section 4 of the Human Rights Act 1998 that the subsection is incompatible. I would also decline the appellants request that the decision that was made in her case should be quashed. There is no doubt that the information that was disclosed about her was relevant for the purpose for which the ECRC was being required. As for the question whether it ought to have been disclosed, insufficient weight was given to the appellants right to respect for her private life. But there is no doubt that the facts that were narrated were true. It was also information that bore directly on the question whether she was a person who could safely be entrusted with the job of supervising children in a school canteen or in the playground. It was for the employer to decide what to make of this information, but it is not at all surprising that the decision was that her employment should be terminated. The consequences that disclosure will have for her private life are regrettable. But I can see no escape from the conclusion that the risk to the children must, in her case, be held to outweigh the prejudicial effects that disclosure will give rise to. I would dismiss the appeal. LORD SAVILLE reasons that he gives I would dismiss this appeal. I have had the advantage of reading in draft the judgment of Lord Hope. For the LORD SCOTT The appellant, L, is a lady who wanted to obtain employment in a school as a casual midday assistant. The duties associated with this position involved supervising the schoolchildren during the lunchtime break both in the school canteen and in the school playground. The appellant hoped to obtain this employment via an agency, Client Services Education (CSE), whose business was to provide staff to schools. For the purposes of furthering the prospects of her success in obtaining the desired employment she made an application for an enhanced criminal record certificate pursuant to section 115 of the Police Act 1997 (as amended). My noble and learned friend, Lord Hope, whose opinion on this appeal I have had the advantage of reading in draft, has explained in para 1 and paras 4 to 11 of his opinion the background to and the purpose of section 115 and has set out the terms of the section. I gratefully adopt what he has said and it suffices for present purposes for me to say that whereas a criminal record certificate gives details of any recorded convictions of the individual to whom the certificate relates, an enhanced criminal record certificate (an ECRC) gives, in addition, any information which in the opinion of the chief officer of the relevant police force might be relevant for the purpose described in the application for the certificate and ought to be included in the certificate (see section 115(7)). The chief officer is not expected to embark upon an investigatory inquiry regarding the individual in question but simply to consult the records maintained by the police. It is clear that additional information disclosed under subsection (7) in an ECRC may be information that does not involve any criminal behaviour on the part of the individual in question. It may, for example, as in the present case, relate to the relationship of the individual with some other person who does have a criminal record. In the previous paragraph I said that the appellant had made an application for an ECRC. In para 7 of the Statement of Facts and Issues, prepared for the purposes of this appeal and signed by the respective counsel for the appellant and the respondent, the Secretary of State, it is stated that the application was made by CSE. Lord Hope, in para 14 of his opinion, has repeated that it was CSE that applied for the ECRC. However, subsections (1) and (2) of section 115 seem to me to make it clear that an application for an ECRC must be made by the individual in question. Subsection (1) says that The Secretary of State shall issue an enhanced criminal record certificate to any individual who (a) makes an application under this section in the prescribed form countersigned by a registered person The registered person in the present case was CSE. Subsection (2) says that the application must be accompanied by a statement by the registered person that the certificate is required for the purposes of an exempted question asked (a) in the course of considering the applicants suitability for a position (whether paid or unpaid) within subsections (3) or (4) (emphasis added) Subsection (3) refers to a position which involves regularly supervising or being in sole charge of persons under 18. Subsection (3) clearly covers the position for which the appellant was hoping to be employed and it is she who must have been the applicant whose suitability was under consideration. The statutory obligation imposed on the Secretary of State by subsection (1) is an obligation to issue the ECRC to the individual who makes the application. Subsection (8) imposes a statutory obligation on the Secretary of State to send a copy of the ECRC to the registered person, CSE in the present case. I think, therefore, that it must be wrong to say that the application for the ECRC had been made by CSE. It must have been made by the appellant. It may be that not very much turns on this point for, as Lord Hope has pointed out, also in para 14, The appellant signed the application to indicate her consent. The ECRC issued in response to the application recorded that the appellant had no criminal convictions but under the heading other relevant information disclosed at the chief police officers discretion the Secretary of State included the details regarding the appellants 13 year old son that are recited by Lord Hope in para 15 of his opinion. It is plain that it was the chief police officers opinion that these details were relevant to the employment of the appellant as a casual midday assistant at a school and that they ought to be included in the certificate. The appellant has challenged the chief police officers decision to include the details in question in the certificate. The decision, it is submitted, violates her rights under article 8 of the European Convention on Human Rights. Article 8 entitles everyone to the right to respect for his or her private life. The ECRC, issued in response to the appellants application, undoubtedly contained details about her private life but these were details that, in my opinion, had a clear relevance to the suitability of the appellant to be employed in a capacity that involved the supervision of schoolchildren, whether in the school canteen or in the school playground. The only remaining question, in my opinion, is whether the decision of the chief police officer that the details ought to be included in the certificate is vulnerable to an article 8 attack. It would be easy to understand a complaint by the appellant of an article 8 breach of her right to respect for her private life if details with no arguable relevance to the employment position in question had been gratuitously included in the ECRC. But that is not the case here. Nor is it suggested that the compilation and retention by the police of the details in question constituted a breach of her article 8 rights. If the compilation and retention by the police of the details was unexceptionable and if it cannot be suggested that the details were irrelevant to the suitability of the appellant for the employment position for which she had applied, I find it difficult to see on what basis her attack on the inclusion of the details in the certificate could succeed. She does not say that they are untrue nor that they are irrelevant. She simply says, as I understand it, that the decision to include them in the certificate showed a lack of the respect for her private life to which she is entitled under article 8. It is at this point, as it seems to me, that it becomes necessary to remember that it was she who applied for the certificate. I do not doubt that the need for the certificate would have been impressed on her by CSE and that she would have realised that unless she agreed to make the application her chances of obtaining the employment position she desired would be reduced. She may or may not have had in mind the full implications of subsection (7) of section 115 and it would probably not have occurred to her that the history of her delinquent 13 year old son and her failure to have controlled his delinquency would be known to the police and might be considered relevant information. But it cannot, in my opinion, possibly be said that the police response showed a lack of respect for her private life. It was she who, in making the application for an ECRC, invited the exercise by the chief police officer of the statutory duty imposed by section 115(7). In para 43 of his opinion Lord Hope has commented that those in respect of whom an ECRC are sought consent to the application but only on the basis that their right to private life is respected. This proposition seems to me, with the greatest respect, to be an impossible one. The any information to which subsection (7) refers is almost bound to be information about private life. An application for subsection (7) information cannot be on the basis that no private information on the police files about the individual in question will be included in the certificate. If an application were ever made on that express basis it would rightly be rejected by the Secretary of State. If the private information is relevant and the decision that it ought to be included in the ECRC is a reasonable one, having regard to the reason why the certificate is being sought, there is, in my opinion, no objection to its inclusion that the applicant for the certificate can make. A decision reasonably reached that relevant information should be included in an ECRC cannot, in my opinion, be attacked by the applicant for the ECRC on the ground that the decision showed an article 8 lack of respect for his or her private life. It follows from what I have said that I would, for my part, endorse the approach taken by Lord Woolf CJ in R (X) v Chief Constable of the West Midlands Police [2005] 1WLR 65, referred to by Lord Hope in paragraphs 41 and 44 of his opinion. I agree that the approach accords priority to the social need to protect the vulnerable as against any article 8 rights the applicant for a section 115(7) ECRC may otherwise be entitled to. The applicant, by making the application, authorises the issue of the certificate in accordance with the criteria prescribed by paragraphs (a) and (b) of the subsection. If the decision of the chief police officer to include in the certificate the additional information is a decision which cannot be challenged as being unreasonable, having regard to the purpose described in the application (see section 115(7)), an article 8 challenge to the decision is not, in my opinion, open to the applicant. I would, therefore, dismiss this appeal. LORD BROWN I have had the advantage of reading in draft the opinions of Lord Hope and Lord Neuberger. I agree with both of them and there is really very little that it might be helpful to add. Instinctively though one rails against a nanny state, there are occasions when nannying is justified and section 115 (7) of the Police Act 1997 seems to me just such a case. As already comprehensively explained by my Lords, it provides a mechanism whereby those considering the employment of someone applying to work with children may be the better informed as to that persons suitability for the post more particularly as to whether there is anything known to the police about the person such as should give the prospective employer, at the very least, pause for thought. That said, there can be no doubting the impact an enhanced criminal record certificate (ECRC) containing any adverse information is likely to have on the persons prospects of obtaining the desired employment and it therefore seems to me imperative in every case to ensure that the public interest in safeguarding children really does justify the relevant disclosure. In short, I wholeheartedly concur with my Lords in concluding that the balance struck by the Court of Appeal in R (X) v Chief Constable of the West Midlands Police [2005] 1 WLR 65 needs to be re struck less unfavourably to the prospective employee. This is to be achieved in the first place by the chief officer of police giving no less weight to the section 115(7) (b) requirement that in his opinion the information ought to be included in the certificate than to the section 115(7)(a) requirement that he thinks it might be relevant (rather than presuming that any potentially relevant information should ordinarily be disclosed); and secondly by requiring the chief officer in any borderline case, before issuing the certificate, to give the prospective employee an opportunity to state why the information which the officer proposes disclosing ought not in fact to be disclosed. Lord Scott takes issue with Lord Hopes statement at para 43 of his opinion that applicants for ECRCs consent to the disclosure of relevant information about them but only on the basis that their right to private life is respected. Assuming, as I do, that all that Lord Hope means by this is that applicants are consenting to the disclosure of relevant information to the extent that this is proportionate to the damage this will cause to their interests in privacy but no more, it seems to me plainly right. As Lord Neuberger puts it at para 73 of his opinion, were it otherwise, legislation could all too easily be devised so as to circumvent Convention rights. The above criticisms of the existing approach to disclosure under section 115(7) notwithstanding, in common with all of my Lords I regard the position in the present case to be clear. The Commissioners decision to make the disputed disclosure here cannot in my opinion be criticised. The appeal must accordingly be dismissed. LORD NEUBERGER Lord Hope has clearly set out the legislative provisions and history, the factual and procedural background and the appellants contentions in paragraphs 4 to 21 of his judgment, and I gratefully adopt what he there says. The appellants contentions raise two principal issues. The first is whether the appellants complaint about the operation of section 115 of the Police Act 1997, as summarised by Lord Hope in paragraph 21, is one which properly falls within the reach of article 8 of the Convention, i.e. whether article 8 is engaged. The second issue, which only arises if the Article is engaged, is whether the operation of the section in a case such as the present infringes article 8. There is also a separate contention that the decision in this particular case should be quashed. As to the first issue, I am firmly of the view that article 8 is engaged in this case. An enhanced criminal record certificate (an ECRC) which contains particulars of any convictions (potentially including spent convictions) or cautions (under section 115(6)(a)(i) and 113(5) of the 1997 Act), or any other information which might be relevant and which ought to be included in the certificate (under section 115(6)(a)(ii) and 115(7) of the 1997 Act), will often have a highly significant effect on the applicant. In the light of the wide ambit of section 115 (extending as it does to social workers and teachers, as well as to those regularly caring for, training, supervising or being in sole charge of children), an adverse ECRC (i.e. an ECRC within section 115(6)(a), rather than section 115(6)(b)) will often effectively shut off forever all employment opportunities for the applicant in a large number of different fields, for the reasons given, in relation to other legislation, by Baroness Hale of Richmond in R (Wright) and others v Secretary of State for Health [2009] UKHL 3, [2009] 2 WLR 267, para 22. An ECRC must be sought for each job application, but, once an adverse ECRC has been issued in relation to one application, it is, in the absence of special factors, likely to be issued in the same terms in relation to all future applications for posts falling within the ambit of section 115. Even where the ECRC records a conviction (or caution) for a relatively minor, or questionably relevant, offence, a prospective employer may well feel it safer, particularly in the present culture, which, at least in its historical context, can be said to be unusually risk averse and judgmental, to reject the applicant. The same point applies to an ECRC which only contained material falling within section 115(6)(a)(ii) and (7), even where the chief officers opinion that the material should be included, while rational, was not one which many chief officers would have shared. (Having said that, there will no doubt be cases where the employer will conclude that the information in the adverse ECRC is irrelevant or has been satisfactorily explained or disposed of by the applicant, but such cases would, I suspect, be comparatively rare.) The view that this feature of the 1997 Act means that Article 8 is engaged derives support from Sidabras v Lithuania (2004) 42 EHRR 104, para 48. An applicants exclusion from a large sector of the job market (especially, it seems to me, a socially important and vocationally driven sector) will frequently have a significant effect on her private life, in terms of career satisfaction, development of personal relationships and ability to earn a living. No reason has been advanced for thinking that this does not apply to the appellant in the present case, and accordingly, unless there is any other reason for holding otherwise, it appears to me that article 8 is engaged here. Quite apart from this reason, while it may be said to be a little artificial to treat it as a separate reason, I consider that article 8 will, at least frequently, be engaged by an adverse ECRC, because it will involve the release of information about the applicant, which is stored on public records. Even where the information released in the ECRC is already in the public domain (as will be the case with almost all convictions), it seems to me that re publication of the information can often engage article 8: see, in the domestic context, R v Chief Constable of the North Wales Police ex p AB [1999] QB 396, 416 and 429 (per Buxton J in the Divisional Court and Lord Woolf MR in the Court of Appeal, respectively), and, in Strasbourg, Segerstedt Wiberg v Sweden Application No 62332/00, 6 June 2006, para 72, and Cemalettin Canli v Turkey, Application No 22427/04, 18 November 2008, para 33. Where the information, or a substantial part of the information, released in the ECRC is not in the public domain, as will very often be the position in relation to information falling within section 115(6)(a)(ii) and (7), the case for Article 8 engagement, as I see it, is self evidently even stronger see Leander v Sweden (1987) 9 EHRR 433, para 48, and Rotaru v Romania, Application no 28341/95, 8 BHRC 449 4 May 2000, para 43. In the present case, as Lord Hope has explained in para 28, the information contained in the ECRC pursuant to section 115(6)(a)(ii) and (7), in so far as it related to the appellant (as opposed to her son), was not publicly available and was not even based on events which had taken place in public. Accordingly, for this reason as well, it appears to me that, subject to any other argument raised to the contrary, article 8 is engaged in this case. Counsel for the Commissioner of Police argued that, despite this reasoning, article 8 was not engaged, because, under section 115(1)(a), an ECRC is issued only on the application of the applicant. The argument amounts to this, that a person cannot complain that disclosure of information about her infringes her article 8 rights where she has consented to the disclosure, and a fortiori where she has applied for the disclosure, as happened in this case, pursuant to section 115(1). I have no hesitation in rejecting this argument. Where the legislature imposes on a commonplace action or relationship, such as a job application or selection process, a statutory fetter, whose terms would normally engage a persons Convention right, it cannot avoid the engagement of the right by including in the fetters procedural provisions a term that the person must agree to those terms. Apart from this proposition being right in principle, it seems to me that, if it were otherwise, there would be an easy procedural device which the legislature could invoke in many cases to by pass Convention rights. I turn, then, to the second issue, namely, given that applicants article 8 rights are engaged in this case, do the provisions of section 115(6)(a)(ii) and (7) infringe those rights? This question raises a problem which the courts have not infrequently had to face since the Human Rights Act 1998 came into force. In order to protect the members of a particular group of people, Parliament has enacted legislation, the effect of which is to encroach on the Convention rights of members of another group. When, as in this case, a member of the latter group, who is adversely affected by the legislation, complains that her Convention rights have been infringed, the task of the court is to decide whether the legislation concerned has struck an appropriate balance between the interests of the two groups. When deciding whether the balance is appropriate, it is for the court to form its own judgment, but, in doing so, it should accord proper deference to the fact that the legislation represents the view of by the democratically elected legislature as to where the balance should be struck. In addition, the court is, of course, bound to try, if possible, to construe the legislation in such a way as to achieve compatibility with the Convention: a declaration of incompatibility is very much of a last resort. Part V of the 1997 Act has the unexceptionable aim of protecting vulnerable people (for present purposes children, but also, in certain circumstances, vulnerable adults), from being harmed by those working with them. It does so by requiring relevant information available to the police, about an applicant for a post involving responsibility for such vulnerable people, to be vouchsafed in an ECRC to the prospective employer. It is then for that employer to decide whether the information is relevant, and, if so, whether it justifies refusing to employ the applicant. As already mentioned, however, it seems to me realistic to assume that, in the majority of cases, it is likely that an adverse ECRC, i.e. one falling within section 115(6)(a), will represent something close to a killer blow to the hopes of a person who aspires to any post which falls within the scope of the section. Further, the vouchsafing of the information in an adverse ECRC will of itself normally (and where, as here, it is pursuant to section 115(6)(a)(ii), almost inevitably) impact on the applicants private life. Given that, in relation to children related posts, the section is limited to those seeking employment involving regular. responsibility for young people, I am prepared to proceed on the basis that there is nothing objectionable in the requirement that an ECRC must contain the information referred to in section 115(6)(a)(i), as expanded by the definition of relevant matter in section 113(5), even though it may on occasions be rather harsh on the applicant concerned. As Lord Woolf MR said in R(X) v Chief Constable of the West Midlands Police [2005] 1 WLR 65, para 20, Parliament must be entitled to enable information to be available to prospective employers, where the nature of the employment means that particular care should be taken to ensure that those who are working with the appropriate categories of persons can be relied on to do so . Whether as a result of a conviction or a caution (which involves the person concerned having admitted committing the offence in question), there can be little doubt that the information in question will be accurate, and will have been sufficiently grave as to amount to a crime. However, section 115(6)(a)(ii), as expanded by section 115(7)(a), requires the inclusion of a different category of material, which raises very different considerations. First, it may frequently extend to allegations of matters which are disputed by the applicant, or even to mere suspicions or hints of matters which are disputed by the applicant. Secondly, the threshold for inclusion in the ECRC is subjective and very low: information must be included in an ECRC if, in the opinion of the chief officer, it might be relevant. So, information would often properly fall within section 115(7)(a) if it was not in fact relevant, or was only very peripherally relevant, to the applicants suitability for the post in question. It could be information which would unfairly blacken her name, unjustly prejudice her prospects of obtaining the post or any other post for which an ECRC was required (e.g. a spent conviction for dishonesty), or simply embarrass her. In my view, if section 115(7)(a) was the sole criterion for the inclusion of information under section 115(6)(a)(ii), it would be impossible to justify. Although its general purpose, namely protection of vulnerable people from potential harm from those with posts involving responsibility for them, is unexceptionable, there would simply be insufficient, indeed effectively no real, countervailing protection for the article 8 rights of applicants for such posts. Although not on all fours with the facts in R (Wright) and others v Secretary of State for Health [2009] 2 WLR 267, I consider that the thrust of the reasoning in that case supports such a conclusion. There would be too many cases where the inclusion in an ECRC of material falling within section 115(7)(a) would represent an unwarranted invasion of an applicants article 8 rights for the statutory provisions to survive an incompatibility assault. However, the test for inclusion of material under section 115(6)(a)(ii) is not limited to paragraph (a) of section 115(7). Information cannot be included in an ECRC under section 115(6(a)(ii) unless it also satisfies paragraph (b). Section 115(7) sets out two requirements which are separate in principle, although they may well frequently involve overlapping factors in practice. The way section 115(7) is worded makes it quite clear that information can only be included in an ECRC under section 115(6)(a)(ii) if the chief officer considers both that (a) it might be relevant for the purposes of section 115(2), and that (b) it ought to be included in the certificate. Both requirements must be satisfied, and therefore both requirements must be separately considered by the chief officer. While paragraph (a) of section 115(7) sets a low hurdle for the inclusion of material under section 115(6)(a)(ii), indeed a hurdle which, if it were the sole hurdle, would be too low to satisfy the article 8 rights of applicants, paragraph (b) provides for the requisite balancing exercise that justifies the conclusion that there is no article 8 infringement. In other words, the legislation, through the medium of section 115(7)(b), rightly acknowledges that the relevant public authority, namely the chief officer, must balance the need to protect those vulnerable people whom an ECRC is designed to assist with the article 8 rights of those in respect of whom an ECRC is issued. Having decided that information might be relevant under section 115(7)(a), the chief officer then has to decide under section 115(7)(b) whether it ought to be included, and, in making that decision, there will often be a number of different, sometimes competing, factors to weigh up. Examples of factors which could often be relevant are the gravity of the material involved, the reliability of the information on which it is based, whether the applicant has had a chance to rebut the information, the relevance of the material to the particular job application, the period that has elapsed since the relevant events occurred, and the impact on the applicant of including the material in the ECRC, both in terms of her prospects of obtaining the post in question and more generally. In many cases, other factors may also come into play, and in other cases, it may be unnecessary or inappropriate to consider one or more of the factors I have mentioned. Thus, the material may be so obviously reliable, relevant and grave as to be disclosable however detrimental the consequential effect on the applicant. In a nutshell, as Lord Hope has said, the issue is essentially one of proportionality. In some, indeed possibly many, cases where the chief officer is minded to include material in an ECRC on the basis that he inclines to the view that it satisfies section 115(7)(b), he would, in my view, be obliged to contact the applicant to seek her views, and take what she says into account, before reaching a final conclusion. Otherwise, in such cases, the applicants article 8 rights will not have been properly protected. Again, it is impossible to be prescriptive as to when that would be required. However, I would have thought that, where the chief officer is not satisfied that the applicant has had a fair opportunity to answer any allegation involved in the material concerned, where he is doubtful as to its potential relevance to the post for which the applicant has applied, or where the information is historical or vague, it would often, indeed perhaps normally, be wrong to include it in an ECRC without first giving the applicant an opportunity to say why it should not be included. This conclusion is at odds with what was said by Lord Woolf MR in R(X) v Chief Constable of West Midlands Police [2005] 1 WLR 65, para 41. He said that absent any untoward circumstance ., it is difficult to see that there can be any reason why the information that might be relevant ought not to be included in the certificate (although it is only fair to add that he did, correctly, refer to the issue as being one of proportionality). In my view, that approach is wrong, even if one ignores the fact that article 8 is engaged. Section 115(7) contains two tests which have to be satisfied, and there is no reason to think that the second test was intended to be of only marginal relevance and rare application. On the contrary: given the low threshold of the first test and the importance of an ECRC to an applicant, one would expect the second test to be important, and this point receives some support from the para 30 of the White Paper which preceded the 1997 Act (see para 5 of Lord Hopes judgment). The point is heavily reinforced, of course, once the impact of article 8 is taken into account. In R (X) v Chief Constable of West Midlands Police [2005] 1 WLR 65, para 67, Lord Woolf MR, disagreeing with the view to the contrary of Wall J at first instance ([2002] EWHC 61 (Admin), [2004] 1 WLR 1518), said that it would be inappropriate to interpret section 115(7)(b) as imposing a duty on a chief officer to contact applicants where he was proposing to include material under section 115(6)(a)(ii) in an ECRC. Lord Woolf thought that this would involve imposing too heavy a burden on chief officers. I disagree. While far from suggesting that the duty would arise in every case, it seems to me that the imposition of such a duty is a necessary ingredient of the process if it is to be fair and proportionate. The widespread concern about the compulsory registration rules for all those having regular contact with children, as proposed by the Government in September 2009, demonstrates that there is a real risk that, unless child protection procedures are proportionate and contain adequate safeguards, they will not merely fall foul of the Convention, but they will redound to the disadvantage of the very group they are designed to shield, and will undermine public confidence in the laudable exercise of protecting the vulnerable. The procedures currently adopted by chief officers have been described by Lord Hope in paras 30 to 34, and they are plainly, and sensibly, based on the observations of Lord Woolf MR in R (X) v Chief Constable of West Midlands Police [2005] 1 WLR 65. It is apparent that, as one would hope, chief officers and their staff take their responsibilities under Part V of the 1997 Act very seriously. However, it is also clear that the current procedures will need to be adapted to accord considerably greater weight to section 115(7)(b) and considerably greater recognition to the article 8 rights of applicants. For these reasons, which are little more than an echo of those more fully expressed by Lord Hope, with whose judgment I agree, I conclude that sections 115(6)(a)(ii) and 115(7) of the 1997 Act can and should be given an effect which is compatible with the article 8 rights of those who make applications under section 115(1). I also consider that, for the reasons given by Lord Hope in para 48, the decision in this particular case cannot be faulted. Accordingly, I too would dismiss this appeal. |
Extended determinate sentences were imposed on Frank Stott in May 2013, pursuant to section 226A of the Criminal Justice Act 2003 (the 2003 Act) for sexual offences. This appeal concerns the provisions of section 246A of the 2003 Act which deal with early release from prison of those serving extended determinate sentences. The effect of the provisions is that Mr Stott will not be eligible to apply for release until he has served two thirds of his custodial term, in contrast to other categories of prisoner who can apply for release at an earlier point in their custodial term. He contends that the provisions of section 246A are discriminatory and in violation of article 14 of the Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR or the Convention) taken together with article 5 of the Convention. The facts The appellant was convicted at trial of 20 offences, including multiple offences of raping an eight year old child. Prior to the trial, he had pleaded guilty to other counts relating to indecent photography of a child. On 23 May 2013, he was sentenced to an extended determinate sentence (EDS) in respect of ten counts of rape. An EDS comprises two elements, namely an appropriate custodial term, and a further period for which the offender is to be subject to a licence (the extension period), see section 226A(5) at para 85 below. Mr Stotts appropriate custodial term has been fixed at 21 years, with an extension period of four years. He was also sentenced to various determinate sentences of imprisonment to be served concurrently. He was refused permission to appeal against his sentence, see R v Stott [2016] EWCA Crim 172. A prisoner serving an EDS can be released before the end of his term of imprisonment. It will be necessary to look further at the statutory provisions governing release later but, in broad outline, section 246A of the 2003 Act requires, in most cases, that the EDS prisoner be released on licence as soon as he has served the requisite custodial period and the Parole Board has directed his release. The requisite custodial period is two thirds of the appropriate custodial term specified by the sentencing court, so Mr Stott would have to serve 14 years before becoming eligible for parole. Other categories of prisoner are, in contrast, eligible for parole at the half way point in their sentences. If these rules had applied to Mr Stott, he would have been eligible for parole once he had served ten and a half years. He complained that there was no justification for this difference in treatment in relation to eligibility for parole, and that it was unlawful discrimination within article 14. He brought judicial review proceedings. In February 2017, a Divisional Court of the Queens Bench Division dismissed his claim [2017] EWHC 214 (Admin). However, it granted a certificate pursuant to section 12 of the Administration of Justice Act 1969 to permit Mr Stott to appeal directly to the Supreme Court, should permission to appeal be granted by the Supreme Court, which in due course it was. Article 5 and article 14 of the ECHR As the focus in this case is upon articles 5 and 14 of the ECHR, it will be convenient to set them out immediately. Article 5 of the ECHR secures the right to liberty and security of person. So far as is material to the present case, it provides: 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 detention of a person after conviction (a) by a competent court; 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. Article 14 prohibits discrimination, providing: The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. The approach to an article 14 claim In order to establish that different treatment amounts to a violation of article 14, it is necessary to establish four elements. First, the circumstances must fall within the ambit of a Convention right. Secondly, the difference in treatment must have been on the ground of one of the characteristics listed in article 14 or other status. Thirdly, the claimant and the person who has been treated differently must be in analogous situations. Fourthly, objective justification for the different treatment will be lacking. It is not always easy to keep the third and the fourth elements entirely separate, and it is not uncommon to see judgments concentrate upon the question of justification, rather than upon whether the people in question are in analogous situations. Lord Nicholls of Birkenhead captured the point at para 3 of R (Carson) v Secretary of State for Work and Pensions [2005] UKHL 37; [2006] 1 AC 173. He observed that once the first two elements are satisfied: 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. The issues In this case, it is accepted that the right to apply for early release, upon which Mr Stott relies, falls within the ambit of article 5. The debate is about the application of article 14. Two issues have been identified. The first issue (Issue 1 or the status issue) is whether the different treatment of Mr Stott is on a ground within the meaning of other status in article 14. The second issue (Issue 2) requires determination only if Issue 1 is answered in the affirmative. It has two parts: (a) Are EDS prisoners in an analogous situation to either indeterminate sentence prisoners or other determinate sentence prisoners, these being the two categories of prisoner with which Mr Stott seeks to compare his own position? If so, is there an objective justification for the difference in treatment (b) between the categories of prisoner? Mr Stott argues that his differential treatment was on the ground of other status, that he was in an analogous situation to other prisoners who were treated differently, and that there was no objective justification for the different treatment. The Secretary of State argues that Mr Stott fails on the status issue, so Issue 2 does not arise. However, if that is wrong, the Secretary of State argues that Mr Stotts sentence is not analogous to the other sentences under consideration, and that there is in any event an objective justification for treating the different categories of prisoner differently. The central importance of R (Clift) v Secretary of State for the Home Department [2007] 1 AC 484 (R (Clift)) and Clift v United Kingdom (Application No 7205/07) At the heart of the appeal are the decisions of the House of Lords and of the European Court of Human Rights (ECtHR) concerning Mr Clift, a prisoner who was serving a sentence of 18 years imprisonment for very serious crimes, including attempted murder, and complained that the early release provisions in respect of his sentence gave rise to a violation of article 14. In 2006, in R (Clift), the House of Lords held that Mr Clifts classification, as a long term prisoner serving a determinate sentence of 15 years or more, did not amount to an other status, and accordingly there was no infringement of article 14. In 2010, in Clift v United Kingdom (Application No 7205/07), the ECtHR took the contrary view, holding that Mr Clift did come within article 14 and that there was no objective justification for the different release provisions applied to prisoners in his category. The decision of the House of Lords in R (Clift) dictated the Divisional Courts decision in the present case. The Divisional Court only rejected Mr Stotts argument that his differential treatment was on the ground of other status, because it was constrained to do so by R (Clift). Had it not been so bound, it would have found that other status was established, and would then have gone on to find section 246A of the 2003 Act incompatible with article 14. It now falls to this court to determine whether the decision of the House of Lords in R (Clift) should continue to be followed, in the light of the subsequent ECtHR decision in Clift v United Kingdom, and of the article 14 jurisprudence as a whole. Issue 1: the status issue Before turning to look at R (Clift) and Clift v United Kingdom in some detail, the decision of the ECtHR in Kjeldsen, Busk Madsen and Pedersen v Denmark (1976) 1 EHRR 711 (Kjeldsen) needs to be introduced, because one paragraph from the courts judgment features regularly in decisions of the ECtHR, and the domestic courts, when the question of status in article 14 is being considered. Kjeldsen, Busk Madsen and Pedersen v Denmark (1976) 1 EHRR 711 Kjeldsen concerned sex education in Danish schools. The applicants were parents who objected to sex education being compulsory in state primary schools and complained that, whereas parents could have their children exempted from religious instruction classes, they could not do so in relation to sex education classes. They claimed, unsuccessfully, that this was discriminatory treatment contrary to article 14 taken with article 2 of First Protocol (right to education). The passage about status to which courts return repeatedly is at para 56: The court first points out that article 14 prohibits, within the ambit of the rights and freedoms guaranteed, discriminatory treatment having as its basis or reason a personal characteristic (status) by which persons or groups of persons are distinguishable from each other. Regina (Clift) v Secretary of State for the Home Department (above) As I have said, Mr Clift was a prisoner serving a sentence of 18 years imprisonment. Some way into his period of imprisonment, the Parole Board recommended his release on parole. Had Mr Clift been serving a term of less than 15 years, or life imprisonment, the Secretary of State would have had a statutory obligation to comply with the recommendation of the Parole Board. However, by virtue of various statutory provisions and the Parole Board (Transfer of Functions) Order 1998 (SI 1998/3218), the final decision in relation to prisoners serving determinate terms of 15 years or more lay with the Secretary of State, who rejected the recommendation. Mr Clift contended that the early release provisions discriminated against him in breach of his rights under articles 5 and 14 of the ECHR by denying him the right, that other long term prisoners enjoyed, to be released if the Parole Board recommended it. Mr Clift was able to establish that his rights in relation to early release were within the ambit of article 5. Although there is no issue about article 5 in the present case, a brief resum of how the House of Lords approached it will set the article 14 issues in a proper context. As Lord Bingham of Cornhill said at para 17, the ECHR does not require member states to establish a scheme for early release, and prisoners may, consistently with the Convention, be required to serve the entirety of the sentence passed, if that is what the domestic law provides. However, where the domestic law in fact provides for a right to seek early release, that right is within the ambit of article 5. In relation to long term prisoners serving determinate terms, the law of England and Wales did confer a right to seek early release, setting a time at which a prisoner must be released as of right, and an earlier time at which he might be released if it was judged safe to do so. Accordingly, as Lord Bingham said at para 18, differential treatment, in relation to early release, of one prisoner as compared with another, otherwise than on the merits of their respective cases, gave rise to a potential complaint under article 14. However, the discrimination which article 14 prohibits is 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. Not falling within any of the named grounds, Mr Clift could only bring himself within the protection of article 14 if his differential treatment could be said to be on the ground of other status. He argued that this requirement was satisfied on the basis that his treatment was on the ground that he was a prisoner sentenced to a determinate term of 15 years or more. Lord Bingham (with whom there was general agreement, although some other members of the House added reasons of their own) rejected this argument, but he did so not without hesitation, and influenced by the fact that the Strasbourg jurisprudence had not endorsed a status of this kind as falling within article 14. Lord Hope of Craighead too, having put the arguments for and against Mr Clift being able to lay claim to status, was mindful of the need for a measure of self restraint, so as not to outstrip Strasbourg. What each would have said, had they known what the ECtHR was going to decide in Clift v United Kingdom in 2010, is unknown, although one cannot avoid the sense that the outcome might well have been different. However, in order to give proper consideration to what, if any, continuing influence R (Clift) should have, it is necessary to isolate the strands of reasoning which went to make up the conclusion of the House: i) There was agreement that the words or other status in article 14 (in French toute autre situation) are far from precise, but that they are not intended to cover differential treatment on any ground whatever, because in that case, the list of grounds which precede them would be otiose (paras 27, 43, and 56). ii) Reliance was placed on the passage quoted above from para 56 of Kjeldsen, and the search was for something in the nature of a personal characteristic by which persons or groups of persons are distinguishable from each other (paras 27, 28, 42, and 56 for example). iii) It was accepted that, as the specific grounds of discrimination listed in article 14 show, protection is extended not only to characteristics over which a person has no control, such as race or birth, but also to acquired characteristics, such as religion or political opinion (paras 28 and 45). iv) Lord Bingham and Lord Hope both advanced the proposition that, to qualify, the personal characteristic in question must exist independently of the treatment of which complaint is made. Lord Bingham said, at para 28, that he did not think that a personal characteristic can be defined by the differential treatment of which a person complains, without giving any explanation, or authority, for this view. He did not appear to consider that Mr Clift would fall foul of this, as he was not complaining of the sentence passed on him, but of being denied a definitive Parole Board recommendation. Lord Hope agreed, at para 47, that [i]t must be accepted, as Lord Bingham points out, that a personal characteristic cannot be defined by the differential treatment of which a person complains. Although he similarly did not spell out the foundation for his view, it may lie in his observation, at para 45, that each of the specific grounds shared a feature in common, namely that they exist independently of the treatment of which complaint is made and [i]n that sense, they are personal to the complainant. The remainder of para 47 is not entirely easy to understand, but might indicate that Lord Hope shared Lord Binghams opinion that this was not an area of difficulty for Mr Clift. It reads: It is plain too that the category of long term prisoner into which Mr Clifts case falls would not have been recognised as a separate category had it not been for the Order which treats prisoners in his group differently from others in the enjoyment of their fundamental right to liberty. But he had already been sentenced, and he had already acquired the status which that sentence gave him before the Order was made that denied prisoners in his group the right to release on the recommendation of the Parole Board. The question which his case raises is whether the distinguishing feature or characteristic which enables persons or a group of persons to be singled out for separate treatment must have been identified as a personal characteristic before it is used for this purpose by the discriminator. v) There was an examination of the ambit of article 14 as demonstrated by decisions of the ECtHR and the domestic courts in various factual contexts. Baroness Hale included a particularly detailed list of authorities at para 58, which led her to make the observation that in the vast majority of Strasbourg cases where violations of article 14 have been found, the real basis for the distinction was clearly one of the proscribed grounds or something very close. Examples were given of cases in which the grounds for the discrimination were not within article 14 (see, for example, paras 27, 45, 59 61), including prisoners who were treated differently because of the legislatures view of the gravity of their offences (Gerger v Turkey 8 July 1999, para 69, and see also Budak v Turkey (Application No 57345/00) (unreported)). And there was discussion of R (S) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196 where the House of Lords held that article 14 did not cover differential treatment on the basis that a person had previously been investigated by the police and provided fingerprints; the possession of fingerprints and DNA samples by the police in that situation was simply a matter of historical fact, not attributable to the personal characteristics of those who had provided them. Having referred earlier to the rather qualified terms in which Lord Bingham and Lord Hope expressed their conclusions, I should set out rather more fully what they actually said. Baroness Hale also dealt with the topic, but Lord Carswell and Lord Brown of Eaton under Heywood simply agreed with Lord Bingham on the issue without adding anything. Lord Binghams conclusions are to be found in para 28: 28. Is his classification as a prisoner serving a determinate sentence of 15 years or more (but less than life) a personal characteristic? I find it difficult to apply so elusive a test. But I would incline to regard a life sentence as an acquired personal characteristic and a lifer as having an other status, and it is hard to see why the classification of Mr Clift, based on the length of his sentence and not the nature of his offences, should be differently regarded. I think, however, that a domestic court should hesitate to apply the Convention in a manner not, as I understand, explicitly or impliedly authorised by the Strasbourg jurisprudence, and I would accordingly, not without hesitation, resolve this question in favour of the Secretary of State and against Mr Clift. As for Lord Hope, he also acknowledged the case for the length of Mr Clifts sentence conferring a status on him which can be regarded as a personal characteristic. From para 46 onwards, he can be seen considering the arguments, beginning thus: 46. It could be said in Mr Clifts case that the length of his sentence did confer a status on him which can be regarded as a personal characteristic. This is because prisoners are divided by the domestic system into broadly defined categories, or groups of people, according to the nature or the length of their sentences. These categories affect the way they are then dealt with throughout the period of their sentences. As a result they are regarded as having acquired a distinctive status which attaches itself to them personally for the purposes of the regime in which they are required to serve their sentences. This is most obviously so in the case of prisoners serving life sentences and where distinctions are drawn between short term and long term prisoners serving determinate sentences. It is less obviously so in the case of long term prisoners serving determinate sentences of different lengths. He thought that, given that the function of article 14 was to secure Convention rights and freedoms without discrimination on grounds which, having regard to the underlying values of the Convention, must be regarded as unacceptable, a generous meaning should be given to or other status (para 48). In his view, the protection of article 14 ought not to be denied just because the distinguishing feature which enabled the discriminator to treat persons or groups of persons differently in the enjoyment of their Convention rights had not previously been recognised, by which he seems, I think, to have meant previously recognised by the ECtHR. But, ultimately, two factors seem to have influenced his rejection of Mr Clifts case. The first was that he accepted that it was possible to regard what he has done, rather than who or what he is, as the true reason for the difference of treatment. The second was caution about outstripping Convention jurisprudence. So, he said, I am persuaded, with some reluctance, that it is not open to us to resolve the [other status point] in Mr Clifts favour (para 49). Baroness Hale did not express hesitation or reluctance in concluding that the difference of treatment between Mr Clift and people sentenced to shorter determinate sentences or to life sentences was a difference in treatment based on the seriousness of the offences concerned, and therefore outside article 14. As she put it, [t]he real reason for the distinction is not a personal characteristic of the offender but what the offender has done (para 62). Clift v United Kingdom (above) It is necessary to look in similar detail at the ECtHRs reasons for concluding that the differential treatment of Mr Clift was on the ground of other status for the purposes of article 14. The court began its assessment, at para 55, by observing that article 14 does not prohibit all differences in treatment, but only those differences based on an identifiable, objective or personal characteristic, or status, by which persons or groups of persons are distinguishable from one another, citing para 56 of Kjeldsen, Busk Madsen and Pedersen (above), Berezovskiy v Ukraine (dec) (Application No 70908/01), 15 June 2004, and paras 61 and 70 of Carson v United Kingdom (2010) 51 EHRR 13. But, equally, it confirmed (para 55) that the list of specific grounds in article 14 is illustrative and not exhaustive, and recalled (para 56) that the words other status (and a fortiori the French toute autre situation) have generally been given a wide meaning. Noting the Governments argument that other status should be more narrowly construed, ejusdem generis with the specific examples in article 14, it demonstrated (paras 56 to 59) that not all the listed grounds could be said to be personal in the sense of being innate characteristics or inherently linked to the identity or personality of the individual. It commented on the inclusion of property as one of the grounds, and observed that it was a ground which had been construed broadly by the court as demonstrated by James v United Kingdom (1986) 8 EHRR 123 (difference in treatment between different categories of property owners) and Chassagnou v France (1999) 29 EHRR 615, paras 90 and 95, (distinction between large and small landowners). It went on, at para 58, to give a list of other cases in which a violation of article 14 had been found because of different treatment based on characteristics which were not personal in the sense of being innate or inherent, namely: Engel v The Netherlands (1976) 1 EHRR 647 (distinction based on military rank), Pine Valley Developments Ltd v Ireland (1991) 14 EHRR 319 (distinction between those who held outline planning permission and benefited from new legislation and those who held outline planning permission but did not), Larkos v Cyprus (1999) 30 EHRR 597, para 21 (distinction between tenants of the State and tenants of private landlords), Shelley v United Kingdom (2008) 46 EHRR SE16 (being a convicted prisoner could be an other status), Sidabras and Dziautas v Lithuania (2004) 42 EHRR 104 (implicitly accepted that status as a former KGB officer fell within article 14), and Paulk v Slovakia (2006) 46 EHRR 10 (a father whose paternity had been established by judicial determination had a status which could be compared to putative fathers and mothers in situations where paternity was legally presumed but not judicially determined). Accordingly, the court concluded (para 59), even if the Governments ejusdem generis argument was correct (upon which no pronouncement was made either way), it would not necessarily preclude Mr Clifts claim. The argument that the treatment of which the applicant complains must exist independently of the other status upon which it is based was advanced, but the court rejected it, citing Paulk (2008) 46 EHRR 10 as undermining it. It said: 60. Further, the court is not persuaded that the Governments argument that the treatment of which the applicant complains must exist independently of the other status upon which it is based finds any clear support in its case law. In Paulk, cited above, there was no suggestion that the distinction relied upon had any relevance outside the applicants complaint but this did not prevent the court from finding a violation of article 14. The question whether there is a difference of treatment based on a personal or identifiable characteristic in any given case is a matter 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 (see Artico v Italy, 13 May 1980, para 33, Series A no 37; and Cudak v Lithuania [GC], no 15869/02, para 36, 23 March 2010). It should be recalled in this regards that the general purpose of article 14 is to ensure that where a state provides for rights falling within the ambit of the Convention which go beyond the minimum guarantees set out therein, those supplementary rights are applied fairly and consistently to all those within its jurisdiction unless a difference of treatment is objectively justified. The court was not impressed, either, with the Governments argument that, as in Gerger (above), the distinction was between different types of offence, according to the legislatures view of their gravity, observing that the cases in which the approach in Gerger had been followed all concerned special court procedures or provisions on early release for those accused or convicted of terrorism offences in Turkey. It continued (para 61): Thus while Gerger made it clear that there may be circumstances in which it is not appropriate to categorise an impugned difference of treatment as one made between groups of people, any exception to the protection offered by article 14 of the Convention should be narrowly construed. In the present case the applicant does not allege a difference of treatment based on the gravity of the offence he committed, but one based on his position as a prisoner serving a determinate sentence of more than 15 years. While sentence length bears some relationship to the perceived gravity of the offence, a number of other factors may also be relevant, including the sentencing judges assessment of the risk posed by the applicant to the public. At para 62, the court said: The court has frequently emphasised the fundamental importance of the guarantees contained in article 5 for securing the right of individuals in a democracy to be free from arbitrary detention at the hands of the authorities (see, for example, akc v Turkey [GC], no 23657/94, para 104, ECHR 1999 IV). Where an early release scheme applies differently to prisoners depending on the length of their sentences, there is a risk that, unless the difference in treatment is objectively justified, it will run counter to the very purpose of article 5, namely to protect the individual from arbitrary detention. Accordingly, there is a need for careful scrutiny of differences of treatment in this field. It concluded that in the light of all the considerations it had set out, Mr Clift did enjoy other status for the purposes of article 14. At paras 66 and 67, the court addressed the issue of whether Mr Clift was in an analogous position to the other prisoners with whom he compared himself, observing that what is required is that the applicant should demonstrate that, having regard to the particular nature of the complaint, his situation was analogous, or relevantly similar; it need not be identical. Mr Clift was in an analogous position to long term prisoners serving less than 15 years and life prisoners, as the methods of assessing the risk posed by a prisoner eligible for early release, and the means of addressing any risk identified, were in principle the same for all categories of prisoner. The court went on to find that the differential treatment of prisoners in Mr Clifts position lacked objective justification. The Government had argued that it was justified on the basis of the risk posed by the category of prisoners in question, and by the need to maintain public confidence in the justice system. As to the first basis, the court accepted in principle that more stringent early release provisions could be justified on the basis that a group of prisoners posed a higher risk, but there had not been shown to be higher risk here. As to the second basis, it had not been demonstrated that requiring the approval of the Secretary of State would address concerns about risk on release, given that the assessment of the risk posed by an individual prisoner was a task without political content and one to which the Secretary of State could bring no superior expertise. There is much in the ECtHRs decision which is in harmony with the approach taken by the House of Lords in R (Clift). But it can be seen that there are respects in which the ECtHR either went further than the House of Lords or differed from its approach. It differed in that it was not persuaded that there was any support for the argument that the treatment of which the applicant complains must exist independently of the other status; on the contrary, the matter had to be assessed taking into consideration all of the circumstances of the case and bearing in mind that the aim of the Convention was to guarantee rights which are practical and effective. It also differed from the House of Lords in rejecting the idea that Mr Clifts complaint was about a difference in treatment based on the gravity of his offence, observing that a number of factors may be relevant to sentence length, as well as the perceived gravity of the offence. It also emphasised the particular context for the decision in Gerger and other cases in which the Gerger approach had been taken. And it stressed that any exception to the protection offered by article 14 should be narrowly construed, and that there needed to be careful scrutiny of differences of treatment where an early release scheme applied differently to prisoners depending on the length of their sentence, given that there was a risk that unless the difference was objectively justified it would run counter to the very purpose of article 5. It possibly went further than the House of Lords in relation to the nature of the characteristics which would be recognised, in that it observed that not all the grounds could be said to be inherently linked to the identity or personality of the individual, highlighting the inclusion of property as a specified ground, and giving examples of characteristics which had sufficed, but were not innate or inherent. ECtHR decisions other than Clift v United Kingdom There have been many decisions of the ECtHR in relation to article 14 and it is unnecessary to refer to more than a few of them. The way in which that court is presently approaching the question of other status can be seen from three recent decisions, one in 2016 and two in 2017. They demonstrate, I think, that the approach has been relatively consistent over the years, and that there has been little change to the approach exhibited in Clift v United Kingdom. The 2016 decision is Biao v Denmark (2016) 64 EHRR 1 (Biao). This concerned the Danish provisions for family reunion which treated Danish born nationals differently from those who acquired Danish nationality later in life, a majority of whom were of foreign ethnic origin. This was said to amount to a violation of article 14 read with article 8. Citing earlier decisions of its own, including Kjeldsen, Carson v United Kingdom 51 EHRR 13, and Clift v United Kingdom, the court said: 89. The court has established in its case law that only differences in treatment based on an identifiable characteristic, or status, are capable of amounting to discrimination within the meaning of article 14. Moreover, in order for an issue to arise under article 14 there must be a difference in the treatment of persons in analogous, or relevantly similar, situations. Article 14 lists specific grounds which constitute status including, inter alia, race, national or social origin and birth. However, the list is illustrative and not exhaustive, as is shown by the words any ground such as and the inclusion in the list of the phrase any other status. The words other status have generally been given a wide meaning and their interpretation has not been limited to characteristics which are personal in the sense that they are innate or inherent. The first of the 2017 decisions is Khamtokhu and Aksenchik v Russia (Applications Nos 60367/08 and 961/11) (Khamtokhu), which concerned applicants who were sentenced to life imprisonment. They complained of discriminatory treatment, in violation of article 14 taken in conjunction with article 5, because they were treated less favourably than other categories of convicted offenders (women, juveniles, and men over 65) who were exempt from life imprisonment. The court said: 61. Article 14 does not prohibit all differences in treatment, but only those differences based on an identifiable, objective or personal characteristic, or status, by which individuals or groups are distinguishable from one another. It lists specific grounds which constitute status including, inter alia, sex, race and property. However, the list set out in article 14 is illustrative and not exhaustive, as is shown by the words any ground such as (in French notamment) and the inclusion in the list of the phrase any other status (in French toute autre situation). The words other status have generally been given a wide meaning, and their interpretation has not been limited to characteristics which are personal in the sense that they are innate or inherent (see Clift, cited above, paras 56 58; Carson v United Kingdom [GC], no 42184/05, paras 61 and 70, ECHR 2010; and Kjeldsen, Busk Madsen and Pedersen v Denmark, 7 December 1976, para 56, Series A no 23). There was no need, in Khamtokhu to labour over the question of status, as sex is explicitly mentioned in article 14 as a prohibited ground of discrimination, and the court had accepted in an earlier case that age was a concept also covered by the provision. Article 14, taken with article 5, was accordingly applicable. The applicants were in an analogous situation to other offenders convicted of the same or comparable offences, but their complaint failed because the governments sentencing provisions had a legitimate aim and were proportionate. The second 2017 case is Minter v United Kingdom (2017) 65 EHRR SE6 (Minter). Mr Minter was sentenced to an extended sentence for sexual offences. This meant that he was subject to an extended licence period, and thus to a requirement to notify the police of various personal details indefinitely. Mr Minter complained that the application of the indefinite notification period was in breach of article 8 of the ECHR, either read alone or in conjunction with article 14. Although the notification requirement was an interference with his article 8 rights, it was not disproportionate, and the article 8 claim was manifestly ill founded. However, Mr Minter argued that, by virtue of a change in the law, if he had been sentenced later, he would not have received an extended sentence and would not therefore have been subject to the indefinite notification period at all. That, he submitted, amounted to an unjustified difference in treatment based on other status, and to a violation of article 14 taken with article 8. The court rejected the article 14 complaint as manifestly ill founded too. On the facts, it considered Mr Minters assertion that no indefinite notification requirement would have been imposed if he had been sentenced later to be entirely speculative. But even had there not been that obstacle, his claim would have failed. The court began its assessment of the issue in this way: 66. In order for an issue to arise under article 14 there must be a difference in the treatment of persons in analogous, or relevantly similar, situations (see Khamtokhu and Aksenchik v Russia (60367/08 and 961/11) 24 January 2017 at para 64). As established in the courts case law, only differences in treatment based on an identifiable characteristic, or status, are capable of amounting to discrimination within the meaning of article 14 (see Khamtokhu and Aksenchik (60367/08 and 961/11) 24 January 2017 at para 61). Such a difference in 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 (Khamtokhu and Aksenchik (60367/08 and 961/11) 24 January 2017 at para 64). The court was not persuaded by the applicants reliance on the Clift v United Kingdom decision. In a passage which exhibits, to my mind, the tendency (also seen elsewhere in the Strasbourg jurisprudence on article 14) for consideration of the issue of whether a difference in treatment is on the ground of other status to convert, almost seamlessly, into consideration of whether the applicant is in an analogous situation and/or whether the difference is justified, it distinguished the situation in Clift v United Kingdom: 68. Furthermore, the court does not consider that Clift (7205/07) 13 July 2010 supports the applicants claim. It is true that in Clift the court accepted that the different treatment of different categories of prisoners depending on the sentences imposed was based on other status within the meaning of article 14 of the Convention. However, in the present case the different treatment complained of did not concern the length of the applicants sentence but rather the different sentencing regime applied to him as a consequence of a new legislation. As such, his article 14 complaint is indistinguishable from that which was declared inadmissible as manifestly ill founded in Massey. Although Massey (14399/02) 8 April 2003 pre dated Clift (7205/07) 13 July 2010, in Zammit and Attard Cassar (1046/12) 30 July 2015, a case which post dated Clift by some four and a half years, that no discrimination was disclosed by the selection of a particular date for the commencement of a new legislative regime. the court reaffirmed Although the approach taken in the three cases can properly be described as consistent, in my view, it is interesting to note that Biao and Minter refer to identifiable characteristic, or status, whereas Khamtokhu is slightly more expansive, speaking of identifiable, objective or personal characteristic, or status, by which individuals or groups are distinguishable from one another. Biao and Khamtokhu both stress that the list in article 14 is illustrative and not exhaustive, and that the words other status have generally been given a wide meaning and their interpretation has not been limited to characteristics which are personal in the sense that they are innate or inherent. The domestic case law on article 14 and status Article 14 has regularly been the subject of consideration in the Supreme Court and, before that, in the House of Lords. The House of Lords decisions pre date the ECtHRs decision in Clift v United Kingdom, of course, but are important in understanding how the approach to article 14 has evolved. After a review of them, I summarise, at para 56 below, the position that the domestic case law seems to have reached on other status by the time of the ECtHRs Clift decision. R (S) v Chief Constable of the South Yorkshire Police (2004, above) was the case concerning fingerprints and DNA samples. Lord Steyn, with whom I do not think there was significant disagreement on this point, worked on the basis that the proscribed grounds in article 14 were not unlimited and was guided by Kjeldsen. Perhaps foreshadowing the ejusdem generis argument advanced in Clift, in summarising his conclusion that the requisite status had not been established, he observed (para 51) that the difference in treatment is not analogous to any of the expressly proscribed grounds. R (Hooper) v Secretary of State for Work and Pensions [2005] UKHL 29; [2005] 1 WLR 1681 concerned widowers who claimed that, in denying them benefits which would have been payable to widows, the Secretary of State had acted incompatibly with their rights under article 14 read with article 1 of Protocol 1 and article 8 of the ECHR. The decision is of interest for Lord Hoffmanns treatment of the question of whether article 14 was infringed. He considered whether being a person who has started legal proceedings qualified as a status, and was not persuaded that it did. In explaining why, at para 65, he appeared to adopt and develop Lord Steyns analogous approach which he described as being that article 14 required discrimination to be by reference to some status analogous with those expressly mentioned, such as sex, race or colour. R (Carson) v Secretary of State for Work and Pensions (above), is an often cited House of Lords decision. Each of the two claimants complained of a violation of their rights under article 14, read with article 1 of the First Protocol to the ECHR. One claimant complained of discrimination on the basis of country of residence, and the other on the basis of age. The first was entitled to a retirement pension, but, because she was resident in South Africa, was precluded from receiving the normal annual cost of living increase. The second received state benefits at a lower rate because she was under 25. Their claims failed because the differential treatment of them was rationally justified. However, they did manage to establish that they came within the scope of other status in article 14. In the case of the claimant who was resident in South Africa, this is of note because she succeeded in establishing that this was a personal characteristic, notwithstanding that it was in principle a matter of choice and was not immutable. This result was reached through the application of what Lord Walker of Gestingthorpe described as the Kjeldsen test of looking for a personal characteristic (para 54). In AL (Serbia) v Secretary of State for the Home Department [2008] 1 WLR 1434, Baroness Hale described Carson as unusual, commenting (para 26) that: In general, the list concentrates on personal characteristics which the complainant did not choose and either cannot or should not be expected to change. The Carson case is therefore unusual, because it concerned discrimination on the ground of habitual residence, which is a matter of personal choice and can be changed. But the ECtHR subsequently confirmed, in Carson v the United Kingdom (2008) 48 EHRR 41, that ordinary residence should be seen as an aspect of personal status. R (RJM) v Secretary of State for Work and Pensions (Equality and Human Rights Commission intervening) [2009] AC 311 might also be considered to take a more expansive view of status. It merits rather more detailed review because there was considerable discussion of the subject. The claimants disability premium in his income support, which he received by reason of his incapacity for work through mental health problems, was stopped because he had become homeless. He claimed that the premium was a possession within article 1 of the First Protocol to the ECHR and that he had been discriminated against contrary to article 14. One of the questions for determination was whether homelessness fell within other status for the purposes of article 14. There was an argument as to whether it was necessary to show that it was a personal characteristic at all, and, if so, whether it was properly so described. It was held that it was indeed a personal characteristic and within the article, even if adopted by choice, although the claim failed because the regulation in question was justified. Lord Neuberger of Abbotsbury discussed whether other status must necessarily be based upon a personal characteristic. He said (para 36) that there was no doubt that the House of Lords had consistently proceeded upon the assumption that that was required, basing that approach primarily on the Kjeldsen case. There was also, in his view, a strong case for saying that as a matter of language, article 14 (or at least the English version of it) appears to envisage precisely this, given the specific grounds on which unjustifiable discrimination is prohibited (para 37). No case to which the court had been taken supported an argument to the contrary. However, before ultimately adopting that approach himself, Lord Neuberger did acknowledge that there may be a case for another interpretation, saying: 39. None the less, it is fair to refer to the fact that the French version of article 14 (which has equal status with the English version see article 59) ends with the words ou toute autre situation, which may suggest a rather wider scope than or other status. Further, while the ECtHR judgments relied on by RJM do not establish that no consideration need be given in an article 14 case to the issue of whether the discrimination is by reference to a status which can be characterised as a personal characteristic, some of those judgments could be read as suggesting a rather less structured approach than that which has been adopted by this House. In particular, in an allegation of article 14 infringement, the ECtHR may not always consider whether the alleged discrimination is on the ground of other status as an entirely free standing question: it sometimes appears to approach the overall allegation of infringement on a more holistic or broad brush basis: see, for instance, the reasoning in Kjeldsen 1 EHRR 711, para 56, and Kafkaris 12 February 2008, paras 163 165, as well as Stubbings v United Kingdom (1996) 23 EHRR 213, paras 70 73. In deciding that homelessness could fairly be described as a personal characteristic, Lord Neuberger proceeded upon the basis that a generous meaning should be given to or other status, as would be expected in enforcing anti discrimination legislation in a democratic state (para 42), and that other status should not be too closely limited by the grounds which are specifically prohibited by the article (para 43). He said (para 45) that while reformulations are dangerous, he considered that the concept of personal characteristics generally requires one to concentrate on what somebody is, rather than what he is doing or what is being done to him, and that, on that approach, homelessness was an other status. He considered (para 46) that this characterisation also fitted with Lord Binghams view in Clift that the personal characteristic could not be defined by the differential treatment of which the person complains. He considered (para 47) that the fact that homelessness was a voluntary choice (if it was) was not of much, if any, significance in determining whether it was a status for article 14; some of the specified grounds in the article were matters of choice too. Nor was it telling that homelessness was not a legal status. Lord Walkers observations about personal characteristics are also instructive: 5. The other point on which I would comment is the expression personal characteristics used by the European Court of Human Rights in Kjeldsen, Busk Madsen and Pedersen v Denmark (1976) 1 EHRR 711, and repeated in some later cases. Personal characteristics is not a precise expression and to my mind a binary approach to its meaning is unhelpful. Personal characteristics are more like a series of concentric circles. The most personal characteristics are those which are innate, largely immutable, and closely connected with an individuals personality: gender, sexual orientation, pigmentation of skin, hair and eyes, congenital disabilities. Nationality, language, religion and politics may be almost innate (depending on a persons family circumstances at birth) or may be acquired (though some religions do not countenance either apostates or converts); but all are regarded as important to the development of an individuals personality (they reflect, it might be said, important values protected by articles 8, 9 and 10 of the Convention). Other acquired characteristics are further out in the concentric circles; they are more concerned with what people do, or with what happens to them, than with who they are; but they may still come within article 14 (Lord Neuberger instances military status, residence or domicile, and past employment in the KGB). Like him, I would include homelessness as falling within that range, whether or not it is regarded as a matter of choice (it is often the culmination of a series of misfortunes that overwhelm an individual so that he or she can no longer cope). 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. There is an illuminating discussion of (contrasting Strasbourg jurisprudence with the American approach to the Fourteenth Amendment) in the speech of Baroness Hale of Richmond in AL (Serbia) v Secretary of State for the Home Department [2008] 1 WLR 1434, paras 20 35. these points It looks from this passage as if Lord Walker was perhaps slightly more ready than Lord Neuberger to accept that what someone was doing, or what was being done to him, could be a personal characteristic, although observing that the more peripheral or debateable the characteristic, the easier it would be to justify differential treatment. Reviewing these decisions, together with R (Clift), I think it can be said (although acknowledging the danger of over simplification) that prior to the decision in Clift v United Kingdom in 2010, the House of Lords had adopted the following position on other status. The possible grounds for discrimination under article 14 were not i) unlimited but a generous meaning ought to be given to other status; ii) The Kjeldsen test of looking for a personal characteristic by which persons or groups of persons were distinguishable from each other was to be applied; iii) Personal characteristics need not be innate, and the fact that a characteristic was a matter of personal choice did not rule it out as a possible other status; iv) There was support for the view that the personal characteristic could not be defined by the differential treatment of which the person complained; v) There was a hint of a requirement that to qualify the characteristic needed to be analogous to those listed in article 14, but it was not consistent (see, for example, Lord Neubergers comment at para 43 of R (RJM)) and it was not really borne out by the substance of the decisions; vi) There was some support for the idea that if the real reason for differential treatment was what someone had done, rather than who or what he was, that would not be a personal characteristic, but it was not universal; vii) The more personal the characteristic in question, the more closely connected with the individuals personality, the more difficult it would be to justify discrimination, with justification becoming increasingly less difficult as the characteristic became more peripheral. Following the decision of the ECtHR in Clift v United Kingdom, there has been further consideration, in the Supreme Court, of the issue of status in article 14. The issue of how R (Clift) should be viewed in the light of the ECtHRs different view has not been directly confronted, although the court made some comment on the ECtHR decision in R (Kaiyam) v Secretary of State for Justice [2014] UKSC 66; [2015] AC 1344. Apart from that case, of the cases singled out for mention below, it could be said that Mathieson v Secretary of State for Work and Pensions [2015] UKSC 47; [2015] 1 WLR 3250 is the one which deals most fully with the question of status. In R (Kaiyam) v Secretary of State for Justice, the issue was what duty the Secretary of State had to provide prisoners serving indeterminate sentences with opportunities for rehabilitation in order to facilitate their release. As part of his claim, one of the appellants, Mr Haney, invoked article 14, claiming that he had been discriminated against by the prison authorities in that they prioritised the movement to open prisons of prisoners whose tariff periods had already expired, whereas his had not. The Supreme Court had to decide whether it 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. At para 52, Lord Mance and Lord Hughes, with whom there was unanimous agreement, noted the decision of the House of Lords in R (Clift), and the different view taken by the ECtHR in that case. They observed: 53. In the light of the European courts 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 they did not need to determine the question of Mr Haneys status finally because the difference in treatment was clearly justified. Para 52 suggests that they might have felt a degree of caution about Clift v United Kingdom (see para 26 above for the passage from para 60 of Clift v United Kingdom to which reference is made): 52. 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 Convention. The House in R (Clift) v Secretary of State of the Home Department [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 European court in Clift v United Kingdom (Application No 7205/07) given 13 July 2010 took a different view, and expressed itself at one point (at the end of para 60) in terms which might, literally read, eliminate any consideration of status. Mathieson v Secretary of State for Work and Pensions [2015] UKSC 47; [2015] 1 WLR 3250 concerned a child with disabilities whose parents received disability living allowance until he had been an in patient in a National Health Service hospital for more than 84 days. He appealed against the suspension of the benefit on the ground that it was in breach of his right not to be discriminated against under article 14 read with article 1 of the First Protocol to the ECHR. One of the arguments in the Supreme Court was as to whether, if there was discrimination in the treatment of him, it was on the ground of other status. It was held that this ground was applicable either by virtue of his status as a severely disabled child in need of lengthy in patient hospital treatment (para 23), or by virtue of his status as a child hospitalised free of charge in a NHS hospital for a period longer than 84 days (para 60). At para 21, Lord Wilson said that the prohibited grounds in article 14 extend well beyond innate characteristics, as demonstrated by R (RJM) v Secretary of State for Work and Pensions [2009] AC 311. Looking at the approach of the ECtHR in Clift, Lord Wilson considered it clear that, if the alleged discrimination falls within the scope of a Convention right, the Court of Human Rights is reluctant to conclude that nevertheless the applicant has no relevant status (para 22). In R (Tigere) v Secretary of State for Business, Innovation and Skills (Just for Kids Law intervening) [2015] 1 WLR 3820, immigration status was recognised as an other status within article 14, (consistently with the decision of the ECtHR in Bah v United Kingdom (2011) 54 EHRR 773), but as the point was conceded, there was no discussion about it in the judgments. R v Docherty (Shaun) [2016] UKSC 62; [2017] 1 WLR 181 concerned a prisoner who was sentenced on 20 December 2012 to imprisonment for public protection for offences to which he had pleaded guilty in November 2012. Imprisonment for public protection had been abolished prior to him being sentenced, but not for those convicted before 3 December 2012. Amongst other things, he claimed that the differentiation between him and a person convicted of an identical offence on 4 December 2012 was unlawful under article 14. At para 63, Lord Hughes dealt with the question of status and, as will be seen, returned to the idea that it will not be possible to bring oneself within article 14 unless the proposed status exists independently of the treatment about which complaint is made: The appellant submits that this discriminates objectionably against him on grounds of other status, namely either (i) his status as a convicted person prior to 3 December or (ii) his status as a prisoner who is subject to an indeterminate sentence. Assuming for the sake of argument that status as a prisoner subject to a particular regime can in some circumstances amount to sufficient status to bring article 14 into question (Clift v United Kingdom (Application No 7205/07) The Times, 21 July 2005), it cannot do so if the suggested status is defined entirely by the alleged discrimination; that was not the case in Clift. For that reason, the second suggested status cannot suffice. As to the first, even if it be assumed in the appellants favour that the mere date of conviction can amount to a sufficient status, which is doubtful, the differential in treatment is clearly justified. All changes in sentencing law have to start somewhere. It will inevitably be possible in every case of such a change to find a difference in treatment as between a defendant sentenced on the day before the change is effective and a defendant sentenced on the day after it. The difference of treatment is inherent in the change in the law. If it were to be objectionable discrimination, it would be impossible to change the law. There are any number of points which may be taken as triggering the change of regime. The point of conviction is clearly one, and the point of sentence is another. Neither is, by itself, irrational or unjustified. Returning to the list of propositions derived from the House of Lords decisions which is to be found at para 56 above, it seems to me that the subsequent authorities in the Supreme Court could be said to have continued to proceed upon the basis of propositions (i) to (iii), which have also continued to be reflected in the jurisprudence of the ECtHR. Proposition (iv) lives on, in R v Docherty, but perhaps needs to be considered further, in the light of its rejection in Clift v United Kingdom (see further, below). The analogous point, which features at proposition (v), is reminiscent of the ejiusdem generis argument advanced in Clift v United Kingdom, but not addressed head on by the ECtHR. That courts answer to the argument was, it will be recalled, to give quite wide ranging examples of situations in which a violation of article 14 had been found. With the continued expansion of the range of cases in which other status has been found, in domestic and Strasbourg decisions, the search for analogy with the grounds expressly set out in article 14 might be thought to be becoming both more difficult and less profitable. However, that should not, of course, undermine the assistance that can be gained from reference to the listed grounds, taken with examples of other status derived from the case law. It may not be helpful to pursue proposition (vi) abstract; whether it assists will depend upon the facts of a particular case. Proposition (vii) comes into play when considering whether differential treatment is justified, rather than in considering the other status question, and need not be further considered at this stage. Submissions in relation to status Mr Southey QC and Mr Bunting for the appellant submit that the decision of the House of Lords in Clift can no longer be considered a reliable guide to the meaning of other status in article 14. The words should be given a generous meaning, they submit. They invite attention to the range of situations which have been held, either by the ECtHR or by the domestic courts, to be within the category. Legally acquired statuses have been accepted as sufficient, as demonstrated, for example, by Larkos v Cyprus and Pine Valley Developments Ltd v Ireland, Bah v United Kingdom (all above) and Krajisnik v United Kingdom (2012) 56 EHRR SE7 (status as a prisoner convicted by the International Criminal Tribunal for former Yugoslavia). They also invite attention to the fact that homelessness has been held to be covered, even if it is a matter of choice, (R (RJM) v Secretary of State for Work and Pensions above), and to the status recognised in Mathieson v Secretary of State Work & Pensions (above). And, of course, they rely on the ECtHRs decision in Clift itself. It is submitted that there has been nothing in the decisions of the Supreme Court post dating the ECtHRs decision in Clift (particularly R (Kaiyam) v Secretary of State for Justice, R v Docherty, and Mathieson) which has undermined the authority of that judgment, and the approach which is there set out should be followed. Thus, life sentences, extended sentences and determinate sentences can all be considered to give rise to other status. For the Secretary of State, Sir James Eadie QC, Ms Davidson and Mr Pobjoy recognise that the court is bound to take into account the ECtHRs decision in Clift and to consider whether to depart from the House of Lords decision in that case. However, this should not, in their submission, lead to the conclusion that Mr Stott can lay claim to other status. They invite the court to consider the scope of Clift against the background of the other cases in which the other status category has been considered by the ECtHR, the House of Lords and the Supreme Court. Whilst this collection of authority establishes that a generous meaning should be given to the words, it also establishes that other status is not a catch all category, see most recently para 61 of Khamtokhu. The central question, so the Secretary of State submits, is whether the basis or reason for the differential treatment is a personal characteristic by which persons or groups of persons are distinguishable from each other. In the Secretary of States submission, article 14 protects personal characteristics which are analogous to those expressly mentioned in the article, see para 65 of R (Hooper) v Secretary of State for Work and Pensions and para 51 of R (S) v Chief Constable of the South Yorkshire Police. And, it is said, although the concept of a personal characteristic is not a precise one, and is not limited to something innate or inherent, it will typically be more concerned with who a person is, than with what he or she does, see paras 5 and 45 of RJM. Furthermore, the personal characteristic must be independent of the treatment about which complaint is made (para 28 and 45 of Clift in the House of Lords, and para 63 of R v Docherty). It is further submitted, on behalf of the Secretary of State, that Clift is distinguishable from the present case. The classification of Mr Clift was based upon the length of his sentence, not the nature or gravity of his offence. That set his case apart from cases such as Gerger v Turkey and Budak v Turkey. Mr Stotts case is different, it is said, because he is not relying on the length of his sentence but on the fact that he is subject to a particular sentencing regime in light of the gravity of his crime and the risk he poses to the community. It is said that the importance of this distinction was affirmed in Minter. Furthermore, unlike with Mr Clift, the treatment of which Mr Stott complains does not exist independently of the characteristic on which he bases his complaint of discrimination, because the release conditions about which he complains flow from his status as a prisoner serving an extended determinate sentence. Mr Clift had already been sentenced, and had thus already acquired his status, before the order was made which led to the different treatment of his group for the purposes of release. Furthermore, the Secretary of State submits that there is no authority for the proposition that any form of sentencing regime constitutes an other status for the purposes of article 14 and says that the implication of such a finding would be that every convicted prisoner would automatically fall within the scope of article 14, and authority establishes that that is not the case. Conclusions in relation to status The different view taken by the ECtHR in Clift v United Kingdom has to be taken into account when considering whether R (Clift) should continue to influence the approach to article 14 status in cases such as the present. For my part, I would now depart from the determination, in R (Clift), that different treatment on the basis that a prisoner was serving imprisonment of 15 years or more could not be said to be on the ground of other status. I am influenced by the ECtHRs reasoned decision to the contrary, notwithstanding that it was not a decision of the Grand Chamber, but of a section of the court. I am also influenced by the hesitation apparent in the speeches of the House of Lords in R (Clift), which disclose the constraint that was felt in the absence of any recognition by the ECtHR of a status such as that for which Mr Clift contended. Although one can only speculate as to how the decision would have gone if the ECtHR had already led the way, it is clear that the House could see the force of arguments advanced in Mr Clifts favour. If R (Clift) is left to one side, at least as to its result, that does not mean that the question of how to approach other status is free of domestic authority. In considering the decisions of the House of Lords which pre date Clift v United Kingdom, it is necessary to keep in mind the ways in which the ECtHR ultimately differed from the House, which I have attempted to set out, commencing at para 33 above. The Supreme Court authorities can be taken to have been decided with Clift v United Kingdom in mind. Perhaps the clearest difference between R (Clift) and Clift v United Kingdom was in relation to whether the treatment of which the applicant complains must exist independently of the other status. Counsel for the Secretary of State continue to rely upon this as part of their argument, and they are correct to point out that it features as part of Lord Hughes analysis in R v Docherty. The first difficulty about the independent existence condition is the uncompromising rejection of it by the ECtHR, which went on to say that, on the contrary, the matter had to be assessed taking into consideration all the circumstances of the case and bearing in mind that the aim of the Convention was to guarantee practical and effective rights. It cited Paulk in support of its stance. The applicant in Paulk was a man who, in 1970, was found by a court to be the father of a girl, paternity then being disproved by a DNA test in 2004. He wanted the finding of paternity overturned, but, unlike fathers whose paternity had been established otherwise than through a court, and mothers, he had no means to achieve this under domestic law. He complained of various breaches of the ECHR, including that he had been discriminated against in the enjoyment of his article 8 and article 6 rights. There was found to be a violation of article 14 taken with article 8. It seems there was no dispute as to the applicability of article 14 (para 51), the dispute having centred on whether the various categories of people were in analogous situations, and whether the difference was justified. Nonetheless, in light of the specific endorsement, in Clift v United Kingdom, of Paulk on the question of status, it is clear that the ECtHR saw the case as an example of a characteristic which did not exist independently of the treatment complained of and yet approved of its categorisation as an other status. The second difficulty with the independent existence condition is that it made its appearance in R (Clift) unsupported by much, if anything, by way of explanation or supportive authority. Lord Hope might have been building upon his observation, at para 45, that the specific grounds all existed independently of the treatment of which complaint was made. However, whilst some of the grounds named in article 14 clearly will always exist independently of the complaint, I am not at all sure that the same can be said of all of them. Property might be a ground which would not always exist independently, and I think there are probably other examples. The third difficulty is that the independent existence condition is not at all easy to grasp. Mr Clift satisfied it, because he relied upon being a prisoner serving a determinate term of 15 years or more, and his complaint was about the fact that, by virtue of a subsequent Order, he required the Secretary of States approval for his release, rather than automatically being released if the Parole Board recommended it. The homeless person in RJM, who complained about losing his benefits, also satisfied it. However, it was not satisfied, according to Docherty, where the prisoner was relying upon being a prisoner subject to an indeterminate sentence, and complained that he had been discriminated against by virtue of the fact that he could not have been given that sentence had he been convicted after 3 December 2012. Even with these practical examples, it is a challenge to make general sense of the concept, and things do not improve when one takes into account the width of the approach taken in Strasbourg to the ambit of article 14. In all these circumstances, I would be cautious about spending too much time on an analysis of whether the proposed status has an independent existence, as opposed to considering the situation as a whole, as encouraged by the ECtHR in Clift v United Kingdom. In any event, it can properly be said that the status upon which Mr Stott relies exists independently of his complaint, which is about the provisions concerning his early release. By way of example, his extended determinate term of imprisonment does not only dictate the point at which he is eligible for release on parole; it dictates the period he will spend in prison if parole is not granted, and it brings with it also a licence extension. A second respect in which the ECtHR differed from the House of Lords was as to whether Mr Clifts complaint was based upon the gravity of his offence; it said not. The Secretary of State argues that Mr Stotts case is not the same as Mr Clifts, as Mr Stotts complaint is not based on length of sentence, as in Mr Clifts case, but on his particular sentencing regime, which is dictated by the seriousness of what he did and the risk he poses. I am not persuaded by the Secretary of States attempt to liken the case to Gerger and Budak, rather than Clift v United Kingdom, and to exclude the extended determinate term prisoner on the basis that the differential treatment in his case is because of what he has done and the risk he poses. The ECtHR dealt with the Gerger cases in para 61 of Clift v United Kingdom, and explained them as all being concerned with special provisions for those accused or convicted of terrorism offences. They also stressed that any exception to the protection offered by article 14 should be narrowly construed. True it is that an extended determinate sentence will only be imposed where there is a particular combination of gravity of offence and risk, but within the category of those serving extended determinate sentences, there will be various types of offence of varying seriousness. Putting it another way, what Mr Stott did has led to him receiving an extended determinate sentence, but, once imposed, that extended determinate sentence exists independently of what he did. If a life sentence is capable of constituting an acquired personal status, as Lord Bingham was understandably disposed to think it was (para 28 of R (Clift)), and a determinate term of 15 years is also (Clift v United Kingdom), it is difficult to see why an extended determinate sentence should be viewed differently. I do not think that reliance on Minter assists the Secretary of State in relation to this issue. The complaint in Minter related to a new legislative regime being introduced, which did not benefit the applicant. The selection of a particular date for the commencement of a new legislative regime did not give rise to discrimination when those who were covered by it were treated differently from those who were subject to the old regime. Given the conflating of the various issues of status, analogous situation and justification, in the passage in Minter to which reference is made, it is difficult to be sure whether, in fact, the ECtHR was rejecting the other status argument or not, but in any event, the present case does not involve the commencement of a new sentencing regime. So, whilst the attributes of the sentencing regime to which Mr Stott is subject will be of central relevance to Issue 2 in due course, for the purposes of determining status, in my view the distinction that the Secretary of State seeks to make between Mr Clift as a prisoner serving 15 years or more and Mr Stott as a prisoner serving an extended determinate term is not a real one. It follows that the decision of the ECtHR in Clift v United Kingdom is potentially influential in evaluating the present case. As to the argument that the characteristic needs to be analogous to those listed in article 14, this is difficult to pursue too far in the light of the ECtHRs acceptance that a prison sentence of a particular length can be within the article. I have no difficulty in accepting that when considering an as yet unconsidered characteristic, a court will have in mind the nature of the grounds it was thought right to list specifically, but the case law that the court cited in Clift v United Kingdom demonstrates that a strict ejusdem generis interpretation would be unduly restrictive. Bearing in mind that, although not open ended, the grounds within article 14 are to be given a generous meaning, bearing in mind the warning of the ECtHR that there is a need for careful scrutiny of differential early release schemes, lest they run counter to the very purpose of article 5, and considering all of the case law, I would conclude that the difference in the treatment of extended determinate sentence prisoners in relation to early release is a difference within the scope of article 14, being on the ground of other status. Issue 2: Analogous situation and justification In order to address the issues concerning the third and fourth elements of the article 14 claim (see para 8 above), it is necessary to understand the sentencing regime to which Mr Stott is subject, and also the other sentences with which he invites comparison. Some of the fine detail of the sentencing regimes is irrelevant for present purposes and has been omitted. Unless otherwise specified, in what follows, references to statute are to the 2003 Act. The sentencing framework: general Section 142(1) sets out the purposes of sentencing adult offenders, applicable fairly generally except in relation to life sentences. It provides that a sentencing court must have regard to: (a) (b) deterrence), (c) (d) (e) affected by their offences. the reform and rehabilitation of offenders, the protection of the public, and the making of reparation by offenders to persons the punishment of offenders, the reduction of crime (including its reduction by The sentencing framework: EDS The EDS was introduced by the Legal Aid Sentencing and Punishment of Offenders Act 2012, as one of the sentences for dangerous offenders replacing the sentence of Imprisonment for Public Protection, and is to be found in section 226A, which was added to the 2003 Act. Section 226A provides (in the version relevant to this case): 226A Extended sentence for certain violent or sexual offences: persons 18 or over (1) This section applies where (a) a person aged 18 or over is convicted of a specified offence (whether the offence was committed before or after this section comes into force), (b) the court considers that there is a significant risk to members of the public of serious harm occasioned by the commission by the offender of further specified offences, the court is not required by section 224A or (c) 225(2) to impose a sentence of imprisonment for life, and (d) condition A or B is met. (2) Condition A is that, at the time the offence was committed, the offender had been convicted of an offence listed in Schedule 15B. (3) Condition B is that, if the court were to impose an extended sentence of imprisonment, the term that it would specify as the appropriate custodial term would be at least four years. (4) The court may impose an extended sentence of imprisonment on the offender. (5) An extended sentence of imprisonment is a sentence of imprisonment the term of which is equal to the aggregate of the appropriate custodial term, and a further period (the extension period) for (a) (b) which the offender is to be subject to a licence. (6) The appropriate custodial term is the term of imprisonment that would (apart from this section) be imposed in compliance with section 153(2). (7) The extension period must be a period of such length as the court considers necessary for the purpose of protecting members of the public from serious harm occasioned by the commission by the offender of further specified offences, subject to subsections (8) and (9). (8) The extension period must not exceed five years in the case of a specified violent eight years in the case of a specified sexual (a) offence, and (b) offence. (9) The term of an extended sentence of imprisonment imposed under this section in respect of an offence must not exceed the term that, at the time the offence was committed, was the maximum term permitted for the offence. (10) In subsections (1)(a) and (8), references to a specified offence, a specified violent offence and a specified sexual offence include an offence that (a) was abolished before 4 April 2005, and (b) would have constituted such an offence if committed on the day on which the offender was convicted of the offence. (11) Where the offence mentioned in subsection (1)(a) was committed before 4 April 2005 subsection (1)(c) has effect as if the words by (a) section 224A or 225(2) were omitted, and (b) compliance with section 153(2) were omitted. (12) [offenders aged at least 18 but under 21]. subsection (6) has effect as if the words in From this, it can be seen that an EDS can only be imposed if the four pre conditions set out in section 226A(1) are satisfied. The offender must be 18 or over and must have been convicted of a specified offence (section 226A(1)(a)); a specified offence is defined by section 224 as a specified violent offence (specified in Part 1 of Schedule 15 to the Act) or a specified sexual offence (specified in Part 2 of that Schedule). Secondly, the court must consider that there is a significant risk to members of the public of serious harm occasioned by the commission by the offender of further specified offences (section 226(1)(b)). Thirdly, a life sentence must not be required by section 224A or section 225(2) (section 226A(1)(c)). Fourthly, either Condition A, or Condition B, must be met (section 226A(1)(d)). Condition A (section 226A(2)) is that at the time the index offence was committed, the person had been convicted of an offence specified in Schedule 15B (offences generally of a violent and sexual nature). Condition B (section 226A(3)) relates to the term that the court would specify as the appropriate custodial term if it did impose an extended sentence. By virtue of section 226A(6), the appropriate custodial term is the term of imprisonment that would, apart from section 226A, be imposed in compliance with section 153(2). Section 153(2) governs custodial sentences where there is discretion as to the length of sentence, setting out that, as a general rule, the sentence must be for the shortest term commensurate with the seriousness of the offence or combination of offences. Condition B will only apply if the appropriate custodial term that the court would impose would be at least four years. The nature of an extended sentence appears from section 226A(5). It is a sentence of imprisonment with a term equal to the aggregate of the appropriate custodial term and a further period, called the extension period, during which the offender is on licence. Subject to maximum periods set out in section 226A(8), the length of the extension period has to be fixed according to what the court considers necessary for the purpose of protecting members of the public from serious harm occasioned by the offender committing further specified offences. However, by section 226A(9), the term of the extended sentence (appropriate custodial term and extension period) must not exceed the maximum term for the offence (section 226A(9)). Release on licence of a prisoner serving an EDS is governed by section 246A. In most cases, the section requires that the Secretary of State refer the case to the Parole Board as soon as the prisoner has served the requisite custodial period, which is two thirds of the appropriate custodial term. The Parole Board can only direct the release of the prisoner if it is satisfied that it is no longer necessary for the protection of the public that he should be confined. If the Parole Board does not direct the release of the prisoner, he must be released on licence at the expiry of the appropriate custodial term. The sentencing framework: standard determinate sentences A standard determinate custodial sentence will be for the shortest term commensurate with the seriousness of the offence or combination of offences (section 153(2)). There is no extension period as there is with an EDS. The majority of standard determinate sentence prisoners are entitled to be released on licence automatically, once they have served the requisite custodial period, which is one half of their sentence (section 244). Home Detention Curfew (sections 246 and 250(5)) is available as a means of releasing a prisoner before the half way point in his sentence, on a licence coupled with a curfew condition. Whether this route is taken depends upon the Secretary of States discretion, which can be exercised at any time during the 135 days ending with the day on which the prisoner will have served the requisite custodial period. Amongst the prisoners not eligible are EDS prisoners and those serving a sentence imposed under section 236A, as to which see below. Foreign national prisoners can also be removed from custody early for the purposes of deportation (section 260). Sentencing framework: special custodial sentences for certain offenders of particular concern Section 236A (as inserted by Schedule 1 to the Criminal Justice and Courts Act 2015) provides for special custodial sentences to be passed in relation to certain offenders of particular concern (an SOPC sentence). The conditions for the imposition of such a sentence are that the offender was over 18 when the offence was committed, that he has been convicted of an offence listed in Schedule 18A to the 2003 Act (as also so inserted), and that the court does not impose a life sentence or EDS. Schedule 18A lists offences under the headings Terrorism offences, and Sexual offences (rape of a child under 13, and assault of a child under 13 by penetration). An SOPC sentence has two elements: the appropriate custodial term (the term that, in the opinion of the court, ensures that the sentence is appropriate, see section 236A(3)) and a further period of one year for which the offender is subject to a licence. The aggregate of these two elements must not exceed the term that, at the time the offence was committed, was the maximum term permitted for the offence. It is worth noting that the appropriate custodial term for the SOPC provisions differs from the appropriate custodial term for the EDS provisions. The focus is on the overall sentence, the aggregate of the two elements, which has to be commensurate with the seriousness of the offence. In contrast, an EDS comprises a custodial term commensurate with the offence plus a specified licence period, and can truly be described as an extended term. Release arrangements for an SOPC prisoner are to be found in section 244A (as also so inserted). The Secretary of State must refer his case to the Parole Board as soon as he has served one half of the appropriate custodial term, and must release him on licence if the Board directs, which it can only do if satisfied that it is not necessary for the protection of the public for the prisoner to be confined. If the Board does not direct release, the prisoner will have to serve the appropriate custodial term before he is released on licence. Sentencing framework: indeterminate sentences A life sentence must be imposed for murder (Murder (Abolition of the Death Penalty) Act 1965); this is referred to as a mandatory life sentence. There are also three other situations in which a life sentence (referred to as a discretionary life sentence) may be imposed, namely (a) life sentences for serious offences (section 225) (b) life sentences for second listed offences (section 224A) and (c) life sentences where the offence carries life as a maximum penalty. It is well understood that, generally, life sentences are sentences of last resort, see for example R v Burinskas (Attorney Generals Reference (No 27 of 2013)) (Practice Note) [2014] EWCA Crim 334; [2014] 1 WLR 4209, para 18. A life sentence must be imposed under section 225, on an offender over 18, if certain conditions are satisfied: i) The offender has been convicted of a serious offence committed after 3 December 2012; a serious offence is defined in section 224 as an offence specified in Schedule 15 to the 2003 Act (certain violent and sexual offences) which is punishable with life imprisonment. ii) The court is of the opinion that there is a significant risk to members of the public of serious harm occasioned by the commission by the offender of further specified offences. iii) The court considers that the seriousness of the offence, or of the offence and one or more offences associated with it, is such as to justify the imposition of a life sentence; section 143 deals with factors to be considered in gauging seriousness, including the offenders culpability and the harm, or potential harm, caused by the offence. In Burinskas, the Court of Appeal explained how the judge should approach the sentencing of offenders who may be considered dangerous, where a sentence under section 225 or one of the allied provisions of the 2003 Act might be required. In relation to section 225, it spelled out (para 22) that consideration of iii) above requires consideration of the seriousness of the offence itself on its own or taken with other offences associated with it, the offenders previous convictions, the level of danger he poses to the public and whether there is a reliable estimate of the length of time that he will remain a danger, and the available alternative sentences. Life sentences for second listed offences are dealt with in section 224A. The (cumulative) criteria for imposing a life sentence under that section are: i) The offender is over 18 and has been convicted of an offence, committed after 3 December 2012, which is listed in Part 1 of Schedule 15B to the 2003 Act; Part 1 includes certain offences of serious violence and of terrorism, certain offences relating to weapons, and certain serious sexual offences. ii) Apart from the section, the court would impose a sentence of imprisonment of ten years or more, disregarding any extension period under section 226A. iii) The previous offence condition is met, that is, at the time the offence was committed, the offender had already been convicted of an offence listed in Schedule 15B and been sentenced to a relevant life sentence or a relevant sentence of imprisonment (the sentences which are relevant being, in essence, sentences of significant length). If the criteria are met, the court is obliged to pass a life sentence unless it is of the opinion that there are particular circumstances, which relate to the offence, to the previous offence, or to the offender, and which would make it unjust to do so in all the circumstances. It is to be noted that, as the Court of Appeal observed at para 8 of Burinskas, there is no requirement under section 224A for the offender to have been found to be dangerous within the meaning of the 2003 Act, although it is likely that in most cases he will be. A life sentence may also be imposed where the offence has a maximum penalty of life imprisonment. Two criteria for the imposition of such a life sentence were identified in Attorney Generals Reference (No 32 of 1996) [1997] 1 Cr App R(S) 261, 264, namely that the offender has been convicted of a very serious offence, and there are good grounds for believing that he may remain a serious danger to the public for a period which cannot be reliably estimated at the date of the sentence. In the case of a mandatory life sentence, unless the seriousness of the offence or offences leads the court to disapply the early release provisions, section 269 requires the judge to determine the minimum custodial term that the offender must serve before he is eligible to apply for release. In setting the minimum custodial term, the court must take account of the seriousness of the offence, and of the effect of the provisions for credit for periods of remand in custody, or on certain types of bail, which would have applied if it had sentenced him to a term of imprisonment. In assessing the seriousness of the offence, regard is to be had to the principles set out in Schedule 21 of the 2003 Act, which set statutory starting points for offences of murder and specify a range of aggravating and mitigating features, and also to any guidelines which are not incompatible with Schedule 21. In the case of discretionary life sentences, section 82A of the Powers of Criminal Courts (Sentencing) Act 2000 (as inserted by section 60 of the Criminal Justice and Court Services Act 2000 and amended by the 2003 Act) requires the court to address the question of early release. There is again provision for the court to disapply the early release provisions in light of the seriousness of the offence or offences. Otherwise, the court is required to specify the part of the sentence which has to be served before the early release provisions apply. The part of the sentence specified shall be such as the court considers appropriate taking into account the seriousness of the offence or offences, provisions for crediting certain periods on remand, and (section 82A(3)(c)) the early release provisions as compared with section 244(1) of the Criminal Justice Act 2003. The Court of Appeal explained, in Burinskas, how section 82A works: 33. The effect of section 82A is to require the sentencing judge to identify the sentence that would have been appropriate had a life sentence not been justified and to reduce that notional sentence to take account of the fact that had a determinate sentence been passed the offender would have been entitled to early release. Normally, section 82A(3)(c) will result in the specified part of the sentence being equivalent to one half of the determinate sentence that would have been imposed had a life sentence not been justified. This is not, however, an invariable rule. As the Court of Appeal said in R v Szczerba [2002] 2 Cr App R(S) 86, whether the specified part is half or two thirds of the notional determinate term, or somewhere between the two, is essentially a matter for the sentencing judges discretion. It gave examples, at para 33, of the sort of exceptional circumstances in which more than half may be appropriate. Section 28 of the Crime (Sentences) Act 1997 governs the release of life prisoners where the court has made a determination of the minimum term that is to be served, whether under section 82A or section 269 of the 2003 Act. Once he has served the minimum term, the prisoner may require the Secretary of State to refer his case to the Parole Board, and the Parole Board directs release if satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined. The sentencing framework: recall of prisoners There are detailed provisions, commencing at section 244 of the 2003 Act, governing the release of prisoners on licence and the revocation of such a licence. For present purposes, it is sufficient to record the following: i) A determinate sentence prisoner who has been released early on licence (see para 90 above) will be liable, until the end of the determinate sentence, to be recalled to prison to serve the remainder of the sentence. Some prisoners (those the Secretary of State is satisfied will not present a risk of serious harm to members of the public if released) will be eligible for automatic release again within a short, stipulated period, and the Secretary of State has a discretion to release them sooner than that or the Parole Board can so direct. ii) An EDS prisoner who is recalled during the period of his licence, and other recalled determinate sentence prisoners who are not suitable for automatic release, may be released again by the Secretary of State, if the Secretary of State is satisfied that it is not necessary for the protection of the public that the prisoner should remain in prison. If the prisoner makes representations within 28 days of recall, or if not released by the Secretary of State within that period, he must be referred to the Parole Board which can direct immediate release. iii) Where a life sentence prisoner is released, it will be on a licence which, by virtue of section 31 of the Crime (Sentences) Act 1997, will remain in force until his death. He can be recalled to prison by the Secretary of State, whereupon his case will be referred to the Parole Board, which can direct his release. Otherwise, he continues to be detained pursuant to his sentence. Sentencing: the relevance of the early release provisions When determining the custodial sentence in a particular case, the judge is not to take account of the early release provisions, see for example para 44 of R v Round [2009] EWCA Crim 2667; [2010] 2 Cr App R(S) 45. However, the early release provisions are taken into account, in sentencing, in fulfilling the requirement of section 82A(3) of the Powers of Criminal Courts (Sentencing) Act 2000, above, when fixing the minimum term to be served. The Divisional Courts reasoning The focus in the Divisional Court was particularly on the comparison between the EDS being served by Mr Stott, and a life sentence, but the court was conscious that there could also, legitimately, be a comparison between the EDS and other forms of determinate sentence (para 6). It contrasted the early release provisions applicable to an EDS, requiring the prisoner to serve two thirds of the custodial term before becoming eligible for release, with the provisions for SOPC sentences (eligibility after half of the custodial term), and for life sentences excepting mandatory life sentences for murder (eligibility once the minimum term has been served which, save in exceptional circumstances, will be equivalent to half way through the notional determinate sentence). This led to the conclusion (para 30) that, putting mandatory life sentences to one side, save exceptionally, in every other case save for those sentenced to EDS, the custodial term to be served is one half of the nominate determinate term. Thus, the EDS prisoner is treated differently in relation to release on licence as compared with almost all other prisoners serving a custodial sentence (para 34). The Divisional Court was, of course, constrained by R (Clift) to find against Mr Stott on the issue of status, although Sir Brian Leveson, President of the Queens Bench Division made clear his view that it was high time that that decision be revisited. We do, however, have the benefit of the Divisional Courts views as to whether Mr Stott was in an analogous position to other relevant prisoners and whether there was justification for the different treatment of EDS prisoners. The Secretary of State argued in the Divisional Court, as in this court, that an EDS prisoner cannot properly be compared to a life prisoner, because each sentencing regime has different features (para 43). This argument did not find favour with the Divisional Court, which considered the two prisoners to be in analogous situations. It considered it essential to have regard to the principle of sentencing practice that both an EDS and a life sentence involve a period identified for punishment and deterrence and, potentially, further detention (albeit, in the case of an EDS, for a finite time) based on risk to the public (para 44). It continued: Both must accept the period for punishment and then address the issue of risk; what is at issue is the question of eligibility for consideration for release not merely the mechanism whereby issues of release are decided. In the light of this, at para 45, attention was invited to the following comparison between a determinate sentence and an EDS: Take the case of a crime which, applying the relevant guideline, justifies a sentence of 12 years imprisonment. For an offender in respect of whom there is no concern that he is a risk to the public, that will be the determinate term: as the law stands, he will serve six years and then be entitled to be released on licence (from which he can be recalled to prison for breach up to the end of the 12 year term). For another offender, deserving the same sentence but who, perhaps by reason of his mental condition, constitutes a risk to the public, the court might take the view that he requires an extended period on licence. If he was sentenced to an EDS with a custodial term of 12 years (ie the same as the first offender, their crimes being of equal gravity) with a two year extension (for the purposes of extending supervision over him), he would only be eligible for consideration of parole after eight years. The gravity of their crimes is identical and their positions (in so far as punishment and deterrence is concerned) seem, to me at least, to be analogous. The court reinforced this view by reference to an offender given an SOPC, who may have committed precisely the same offences as those committed by an offender sentenced to an EDS, and yet be eligible for release after one half of the determinate term. As for justification (paras 47 to 50), the government had explained that it wished to introduce a tougher determinate sentence, designed to enhance public protection and to maintain public confidence in the sentencing framework, and relied upon the fact that an offender eligible for an EDS had committed a serious offence and had been found to be dangerous. The court was not persuaded that this explanation for the difference in treatment of prisoners addressed what was, in the courts view, the crucial issue of the distinction between the punitive element of any sentence and that part of the sentence designed to cater for risk. The fact that the offender had committed a serious offence did not, in the courts view, provide any rational basis for altering the extent of the punitive element of a sentence, which was, in its view, the result of deferring eligibility for release in the case of an EDS prisoner; other prisoners would also have committed very serious offences, but be eligible at an earlier stage. As for dangerousness, that did not justify the different release provisions because that is to confuse punishment and deterrence with risk. This point is explained at para 49 as follows: Dangerousness under Part 12 of the 2003 Act [the sentencing provisions] is assessed by reference to future risk, and it is only at the point of potential release that the risk will be assessed (based, of course, on the history of the offender, progress in custody and resettlement plans). If relevant risk to the public remains, the offender will remain in prison. If not, it will be appropriate to release him. There is no rational justification for setting a later and arbitrary point for parole eligibility (at which risk is to be assessed) for EDS prisoners, as opposed to life sentence prisoners, or prisoners serving a sentence pursuant to section 244A of the 2003 Act. The requirement that some prisoners apply for parole, whereas others are automatically released at a certain point in their sentence, was justified as it was for the purpose of protecting the public from risk but, in the courts view, the difference in the term to be served for punishment and deterrence is not. Had it not been for the status issue, the court would accordingly have found the provisions incompatible with article 14. The appellants submissions in relation to Issue 2 The argument advanced on behalf of Mr Stott is a simple one, namely: although they are in an analogous situation, different classes of prisoner are treated differently with regard to eligibility for release, and there is no valid justification for this. If he had been given a determinate sentence, Mr Stott would have been entitled to release at the half way point in his sentence, that is after ten and a half years, and, had he been given a life sentence, he would probably also have been eligible for release after ten and a half years. So, Mr Southey suggests, in relation to eligibility for release, Mr Stott would have been in a better position had he been given a life sentence, even though life sentences are reserved for the most serious cases, for offenders who are the highest risk or have the most serious criminal records. Mr Southey invites us, in considering whether the prisoners under consideration are in analogous positions, to put weight upon the decision in Clift v United Kingdom. He also invites us to recognise that people can be in an analogous position even if their situation is not identical, and to concentrate on the similarities between EDS prisoners and other prisoners. In terms of similarities, he emphasises that both EDS prisoners and indeterminate sentence prisoners depend, for their early release, on risk assessment by the Parole Board. Like the Divisional Court, he relies upon what he says is the sentencing principle that the period preceding eligibility for parole is the punitive and deterrent element of a sentence passed, whereas any further time spent in custody is seen as pertaining to the risk to the public posed by the offender (see, for example, R (Foley) v Parole Board for England and Wales [2012] EWHC 2184 (Admin)). In his submission, this is the same for each group of prisoners, and the Secretary of States argument is wrong because it ignores that sentencing principle. Furthermore, he points out that determinate sentence prisoners, EDS prisoners, and those serving an indeterminate sentence all share the same interest, namely in being released from custody. On justification, Mr Southey reminds us that it is the differential treatment that must be justified, not the EDS itself, and in his submission, it has not been. Considerations of relative risk cannot provide the required justification, he says. It can be assumed that the highest risk offenders, and the offenders who have committed the most serious offences, are serving a life sentence, and lower risk prisoners should not be treated less favourably in relation to early release. Risk is addressed through the Parole Board process, an EDS prisoner only being released if the Parole Board is satisfied that continued detention is not necessary for the protection of the public. There is no basis, submits Mr Southey, for concluding that the risk that an EDS prisoner poses at the half way point in his sentence will necessarily be such as to require continued detention, and denying him the opportunity even to apply for release until two thirds of the way through his sentence, when the prisoner serving an indeterminate term can apply at half time. The effect of this is to impose a greater penalty without reason. Further, he says that there is no basis to distinguish between the EDS prisoner and the regular determinate sentence prisoner as both are equally culpable, and the punitive component of their sentence should be the same; differential risk is addressed by the involvement of the Parole Board in the case of the EDS prisoner. The Secretary of States submissions in relation to Issue 2 The Secretary of States case is that an EDS is not analogous either to other types of determinate sentence or to indeterminate sentences. It is submitted that it is in a class by itself, designed to address a particular combination of offending and risk. Although accepting that a life sentence can be viewed as comprising a period of detention justified by punishment and deterrent followed by detention justified solely by public protection, Sir James Eadie does not accept that a similar analysis applies to a determinate sentence. His submission is that the whole of a determinate sentence (and the whole of the custodial term of an EDS) is imposed for the purpose of punishment and deterrence. Further, Sir James submits that there is, in any event, no absolute rule that a prisoner is eligible for release at the half way point of his sentence. Some prisoners have a right to release on licence at the half way stage, but in some cases, the prisoner is entitled to apply for release sooner, and in some cases release requires the Parole Boards direction. In the case of life sentences, a prisoner may not always be eligible to apply to the Parole Board at what would be the half way point in a determinate sentence, because the minimum term of a life sentence can be fixed at more than half of the notional determinate sentence (see Szczerba above). Accordingly, in the Secretary of States submission, each type of sentence has release arrangements which have been tailored to meet the requirements of that particular sentence, justified by reference to the particular characteristics of the offenders on whom the sentence is imposed. The particular arrangements for EDS prisoners flow from the characteristics of that group of prisoners, in contrast to those serving ordinary determinate terms or indeterminate sentences. The Secretary of State draws a distinction between the present case and Clift v United Kingdom and Foley. Those cases were about relevantly similar release processes being applied differently, he says, whereas the complaint here is, in contrast, about the operation of different types of sentence, and whether the factors which justify the imposition of a particular sentence also justify the particular release arrangements that form part of the administration of the sentence. More assistance can be obtained from R (Bristow) v Secretary of State [2013] EWHC 3094 (Admin) (later affirmed in the Court of Appeal [2015] EWCA Civ 1170) and R (Massey) v Secretary of State for Justice [2013] EWHC 1950 (Admin). Sir James emphasises the wide margin of appreciation afforded to states with respect to prisoner and penal policy, although acknowledging that this court will exercise close scrutiny in relation to measures that result in detention. Here, the policy choices made by Parliament, with respect to the release arrangements for an EDS prisoner, are well within its discretion when striking a balance between the interests of public protection and the interests of the individual prisoner. Unlike in Clift v United Kingdom, the differences in treatment are all justified by the risk that EDS prisoners pose in comparison to other prisoners, and the early release provisions achieve the legitimate aim of protecting the public. Discussion I need to start with a consideration of the fundamental difference between the parties in relation to whether a determinate sentence can be said to comprise two separate components, a period for punishment and deterrence, and a further period based on the risk posed by the offender to the public, particularly as this featured significantly in the decision of the Divisional Court. The Secretary of State accepts that it has long been established that life sentences incorporate two such periods, but does not accept that that is so with regard to determinate sentences, relying on a number of decisions of the domestic courts and the ECtHR, which it is said call the two component analysis into question. It will be seen that the observations to which our attention has been invited have tended to be made in the context of determining an issue as to whether article 5(4) of the ECHR requires a review, during the course of a particular sentence, of the lawfulness of detention. In my view, the Secretary of State is correct to differentiate between determinate and indeterminate sentences in this connection. The ECtHR does make a distinction, treating the post tariff phase of an indeterminate sentences as directed at managing risk, whereas the whole of a determinate sentence is viewed as punishment. In R (Black) v Secretary of State for Justice [2009] 1 AC 949, Lord Brown (in the majority) remarked on the distinction, commenting (para 67) that, throughout its case law, the Strasbourg court has consistently appeared to treat determinate sentences quite differently, time and again contrasting them with the indeterminate cases, with article 5(4) being engaged in the determination of the length of post tariff detention in life sentence cases, but not in decisions regarding early or conditional release from a determinate term of imprisonment (para 83). So, in Mansell v United Kingdom (Application No 32072/96, 2 July 1997), Ganusauskas v Lithuania (Application No 47922/99, 7 September 1999), and Brown v United Kingdom (Application No 968/04, 26 October 2004), the ECtHR held article 5 challenges to determinate sentences to be manifestly ill founded, the sentences being justified throughout the prison term as punishment for the offence. A brief look at Mansell will illustrate the approach in the Strasbourg cases. The applicant had been sentenced to a longer custodial sentence than would have been commensurate with the seriousness of the offence, because the court considered it necessary to protect the public from serious harm (section 2 of the Criminal Justice Act 1991). He argued that his sentence consisted of a punitive part and a preventive part, and that he should have been entitled to a proper review of the lawfulness of his continued detention, with an oral hearing, as soon as he had served the period that he would have served under the normal punitive sentence. The ECtHR observed that, in contrast to indeterminate sentences, there was no question of the sentence being imposed because of factors that were susceptible to change with the passage of time, such as dangerousness or mental instability. The whole of the fixed term was a sentence which was imposed as punishment for the offences committed. The necessary judicial control was therefore incorporated in the original conviction and sentence. In R (Whiston) v Secretary of State for Justice [2015] AC 176, which concerned a determinate sentence prisoner released on Home Detention Curfew, then recalled to prison, Lord Neuberger, with whom three of the court of five agreed, also reviewed the Strasbourg case law. His observation at para 25, made in connection with Ganusauskas and Brown, might perhaps lend a modicum of further support to the Secretary of States argument against the two component analysis. He said that: in each case, the court rejected the article 5.4 complaint on the ground that the article did not apply at all in circumstances where the recall to prison occurred during the period of a determinate sentence imposed for the purposes of punishment. I would add that the reference to punishment cannot have been intended to mean solely for punishment: determinate prison sentences are imposed for a mixture of reasons, each of which should, at least normally, be treated as applicable to the whole of the sentence period. (Emphasis added) It appears from para 53 that Lady Hale, who wished to sound a note of caution about some of the reasoning by which Lord Neuberger had reached his conclusion in the appeal, might not have been entirely in agreement with what he said on this particular point, but she did comment upon the fact that the sentencing judge imposes the sentence which is thought to be correct, without regard to the right to early release, and followed that with the observation that the whole of the sentence is intended as punishment. Brown v Parole Board for Scotland [2017] UKSC 69; [2018] AC 1 might also be taken as providing some support for the Secretary of States position on punishment/risk, particularly what is said at para 60, which I set out below. The case was concerned with an extended sentence imposed under section 210A of the Criminal Procedure (Scotland) Act 1995 (as inserted by section 86 of the (inserted by Crime and Disorder Act 1998)), but there are similarities between such a sentence and an EDS. The sentence comprised a custodial term of seven years followed by an extension period of three years on licence. The prisoner was released on licence after serving two thirds of the custodial term, but then recalled. He complained of a breach of article 5, on the basis that he had not been provided with appropriate rehabilitation courses, during the period of his recall, to enable him to achieve his release, by demonstrating to the Parole Board that he no longer posed a risk to the public. Although the court took the opportunity to modify the article 5 jurisprudence by departing from R (Kaiyam) v Secretary of State for Justice (above), his action failed because he had, in fact, been provided with a range of appropriate rehabilitative measures. Lord Reed gave a judgment with which the remaining members of the court were all in agreement, and, although the issue for the court was different, some passages have some relevance to the present case. At para 49, Lord Reed noted that, in fixing the custodial term of the extended sentence, as in fixing an ordinary sentence of imprisonment, the court will take account of all matters relevant to sentencing and have regard to all the accepted objectives of a custodial sentence, including punishment, deterrence, public protection and rehabilitation. The same can be said of the present case, as these objectives form part of the sentencing process in England and Wales as well, featuring in section 142(1) of the 2003 Act as purposes of sentencing (above). Section 142(1) is in very general terms, applying to any court dealing with an offender in respect of his offences, making no difference between periods of the sentence which will be spent in custody and periods which the offender can expect to spend on licence. No doubt this is unsurprising, given that the sentencing judge is not to have regard to the early release provisions when fixing the appropriate sentence. At para 50, Lord Reed made an observation about release on licence, which must also be relevant to release on licence in England and Wales, and does perhaps underline that a licence may not only be there to protect the public, although plainly that can be significant part of its purpose and, of course, the extension period in an EDS is indeed expressly for that purpose (section 226A(7) of the 2003 Act). He said: Release on licence is intended to ensure that the process of transition from custody to freedom is supervised, so as to maximise the chances of the ex prisoners successful reintegration into the community and minimise the chances of his relapse into criminal activity. It is of note that Lord Reed drew a clear distinction between the custodial term of the extended sentence, including any period spent on licence during it, and the extension period. In the following passage from para 60, he proceeded upon the basis that the custodial term addressed the punitive aspect of the sentence, in contrast to the extension, which was for the protection of the public: 60. the purpose of detention during the extension period is materially different from that of a determinate sentence. In terms of section 210A(2)(b) of the 1995 Act, the extension period is of such length as the court considers necessary for the purpose mentioned in subsection (1)(b), namely protecting the public from serious harm from the offender. The punitive aspect of the sentence has already been dealt with by the custodial term, which is the term of imprisonment which the court would have passed on the offender otherwise than by virtue of this section: section 210A(2)(a). Where a prisoner serving an extended sentence is detained during the extension period, other than by virtue of an order made under section 16 or another sentence, his continued detention is therefore justified solely by the need to protect the public from serious harm. The Secretary of State relies also upon a body of case law concerning article 7 of the ECHR (no heavier penalty to be imposed than the one that was applicable at the time the criminal offence was committed). It is pointed out that post sentence changes to early release provisions are not treated as altering the penalty for the offence, see for example R v Docherty (above) at para 65, and the cases there cited. It is argued that this is not consistent with Mr Stotts case. If the punitive element of a determinate sentence ends upon early release, or eligibility to apply for release, then a change in the release provisions would potentially impermissibly increase the penalty imposed for the offence. Having reviewed the authorities, it seems to me fairly clear that the Strasbourg jurisprudence is against the two component analysis, so far as determinate sentences are concerned. Viewing the whole term as punitive would would also be consistent with the generally applicable purposes of sentencing set out in section 142(1) of the 2003 Act, and with the embargo on the sentencing judge having regard to the early release provisions when deciding what period of imprisonment to impose, save in particular defined circumstances. If the two component analysis is inappropriate, there must be force in the Secretary of States submission that, when looking to compare that part of an EDS which is imposed for punishment and deterrence, with the equivalent part of another sentence, it requires a comparison between the appropriate custodial term of the EDS and: in the case of a standard determinate sentence and an SOPC, the whole i) term of imprisonment; ii) in the case of an indeterminate sentence, the minimum term. Having said that, I can entirely accept that, as a matter of practice, the domestic criminal courts do see determinative sentences as having distinct punitive and risk based elements, see the Divisional Court in the present case for example. And, even if the Secretary of State is correct that a sentence should not actually be analysed in this way, it remains the stark fact that some prisoners have to serve a greater proportion of their overall sentence before becoming eligible for release on licence than others. The category in relation to which this is perhaps most challenging to explain, is where release requires the Parole Board to be satisfied on the question of risk. Some prisoners, notably for present purposes, the EDS prisoner, have to serve a greater proportion of their sentence than others, before they can try to persuade the Parole Board on that issue. Whatever the correct answer to the two component debate, this differential wait for the chance to approach the Parole Board demands attention. Accordingly, there might not be much value in pursuing the two component debate further. It is important to put the differential wait argument into proper context however. Whilst the assertion that the requirement for an EDS prisoner to serve two thirds of his sentence before becoming eligible for parole is out of step with comparable prisoners has an initial attraction, it is less compelling if the rest of the prisoners are not, in fact, in step with each other. The argument proceeds on the basis that other prisoners are eligible for release/parole at the half way point in their sentence, but on closer examination, it can be seen that this is by no means universal. Standard determinate sentence prisoners are entitled to (automatic) release at the half way point. Most life sentence prisoners (excepting those where a whole life term has been imposed) are eligible to apply for release once they have served their minimum term, and in most cases this minimum term will be the equivalent to half of the notional determinate term, but that is not universal even for discretionary life sentences (see Szczerba above), and in the case of mandatory life sentences, the period is not fixed by reference to a notional determinate term. Accordingly there are other prisoners who serve longer than half of their sentences before they have a chance of release on licence. Conversely, there are some prisoners who serve less than half. Home Detention Curfew can enable determinate sentence prisoners to achieve their release before the half way point, and an SOPC prisoner is eligible to apply for release from the half way point of his appropriate custodial term, and not the half way point in his overall sentence (which will be the aggregate of the custodial term plus the licence tacked on to it). I turn then, rather more directly, to the twin questions of whether an EDS prisoner is in an analogous position to other prisoners serving either determinate or indeterminate sentences (Issue 2A), and whether the differences in treatment that there undoubtedly are between EDS prisoners and other prisoners are justified (Issue 2B). As is apparent from the authorities concerning article 14, it is not at all easy to separate these two questions into watertight compartments, but I will at least begin with Issue 2A. In determining whether groups are in a relevantly analogous situation for article 14, regard has to be had to the particular nature of the complaint that is being made, see for example para 66 of Clift v United Kingdom. Mr Stott relies upon Clift v United Kingdom, on the basis that it involved a similar complaint to his own. However, the Secretary of State submits that it does not assist here, because it concerned a complaint about similar release provisions being operated differently whereas Mr Stotts complaint is about the operation of different types of sentence. Clift v United Kingdom can properly be described, I think, as concerning a complaint about similar release provisions being operated differently. The prisoners under consideration there, all required a recommendation from the Parole Board before they could achieve early release. But for those, like Mr Clift, who were serving determinate terms of 15 years or more, the final decision on early release lay with the Secretary of State, whereas for the other prisoners the Parole Boards recommendation was enough. The ECtHR considered the prisoners to be relevantly similar. The key was that, in each case, it was all about determining whether the prisoner posed too much of a risk to be released. So, at para 67, the court observed that a refusal of early release was not intended to constitute further punishment but to reflect the assessment of those qualified to conduct it that the prisoner in question poses an unacceptable risk upon release. As the methods of assessing risk and the means of addressing any risk identified are in principle the same for all categories of prisoners, it considered that there was no distinction to be drawn between the prisoners, who were in analogous positions. I do not see the present case as entirely on all fours with Clift v United Kingdom. R (Foley) v Parole Board for England and Wales (above), upon which Mr Southey also relies, is possibly a step closer to the present case than Clift, because it concerned the substance of the release arrangements, rather than simply the mechanism of release ie who made the final decision. The claimant had been given a determinate sentence of 18 years. She was eligible for release at the half way point in the sentence if the Parole Board recommended it, and for automatic release at the two thirds point. The test that the Parole Board had to apply in her case was more onerous than the test that would have been applicable had she been given a life sentence. She therefore argued that there was a violation of article 14. Her claim failed because R (Clift) meant that she could not establish that the different treatment was on the ground of other status, but the court went on to set out what it would have decided had there not been that obstacle. Although acknowledging that there were differences between the sentences, Treacy J (with whom Thomas LJ agreed, adding a few words) accepted, at para 71, that the situation of the claimant was analogous to an indeterminate sentence prisoner, saying: Whilst it is obvious that an offender serving a determinate sentence has the benefit of having a finite limit on the reach of the law in relation to that sentence, I do not think that constitutes a material difference. Both types of sentence now in reality are divided into a punitive element which may be followed by a period of risk based detention. So, in my view, the identified differences between a determinate and an indeterminate sentence do not prevent their treatment as analogous. The courts conclusion was that there was no objective justification for the difference. Treacy J considered the reasoning in Clift v United Kingdom pertinent, because it was also about the imposition of different early release requirements. Release during Ms Foleys sentence and during an indeterminate sentence both involved a risk assessment exercise, and consideration of risk by the same body, but significantly different tests were applied. Treacy Js analysis proceeded upon the basis that the punitive element of a determinate sentence lasted up to the half way point, leading him to conclude that there was no good reason why those who ex hypothesi are to be regarded as less dangerous because they have received a determinate rather than an indeterminate sentence, should be subject to greater punishment [or] why both types of offender should not become eligible for release subject to questions of risk at the same point in their sentence (see paras 69 and 76). The Secretary of State would distinguish Foley because of the significant part played in the courts approach by the two component (punitive/risk) analysis. Sir James invites us to set more store by R (Massey) v Secretary of State for Justice [2013] EWHC 1950 (Admin) because, although Massey involved an IPP prisoner seeking to compare himself with the later EDS regime, the complaint in both that case and this one was in essence that prisoners with different characteristics, serving different sentences, have different release provisions. The situation was not found to be analogous in Massey, and the following reasoning found at para 25 of the judgment of Moses LJ is equally applicable here, it is submitted: however he cloaks his application, the real complaint he advances is a challenge to his original sentence. The reality of his argument is that he was sentenced under a different regime. It is not coherent then to allege discrimination when compared to other offenders sentenced under a different regime. They are not in an analogous situation precisely because they were sentenced under a different regime Like the reasoning of the Divisional Court in the present case, the view of the Divisional Court in Foley cannot be dismissed lightly, given the enormous experience that the judges involved in those two decisions have in criminal work, but, for the reasons I gave earlier, I would question the two component analysis upon which the courts proceeded. Massey should also be treated with a little caution, given that it concerned a complaint derived from a change in the sentencing legislation, and differential treatment caused purely by the commencement of a new legislative regime does not constitute discrimination, see, for example, Minter v United Kingdom (above). At the least, however, Massey serves as an introduction to my consideration of whether Mr Stotts complaint is also, in fact, about the sentencing regime to which he has been consigned rather than, discretely, about the early release provisions that are part of it. It seems to me important to recognise the complexity and detail of the provisions governing the various sentences that can be imposed. It was, in part, for that reason that I set these out as fully as I did earlier. From that review of the statutory provisions concerning EDS, standard determinate sentences, SOPC, and indeterminate sentences, it can be seen that, far from there being a basic sentencing regime, with discrete variations for particular sentences, each sentence has its own detailed set of rules, dictating when it can be imposed and how it operates in practice, the early release provisions being part and parcel of the rules. Some sentences can only be imposed if there is a significant risk of the offender causing serious harm to members of the public by committing further offences, for example. Some sentences can only be imposed where the offender has already committed offences of a particular type. For some, there is automatic early release on licence, but, for others, release on licence is dependent on the Parole Board. Those serving indeterminate terms remain on licence (and liable to be recalled to prison) for the rest of their lives, whereas other offenders will be on licence for a finite period only. All of this fine detail tends to support the Secretary of States argument that each sentence is tailored to a particular category of offender, addressing a particular combination of offending and risk. Subject of course to sentencing guidance, the judge selects the sentence which matches the attributes of the case before him, and fixes the term of any period of imprisonment, extended licence etc. I can therefore see the force in the argument that the release provisions about which Mr Stott complains should not be looked at on their own, but as a feature of the regime under which he has been sentenced, the same regime that is sufficiently distinct to justify taking the view that his complaint is on the ground of other status. There might be said, therefore, to be a building case for holding that he is not in an analogous situation to others sentenced under different regimes. Weight is added to this when some of the detail of the EDS regime is compared specifically with other sentences. Of the determinate sentences, only an EDS requires a finding of significant risk to members of the public of serious harm. The Secretary of State points out that, in contrast to EDS prisoners, not all discretionary life sentence prisoners have been found to be dangerous, such a finding not being required for the imposition of life sentences under section 224A. That submission, whilst literally correct, is significantly weakened when one considers the nature of the listed offences which are a pre requisite to the imposition of such a life sentence. As we have seen, Mr Southeys submission that life sentences are reserved for offenders who are the highest risk or have the most serious criminal records, for the most serious cases, reflects the view that Treacy J took of relative dangerousness in Foley. There are important differences between an EDS and a discretionary life sentence, however. There are respects in which a discretionary life sentence must undoubtedly be viewed as having more serious consequences for the offender, notwithstanding that he may have an earlier opportunity to approach the Parole Board. An EDS involves imprisonment for a specified period which will necessarily come to an end, whether or not the prisoners release is directed by the Parole Board, but a prisoner serving a discretionary life sentence may remain in detention for the rest of his life. If he is released, he remains on licence (and liable to recall) for life, whereas the EDS prisoner is on licence for a finite period only. Recognising that there are valid arguments both ways in relation to Issue 2A, it seems appropriate to act on the wise suggestion of Lord Nicholls, in R (Carson) v Secretary of State for Work and Pensions (above), that sometimes, lacking an obvious answer to the question whether the claimant is in an analogous situation, it may be best to turn to a consideration of whether the differential treatment has a legitimate aim, and whether the method chosen to achieve the aim is appropriate and not disproportionate in its adverse impact (Issue 2B), although I will in fact return to Issue 2A again thereafter. Behind the detailed argument focusing on the particular features of particular sentences, both sides have a simple argument to advance in relation to justification. Mr Southey proceeds upon the basis that life sentences are given to the prisoners who are the highest risk or have committed the most serious offences. Those serving a determinate sentence, including an EDS, are therefore lower risk/less serious offenders, and there cannot be any justification for treating them less favourably in relation to early release than life prisoners. Relative risk cannot justify this, he says, because neither category of prisoner will be released before the Parole Board directs it, having considered the question of risk, and both categories will be on licence upon early release. Although Mr Southey also complains that there is no basis for distinguishing between those serving an EDS and those serving a determinate term, I find the comparison less persuasive than is the comparison with indeterminate sentence prisoners, given the conditions for the imposition of an EDS, which differentiate EDS prisoners from standard determinate term prisoners. The comparison may have had more force, had the two component punitive/risk analysis been unassailable. In that event, it could have been questioned how it was justified to require the EDS prisoner to serve a longer punishment period (as opposed to a longer period of detention dependent upon risk) than a standard determinate term prisoner. However, I have explained my reservations about the two component analysis earlier. The Secretary of States fundamental answer is that there are different categories of sentence, tailored to the particular characteristics of the offenders, and striking a balance between the interests of public protection and the interests of the individual prisoner. All EDS prisoners are dangerous, and the legitimate aim is to protect the public by ensuring that they serve a greater proportion of their custodial term than other categories of prisoner, which may include prisoners who are not dangerous. This is comprehensible when the position of an EDS prisoner is compared with a standard determinate term prisoner, in relation to whom there is no equivalent requirement to find specifically that there is a significant risk of serious harm to the public through further specified offences. It works less easily in relation to indeterminate sentences. True it is that there is not a universal requirement for a finding of dangerousness, before the imposition of an indeterminate sentence, but, as I implied earlier, it is not a great leap from the conditions that have to be satisfied before the sentence can be passed to the conclusion that by far the majority of indeterminate sentence prisoners will pose a risk to the public. Nevertheless, it is correctly pointed out on behalf of the Secretary of State that, in contrast to the release provisions in relation to an EDS, the release provisions in relation to indeterminate sentences must cater for prisoners who are not dangerous, and might be suitable for release sooner. Moreover, Sir James invites us to consider each sentence as a whole, when considering justification, because it is artificial to compare release provisions only. Of crucial importance is the fact that the indeterminate sentence prisoner may never be released at all, whereas the EDS prisoner will be released at the end of his custodial term, even if he fails to satisfy the Parole Board on the question of risk, and also the difference in the duration of the licence in each case. It may be apparent, by now, that I find the arguments in relation to Issue 2 finely balanced. Concentrating upon justification, for the present, it is necessary to decide whether the different treatment of EDS prisoners has a legitimate aim, and whether the method selected for achieving the aim is appropriate, and not disproportionate in its adverse impact. I do not have much difficulty in accepting that, in general terms, the aim of the EDS provisions is legitimate. Ms Foulds, an official from the Ministry of Justice who describes herself as the policy lead on adult custodial sentencing policy, says in her witness statement of September 2016 that the government introduced a tougher, extended determinate sentence as a measure designed to enhance public protection and maintain public confidence in the sentencing framework. The ECtHR in Clift v United Kingdom was not impressed with the public confidence argument, but accepted (para 74) that more stringent early release provisions may be justified where it can be demonstrated that those to whom they apply pose a higher risk to the public upon release. Given that it cannot be passed unless a risk condition is satisfied, an EDS is clearly aimed at offenders of this sort. The questions that are more difficult are whether the longer wait before the prisoner is eligible to apply to the Parole Board is an appropriate means of achieving this aim and whether it is disproportionate in its impact. The starting point for a determination of these questions is that the ECtHR would allow a Contracting State a margin of appreciation in assessing whether, and to what extent, differences in otherwise similar situations justify different treatment, and would allow a wide margin when it comes to questions of prisoner and penal policy, although closely scrutinising the situation where the complaint is in the ambit of article 5. This court must equally respect the policy choices of parliament in relation to sentencing. In the end, the answer depends significantly, I think, upon whether one concentrates entirely upon the early release provisions in the EDS and other sentences, or looks up from the detail to consider the various sentencing regimes as complete regimes. Ultimately, I am persuaded that the proper way to look at the issue is by considering each sentence as a whole, as the Secretary of State invites us to do. The sentencing judge imposes the sentence that complies with the statutory conditions prescribed by parliament, and the sentencing guidelines, and, within that framework, best meets the characteristics of the offence and the offender. The early release provisions have to be seen as part of the chosen sentencing regime, and the question of whether there is an objective justification for the differential treatment of prisoners in relation to earlier release, considered in that wider context. For reasons that I have set out above, there is a readier comparison between the EDS and an indeterminate sentence, than between a simple determinate term and an EDS. But the EDS and the indeterminate sentence are by no means a complete match, leaving aside the difference in parole eligibility. Counter balancing the indeterminate prisoners earlier eligibility for parole is the lack of any guaranteed end to his incarceration, and the life licence to which he is subjected. This fundamentally undermines the argument that the difference in treatment between the two prisoners in relation to early release is disproportionate, or putting it more plainly, unfair. I would accept that, on the contrary, bearing in mind the EDS sentencing package as a whole, the early release provisions are justified as a proportionate means of achieving the governments legitimate aim. Thus, although I would accept that Mr Stott has been treated differently on the grounds of other status within article 14, there being an objective justification for the difference in treatment of EDS prisoners, his claim must fail. It is not in fact necessary in those circumstances to give a definitive answer as to whether EDS prisoners can be said to be in an analogous situation to other prisoners. However, there is a significant overlap between the considerations that are relevant to Issue 2A and to Issue 2B, and having looked at those matters again in the context of Issue 2B, and considered the complete picture, with the benefit also of what Lord Hodge has to say on the subject in his judgment, I have come to the view that EDS prisoners cannot be said to be in an analogous situation to other prisoners. Most influential in this conclusion is that, as I see it, rather than focusing entirely upon the early release provisions, the various sentencing regimes have to be viewed as whole entities, each with its own particular, different, mix of ingredients, designed for a particular set of circumstances. For these reasons, which are, of course, different from those of the Divisional Court, I would dismiss the appeal. LORD CARNWATH: I agree that the appeal should be dismissed. I gratefully adopt Lady Blacks exposition of the legal and factual background. Status The first question under article 14 of the Convention is whether the alleged difference of treatment is attributable to a relevant status. As to that, the Divisional Court was bound by House of Lords authority to hold that it is not: R (Clift) v Secretary of State for the Home Department [2007] 1 AC 484; [2006] UKHL 54. As Lady Black explains, that issue now falls to be reconsidered by this court, in the light of the contradictory decision of the Fourth Section of the ECtHR in Clift v United Kingdom (Application No 7205/07), 13 July 2010. Sir James Eadie QC for the Secretary of State argues that the decision in Clift does not justify departing from the principles governing the definition of status in this context, as established by a long line of Strasbourg case law, starting with the often cited decision in Kjeldsen, Busk Madsen and Pedersen v Denmark (1976) 1 EHRR 711, para 56, stating that: Article 14 prohibits, within the ambit of the rights and freedoms guaranteed, discriminatory treatment having as its basis or reason a personal characteristic (status) by which persons or groups of persons are distinguishable from each other. He relies also on Lord Neubergers pithy summary of the effect of subsequent case law in R (RJM) v Secretary of State for Work and Pensions [2009] AC 311 para 45: I consider that the concept of personal characteristic (not surprisingly, like the concept of status) generally requires one to concentrate on what somebody is, rather than what he is doing or what is being done to him. Such a characterisation approach appears not only consistent with the natural meaning of the expression, but also with the approach of the ECtHR and of this House to this issue. (Emphasis added) Lord Neuberger cited Gerger v Turkey (Application No 24919/94) (unreported) 8 July 1999, in which the ECtHR had held that article 14 had no application to a law under which people committing terrorist offences were treated less favourably than other prisoners with regard to automatic parole. Sir James Eadie also points to the potentially far reaching effects of the widening of the scope of status in other areas of the law, for example immigration: cf R (HC) v Secretary of State for Work and Pensions (AIRE Centre intervening) [2017] 3 WLR 1486, para 31, where this court held that differences in immigration status did not give rise to issues under article 14. In respectful disagreement with the other members of the court, I consider that these submissions are broadly correct. To explain why, and at the risk of some repetition, it is necessary to look again at the treatment of this issue in Clift both here and in Strasbourg. Clift in the House of Lords and Strasbourg The background I start by considering the background to the decisions in Clift including the facts and the applicable legislation. The latter is set out most fully in the judgment of the ECtHR (paras 23ff). Mr Clift had been sentenced in 1994 to 18 years imprisonment for serious crimes including attempted murder, which carried a maximum sentence of life imprisonment. In March 2002 the Parole Board recommended his release on parole taking account of reduced risk and the scope for addressing it by other means. Under the legislation then in force, for prisoners serving determinate sentences of more than 15 years, release in line with a Parole Board recommendation remained in the discretion of the Secretary of State; for prisoners serving shorter sentences (and for prisoners serving indeterminate sentences) release was mandatory. In October 2002 the Secretary of State rejected the recommendation of the Parole Board in Mr Clifts case on the grounds that his release would present an unacceptable risk to the public. The distinction between automatic and discretionary release, depending on whether the sentence was more or less than 15 years, arose not directly from the primary legislation itself, but from a statutory order made under it by the Secretary of State. Section 35 of the Criminal Justice Act 1991 provided a discretionary power to release long term prisoners before the two thirds point of their sentence, if recommended by the Parole Board. Section 50 gave power to reduce the effective period of detention by converting the discretionary power under section 35 into a duty in relation to specified classes of prisoners. The Secretary of State exercised that power by the Parole Board (Transfer of Functions) Order 1998 (SI 1998/3218), which applied to prisoners serving a sentence of imprisonment for a term of less than 15 years. For those serving sentences of 15 years or more, the order left in place the discretion to order early release between the service of half and two thirds of the sentence. In the House of Lords Lord Bingham (para 33) described the discretion so given to the Secretary for State as an indefensible anomaly. That was because, following the decision of the ECtHR in Stafford v United Kingdom (2002) 35 EHRR 1121, it had become clear that assessment of the risk presented by any individual prisoner was a task with no political content and one to which the Secretary of State could not (and did not claim to) bring any superior expertise. A defence of justification would not therefore have been sustainable. (That view was in due course adopted in terms by the ECtHR: para 77). However, justification would only become relevant under article 14, if his treatment amounted to discrimination on the grounds of other status. I turn to the consideration of that issue, first in the House of Lords and then in the ECtHR. Status The House of Lords Lord Bingham (with whom all his colleagues agreed) started from the premise that the word status in this context could be equated with personal characteristic (following Kjeldsen above). He did not think that a personal characteristic could be defined by the differential treatment of which a person complains. However, Mr Clift was not complaining of the sentence passed upon him, but of being denied a definitive Parole Board recommendation. Having described the personal characteristic criterion as elusive, he continued: But I would incline to regard a life sentence as an acquired personal characteristic and a lifer as having an other status, and it is hard to see why the classification of Mr Clift, based on the length of his sentence and not the nature of his offences, should be differently regarded. However, while clearly sympathetic to the claim, he was unwilling to uphold it in the absence of support, explicit or implicit, from the Strasbourg jurisprudence (para 28). Lord Hope spoke to similar effect, agreeing that a personal characteristic cannot be defined by the differential treatment of which a person complains: It is plain too that the category of long term prisoner into which Mr Clifts case falls would not have been recognised as a separate category had it not been for the Order which treats prisoners in his group differently from others in the enjoyment of their fundamental right to liberty. But he had already been sentenced, and he had already acquired the status which that sentence gave him before the Order was made that denied prisoners in his group the right to release on the recommendation of the Parole Board. The question which his case raises is whether the distinguishing feature or characteristic which enables persons or a group of persons to be singled out for separate treatment must have been identified as a personal characteristic before it is used for this purpose by the discriminator. (para 47) Like Lord Bingham he was sympathetic to the claim, but unwilling to uphold it, the issue not yet having been addressed by the Strasbourg jurisprudence. He noted also Lady Hales observation that it was possible to regard what he has done, rather than who or what he is, as the true reason for the difference of treatment in Mr Clifts case (paras 48 49). Lady Hale expressed agreement with Lord Binghams reasons, but (as I read her judgment) with a rather different emphasis. In the course of a detailed review of the Strasbourg authorities on the grounds of discrimination covered by article 14, she referred (para 60) to the example pertinent to this case of differences in the treatment of different criminal offences, exemplified by Gerger v Turkey (above): the court deduced from the fact that people convicted of terrorist offences would be treated less favourably with regard to automatic parole that the distinction is made not between different groups of people, but between different types of offence, according to the legislatures view of their gravity: para 69. Similarly, in Budak v Turkey (Application No 57345/00) (unreported), 7 September 2004, the court had repeated the personal characteristic test from Kjeldsen, and had held that a distinction in procedure and sentences for offences tried before the state security court from those tried before other courts was made, again, not between different groups of people but between different types of offence. In conclusion on this aspect, having noted the Secretary of States acceptance that a different parole regime for foreigners liable to deportation, as compared to those with the right to remain here, fell within the proscribed grounds, she said: But a difference in treatment based on the seriousness of the offence would fall outside those grounds. The real reason for the distinction is not a personal characteristic of the offender but what the offender has done. The result is that the difference of treatment between Mr Clift and people sentenced either to shorter determinate sentences or to life imprisonment is not covered by article 14 at all (paras 62 63). She acknowledged that the law might look odd, but it was not for the court to declare legislation which Parliament has passed incompatible with the Convention rights unless the Convention and its case law require us so to do (para 63). Status the ECtHR The Fourth Section conducted a detailed review of the previous ECtHR authorities on the meaning of other status (in French toute autre situation). Its conclusions are set out in paras 55 63 of the decision. It accepted that many of the cases related to personal characteristics, in the sense that they are innate characteristics or inherently linked to the identity or the personality of the individual. However, there were others where that approach could not be applied. It gave (para 58) six examples which I list below with the courts comments: i) Engel v The Netherlands (No 1) (1976) 1 EHRR 647: the court held that a distinction based on military rank could run counter to article 14, the complaint in that case concerning a difference in treatment as regards provisional arrest between officers on the one hand and non commissioned officers and ordinary servicemen on the other. ii) Pine Valley Developments Ltd v Ireland (1991) 14 EHRR 319: the court found a violation where there was a difference in treatment between the applicants and other holders of planning permissions in the same category as theirs. Although the court did not specifically address the question of the relevant status in that case, it would appear that the distinction of which the applicants complained was between holders of outline planning permission who benefited from new legislation and holders of outline planning permission who did not (in that case, by virtue of the fact that the applicants planning complaint had already been determined by the court and that the outline planning permission had been found to be invalid see para 26 of the judgment). iii) Larkos v Cyprus (1999) 30 EHRR 597: the court found a violation of article 14 as a result of a distinction between tenants of the state on the one hand and tenants of private landlords on the other, the parties did not dispute that article 14 applied and the court saw no reason to hold otherwise. iv) Shelley v United Kingdom (2008) 46 EHRR SE16: the court considered that being a convicted prisoner could fall within the notion of other status in article 14. Sidabras and Dziautas v Lithuania (Application Nos 55480/00 and v) 59330/00), ECHR (2004) 42 EHRR 104 VIII: the court did not specifically address the question of other status but in finding a violation of article 14 and article 8 implicitly accepted that status as a former KGB officer fell within article 14. vi) Paulk v Slovakia (2006) 46 EHRR 10: the court accepted that the applicant, a father whose paternity had been established by judicial determination, had a resulting status which could be compared to putative fathers and mothers in situations where paternity was legally presumed but not judicially determined. The court went on (paras 60 61) to address two particular points made by the House of Lords, and adopted in the UK Governments argument: first, that the treatment of which the applicant complains must exist independently of the other status upon which it is based; and, secondly, reliance on Gerger to support the argument that no separate status arises where the distinction is made, not between different groups of people, but between different types of offence, according to the legislatures view of their gravity. For the former argument the court found no clear support in its case law. It said: In Paulk, cited above, there was no suggestion that the distinction relied upon had any relevance outside the applicants complaint but this did not prevent the court from finding a violation of article 14. The question whether there is a difference of treatment based on a personal or identifiable characteristic in any given case is a matter 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. It should be recalled in this regards that the general purpose of article 14 is to ensure that where a state provides for rights falling within the ambit of the Convention which go beyond the minimum guarantees set out therein, those supplementary rights are applied fairly and consistently to all those within its jurisdiction unless a difference of treatment is objectively justified. (para 60) Of the argument based on Gerger it said: The court observes that the approach adopted in Gerger has been followed in a number of cases, but all concerned special court procedures or provisions on early release for those accused or convicted of terrorism offences in Turkey. Thus while Gerger made it clear that there may be circumstances in which it is not appropriate to categorise an impugned difference of treatment as one made between groups of people, any exception to the protection offered by article 14 of the Convention should be narrowly construed. In the present case the applicant does not allege a difference of treatment based on the gravity of the offence he committed, but one based on his position as a prisoner serving a determinate sentence of more than 15 years. While sentence length bears some relationship to the perceived gravity of the offence, a number of other factors may also be relevant, including the sentencing judges assessment of the risk posed by the applicant to the public. (para 61) Discussion With respect to the Fourth Section, I do not find its reasoning in Clift convincing. It is difficult to extract any principle from the disparate list of cases in its para 58. They have very little in common, other than the fact that in none of them, it seems, was the issue of status a matter for detailed consideration because it was not contested. Equally unconvincing is the reliance on Paulk to counter the view that the treatment complained of must be distinct from the status. That proposition is no more than the ordinary reading of the words of article 14 itself. Paulk was an unusual case on very special facts. The claim succeeded under article 8 in any event, and no issue was taken about status in the consideration of article 14. I note that both Lady Hale and Lord Mance share my doubts as to the weight placed on this decision by the court in Clift. Finally the Fourth Sections discussion of Gerger is hard to follow. It is accepted that there may be cases where it is not appropriate to treat an impugned difference as one made between groups of people. But there is no indication as to why Gerger itself fell into that category of cases, or by reference to what criterion. Further, while it is of course true that sentence length may reflect factors other than the perceived gravity, it is not clear why such factors (which are likely to be special to the circumstances of the particular offender and his case) strengthen the reasons for treating the difference as one between groups. It is true that in Clift in the House of Lords, Lord Bingham was willing in principle to regard the imposition of a particular form of sentence as conferring an acquired status for these purposes. However, as is apparent from a comparison with Lady Hales speech, his approach does not appear to take full account of decisions like Gerger. That in turn formed the basis of the more limited approach subsequently taken by the House in R (RJM). Lord Neuberger (para 46), while noting that Lord Bingham would have been inclined to regard a life sentence as an acquired personal characteristic and a lifer as having an other status, observed that this was in the absence of decisions such as Gerger . I am conscious that in Mathieson v Secretary of State for Work and Pensions [2015] 1 WLR 3250 the authority of the approach of the Fourth Section in Clift v United Kingdom was accepted without question by this court. However, the factual context was very different. The key to the decision can be found in the rhetorical question posed by Lord Wilson at the conclusion of his discussion of status: Disability is a prohibited ground: Burnip v Birmingham City Council [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? . (para 23) I am grateful for Lady Blacks comprehensive review of the authorities on this issue. It shows that the courts both here and in Strasbourg have been struggling with difficulty over a long period to find a rational criterion for defining and limiting the scope of status in article 14. It is true, as she says (para 44), that in more recent cases the Strasbourg court has moved beyond simple reference to a personal characteristic, to more expansive phrases such as identifiable, objective or personal characteristic. However, the decision in Minter v United Kingdom (2017) 65 EHRR SE6, noted by her at paras 41 43, suggests a tendency to restrict the scope of the decision in Clift itself, at least in the context of different sentencing regimes. I note Lady Hales suggestion that sentencing criteria concentrate upon the dangerousness of the offender, itself a personal characteristic. That may be so, but I find it hard to accept that dangerousness, whether a personal characteristic or not, is a status deserving of special protection under article 14. In conclusion on this issue, short of confirmation by the Grand Chamber, I would not for myself regard the decision of the Fourth Section in Clift (or the other more recent decisions reviewed by Lady Black) as requiring us to depart from the more restrictive approach to the concept of status reflected in the actual decision of the House in Clift, and confirmed in R (RJM). I would need considerable persuasion that the authors of the Convention intended mere conviction of a criminal offence, or subjection to a particular custodial regime, to entitle the recipient to specially protected status under human rights law. More generally, it is important that article 14 is kept within its proper role within the Convention, and outside the core protected areas is not allowed to develop into a means of bypassing the carefully defined limits applicable to the individual rights. Analogy and justification I can deal with these issues shortly, because I agree with the reasons given by Lady Black and Lord Hodge for dismissing the appeal. In particular I agree that the EDS regime must be looked at as a whole and cannot be treated as analogous to regimes which have different purposes and different characteristics. It is wrong to isolate the particular feature of the provisions for release on parole, and to compare it with other release provisions without regard to their context. In this respect the case is clearly distinguishable from Clift where there was a direct analogy between the sentence as applied respectively to those serving more and less than 15 years. As Lord Hope pointed out, the difference was not part of the original sentence as prescribed by Parliament, but was imposed subsequently by Ministerial order. I am also fortified in this conclusion by the consideration that, even if Mr Stotts sentencing regime gives him a relevant status for the purposes of article 14, it is on the outer edge of the concentric circles described by Lord Walker in the passage cited by Lady Black (para 54). Consistency in sentencing policy is an important objective, but it does not impinge on the core values which article 14 is designed to protect. Short of irrationality or (in Strasbourg terms) manifest unreasonableness, the courts should not allow themselves to be drawn into detailed consideration of the lines drawn by the legislature between the treatment of different categories of offender. LORD HODGE: I am very grateful to Lady Black for setting out the facts, the legal background and the legal issues so comprehensively and clearly. I can therefore state my views briefly. I agree with her that the appeal should be dismissed. But I would dismiss the appeal on the basis that the extended determinate sentence (EDS), which has been imposed on Mr Stott, is not sufficiently analogous to the sentences, which he puts forward as comparators, to bring him within article 14 of the European Convention on Human Rights (the ECHR) and require the Government to justify his treatment. If, contrary to my view, it is necessary to proceed to consider justification, I would hold that the difference in treatment of a prisoner detained under an EDS is justified principally because of the differing natures of the regimes for imprisonment. It is not disputed that Mr Stotts complaint is within the ambit of article 5 of the ECHR so that article 14 can be invoked if there has been unjustified discrimination in relation to a rule adopted by the United Kingdom concerning the early release of convicted prisoners. The questions on the applicability of article 14 relate to (i) status, (ii) analogy, and (iii) justification. Status I agree with Lady Black that Mr Stott as a prisoner sentenced to an EDS has the required status to invoke article 14 of the ECHR. That article speaks of the ECHR rights being secured without discrimination on any ground such as and then lists specific grounds, including or other status. As Lady Black has shown in paras 13 35 of her judgment, there has been a difference of view between the House of Lords and the European Court of Human Rights (ECtHR) as to the meaning of the phrase other status in article 14, which was manifested in the speeches in the House of Lords in R (Clift) v Secretary of State for the Home Department [2007] 1 AC 484 (Clift (HL)) and in the judgment of the 4th Section of the ECtHR in Clift v United Kingdom (Application No 7205/07, 13 July 2010) (Clift (ECtHR)). Questions are likely to arise as to the boundaries of any other status absent further guidance by the Grand Chamber of the ECtHR and I would not seek to make any general statement as to those boundaries. But I am satisfied that Mr Stott has the requisite status for the following four reasons. First, the opening words of the relevant phrase, on any ground such as, are clearly indicative of a broad approach to status. Secondly, there is ample authority in the ECtHR, the House of Lords and the Supreme Court to support the view that the words any other status should not be interpreted narrowly. Thus, in Clift (HL) para 48, Lord Hope of Craighead stated that a generous meaning should be given to the words or other status while recognising that the proscribed grounds are not unlimited. Similarly, in R (RJM) v Secretary of State for Work and Pensions [2009] AC 311 (RJM), Lord Neuberger of Abbotsbury at para 42 spoke of a liberal approach to the grounds on which discrimination was prohibited. In Clift (ECtHR), paras 55 and 56, the ECtHR spoke of the listed examples of status as being illustrative and not exhaustive and suggested that a wide meaning be given to the words other status. In Biao v Denmark (2016) 64 EHRR 1, the ECtHR again spoke of giving those words a wide meaning and in Khamtokhu and Aksenchik v Russia (Application Nos 60367/08 and 961/11) the Grand Chamber repeated that view at para 61. It appears, as Lord Neuberger stated in RJM (para 39) that the ECtHR interprets article 14 on a holistic or broad brush basis. Thirdly, the Supreme Court in Mathieson v Secretary of State for Health [2015] UKSC 47; [2015] 1 WLR 3250, para 22, has accepted the judgment in Clift (ECtHR). While, like Lord Carnwath, I would welcome further guidance from the Grand Chamber, I am persuaded that the weight of authority currently supports the view that Mr Stott has the required status under article 14 because he has been sentenced to a particular sentence of imprisonment, namely an EDS. Analogy Where I find myself in respectful disagreement with the experienced judges of the Divisional Court is that I am persuaded by Sir James Eadie QC that it is wrong to focus solely on the arrangements for early release and to disregard the existence of distinctive and separate sentencing regimes. Lady Black has helpfully set out the different types of sentence which a judge in England and Wales can impose in paras 84 105 of her judgment. I agree with her analysis in paras 123 134 of her judgment that a determinate sentence cannot be divided into a part relating to punishment and deterrence on the one hand and the avoidance of risk on the other. The idea that the punitive and deterrent part of a determinate sentence ends at the point of entitlement to, or at least eligibility for consideration for, early release is central to Mr Southeys case and the reasoning of the Divisional Court. In my view that idea is not correct. Section 142(1) of the 2003 Act sets out five purposes of sentencing. They are (i) the punishment of offenders, (ii) the reduction of crime (including its reduction by deterrence), (iii) the reform and rehabilitation of offenders, (iv) the protection of the public, and (v) the making of reparation by offenders to persons affected by their offences. Purpose (v) is not relevant to a sentence of imprisonment but purposes (i) to (iv) inclusive may co exist throughout the term of a determinate prison sentence: R (Whiston) v Secretary of State for Justice [2015] AC 176, para 25, per Lord Neuberger. In fixing the appropriate sentence of imprisonment of a convicted person, the judge does not take account of the statutory provisions for early release. In R v Round [2010] 2 Crim App R(S) 45, para 44, Hughes LJ described this requirement to disregard early release in fixing a sentence of imprisonment was a matter of principle of some importance. The Court of Appeal in R v Burinskas (Attorney Generals Reference (No 27 of 2013)) (Practice Note) [2014] 1 WLR 4209, paras 38 39 endorsed his statement. This disregard is unsurprising as the purposes of the early release regimes include matters such as economy and the relief of over crowding in prisons, as well as the public interest in re integrating a prisoner into society with the benefit of supervision. As a result, each of the four purposes of imprisonment in section 142(1) of the 2003 Act may be relevant justifications of the prisoners continued detention throughout the custodial sentence which the judge has imposed. It follows that a determinate sentence of imprisonment is not to be divided by reference to its relevant early release provisions into a period for punishment, deterrence and rehabilitation on the one hand and a period when the only purpose is the protection of the public. There is no punitive part and preventive part in a determinate sentence of imprisonment. As Lady Black has shown (paras 124 125 of her judgment), judgments of the ECtHR, which address the requirement allowing the detained person access to judicial determination of the lawfulness of his detention in article 5(4) of the ECHR, have repeatedly recognised this characteristic of the determinate sentence. I therefore find myself in respectful disagreement with the Divisional Court in R (Foley) v Parole Board for England and Wales [2012] EWHC 2184 (Admin) in so far as it reasoned (para 68 69) that the reality was that the punitive element of a determinate sentence ended at the half way point. The reality is that that element continues and would justify the detention of a prisoner if he were recalled to prison after early release. Mr Southey in his submission on behalf of Mr Stott asserts: [t]he point at which prisoners become eligible for release is the point which represents the expiry of the punitive and deterrent element of their sentences. For determinate sentence prisoners, the half way point represents the punitive element. (appellants case para 4.5.2). The Divisional Court appears to have accepted this submission in paras 44 45 and 48 of its judgment. I respectfully disagree in relation to determinate sentences for the reasons set out in the preceding two paragraphs. Similarly, in relation to SOPC sentences, which Lady Black discusses at paras 93 95 of her judgment, punishment and deterrence remain relevant grounds of detention throughout the appropriate custodial term. An EDS, which is a form of determinate sentence, similarly does not have two component parts in its custodial term. An EDS is very similar to the extended sentence in Scots law which this court discussed in Brown v Parole Board for Scotland [2017] UKSC 69; [2018] AC 1. In Lord Reeds judgment, with which the other Justices agreed, punishment and deterrence were relevant purposes throughout the custodial term (paras 49 and 60). The provisions for early release and the period on licence (if any) before the expiry of the custodial term serve the purpose of assisting a prisoner to resume his life in the community with the assistance of supervision (para 50). The early release provisions when applied to a determinate sentence in English law or to an EDS serve a similar purpose. The period on licence after the expiry of the custodial term of an extended sentence, on the other hand, is to protect the public from serious harm (paras 53 and 60). It is only in the sentencing framework relating to indeterminate sentences, which Lady Black discusses in paras 96 to 105 of her judgment, that the sentencing judge in fixing the minimum term is required to take account of the early release provisions and to split the sentence into a part which is for punishment and deterrence and another part in which retention in custody is justified only if the prisoner remains a risk to the public. Such considerations are also not relevant to mandatory life sentences. In relation to the date of early release there is also a less consistent picture than the appellant suggests. Lady Black has discussed this in paras 136 and 145 of her judgment. As she states, there are prisoners serving discretionary life sentences who are not eligible to apply for release because their minimum term imposed under section 82A of the Powers of Criminal Courts (Sentencing) Act 2000 (the 2000 Act) exceeds one half of the notional determinate term (R v Szczerba [2002] 2 Cr App R(S) 86). Further, the minimum term for prisoners on mandatory life sentences is not fixed by reference to early release provisions applicable to a notional determinate term (section 269 of and Schedule 21 to the 2003 Act). On the other hand, SOPC prisoners under section 236A of the 2003 Act are eligible to apply for release once they have served one half of the appropriate custodial term, which is less than their overall sentence, and the overall sentence is the sentence that is commensurate with the seriousness of the offence (section 236A(3)). Other prisoners on determinate sentences can achieve release before they have served one half of their sentence at the discretion of the Secretary of State by being placed on a curfew at a specified location (sections 246 and 250(5)). When assessing whether Mr Stott is in an analogous situation to other prisoners it is important to have regard to the reality that in England and Wales there are separate sentencing regimes which have different characteristics. It is appropriate to take a holistic approach to each sentencing regime in deciding whether or not one regime is analogous to another. Not all prisoners serving a discretionary life sentence will be more dangerous than a prisoner serving an EDS. There are prisoners who are serving a life sentence under section 224A of the 2003 Act, which does not require a finding that the offender was dangerous, although it is likely that in most cases he will be: Burinskas at para 8. A prisoner serving an EDS is not eligible for release at the direction of the Parole Board at one half of his custodial term while a prisoner serving a discretionary life sentence is generally so eligible when the court exercises its discretion under section 82A of the 2000 Act. But that is far from the whole picture. As the Court of Appeal recognised in Burinskas (para 36), a life prisoner might have to wait for many years after his minimum term has expired before the Parole Board consider it safe to release him. By contrast, a prisoner serving an EDS is entitled to be released at the end of the custodial period without any further assessment of risk (section 246A(7)). Similarly, a person who has been given a life sentence remains on licence and subject to recall to prison for the rest of his life. By contrast, the licence provisions imposed on a person serving an EDS end on the expiry of the specified extension period (section 226A(5) and (8)). Sir James Eadie also drew support for his submission that different sentencing regimes were not analogous from two judgments of the Divisional Court and one of the ECtHR. In R (Massey) v Secretary of State for Justice [2013] EWHC 1950 (Admin) a prisoner serving a sentence of imprisonment for public protection (an IPP) complained that he had been discriminated against compared with a prisoner who was sentenced to an EDS after the new sentences introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 because he was subject to an indeterminate period of imprisonment while the EDS prisoner was not. Moses LJ rejected this claim, stating (at para 25) that the claimant and the EDS prisoner were not in an analogous situation precisely because they were sentenced under a different regime. In R (Bristow) v Secretary of State for Justice [2013] EWHC 3094 (Admin) the Divisional Court held that a claimant was not in an analogous situation to prisoners under a previous legislative regime and (para 16) that prisoners who were subject to discretionary release were not in an analogous situation to prisoners under an automatic release scheme. In Minter v United Kingdom (2017) 65 EHRR SE 6 in which an applicant complained of being subjected to an indefinite notification requirement, the ECtHR held that there was no discrimination as the applicant had been subjected to a different sentencing regime which was the consequence of new legislation (para 68). There is some force in Mr Southeys response that the cases were concerned with changes in sentencing policy which were effected by legislation. This weakens their utility to Sir James Eadie to some extent. But the cases, and R (Massey) in particular, provide some support for his submission that one should have regard to the characteristics of each regime as a whole and not just to its provisions for early release when judging whether a claimant is in an analogous situation to someone sentenced under a different regime. In summary, I am not persuaded that a prisoner serving an EDS is in an analogous situation to prisoners under different regimes of imprisonment in relation to his eligibility for early release. This is, first, because there is no split between the punitive/deterrent part and the risk related part of a custodial term in a determinate sentence (including an EDS) at the point at which a prisoner becomes eligible for early release. This contrasts with the position of prisoners serving discretionary life sentences. The supposed existence of this split played a fundamental part in Mr Southeys argument and appears to have influenced the judgment of the Divisional Court, giving rise to a focus only on whether a prisoner remained dangerous after a spell in prison. It is, secondly, because there is no principle that a prisoner is entitled to be released or is eligible at the discretion of the Parole Board to be released once he has served one half of his custodial term. The position is, as I have stated, more complex. Thirdly, it is because a prisoner sentenced to an EDS is sentenced under a statutory regime which, when viewed in the round, has materially different characteristics from other determinate sentences and from life sentences, both discretionary and mandatory. In my view, the obvious and relevant differences between the sentencing regimes are sufficient to prevent prisoners serving sentences under these different sentencing regimes from being in an analogous situation. Justification Having reached this conclusion on issue 2A, it is not strictly necessary to consider the issue of justification. But as the ECtHR frequently wraps the issues of analogous situation and justification together, it is appropriate that I state my view briefly. The Secretary of State has explained, through the witness statement of Ms Alison Foulds, that Parliament introduced the EDS as a part of a suite of new sentencing regimes to replace the previous sentence of the IPP, which was an indeterminate sentence for dangerous offenders and which had been shown to have unsatisfactory characteristics. Ms Foulds explained that offenders eligible for an EDS have committed serious offences, which merit a custodial sentence of at least four years, and been found to be dangerous and would in the past have been eligible for an IPP but not necessarily a life sentence. She stated: In replacing the indeterminate IPP sentence, the Government committed to introducing a tougher, extended determinate sentence requiring the offender to serve at least two thirds of the custodial term rather than one half. This was a measure designed to enhance public protection and maintain public confidence in the sentencing framework. When the court considers the justification of different treatment under article 14 of the ECHR it gives a wide margin of appreciation to the democratic legislature in its determination of criminal sentencing policy but exercises close scrutiny where the allegation is that detention is arbitrary or unlawful: Clift (ECtHR) para 73. As I have stated, the early release provisions relating to a sentence do not determine what is the appropriate part of a sentence for the punitive and deterrent purposes set out in section 142. They are the result of other considerations such as economy and the prevention of overcrowding in prisons (see para 188 above). In repealing the provisions which established the IPP and in creating a particular regime for the imprisonment of persons convicted of serious offences and who are also dangerous Parliament is entitled to have regard both to public protection and to the maintenance of public confidence in criminal sentencing. The preservation of public confidence is a legitimate aim, at least in the context in which the custodial term which is appropriate for the offence has not expired: Clift (ECtHR) para 74. The three considerations, which have persuaded me that an EDS prisoner is not in an analogous situation (para 195 above), are relevant to the question of the appropriate means of achieving those aims and need not be repeated. In my view one must look at the early release provisions in the context of the individual sentencing regimes which may have positive and negative features as far as the prisoner is concerned. The EDS prisoner, convicted of a serious offence and who is dangerous at the time of sentencing, has a longer wait before he is eligible for consideration for parole than many other offenders who are subject to different regimes of imprisonment, but he also has the benefit of a defined custodial term and a defined period during which he is subject to licence thereafter, in contrast to prisoners who have received life sentences. Those are the components of the particular sentencing regime which cannot be described as arbitrary. Sir James Eadie in his submissions has not provided any separate justification for the requirement of an EDS that the prisoner serve two thirds of his sentence before he is eligible to be considered for parole rather than some other proportion, beyond saying that the offender has committed a serious offence and is dangerous at the time of sentencing. But, in my view, he does not require to do so because the EDS is a separate sentencing regime which is neither arbitrary nor unlawful. I therefore conclude in relation to issue 2B that the difference in treatment of EDS prisoners resulting from the potentially more onerous early release provisions of section 246A is justified. Accordingly, there has been no breach of article 14 taken with article 5 of the ECHR. In so concluding, I do not overlook the observation of Lord Brown of Eaton under Heywood in Clift (HL) at para 66: where the penal system includes a parole scheme, liberty is dependent no less upon the non discriminatory operation of that than on a fair sentencing process in the first place. The interest of a prisoner in obtaining early release should not be underestimated. In this case, however, access to the parole scheme depends on the terms of the particular sentencing regime and differential access to that scheme as between discrete sentencing regimes is not per se discriminatory. I am also aware that there is a real potential for a sense of unfairness about differential eligibility for early release where two people are jointly convicted of the same offence and one receives a determinate sentence while the other, because he is dangerous, receives an EDS. The grievance this would generate was a matter of concern to the judges of the Divisional Court who referred to it in paras 45 and 50 of their judgment. That is clearly not the situation in Mr Stotts case. It will not be the situation in many cases and it is not a sufficient basis for calling into question the justification for the early release provisions of the EDS generally. Article 14 of the ECHR does not in my view provide an answer to this problem; not every anomaly in sentencing is a breach of ECHR rights. I am left wondering whether in future the common law might be developed by creating an exception to the principle in R v Round where it was necessary to achieve comparative justice in such a case of joint offenders. But as parties have not had any opportunity to discuss this matter, I will say no more about it. Conclusion I would dismiss the appeal. LADY HALE: I am most grateful to Lady Black for having discussed the authorities in such depth. It has enabled me to stand back and look at the basics. The claim is that the early release provisions relating to prisoners serving an extended determinate sentence (EDS) unjustifiably discriminate against such prisoners in the enjoyment of their right to liberty, contrary to article 14 of the European Convention on Human Rights read with article 5. The basic fact about any sentence of imprisonment is that it takes away the prisoners liberty: that is the right protected by article 5. The first thing that the prisoner (and indeed anyone else) wants to know is how long for? So let us take three prisoners who have committed the same, very serious, offence: one receives an ordinary determinate sentence of, say, 21 years; another qualifies for an EDS and receives an EDS of, say 21 years, with an extended licence period of four years on top of that; and another qualifies for and receives a discretionary life sentence, with a minimum custodial period of ten and a half years. The first prisoner will automatically be released on licence after ten and a half years; the second prisoner will only be considered for release on licence after 14 years; the third prisoner will be considered for release on licence after ten and half years. Is this most basic disparity in the treatment of these three prisoners compatible with the convention rights of the less favourably treated one? The English version of article 14 reads: The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. The equally authentic French text reads: La jouissance des droits et liberts reconnus dans la prsente Convention doit tre assure, sans distinction aucune, fonde notamment sur le sexe, la race, la couleur, la langue, la religion, les opinions politiques ou toutes autres opinions, lorigine nationale ou sociale, lappartenance une minorit nationale, la fortune, la naissance ou toute autre situation. Thus, for the English without discrimination, the French reads sans distinction aucune, but the European Court of Human Rights has said that outlawing any distinction could lead to absurd results, and the French text should be read in the light of the more restrictive text of the English version (Belgian Linguistic case (No 2) (1968) 1 EHRR 252, para 10). On the other hand, for other status, the French reads toute autre situation, which has led the court to take an expansive view of what counts as an other status (see Carson v United Kingdom (2010) 51 EHRR 13, para 70). In article 14 cases it is customary in this country to ask four questions: (1) does the treatment complained of fall within the ambit of one of the Convention rights; (2) is that treatment on the ground of some status; (3) is the situation of the claimant analogous to that of some other person who has been treated differently; and (4) is the difference justified, in the sense that it is a proportionate means of achieving a legitimate aim? Question (1) stems from the subsidiary nature of article 14. Unlike article 1 of the 12th Protocol to the Convention (to which the United Kingdom is not a party), it does not prohibit discrimination in the enjoyment of any right set forth by law but only in the enjoyment of the Convention rights. But of course there does not have to be a breach of one of those rights otherwise the article would add nothing. The rights have to be enjoyed equally. So the facts have to fall within the ambit of one of the rights or relate to one of the ways in which one of the rights is secured within the member state. In this case it is common ground that a sentence of imprisonment falls within the ambit of article 5, which regulates the circumstances in which a person may be deprived of his liberty. Equally it is common ground that there is no breach of article 5, because article 5(1)(a) permits the lawful detention of a person after conviction by a competent court. Question (2) directs attention to the ground on which one person has been treated differently from another in the enjoyment of a Convention right. It is clearly intended to add something to the requirement of discrimination or a difference in treatment: otherwise article 14 would simple have said that the enjoyment of the Convention rights shall be secured without (unjustified) discrimination (between persons in an analogous situation). Status has usually been said to refer to a personal characteristic of the person concerned (beginning with Kjeldsen, Busk Madsen and Pedersen v Denmark (1976) 1 EHRR 711, but see also, for example, Maktouf and Damjanovic v Bosnia and Herzegovina (2013) 58 EHRR 11, para 83, and Magee v United Kingdom (2000) 31 EHRR 35, para 50, where differences in treatment between different courts or different parts of the United Kingdom were held not to be contrary to article 14 as they were not based upon personal characteristics). But it is not limited to innate qualities such as sex, race, colour, birth status or sexual orientation. It includes acquired qualities such as religion, political opinion, marital or nonmarital status, or habitual residence. But in Clift v United Kingdom (Application No 7205/07, judgment of 13 July 2010, inexplicably only reported in The Times, 21 July 2010), the court pointed out that not all the listed qualities are a personal characteristic, giving property as an example. Not only that, the court has not given an ejusdem generis interpretation to other status and has adopted a very broad approach: applying article 14, for example, to different categories of property owners (James v United Kingdom (1986) 8 EHRR 123, para 74), large and small landowners (Chassagnou v France (1999) 29 EHRR 615, para 95), and non commissioned officers and ordinary soldiers (Engle v The Netherlands (No 1) (1969) 1 EHRR 647). In Clift v United Kingdom, the court also declared itself not persuaded that the Governments argument that the treatment of which the applicant complains must exist independently of the other status upon which it is based finds any clear support in its case law (para 60). Paulk v Slovakia (2006) 46 EHRR 10 was cited as an illustration: a man who had been adjudged father of a child in legal proceedings complained that there was no way of correcting the record when DNA tests proved that he was not the father, whereas fathers whose paternity had been established on other grounds, and mothers, did have such a possibility (Paulk, para 48). With respect, this is not a good illustration, for two reasons. First, the applicability of article 14 was not disputed and so there is no discussion of other status in the judgment. Second, and more important, while it may well be the case that there was no other difference in treatment between the applicant and the others with whom he compared himself, his status, as a man who had been adjudged father in legal proceedings, was obviously different from the status of those fathers who had not, and even more different from the status of mothers. In other words, his status was not defined by the difference in treatment complained of. That, it seems to me is the true principle: the status must not be defined solely by the difference in treatment complained of, for otherwise the words on any ground such as would add nothing to the article. There is a useful analogy here with the United Nations Convention relating to the Status of Refugees (1951) (Cmd 9171): to be recognised as a refugee, a person has to have a well founded fear of persecution on one of the Convention grounds race, religion, nationality, membership of a particular social group or political opinion. In Fornah v Secretary of State for the Home Department [2006] UKHL 46; [2007] 1 AC 412, the House of Lords affirmed the principle (also endorsed by the UN High Commissioner for Refugees) that a particular social group must exist independently of the persecution to which the group is subject: by this was meant that the group was not defined solely by the persecution it feared. That said, I have no difficulty in accepting that The question whether there is a difference of treatment based on a personal or identifiable characteristic in any given case is a matter 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 (Clift v United Kingdom, para 60). Prisoners subject to an EDS can be identified as a distinct group, just as prisoners subject to an ordinary determinate sentence and prisoners subject to a life sentence, can be identified as a distinct group. They are defined by much more than the particular early release regime to which they are subjected. Indeed, the argument that this particular type of sentence is a distinct package, so persuasively put forward on behalf of the Secretary of State as a justification for the difference, confirms that fact. This is much clearer than the difference in Clift, which was simply between different lengths of determinate sentence. If further support for that conclusion were required, it could lie in the different criteria for the imposition of each type of sentence, which concentrate upon the dangerousness of the offender, itself a personal characteristic. Questions (3) and (4) are logically distinct but are often discussed together in the cases. As Lord Nicholls put it in R (Carson) v Secretary of State for Work and Pensions [2005] UKHL 17; [2006] 1 AC 173, para 3: 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. There is no such obvious, relevant difference here. The three groups in question are all prisoners serving sentences of imprisonment. From their point of view, the most important question in their lives is when will I get out? Allied to that may be two subsidiary questions, who will decide when I get out will it be automatic or will I have to go before the Parole Board? and if I am let out, what will be the consequences of that? Each group of prisoners under discussion here is subject to a different package of answers to those questions. But we must beware of treating the package which means that each of these groups has a different status as meaning that their situations are not analogous for the purpose of needing a justification for the difference in their treatment. To take an obvious example, women have a different status from men for the purpose of article 14. But the obvious physical differences between men and women do not mean that their situations are not relevantly similar, for the purpose, for example, of their right to liberty or to respect for their family lives. We have to look to the essence of the right in question to ask whether men and women prisoners are in a relevantly similar situation. The essence of the right in question here is liberty. It would obviously be discriminatory to make one sex serve longer sentences for the same crime simply because of their gender (as opposed to other factors which might justify a difference in treatment). The real question in this case has always been whether the difference in treatment can be justified as a proportionate means of achieving a legitimate aim. The background is important here. The EDS was introduced in its current form when the indefinite sentence for public protection (IPP) was abolished. It was considered necessary to replace IPP with a sentence, reserved for those who posed a particular risk to the public, which was demonstrably tougher than an ordinary determinate sentence. As Alison Foulds, policy lead on adult custodial sentencing policy in the Ministry of Justice, explained in her witness statement: This was a measure designed to enhance public protection and maintain public confidence in the sentencing framework. Offenders eligible for an EDS have committed serious offences and been found to be dangerous, and would previously have been eligible for an indefinite sentence, an IPP, but not necessarily a life sentence. The longer period to be served in prison under the EDS is justified on these grounds, and distinguishes the sentence from a standard determinate sentence, and a special determinate sentence for offenders of particular concern, which provide for automatic release at the half way point, or discretionary release from the half way point, as appropriate. Protecting the public is undoubtedly a legitimate aim. Furthermore, the criteria for imposing an EDS include that there is a significant risk to members of the public of serious harm occasioned by the commission by the offender of further specified offences (Criminal Justice Act 2003, section 226A(1)(b)). The public will be better protected if he is required to serve more of his sentence in prison and can only be released during the rest of his custodial term if the Parole Board determines that this will be safe. The criterion for imposing the sentence would therefore appear to justify the difference in treatment between an EDS prisoner and a prisoner serving a standard determinate term, even though their actual offences may be commensurate. The same could be said of offenders serving a special custodial sentence for certain offenders of particular concern (Criminal Justice Act 2003, section 236A). Here the criterion is not the dangerousness of the particular offender, but the dangerousness of the offence which he has committed: if he is convicted of an offence listed in Schedule 18A, and the court does not impose a life sentence or an EDS, the court must impose a special sentence which consists of the appropriate custodial term plus an extra year for which he is subject to a licence (section 236A(1), (2)). These prisoners may be let out at half time, but only if the Parole Board decides that this will be safe. These prisoners have not been held to be dangerous in themselves in the same way that prisoners sentenced to an EDS have been held to be dangerous. Nevertheless, this comparison is getting closer to the bone, given the intrinsically dangerous nature of the offences listed in Schedule 18A (most of which have a terrorist connection). The comparison with a discretionary life sentence is more difficult to understand. It is well established that, in the absence of exceptional circumstances, the specified period which the prisoner must serve before he can be considered for release on licence should be fixed at half of the notional determinate sentence which he would have received for the offence had he not been subject to a life sentence because of his dangerousness: see R v Szczerba [2002] 2 Cr App R(S) 86. Given that a discretionary life sentence prisoner is even more dangerous than an EDS prisoner, how can it be justified that the former can be considered for release on licence after serving half of what would have been an appropriate determinate sentence, whereas the latter must wait until he has served two thirds of the appropriate determinate sentence? The publics need for protection is likely to be greater in the case of the lifer than in the case of the EDS prisoner. But in any event, neither can be released on licence until the Parole Board has determined that it will be safe to do so. The public is equally well protected in each case. It is, of course, the case that there are ways in which the EDS prisoner is better off than the lifer. He must be released on licence at the end of his appropriate custodial term, even if the Parole Board has not determined that this would be safe, whereas the lifer must only be released if this is adjudged safe. Once released on licence, he can only be returned to prison during the period of his extended sentence, whereas the lifer will remain on licence, and thus subject to return to prison, for the whole of his natural life. This is the essence of the package element which was pressed on us as a justification for the difference in their early release regimes. The package should not be salami sliced into its component parts for the purpose of deciding whether each difference in treatment can be justified. In the end, however, it is easy to see how the additional disadvantages (from the prisoners point of view) of a discretionary life sentence are justified by the considerations which led the court to impose the sentence in the first place. It is hard to see how, alone of all four types of prisoner considered here, it is thought necessary to insist that an EDS prisoner stays in prison for more than half the custodial term appropriate to the seriousness of his offending. One would have thought that, if anything, a discretionary life prisoner would be even less likely to be fit for release at the half way point. But the speed of rehabilitation is notoriously difficult to predict at the outset. That is why the decision is left to the Parole Board when the time comes to consider release. And the protection which the Parole Board offers to the public is the reason why it is not necessary, for that purpose, to insist that EDS prisoners spend a larger proportion of the appropriate term in prison. That conclusion is to my mind strengthened by the fact that, had he not been bound by the decision of the House of Lords in R (Clift) v Secretary of State for the Home Department [2007] 1 AC 484, it would also have been the conclusion of Sir Brian Leveson, President of the Queens Bench Division, who has unrivalled experience in penal matters and would have recognised a justification if there was one. I would therefore allow this appeal and make a declaration of incompatibility. It would then be for Parliament to decide how, if at all, that incompatibility is to be rectified. LORD MANCE: Introduction I have had the advantage of reading in draft the judgments prepared by Lady Black and Lord Carnwath. They reach different conclusions on the issue whether a prisoner on whom an extended determinate sentence (EDS) has been passed under section 226A of the Criminal Justice Act 2003 (the 2003 Act) acquires a status on which he may rely for the purposes of a complaint about alleged discrimination under article 14 of the European Convention on Human Rights (ECHR). An EDS consists of the appropriate custodial terms, specified in Mr Stotts case as 21 years, and a further extension period, specified in his case as four years, during which he was to be subject to a licence. The discrimination alleged is that, under section 246A of the 2003 Act, as introduced by section 125 of the Legal Aid Sentencing and Punishment of Offenders Act 2012 and amended by section 4 of the Criminal Justice and Courts Act 2015, a prisoner subject to an EDS of ten years or more must serve a requisite custodial term of normally two thirds of his specified appropriate custodial term, before being eligible for consideration by the Parole Board for release on licence. Serving an EDS of less than ten years, imposed prior to 13 April 2015, and not in respect of an offence listed in Parts 1 to 3 of Schedule 15B to the Criminal Justice Act 2003, are automatically released once they have served two thirds of the requisite custodial period (section 246A(2) of the 2003 Act). Under his EDS, Mr Stott would thus have to serve 14 years, before being eligible for referral to the Parole Board for consideration. The comparisons which Mr Stott seeks to draw are with prisoners sentenced to both determinate and indeterminate sentences. The former (determinate sentence prisoners) are, as Lady Black explains (para 90), entitled to be released on licence automatically, once they have served a requisite custodial sentence, which is in their case one half of their sentence. It is worth noting, in parenthesis, that under the rgime of extended sentences which was introduced by section 227 of the 2003 Act, was in force until 3 December 2003 and was the precursor of the rgime presently in issue, a prisoner was also entitled to automatic release on licence once he had served half of the requisite custodial sentence. Further, under the special custodial sentence regime introduced by Schedule 1 to the Criminal Justice and Courts Act 2015 as amended by section 236A of the 2003 Act, whereby a court could impose the appropriate custodial sentence plus a further period on licence of one year, a prisoner was entitled to have his suitability for release on licence considered by the Parole Board after serving half such sentence. The special custodial regime was available for inter alia an offender who had raped a child under 13, which it happens was also offending for which Mr Stott was sentenced. In respect of prisoners serving indeterminate sentences, the judge will determine a minimum custodial sentence which the offender must serve before being eligible to apply for early release, although the court may disapply this provision if the seriousness of the offending justifies this course. In the case of a mandatory life sentence, the minimum custodial sentence must take account of various factors, none expressly linked with any notional determinate term. In the case of a discretionary life sentence, the court must, under section 82A of the Powers of Criminal Courts (Sentencing) Act 2000, identify what sentence would have been appropriate had a determinate sentence been imposed and take account of the fact that the offender would then have been entitled to early release: see Lady Black, para 103. In practice, this normally leads to a tariff period of half the notional determinate period although, in exceptional circumstances requiring the giving of proper reasons, the sentencing judge may as a matter of discretion fix the tariff at half or two thirds or somewhere in between: R v Szczerba [2002] 2 Cr App R(S) 86; R v Jarvis [2006] EWCA Crim 1985; R v Rossi [2015] 1 Cr App R(S) 15. Status The first question in these circumstances is whether Mr Stott can claim to have an other status for the purposes of invoking article 14 of the ECHR. I agree with Lady Black that he can. I accept that the requirement of an other status cannot simply be ignored, or subsumed in the question whether any discrimination is unjustified. This is for at least three reasons. First, the language of article 14 states that there must be discrimination on a ground such as those specified, the last being other status. There would be no point in this language, if the only question was whether there was discrimination. Secondly, the ECtHR has expressly accepted as much in Clift v United Kingdom (Application No 7205/07), paras 55 to 56, while at the same time stating, at para 61, that any exception to the protection offered by article 14 . should be narrowly construed. While it may be odd to speak of a criterion for the application of article 14 as an exception, the general idea is clear enough: (a) the concept of status should be construed broadly, but (b) not every difference in treatment is on the ground of status. Thus, a difference in treatment regarding automatic parole between terrorism related and other offences was held not to be on the ground of status in Gerger v Turkey (Application No 24919/94). It was a difference based on the differing gravity of the offence, rather than on any status. For the same reason, a mere difference in the sentence imposed cannot of itself amount to a difference in status. This also explains the difference in treatment by Lord Hughes of the two arguments raised in favour of the existence of a status in R v Docherty (Shaun) [2016] UKSC 62; [2017] 1 WLR 181, para 63. As to the second argument, the mere imposition of an indeterminate sentence under the appropriate sentencing regime could not give the offender a different status. As to the first, however, Lord Hughes left open the possibility that the offender had a different status because he had been convicted prior to 3 December 2012, when the appropriate sentencing regime provided for an indeterminate sentence, rather than after 3 December 2012, when indeterminate sentences for public protection were abolished. He held instead that any discrimination on the ground of status was justified. That a mere difference in treatment does not by itself constitute a difference in status is a proposition which is difficult to fault in the light of Gerger and what I have already said. But problems have arisen from attempts to extend the application of such a proposition to cases beyond its scope. This is, I think, the root of the third difficulty expressed by Lady Black in the first sentence of para 74 of her judgment. There is no reason why a person may not be identified as having a particular status when the or an aim is to discriminate against him in some respect on the ground of that status. Thus, in Clift the categorisation of Mr Clift as a prisoner serving a sentence of more than 15 years imprisonment (a bright line distinction clearly associated in the legislatures mind with a significantly higher level of risk) was with a view to the discriminatory treatment about which Mr Clift complained, since it meant that he would receive less favourable treatment (a) as regards early release, than life prisoners presenting on their face an even greater risk, and also (b) as regards prisoners serving sentences of less than 15 years, since his release would be subject to approval by the Secretary of State who could contribute nothing relevant to any evaluation of continuing risk. It is to my mind unsurprising that such categorisation was in these circumstances regarded as giving Mr Clift a relevant status. It was common ground in Clift that being a prisoner was a status, and it was a short step from that in the circumstances to accepting that being a particular type of prisoner, namely one serving a determinate sentence of 15 years of more and viewed accordingly as presenting a particular risk (which was however addressed in a discriminatory fashion), could also be identified as a status. Similarly, it is difficult to see any real problem about attributing a relevant status to the complainant in Paulk v Slovakia (2006) 46 EHRR 10. He had the status of a father whose paternity had been established by judicial determination, in contrast with the different status of a parent whose paternity was legally presumed without judicial determination. The discrimination between these two statuses was that in the latter case paternity could subsequently be disproved by a DNA test, whereas in the former case no such procedure existed under domestic law. The ECtHR in para 60 of its judgment in Clift rejected the Governments argument that the treatment of which the applicant complains must exist independently of the other status upon which it is based. It reasoned that in Paulk there was no suggestion that the distinction relied upon had any relevance outside the applicants complaint. One might question if that could really have been so: it seems, self evidently, one thing to have to prove paternity in court and thereafter, whenever the need arose, to have to identify a valid and enforceable court decision establishing paternity, and another matter to be able simply to rely on a factual presumption. Leaving that thought on one side, however, Clift suggests that a difference in the basis of established paternity represented a sufficient difference in status, even though the only continuing effect of the distinction consisted in the discriminatory possibility in the one case and impossibility in the other of subsequent disproof of paternity by a DNA test. The same point can be tested by supposing a person who was discriminated against on the ground of some previously held, but now abandoned, religious belief or political or other opinion. That would surely be discrimination on an illegitimate ground within the language of article 14. It is likewise notable that article 14 expressly identifies national or social origin and birth as a prohibited ground of discrimination. Thirdly, article 14 addresses discrimination, whether deliberate or unconscious, having a systematic nature in the sense that it occurs on the ground of a characteristic or characteristics in some sense attributed to the victim, whether innately or as a matter of choice or against their will: see the discussion in Clift at paras 56 to 59; and see also Lady Blacks judgment at para 56(i) to (iii) and 63. Article 14 is not targeted at achieving complete equality of treatment. A firm which haphazardly treated different customers with different standards of attention because its different employees were not consistently trained to perform to the same standards could not be said to be discriminating on the ground of any status possessed by any of its customers. A person who refused to serve a customer within ordinary hours (or to stay open late out of hours, when normally he would have been prepared to do so) because he had a headache could not be said to be discriminating on the ground of any status possessed by the or any customer. There would be no question of him having to justify his conduct by reference to the severity of his headache. In the present case, I conclude without hesitation that Mr Stott possesses a relevant status, independent of the difference in treatment about which he is complaining. He is subject to an EDS, which is a sentence distinct from and has characteristics differing from those of any ordinary determinate or indeterminate sentence. The difference of treatment about which he complains consists in one consequence of his being given an EDS, namely that he was and is subject to a different regime as regards eligibility for consideration for parole. Mr Southey QC representing Mr Stott felt, rightly, obliged to concede that the claim must fail before the Administrative Court on the issue of status, because of the decision of the House of Lords in R (Clift) v Secretary of State for the Home Department [2006] UKHL 54; [2007] 1 AC 484. It follows from what I have already said that, in my opinion, the Supreme Court should now depart from that decision, and follow the clear guidance given by the ECtHR in Clift v United Kingdom. I should add that, in reaching this conclusion, I have benefitted substantially from Lady Blacks comprehensive analysis of the authorities on status. Save to the limited extent that appears from what I have said above, I have no comment on and see no reason to disagree with that analysis. Analogous position and justification The decisive questions are therefore whether an offender like Mr Stott serving an EDS is in an analogous position to an offender serving a determinate or indeterminate sentence, and, if so, whether the difference in treatment of an EDS offender as regards parole is objectively justified. In this connection, I have come ultimately to a different conclusion to Lady Black and Lord Carnwath. First, the ECtHR in Clift had no difficulty in treating prisoners serving more and less than 15 years imprisonment and life prisoners as all being in an analogous position, insofar as the assessment of the risk posed by a prisoner eligible for early release is concerned: para 67. On this basis, the question is whether the differences in their treatment as regards release on licence are justified. Like Lady Black, I do not consider that this question is avoided by the argument, advanced by the Secretary of State, that the whole of all such sentences should be seen as imposed as punishment for the offences committed, rather than as having two components, a punitive part followed by a preventive part. However such sentences may in other contexts be analysed, it remains the case that the differences between them regarding early release have significant advantages or disadvantages for the relevant prisoners, which once identified call for examination and justification. Second, as regards justification, the ECtHR accepted in Clift that more stringent early release provisions could be justified where a particular group of prisoners could be demonstrated to pose a higher risk to the public upon release: para 74. On that basis, it accepted in principle that the application of more stringent early release provisions might have to be dependent on a bright line cut off point and considered that such a bright line distinction will not of itself fall foul of the Convention; accordingly, the fact that different early release provisions applied to those serving determinate sentences of 15 years or more, compared to those serving less than 15 years, did not of itself suggest unlawful discrimination: para 76. The reason the ECtHR regarded the difference in Clift between treatment of, on the one hand, prisoners serving more than 15 years imprisonment and, on the other hand, prisoners serving less than 15 years imprisonment or serving indeterminate sentences as unjustifiable was the requirement for the Secretary of State to consent to implementation of any Parole Board recommendation for release in the case of the former: paras 77 to 78. The ECtHR said in this connection that: The differential treatment of prisoners serving 15 years or more, whose release continued to be dependent on the decision of the Secretary of State, had become an indefensible anomaly, as the assessment of the risk presented by any individual prisoner, in the application of publicly promulgated criteria, was a task which was at the relevant time recognised to have no political content and one to which the Secretary of State could not, and did not claim to, bring any superior expertise The ECtHR also held the difference in treatment in Clift between prisoners serving in excess of 15 years imprisonment and life prisoners to be unjustified for a further reason. Life prisoners apparently presented a greater risk than a prisoner on whom a determinate sentence had been passed. Yet there was in their case no requirement that the Secretary of State consent to their release. Once release was recommended by the Parole Board, it was the Secretary of States duty to direct their release on licence. By the same token, in the present case, a more stringent release regime for prisoners sentenced to an EDS could be regarded as justified, when compared with that applicable to prisoners sentenced to an ordinary determinate sentence. Any ordinary determinate sentence and the appropriate custodial term to be served under an EDS fall to be determined on the principle set out in section 153(2) of the Criminal Justice Act 2003, that they: must be for the shortest term (not exceeding the permitted maximum) that in the opinion of the court is commensurate with the seriousness of the offence, or the combination of the offence and one or more offences associated with it. One pre condition to the imposition of an EDS is, however, that the court considers that there is a significant risk to members of the public of serious harm occasioned by the commission by the offender of further specified offences: section 226A(1)(b) of the 2003 Act. Another (at the relevant time) was that the court was not required by section 224A or 225(2) to impose a sentence of imprisonment for life: section 226A(1)(c). Applying similar reasoning to that of the ECtHR in Clift, Parliament could be taken to have considered that this risk was in the case of an EDS prisoner sufficiently significant (a) to require release on licence during the currency of the appropriate custodial term to depend on a Parole Board recommendation, (b) to require two thirds of such term to have run, before the Parole Board considered whether to make such a recommendation and (c) to require an extended period on licence after expiry of the appropriate custodial term. In contrast, release on licence is, in the case of an ordinary determinate prisoner, automatic once he has served the requisite custodial period consisting of half their nominal sentence: section 244. The Administrative Court in Sir Brian Leveson, President of the Queens Bench Divisions full and helpful judgment, was not persuaded that there was any justification for a distinction which necessarily assumes that EDS prisoners remain as a class a significant risk until the two thirds point, depriving them of even the chance of demonstrating their safety for release on licence until that point, whereas all ordinary determinate prisoners are assumed to be safe for automatic release at the half way stage. I see the force of the Administrative Courts view, but in the light of the ECtHRs approach in Clift and my conclusions regarding the comparison with indeterminate prisoners in the ensuing paragraphs, I do not base my judgment on it. It is, on any view, even more difficult to understand the logic of an apparently more stringent regime for EDS prisoners, when compared with discretionary life prisoners, in circumstances where the offending was, by definition, not of such a seriousness as to attract a life sentence. The tariff period for a discretionary life prisoner is, barring exceptional circumstances, set at half the notional determinate period. Once that tariff period has expired, the life prisoner has a right to require the Secretary of State to refer his case to the Parole Board, and to be released on licence if the Parole Board is satisfied that such release is, in short, safe: Crime (Sentences) Act 1997, section 28(5). A prisoner serving an EDS, therefore, is likely to be in a significantly worse position, as regards consideration by the Parole Board and release on licence, than a discretionary life prisoner, although the latter is likely to have committed a more serious, or no less serious, offence. It is true that in other respects a life prisoner is treated more severely: if the Parole Board is not satisfied as to the safety of his release, he may remain in prison indefinitely and, if he is released, he remains on licence and may be recalled throughout his life. But this is inherent in the nature of a discretionary life sentence, and, if anything, suggests that one would expect a more, rather than less, severe regime of review for release on licence to apply to life prisoners. It is also the case that some life prisoners may be less dangerous and safer at an earlier stage for release than some prisoners serving an EDS. But that is not the general position. None of these factors explains why life prisoners are in the great generality of cases likely to be eligible for consideration of their safety for release on licence by the Parole Board at a considerably earlier point than prisoners serving an EDS can hope for. Eligibility for consideration for release is merely the gateway to consideration by the Parole Board of safety for release on licence. It does not prejudge that question. No real explanation or justification has been given for a difference in treatment, which has important practical consequences for the prisoners affected and must seem a palpable anomaly. The position regarding mandatory life prisoners is less easy to compare with that of prisoners serving an EDS. As Lady Black explains in para 102, the sentencing judge determines, in the light of the seriousness of the offence and other circumstances, a minimum custodial period after the expiry of which the prisoner has a right to require the Secretary of State to refer him to the Parole Board and a right to be released on licence if the Parole Board so recommends. But there appears to be no general or normal rule as to the length of this period, as there is in the case of discretionary life sentences: see R v Szczerba, cited above. In the event, I conclude that prisoners serving an EDS are in a significantly worse position as regards eligibility for consideration by the Parole Board and release on licence, when compared with discretionary life prisoners, that no convincing explanation or justification for this difference has been shown and that section 246A(8)(a) of the Criminal Justice Act 2003 is for this reason incompatible with article 14 read with article 5 of the ECHR, in so far as it requires two thirds of the relevant custodial period to have expired before any such eligibility arises. Since preparing this judgment on the issues of analogous situation and justification, I have also had the advantage of reading what Lady Hale says in her paras 213 to 222, with which I find myself in agreement on these issues. It follows that, in my opinion, the appeal succeeds, and Mr Stott is entitled to succeed to a corresponding declaration of incompatibility. |
The issue raised on this appeal concerns the extent to which the jurisdiction of the First tier Tribunal to make an order for costs is fettered by the provisions of the Rules regulating the procedure of the Tribunal. Although the Rules in question govern the procedure of the Tax and Chancery Chamber, we were told that our conclusion will apply to the other Chambers of the First tier Tribunal (FTT). Subsections (1) and (2) of section 29 of the Tribunals, Courts and Enforcement Act 2007 provide that the costs of and incidental to any proceedings in the FTT shall be in the discretion of the Tribunal in which the proceedings take place, and that the Tribunal has full power to make orders for costs. However, subsection (3) of the same section stipulates that the preceding two subsections have effect subject to Tribunal Procedure Rules. The Rules The Rules which governed the instant proceedings are the Tribunal Procedure (First tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273) (L1) (the Rules). Rule 2 describes the overriding objective of the Rules as being to enable the FTT to deal with cases fairly and justly, which includes dealing with cases proportionately. Rule 5 is headed Case management powers and it is in these terms: (1) Subject to the provisions of the 2007 Act and any other enactment, the Tribunal may regulate its own procedure. (2) The Tribunal may give a direction in relation to the conduct or disposal of proceedings at any time, including a direction amending, suspending or setting aside an earlier direction. (3) In particular, and without restricting the general powers in paragraphs (1) and (2), the Tribunal may by direction (i) require a party to produce a bundle for a hearing In addition to sub paragraph (i), rule 5(3) has eleven other sub paragraphs, which include powers to (a) extend or shorten time for complying with the Rules, (c) permit or require an amendment, (f) hold a case management hearing, (h) adjourn a hearing, and (k) transfer proceedings to another tribunal. Rule 10 is headed Orders for costs. Rule 10(1) is somewhat convoluted, and it is in these terms: The Tribunal may only make an order in respect of costs (or, in Scotland, expenses) (a) under section 29(4) of the 2007 Act (wasted costs) ; (b) if the Tribunal considers that a party or their representative has acted unreasonably in bringing, defending or conducting the proceedings; (c) if the proceedings have been allocated as a (i) Complex case under Rule 23 (allocation of cases to categories); and (ii) the taxpayer (or, where more than one party is a taxpayer, one of them) has not sent or delivered a written request to the Tribunal, within 28 days of receiving notice that the case had been allocated as a Complex case, that the proceedings be excluded from potential liability for costs or expenses under this sub paragraph With one exception, it would therefore appear that, at least under rule 10(1), the FTT can only make two types of costs order. The first is a wasted costs order under sub para (a), and the other is an order for costs where a party has behaved unreasonably under sub para (b). The one exception is under sub para (c), which envisages that there will be no such limitation on the FTTs jurisdiction to award costs if two conditions are satisfied namely (i) the proceedings are a Complex case under Rule 23, and (ii) the taxpayer has not served a request (within the requisite 28 day period) that there should be no potential liability under rule 10(1)(c). Rule 10(3) sets out how an application for costs under rule 10(1) is to be initiated. Rule 10(4) provides that such an application must be made within 28 days of the FTTs decision disposing of the proceedings. Rule 10(5) forbids the FTT from making an order for costs under rule 10(1) without first giving notice to the potential payer and enabling him to make representations. Rule 10(6) sets out three different ways in which costs under rule 10(1) can be assessed (summary assessment, agreement and normal assessment). Rule 10(7) provides that the sum so assessed can be recovered through proceedings in the County Court or the Costs Office of the High Court. The only other reference to recovery of costs or expenses to which we were taken to in the Rules is in Rule 16, which is concerned with Summoning or citation of witnesses and orders to answer questions or produce documents. Rule 16(2)(b) provides that a summons issued by the Tribunal requiring a person to attend proceedings (other than a party to the proceedings) must make provision for the persons necessary expenses of attendance to be paid, and state who is to pay them. The facts Eclipse Film Partners No 35 LLP (Eclipse) filed a tax return in respect of the period which ended on 5 April 2007. The Revenue issued a closure notice determining that Eclipse did not carry on a trade or business, which, if correct, would have had severely adverse tax consequences for Eclipse. Accordingly, Eclipse appealed to the FTT against the closure notice. The appeal was allocated as a Complex case under Rule 23, and, within the 28 day period specified therein, Eclipse served a request under rule 10(3), that the proceedings be excluded from potential liability for costs or expenses under rule 10(1)(c). Thereafter, Eclipse and the Revenue agreed directions for the procedure leading up to the hearing. The FTT duly made those directions, which included in para 13 a direction that the parties should try and agree an appropriate bundle of documents, which should be prepared by Eclipse, who were to serve three copies on the Revenue and three copies on the FTT. Paragraph 13 of the agreed Directions also provided that, if the parties were unable to agree the Bundle, each party was to prepare its own bundle of documents and serve three copies on the other party and on the FTT. The parties were unable to agree a Bundle, and there was a hearing before the FTT, at which, among other issues, that problem was discussed. The upshot of the hearing so far as this problem was concerned was an oral direction by the FTT that Eclipse prepare the Bundle, and that the costs should be shared. Eclipses solicitors accordingly prepared the Bundle, which was very extensive indeed (the total for the parties ran to over 700 lever arch files), and its size was in part attributable to requests by the Revenue for the inclusion of documents of what some might think were of marginal relevance. In due course, the hearing took place, and, after some fourteen days of evidence and argument, the FTT gave a reserved decision dismissing Eclipses appeal on the substantive issue of the validity of the closure notice [2012] UKFTT 270 (TC). (That decision was subsequently affirmed by the Upper Tribunal, [2014] BTC 503, whose decision was in turn upheld by the Court of Appeal, [2015] BTC 10, and we refused Eclipse permission to appeal to the Supreme Court on 13 April 2016). Following the hearing before the FTT, Eclipses agents sent the Revenue invoices for a total of 108,395.48 (inclusive of VAT), representing half the cost to Eclipse of preparing the Bundles. After some discussion between the parties, and after the FTT had given its decision, the Revenue applied to the FTT to set aside the oral direction that the parties should share the costs of preparing the Bundles (the Order), on the ground that the FTT had no jurisdiction to give such a direction, in the light of Rule 10. The FTT held that it had had such jurisdiction and therefore dismissed the Revenues application. The Revenue appealed, and the Upper Tribunal took a different view, and held that the Order was made without jurisdiction, and consequently set it aside [2013] UKUT 1041 (TCC). Eclipses appeal to the Court of Appeal failed [2014] EWCA Civ 184. Eclipse now appeals to this court. Discussion The reasoning of the Court of Appeal and the Upper Tribunal, which is reflected in the Revenues argument before us, is very simple, and it is as follows. This was a Complex case under Rule 23, and therefore the FTT would have had a broad jurisdiction as to costs if no request (Request) under rule 10(1)(c)(ii) had been served, but, as such a Request was served by Eclipse, the effect of rule 10(1)(c) is that the FTT could only make an order for costs if, and to the extent that, rule 10(1)(a) (wasted costs) and/or rule 10(1)(b) (unreasonable behaviour) could be invoked, and neither of those provisions applied here. Two arguments are advanced on behalf of Eclipse to counter this analysis. As an initial point, it is said that the Order was not really an order for the payment of costs; it was on analysis an order for the sharing of costs. The flaw in that argument is that it assumes that the sharing of costs cannot involve the payment of costs. On the facts of this case, even though the result of the payment of half Eclipses expenses in preparing the Bundles could fairly be described as the Revenue sharing those costs, it would also undoubtedly involve the Revenue paying costs, in the sense that they would be reimbursing Eclipse half the expenses which it had incurred in having the Bundles prepared. What the Order plainly envisaged was (i) Eclipse incurring the expense of the preparation of the Bundles and (ii) then recovering half the expense from the Revenue. Step (ii) is plainly an order, albeit a partially proleptic order, for the recovery of costs. The second, and main, argument advanced on behalf of Eclipse is that it is inherent in rule 5(3) that the orders that the FTT makes thereunder can include terms as to costs. For instance, it is said that it would be unrealistic to suggest that the FTT might grant permission to one party to amend its case under rule 5(3)(c) or to have an adjournment under rule 5(3)(h), without being able to do so on terms as to costs which compensate the other party for any prejudice suffered as a result. Despite its initial attraction, I do not find that argument convincing, for a number of reasons. First, Eclipses interpretation of rule 5(3) robs rule 10(1) of much of its force. The purpose of rule 10(1) is to shut out the FTT from making cost shifting orders in all ordinary cases save in those where a party or a partys legal advisers have behaved unreasonably or worse, and even in Complex cases the taxpayer can opt to avoid cost shifting. While this would prevent a taxpayer from recovering costs from the Revenue, its principal purpose is no doubt to protect a taxpayer from a costs exposure which goes beyond having to pay his own lawyers. Warren J said in Atlantic Electronics Ltd v Revenue and Customs Comrs [2012] STC 931, para 8, that the policy that in cases other than Complex cases the inability to recover costs is not seen as likely to lead to a denial of access to justice but that in Complex cases, the choice of the taxpayer is to prevail. The only quarrel I have with that is that it seems to me that in non Complex cases, the normal inability of either the taxpayer or the Revenue to recover costs is positively intended to improve access to justice in the majority of such cases. The logic of Eclipses argument means that every time that the FTT makes a direction, not merely under one of the subparagraphs of rule 5(3), but under the more general powers contained in rule 5(2), it can attach an order for costs, even where neither the party against whom the order is made, nor its legal advisers, have behaved unreasonably. While this would not, of course, mean that the FTT could deal with costs as if there was no fetter on its powers, it would very significantly cut down the effectiveness of the no costs shifting scheme in rule 10(1). Secondly, Eclipses argument is inconsistent with rules 10(3) to 10(7). As explained in para 7 above, those paragraphs contain rules as to how any costs awarded by the FTT pursuant to rule 10(1) are to be assessed and recovered. If there is a power to award costs under Rule 5, as Eclipse effectively argues, there would appear to be a lacuna in the Rules, because there are no such provisions governing the assessment and recovery of such costs. I appreciate that this argument has limited force in relation to paras 10(3) to 10(5), as the paying party would normally (but not always) be expected to have the opportunity to make submissions about costs at the hearing at which such costs could, on Eclipses case, be awarded. However, that point does not, I think, apply to rules 10(6) and 10(7). Thirdly, rejecting Eclipses case does not mean that the FTT cannot give permission to amend, or grant an adjournment, on terms as to costs. If, for instance, a party wishes to amend its case or be granted an adjournment, there is nothing in the Rules which would prevent the FTT from deciding that it will only give permission to amend, or grant the adjournment, on terms that that party pays the other partys costs wasted or incurred as a result of the proposed amendment or adjournment. However, that is not what happened in this case. Fourthly, while of very slender force, there is rule 16(2)(b), which enables, indeed requires, the FTT to provide for the costs of a witness, who is required to attend a hearing, to be paid for by one or other party. It was suggested on behalf of Eclipse that it showed that rule 10(1) did not amount to an absolute code. To my mind, if anything, rule 16(2)(b) supports the Revenues case: it shows that, where the Rules intend to enable or require the FTT to render a party liable for costs, they say so. Some supplementary points Four other points should be mentioned. First, I have only referred to the basic facts of this case. Although Moses LJ, who gave the only reasoned judgment in the Court of Appeal thought otherwise (see paras 19 22 of his judgment), I agree with Mr Maugham QC, for Eclipse, that, in connection with the point at issue, it is inappropriate to consider the detailed facts of this case relating to the preparation of the Bundle and which led to the making of the Order. This case raises an issue of principle, which turns on the interpretation of the Rules. Secondly, there was some suggestion that, given that they relate to the procedure of a tribunal rather than a court, the Rules should be interpreted on a somewhat looser basis than Rules of court. I accept that the procedure of the tribunals is intended to be less formal and more flexible than that of the traditional courts. While that consideration can, indeed should, properly be taken into account when interpreting the Rules, I do not believe that it justifies a different result. Indeed, if anything, it is a point which supports the conclusion I have reached, based as it is on the fact that the Rules point strongly against costs shifting in the tribunal, whereas costs shifting in litigation in traditional courts is still the norm. Thirdly, the fact that things could have been arranged so as to achieve the same result as the Order is irrelevant to the outcome of this appeal. As Moses LJ pointed out in para 22 of his judgment, the FTT could have ordered both parties to prepare the Bundles jointly, in which case there would have been a powerful argument for saying that Eclipse could have recovered the 108,395.48 which they now claim, simply on the basis of a contribution between two jointly liable parties. But that is not what happened here: Eclipse were liable for the preparation of the Bundles, and it is not sensibly possible to characterise the Order as having any effect other than requiring the Revenue to pay some of Eclipses costs, an order which was precluded by rule 10(1). Finally, it is perhaps worth recording that, during the hearing of this appeal, Lord Toulson mentioned the possibility of Eclipse having a claim against the Revenue for 108,395.48 based on restitution, in the same way that a restitutionary claim may be made where services are performed under a contract which is for some reason unenforceable or void. That argument could not be pursued before us, and therefore I should say no more about it. Conclusion In the event, for the reasons given in paras 17 to 21 above, I would dismiss this appeal. |
Two appeals are before the Court by prisoners who were convicted of murder and sentenced to life imprisonment. In the case of the appellant Peter Chester, the tariff period fixed expired many years ago, but he has not yet satisfied the Parole Board that it is no longer necessary for the protection of the public that he should be confined. In the case of the appellant George McGeoch, the sentencing judge fixed a punishment part of 13 years which expired on 7 October 2011, but he has committed various intervening offences including violently escaping from lawful custody in 2008 for which he received a seven and a half year consecutive sentence. The result is that the earliest date on which McGeoch could be considered for parole is July 2015. Both the appellants claim that their rights have been and are being infringed by reason of their disenfranchisement from voting. Chesters claim for judicial review was issued in December 2008 and relates to voting in United Kingdom and European Parliamentary elections. It relies on Article 3 of Protocol No 1 (A3P1) as incorporated into domestic law by the Human Rights Act 1998 and directly on European Union law. Burton J and the Court of Appeal (Lord Neuberger MR, Laws and Carnwath LJJ), [2010] EWCA Civ 1439, [2011] 1 WLR 14346, dismissed Chesters claim. They held that it was not the courts role to sanction the government for continuing delay in implementing the European Court of Human Rights decision in Hirst v United Kingdom (No 2) (2005) 42 EHRR 849 or to repeat the declaration of incompatibility issued by the Scottish Registration Appeal Court in Smith v Scott 2007 SC 345 or issue advice as to the form which compatible legislation might take. They held that European Union law raises no separate issue. McGeochs claim for judicial review was issued in February 2011 and related to voting in local municipal and Scottish Parliamentary elections. It relies solely on European Union law. The Extra Division dismissed the petition on the ground that European Union law only conferred a right to vote in municipal elections in a Member State on European Union citizens residing in a Member State of which they were not nationals. It also considered that Scottish Parliamentary elections were not for this purpose municipal elections. Before the Extra Division McGeoch was refused permission to amend to include a complaint relating to voting in European Parliamentary elections, but a corresponding amendment was permitted by the Supreme Court by order of 15 October 2012. The following summarises my conclusions: (A) Human Rights Act In respect of Chesters claim under the Human Rights Act, which only relates to elections to the European and United Kingdom Parliaments (para 2), I would decline the Attorney Generals invitation to this Court not to apply the principles in Hirst v United Kingdom (No 2) (2005) 42 EHRR 849 (Hirst (No 2)) and Scoppola v Italy (No 3) (2012) 56 EHRR (paras 34 35) (Scoppola), but also decline to make any further declaration of incompatibility with the Convention rights (paras 39 42). (B) European law a. In respect of McGeochs and Chesters claims under European law, which can at most relate to elections to the European Parliament and municipal authorities (paras 9, 45 and 46), I conclude that European law does not incorporate any right to vote paralleling that recognised by the European Court of Human Rights in its case law or any other individual right to vote which is engaged or upon which, if engaged, they are able to rely (paras 46 47, 58, 59, 63 64 and 68). b. Had European law conferred any right to vote on which McGeoch and Chester can rely: i. the only relief that might have been considered would have been a generally phrased declaration that the legislative provisions governing eligibility to vote in European Parliamentary and municipal elections in the United Kingdom were inconsistent with European Community or Union law but that would not have appeared appropriate in the particular cases of Chester and McGeoch (para 72); ii. the general ban on voting in European Parliamentary and municipal elections could not have been disapplied as a whole (para 73); iii. it would not have been possible to read the RPA section 3 or EPEA section 8 compatibly with European law (para 74); iv. the Supreme Court could not itself devise a scheme or arrangements that would or might pass muster with European law; that would be for Parliament (para 74); vs neither of the appellants could have had any arguable claim for damages in respect of any breach of European law which may be involved in RPA section 3 and/or EPEA section 8 (paras 82 83). (C) European Court of Justice The resolution of these appeals does not necessitate a reference to the European Court of Justice. In so far as it raises issues of European law for determination, they are either not open to reasonable doubt or involve the application by this Court to the facts of established principles of European law (para 84). (D) Both appeals fall therefore, in my opinion, to be dismissed (para 85). Legislation Entitlement to vote in parliamentary and local government elections in the United Kingdom is governed by the Representation of the People Act 1983 (RPA). Section 1, as substituted by section 1 of the Representation of the People Act 2000, provides that: (1) A person is entitled to vote as an elector at a parliamentary election in any constituency if on the date of the poll he (a) is registered in the register of parliamentary electors for that constituency; (b) is not subject to any legal incapacity to vote (age apart); (c) is either a Commonwealth citizen or a citizen of the Republic of Ireland; and (d) is of voting age (that is, 18 years or over). Section 2 provides in similar terms in relation to local government elections, but with the addition in (c) of the words or a relevant citizen of the Union, to meet the requirements of what is now article 22(1) TFEU. Section 3 of the Act, as amended by section 24 of and paragraph 1 of Schedule 4 to the Representation of the People Act 1985, disenfranchises serving prisoners, providing: Disfranchisement of offenders in prison etc (1) A convicted person during the time that he is detained in a penal institution in pursuance of his sentence or unlawfully at large when he would otherwise be so detained is legally incapable of voting at any parliamentary or local government election. (2) For this purpose (a) convicted person means any person found guilty of an offence (whether under the law of the United Kingdom or not), . , but not including a person dealt with by committal or other summary process for contempt of court; (c) a person detained for default in complying with his sentence shall not be treated as detained in pursuance of the sentence The effect of the last words of section 3(2)(a) and of section 3(2)(c) is to exclude persons imprisoned for contempt of court or default in paying a fine. Entitlement to vote in European Parliamentary elections is provided domestically by the European Parliamentary Elections Act 2002 (EPEA). For present purposes section 8(2) and (3) are relevant, and they confer such entitlement on a person: (2) . if on the day of the poll he would be entitled to vote as an elector at a parliamentary election in a parliamentary constituency wholly or partly comprised in the electoral region, and (a) the address in respect of which he is registered in the relevant register of parliamentary electors is within the electoral region, or (b) his registration in the relevant register of parliamentary electors results from an overseas elector's declaration which specifies an address within the electoral region. The disenfranchisement enacted by RPA section 3 is thus extended to apply to European Parliamentary elections. Under the Scotland Act 1998, section 11(1), the persons entitled to vote as electors at an election for membership of the Scottish Parliament in any constituency are those who on the day of the poll would be entitled to vote as electors at a local government election in an electoral area falling wholly or partly within the constituency. In effect, RPA section 3 is extended to Scottish Parliamentary elections. A3P1 reads: The High Contracting Parties undertake to hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature. The European Parliament is for this purpose a legislature within the meaning of A3P1: see Matthews v United Kingdom (1999) 28 EHRR 361. So too is clearly the Scottish Parliament, under the devolution arrangements instituted by the Scotland Act, giving it wide ranging legislative authority. Lord Hope described as such in AXA General Insurance Ltd v HM Advocate [2011] UKSC 46, [2012] 1 AC 868, para 46: The Scottish Parliament takes its place under our constitutional arrangements as a self standing democratically elected legislature. Its democratic mandate to make laws for the people of Scotland is beyond question. Acts that the Scottish Parliament enacts which are within its legislative competence enjoy, in that respect, the highest legal authority. The United Kingdom Parliament has vested in the Scottish Parliament the authority to make laws that are within its devolved competence. The conclusion that the Scottish Parliament is a legislature within A3P1 was a conclusion implicitly accepted by the European Court of Human Rights in McLean and Cole v United Kingdom (Application Nos 12626/13 and 2522/12) (unreported) given 11 June 2013, and was shared by Lord Reed in the Extra Division in the present case (para 29 of his judgment). Conversely, a local government body or municipal authority is not part of a legislature in the United Kingdom within A3P1: McLean and Cole v United Kingdom. Under European Union law, as it stands since 1 December 2009 when the Treaty of Lisbon came into force, a wide range of provisions is potentially relevant. Articles 6, 10 and 14 TEU provide: COMMON PROVISIONS . 6.1. The Union recognises the rights, freedoms and principles set out in the Charter of Fundamental Rights of the European Union of 7 December 2000, as adapted at Strasbourg, on 12 December 2007, which shall have the same legal value as the Treaties. The provisions of the Charter shall not extend in any way the competences of the Union as defined in the Treaties. The rights, freedoms and principles in the Charter shall be interpreted in accordance with the general provisions in Title VII [Articles 5154] of the Charter governing its interpretation and application and with due regard to the explanations referred to in the Charter, that set out the sources of those provisions. 6.3. Fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States, shall constitute general principles of the Unions law. PROVISIONS ON DEMOCRATIC PRINCIPLES . 10. 1. The functioning of the Union shall be founded on representative democracy. 10.2. Citizens are directly represented at Union level in the European Parliament. Member States are represented in the European Council by their Heads of State or Government and in the Council by their governments, themselves democratically accountable either to their national Parliaments, or to their citizens. 10.3. Every citizen shall have the right to participate in the democratic life of the Union. Decisions shall be taken as openly and as closely as possible to the citizen. 10.4. Political parties at European level contribute to forming European political awareness and to expressing the will of citizens of the Union. PROVISIONS ON THE INSTITUTIONS . 14.3. The members of the European Parliament shall be elected for a term of five years by direct universal suffrage in a free and secret ballot. The pre Lisbon Treaty predecessor of article 14.3 was article 190.1 and 190.4, reading: 190.1 The representatives in the European Parliament of the peoples of the States brought together in the Community shall be elected by direct universal suffrage. 4 The European Parliament shall draw up a proposal for elections by direct universal suffrage in accordance with a uniform procedure in all Member States or in accordance with principles common to all Member States. To give effect to article 190.4 the Council of Ministers agreed the Act concerning the election of the representatives of the European Parliament by direct universal suffrage, annexed to Council Decision 76/787/ECSC, EEC, Euratom of 20 September 1976 (0J 1976 L 278, p 1), as amended by Council Decision 2002/772/EC, Euratom of 25 June 2002 and 23 September 2002 (OJ 2002 L 283, p 1) (the 1976 Act), which continues to apply in the post Lisbon Treaty era. The 1976 Act provides inter alia by what is now article 7: Subject to the provisions of this Act, the electoral procedure shall be governed in each Member State by its national provisions. These national provisions, which may if appropriate take account of the specific situation in the Member States, shall not affect the essentially proportional nature of the voting system. Voting in European Parliamentary and municipal elections is dealt with more specifically by Articles 20 and 22 TFEU in a Part headed Non discrimination and Citizenship of the Union: 20.1. Citizenship of the Union is hereby established. Every person holding the nationality of a Member State shall be a citizen of the Union. Citizenship of the Union shall be additional to and not replace national citizenship. 2. Citizens of the Union shall enjoy the rights and be subject to the duties provided for in the Treaties. They shall have, inter alia: (a) the right to move and reside freely within the territory of the Member States; (b) the right to vote and to stand as candidates in elections to the European Parliament and in municipal elections in their Member State of residence, under the same conditions as nationals of that State; (c) the right to enjoy, in the territory of a third country in which the Member State of which they are nationals is not represented, the protection of the diplomatic and consular authorities of any Member State on the same conditions as the nationals of that State; (d) the right to petition the European Parliament, to apply to the European Ombudsman, and to address the institutions and advisory bodies of the Union in any of the Treaty languages and to obtain a reply in the same language. 22.1. Every citizen of the Union residing in a Member State of which he is not a national shall have the right to vote and to stand as a candidate at municipal elections in the Member State in which he resides, under the same conditions as nationals of that State. This right shall be exercised subject to detailed arrangements adopted by the Council, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament; these arrangements may provide for derogations where warranted by problems specific to a Member State. 2. Without prejudice to Article 223(1) and to the provisions adopted for its implementation, every citizen of the Union residing in a Member State of which he is not a national shall have the right to vote and to stand as a Candidate in elections to the European Parliament in the Member State in which he resides, under the same conditions as nationals of that State. This right shall be exercised subject to detailed arrangements adopted by the Council, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament; these arrangements may provide for derogations where warranted by problems specific to a Member State. Article 52 of the Charter of Fundamental Rights (CFR) deals with the Charters scope and interpretation: 1. Any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others. 2. Rights recognised by this Charter for which provision is made in the Treaties shall be exercised under the conditions and within the limits defined by those Treaties. 3. In so far as this Charter contains rights which correspond to rights guaranteed by the Convention for the Protection of Human Rights and Fundamental Freedoms, the meaning and scope of those rights shall be the same as those laid down by the said Convention. This provision shall not prevent Union law providing more extensive protection. 4. In so far as this Charter recognises fundamental rights as they result from the constitutional traditions common to the Member States, those rights shall be interpreted in harmony with those traditions. 5. The provisions of this Charter which contain principles may be implemented by legislative and executive acts taken by institutions, bodies, offices and agencies of the Union, and by acts of Member States when they are implementing Union law, in the exercise of their respective powers. They shall be judicially cognisable only in the interpretation of such acts and in the ruling on their legality. 6. Full account shall be taken of national laws and practices as specified in this Charter. 7. The explanations drawn up as a way of providing guidance in the interpretation of this Charter shall be given due regard by the courts of the Union and of the Member States. The CFR includes the following provisions: Article 39 Right to vote and to stand as a candidate at elections to the European Parliament 1. Every citizen of the Union has the right to vote and to stand as a candidate at elections to the European Parliament in the Member State in which he or she resides, under the same conditions as nationals of that State. 2. Members of the European Parliament shall be elected by direct universal suffrage in a free and secret ballot. Article 40 Right to vote and to stand as a candidate at municipal elections Every citizen of the Union has the right to vote and to stand as a candidate at municipal elections in the Member State in which he or she resides under the same conditions as nationals of that State. The Explanations relating to the CFR, referred to in article 6.1 TEU, state that article 39 CFR: applies under the conditions laid down in the Treaties, in accordance with Article 52(2) of the Charter. Article 39(1) corresponds to the right guaranteed in Article 20(2) [TFEU] (cf. also the legal base in Article 22 [TFEU] for the adoption of detailed arrangements for the exercise of that right) and Article 39(2) corresponds to Article 14(3) [TEU]. Article 39(2) takes over the basic principles of the electoral system in a democratic state. The Explanations state further that article 40 CFR: corresponds to the right guaranteed by Article 20(2) [TFEU] (cf. also the legal base in Article 22 [TFEU] for the adoption of detailed arrangements for the exercise of that right). In accordance with Article 52(2) of the Charter, it applies under the conditions defined in these Articles in the Treaties. European Convention on Human Rights The general significance of A3P1 was summarised by Lord Collins in a judgment with which all members of the Court agreed in R (Barclay) v Lord Chancellor and Secretary of State for Justice [2009] UKSC 9, [2010] 1 AC 464, para 52. I need only to set out parts of his summary, omitting also some of the case references: 53. First, article 3 of the First Protocol enshrines a characteristic principle of an effective democracy. 54. Second, although article 3 is phrased in terms of the obligation of the contracting states to hold elections which ensure the free expression of the opinion of the people rather than in terms of individual rights, article 3 guarantees individual rights, including the right to vote and the right to stand for election . 55. Third, there is room for implied limitations on the rights enshrined in article 3, and contracting states must be given a wide margin of appreciation in this sphere: Mathieu Mohin v Belgium (1987) 10 EHRR 1, para 52; Yumak v Turkey (2008) 48 EHRR 61, para 109(ii). 56. Fourth, the content of the obligation under article 3 varies in accordance with the historical and political factors specific to each state; . 57. Fifth, article 3 is not (by contrast with some other Convention rights, such as those enumerated in articles 8 to 11) subject to a specific list of legitimate limitations, and the contracting states are therefore free to rely in general in justifying a limitation on aims which are proved to be compatible with the principle of the rule of law and the general objectives of the Convention: Yumak, para 109 (iii); Tanase v Moldova (Application No 7/08) (unreported) given 18 November 2008, para 105. 58. Sixth, limitations on the exercise of the right to vote or stand for election must be imposed in pursuit of a legitimate aim, must not be arbitrary or disproportionate, and must not interfere with the free expression of the opinion of the people in the choice of the legislature: Yumak, para 109(iii) to (iv). 59. Seventh, such limitations must not curtail the rights under article 3 to such an extent as to impair their very essence, and deprive them of their effectiveness. They must reflect, or not run counter to, the concern to maintain the integrity and effectiveness of an electoral procedure aimed at identifying the will of the people through universal suffrage. Any departure from the principle of universal suffrage risks undermining the democratic validity of the legislature and the laws which it promulgates: Mathieu Mohin, para 52; Yumak, para 109(iv). The European Court of Human Rights has expressed its attitude to the exclusion or limitation of prisoners voting rights in well known decisions. Hirst v United Kingdom (No 2) (2005) 42 EHRR 849 and Scoppola v Italy (No 3) (2012) 56 EHRR 663 each came first before a simple Chamber of seven judges and then before a Grand Chamber composed of 17 judges. Hirst (No 2) was a claim regarding his disenfranchisement from voting in United Kingdom Parliamentary and local elections brought by a prisoner serving a life sentence in England for manslaughter on the ground of diminished responsibility, whose tariff period had expired without his release. Scoppola was a claim relating to disenfranchisement under Italian law brought by a prisoner serving a sentence of 30 years imprisonment for murder, attempted murder and other offences. In between these two decisions came Greens and MT v United Kingdom (2010) 53 EHRR 710, in which a simple Chamber applied the principles in Hirst (No 2) to complaints of ineligibility to vote in both European and United Kingdom Parliamentary elections. More recently simple Chambers have applied the principles in Hirst (No 2) and Scoppola in Anchugov and Gladkov v Russia (Application Nos 11157/04 and 15162/05) (unreported), 4 July 2013, and Syler v Turkey (Application No 29411/07) (unreported), 17 September 2013. In Greens the Strasbourg Court gave the United Kingdom six months to introduce legislative proposals to amend RPA section 3, a period subsequently extended first pending the decision in Scoppola and then to six months after the Grand Chamber decision in Scoppola, delivered 22 May 2012. A draft Bill was published for pre legislative scrutiny on 22 November 2012 (Cm 8499) and a joint select committee was established to undertake this and to report by 31 October 2013. As envisaged in Hirst (No 2), para 83, the United Kingdom government has continued in this regard to liaise with the Committee of Ministers of the Council of Europe, which has on 6 December 2012 accepted the draft bill and the establishment of the committee as a legitimate means of implementing the judgment in Greens, and at its meeting on 26 September 2013, noted with interest that the pre legislative scrutiny by the committee was now due to be completed by 31 October 2013, underlined the urgency of bringing the legislative process to a conclusion, urged the United Kingdom authorities to provide information on the proposed legislative timescale without further delay and decided to resume examination of the progress made at a meeting in December 2013. This ongoing process was in June 2013 noted by the Strasbourg Court in its judgment in McLean and Cole, paras 36 37, where the Court concluded that, in its light, there was nothing to be gained from examining applications concerning future elections at this time (para 37). In Hirst (No 2), Greens and Scoppola the European Court of Human Rights acknowledged the width of the margin of appreciation, or the wide range of policy alternatives, which States enjoy in relation to voting rights (Hirst (No 2), para 78, Greens, para 114 and Scoppola, para 83). In both Hirst (No 2) and Scoppola the Grand Chamber acknowledged that disenfranchisement of convicted serving prisoners may be considered to pursue the aims of preventing crime and enhancing civic responsibility and respect for the rule of law (Hirst (No 2), paras 74 75 and Scoppola, para 90). In Hirst (No 2) the Grand Chamber (upholding the earlier Chamber) held that the United Kingdoms ban on prisoner voting was a general, automatic and indiscriminate restriction on a vitally important Convention right which fell outside any acceptable margin of appreciation and was incompatible with A3P1 (para 82). A powerfully constituted minority of the Grand Chamber (including its President and future President) dissented. It took as its test whether the restrictions on prisoner voting impair the very essence of the right to vote or are arbitrary (para O III5), and it pointed out that the Court should be very careful not to assume legislative functions and that there was little consensus in Europe about whether or not prisoners should have the vote (para O III6). It noted that a multi party Speakers Conference on Electoral Law in 1968 had unanimously recommended that convicted persons should not be entitled to vote, and that the RPA had been amended in 2000 only to permit remand prisoners and unconvicted mental patients to vote. As to the majority comment that there was no evidence of substantive debate in Parliament about the ban on convicted prisoners voting, the minority disagreed, on the basis that it was not for the Court to prescribe the way in which national legislatures carry out their legislative functions, and it must be assumed that the RPA reflects political, social and cultural values in the United Kingdom (para O III7) In Scoppola the United Kingdom intervened and the Attorney General appeared before the Grand Chamber to ask that it reconsider Hirst (No 2). But, in its judgment the Grand Chamber said (para 96) that it reaffirmed the principles set out by the Grand Chamber in the Hirst (No 2) judgment, in particular the fact that when disenfranchisement affects a group of people generally, automatically and indiscriminately, based solely on the fact that they are serving a prison sentence, irrespective of the length of the sentence and irrespective of the nature or gravity of their offence and their individual circumstances, it is not compatible with [A3P1]. However, the Grand Chamber (reversing the simple Chamber) found no contravention in relation to the Italian law in issue in Scoppola. The only dissent, by Judge Thr Bjrgvinsson, related to this conclusion. The Italian law was held compatible with the Convention because disenfranchisement applied only to sentences of three or more years, and lasted for only five years in the case of sentences of three to five years, though for life in the case of longer sentences. The Grand Chamber said that As a result, a large number of convicted prisoners are not deprived of the right to vote (paras 106 and 108). Furthermore, any prisoner could, three years after completing his sentence, apply for rehabilitation, which would be granted upon his displaying consistent and genuine good conduct and would terminate any ancillary penalties and other penal effect of the conviction including disenfranchisement (Scoppola, paras 38 and 109). The Grand Chamber specifically rejected the Chamber view that any decision to deprive a prisoner of the vote should be taken by a court, saying (para 99): While the intervention of a judge is in principle likely to guarantee the proportionality of restrictions on prisoners' voting rights, such restrictions will not necessarily be automatic, general and indiscriminate simply because they were not ordered by a judge. Indeed, the circumstances in which the right to vote is forfeited may be detailed in the law, making its application conditional on such factors as the nature or the gravity of the offence committed. Judge Thr Bjrgvinsson dissented because in his view the Grand Chamber judgment in Scoppola offer[ed] a very narrow interpretation of the Hirst judgment which stripped it of all its bite (para OI 16). In particular, the Grand Chamber had in his view overlooked significant elements of the reasoning in Hirst (No 2), notably the absence of any direct link between the facts of the individual case and the ban on voting, the bluntness of the Italian legislation, just like the UK legislation, and the absence of evidence that either the legislature or the courts had weighed the proportionality of the ban (para 0I 13). Should the Supreme Court follow the Strasbourg case law? On the present appeal, the Attorney General (withdrawing a concession of incompatibility made in the courts below) has made a fresh challenge to the principles endorsed by the European Court of Human Rights in Hirst (No 2) and Scoppola. He points out, correctly, that the Supreme Court is, under section 2(1) of the Human Rights Act, obliged only to take into account any judgment or decision of the European Court of Human Rights when determining a question which has arisen in connection with a Convention right. In R v Horncastle [2009] UKSC 14, [2010] 2 AC 373, para 11 Lord Phillips said that The requirement to take into account the Strasbourg jurisprudence will normally result in the domestic court applying principles that are clearly established by the Strasbourg court. There will, however, be rare occasions where the domestic court has concerns as to whether a decision of the Strasbourg court sufficiently appreciates or accommodates particular aspects of our domestic process. In such circumstances it is open to the domestic court to decline to follow the Strasbourg decision, giving reasons for adopting this course. This is likely to give the Strasbourg court the opportunity to reconsider the particular aspect of the decision that is in issue, so that there takes place what may prove to be a valuable dialogue between the domestic court and the Strasbourg court. In Manchester City Council v Pinnock [2010] UKSC 45, [2011] 2 AC 104, para 48 Lord Neuberger summarised the position: This court is not bound to follow every decision of the European court. Not only would it be impractical to do so: it would sometimes be inappropriate, as it would destroy the ability of the court to engage in the constructive dialogue with the European court which is of value to the development of Convention law: see e g R v Horncastle [2010] 2 AC 373. Of course, we should usually follow a clear and constant line of decisions by the European court: R (Ullah) v Special Adjudicator [2004] 2 AC 323. But we are not actually bound to do so or (in theory, at least) to follow a decision of the Grand Chamber. As Lord Mance pointed out in Doherty v Birmingham City Council [2009] AC 367, para 126, section 2 of the 1998 Act requires our courts to take into account European court decisions, not necessarily to follow them. Where, however, there is a clear and constant line of decisions whose effect is not inconsistent with some fundamental substantive or procedural aspect of our law, and whose reasoning does not appear to overlook or misunderstand some argument or point of principle, we consider that it would be wrong for this court not to follow that line. In relation to authority consisting of one or more simple Chamber decisions, dialogue with Strasbourg by national courts, including the Supreme Court, has proved valuable in recent years. The process enables national courts to express their concerns and, in an appropriate case such as R v Horncastle, to refuse to follow Strasbourg case law in the confidence that the reasoned expression of a diverging national viewpoint will lead to a serious review of the position in Strasbourg. But there are limits to this process, particularly where the matter has been already to a Grand Chamber once or, even more so, as in this case, twice. It would have then to involve some truly fundamental principle of our law or some most egregious oversight or misunderstanding before it could be appropriate for this Court to contemplate an outright refusal to follow Strasbourg authority at the Grand Chamber level. The Attorney Generals submissions to us in this case have to be considered in that light. Parliament has required this Court to take into account Strasbourg case law (Human Rights Act, section 2(1)(a)) and, So far as it is possible to do so, to read and give effect to legislation in a way which is compatible with the Convention rights (section 3(1)). Parliament has given this Court, if satisfied that a provision of primary legislation is incompatible with a Convention right, power to make a declaration of that incompatibility (section 4). The Act itself contemplates that domestic legislation may not match this countrys international obligations as established by case law of the European Court of Human Rights. It is against this background that the Supreme Court must consider whether the Attorney General has made good his case that the Court should refuse to follow and apply the approach taken by the European Court of Human Rights in Hirst (No 2) and Scoppola. The Attorney General took issue with any description of Hirst (No 2) and Scoppola as a clear and consistent line of decisions. But, whatever else may be said about their reasoning or its outcome, they both clearly stand for the core proposition, directly applicable to the current general ban on convicted prisoners voting, quoted in paras 20 and 22 above. At the heart of the Attorney Generals submissions lies the wide margin of appreciation which States have in this area, and the variety of legislative attitudes in other States, some according with the United Kingdoms. These were matters which the European Court of Human Rights acknowledged, but in the Attorney Generals submission failed to respect. In support of his submission the Attorney General makes a number of points. First, the area is one where there is room (in Laws LJs words in the Court of Appeal, [2010] EWCA Civ 1439, [2011] 1 WLR 1436, para 32) for deep philosophical differences of view between reasonable people. In circumstances where the Grand Chamber accepted as a legitimate aim of disenfranchisement enhancing civic responsibility and respect for the rule of law (Scoppola, para 90), the United Kingdom was, as a participatory democracy, entitled to withhold the vote from those serving sentences for offences sufficiently serious to justify such a sentence, including those who, after their tariff period, could not satisfy the Parole Board that it was no longer necessary for the protection of the public that they should be confined (Crime (Sentences) Act 1997, section 28(6)(b)). Secondly, the Grand Chamber in Hirst (No 2) (para 79) attached some significance to a suggested lack of evidence that Parliament [had] ever sought to weigh the competing interests or to assess the proportionality of a blanket ban on the right of a convicted prisoner to vote, adding only: It may perhaps be said that, by voting the way they did to exempt unconvicted prisoners from the restriction on voting, Parliament implicitly affirmed the need for continued restrictions on the voting rights of convicted prisoners. Nonetheless it cannot be said that there was any substantive debate by members of the legislature on the continued justification in light of modern day penal policy and of current human rights standards for maintaining such a general restriction on the right of prisoners to vote. The majority in Scoppola did not mention this factor, as Judge Thr Bjrgvinsson, dissenting, pointed out at paras OI 09 and OI 15. Nevertheless, the Attorney General submits that it is relevant that Parliament has, since Hirst (No 2), conducted three formal debates, in Westminster Hall on 11 January 2011, in the Commons on 10 February 2011, when MPs voted 234 to 22 to maintain the status quo, and again in the Commons on 22 November 2012, after the Lord Chancellor introduced a draft Bill, the outcome of which is not yet determined. Mindful of the injunction in the Bill of Rights 1688 That the Freedome of Speech and Debates or Proceedings in Parlyament ought not to be impeached or questioned in any Court or Place out of Parlyament, the Attorney General did not suggest that we should seek to evaluate the quality of the debate in Parliament. But he relied upon the fact of debate and the continuation following it of the ban on prisoner voting as underlining his submission that the Convention rights should be understood and applied in a way respecting the choice made by the institution competent to make such choices in a democracy. He pointed out that the Court in its recent decision in Animal Defenders International v United Kingdom (Application No 48876/08, 22 April 2013) demonstrated the considerable weight that it was prepared to attach to exacting and pertinent reviews, by both parliamentary and judicial bodies, of the complex regulatory regime governing political broadcasting in the United Kingdom and to their view that the general measure [prohibiting religious or political advertising on radio and television] was necessary to prevent the distortion of crucial public interest debates and, thereby, the undermining of the democratic process (para 116). Thirdly, the Attorney General argues, it was fallacious to treat the United Kingdom ban as affecting a group of people generally, automatically and indiscriminately, simply because the ban was based solely on the fact that they are serving a prison sentence, irrespective of the length of the sentence and irrespective of the nature or gravity of their offence and their individual circumstances. Any rule of law affects a group of people defined by its terms. If a group is rationally defined, there is no reason why there should necessarily be exceptions. As the Grand Chamber pointed out in relation to the Italian legislation in Scoppola (para 106), so also in the United Kingdom a sentencing court takes into account the nature and gravity of the offence as well as individual circumstances when deciding in the first place whether any and if so what sentence of imprisonment is required. As a result, only 8% of convicted offenders go to prison in England, 15% in Scotland. The group affected is confined to convicted prisoners and so excludes those in prison on remand awaiting trial as well as hospital detainees. Further, within the group of convicted prisoners, the ban does not extend to those in prison for contempt or default in paying fines. Despite the Attorney Generals forceful submissions, I do not consider that it would be right for this Court to refuse to apply the principles established by the Grand Chamber decisions in Hirst (No 2) and Scoppola consistently with the way in which they were understood and applied in those decisions. The Grand Chamber in Scoppola was prepared to give the Italian legislator a greater margin of manoeuvre than one would have expected from its previous decision in Hirst (No 2). But this was on the basis that the Italian law did not involve a blanket ban in respect of all or almost all convicted prisoners. It excluded those convicted of minor offences (involving less than three years imprisonment), and it had a two step gradation in the length of the ban according to whether the sentence was for less or for more than five years imprisonment. As a result a large number of convicted prisoners had the vote. Furthermore, there was the possibility of rehabilitation for consistent and genuine good conduct displayed for three years after release. Nothing in Scoppola therefore suggests that the Grand Chamber would revise its view in Hirst (No 2) to the point where it would accept the United Kingdoms present general ban. There is on this point no prospect of any further meaningful dialogue between United Kingdom Courts and Strasbourg. I would also reject the suggestion that the Supreme Court should refuse to apply the principles stated in the Strasbourg case law in the present circumstances. Deep though the philosophical differences of view between reasonable people may be on this point, it would in my opinion exaggerate their legal and social importance to regard them as going to some fundamental substantive or procedural aspect of our law: see the citation from Pinnock in para 26 above. While the diversity of approach in this area within Europe derives from different traditions and social attitudes, it makes it difficult to see prisoner disenfranchisement as fundamental to a stable democracy and legal system such as the United Kingdom enjoys. It is possible to argue, as the Canadian Supreme Court did in Sauv v Canada (No 2) [2002] 3 SCR 519 that the objective of promoting civic responsibility and respect for the law may be undermined, rather than enhanced, by denying serving prisoners the right to vote. The haphazard effects of an effectively blanket ban are certainly difficult to deny. As the Grand Chamber observed in Hirst (No 2) (para 77) it includes a wide range of offenders and sentences, from one day to life and from relatively minor offences to offences of the utmost gravity. The Grand Chamber may have had in mind that, although minor offences involve shorter periods of disenfranchisement, the effect is more likely to be haphazard, depending as it must upon the timing of elections. Application of the principles in Hirst (No 2) and Scoppola This brings me to the effect of the principles in Hirst (No 2) and Scoppola in the present cases. Chesters claim, which relates to voting in European Parliamentary elections, is based directly on the Convention rights as well as on EU law. The first question is therefore whether he is a victim capable of bringing a claim against the respondents under the Human Rights Act. Section 7 of the Act provides: (1) A person who claims that a public authority has acted (or proposes to act) in a way which is made unlawful by section 6(1) may (a) bring proceedings against the authority under this Act in the appropriate court or tribunal, or (b) rely on the Convention right or rights concerned in any legal proceedings, but only if he is (or would be) a victim of the unlawful act. (3) If the proceedings are brought on an application for judicial review, the applicant is to be taken to have a sufficient interest in relation to the unlawful act only if he is, or would be, a victim of that act. (4) If the proceedings are made by way of a petition for judicial review in Scotland, the applicant shall be taken to have title and interest to sue in relation to the unlawful act only if he is, or would be, a victim of that act. (7) For the purposes of this section, a person is a victim of an unlawful act only if he would be a victim for the purposes of Article 34 of the Convention if proceedings were brought in the European Court of Human Rights in respect of that act. In Hirst (No 2), the majority rejected a submission by the United Kingdom Government that the Chamber had assessed the compatibility of the legislation with the Convention in the abstract without consideration of whether removal of the vote from the applicant as a person convicted of a serious offence and sentenced to life imprisonment disclosed a violation. It said (para 72) that Hirsts complaint was in no sense an actio popularis. He was directly and immediately affected by the legislative provision of which complaint is made and in these circumstances the Chamber was justified in examining the compatibility with the Convention of such a measure, without regard to the question whether if the measure had been framed otherwise and in a way which was compatible with the Convention, the applicant might still have been deprived of the vote. It would not in any event be right for the Court to assume that, if Parliament were to amend the current law, restrictions on the right to vote would necessarily still apply to post tariff life prisoners or to conclude that such an amendment would necessarily be compatible with Article 3 of Protocol No 1. This was another point on which the minority disagreed, observing the Courts task was not normally to review the relevant law and practice in abstracto and that it was in our opinion, difficult to see in what circumstances restrictions on voting rights would be acceptable, if not in the case of persons sentenced to life imprisonment (para O III8). Taking the majority approach, Chester is a victim for the purposes of section 7 of the Human Rights Act, but this means that he satisfies a pre condition to, not that he is necessarily entitled to any particular relief in, a complaint about the general disenfranchisement of prisoners from voting in United Kingdom and European Parliamentary elections which results from EPEA section 8(2) and (3), read with RPA section 3. He claims a declaration that both RPA section 3 and EPEA section 8(2) are incompatible with A3P1. (I note that, in contrast, under European Union law, his primary submission in relation to EPEA section 8(2) is that it can be rendered compatible with European Union law by reading in an additional right to vote in European Parliamentary elections if necessary to comply with European Union law.) The incompatibility of RPA section 3 with A3P1 was recognised by the Registration Appeal Court in Smith v Scott 2007 SC 345, which made a declaration of incompatibility. That declaration was properly made in the case of a convicted person sentenced to five years imprisonment for being concerned with supply of controlled drugs. It entitled the Government to use the remedial order provisions contained in section 10 of the Human Rights Act. The Government decided not to do this. The issue is now however before the United Kingdom Parliament and under active consideration in the light of the decisions in Hirst (No 2), Greens and Scoppola. Further, it is clear from Greens (para 18 above) and the Attorney General accepts that EPEA section 8 is, in relation to European Parliamentary elections, as incompatible with A3P1 as RPA section 3 is, in relation to United Kingdom Parliamentary elections. A declaration is a discretionary remedy, both generally and under the Human Rights Act 1998, section 4 (4). There is in these circumstances no point in making any further declaration of incompatibility. On this I am in agreement with both Burton J at first instance, [2009] EWHC 2923 (Admin), and the Court of Appeal, [2010] EWCA Civ 1439, [2011] 1 WLR 1436. The Strasbourg Courts own decision in McLean and Cole to defer consideration of applications concerning future elections in the light of the ongoing Parliamentary process is also consistent with this view. Further, it can, I consider, now be said with considerable confidence that the ban on Chesters voting is one which the United Kingdom Parliament can, consistently with the Convention right, and would maintain, whatever amendments it may be obliged to make or may make to allow any prisoners detained for different reasons or periods to vote. In the original Chamber decision in Hirst (2004) 38 EHRR 825, reference was made to the continuation of the ban on voting after the expiry of the tariff period in the case of a life prisoner as an additional anomaly (para 49). Nevertheless, the Chamber went on to say that it could not speculate as to whether Hirst, whose tariff had expired, would still have been deprived of the vote even if a more limited restriction on the right to [sic] prisoners to vote had been imposed, which was such as to comply with the requirements of [A3P1] (para 51). It is notable that the majority in the Grand Chamber in Hirst (No 2) did not endorse this reference in para 49 of the simple Chambers judgment to an additional anomaly, saying only that it would not in any event be right for the Court to assume that, if Parliament were to amend the current law, restrictions on the right to vote would necessarily still apply to post tariff life prisoners or to conclude that such an amendment would necessarily be compatible with [A3P1] (para 72). Only in a concurring opinion of Judge Caflisch did he raise the point, going so far as to say that this may be the essential point for the present case (para O 17(d)). His opinion does not appear to have been shared by other judges, and must now in any event be seen in the light of the decision in Scoppola, accepting that a lifelong ban on voting by prisoners sentenced for five or more years was legitimate. The additional fact that it was subject to removal after three years had elapsed from release, provided that the offender has displayed consistent and genuine good behaviour does not appear to have been critical to this conclusion; but, however that may be, it points strongly in favour of a view that it can be legitimate to withhold a prisoners voting rights until satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined. The Grand Chambers reasoning in its very recent decision in Vinter v United Kingdom (Application Nos 66069/09, 130/10 and 3896/10; 9 July 2013), which post dated submissions in this case, is also worth noting for its explanation of detention during a post tariff period by reference to core aims of imprisonment: 108. First, a life sentence does not become irreducible by the mere fact that in practice it may be served in full. No issue arises under Article 3 if a life sentence is de jure and de facto reducible . In this respect, the Court would emphasise that no Article 3 issue could arise if, for instance, a life prisoner had the right under domestic law to be considered for release but was refused on the ground that he or she continued to pose a danger to society. This is because States have a duty under the Convention to take measures for the protection of the public from violent crime and the Convention does not prohibit States from subjecting a person convicted of a serious crime to an indeterminate sentence allowing for the offenders continued detention where necessary for the protection of the public . Indeed, preventing a criminal from re offending is one of the essential functions of a prison sentence . This is particularly so for those convicted of murder or other serious offences against the person. The mere fact that such prisoners may have already served a long period of imprisonment does not weaken the States positive obligation to protect the public; States may fulfil that obligation by continuing to detain such life sentenced prisoners for as long as they remain dangerous . [case references omitted] emphasised in Hirst (No 2) that In Greens, the Court noted (para 113) that the Grand Chamber had there are numerous ways of organising and running electoral systems and a wealth of differences, inter alia, in historical development, cultural diversity and political thought within Europe which it is for each contracting state to mould into their own democratic vision. The Court recalls that its role in this area is a subsidiary one: the national authorities are, in principle, better placed than an international court to evaluate local needs and conditions and, as a result, in matters of general policy, on which opinions within a democratic society may reasonably differ, the role of the domestic policy maker should be given special weight. See also Scoppola, para 83 and Syler, para 33. Within the domestic legal context, it is now therefore for Parliament as the democratically elected legislature to complete its consideration of the position in relation to both RPA section 3 and EPEA section 8. There is no further current role for this Court, and there is no further claim, for a declaration or, in the light of the incompatibility, for damages which the appellant Chester can bring. European law I turn to the position under European Community and now Union law. Before Burton J and the Court of Appeal, and reflecting no doubt the argument before those courts, any claim under European Union law by Chester was treated as effectively consequential on the incompatibility of the ban with A3P1, and attracted no separate analysis. Bearing in mind the date of Chesters claim for judicial review (December 2008), he is also unable to rely upon European law as it stands after 1 December 2009 under the TEU and TFEU, as a result of the Treaty of Lisbon. This difficulty is not overcome by maintaining that his claim related to forthcoming elections. It still required to be viewed in the light of the law when it was brought. At that date, the Charter of Fundamental Rights did not have direct legal force, so that there was no equivalent of article 6.1 TEU. The predecessor of article 6.3 TEU was article 6.2 of the pre December 2009 TEU reading: The Union shall respect fundamental rights, as guaranteed by the [Human Rights] Convention and as they result from the constitutional traditions common to the Member States, as general principles of Community law. The predecessor of article 14.3 TEU was article 190.1 and 4 of the Treaty on the European Community (EC), set out in para 11 above. Article 22.1 and 22.2 had a precise equivalent in article 19.1 and 19.2 EC, but the predecessor of article 20 was article 17 EC, reading simply: 17.1 Citizenship of the Union is hereby established. Every person holding the nationality of a Member State shall be a citizen of the Union. Citizenship of the Union shall complement and not replace national citizenship. 2. Citizens of the Union shall enjoy the rights conferred by this Treaty and shall be subject to the duties imposed thereby. McGeochs claim under European Union law was on the other hand issued in early 2011 and relates to voting in local as well as Scottish and European Parliamentary elections. It therefore opens up all possible avenues for exploration under current European Union law. However, there is nothing in European Union law which can entitle McGeoch to complain in respect of his inability to vote in Scottish Parliamentary elections. European Union law refers in various contexts, which have already been set out in this judgment, to voting in European Parliamentary elections and in municipal elections, and to no other elections. It is obvious that Scottish Parliamentary elections fall within neither category: see also what I have already said in para 9 above. That municipal elections are local government elections at a lower level of government, closer to people and with a more direct responsibility for service delivery, is furthermore consistent with the nature of the units found (though in the case of Scotland, not yet updated) in the annex to Council Directive 94/80/EC, which lays down detailed arrangements for the exercise of the right to vote and stand in municipal elections by Union citizens residing in a Member State of which they are not nationals. The submissions under European Union law are put at various different levels. Mr Aidan ONeill QC for McGeoch concentrated upon articles 20 and 22 TFEU, read with articles 39 and 40 CFR. Mr Southey for Chester adopted Mr ONeills submissions, but relied in addition upon the more general provisions of articles 6.3 (or its predecessor article 6.2 in the pre December 2009 TEU), 10 and 14.3 TEU (or the latters predecessor articles 190.1 and 4 EC). In his submission, the effect of these articles was, at the least, to incorporate into European Union law in relation to voting in European Parliamentary elections the principles recognised under Strasbourg case law (Hirst (No 2) and Scoppola) in relation to national legislatures. Quite possibly, he submitted, their effect may even be to lead the Court of Justice to go further than Strasbourg case law by prohibiting on a more extensive basis any limitations on the democratically based universal suffrage to which the Treaties refer. If Mr Southeys wider submission with regard to the wholesale importation into European Community or Union law of the Strasbourg jurisprudence regarding the right to vote were valid, it would be surprising to find no hint of this in any Court of Justice judgment. That is particularly so with regard to Case C 145/04 Spain v United Kingdom [2006] ECR I 7917 and Case 300/04 Eman and Sevinger v College van Burgemeester en Wethouders van den Haag [2006] ECR I 8055, despite the difference in the actual issues. Mr Southeys submission would also mean that a case such as Matthews v United Kingdom (1999) 28 EHRR 361 could, now at least, be pursued in either of two parallel forums. Spain v United Kingdom and Eman and Sevinger The judgments in Spain v United Kingdom and Eman and Sevinger were both issued on the same day (12 September 2006) following an opinion of Advocate General Tizzano (dated 6 April 2006) which had covered both cases. The judgments contain discussion of the scope and effect of European Treaty law which bears on both Mr Southeys wider and Mr ONeills narrower submissions. In Spain v United Kingdom the first issue was whether it was legitimate under European law for the United Kingdom to extend the franchise in European Parliamentary elections to qualifying Commonwealth citizens, as well as European Union citizens, registered in the Gibraltar register. The Court held (para 78) that, in the then current state of Community law the definition of the persons entitled to vote and to stand as a candidate in elections to the European Parliament falls within the competence of each Member State in compliance with Community law, and that Articles 189 EC, 190 EC, 17 EC and 19 EC do not preclude the Member States from granting that right to vote and to stand as a candidate to certain persons who have close links to them, other than their own nationals or citizens of the Union resident in their territory. In the course of its reasoning, the Court said: Articles 189 EC and 190 EC do not expressly and precisely state who are to be entitled to the right to vote and to stand as a candidate for the European Parliament. 66 [Article 19 EC] is confined to applying the principle of non discrimination on grounds of nationality to the exercise of that right, by providing that every citizen of the Union residing in a Member State of which he is not a national is to have the right to vote and to stand as a candidate in elections to the European Parliament in the Member State in which he resides, under the same conditions as nationals of that State. 76 . Article 19(2) EC . is confined, as pointed out in paragraph 66 above, to stating a rule of equal treatment between citizens of the Union residing in a Member State so far as concerns that right to vote and stand for election. While that provision, like Article 19(1) EC relating to the right of Union citizens to vote and to stand as a candidate at municipal elections, implies that nationals of a Member State have the right to vote and to stand as a candidate in their own country and requires the Member States to accord those rights to citizens of the Union residing in their territory, it does not follow that a Member State in a position such as that of the United Kingdom is prevented from granting the right to vote and to stand for election to certain persons who have a close link with it without however being nationals of that State or another Member State. The Court also referred to the provisions of the 1976 Act (paras 67 to 69). In paras 90 to 97 the Court of Justice addressed Spains second plea that the United Kingdom had, in the arrangements made to enable the Gibraltar electorate to vote, gone further than required to comply with the European Court of Justices judgment in Matthews v United Kingdom. It recited in this connection that it was the United Kingdoms obligation to comply with Matthews and that in the light of the case law of the European Court of Human Rights and the fact that that Court has declared the failure to hold elections to the European Parliament in Gibraltar to be contrary to [A3P1] ., the United Kingdom cannot be criticised for adopting the necessary legislation. In Eman and Sevinger the Court was concerned with the legitimacy under European Union law of a provision of Dutch law which conferred the right to vote in European Parliamentary elections upon Dutch nationals residing in the Netherlands or abroad except in Aruba and the Netherlands Antilles. After repeating (para 45) that in the current state of Community law, the definition of the persons entitled to vote and to stand for election falls within the competence of each Member State in compliance with Community law, the Court opened a possible role for European law in the instant case by continuing It must, however, be ascertained whether that law precludes a situation such as that in the main proceedings, in which Netherlands nationals residing in Aruba do not have the right to vote and to stand as a candidate in elections to the European Parliament. In relation to articles 189 and 190 EC, the Court repeated its words in para 65 of Spain v United Kingdom. It also repeated (para 53) that Article 19(2) EC is confined to applying the principle of non discrimination on grounds of nationality to that right to vote and stand for election, by stipulating that every citizen of the Union residing in a Member State of which he is not a national is to have the right to vote and to stand as a candidate in elections to the European Parliament in the Member State in which he resides, under the same conditions as nationals of that State. The Court further noted that the European Court of Human Rights had accepted that the right to vote might be limited by reference to residence. However, the Court found in the principle of equal treatment or non discrimination, which is one of the general principles of Community law a basis for comparing the position of a Netherlands national resident in the Netherlands Antilles or Aruba and one residing in a non member country (paras 57 58) and for concluding that the Dutch Government had not demonstrated an objective justification for the different treatment of these two persons (para 60). Earlier in its judgment, the Court of Justice had observed that A3P1 did not apply to Aruba; unlike the case with Gibraltar, the European Treaties have no application there, so the European Parliament could not be regarded as the Aruba legislature (para 48). But the Courts decision was based on the fact that the complainants held Dutch nationality and were as such citizens of the Union under article 17(1) EC, and entitled to enjoy the rights conferred by the Treaty under article 17(2). They succeeded under the general European legal principle of non discrimination. In Spain v United Kingdom the Court was thus concerned with Gibraltar which is within the territorial scope of both the Community and the European Convention on Human Rights, but with voting rights which the United Kingdom had conferred on persons who were not United Kingdom nationals for the purposes of Community law. The Court had nonetheless to consider the nature of the United Kingdoms obligation to extend the franchise in European Parliamentary elections to Gibraltar. In Eman and Sevinger, the Court was concerned with Aruba which is outside the territorial scope of the Community, but within the territorial scope of the European Convention on Human Rights (by the combination of declarations dated 29 November 1954 and 24 December 1985 deposited by the Netherlands with the Council of Europe), and with voting rights which had been withheld from persons who were citizens of the European Union. What is notably absent from the Court of Justices judgments in both Spain v United Kingdom and Eman and Sevinger is any suggestion that, by reason of article 6.2 of the pre December 2009 TEU and articles 17 and 190 EC, the European Treaties confer on citizens of the Union an individual right to vote, the scope and conditions of which must be measured by reference to the principles established in European Court of Human Rights jurisprudence, such as Hirst (No 2) and Scoppola. If available, that could have been advanced as a reason why it was obligatory under European Community law for the United Kingdom to take steps to enable the Gibraltar electorate to vote. Instead, the reason given was the United Kingdoms Council of Europe obligations to comply with Strasbourg decisions: see para 49 above. Likewise, in Scoppola there was no suggestion that as Union citizens the claimants were under Community law entitled to enjoy an individual right to vote, complying with the principles established by European Court of Human Rights jurisprudence. Advocate General Tizzano in his opinion for these two cases had adopted much broader reasoning which the Court in its judgments was careful not to endorse. He would have inferred from Community principles and legislation as a whole . that there is an obligation to grant the voting rights in question to citizens of the Member States and, consequently, to citizens of the Union (para 67), deriving this (para 69) from the principles of democracy on which the Union is based, and in particular, to use the words of the Strasbourg Court, the principle of universal suffrage which has become the basic principle in modern democratic States [FN: Eur. Court H.R. Mathieu Mohin and Clerfayt v Belgium, judgment of 2 March 1987 . , Hirst v United Kingdom (No 2), . 30 March 2004] and is also codified within the Community legal order in Article 190(1) EC and Article 1 of the 1976 Act, which specifically provide that the members of the European Parliament are to be elected by direct universal suffrage. He went on to say that this general guidance was also confirmed by the fact that the right in question is a fundamental right safeguarded by [A3P1], and to mention in a footnote that the text of article 6(2) need merely be borne in mind (paras 70 to 71). Turning to Spains second criticism, Advocate General Tizzano also derived from his conclusion that individual voting was a fundamental right of citizens of the Union a converse conclusion that it was illegitimate for the United Kingdom to deviate to any greater extent from its statement in what was then Annex II of the 1976 Act that The United Kingdom will apply the provisions of this Act only in respect of the United Kingdom. As stated in para 49 above, the Court of Justice adopted quite different reasoning and reached an opposite conclusion, based simply on the United Kingdoms obligation to give effect to the European Court of Human Rights ruling in Matthews. The Court of Justice did not therefore endorse Advocate General Tizzanos broad approach, or import the Strasbourg jurisprudence into the general provisions of Community and Union law referring to voting in European Parliamentary elections. There was good reason for this. Eligibility to vote is under the Treaties and the 1976 Act a matter for national Parliaments, one of considerable national interest. There is no sign that the European Commission has ever sought to involve itself in or take issue with voting eligibility in Member States or specifically with the restrictions on prisoner voting which apply in a number of such States. The Strasbourg jurisprudence operates as the relevant control, albeit one that has itself proved in some respects controversial. It would not only unnecessarily duplicate that control at the European Community or Union level, it could also lead to further conflict and uncertainty. Hence the Court of Justice in Eman and Sevinger confined its reasoning to a well established core principle of Treaty law, that of non discrimination, in that case between different categories of Dutch national, to which I shall return (paras 60 64 below). Further, even in the form into which they have been shaped by the Treaty of Lisbon, it is notable that such provisions as the European Treaties contain concerning individual voting rights are notably limited in scope. They relate to the core Treaty concerns of equality between nationals or Union citizens and freedom of movement within the European Union (see para 59 below). For all these reasons, I reject Mr Southeys wider submission set out in (paras 46 47 above). Articles 20.2 and 22 TFEU In Mr ONeills submission, the changes effected by the Treaty of Lisbon significantly altered the Treaty position considered in Spain v United Kingdom and Eman and Sevinger. In those cases article 19 EC was explained as confined to stating rules of equal treatment requiring Union citizens residing in Member States of which they were not nationals to be able to vote and stand in municipal as well as European Parliamentary elections under the same conditions as nationals. The same must apply to the current equivalent, article 22 TFEU. But Mr ONeill relies upon the introduction of the new article 20.2(b). This, he submits, is a self standing provision, expressly conferring the individual right to vote on citizens of the Union in respect of European Parliamentary and municipal elections. In my opinion, it is clear that that is not the effect of article 20.2(b). As its opening sentence proclaims, article 20 deals with the enjoyment of rights provided in the Treaties. What follow are some of the basic rights so enjoyed. They all have a supra national element. Article 20.2(b) is thus expressly limited to recording the existence of the right of Union citizens to vote and stand in municipal and European Parliamentary elections in their Member State of residence under the same conditions as nationals of that State. The omission of express reference to the fact that this is dealing with citizens resident in a State other than that of their nationality is entirely understandable in the context of what was intended as a concise summary. That fact is anyway implicit. The detailed Treaty provisions regarding the rights to which article 20.2(b) refers are contained in article 22.1 and 22.2, which would on Mr ONeills case in fact be not only redundant but also positively misleading in their limitation to the situation of residence in a Member State other than that of nationality. The position is further confirmed by articles 39 and 40 CFR, which again would be positively misleading in their limitation to that situation, and by the Explanations to the CFR which explicitly equate articles 20.2 and 22: see para 16 above. There is no basis for or likelihood in Mr ONeills supporting submission that article 20.2(b) was expressly aimed at, in effect, endorsing Advocate General Tizzanos views as to where European Union law was or should go in conferring individual rights. Had that been remotely intended, quite different explicit language would have been used. Non discrimination The other limb of Mr ONeills submissions involves reliance on the principle of non discrimination applied in Eman and Sevinger. The infringement there consisted in unequal treatment by Dutch law in relation to voting in European Parliamentary elections by Netherlands nationals in comparable situations. The most fundamental area in which this principle has always manifested itself is in relation to discrimination on the grounds of nationality: see article 7 of the original EEC Treaty, now article 18 TFEU, which provides: Within the scope of application of the Treaties, and without prejudice to any special provisions contained therein, any discrimination on the grounds of nationality shall be prohibited. But the principle has achieved much wider application. Article 13.1 EC (now substantially reproduced as article 19.1 TFEU) provides: Without prejudice to the other provisions of this Treaty and within the limits of the powers conferred by it upon the Community, the Council . may take appropriate action to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation. Article 13 has been responsible for some well known, if in some respects controversial case law. The Court of Justice has accepted that, although the Treaty contemplates that the general principle of non discrimination underlying article 13 will be implemented by directives, Member States will be bound thereby to discontinue, disregard or set aside measures so far as they involve discrimination on a basis contrary to article 13 at least after the time for transposition of such a directive: Case C 555/07 Kkkdeveci v Swedex GmbH & Co KG [2010] 2 CMLR 33, para 61 and perhaps even when legislating in the area of the directive during the period for transposition: Case C 144/04 Mangold v Helm [2005] ECR I 9981. However, for the general principle of non discrimination to apply, the context must fall within the scope of Community or now Union law: see Mangold, para 75, Case C 427/06 Bartsch v Bosch und Siemens Hausgerte (BSH) Altersfrsorge GmBH [2008] ECR I 7245, para 25, Kkkdeveci, para 23, Case C 147/08 Rmer v Freie und Hansestadt Hamburg [2013] CMLR 11, para 70, and Craig and de Burca, EU Law: Text, Cases and Materials [OUP: 4th ed, 2008, p 891]. The only difficulty about Eman and Sevinger is to identify the link with European law, once one has rejected the conclusion that European law recognises all EU citizens as having under European law an individual right to vote in European Parliamentary elections (paras 56 to 58 above). The general principle was simply stated to be applicable in a context where, and on the basis that, Netherlands nationals, who were under article 17.1 EC Union citizens, were being treated unequally in comparable situations in relation to European Parliamentary elections, having regard to the difference in treatment of Netherlands nationals resident, on the one hand, in the Netherlands Antilles and Aruba and, on the other hand, in other non EU member countries: see in particular paras 45, 56 to 58 of the Courts judgment. It is however a general principle of Strasbourg law under article 14 of the Convention that additional rights falling within the general scope of any Convention right for which the state has voluntarily decided to provide must in that event be provided without discrimination: Belgian Linguistics Case (No 2) (1968) 1 EHRR 252, 283, R (Clift) v Secretary of State for the Home Department [2006] UKHL 54, [2007] 1 AC 484, paras 12, 17 18. This principle in my opinion clearly underlies Eman and Sevinger. As the Court noted (para 53), article 19 EC (now article 22 TFEU) only covered nationals resident in another Member State. But the Dutch legislator had chosen to extend the right to vote to its nationals resident outside any Member State but not in the Dutch Antilles or Aruba. There was no justification for this different treatment of comparable situations in a context which fell within the scope of European law, that is voting by nationals residing outside their own member state. Supporting this is also the consideration that the Court accepted that the definition of the persons entitled to vote and to stand falls within the competence of each Member State in compliance with Community law (Spain v United Kingdom, para 78, Eman and Sevinger, para 45). If the qualification in compliance with Community law were meant to require scrutiny by reference to European Community law of all national limitations affecting European Parliamentary elections for their non discriminatory quality even where no other link with European law was established other than that the elections were European Parliamentary elections, that could, depending upon the intensity of the scrutiny, effectively erode the general principle that the Court was accepting. Position if the principle of non discrimination had been engaged This brings me to consideration of the nature and intensity of the scrutiny which would be required, if (contrary to my conclusion in paras 63 64) the principle of non discrimination were to be viewed as all embracing in the manner advocated by Mr ONeill and Mr Southey. In both Strasbourg and Luxembourg case law, discrimination issues are customarily described as involving a two stage process, consisting of first the identification of an appropriate comparator and then, if one is found, examination of the justification for any difference in treatment: see e.g. Edward and Lane, European Union Law (EE, 2013) para 6.125, citing numerous authorities. The exercise as presented is neither a unitary nor an entirely open one, or a court would in every case be required to ascertain the differences between two different situations and ask whether, assessing such differences and their significance as best it could, it considered the differences in their treatment to be fair or justified. There must be basic comparability before the court embarks on considering justification. Thus, in Eman and Sevinger itself the Court observed (para 57) that the principle of equal treatment or non discrimination, which is one of the general principles of Community law, requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified The principle was reiterated in Case C485/08 P, Gualtieri v European Commission [2010] ECR I 3009, para 70 with reference to Eman and Sevinger as well as other cases including Case C 227/04 P Lindorfer v Council of the European Union [2007] ECR I6767. As the Court noted in Case C 267/06 Maruko v Versorgungsanstalt der deutschen Bhnen [2008] ECR I 1757, para 73, it is for the national court to determine whether two persons are in a comparable position. That does not however mean an identical position. The referring court in Maruko identified a gradual movement towards recognising equivalence of life partnership and marriage, meaning that, although the two were not identical, persons of the same sex could be regarded as being in a situation comparable to that of spouses so far as concerns the survivors benefit at issue in that case. The Court of Justice in Case 147/08 Rmer v Freie und Hansestadt Hamburg approved that approach, saying: 41 Accordingly, the existence of direct discrimination, within the meaning of the Directive, presupposes, first, that the situations being weighed up are comparable. 42 In that regard, it should be pointed out that, as is apparent from the judgment in Maruko at [67][73], first, it is required not that the situations be identical, but only that they be comparable and, secondly, the assessment of that comparability must be carried out not in a global and abstract manner, but in a specific and concrete manner in the light of the benefit concerned. Gualtieri was an appeal from the General Court and provides a contrasting example. The claimant complained that she received a lower daily allowance on the basis of the proximity of her spouses residence to her place of secondment than she would have done if she had been single, but living in a de facto union. The Court upheld the General Courts conclusion that the two situations were not comparable, saying: 75 . it must be observed that, although de facto unions and legally recognised unions, such as marriage, may display similarities in certain respects, those similarities do not necessarily mean that those two types of union must be treated in the same way. 76 In those circumstances, the decision to apply the criterion of matrimonial legal status appears neither arbitrary nor manifestly inappropriate in relation to the objective of reducing the allowances paid to SNEs [national experts seconded to the Commission] when they are in a situation in which it can be assumed that they bear fewer costs and disadvantages on account of their matrimonial status. Applying these principles to the present case, I do not regard convicted prisoners serving their sentence as in a comparable position either to free persons or to remand prisoners awaiting trial. They have a very different status, to which it is evident that very different considerations may apply and which are capable at least of giving rise to very different arguments. It follows that, assuming that the general principle of non discrimination applies under European Union law to eligibility to vote in European Parliamentary elections, there is in my view no basis for its application in the context of a complaint that convicted prisoners are discriminated against by reference to free persons or remand prisoners. The position assuming contrary conclusions I have concluded that the appellants are not entitled to invoke European law, because, firstly, it confers no individual right by reference to which the Strasbourg case law of Hirst (No 2) and Scoppola could be relevant (paras 58 and 59) and, secondly, the general principle of non discrimination recognised in Eman and Sevinger is not engaged (paras 63 64) or, if it is engaged, does not assist the appellants (para 68). In what follows, I will, for completeness, consider the position assuming opposite conclusions on all these points. If European law recognises an individual right to vote in European Parliamentary and/or municipal elections, I would reject Mr Southeys submission that it would or might go further than the Strasbourg case law in allowing convicted prisoners the vote. Court of Justice jurisprudence pays close attention to and, with very few exceptions, follows Strasbourg jurisprudence. Examples of divergence are few and far between, although one may, ironically, have occurred in a sequel to Eman and Sevinger concerning the right to vote in elections for the Kingdom of Holland, in so far as it is arguable that the Strasbourg court went less far in Sevinger and Eman v Netherlands (2007) 46 EHRR 179 than the Court of Justice did in Eman and Sevinger itself: see an instructive case note by Professor Leonard F M Besselink on this Strasbourg authority in (2008) 45 CMLR 787. In the present case, I reject in particular the submission that the Court of Justice might return to the theme suggested in Frodl v Austria (2010) 52 EHRR 267, para 34 by reference to Hirst (No 2), para 82 that it is essential that any disenfranchisement of a convicted prisoner be ordered on a case by case basis by a judge, rather than be pre determined by an otherwise appropriate legislative scheme. This suggestion was very clearly, and for very obvious reasons, rejected by the Grand Chamber in Scoppola v Italy, paras 99 100, a rejection which the simple Chamber in Anchugov, para 107, took pains to reiterate; see also (though coupled with a reference to judicial interventions being likely to guarantee the proportionality of restrictions on prisoners voting rights) Syler, para 39. The majority in the European Court of Human Rights in Hirst (No 2) found a violation because Hirst was directly and immediately affected by the legislative provision of which complaint is made and that the Chamber was justified in examining the compatibility with the Convention of such a measure, without regard to the question whether, if the measure had been framed otherwise and in a way which was compatible with the Convention, the applicant might still have been deprived of the vote (para 72). But it regarded the finding of a violation as just satisfaction and awarded no damages. As the Court said in Kkkdevici, para 51, it is for a national court, in applying national law, to provide, within the limits of its jurisdiction, the legal protection which individuals derive from European Union law and to ensure the full effectiveness of that law, disapplying if need be any provision of national legislation contrary to that principle (see, to that effect, Mangold, para 77). In the present cases, on the assumptions (contrary to my conclusions), first, that European law recognises an individual right to vote paralleling in substance that recognised in the Strasbourg case law of Hirst (No 2) and Scoppola, and, second, that the view taken by the majority of the Grand Chamber in Hirst (No 2) regarding standing to claim a general declaration were to be transposed into European law, the only relief that could be considered under domestic law would be a generally phrased declaration that the legislative provisions governing eligibility to vote in European Parliamentary and municipal elections in the United Kingdom were inconsistent with European Union law. Thereafter, it would be for the United Kingdom Parliament to address the position and make such legislative changes as were considered appropriate. But, for reasons paralleling those given in paras 40 42 above, it appears improbable that the Convention rights would, even when viewed through the prism of European Union law, involve or require the granting of declarations in the abstract at the instance of claimants like both Chester and McGeoch, detained in circumstances summarised in para 1 above, from whom the United Kingdom Parliament could legitimately, and it seems clear would, under any amended legislative scheme still withhold the vote. I reject the submission that the Supreme Court could or should simply disapply the whole of the legislative prohibition on prisoner voting, in relation to European Parliamentary and municipal elections, thereby making all convicted prisoners eligible to vote pending fresh legislation found to conform with European Union law. It is clear from both Hirst (No 2) and Scoppola that, under the principles established by those cases, a ban on eligibility will be justified in respect of a very significant number of convicted prisoners. Nor would it have been possible to read the RPA section 3 or EPEA section 8 compatibly with European law; the legislation is entirely clear and it would flatly contradict the evident intention of the United Kingdom, when enacting it, to read into it or to read it as subject to some unspecified scheme or set of qualifications allowing some unspecified set of convicted prisoners to vote under some unspecified conditions and arrangements. It would also be impossible for the Supreme Court itself to devise an alternative scheme of voting eligibility that would or might pass muster in a domestic or supra national European Court. Equally, the Court could not determine or implement the practical and administrative arrangements that would need to be made to enable any convicted prisoners eligible under any such scheme to have the vote. Such matters would be beyond its jurisdiction. In the domestic constitutional scheme, any scheme conferring partial eligibility to vote on some convicted prisoners is quintessentially a matter for the United Kingdom Parliament to consider, determine and arrange. In the passage quoted in para 72 above, the Court of Justice made clear that it is only within the limits of its jurisdiction that a national court can be expected to provide the legal protection that European Union law requires. That being so, the creation of any new scheme must be a matter for the United Kingdom Parliament. That does not necessarily conclude this Courts role under European law. The principles established in Case C 6/90 Francovich v Italian Republic [1992] IRLR 84 and Joined Cases C 46/93 and C 48/93 Brasserie du Pecheur SA v Federal Republic of Germany and R v Secretary of State for Transport, Ex p Factortame Ltd (No 4) [1996] QB 404 require domestic courts, under certain conditions, to order their State to make good any loss caused by breach of European Union law, even where the breach consists in legislation incompatible with that law. After these decisions by the Court of Justice, the principles stated by that Court were examined and applied domestically by the House of Lords in R v Secretary of State, Ex p Factortame Ltd (No 5) [2000] 1 AC 524. Neither Chester nor McGeoch has set out, supported with evidence or pursued any claim for damages in the courts below. Both now seek to claim damages, still without any supporting evidence, and, if necessary, to have their cases remitted for further determination in this regard. I will however put on one side without deciding the question whether either should be given leave to enable them at this late stage to raise any damages claim, and consider the nature and application of the relevant principles, assuming that such claims were to be permitted. An important factor in determining whether liability in damages may exist under European law is the width of the discretion available to the legislator: see Ex p Factortame, paras 44 to 46. In this respect the Court equated the position of the Community and national legislators (para 47). A strict (meaning more limited) approach was taken towards the liability of the Community (or therefore of national legislators) in the exercise of legislative activities. This was explained (para 45) as due to two considerations: 45. First, even where the legality of measures is subject to judicial review, exercise of the legislative function must not be hindered by the prospect of actions for damages whenever the general interest of the Community requires legislative measures to be adopted which may adversely affect individual interests. Secondly, in a legislative context characterized by the exercise of a wide discretion, which is essential for implementing a Community policy, the Community cannot incur liability unless the institution concerned has manifestly and gravely disregarded the limits on the exercise of its powers As the Court went on to point out, the national legislature like the Community institutions does not systematically have a wide discretion when it acts in a field governed by Community law (para 46). It depends on the nature of the European law or principle being implemented. However, in the context of eligibility to vote, it is clear that national legislatures have a wide discretion. Where a wide legislative discretion of this nature exists, three conditions govern the incurring of any liability on account of the legislative choices made by the State pursuant to such discretion. These were explained in Ex p Factortame as follows: 51 In such circumstances, Community law confers a right to reparation where three conditions are met: the rule of law infringed must be intended to confer rights on individuals; the breach must be sufficiently serious, and there must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties. 52 First, those conditions satisfy the requirements of the full effectiveness of the rules of Community law and of the effective protection of the rights which those rules confer. 53 Secondly, those conditions correspond in substance to those defined by the Court in relation to Article 215 in its case law on liability of the Community for damage caused to individuals by unlawful legislative measures adopted by its institutions. 55 As to the second condition, as regards both Community liability under Article 215 and Member State liability for breaches of Community law, the decisive test for finding that a breach of Community law is sufficiently serious is whether the Member State or the Community institution concerned manifestly and gravely disregarded the limits on its discretion. 56 The factors which the competent court may take into consideration include the clarity and precision of the rule breached; the measure of discretion left by that rule to the national or Community authorities; whether the infringement and the damage caused was intentional or involuntary; whether any error of law was excusable or inexcusable; the fact that the position taken by a Community institution may have contributed towards the omission, and the adoption or retention of national measures or practices contrary to Community law. 57 On any view, a breach of Community law will clearly be sufficiently serious if it has persisted despite a judgment finding the infringement in question to be established, or a preliminary ruling or settled case law of the Court on the matter from which it is clear that the conduct in question constituted an infringement. These principles were reiterated in Case 392/93 R v HM Treasury, Ex p British Telecommunications plc [1996] QB 615, an example of a case where the Court of Justice held that the breach had not involved a manifest and grave disregard of European law, and Case 278/05 Robins v Secretary of State for Work and Pensions [2007] ICR 779, where the Court emphasised the importance of the breadth of the legislative discretion in that case and the fact that the provisions of the relevant directive did not make it possible to establish with any precision the level of pension protection which it required. Turning to apply these principles to the present cases, I make the twin assumptions (again contrary to my conclusions) that (a) European Union confers rights to vote on individual citizens of the Union, subject to the United Kingdoms legislative discretion to introduce limitations, but that (b) the present general prohibition on prisoner voting is contrary to principles paralleling those stated by the Strasbourg court in Hirst (No 2) and Scoppola and/or the general European Union principle of equality or non discrimination. On those assumptions, the second and third conditions for any personal claim arise for consideration. The second condition is that the breach was sufficiently serious. This in turn depends, under European law, upon whether Parliament, the relevant United Kingdom authority, can be said manifestly and gravely to have disregarded the limits on its discretion. This must be judged taking into consideration the clarity and precision of the rule breached; the measure of discretion left by that rule to the national or Community authorities; whether the infringement and the damage caused was intentional or involuntary; whether any error of law was excusable or inexcusable (para 77 above). In relation to voting by convicted prisoners, the United Kingdom legislature enjoyed a wide margin of discretion. Further, this is in a context where there has been and remains a considerable lack of certainty about what the parameters of that discretion may be. This is evident from a reading of the Strasbourg case law, particularly the two Hirst judgments, the Chamber judgment in Frodl v Austria (2010) 52 EHRR 267 and the Grand Chamber judgment over ruling the Chamber judgment in Scoppola v Italy, in which the European Court of Human Rights has sought to identify the relevant considerations and to apply them to particular facts. Accordingly, it is clearly very arguable that this condition is not met. I will not however say more about the application of the second condition in this case, in view of one further factor, which I prefer to leave open. The test stated in the European authorities postulates some degree of examination of the conduct of the relevant national authority. Since the relevant United Kingdom authority is here Parliament in enacting and continuing in force the relevant legislation, an assessment of some of these matters (particularly whether the infringement was intentional or involuntary, excusable or inexcusable) may threaten conflict with the constitutional principle enshrined in the Bill of Rights 1688 that domestic courts in the United Kingdom ought not to impeach or question proceedings in Parliament. To avoid this, it may perhaps be necessary to approach a claim for damages in a case like the present on an objective basis, without regard to what has actually happened or been said in Parliament. The decision in R v Secretary of State, Ex p Factortame (No 5) [2000] 1 AC 524 does not appear to throw any light on this problem, because there does not seem there to have been any call to consider Parliamentary debates. On any view, however, the fact of Parliamentary activity, referred to in Greens and continuing, can no doubt be taken into account. The third condition is that there must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties. In relation to both the second and the third conditions, it must in my opinion be relevant to have regard to the particular position of the present appellants. The questions are whether, in refusing them the vote, the United Kingdom has manifestly and gravely disregarded the limits on its discretion and whether they have sustained damage directly caused by the United Kingdoms breach of an obligation owed to give each of them a right to vote. In Strasbourg case law, according to the majority in Hirst (No 2), a claimant can complain that the law in general is incompatible with the Convention rights, without showing that it was or would have been incompatible with such rights to deprive him in particular of the vote. But to award a convicted prisoner damages without showing that European Union law required him, rather than some other prisoner or prisoners, to have the vote would be positively inconsistent with the conditions stated in Francovich and Ex p Factortame. On that basis, I consider that any claim for damages by McGeoch and Chester must on any view fail. McGeoch is still serving the punishment part of his sentence resulting from the combination of his life and consecutive fixed term sentence. There can, in the light of Scoppola, be no question about the United Kingdoms entitlement to deprive a prisoner in his position of the vote. Chester is in his post tariff period of his life sentence, but it is notable that the European Court of Human Rights deliberately refrained from endorsing the original Chamber view or Judge Caflischs concurring minority view (para 40 above) that there is a critical distinction between the tariff and post tariff period. Further, in Scoppola, the Strasbourg court accepted that disenfranchisement could continue for life in the case of sentences of five years or more. This was subject only to the right, three years after release, to apply for rehabilitation, which would be granted upon his displaying consistent and genuine good conduct: see para 22 above. The requirement to display good conduct in order to regain voting rights was thus regarded as not only relevant, but acceptable. The Strasbourg court accepted as a legitimate aim enhancing civic responsibility and respect for the rule of law. Continuing detention for a period lasting so long as necessary for the protection of the public (paras 30 and 40 above) can be no less relevant and acceptable as a criterion for continuing deprivation of the right to vote during that period. The underlying consideration, that the offender is not fully rehabilitated or ready to participate responsibly in the countrys democratic life, is the same in each case. This is underlined by the passage from the Grand Chambers recent decision in Vinter quoted in para 41 above. Conclusions My conclusions on the issues argued on this appeal are summarised in para 4 above. It remains only to consider whether the resolution of this appeal necessitates a reference to the European Court of Justice. This depends upon whether it depends upon the determination of any question of European law which is open to reasonable doubt under the principles stated in Case 283/81 CILFIT Srl v Ministry of Health [1982] ECR 3415 and recently discussed in this Court in X v Mid Sussex Citizens Advice Bureau [2012] UKSC 59, [2013] ICR 249. In my opinion, the conclusions of European law reached in paras 45, 58, 59 and 63 64 are acte clair, and they are by themselves sufficient to resolve the appeals. Were it necessary for the decision of these appeals, I would also regard the conclusions in para 70 as acte clair. The further conclusions (again not necessary for the resolution of these appeals) reached in other paras are matters for this Court to determine, applying established principles of European law where relevant. In the circumstances, I do not consider that any reference to the Court of Justice is called for. It follows that, in my opinion, both appeals should be dismissed. LADY HALE (with whom Lord Hope and Lord Kerr agree) Prisoners voting is an emotive subject. Some people feel very strongly that prisoners should not be allowed to vote. And public opinion polls indicate that most people share that view. A YouGov poll in November 2012 found that 63% of respondents said that no prisoners should be allowed to vote, 15% said that those serving sentences of less than six months should be allowed to vote, 9% said that those serving less than four years should be allowed to vote, and 8% said that all prisoners should be allowed to vote. A YouGov poll in January 2011 which asked the same questions produced respective figures of 69%, 6%, 3% and 8%. This suggests that public opinion may be becoming more sympathetic to the idea, with 32% now favouring some relaxation in the present law, but there is still a substantial majority against it. It is not surprising, therefore, that in February 2011 elected Parliamentarians also voted overwhelmingly against any relaxation of the present law. In such circumstances, it is incumbent upon the courts to tread delicately. As I shall explain, in my view it is now clear that the courts should not entertain a human rights claim on behalf of Mr Chester or, indeed, of Mr McGeoch had he made one. Both are serving sentences of life imprisonment for murder. Mr Chester was sentenced to life imprisonment for the murder of his niece, with a tariff of 20 years which expired in October 1997. The Parole Board has not yet found him suitable for release on licence. Mr McGeoch was also sentenced to life imprisonment for murder, with a tariff of 13 years which expired in October 2011; but he has had further convictions for serious offences committed while in prison and is currently serving seven and a half years for violently escaping from prison in 2008. I do not consider that the human rights of either were violated by the Electoral Registration Officers refusal to register them on the electoral roll. Their claims under European Union law are another story, because they raise novel arguments which require to be resolved. On those claims I have nothing to add to the judgment of Lord Mance, with which I agree. Of course, in any modern democracy, the views of the public and Parliamentarians cannot be the end of the story. Democracy is about more than respecting the views of the majority. It is also about safeguarding the rights of minorities, including unpopular minorities. Democracy values everyone equally even if the majority does not: Ghaidan v Godin Mendoza [2004] 2 AC 557, para 132. It follows that one of the essential roles of the courts in a democracy is to protect those rights. It was for that reason that Lord Bingham took issue with the argument of a previous Attorney General, Lord Goldsmith, in A v Secretary of State for the Home Department [2005] 2 AC 68, para 42: I do not . accept the distinction which he drew between democratic institutions and the courts. It is of course true that the judges in this country are not elected and are not answerable to Parliament. But the function of independent judges charged to interpret and apply the law is universally recognised as a cardinal feature of the modern democratic state, a cornerstone of the rule of law itself. The Attorney General is fully entitled to insist on the proper limits of judicial authority, but he is wrong to stigmatise judicial decision making as in some way undemocratic. The present Attorney General has wisely not suggested any such thing. He recognises that it is the courts task to protect the rights of citizens and others within the jurisdiction of the United Kingdom in the ways which Parliament has laid down for us in the Human Rights Act 1998. But insofar as he implied that elected Parliamentarians are uniquely qualified to determine what the franchise should be, he cannot be right. If the current franchise unjustifiably excludes certain people from voting, it is the courts duty to say so and to give them whatever remedy is appropriate. More fundamentally, Parliamentarians derive their authority and legitimacy from those who elected them, in other words from the current franchise, and it is to those electors that they are accountable. They have no such relationship with the disenfranchised. Indeed, in some situations, they may have a vested interest in keeping the franchise as it is. To take an obvious example, we would not regard a Parliament elected by an electorate consisting only of white, heterosexual men as uniquely qualified to decide whether women or African Caribbeans or homosexuals should be allowed to vote. If there is a Constitution, or a Bill of Rights, or even a Human Rights Act, which guarantees equal treatment in the enjoyment of its fundamental rights, including the right to vote, it would be the task of the courts, as guardians of those rights, to declare the unjustified exclusion unconstitutional. Given that, by definition, Parliamentarians do not represent the disenfranchised, the usual respect which the courts accord to a recent and carefully considered balancing of individual rights and community interests (as, for example, in R (Countryside Alliance) v Attorney General [2007] UKHL 52, [2008] AC 719 and R (Animal Defenders International) v Secretary of State for Culture, Media and Sport [2008] UKHL 15, [2008] AC 1312, both upheld in Strasbourg for that very reason) may not be appropriate. Of course, the exclusion of prisoners from voting is of a different order from the exclusion of women, African Caribbeans or homosexuals. It is difficult to see how any elected politician would have a vested interest in excluding them (save just possibly from local elections in places where there are very large prisons). The arguments for and against their exclusion are quite finely balanced. On the one hand, unlike women, African Caribbeans and homosexuals, prisoners share a characteristic which many think relevant to whether or not they should be allowed to vote: they have all committed an offence deemed serious enough to justify their removal from society for at least a while and in some cases indefinitely. While clearly this does not mean that all their other rights are forfeited, why should they not for the same time forfeit their right to take part in the machinery of democracy? Hence I see the logic of the Attorney Generals argument, that by deciding that an offence is so serious that it merits a custodial penalty, the court is also deciding that the offence merits exclusion from the franchise for the time being. The custody threshold means that the exclusion, far from being arbitrary and disproportionate, is tailored to the justice of the individual case. One problem with that argument is that it does not explain the purpose of the exclusion. Any restriction of fundamental rights has to be a proportionate means of pursuing a legitimate aim. Is it simply an additional punishment, a further mark of societys disapproval of the criminal offence? Or is it rather to encourage a sense of civic responsibility and respect for democratic institutions? If so, it could well be argued that this is more likely to be achieved by retaining the vote, as a badge of continuing citizenship, to encourage civic responsibility and reintegration in civil society in due course. This is indeed, as Laws LJ observed in the Court of Appeal, a matter on which thoughtful people can hold diametrically opposing views. A more concrete objection to the Attorney Generals argument is that the custody threshold in this country has never been particularly high. As Lord Bingham of Cornhill CJ observed in R v Howells [1999] 1 WLR 307, 310, deciding when an offence is so serious that only a custodial sentence can be justified is one of the most elusive problems of criminal sentencing. Between 1992 and 2002, the custodial sentencing rate rose from 5% to 15% in the magistrates courts and from 44% to 63% in the Crown Court (for an overview of sentencing trends in the last 20 years, see Ministry of Justice, The Story of the Prison Population 1993 2012, 2013). Some of the rise may be accounted for by the greater seriousness of the offences coming before the courts, but this cannot be the whole explanation. There are many people in prison who have not committed very serious crimes, but for whom community punishments are not available, or who have committed minor crimes so frequently that the courts have run out of alternatives. Also, the threshold has varied over time in accordance with changes in penal policy which have nothing to do with electoral policy: what, for example, are we to make of the ups and downs in the legislative popularity of suspended sentences? Exactly the same crime may attract an immediate custodial sentence and disenfranchisement at one time or a suspended sentence without disenfranchisement at another. Moreover, the custody threshold has traditionally varied as between different parts of the United Kingdom, with a significantly greater use of imprisonment in Scotland than in England and Wales (although this is diminishing). The sentencing regimes are different in England and Wales, Scotland and Northern Ireland, but the exclusion from voting is the same. All of this suggests an element of arbitrariness in selecting the custody threshold as a unique indicator of offending so serious as to justify exclusion from the democratic process. To this may be added the random impact of happening to be in prison on polling day and the various reasons why someone who has been sentenced to a period of imprisonment may not in fact be in prison on that day. He may, as Lord Clarke points out, be on bail pending an appeal; or he may be released early under electronic monitoring. Then there is the situation of mental patients. All those who are detained in hospital as a result of an order made in a criminal court, apart from those on remand, are also disenfranchised (Representation of the People Act 1983, section 3A(1),(2)). This includes patients who have been found unfit to plead or not guilty by reason of mental disorder, whose culpability may be very different from that of convicted prisoners. There is no equivalent of the custody threshold (as long as the offence is punishable with imprisonment) and no correlation between the seriousness of the offence and the length of time that the patient will be detained in hospital. I mention these additional matters to explain why, in common with Lord Clarke, I have some sympathy for the view of the Strasbourg court that our present law is arbitrary and indiscriminate. But I acknowledge how difficult it would be to devise any alternative scheme which would not also have some element of arbitrariness about it. The Strasbourg court, having stepped back from the suggestion in Frodl v Austria (2010) 52 EHRR 267 that exclusion from the franchise requires a judicial decision in every case and approved the Italian law in Scoppola v Italy (No 3) (2012) 56 EHRR 663, must be taken to have accepted this. However, I have no sympathy at all for either of these appellants. I cannot envisage any law which the United Kingdom Parliament might eventually pass on this subject which would grant either of them the right to vote. In Hirst v United Kingdom (No 2) (2005) 42 EHRR 849, the Strasbourg court declined to conclude that applying the ban to post tariff life prisoners would necessarily be compatible with article 3 of the First Protocol. But it seems clear from the decision in Scoppola v Italy (No 3) that Strasbourg would now uphold a scheme which deprived murderers sentenced to life imprisonment of the right to vote, certainly while they remained in prison, and probably even after they were released on licence, as long as there was then a power of review. Hence I cannot see how Mr Chester can sensibly have a claim to a remedy under the Human Rights Act. It may be, as Lord Mance has concluded, that he qualifies as a victim for the purpose of section 7 of the Human Rights Act. But this is only in the sense that, as the majority of the Grand Chamber in Hirst (No 2) held, he was directly affected by the law in question. This justified that court, in the majority view, examining the compatibility of the law with the Convention, irrespective of whether he might justifiably have been deprived of the vote under some other law. A strong minority, including the then President, Judge Wildhaber, and his successor, Judge Costa, pointed out that this was not the usual practice of the court (para OIII8): The Court has consistently held in its case law that its task is not normally to review the relevant law and practice in abstracto, but to determine whether the manner in which they were applied to, or affected, the applicant gave rise to a violation of the Convention. It is, in our opinion, difficult to see in what circumstances restrictions on voting rights would be acceptable, if not in the case of persons sentenced to life imprisonment. Generally speaking, the Court's judgment concentrates above all on finding the British legislation incompatible with the Convention in abstracto. We regret that despite this focus it gives the states little or no guidance as to what would be solutions compatible with the Convention. Since restrictions on the right to vote continue to be compatible, it would seem obvious that the deprivation of the right to vote for the most serious offences such as murder or manslaughter, is not excluded in the future. Either the majority are of the view that deprivations for the post tariff period are excluded, or else they think that a judge has to order such deprivations in each individual case. We think that it would have been desirable to indicate the correct answer. In other words, it would have been in accordance with the consistent practice of the court for the majority to indicate in precisely what way Mr Hirsts rights had been violated by the law in question. It seems to me that the courts of this country should adopt that sensible practice when considering the application of the various remedies provided by the Human Rights Act. In this case, there can be no question of Mr Chester having a cause of action under section 6(1) of the Human Rights Act. The Electoral Registration Officer for Wakefield refused his application for inclusion on the electoral roll. But in my view that could not have been incompatible with his Convention rights, because (at least following Scoppola v Italy) the Convention does not give him the right to vote. But even if it was incompatible, the public authority could not have acted differently, because of the provisions of the Representation of the People Act, and so by virtue of section 6(2)(a) the act was not unlawful. Nor is there any question of our reading and giving effect to the Act in a way which is compatible with the Convention rights, in accordance with our duty under section 3(1). No one has suggested that it would be possible to do so in a case such as this. It is obvious that any incompatibility can only be cured by legislation and the courts cannot legislate. But even if we could, we would only seek to read and give effect to the statute in a way which was compatible with the rights of the individual litigant before us. As, in my view at least, the ban on voting is not incompatible with the rights of this particular litigant, a reading which was compatible with the rights of a completely different litigant would do him no good. That leaves the possibility of a declaration of incompatibility under section 4(2) of the Human Rights Act. This applies in any proceedings in which a court determines whether a provision of primary legislation is compatible with a Convention right. This does appear to leave open the possibility of a declaration in abstracto, irrespective of whether the provision in question is incompatible with the rights of the individual litigant. There may be occasions when that would be appropriate. But in my view the court should be extremely slow to make a declaration of incompatibility at the instance of an individual litigant with whose own rights the provision in question is not incompatible. Any other approach is to invite a multitude of unmeritorious claims. It is principally for that reason that I would decline to make a declaration of incompatibility on the application of either Mr Chester or (had he made one) Mr McGeoch. Indeed, in my view the courts should not entertain such claims. It is otherwise, of course, in borderline cases. In those circumstances it seems to me unnecessary to express a view on whether we should follow or depart from the substance of the decision in Hirst v LORD CLARKE I agree that these appeals should be disposed of as proposed by Lord Mance and Lord Sumption. I also agree with the reasoning of both Lord Mance and Lord Sumption, subject to this. I would be less critical than Lord Sumption of the decisions of the European Court of Human Rights to which they refer. The reasoning of the Strasbourg Court has very recently been summarised in Anchugov and Gladkov v Russia (Application Nos 11157/04 and 15162/05), 4 July 2013, at paras 93 100. In particular, in para 100 it distinguished between Hirst v United Kingdom (No 2) (2005) 42 EHRR 849 and Scoppola v Italy (No 3) (2012) 56 EHRR 663 in this way: 100. The principles set out in the Hirst (No 2) case were later reaffirmed in the Scoppola (No 3) [GC] judgment. The Court reiterated, in particular, that when disenfranchisement affected a group of people generally, automatically and indiscriminately, based solely on the fact that they are serving a prison sentence, irrespective of the length of the sentence and irrespective of the nature or gravity of their offence and their individual circumstances, it was not compatible with Article 3 of Protocol No 1 (see Scoppola (No 3) [GC], cited above, para 96). The Court found no violation of that Convention provision in the particular circumstances of this latter case however, having distinguished it from the Hirst (No 2) case. It observed that in Italy disenfranchisement was applied only in respect of certain offences against the State or the judicial system, or offences punishable by a term of imprisonment of three years or more, that is, those which the courts considered to warrant a particularly harsh sentence. The Court thus considered that the legal provisions in Italy defining the circumstances in which individuals may be deprived of the right to vote show[ed] the legislatures concern to adjust the application of the measure to the particular circumstances of [each] case, taking into account such factors as the gravity of the offence committed and the conduct of the offender (ibid, para 106). As a result, the Italian system could not be said to have a general automatic and indiscriminate character, and therefore the Italian authorities had not overstepped the margin of appreciation afforded to them in that sphere (ibid, paras 108 and 110). On the facts the Court held at para 101 that the position in Russia was very similar to that in Hirst (No 2), namely that the applicants were stripped of their right to vote by virtue of a provision of the Russian Constitution which applied to all persons convicted and serving a custodial sentence, irrespective of the length of their sentence and of the nature or gravity of their offence and their individual circumstances. The Court compared Hirst (No 2) at para 82 with Scoppola (No 3) at paras 105 110. The Court said at para 102 that it was prepared to accept that the relevant measure pursued the aims of enhancing civic responsibility and the respect for the rule of law and ensuring the proper functioning and preservation of civil society and the democratic regime and that those aims could not, as such, be excluded as untenable or incompatible with A3P1. The essence of the Courts decision is set out in para 103. It rejected the Governments arguments on the issue of proportionality, reiterating the point made in para 82 of Hirst (No 2), that, although the margin of appreciation is wide, it is not all embracing and added: the right to vote is not a privilege; in the twenty first century, the presumption in a democratic State must be in favour of inclusion and universal suffrage has become the basic principle. In the light of modern day penal policy and of current human rights standards, valid and convincing reasons should be put forward for the continued justification of maintaining such a general restriction on the right of prisoners to vote as that provided for in Article 32(3) of the Russian Constitution (ibid, para 79). Further, at para 105 the Court emphasised the fact that the Russian constitution imposed a blanket ban on all those imprisoned, from two months, which is the minimum period of imprisonment following conviction in Russia, to life and from relatively minor offences to offences of the utmost seriousness. At para 106 it stressed that, as in the United Kingdom, there was no evidence that, when deciding whether to impose a custodial sentence, the court should take into account the fact that the sentence would involve disenfranchisement, so that there was no direct link between the facts of a particular case and the loss of the right to vote. It recognised in para 107 that removal of the right to vote without an ad hoc judicial decision does not of itself give rise to a violation but, in response to an argument that the adoption of the Russian constitution was preceded by extensive public debate, it observed that the Government had submitted no relevant materials to support it. In doing so, it expressly followed an almost identical conclusion in para 79 of Hirst (No 2). As I see it, the thrust of the conclusions in the Strasbourg cases is that a blanket ban is disproportionate and indiscriminate, at any rate without detailed analysis of the problem because, as it is put at para 82 of Hirst (No 2), the ban applies automatically to all prisoners irrespective of the nature and gravity of the relevant offence or the individual circumstances of the particular offender. It thus applies to those sentenced to very short sentences and operates in an arbitrary way for two reasons. First, it applies in the same way to a person sentenced to 28 days or 28 years. Yet there is clearly an enormous gulf in terms of culpability between those sentenced to 28 days for, say, persistent shoplifting and those sentenced to 28 years for a very serious offence. Secondly, whether a person loses the right to vote depends upon the chance that the relevant person happens to be in prison on a particular day, by comparison perhaps with a co defendant who received an identical sentence but is on bail pending appeal. Moreover, it is difficult to see how it can be proportionate to deprive a person of a vote which is relevant to the governance of the state for a period of five years in circumstances where that person may be in prison for no more than 14 days. I appreciate that, wherever the line may be drawn, there may be an element of arbitrariness as to the choice and effect of a particular line. But there seems to me to be much to be said for the Strasbourg Courts approach to a blanket ban, at any rate absent detailed consideration of the pros and cons of such a ban. However that may be, I agree that this Court should follow the now settled jurisprudence in the Strasbourg Court for the reasons given by Lord Mance and Lord Sumption. Since writing the above, I have read the judgment of Baroness Hale in draft and would simply like to add that I agree with it. LORD SUMPTION (with whom Lord Hughes agrees) I agree with the orders proposed by Lord Mance, for all of the reasons that he gives in his judgment as well as those given in the judgment of Lady Hale. I wish to add my own observations on one question only, namely whether we should apply the principles stated by the European Court of Human Rights in Hirst (No 2) and Scoppola. It is an issue which raises in an acute form the potential conflict between the interpretation of the European Convention on Human Rights by the European Court of Human Rights and the processes by which alone laws are made in a democracy. The conflict arises from the requirement of the European Court of Human Rights that the United Kingdom should amend the Representation of the People Act 1983 so as to give at least some convicted prisoners the right to vote in national and local elections, something for which there is at present only negligible support in the House of Commons and very little among the public at large. If democracy is viewed as a system of decision making by those answerable to the electorate (as opposed to a system of values thought to be characteristic of democracies), this is bound to be a matter of real concern. Of course, as Lady Hale has pointed out, it does not follow that a democracy can properly do whatever it likes, simply by virtue of the democratic mandate for its acts. The protection of minorities is a necessary concern of any democratic constitution. But the present issue has nothing whatever to do with the protection of minorities. Prisoners belong to a minority only in the banal and legally irrelevant sense that most people do not do the things which warrant imprisonment by due process of law. In any democracy, the franchise will be determined by domestic laws which will define those entitled to vote in more or less inclusive terms. The right to vote may be based on citizenship or residence, or a combination of the two. There will invariably be a minimum voting age and may be other conditions of eligibility, such as mental capacity. In the United Kingdom, the right to vote at parliamentary and local government elections is enjoyed by Commonwealth citizens and citizens of the Republic of Ireland aged over 18, who are on the electoral roll, and not subject to any legal incapacity to vote. Inclusion on the electoral roll depends on current (or in some cases recent) residence. The only legal incapacity of any significance relates to convicted prisoners. Section 3(1) of the Representation of the People Act 1983 provides that convicted prisoners are legally incapable of voting at any parliamentary or local government election. There are limited exceptions for those committed for contempt of court or detained for default of compliance with another sentence (such as a fine). Section 8(1) and (2) of the European Parliamentary Elections Act 2002 apply the same rules of eligibility to elections for the European Parliament. These provisions are entirely clear. There is no way in which they can be read down so as to allow voting rights to any category of convicted prisoners other than those falling within the specified exceptions. The exclusion of convicted prisoners from the franchise is not a universal principle among mature democracies, but neither is it uncommon. Information provided by the Foreign Office in answer to a parliamentary question (updated to July 2012) indicates that at least 18 European countries including Denmark, Finland, Ireland, Spain, Sweden and Switzerland have no restrictions on voting by prisoners. Bulgaria, Estonia, Georgia, Hungary, Japan, Liechtenstein, Russia and the United States ban all convicted prisoners from voting, as do two of the seven Australian states. In some countries such as France disenfranchisement is reserved for those convicted of certain particularly serious offences, and in others such as Belgium for cases in which the prisoner is sentenced to a period of imprisonment exceeding a given threshold. In France, the Netherlands and Belgium disenfranchisement is an additional penalty imposed as a matter of judicial discretion. In other countries, such as Germany and Italy, it is automatic in specified cases. In Belgium, Italy and some jurisdictions of the United States, the loss of voting rights may continue even after a prisoners release. It is apparent that this is not a question on which there is any consensus. From a prisoners point of view the loss of the right to vote is likely to be a very minor deprivation by comparison with the loss of liberty. There are no doubt prisoners whose interest in public affairs or strong views on particular issues are such that their disenfranchisement represents a serious loss, just as there are prisoners (probably more numerous) whose enthusiasm for active sports makes imprisonment a special hardship. The severity of a sentence of imprisonment for the convicted person will always vary with a wide variety of factors whose impact on him or her will inevitably be arbitrary to some degree. It has been said, for example, that disenfranchisement may bear hardly on someone sentenced to, say, a short period of imprisonment which happens to coincide with a general election. For some prisoners, this will no doubt be true. But I decline to regard it as any more significant than the fact that it may coincide with a special anniversary, a long anticipated holiday or the only period of fine weather all summer. Article 3 of the First Protocol to the Human Rights Convention provides that the contracting parties undertake to hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature. In 2005, the Grand Chamber of the European Court of Human Rights held in Hirst v United Kingdom (No 2) (2005) 42 EHRR 849 that a blanket restriction on voting by all prisoners violated article 3 of the First Protocol. In Greens and MT v United Kingdom (2010) 53 EHRR 710, the European Court of Human Rights delivered a pilot judgment on a large number of petitions by convicted prisoners which sought damages for the denial of their rights under article 3 of the First Protocol, consequent upon the decision in Hirst. The court refused to make an award of damages, but directed that the United Kingdom should bring forward, within six months of the date upon which the present judgment becomes final, legislative proposals intended to amend the 1983 Act and, if appropriate, the 2002 Act in a manner which is Convention compliant and effectively stayed further proceedings on pending petitions of the same kind until the expiry of that period. The deadline was subsequently extended by the European Court until six months after the judgment of the Grand Court in another case, Scoppola v Italy (No 3) (2012) 56 EHRR 663, in which the United Kingdom government proposed to intervene to make submissions about the correctness of Hirst. However, the judgment in that case, which was delivered on 22 May 2012, reaffirmed both the reasoning and the decision in Hirst. The deadline imposed by the Strasbourg Court expired in November 2012. In December 2006, in the light of the decision in Hirst, the Government published a consultation paper setting out two alternative proposals for amending section 3 of the Representation of the People Act. One was to enfranchise prisoners sentenced to less than a specified term, which would be low. , such as one year in prison. The other was to allow sentencers a discretion on whether the franchise should be withdrawn in the particular case. A further consultation paper was published in April 2009 summarising responses to the first paper and seeking views on the approach to be adopted. The Government indicated its own preference for an automatic restriction of the franchise based on the seriousness of the offence, as reflected in the length of the sentence. On 20 December 2010, after the decision of the European Court of Human Rights in Greens and MT, the Government announced that it would propose to Parliament that offenders sentenced to a term of imprisonment of less than four years would have the right to vote in parliamentary and European Parliament elections, unless the sentencing judge directed otherwise. Subsequently, the question of prisoners voting rights was debated twice. There was a Westminster Hall adjournment debate on 10 January 2011, at which many members of the House of Commons expressed strong opposition to enfranchising any prisoners. A month later, on 11 February 2011, there was an all day debate on the floor of the House of Commons on a motion put forward jointly by senior backbench MPs from both sides of the House, that legislative decisions of this nature should be a matter for democratically elected lawmakers; and supports the current situation in which no sentenced prisoner is able to vote except those imprisoned for contempt, default or on remand. This motion was carried by 234 votes to 22, both front benches abstaining. On 22 November 2012 the Government published the Voting Eligibility (Prisoners) Draft Bill (Cm 8499), setting out three options, (a) a ban on voting by prisoners sentenced to four years imprisonment or more, (b) a ban for prisoners sentenced to more than six months imprisonment, or (c) a general ban, i.e. a restatement of the present position. The explanatory memorandum accompanying the draft Bill pointed out that option (c) could not be regarded as compatible with the Convention. The draft Bill is currently being considered by a joint Select Committee of both Houses. For the moment, however, the only reasonable conclusion that can be drawn from this history is that there is no democratic mandate for the enfranchisement of convicted prisoners. It is an international obligation of the United Kingdom under article 46.1 of the Convention to abide by the decisions of the European Court of Human Rights in any case to which it is a party. This obligation is in terms absolute. The remainder of article 46 contains provisions for its collective enforcement by the institutions of the Council of Europe. Many states have written constitutions which give automatic effect in domestic law to treaties to which they are party. Constitutional provisions of this kind are generally accompanied by provisions giving the legislature a role in the ratification of treaties. But the making of treaties in the United Kingdom is an exercise of the royal prerogative. There was no legal requirement for parliamentary scrutiny until the enactment of Part 2 of the Constitutional Reform and Governance Act 2010, although pursuant to an undertaking given to Parliament in April 1924 treaties were in practice laid before Parliament and there was a recognised constitutional convention (the so called Ponsonby Rule) that this should be done. The result of the constitutional status of treaties in the United Kingdom is that they are not a source of rights or obligations in domestic law unless effect is given to them by statute: R v Secretary of State for the Home Department, Ex p Brind [1991] 1 AC 696, 747 748 (Lord Bridge of Harwich), 762 (Lord Ackner); R v Lyons [2003] 1 AC 976; In re McKerr [2004] 1 WLR 807, para 25 (Lord Nicholls of Birkenhead), para 48 (Lord Steyn), para 63 (Lord Hoffmann), para 80 (Lord Rodger of Earlsferry) and para 90 (Lord Brown of Eaton under Heywood). The Human Rights Act 1998 might have given direct legal effect to interpretations of the Human Rights Convention by the Strasbourg Court, or required the executive to give effect to them by statutory instrument. Both techniques were employed in relation to EU law by the European Communities Act 1972. But, as is well known, its drafting was a compromise designed to make the incorporation of the Convention into English law compatible with the sovereignty of Parliament. Neither of these techniques was therefore adopted. Under section 10 of and Schedule 2 to the Act, the Crown has a power but not a duty to amend legislation by order so as to conform with the Convention where there are compelling reasons for doing so, but this is subject to prior parliamentary approval under the positive resolution procedure (there are special provisions in urgent cases for an order to be made with provisional effect subject to such a resolution being passed). It follows that the interpretation of the Convention by the Strasbourg Court takes effect in English law only by decision of the English courts. Section 2(1) of the Act provides that a United Kingdom court determining a question which has arisen in connection with a Convention right must take into account any judgment, decision or declaration of the European Court of Human Rights. For this purpose Convention rights are those set out in those of its provisions to which effect is given by the Act, i.e. articles 2 to 12 and 14 of the Convention, articles 1 to 3 of the First Protocol and article 1 of the Thirteenth Protocol: see section 1(1) and (2). Whatever may be meant by taking into account a decision of the Strasbourg Court, it is clearly less than an absolute obligation. The international law obligation of the United Kingdom under article 46.1 of the Convention goes further than section 2(1) of the Act, but it is not one of the provisions to which the Act gives effect. In the ordinary use of language, to take into account a decision of the European Court of Human Rights means no more than to consider it, which is consistent with rejecting it as wrong. However, this is not an approach that a United Kingdom court can adopt, save in altogether exceptional cases. The courts have for many years interpreted statutes and developed the common law so as to achieve consistency between the domestic law of the United Kingdom and its international obligations, so far as they are free to do so. In enacting the Human Rights Act 1998, Parliament must be taken to have been aware that effect would be given to the Act in accordance with this long standing principle. A decision of the European Court of Human Rights is more than an opinion about the meaning of the Convention. It is an adjudication by the tribunal which the United Kingdom has by treaty agreed should give definitive rulings on the subject. The courts are therefore bound to treat them as the authoritative expositions of the Convention which the Convention intends them to be, unless it is apparent that it has misunderstood or overlooked some significant feature of English law or practice which may, when properly explained, lead to the decision being reviewed by the Strasbourg Court. In R v Horncastle [2010] 2 AC 373 at para 11, Lord Phillips of Worth Matravers, with the agreement of the rest of this court, rejected the submission that it should hold itself to be bound by a clear statement of principle of the European Court on the precise issue that was before it: The requirement to take into account the Strasbourg jurisprudence will normally result in the domestic court applying principles that are clearly established by the Strasbourg court. There will, however, be rare occasions where the domestic court has concerns as to whether a decision of the Strasbourg court sufficiently appreciates or accommodates particular aspects of our domestic process. In such circumstances it is open to the domestic court to decline to follow the Strasbourg decision, giving reasons for adopting this course. This is likely to give the Strasbourg court the opportunity to reconsider the particular aspect of the decision that is in issue, so that there takes place what may prove to be a valuable dialogue between the domestic court and the Strasbourg court. In Manchester City Council v Pinnock (Nos 1 and 2) [2011] 2 AC 104, para 48, Lord Neuberger MR, again with the agreement of the whole court, expanded on this statement: This court is not bound to follow every decision of the European court. Not only would it be impractical to do so: it would sometimes be inappropriate, as it would destroy the ability of the court to engage in the constructive dialogue with the European court which is of value to the development of Convention law: see e.g. R v Horncastle [2010] 2 AC 373. Of course, we should usually follow a clear and constant line of decisions by the European court: R (Ullah) v Special Adjudicator [2004] 2 AC 323. But we are not actually bound to do so or (in theory, at least) to follow a decision of the Grand Chamber. As Lord Mance pointed out in Doherty v Birmingham City Council [2009] AC 367, para 126, section 2 of the 1998 Act requires our courts to take into account European court decisions, not necessarily to follow them. Where, however, there is a clear and constant line of decisions whose effect is not inconsistent with some fundamental substantive or procedural aspect of our law, and whose reasoning does not appear to overlook or misunderstand some argument or point of principle, we consider that it would be wrong for this court not to follow that line. It follows that the exceptionally delicate issues presently before the court cannot be resolved by summarily applying the decisions of the European Court of Human Rights in Hirst and Scoppola. It is necessary to consider the basis on which the Strasbourg Court approached the relevant features of our domestic law. What is the rationale of the statutory rule excluding convicted prisoners from the franchise? In his Second Treatise of Government (1690), John Locke considered that because (as he saw it) all social obligations were ultimately founded upon implicit contract, a criminal, having repudiated that contract, had no rights. He had repudiated the collective security which was the purpose of the social contract and returned to the pre existing state of nature in which force was the only law. It followed, Locke thought, that he may be destroyed as a lion or tyger, one of those wild savage beasts, with whom men can have no society nor security. The same view was taken by others who identified the social contract as the foundation of the state, including Thomas Hobbes and Jean Jacques Rousseau. It is tempting to regard the present British rule about prisoners voting rights as a distant reflexion of this view, and plenty of commentators have succumbed to the temptation. But like most rhetoric, this is misleading. The disenfranchisement of convicted prisoners is not and never has been a form of outlawry, or civil death (the phrase sometimes used to describe the current state of the law on prisoners voting rights). On the contrary, until the 1960s, it was mainly the incidental consequence of other rules of law. In the first place, until 1870, convicted felons automatically suffered the confiscation of their real property, as a result of which they could not meet the property qualification which at that time was part of United Kingdom electoral law. The Forfeiture Act 1870 abolished the rule of confiscation. But section 2 partially preserved its effect on the franchise by providing that those sentenced for treason or felony to a period of imprisonment exceeding one year could not vote in parliamentary elections until they had served their sentence. This remained the position until the Criminal Law Act 1967 abolished the distinction between felonies and misdemeanours and amended section 2 of the Act of 1870 so that it applied only to those convicted of treason. Secondly, section 41(5) of the Representation of the People Act 1918 provided that an inmate in any prison, lunatic asylum, workhouse, poorhouse, or any other similar institution was not to be treated as resident there. This had the unintended effect of excluding from registration not only convicted prisoners, but prisoners on remand, an anomaly which was not corrected until the Representation of the People Act 2000 allowed remand prisoners to be treated as residing in the place where they were in custody. Thirdly, even those prisoners who before 1969 were eligible to vote were generally unable in practice to do so because of the absence of the necessary administrative arrangements. Except in the case of servicemen, postal voting was not introduced until the Representation of the People Act 1948, and was not available generally until the Representation of the People Act 2000. The modern law on this subject can be said to date from the Speakers Conference on Electoral Reform, which sat from 1965 to 1968 and issued its final report in February 1968 (Cmnd 3550). The conference was a non partisan body drawn from all parties in the House of Commons and meeting under the chairmanship of the Speaker. It gave systematic consideration to all aspects of electoral law including the franchise and, apparently for the first time, the question of prisoners voting rights. Only its conclusions, not its reasons, were published, but the final report records that it considered evidence and documentation from many sources. It unanimously recommended that all convicted prisoners should be ineligible to vote. This recommendation was accepted, and effect was given to it by section 3 of the Representation of the People Act 1969. The rationale of the exclusion of convicted prisoners from the franchise is as complex as the rationale for imprisonment itself. Section 142(1) of the Criminal Justice Act 2003 provides: Any court dealing with an offender in respect of his offence must have regard to the following purposes of sentencing (a) (b) (c) (d) the punishment of offenders, the reduction of crime (including its reduction by deterrence), the reform and rehabilitation of offenders, the protection of the public, and the making of reparation by offenders to persons affected by (e) their offences. All of these factors, except in the earlier period for (e), have been features of sentencing policy for very many years. For my part, I doubt whether the disenfranchisement of convicted prisoners can realistically be regarded as an additional punishment or a deterrent, and it may at least arguably be said to work against the reform and rehabilitation of the offender. But in my opinion, it has a more fundamental rationale. All criminal law, and penal policy in particular, has an important demonstrative function, which underlies all five of the statutory sentencing factors. The sentencing of offenders, and imprisonment more than any other sentence, is a reassertion of the rule of law and of the fundamental collective values of society which the convicted person has violated. This does not mean that the offender is disenfranchised because he is unpopular. Nor does it mean that he is regarded as having lost all civil rights or all claims against society, which is why the expression civil death is inappropriate. The present rule simply reflects the fact that imprisonment is more than a mere deprivation of liberty. It is a temporary reclusion of the prisoner from society, which carries with it the loss of the right to participate in societys public, collective processes. Similar principles appear to underlie the exclusion of convicted offenders from the franchise in the many other jurisdictions which practise it, whether on an automatic or a discretionary basis, and in particular those in which the suspension or abrogation of voting rights may be imposed independently of a prison sentence or continue after a term of imprisonment has been served. Fundamental to this approach, and to the automatic character of the exclusion of convicted prisoners from the franchise is the principle that sentences of imprisonment are imposed only for the more serious offences. This has always been a central feature of sentencing policy. Currently, section 152 of the Criminal Justice Act 2003, repeating previous statutory provisions and the long standing practice of the Court of Appeal (Criminal Division) provides: (2) The court must not pass a custodial sentence unless it is of the opinion that the offence, or the combination of the offence and one or more offences associated with it, was so serious that neither a fine alone nor a community sentence can be justified for the offence. The only exceptions relate either to a very few grave offences where the sentence is prescribed (such as murder, some firearms offences, repeated violence or Class A drug trafficking) or to a separate sentencing regime for dangerous repeat offenders. The section also provides that it does not apply in cases where the offender has refused to accept or comply with the conditions on which some lesser sentence would have been imposed. These principles are broadly reflected in the composition of the prison population. As Lord Mance has pointed out, only 8 per cent of persons convicted of an offence in England and 15 per cent in Scotland are sentenced to imprisonment. A statistical breakdown of the prison population as at 30 September 2010 suggests that 85% of prisoners serving sentences of less than five years were convicted of violent or sexual offences, robbery, burglary, theft, handling, fraud, forgery or drug offences. No doubt the threshold of seriousness for the passing of a sentence of imprisonment will vary in practice from one country to another. Different offences will perfectly properly be regarded as having more serious implications for some societies than for others. The United Kingdom is widely thought to have a relatively low threshold, but I am not aware that any comprehensive comparative study has been carried out which takes account of the underlying patterns of criminality. Although article 3 of the First Protocol is in unqualified terms, the jurisprudence of the Strasbourg Court has acknowledged from the outset that the right to vote may be subject to limitations of a kind which is familiar in the case law governing other Convention rights. The limitations must pursue a legitimate aim by proportionate means and must not be such as to impair the essence of the right: see Mathieu Mohin and Clerfayt v Belgium (1988) 10 EHRR 1, para 52; Matthews v United Kingdom (1999) 28 EHRR 361, para 63. It has generally been held that the essence of the right is not impaired if it does not thwart the free expression of the opinion of the people as a whole: see Holland v Ireland (Application No 24827/94) (unreported) 14 April 1998. It follows that the exclusion of certain categories of person from the franchise may be compatible with the Convention notwithstanding that as far as those persons are concerned the exclusion is total while it lasts. The case law has consistently emphasised that these are matters on which the state enjoys a wide margin of appreciation. In Hirst this was said to reflect the numerous ways of organising and running electoral systems and a wealth of differences, inter alia, in historical development, cultural diversity and political thought within Europe which it is for each Contracting State to mould into its own democratic vision (para 61). The United Kingdom government argued before the Strasbourg Court in Hirst that the objective of disenfranchisement was to serve as an additional punishment. The court accepted that that was a possible rationalisation, and regarded it as a legitimate objective, compatible with article 3 of the First Protocol. The rule was nevertheless held to be incompatible because it was disproportionate, essentially as it was an automatic blanket ban imposed on all convicted prisoners which was arbitrary in its effects and could no longer be said to serve the aim of punishing the applicant once his tariff (that period representing retribution and deterrence) had expired (para 76). The court considered the governments argument that the exclusion affected only those convicted of crimes serious enough to warrant a custodial sentence, and the very similar argument put forward by an intervener that imprisonment was the last resort of criminal justice. They appear to have rejected this argument on the facts, observing that sentences of imprisonment are imposed for a wide range of offenders and for periods from one day to life, and that because disenfranchisement was automatic the sentencer had no opportunity to assess its proportionality in any particular case (paras 77, 80). The court considered that the absolute character of the rule disenfranchising convicted prisoners and its application to all convicted prisoners put it beyond the states margin of appreciation. They were fortified in this conclusion by their view that there was no evidence that Parliament had weighed the proportionality of a general exclusion. The court referred to the Speakers Conference of 1965 1968, and the Home Office working party of 1998 1999, and acknowledged that Parliament might be said implicitly to have endorsed their conclusions: Nonetheless [they concluded] it cannot be said that there was any substantive debate by members of the legislature on the continued justification in light of modern day penal policy and of current human rights standards for maintaining such a general restriction on the right of prisoners to vote. (para 79). The court concluded as follows, at para 82: Therefore, while the court reiterates that the margin of appreciation is wide, it is not all embracing. Further, although the situation was somewhat improved by the Act of 2000 which for the first time granted the vote to persons detained on remand, section 3 of the 1983 Act remains a blunt instrument. It strips of their Convention right to vote a significant category of persons and it does so in a way which is indiscriminate. The provision imposes a blanket restriction on all convicted prisoners in prison. It applies automatically to such prisoners, irrespective of the length of their sentence and irrespective of the nature or gravity of their offence and their individual circumstances. Such a general, automatic and indiscriminate restriction on a vitally important Convention right must be seen as falling outside any acceptable margin of appreciation, however wide that margin might be, and as being incompatible with article 3 of Protocol No 1. Scoppola v Italy (No 3) (2012) 56 EHRR 663 was directly concerned with the automatic lifetime exclusion from the franchise which was the consequence under Italian law of the imposition of a sentence of life imprisonment. However, the United Kingdom rule was indirectly in question, because the Grand Chamber reviewed the decision in Hirst and the British government intervened to make submissions about it. The Chamber had held that the Italian rule violated article 3 of the First Protocol because of its automatic character. The Grand Chamber held that it was compatible with the Convention. It found that the rule pursued the legitimate aim of preventing crime and enhancing civil responsibility and respect for the rule of law (para 90). Turning to proportionality, it held that notwithstanding the statements in Hirst the test of proportionality did not require that disenfranchisement should be discretionary. It could be automatic, provided that the principles governing its imposition were sufficiently related to the gravity of the offence. The provisions of the relevant Italian law were held to be proportionate, unlike the English rule, because they disenfranchised only those convicted of particularly serious offences and those sentenced to the longer terms of imprisonment. Subject to the point about the absence of judicial discretion, the Grand Chamber reaffirmed the decision in Hirst. Accordingly, the Strasbourg Court has arrived at a very curious position. It has held that it is open to a Convention state to fix a minimum threshold of gravity which warrants the disenfranchisement of a convicted person. It has held that the threshold beyond which he will be disenfranchised may be fixed by law by reference to the nature of the sentence. It has held that disenfranchisement may be automatic, once a sentence above that threshold has been imposed. But it has also held that even with the wide margin of appreciation allowed to Convention states in this area, it is not permissible for the threshold for disenfranchisement to correspond with the threshold for imprisonment. Wherever the threshold for imprisonment is placed, it seems to have been their view that there must always be some offences which are serious enough to warrant imprisonment but not serious enough to warrant disenfranchisement. Yet the basis of this view is nowhere articulated. It might perhaps have been justified by a careful examination of the principles of sentencing in the United Kingdom, with a view to demonstrating that they involve the imprisonment of some categories of people for offences so trivial that one could not rationally suppose them to warrant disenfranchisement. That would be an indictment not just of the principle of disenfranchisement but of the sentencing principles themselves. However, no such exercise appears to have been carried out. I confess that I also find it surprising that the Strasbourg Court should have concluded in Hirst that the United Kingdom Parliament adopted the present rule per incuriam, so to speak, in 1969, without properly considering the justification for it as a matter of penal policy. The absence of debate to which the court referred reflects the attention which had already been given to the issue by the Speakers Conference, and the complete consensus on the appropriateness of the voting ban. Without the decisions in Hirst and Scoppola, I would have held that the question how serious an offence has to be to warrant temporary disenfranchisement is a classic matter for political and legislative judgment, and that the United Kingdom rule is well within any reasonable assessment of a Convention states margin of appreciation. However, the contrary view has now been upheld twice by the Grand Chamber of the European Court of Human Rights, and is firmly established in the courts case law. It cannot be said that the Grand Chamber overlooked or misunderstood any relevant principle of English law. The problems about the view which the court ultimately came to were fairly pointed out in both cases in the course of argument. Whatever parliamentary consideration may or may not have been given to the issue in 1969, it has undoubtedly received a great deal of parliamentary attention more recently, in debates which were drawn to the Grand Chambers attention in Scoppola but made no difference to its view. There is no realistic prospect that further dialogue with Strasbourg will produce a change of heart. In those circumstances, we would be justified in departing from the case law of the Strasbourg Court only if the disenfranchisement of convicted prisoners could be categorised as a fundamental feature of the law of the United Kingdom. I would regard that as an extreme suggestion, and in agreement with Lord Mance I would reject it. A wider and perhaps more realistic assessment of the margin of appreciation would have avoided the current controversy. But it would be neither wise nor legally defensible for an English court to say that article 3 of the First Protocol has a meaning different from that which represents the settled view of the principal court charged with its interpretation, and different from that which will consequently apply in every other state party to the Convention. |
The appellant is the brother of the late Alan Austin (the deceased) who was the tenant of a dwelling house at 52 Michael Faraday House, Thurlow Street, London. The London Borough of Southwark (the Council) granted the deceased a tenancy of the premises on 12 July 1983. It was a secure tenancy under the Housing Act 1980. The provisions of that Act were consolidated in the Housing Act 1985 (the 1985 Act). In June 1986 the Council brought a claim against the deceased in Lambeth County Court for possession of the premises, relying on the fact that he was in arrears of rent. An order for possession was made against him on 4 February 1987. It was a conditional suspended possession order, issued in the form then current which was Form N28. It provided that it was not to be enforced so long as the deceased paid the arrears of rent, amounting to 3,312.98, by 4 March 1987. The deceased failed to comply with the terms of the order, so on 4 March 1987 it became enforceable. But he remained in the premises, paying rent plus amounts towards the arrears, until his death 18 years later on 8 February 2005. Prior to his death the deceased had been suffering from a chronic illness which proved to be terminal. The appellant maintains that he moved in to live with his brother in October 2003 and became the deceaseds full time carer. The Council does not accept the appellants claim that he resided at the premises prior to the deceaseds death. This has not yet been established as a fact. The deceased died intestate. No grant of probate or administration has been made, and he has no personal representative. On 11 September 2006 the Council served a notice to quit on the appellant, and in January 2007 it issued proceedings against him in Lambeth County Court for possession of the premises. Those proceedings are currently stayed, pending the outcome of this appeal. On 29 March 2007 the appellant lodged an application in Lambeth County Court seeking to be appointed to represent the deceaseds estate in the possession proceedings which had been brought in 1986, pursuant to CPR 19.8. If so appointed, his intention is to apply to the County Court under section 85(2)(b) of the 1985 Act for postponement of the date for possession in the order that was issued against the deceased in 1987. If that application is successful, it would have the effect of reviving the deceaseds secure tenancy. The appellant would then seek to show that he was resident in the premises throughout the period of twelve months that ended with the deceaseds death. If that is found to have been the case, the deceaseds secure tenancy will vest in the appellant by virtue of section 87 of the 1985 Act. On 5 September 2007 the appellants application to be appointed to represent the deceaseds estate in the original possession proceedings was dismissed by HHJ Welchman. On 29 January 2008 Flaux J dismissed the appellants appeal against its dismissal: [2008] EWHC 355 (QB). On 16 February 2009 the Court of Appeal (Pill, Arden and Longmore LJJ) dismissed the appellants appeal against the order of Flaux J: [2009] EWCA Civ 66. He now appeals to this Court. The issues It has until now been assumed that a secure tenancy ends at the moment when the tenant is in breach of the terms of a conditional suspended possession order. In his annotations to the 1985 Act in Current Law Statutes the annotator, Andrew Arden, seems to have entertained no doubt on the point. He said of section 82(2) that when the tenancy is brought to an end by the court under that subsection it ends on the date the court specifies, not at any later date when the tenant is actually evicted. In Thompson v Elmbridge Borough Council [1987] 1 WLR 1425, 1430 1431 Russell LJ described the effect of the subsection in this way: In my judgment, once the defendant in proceedings of this kind where there is a suspended order for possession, ceases to comply with the conditions of the order, namely, the punctual payment of the current rent and arrears, and there is a breach of the terms of the order, the tenancy, whatever it may be, from that moment comes to an end. In Burrows v Brent London Borough Council [1996] 1 WLR 1448, 1457 Lord Jauncey of Tullichettle, referring to the decision in Thompson, said that if the court makes an order but postpones the date of possession the tenancy will not be terminated under section 82(2) until any condition imposed under subsection (3) has been breached by the tenant. He added these words: However, the courts power to make an order postponing the date of possession is not restricted to exercise on the first application for an order for possession but may be exercised on the application of either party at any time prior to execution of that order and even after the secure tenancy has ended by reason of section 82(2). This is made clear by the words in section 85(2) or at any time before the execution of the order: see also Greenwich London Borough Council v Regan, 28 HLR 469, 476, per Millett LJ. In such an event the secure tenancy is reinstated or revived subject to any conditions imposed under subsection (3). Encouraged by observations to the contrary effect by Lord Neuberger of Abbotsbury in Knowsley Housing Trust v White [2009] AC 636, para 91, the appellant now seeks to challenge this assumption. He submits that a secure tenancy does not end on breach of a conditional suspended possession order but endures until the order for possession is executed. That is the first issue in this appeal. On the assumption that a secure tenancy ends on breach of the terms of a conditional suspended possession order, a former tenant who continues in occupation assumes an unusual status. It has come to be known as that of a tolerated trespasser. Commenting on this expression in Knowsley, paras 3 4, Lord Walker of Gestingthorpe described the phrase as rather unfortunate, but he concluded that it was too firmly embedded to be dislodged. If the appellant is right on the first issue, however, the deceased was still a tenant when he died. The description of him and so many other secure tenants who are in the same position as he was as tolerated trespassers will be consigned to history. The appellant has an alternative argument, should he not succeed on the first issue. Until now it has been assumed that the right of a former secure tenant to apply for postponement of the date for possession to enable him to remedy the default, and thus revive a secure tenancy under section 85(2) of the 1985 Act according to the principles described by Millett LJ in Greenwich London Borough Council v Regan (1996) 28 HLR 469, 476, did not survive the death of the former secure tenant. In Brent London Borough Council v Knightley (1997) 29 HLR 857, 862 Aldous LJ said that the right to apply for a postponement of an order for possession was not an interest in land capable of being inherited. It was held that the daughter of a deceased tolerated trespasser who had resided with her could not apply under that subsection for the revival of the tenancy. The appellant submits that that case was wrongly decided. So the second issue is whether the former tenants statutory right to apply to postpone the date for possession, and thus revive the secure tenancy, survives his death and passes to the estate of the deceased former tenant. In support of the position which he seeks to advance on the second issue the appellant submits that the statutory right to apply to the court under section 85(2) is a possession, the enjoyment of which is protected within the meaning of article 1, Protocol 1 of the European Convention on Human Rights. If so, he submits that a construction of section 85(2) which holds that the right determines on death would be contrary to that provision and should not be adopted. Those are the third and fourth issues. The fifth issue is whether, if the statutory right to apply under section 85(2) endures beyond the death of a former tenant, the deceased was a person who had an interest in a claim for the purposes of CPR 19.8 and, if so, what claim. But the respondent accepts that, if the claimed right did exist at the date of the deceaseds death, the appellant would be entitled to apply to the court under that rule. The statutory provisions It is not necessary to do more to describe the general background than to refer to Lord Neubergers summary of the law governing residential security of tenure in Knowsley [2009] AC 636, paras 30 47. There were three appeals in that case. They raised issues about the effect of suspended possession orders on the status and rights of secure tenants under the 1985 Act and assured tenants under the Housing Act 1988. It was held that an assured tenancy subject to a suspended possession order ended only when possession was delivered up, but that reconsideration of the approach that had been adopted to secure tenancies under the 1985 Act was inappropriate since it derived from long standing authority, had been applied in numerous cases and would be resolved by section 299 of and Schedule 11 to the Housing and Regeneration Act 2008 (the 2008 Act) which had amended and clarified the law. I shall come back to examine that part of the decision in Knowsley later. As we are concerned in this case only with secure tenancies, I shall concentrate on the relevant provisions of the 1985 Act as originally enacted and on the amendments that were introduced by the 2008 Act. It should be noted that the relevant provisions of the 2008 Act were, for the most part, prospective only. They took effect from the commencement date of Schedule 11, which was 20 May 2009: Housing and Regeneration Act 2008 (Commencement No 5) Order 2009 (SI 2009/1261). Section 79(1) of the 1985 Act provides that a tenancy under which a dwelling house is let as a separate dwelling is a secure tenancy at any time when the conditions described in sections 80 and 81 as the landlord condition and the tenant condition are satisfied. Section 80(1) provides that the landlord condition is that the interest of the landlord is vested in one or more of the authorities or bodies listed in that subsection, which include a local authority. Section 81 provides that the tenancy condition is satisfied if the tenant is an individual and occupies the dwelling house as his only or principal home. Section 82 deals with security of tenure. As originally enacted, subsections (1) to (3) of this section were in these terms: (1) A secure tenancy which is either (a) a weekly or other periodic tenancy, or (b) a tenancy for a term certain but subject to termination by the landlord, cannot be brought to an end by the landlord except by obtaining an order of the court for the possession of the dwelling house or an order under subsection (3). (2) Where the landlord obtains an order for the possession of the dwelling house, the tenancy ends on the date on which the tenant is to give up possession in pursuance of the order. (3) Where a secure tenancy is a tenancy for a term certain but with a provision for re entry or forfeiture, the court shall not order possession of the dwelling house in pursuance of that provision, but in a case where the court would have made such an order it shall instead make an order terminating the tenancy on a date specified in the order and section 86 (periodic tenancy arising on termination of a fixed term) shall apply. As amended by para 2 of Part 1 of Schedule 11 to the 2008 Act with effect from 20 May 2009, the opening subsections of section 82 now provide: (1) A secure tenancy which is either (a) a weekly or other periodic tenancy, or (b) a tenancy for a term certain but subject to termination by the landlord, cannot be brought to an end by the landlord except as mentioned in subsection 1A. (1A) The tenancy may be brought to an end by the landlord (a) obtaining (i) an order of the court for the possession of the dwelling house, and (ii) the execution of the order, (b) obtaining an order under subsection (3), or (c) obtaining a demotion order under section 82A. (2) In the case mentioned in subsection (1A)(a), the tenancy ends when the order is executed. Section 83 provides that the court shall not entertain proceedings for the possession of a dwelling house let under a secure tenancy unless the landlord has served on the tenant a notice complying with the provisions of that section. Section 84 deals with the grounds on which an order for possession may be made. In cases where the tenant is in arrears of rent they require the landlord to satisfy the court that it is reasonable to make such an order before the court will order possession. In such a case the court is given very wide and flexible powers by section 85. Subsections (1) (2) and (3) of this section, as originally enacted, were in these terms: (1) Where proceedings are brought for possession of a dwelling house let under a secure tenancy on any of the grounds set out in . ([being] cases in which the court must be satisfied that it is reasonable to make a possession order), the court may adjourn the proceedings for such period or periods as it thinks fit. (2) On the making of an order for possession of such a dwelling house on any of those grounds, or at any any time before the execution of the order, the court may (a) stay or suspend the execution of the order, or (b) postpone the date of possession, for such period or periods as the court thinks fit. (3) On such an adjournment, stay, suspension or postponement the court (a) shall impose conditions with respect to the payment by the tenant of arrears of rent (if any) and rent or payments in respect of occupation after the termination of the tenancy (mesne profits), unless it considers that to do so would cause exceptional hardship to the tenant or would otherwise be unreasonable, and (b) may impose such other conditions as it thinks fit. By para 3(2) of Part 1 of Schedule 11 to the 2008 Act the reference to mesne profits in section 85(3)(a) was omitted with effect from 20 May 2009. The first issue The question to which this issue is directed is about the effect of section 82(2) of the 1985 Act. Does the secure tenancy end when the tenant is in breach of the conditions of the suspended possession order? Or does it end only when possession is delivered up when the possession order is executed? As I said earlier, it was for a long time assumed that the law was as stated in Thompson v Elmbridge Borough Council [1987] 1 WLR 1425. In that case a secure tenant had fallen into arrears of rent. The local authority obtained an order for possession in the same form as that which was set out in the order which the Council obtained against the deceased in this case. It stated that it was not to be enforced for 28 days in any event, and for so long thereafter as the tenant paid the arrears of rent by stated instalments in addition to the rent. She failed to comply with the terms of the order and the question was whether, and if so when, the secure tenancy had come to an end. Russell LJ rejected an analogy which was sought to be drawn with the position under the Rent Acts. Basing his decision simply on the terms of section 82(2), he said that where there was a breach of the terms of the order the tenancy came to an end from the moment of the breach: see para 5, above, where the words that he used are set out. In Burrows v Brent London Borough Council [1996] 1 WLR 1448 a secure tenant had fallen into arrears with the rent and the council obtained a final order for possession of the premises. Shortly before the order was due to take effect the council entered into an agreement with the tenant that she would not be evicted provided she complied with certain conditions, which she failed to do. The question was whether a new tenancy had been created by this agreement. Reference was made to the Court of Appeals decision in Thompson [1987] 1 WLR 1425, but the soundness of that decision was not questioned by either side. Lord Browne Wilkinson referred to it at p 1453 when he was summarising the local authoritys argument that the old tenancy came to an end when the tenant failed to comply with the conditions imposed by the possession order. Lord Jauncey, with whom Lord Griffiths and Lord Steyn agreed, at p 1457 went further. He summarised the law in a way that indicated that in his opinion Thompson, which by then had been followed by the Court of Appeal in Greenwich London Borough Council v Regan (1996) 28 HLR 469, was rightly decided. There the matter rested until it came under the scrutiny of the House of Lords more than a decade later in Knowsley Housing Trust v White [2009] AC 636. Lord Neuberger observed in that case at para 73 that a number of cases in the Court of Appeal had proceeded on the assumption that the law was as stated in Thompson: see, for example, Harlow District Council v Hall [2006] 1 WLR 2116. He also said that there would also have been tens of thousands of cases in the county courts, many negotiations, much legal advice and many actions which had also proceeded on that assumption. In para 91 however, having added that he strongly suspected that, if the point had not been determined in Burrows [1996] 1 WLR 1448, he would have reached the same conclusion in relation to section 85 of the 1985 Act as that which he had reached in relation to section 9 of the Housing Act 1988 in relation to assured tenancies, he said: There is a powerful case for saying that the date on which the tenant is to give up possession in pursuance of the order in section 82(2) of the 1985 Act can, and therefore should, mean the date specified in a warrant of possession which is duly executed (or acted on by the tenant). Furthermore section 121 of the 1985 Act [circumstances in which the right to buy cannot be exercised] appears to me to be arguably inconsistent with the decisions in Thompson [1987] 1 WLR 1425 and in Hall [2006] 1 WLR 2116, in that it appears expressly to assume that a tenant who is, as well as a tenant who will be, obliged to give up possession pursuant to a court order, would remain entitled to pursue the right to buy, and only a person who is a secure tenant can have that right. Despite these reservations, he refrained from moving the House to hold that Thompson [1987] 1 WLR 1425 and Hall [2006] 1 WLR 2116 were wrongly decided so far as secure tenancies were concerned. He set out his reasons for doing so in paras 92 and 93. One was the response that was received from counsel in that case, all highly experienced in the field of social housing law. Mr Luba QC said that it was simply too late to take that course, as Thompson had been assumed to be right, and had been acted on, in many tens of thousands of cases over the past 20 years or so. The other was that, by section 299 of and Schedule 11 to the 2008 Act, Parliament had amended and clarified the law so that secure and assured tenancies would only end when the order for possession was executed by means of provisions that were largely prospective in their effect. Agreeing with these submissions, Lord Neuberger said that it would be wrong for the House effectively to go back on its previous approval of Thompson in Burrows [1996] 1 WLR 1448, when there was in place amending legislation having the same effect as such a reversal, in which Parliament had decided to amend the law only prospectively. Mr Lubas position for the appellant in this case, as he frankly accepted, is the reverse of that which he adopted in Knowsley [2009] AC 636. He submits nevertheless that this Court should now take the step from which the House held back in that case and hold that Thompson [1987] 1 WLR 1425 was wrongly decided. There are, then, two questions that must be addressed. The first is whether, as Lord Neuberger indicated, section 82(2) can be read as meaning that, notwithstanding that the tenant is in breach of the conditions in the possession order, the tenancy continues until the date specified in a warrant for possession which is duly executed or acted upon. The second is whether, if it can be so read, it should now be held that this is indeed its meaning and Thompson should be overruled. As to the first question, it is a remarkable fact that a conclusion about the meaning of section 82(2) which, admittedly with the benefit of hindsight, is so obviously unsatisfactory and conceptually confusing should have been reached with so little reasoning. The Court of Appeals decision on the point in Thompson [1987] 1 WLR 1425 was expressed by Russell LJ in a single sentence at pp 1430 1431. It amounted to little more than an assertion. No attempt was made to see whether the meaning that he attributed to the subsection was consistent with provisions that were to be found elsewhere in the 1985 Act. As for the references to Thompson in Burrows [1996] 1 WLR 1448, I think that Lord Neuberger was perhaps being a little generous when he said in Knowsley [2009] AC 636, para 72 that Lord Browne Wilkinson and Lord Jauncey expressly stated that Thompson was rightly decided. Lord Browne Wilkinson referred to that case at p 1453 when summarising the submissions that were before the court in Greenwich London Borough Council v Regan (1996) 28 HLR 469 and accepting counsels analysis of that case. Lord Jauncey went further in endorsing what was said in Thompson, but I do not detect in his treatment of it any attempt on his part to reach a view of his own as to whether section 82(2) had to be read in the way that Russell LJ had indicated. I would not attach much weight to the uncritical way in which the decision in Thompson was treated by the House of Lords in Burrows. The wording of section 82(2) needs therefore to be examined more closely in its context. There are, of course, other ways in which a tenancy may come to an end. But, as the section as a whole is concerned with security of tenure, it deals with the steps that must be taken by the landlord. The landlord must first obtain an order for possession of the dwelling house. In the case of a secure tenancy for a term certain with a provision for re entry or forfeiture, the court is required to make an order terminating the tenancy on a date specified in the order, which unless the court orders that both termination and possession are to take effect on the same date will be followed by a periodic tenancy: section 82(3). Section 82(2) adopts a different approach. It does not say, as it could have done, that the date specified in the order is to be the date when the tenancy terminates. It refers instead to the date when the tenant is to give up possession in pursuance of the order. That phrase can, I think, be read as indicating that the date when the tenancy is to terminate is to be found in the possession order itself. That is how Russell LJ read it in Thompson [1987] 1 WLR 1425, at pp 1430 1431. But the words is to give up possession can also be read, as Lord Neuberger said in Knowsley [2009] AC 636, para 91, as contemplating the date when possession will actually be given up under a warrant for possession which is duly executed or acted upon. I think that the context tends to favour Lord Neubergers indication that the tenancy ends only when the order for possession is executed. The fact that the court is given such wide powers by section 85, including the power to discharge or rescind the possession order if the conditions are complied with, suggests that it was envisaged that the tenancy could still be in existence during the period when the court can exercise this control. Then there are the indications in section 121, to which Lord Neuberger referred in para 91, that the section was drafted on the assumption that a tenant who is obliged to give up possession pursuant to a court order is nevertheless still entitled to exercise the right to buy which is a right that, as section 118 makes clear, only a secure tenant can have. The reference in section 85(3) to payments after the termination of the tenancy and mesne profits might seem to indicate the contrary. But, as Lord Neuberger pointed out in paras 87 and 88, this is best seen as an example of torrential drafting as the same wording appears in section 100(3) of the Rent Act 1977 where it cannot have that effect. Apart from this point, I do not find anything in the context that supports the interpretation that was given to section 82(2) in Thompson [1987] 1 WLR 1425. The conclusion which I would draw is that there is much to be said for Lord Neubergers interpretation. Perhaps the strongest point in its favour is that reading section 82(2) in the way he has suggested avoids what he described in Knowsley [2009] AC 636, para 80 as the anomalous and potentially retrospectively reversible status of tolerated trespassers. The conceptual problems that this gives rise to do not seem to have been anticipated by the judges who guided the law in a different direction in Thompson [1987] 1 WLR 1425 and Burrows [1996] 1 WLR 1448. A fair and practical reading would, as Lord Neuberger suggests, eliminate these difficulties. But it seems to me that the contrary view is not unarguable. The question then is whether this Court should now hold that the interpretation of section 82(2) that Lord Neuberger has suggested is indeed what this subsection means and that Thompson [1987] 1 WLR 1425 should be overruled. As is of course very well known, the House of Lords issued a Practice Statement on 26 July 1966 which stated that it would still treat former decisions of the House as normally binding, but that it would depart from a previous decision when it appeared right to do so: Practice Statement (Judicial Precedent) [1966] 1 WLR 1234. Its application was considered and applied from time to time by the Appellate Committee during the 40 years or so that were to elapse until 1 October 2009 when the appellate jurisdiction was transferred from the House of Lords to this Court: see, for example, R v National Insurance Commissioner, Ex p Hudson [1972] AC 944, 966 per Lord Reid; R v Knuller (Publishing, Printing and Promotions) Ltd [1973] AC 435, 455 per Lord Reid; Miliangos v George Frank (Textiles) Ltd [1976] AC 443; Fitzleet Estates Ltd v Cherry [1977] 1 WLR 1345, 1349 per Lord Wilberforce ; Hesperides Hotels Ltd v Aegean Turkish Holidays Ltd [1979] AC 508; Vestey v Inland Revenue Commissioners (Nos 1 and 2) [1980] AC 1148; R v Secretary of State for the Home Department, Ex p Khawaja [1984] AC 74; R v Howe [1987] AC 417; R v Kansal (No 2) [2002] 2 AC 69; Rees v Darlington Memorial Hospital NHS Trust [2004] 1 AC 309; and Horton v Sadler [2007] 1 AC 307, para 29 per Lord Bingham of Cornhill. The Supreme Court has not thought it necessary to re issue the Practice Statement as a fresh statement of practice in the Courts own name. This is because it has as much effect in this Court as it did before the Appellate Committee in the House of Lords. It was part of the established jurisprudence relating to the conduct of appeals in the House of Lords which was transferred to this Court by section 40 of the Constitutional Reform Act 2005. So the question which we must consider is not whether the Court has power to depart from the previous decisions of the House of Lords which have been referred to, but whether in the circumstances of this case it would be right for it to do so. In R v Knuller (Publishing, Printing and Promotions) Ltd [1973] AC 435, 455 Lord Reid made the following observations about the Practice Statement which I think are particularly in point in this case: I have said more than once in recent cases that our change of practice in no longer regarding previous decisions of this House as absolutely binding does not mean that whenever we think that a previous decision was wrong we should reverse it. In the general interest of certainty in the law we must be sure that there is some very good reason before we so act. I think that however wrong or anomalous the decision may be it must stand and apply to cases reasonably analogous unless or until it is altered by Parliament. In R v National Insurance Commissioner, Ex p Hudson [1972] AC 944, 966, on the other hand, he said that it might be appropriate to do so if to adhere to the previous decision would produce serious anomalies or other results which were plainly unsatisfactory. In Rees v Darlington Memorial Hospital NHS Trust [2004] 1 AC 309, para 31 Lord Steyn said that, without trying to be exhaustive, a fundamental change in circumstances such as was before the House in Miliangos v George Frank (Textiles) Ltd [1976] AC 443, or experience showing that a decision of the House results in unforeseen serious injustice, might permit such a departure. In Horton v Sadler [2007] 1 AC 307, para 29 Lord Bingham said that the power had been exercised rarely and sparingly but that too rigid an adherence to precedent might lead to injustice in a particular case and unduly restrict the development of the law. The House, he said, will depart from a previous decision where it appears right to do so. Two previous decisions of the House are before us in this case: Burrows v Brent London Borough Council [1996] 1 WLR 1448 and Knowsley Housing Trust v White [2009] AC 636. Of these the one that gives rise to most concern is Knowsley. In para 92 of his speech in that case Lord Neuberger addressed the question directly as to whether, given that the point at issue was not actually debated in Burrows, the cases of Thompson [1987] 1 WLR 1425 and Hall [2006] 1 WLR 2116 were rightly decided. His answer, as he explained in para 93, was that it should not reconsider the view expressed by the House in Burrows that Thompson was rightly decided so far as secure tenancies were concerned. It is true that this was the approach that had been contended for by counsel. But there was much more in it than that. The fact that the decision in Thompson was of such long standing and had been acted upon in so many cases was a powerful factor in his assessment. So too was the way the need for an amendment of the law had been dealt with by Parliament. I am not persuaded that we should depart from the decision which the House took in Knowsley [2009] AC 636 that the view expressed about Thompson [1987] 1 WLR 1425 in Burrows [1996] 1 WLR 1448 should not be reconsidered and departed from. It is true that we have had the benefit of a more complete argument on the point than was before the House in Knowsley. But the fact remains that the law was regarded as having been settled by Thompson and the effects of reversing that decision now are incalculable. As Lord Neuberger said, it has been assumed to be right and has been acted upon in many tens of thousands of cases. The area of greatest concern is the effect that a retrospective reversal would have on social landlords who for so long have assumed that those who had failed to comply with the conditions in a suspended possession order were no longer tenants with a right to enforce the implementation of repairing covenants. Although we have not seen any direct evidence on the point, it is a reasonable assumption that the consequences of reviving these covenants and the opportunity that this would give for claiming damages for breach of these obligations was one of the factors that led to the decision that the law should be amended by the Housing and Regeneration Act 2008 only prospectively. In August 2007 the Department for Communities and Local Government issued a consultation paper on tolerated trespassers. It set out four options for changes to the legislation relating to secure and assured tenancies. One was to do nothing. The second was to deal only with tenants who were subject to future possession orders. The third was to restore tenancy status to all existing tolerated trespassers. The fourth was to restore this status to tolerated trespassers who had complied with the terms of the possession order. In its summary of responses to the consultation in April 2008 the Department noted that the overwhelming majority of those who responded were in favour of legislation to prevent the creation of future tolerated trespassers. It also noted that, while there was strong support for amending the legislation to restore the tenancies of all existing tolerated trespassers, there were dissenting voices. Those who opposed this option suggested that it could be seen to reward tenants who had repeatedly failed to meet their obligations and that it would remove potential leverage against difficult tenants. They drew attention too to the need to protect landlords from liability for actions taken in accordance with the law at the time. The Governments position was that the opportunity should be taken to prevent the creation of future tolerated trespassers and restore tenancy status to all existing tolerated trespassers. In an impact assessment issued in November 2008 it was indicated that, following consultation, the options had been narrowed down to two: do nothing, and restore tenancy status to all tolerated trespassers. The 2008 Act received the Royal Assent on 22 July 2008. Section 299 introduces Schedule 11. Part 1 of the Schedule amends the relevant legislation for the future. Part 2 restores tenancy status to existing tolerated trespassers. These provisions were brought into force by the Housing and Regeneration Act 2008 (Commencement No 5) Order 2009 (SI 2009/1261). Significantly, however, what Part 2 of the Schedule does is to provide for the creation of replacement tenancies. As paragraph 16 states, these are new tenancies. Paragraph 18 provides that the new tenancy is to have effect on the same terms and conditions that were applicable to the original tenancy immediately before it ended. Absent from the Schedule however is any provision for the revival or restoration of the pre existing tenancy. This carefully crafted system avoids the problems to which the dissenting voices had drawn attention during the consultation process. For us now to declare that Thompson [1987] 1 WLR 1425 was no longer good law would undermine the system with the result that those problems would, after all, become unavoidable. Such a result would contradict the will of Parliament. Reverting to what Lord Reid said in R v Knuller (Publishing, Printing and Promotions) Ltd [1973] AC 435, 455, I think that, far from there being some very good reasons for reversing the decision that the House took in Knowsley [2009] AC 636, the position in this case is the other way round. There are very good reasons for accepting that the law as declared in Thompson [1987] 1 WLR 1425, however unsatisfactory it can now be seen to be, should not be disturbed. I would therefore reject the appellants argument on the first issue. The second issue This issue is directed to the effect of section 85(2) of the 1985 Act. The question is whether the former tenants statutory right to apply to postpone the date for possession, and thus revive the secure tenancy, survives death and passes to the estate of the deceased former tenant. The answer to it depends on how the wording of this subsection should be construed in the context of the scheme of Part IV of the 1985 read as a whole. In the Court of Appeal it was submitted that the short answer to this question was that the point was decided in Brent London Borough Council v Knightley (1997) 29 HLR 857 and that that case was binding authority in that court for the proposition that the right to apply for the postponement of the order for possession under section 85(2) is not an interest in land capable of being inherited. So it could not survive the deceaseds death. Having examined the decision, Arden LJ, with whom Pill LJ agreed, concluded that it bound the court to hold that the former tenants right to apply under section 85(2) terminates on the tenants death: [2009] EWCA Civ 66, para 42. Longmore LJ said that, even if the matter had not been expressly decided by Knightley, the correct view must be that the right is not exercisable by a deceaseds personal representatives: para 54. The appellant in Knightley (1997) 29 HLR 857 was the daughter of the tenant under a secure tenancy. Upon her mothers death she claimed the right to succeed to the tenancy under section 89 of the 1985 Act. The council refused to accept her claim on the ground that, as the mother had died, there was no tenancy to which the daughter could succeed as it had been terminated pursuant to a conditional possession order for non payment of rent. In other words, the mother was no more than a tolerated trespasser. The judgment of the Court of Appeal was delivered by Aldous LJ. At p 862 he noted that the law as to the effect of section 82(2) had recently been clarified by the decision of the House of Lords in Burrows [1996] 1 WLR 1448. Given that, at her mothers death, there was no tenancy to which the daughter could succeed, everything depended on whether it was open to her to apply for an order under 85 to postpone the order for possession and revive the tenancy. He concluded that her submissions to that effect were untenable. Aldous LJ set out the reasoning on which that conclusion was based in the following paragraph at p 862: The right to apply for a postponement of an order for possession is not an interest in land capable of being inherited. Further, the right to apply under section 85 is a right given to the tenant and in subsection (5) to the tenants spouse or former spouse. Section 87 also gives a right to apply to a person who is qualified to succeed as a tenant under a secure tenancy. That section only applies where there is a tenancy in existence. That was not the case here. To be a tolerated trespasser of the kind contemplated in Burrows, the person must be a trespasser tolerated by the law. The appellant was not such a person. In my view, there is no right given to a person in Miss Knightleys position to apply to revive a tenancy and no tenancy existed at the time when her mother died. Endorsing that decision in the Court of Appeal [2009] EWCA Civ 66, Longmore LJ introduced his remarks with this comment in para 53: Aldous LJ, with whom the other members of the court agreed, said in terms that the right was incapable of being transmitted. That conclusion applies to transmission by will or on intestacy just as much as any other transmission eg by assignment between living persons. What Aldous LJ actually said, in the passage which I quoted in para 35, was that the right was not capable of being inherited. There is an important distinction between these two phrases. Had Aldous LJ appreciated that the question which is really at issue here is whether the right is capable of being transmitted, not whether it is capable of being inherited, he might perhaps have arrived at a different answer. The right to apply to the court for the exercise of the powers that are given to it by section 85(2) is a right conferred by the statute. So the answer to the question whether the right can be exercised after the tenant has died is to be found by construing the statute. It does not depend on whether it is thought to be a right that is capable of being inherited at common law. Addressing himself, in para 54, to the terms of the statute, Longmore LJ said that Parliament plainly intended that the person who would otherwise be entitled to a secure tenancy if it had been revived should not be able to revive it in his or her own name. To hold that the deceaseds estate can apply to revive it for the purpose of enabling that person to obtain a secure tenancy would be to circumvent, if not flout, that intention by means of a legal device. I have to confess that I do not follow this reasoning. It seems to confuse the provisions about succession on the death of the tenant under a secure tenancy with the situation that section 85 is dealing with, which is the exercise of powers by the court on the making of a possession order. Of course, one thing may lead to another. But the sections must be taken in the order in which they appear, and they must be taken separately. The first thing that strikes one, on reading the words of the subsection, is that the powers that it refers to are said to be exercisable at any time before the execution of the order. The possibility that the tenant may have died in the meantime is not mentioned. If it had been the intention that the powers should not be exercisable on the tenants death it would have been easy to say so. Indeed, given the width of the phrase that is actually used, one would have expected words to that effect to have been inserted. Cases could arise, for example, where the tenant has died before the possession order has taken effect to end the tenancy. There would seem to be no reason why the deceaseds personal representative should not be able to seek the exercise of the power to postpone giving effect to the possession order, for example to enable the deceaseds affairs to be put in order and any licensee or sub tenant to be re housed. Another example of a case where one would expect the personal representative to be able to apply would be where the deceased tenant, having made good a previous default, has applied for the date for possession to be postponed but dies the day before his application is to be heard. The wording of the subsection does not compel a reading that would deny the jurisdiction of the court to exercise its powers in such circumstances. There are other indications in this Part of the Act that support this approach. When it contemplates what is to happen on death, it says so. Sections 87 to 90, which deal with succession on the tenants death, constitute the prime example. It is worth noting too that section 90, which deals with fixed term tenancies, contemplates that the tenancy may continue after the secure tenant dies and vest in someone else in the circumstances referred to in subsection (3). One would expect the powers under section 85(2) to be exercisable after the tenants death in such circumstances, and there is nothing in its wording that suggests the contrary. Also, the rights that were given to the tenants spouse or former spouse who is in occupation when proceedings for possession are brought by section 85(5) are not said to come to an end when the secure tenant dies. That subsection was repealed by section 299 of and Schedule 11, paras 1 and 3 to the 2008 Act. But it was there when section 85 was enacted, and it indicates the width and variety of the circumstances in which the powers under section 85(2) were intended to be available. For these reasons I would hold that Knightley (1997) 29 HLR 857 was wrongly decided and that it should be overruled. In my opinion the fact that the former secure tenant has died does not deprive the court of its jurisdiction to exercise the power conferred on it by section 85(2)(b) of the 1985 Act to postpone the date of possession under a possession order. It follows that it is open to the appellant, who seeks to represent the estate of the person who was served with a claim for possession, to apply under CPR 19.8 for the date for possession to be postponed. I have to say that I regard this solution to his case to be preferable to the solution for which Mr Luba contended under the first issue. It is directed precisely to the situation that arises where a former tenant who has become a tolerated trespasser has died. Above all, it preserves the discretion of the court under section 85(2) to do what is just in all the circumstances. This is a protection for the landlord which would be entirely absent if the first solution were to be adopted. Conclusion In view of the conclusion that I have reached in the appellants favour on the second issue I do not need to say anything about the remaining issues. Mr Drabble QC for the Council did not suggest that, if the second issue were to be answered in the appellants favour, the deceased was not a person who had an interest in a claim for the purposes of CPR 19.8 which in the events that have happened could be invoked by his estate. The claim which the appellant can invoke for this purpose is the claim for possession that was issued against the deceased in 1986. I would allow the appeal. I would order that the appellant be appointed to represent the estate of the deceased under CPR 19.8(1)(b) and would remit his application under section 85(2) of the 1985 Act for postponement of the 1987 possession order to Lambeth County Court for determination. LORD WALKER I am in full agreement with the reasoning and conclusions in Lord Hopes judgment. I have nothing to add except to express my admiration for the concurring judgment of Lady Hale, who has written the definitive obituary of the tolerated trespasser. Indeed her trenchant analysis clearly demonstrates that this unfortunate zombie like creature achieved a sort of half life only through a series of judicial decisions in which courts failed, or did not need, to face up to the theoretical and practical contradictions inherent in the notion. But in common with all the members of the Court I agree that Parliament is best fitted to give the tolerated trespasser his quietus, as it has by the Housing and Regeneration Act 2008. LADY HALE I agree that this appeal should be allowed for the reasons given by Lord Hope but wish to add a few words on the issue of tolerated trespassers. In my view, had it not been for Parliaments intervention, it would have been the duty of this Court to set the matter right. There is no reason to believe that Parliament intended that such an anomalous status should arise as a result of the provisions of the 1980 and 1985 Housing Acts. There is little reason to believe that the full implications of their decision were apparent to the Court of Appeal when they decided Thompson v Elmbridge Borough Council [1987] 1 WLR 1425. That decision was assumed to be correct by the House of Lords in Burrows v Brent London Borough Council [1996] 1 WLR 1448 but it suited both parties in that case for them to do so. And the issue did not strictly arise in Knowsley Housing Trust v White [2008] UKHL 70, [2009] AC 636, which was concerned with a different statutory regime. Thus there is no House of Lords case which has addressed the issue full on and reached a reasoned conclusion about it. If there had been, it would have had to address all the conceptual and practical problems which have arisen since Thompson. These were forcefully spelled out by Lord Neuberger in Knowsley, but it is worth reiterating them here, because in Knowsley the parties did not want the House to address the matter, whereas in this case the Court has expressly been asked to do so. A tolerated trespasser is an oxymoron. A trespasser is someone who should not be there. But tolerated trespassers were allowed to be there. Indeed, in some cases the local authority had no right to evict them. The Court of Appeal decided in Harlow District Council v Hall [2006] 1 WLR 2116 that if the order fixed a date for possession, but postponed its enforcement on terms, the tenancy came to an end on the date fixed, even if the trespasser complied with the terms. In other cases, the local authority had expressly agreed that the trespasser could stay. The House of Lords decided in Burrows v Brent London Borough Council [1996] 1 WLR 1448 that even a written agreement not to evict the trespasser if she complied with certain terms did not create a new tenancy. Even without such an agreement, the local authority were often quite uninterested in enforcing the order. They may not have realised that the order had been breached; they may have realised that the order had been breached but also that this was not the trespassers fault but the result of the way the housing benefit system worked; they may have obtained the order without any intention of actually evicting the trespasser, but in order to obtain a money judgment and encourage more punctual payment of what both still regarded as rent; and they may not have wanted to have to rehouse a trespasser, who was by definition homeless, if she was in priority need. These were not people whom the local authority were reluctant to have there and were waiting for the machinery of eviction to take its course. These were people whom the authority wanted to have there, provided that they could be persuaded to pay most, if not all, of their rent. In normal circumstances this would give rise to some sort of right to be there, whether a licence or (more probably, given Street v Mountford [1985] AC 809) a tenancy and, if the landlord and tenant conditions required by section 79 were satisfied, this would be a secure tenancy. But the House of Lords was persuaded in Burrows to hold that a new tenancy would not arise, save in special circumstances. The practical reason for this was that local authorities did not want to have to go back to court for a new possession order if the new agreement was breached. The chain of reasoning which persuaded the House relied mainly on the decision in Greenwich London Borough Council v Regan (1996) 28 HLR 469, that the old tenancy could be revived by a successful application under section 85(2) at any time before the possession order was actually executed. No one argued that the same sensible policy result could have been reached by overruling Thompson. So we had a situation in which people became trespassers in their own homes, whether they or their landlords knew that this was so and irrespective of whether the landlords were content for them to stay. During the time that they were trespassers, neither the landlord nor the tenant could enforce the covenants under the tenancy agreement, although the tenant might be able to sue the landlord for nuisance. The statutory scheme for determining the rent did not apply. The trespasser could not exercise the right to buy even if he was now fully paid up. His spouse, partner or member of his family living there with him could not succeed. Technically, they were all homeless. Yet all these consequences could be retrospectively reversed by a successful application under section 85(2). The tenancy miraculously sprang back into life and it was as if the trespasser had been a tenant all along. Whether the court always realised that this would be the effect of its order may be doubted. The standard form of possession order granted in the county courts has changed over the years. The pre 1993 form N28, which was used in this case, did not specify a date upon which possession was to be given up. It merely adjudged that the landlord do recover against the defendant possession of the land mentioned. It ordered that the judgment for possession should not be enforced for 28 days in any event and for so long thereafter as the defendant punctually pays to the plaintiff or his agent the arrears of rent, mesne profits and costs by 4th March 1987. This was in fact 28 days after the date of the order, which was 4th February 1987. The order was also most unusual in ordering the defendant to pay off the whole arrears plus costs within that time rather than by the more usual instalments. This does not induce confidence that either the plaintiff landlord or the court had addressed their minds to the exact consequences if this was not done. Was it an order for possession forthwith, postponed for 28 days and suspended on terms? Or was it an order for possession on 4th March? Or was it an order for possession at some indeterminate future date? The standard form changed in 1993 and again in 2001. Paragraph 1 of the 2001 order required that the defendant give the claimant possession of [. ] on or before [. ]. If this form was used, the Court of Appeal held in Harlow District Council v Hall that the tenant became a trespasser on that date, even if she faithfully complied with the terms for postponing enforcement. But the standard form did not have to be used and, in Bristol City Council v Hassan [2006] 1 WLR 2582, the Court of Appeal approved an order providing that the date on which the defendant is to give up possession of the premises to the claimant is postponed to a date to be fixed by the court on an application by the claimant. It is a fair assumption that there are many old possession orders around which had an effect which the court making them would have avoided if it had known how to do so. The acquisition of trespasser status was accidental not intentional. It was also very common. Strict compliance with the terms of suspension would, in Lord Neubergers view, be rare. All of this nonsense could have been avoided if a different construction had been put upon section 82(2) of the Housing Act 1985. The whole edifice was built upon the extempore judgment of a two judge Court of Appeal in Thompson. Section 82(1), so far as is material, provides that a secure tenancy cannot be brought to an end by the landlord except by obtaining an order of the court for the possession of the dwelling house . This does not affect the ways in which the tenancy may be brought to an end by the tenant or by agreement between the landlord and the tenant. But it does mean that the landlord cannot end the tenancy without getting a possession order. Section 82(2) then provided that where the landlord obtains an order for the possession of the dwelling house, the tenancy ends on the date on which the tenant is to give up possession in pursuance of the order. Clearly, the construction put upon section 82(2) in Thompson and in subsequent cases is a tenable one. The subsection did say is to give rather than actually gives up possession. Equally clearly, as Lord Neuberger demonstrated in Knowsley, it is not the only tenable construction. The order made in this case did not specify a date on which the tenant had to give up possession, so why choose an unspecified and indeterminate date upon which the tenant puts himself in a position whereby he may be required to give up possession in pursuance of the order? Even if the order does specify a date or an event upon which possession is in theory to be given up, that is never the end of the story. Unless the tenant leaves voluntarily, the landlord will have to get and have executed a warrant for possession. The tenant is not obliged to leave until a warrant has been obtained and cannot be forced to do so until the date specified in the warrant. So an even more tenable interpretation is that it refers to the date specified in a warrant of execution. But that too is not the end of the story, because the landlord may obtain a warrant and never execute it. That, in fact, is what happened in Thompson; the possession order was obtained on 31 January 1985; its terms were breached at the latest by 5 September 1985; and a warrant was obtained on 8 January 1986; the proceedings by the tenants husband then ensued. It is therefore difficult to say that the tenant is to give up the property until he actually does so, whether of his own accord or with the encouragement of the bailiffs. This construction is reinforced by section 85(2), which allows the court to stay or suspend execution or postpone the date of possession at any time before the execution of the order. If the tenancy continues until then, there is no need for it to be resurrected with retrospective effect. This construction is also, as Lord Neuberger observed in Knowsley, arguably more consistent with section 121. This provides that the right to buy cannot be exercised by a tenant who is obliged to give up possession of the dwelling house in pursuance of an order of the court, thus assuming that even if a person is currently obliged to give up possession he is nevertheless still a tenant until he actually does so. Arguably inconsistent with this construction was section 85(5), which gave the current or former spouse or civil partner of a tenant the same rights in relation to adjournment, stay, suspension or postponement of possession proceedings under section 85 as he or she would have if his or her home rights had not been affected by the termination of the tenancy. This may be explained as an example of torrential drafting in which the same provision is inserted into different statutory schemes irrespective of its applicability. Thus there is indeed a powerful case for construing the date referred to in section 82(2) as the date specified in a warrant of possession which is duly executed (or acted on by the tenant), as Lord Neuberger put it in Knowsley, at para 91. When the linguistic case is put together with the conceptual and practical problems which arise from any other construction, the case becomes overwhelming. Legislation designed to protect residential tenants should be clear, simple and consistent in its effects, not dubious, complex and arbitrary. It is scarcely surprising that the Governments view, when consulting on what became Schedule 11 to the Housing and Regeneration Act 2008, was that the result of Thompson had been unintended. Were it not for that Act, I would consider it right for this Court to sort the matter out. The decisions in Thompson and the cases which proceeded on the unquestioned basis that Thompson was correct were not merely wrongly decided. They set the law on a course which was wrong in principle and wrong in practice. They produced a position with which no one was happy neither the landlords nor the tenants as is shown by the response to the Governments consultations. Even if some local authority landlords might have welcomed not being under a contractual obligation to repair properties for which the occupier was not paying the full rent, they would also have acknowledged that it could not be right for them to be able to charge the equivalent of the full rent which was calculated on the basis that they did have an obligation to repair. In such circumstances, it would ordinarily be our duty to recognise that the law had always been what we hold it to be. Does the 2008 Act make a difference? I am persuaded that, in this case, it does. It has abolished the problem for tenancies granted after it came into force. It has given those formerly considered tolerated trespassers a new tenancy which is in most respects the same as the tenancy they would otherwise still have had. In other respects, of which repairing covenants are likely to be the most important, the court has the discretion to tailor a just solution. The only gap which counsel have identified is the gap exemplified by this case where the tolerated trespasser has died before an application under section 85(2) has been made or determined. But this case solves that problem. Parliament has therefore recently devised a considered and carefully balanced solution to the problem. We would be obliged to respect the will of Parliament if it had devised a wholly new scheme or amended a scheme which we thought had been properly interpreted by the courts. I am persuaded that we should also do so in this case even if we believe that the premise which led them to devise the new scheme was wrong. In agreement with the other members of the Court, therefore, I would reluctantly dismiss the appeal on the first issue but happily allow it on the second. |
How should the courts of this country react when a child is brought here pursuant to an order made abroad in proceedings under the Hague Convention on the Civil Aspects of International Child Abduction (the Convention) which is later over turned on appeal? It might be thought that this is a somewhat rare and esoteric problem, but it could arise whenever the enforcement of the foreign order is not stayed pending an appeal. We have no means of knowing how common this combination of events is among the States party to the Convention, but it would appear from the facts of this case that it is not at all uncommon in the United States of America, the country which handles the greatest number of cases under the Convention (England and Wales being next on the list). The facts We are concerned with a little boy called K. He was born on 7 August 2006, so is now aged seven. He was born in Texas and is a citizen of the United States of America. His parents are both of Ghanaian heritage. His father is a US citizen and holds the rank of Lieutenant Colonel in the United States Air Force. His mother came to this country from Ghana with her parents when she was aged four and has indefinite leave to remain here. The parents married in Texas on 28 December 2005. The father was stationed at the Lackland Airforce Base at San Antonio at the time. He has an older son, KWE, from an earlier relationship and the family all lived together in Texas. From May to September 2007, the father was posted to Iraq and so the mother looked after K in the matrimonial home. From October to December 2007, the mother took up a short term post in England and so the father looked after K in the matrimonial home. The marriage broke up in 2008. The father issued divorce proceedings in the Texas state court in March 2008. He then learned that he was to be posted to Afghanistan from June 2008 until August 2009, so the parents agreed to temporary orders made in the Texan court. Although these gave the mother authority to determine Ks residence without regard to geographic location, they clearly envisaged that the mother and K would continue to occupy the matrimonial home in Texas. Despite this, in July 2008, the mother removed K and herself to London, where they remained until February 2010, when she was ordered to return the child to Texas for the purpose of completing the divorce proceedings. In the autumn of 2008, she applied to the immigration authorities here for K to have indefinite leave to remain, stating that she was unable to give the father notice of the application because of his deployment in Afghanistan, when in fact the agreed order provided for him to have contact with K during Ks spring break in March 2009. When the time came for that contact, the mother resisted it. The father had to obtain a further order from the Texas court clarifying the position and then an order in the English court to enforce it. According to the United States Court of Appeals, the mother also gave conflicting accounts of her intentions, stating to the English authorities that she intended to remain here and to the Texan court that she hoped to maintain permanent residence in the US. A Texan divorce decree was granted in July 2009, as appears from the judgment of the Court of Appeals because the mother had said that unless she was divorced and given custody, K was due to be deported from the UK imminently (there was nothing in the record to support this statement, which is implausible in the extreme). This was always without prejudice to the fathers right to claim custody on his return from Afghanistan, and in fact the decree was vacated in August. A welfare based custody hearing took place on 1 and 2 March 2010. Both parties were represented and the proceedings were governed by the best interests of the child. The mother raised no objection to the courts jurisdiction. The judge decided that it was in Ks best interests that his father should have the exclusive right to designate his primary residence. Clearly, she cannot have been too concerned that by then K had been living with his mother in London since July 2008. She concluded that the father was the parent who would best promote the childs relationship with the other parent. In her words, my great concern is that the testimony I have heard here today, to a certain extent, does not speak as loud as the actions do. She found that there was a risk of international child abduction by the mother. The mother had taken or kept K away in violation of the fathers right of possession or access; she had engaged in plans and activities to facilitate Ks removal from the US while the father was in Afghanistan; she had strong ties to Ghana, a country which was not party to the Convention; she had no strong ties to the US and had undergone a change in status with the US immigration authorities which would adversely affect her ability to remain there; she had testified that she was not obliged to abide by the Texas court order; she had resisted the clear terms of the Texan access order; she would interfere with the fathers rights as custodian. The order provided for K to have contact with his mother, for the mother to pay the costs of his international travel in lieu of child support, and for her to post a $25,000 bond as security for Ks return. After the hearing, K remained living with his father in Texas from March 2010 until August 2011, but spending his summer vacation in England and Christmas and New Year with the mother. The mother lodged an appeal against the Texan courts order but that appeal was never heard. Instead, the mother applied to the United States Federal District Court for an order under the Convention. She alleged that K had been habitually resident in England in March 2010 and that by acting upon the Texan court order the father was wrongfully retaining him in Texas. In a decision described by Thorpe LJ in the Court of Appeal as bizarre in the extreme, the District Court accepted this argument and ordered the father to deliver K and his passport to the mother immediately so that she could return with him to England. That order was communicated to the parties on Wednesday 10 August 2011. K was in fact having contact with his mother then. The father delivered Ks passport to her on Friday 12 August and she and K flew to England on Sunday 14 August. They have lived here ever since. The father did not apply for a stay of the District Courts order but he did lodge an appeal with the US Court of Appeals for the Fifth Circuit. That appeal was eventually determined on 31 July 2012. The mother did not contest the substance of the fathers appeal. She merely argued that it was moot, given that the return order had been put into effect. The Court of Appeals rejected that argument. They held that the mother had consented to Ks retention in the United States because she had consented to the Texan courts deciding the case. They also held that K had still been habitually resident in the United States in March 2010; their approach to this question is not without interest: We join the majority of circuits that have adopted an approach that begins with the parents shared intent or settled purpose regarding their childs residence. Nicolson, 605 F 3d at 104 & n 2 (collecting cases). This approach does not ignore the childs experience, but rather gives greater weight to the parents subjective intentions relative to the childs age. For example, parents intentions should be dispositive where, as here, the child is so young that he or she cannot possibly decide the issue of residency. Whiting, 391 F 3d at 548 49 (citing English case that looked to parents intentions because the child was two and one half years old at the time of her abduction). In such cases, the threshold test is whether both parents intended for the child to abandon the [habitual residence] left behind. Mozes, 239 F 3d at 1075, see also Whiting, 391 F 3d at 549 50. The record clearly established that Ks presence in the UK was to last for a limited duration, that the father never agreed to any other arrangement, and that there were no circumstances to justify departing from the courts general practice of finding no change in habitual residence in such cases. Hence by acting upon the Texan courts order the father was not wrongfully retaining K in breach of the mothers rights of custody. The District Courts order was vacated. On 29 August 2012, the District Court made an order requiring the mother to return K to his father in the United States and thereafter to comply with the terms of the Texan courts order. The order of 29 August 2012 remains in force and the mother is in breach of it. The mother filed an appeal to the United States Supreme Court against the decision of the Court of Appeals, asking that her case be consolidated with that of Chafin v Chafin, which raised the same issue of whether such appeals were moot. Her case was not consolidated with Chafin, but held in abeyance pending the outcome. Chafin was in fact decided by the Supreme Court in February 2013: Chafin v Chafin 568 US ___ (2013). The Court held that such appeals were not moot. Giving the unanimous opinion of the court, Roberts CJ pointed out that if they were held to be moot, courts would be more likely to grant stays as a matter of course, to prevent the loss of any right to appeal. This would conflict with the Conventions mandate of prompt return to a childs country of habitual residence. Routine stays might also increase the number of appeals: If losing parents were effectively guaranteed a stay, it seems likely that more would appeal, a scenario that would undermine the goal of prompt return and the best interests of children who should in fact be returned. Instead, courts should apply the traditional stay factors, thus ensuring that each case will receive the individualised treatment necessary for appropriate consideration of the childs best interests. Importantly, courts at both district and appellate level both could and should take steps to decide these cases as expeditiously as possible. Many courts already did so, but cases in American courts often take over two years from filing to resolution. Ginsburg J, with whom Scalia and Breyer JJ joined, filed a concurring opinion. She agreed that stays, even of short duration should not be granted as a matter of course, for they inevitably entail loss of precious months when [the child] could have been readjusting to life in her country of residence. She drew attention to the system in this country, where permission to appeal is required and will only be granted where there is a real prospect of success. Although stays are not automatic, they are usually granted if permission is granted, and appeals are then fast tracked. She commented that By rendering a return order effectively final absent leave to appeal, the rules governing Convention proceedings in England and Wales aim for speedy implementation without turning away appellants whose pleas may have merit. And by providing for stays when an appeal is well founded, the system reduces the risk of rival custody proceedings. She made a plea for rule makers and legislators to consider introducing such a scheme in the US. Meanwhile, while the US District Courts original order still stood, there were Children Act proceedings here. On 23 November 2011, the mother obtained a residence order on a summary basis, the father not accepting that the English courts had jurisdiction pending his appeal in the US. However, he did later take part for the purpose of gaining orders for contact with K during 2012. He made it clear throughout that he was pursuing an appeal in the US with a view to securing the return of his son. Once he had succeeded in the US Court of Appeals, the father issued two applications here under the Convention. In the first, issued in August 2012, he asserted that the mothers removal of K following the order in August 2011 had itself been wrongful. His argument was that the Court of Appeals decision setting aside the District Courts order had retrospectively rendered the mothers removal wrongful. That argument was rejected by Sir Peter Singer in the High Court and by the Court of Appeal and this court has refused him permission to pursue it here. In his second application, issued in September 2012, he asserted that the mothers retention of K in this country after the District Courts order of 29 August 2012 was wrongful. That contention depends upon whether K was still habitually resident in Texas on that date. The father alternatively asserted that the court should exercise its inherent jurisdiction to return the child even if not required to do so under the terms of the Convention. Although he considers it in Ks best interests to return to live with him, he recognised that the mother might wish to apply to the Texan court to modify its order of March 2010. He therefore offered undertakings that would enable the mother to live in Texas independently of the father whilst K could divide his time between them in a shared care arrangement pending the decision of the Texan court. The case was listed for hearing before Sir Peter Singer for five days beginning on 10 December 2012. Before the hearing, K was twice interviewed by a Cafcass officer in order to discover his wishes and feelings (his mother did not defend the proceedings on the basis that K objected to returning to the USA). In the first interview, K expressed warm feelings towards his father and his time in America and stated that wherever people say I have to live I dont mind. Ill just do it. The Cafcass officer felt that his feelings were confused and lacked coherence. She was then asked to see him again. This time he wanted to cross out where he had said that he would be happy to go back to the USA. Instead he dictated I want to say I dont mind if I stay in England. I dont want to go to the USA but my dad can come to England and I can see him. The officer commented: I suggest that his wishes and feelings reported above provide ample evidence of his confusion, sense of other people's expectations of him, and his inability to differentiate between spontaneously arising feelings and more considered views on situations which at his age he struggles to formulate. Hence in my view it would not be advisable to place too much reliance what K had to say. She found his change of mind worrying and concluded that his expressed thoughts and feelings could not reliably be taken as an objection to return. When considering whether he should be separately represented, she commented that His change of heart could suggest that he may have been susceptible to his mothers wishes and feelings after discussion with her and this could cast doubt on her ability to put forward Ks interests as distinct from her own. Her overall conclusion was: Young children experience the world as an environment of relationships and the overwhelming conclusion I draw from the information I have gleaned is that this is a young child who is finding it impossible to please both parents and is feeling far too much responsibility for trying to resolve the acrimony between them. He is clearly affected by the corrosive conflict that has been going on for some time. I suggest that at his young age his wishes and feelings are not the focus of the legal arguments involved in this application to the court. Sir Peter Singer gave judgment on 17 January 2013 dismissing both the fathers applications: [2013] EWHC 49 (Fam); the fathers appeal to the Court of Appeal was dismissed on 16 July 2013: [2013] EWCA Civ 865; the father was given permission to appeal to this court on each of the grounds in his second application. Habitual residence The mothers failure to comply with the order of 29 August 2012 is clearly a breach of the fathers rights of custody in US law. However, that is not enough for him to succeed in this application. It is not at all uncommon for there to be competing custody orders made in different jurisdictions, as there are here. Under the Convention, the tie breaker is the habitual residence of the child. As the preamble to the Convention states, it was the desire of the States parties to protect children internationally from the harmful effects of their wrongful removal or retention and to establish procedures to ensure their prompt return to the State of their habitual residence. Article 3 provides that: The removal or the retention of a child is to be considered wrongful where (a) it is in breach of rights of custody attributed to a person, an institution or any other body, either jointly or alone, under the law of the State in which the child was habitually resident immediately before the removal or retention. Hence it is common ground that the father can only succeed in his application under the Convention if K was habitually resident in the United States on either 31 July or 29 August 2012 when the mothers disobedience of the Texan order became wrongful. The Convention does not define the concept of habitual residence and it is clear that not all the states parties would apply an identical test. However, member states of the European Union (apart from Denmark) are also parties to Council Regulation (EC) No 2201/2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, commonly known as the Brussels II Revised Regulation (the Regulation). This lays down a uniform jurisdictional scheme as between Member States. This Court held in A v A and another (Children: Habitual Residence) (Reunite International Child Abduction Centre intervening) [2013] UKSC 60, [2013] 3 WLR 761, that the provisions giving the courts of a member state jurisdiction also apply where there is an alternative jurisdiction in a non member state such as the United States. Hence for that purpose the courts of England and Wales should apply the concept of habitual residence as explained by the Court of Justice of the European Union in the cases of Proceedings brought by A (Case C 523/07) [2010] Fam 42 and Mercredi v Chaffe (Case C 497/10 PPU) [2012] Fam 22. A v A was not a Hague Convention case. Nevertheless, it is common ground between the parties to this case, which include not only the mother and father but also Reunite International Child Abduction Centre (the leading non governmental organisation in the United Kingdom specialising in child abduction and the movement of children across international borders), that the same test should apply in Hague Convention proceedings. There are two good reasons for this. The first is that the Regulation also deals with how child abduction cases are to be dealt with as between member states of the European Union. The second is that the various international conventions dealing with children, including this one, formed part of the legislative history of the Regulation. As Advocate General Kokott explained in Proceedings brought by A, this presumed a uniform understanding of the concept of habitual residence. The essential features of the test adopted both by the CJEU and by this Court are that habitual residence is a question of fact which should not be glossed with legal concepts which would produce a different result from that which the factual inquiry would produce (A v A, para 54). In both Proceedings brought by A and Mercredi v Chaffe, the operative part of the judgment of the CJEU stated that the concept corresponds to the place which reflects some degree of integration by the child in a social and family environment. In A, the CJEU continued, 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. In Mercredi, the CJEU also pointed out, at para 55, that: 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. Several further points can be taken from A v A. There is no legal rule, akin to that in the law of domicile, that a child automatically takes the habitual residence of his parents. The proposition of Lord Brandon of Oakbrook in In re J (A Minor) (Abduction: Custody Rights) [1990] 2 AC 562, that a young child in the sole lawful custody of his mother will necessarily have the same habitual residence as she does, is to be regarded as a helpful generalisation of fact, which will usually but not invariably be true, rather than a proposition of law (see A v A, paras 44 and 73). As Lord Hughes pointed out, Lord Brandon cannot have intended it as such without destroying his first proposition, which was that habitual residence is a question of fact, to be decided in the light of all the circumstances. Both Lord Hughes and I also questioned whether it was necessary to maintain the rule, hitherto firmly established in English law, that (where both parents have equal status in relation to the child) one parent could not unilaterally change the habitual residence of a child (see 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). As the US Court of Appeals for the Ninth Circuit pointed out in In re the application of Mozes, 239 F 3d 1067 (9th Cir 2001), at 1081, such a bright line rule certainly furthers the policy of discouraging child abductions, but if not carefully qualified it is capable of leading to absurd results (referring to EM Clive, The Concept of Habitual Residence [1997] Juridical Review 137, at 145). The court continued: Habitual residence is intended to be a description of a factual state of affairs, and a child can lose its [sic] habitual attachment to a place even without a parents consent. Even when there is no settled intent on the part of the parents to abandon the childs prior habitual residence, courts should find a change in habitual residence if the objective facts point unequivocally to a persons ordinary or habitual residence being in a particular place [referring to the Scottish case of Zenel v Haddow 1993 SLT 975]. Nevertheless, it is clear that parental intent does play a part in establishing or changing the habitual residence of a child: not parental intent in relation to habitual residence as a legal concept, but parental intent in relation to the reasons for a childs leaving one country and going to stay in another. This will have to be factored in, along with all the other relevant factors, in deciding whether a move from one country to another has a sufficient degree of stability to amount to a change of habitual residence. Mr Richard Harrison QC, for the father, is happy to accept that there is no rule that a child is habitually resident where the parent with custody is resident. He argues that in a case like this, where the child is permitted to live in a foreign country pursuant to an order which is under appeal, the child does not acquire the habitual residence of the parent with whom he is living until the appeal is determined. He urges that there are strong policy reasons for adopting this approach, so that orders made in child abduction cases can be speedily implemented, but without prejudice to the re return of the child should the order turn out to have been wrongly made. He also cites from Mozes, at pp 1078 1079: A more difficult question is when evidence of acclimatization should suffice to establish a childs habitual residence, despite uncertain or contrary parental intent. Most agree that, given enough time and positive experience, a childs life may become so firmly embedded in the new country as to make it [sic] habitually resident even though there be lingering parental intentions to the contrary [referring again to Clive, loc cit, at p 145]. The question is how readily courts should reach the conclusion that this has occurred. Despite the superficial appeal of focusing primarily on the childs contacts in the new country, however, we conclude that, in the absence of settled parental intent, courts should be slow to infer from such contacts that an earlier habitual residence has been abandoned. That approach is, of course, consistent with the approach of the United States Court of Appeals for the Fifth Circuit in this case (see para 7 above). The problem with Mr Harrisons argument is that it too is seeking to place a legal gloss on the factual concept. The fact of the matter is that the mother brought K to this country pursuant to the order of a court permitting her to do so. The English rule against unilateral changes could not apply in such circumstances clearly a childs residence may change in the teeth of the opposition of one parent if this is permitted by order of a court. The same would apply to any assumption that a shared parental intent is generally required before the childs integration or acclimatisation results in a change of habitual residence, at least where the court order contemplates a permanent or long term move. On the other hand, the fact that the childs residence is precarious may prevent it from acquiring the necessary quality of stability. But in this case every other factor points the other way. The mother was coming home. This was where she had lived and worked before her short lived marriage to the father. This was where she intended to stay. This was where she had a child by another relationship, KWA, now aged two, who lives with her and K. So neither she nor K will have perceived the return here as in any way temporary. From Ks point of view, this was where he had lived for some twenty months before his return to the United States in March 2010. This is where he became integrated into a social and family environment during the eleven and a half months in which he lived here before the US Court of Appeals judgment of 31 July 2012. Against all those powerful factors in favour of the childs integration or acclimatisation, there is only his fathers fervent desire, of which K may very well have been aware, that he should return to live in the United States. Looked at from the point of view of the child, therefore, the judge was entitled to hold that he had become habitually resident in England and Wales by 29 August 2012. It is not for us to say whether the United States Court of Appeals was wrong to hold that he was still habitually resident in the United States during the period after his mother brought him to live here while his father was serving in Afghanistan. The situation was inherently unstable and the mother both represented to the Texan court that she hoped to maintain permanent residence in the United States and accepted its jurisdiction. I also recognise that courts in other jurisdictions might decline to hold that eleven months precarious residence here was sufficient integration or acclimatisation to change the habitual residence established in his country of birth. Inherent Jurisdiction Article 18 of the Convention provides that its provisions on return of children do not limit the power of a judicial or administrative authority to order the return of the child at any time. The High Court has power to exercise its inherent jurisdiction in relation to children by virtue of the childs habitual residence or presence here: Family Law Act 1986, ss 2(3) and 3(1). The welfare of the child is the courts paramount consideration: Children Act 1989, s 1(1). But this does not mean that the court is obliged in every case to conduct a full blown welfare based inquiry into where the child should live. Long before the Hague Convention was adopted, the inherent jurisdiction was used to secure the prompt return of a child who had been wrongfully removed from his home country: see In re J (A Child) (Custody Rights: Jurisdiction) [2005] UKHL 40, [2006] 1 AC 80, paras 26, 27, and the cases cited therein. Furthermore, it has long been established that, in the interests of international comity, the existence of an order made by a foreign court of competent jurisdiction is a relevant factor. As the Judicial Committee of the Privy Council put it in the Canadian case of McKee v McKee [1951] AC 352, 364: Once it is conceded that the court of Ontario had jurisdiction to entertain the question of custody and that it need not blindly follow an order made by a foreign court, the consequence cannot be escaped that it must form an independent judgment on the question, although in doing so it will give proper weight to the foreign judgment. What is the proper weight will depend on the circumstances of each case. In this case, Sir Peter Singer posed himself the following question, at para 63 of his judgment: So the question becomes whether I can on the information presently available to this court reasonably conclude that to leave his mother and London for his father and San Antonio would, at this point, be in his best interests. He answered that question thus in para 65: This is not a case where I would begin to feel justified in making what would be a peremptory return order. I have heard evidence from neither party nor from any witness. I have no Cafcass report directed, as I would need as the barest minimum, to the degree to which KL is secure and settled in his current situation, to ascertain whether he thrives and what he may lack, and importantly to provide some assessment of the likely impact upon him of a move from M to F and from London to Texas. Mr Harrison complains that the judge asked himself the wrong question. The father obviously wants K to move to live with him, but that is not what he immediately proposes. He proposes that K should return to Texas, with his mother, so that the Texan court can consider any application which the mother may make for the modification of its order of 2 March 2010. The fathers evidence was that such an application could be decided within less than three months. In the meantime, the father offers undertakings which would enable the parents to live separately in Texas but to share the care of their son between them. If the outcome were that K returned to live with his father, that would be because it was in his long term best interests to do so. The Court of Appeal acknowledged that ideally Sir Peter would have referred to the protective undertakings and the extent to which they would have resulted in mother and child returning together (para 54), but then introduced considerations relating to the mother and her younger child contained in a statement the admissibility of which had not been formally determined; more importantly, they did not address the essential point that Sir Peter had asked himself the wrong question. That being the case, it is open to this court to ask itself the correct question: is it in Ks best interests to remain in this country so that the dispute between his parents is decided here or to return to Texas so that the dispute can be decided there? As the judge heard no oral evidence, we are also in as good a position as he was to answer it. Although the question comes before the court in an application to invoke the inherent jurisdiction, it might have come before the court in the shape of an application under section 5 of the Family Law Act 1986 to refuse an order or to stay the English proceedings on the ground that the question has already been determined, or that it is more appropriate for it to be determined, in proceedings in another jurisdiction. That was taken to be the position in Re K (Abduction: Consent: Forum Conveniens) [1995] 2 FLR 211, 215, in which the facts were remarkably similar to those in this case. Although the circumstances of each individual child and his family are different, it is worth recalling that the Court of Appeal stressed how similar were the approach and the procedure of the Texan and the English courts in these cases. In favour of Ks remaining here is the fact that he has now been living here with his mother and younger brother for over two years. He is at school here and apparently doing well. Although he is obviously confused and upset by the conflict between his parents, and his conflict of loyalties to them, there is no reason to suppose that he is unhappy here. The evidence as to his current home and school situation is readily available here and no doubt the evidence as to his prospective home and school situation in Texas would be available to a Cafcass reporter, perhaps with the assistance of Children and Families Across Borders (formerly International Social Service). In favour of his returning to Texas is the fact that he is a Texan child. His parents were married there and he was born there. He has an older half brother who is now at University in the United States. He also has a large extended family living in the United States. He has spent three years and seven months of his life living there, most recently in the sole possession (as they put it in Texas) of his father, who has facilitated contact with his mother. He is used to travelling between here and the United States and to changes in parental care. It is clear from his interview with the Cafcass officer that he has fond memories of his time in the United States. The evidence as to what his home and school situation would be if he were to return to live there will be readily available and no doubt the evidence as to his current home and school situation would be available there through the same sort of machinery. The view of the Cafcass officer, albeit in the context of a Convention application, was that this is a case in which K is experiencing such a conflict of loyalties that too much weight should not be given to his wishes and feelings. But no doubt the Texan court would be in just as good a position to investigate these as would the English court. The crucial factor, in my view, is that this is a Texan child who is currently being denied a proper opportunity to develop a relationship with his father and with his country of birth. For as long as the Texan order remains in force, his mother is most unlikely to allow, let alone to encourage, him to spend his vacations in America with his father. Whilst conflicting orders remain in force, he is effectively denied access to his country of origin. Nor has his mother been exactly enthusiastic about contact here. The best chance that K has of developing a proper relationship with both his parents, and with the country whose nationality he holds, is for the Texas court to consider where his best interests lie in the long term. It is necessary to restore the synthesis between the two jurisdictions, which the mothers actions have distorted. Despite the passage of time, there is not the slightest reason to consider that K would suffer any significant harm by returning to Texas on the basis proposed by the father. Indeed, the mother did not defend the Convention proceedings on the basis either of his objections or of a risk of harm should he be returned (although she did suggest that he had been settled here so long that to return would place him in an intolerable situation). Had it not been for our decision on habitual residence which I accept that courts in some jurisdictions might consider debateable, it would have been our duty to return K to Texas under the Convention. I would therefore allow this appeal and order the return of the child to San Antonio forthwith on the basis of the undertakings offered by his father. But should the mother choose not to avail herself of the opportunity to return with her son, the order for his return will stand. The parties are invited to submit a draft order before this judgment is formally handed down. |
These appeals raise important and difficult issues in the field of equity and trust law. Both appeals raise issues about the so called rule in Hastings Bass. One appeal (Pitt) also raises issues as to the courts jurisdiction to set aside a voluntary disposition on the ground of mistake. It is now generally recognized that the label the rule in Hastings Bass is a misnomer. The decision of the Court of Appeal in In re Hastings Bass, decd [1975] Ch 25 can be seen, on analysis, to be concerned with a different category of the techniques by which trust law controls the exercise of fiduciary powers. That decision is concerned with the scope of the power itself, rather than with the nature of the decision making process which led to its being exercised in a particular way (see R C Nolan, Controlling Fiduciary Power [2009] CLJ 293, especially pp 294 295 and 306 309). The rule would be more aptly called the rule in Mettoy, from the decision of Warner J in Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587. But the misnomer is by now so familiar that it is best to continue to use it, inapposite though it is. As Mettoy illustrates, the rule is concerned with trustees who make decisions without having given proper consideration to relevant matters which they ought to have taken into consideration. It has also been applied to other fiduciaries (in Pitt Mrs Pitt was acting as a receiver appointed by the Court of Protection). Mettoy was concerned with the rules of an occupational pension scheme, as are some other cases on the rule. But since the turn of the century there have been several cases concerned with family trusts, and in particular with taxplanning arrangements involving trusts, where the arrangements have for one reason or another proved unexpectedly disadvantageous, and the court has been asked to restore the status quo ante under the Hastings Bass rule. Futter is such a case, as Norris J pointed out in blunt terms at the beginning of his judgment, [2010] EWHC 449 Ch, [2010] STC 982, para 2: This is another application by trustees who wish to assert that they have acted in an un trustee like fashion and so have failed properly to exercise a power vested in them. The trustees wish to take advantage of this failure to perform their duties in order to enable the beneficiaries to avoid paying the tax liability consequent upon the trustees decision. Put like that (and I am conscious that that is not the only way in which the situation may be described) the possibility is raised that the development of the rule may have been diverted from its true course. These appeals are the first cases on the Hastings Bass rule in which the Commissioners of HM Revenue and Customs (the Revenue, so as to include their predecessors, the Commissioners of Inland Revenue) have been joined as parties in the proceedings. It is the Revenue that has taken on the task of challenging, if not the existence, at least the limits of the Hastings Bass rule. It is no coincidence that the judgment of the Court of Appeal in these two appeals (which were heard together in that court also) is the first fully considered judgment above first instance level, and the first to come on further appeal to the Supreme Court (Mettoy was not cited to the Court of Appeal in Stannard v Fisons Pension Trust Ltd [1991] Pen LR 225, discussed in para 34 below). Rescission of a voluntary disposition on the ground of mistake is, by contrast, a topic on which there is a good deal of authority, including a decision of the House of Lords, Ogilvie v Allen (1899) 15 TLR 294. But some of the authorities are quite old, and others are debatable. There has been much discussion of the distinction drawn by Millett J in Gibbon v Mitchell [1990] 1 WLR 1304, 1309, between a relevant mistake having to be as to the effect of the transaction itself and not merely as to its consequences or the advantages to be gained by entering into it. So here too review by the Supreme Court is appropriate. This court has therefore had to consider a large volume of case law, culminating in the judgment of Lloyd LJ in the Court of Appeal in these appeals: [2011] EWCA Civ 197, [2012] Ch 132. That judgment, described by Longmore LJ, para 227, as remarkable, and by Mummery LJ, para 230, as a very fine comprehensive and clarifying judgment, runs to 226 paragraphs. I share their admiration, and I agree with Lloyd LJs main conclusions as to the scope of the Hastings Bass rule, and the outcome of the appeals on that issue. But I will say at once that I take a different view of the disposal of the appeal in Pitt on the mistake issue. Before any detailed consideration of the case law it may be helpful to identify, in general terms, some of the principal topics in the appeals. It has often been said (for instance, by Norris J in Futter, para 21) that the rule in Hastings Bass is not founded in the law of mistake, and in his judgment Lloyd LJ dealt with them as almost completely separate topics. They do cover different areas, in that the Hastings Bass rule is restricted to decisions by trustees and other fiduciaries, and does not necessarily require the decision maker to be under a positive misapprehension: mere absence of thought may be sufficient. The courts wider jurisdiction to rescind a transaction on the ground of mistake is not limited to transactions entered into by fiduciaries, and does generally require there to have been something that can be identified as an operative mistake. The significance of fault in the error or inadvertence is a further point of distinction. Nevertheless there is a degree of overlap between the two principles in their practical application. In some of the first instance cases on the Hastings Bass rule judges have drawn attention, with evident surprise, to the absence of any alternative claim for relief by way of rectification or rescission on the ground of mistake. In some of the cases (such as Abacus Trust Co (Isle of Man) v Barr [2003] EWHC 114 (Ch), [2003] Ch 409, the facts of which are summarized at paras 36 and 37 below) rescission on the ground of mistake would seem to have been the natural remedy for the trustees to seek. There must be some suspicion that reliance on the Hastings Bass rule has come to be seen as something of a soft option, or at any rate as a safer option, at a time when it was supposed, wrongly, that the application of the rule did not require the granting of a remedy which was discretionary in the sense that it might be withheld because some equitable defence was established. The way in which the law seemed to be developing, especially in cases concerned with unsuccessful tax planning arrangements, led one legal scholar (Professor Charles Mitchell, Reining in the rule in In Re Hastings Bass, (2006) 122 LQR 35, 41 42) to ask: Why should a beneficiary be placed in a stronger position than the outright legal owner of property if he wishes to unwind a transaction to which he has given his consent, but which turns out to have unforeseen tax disadvantages? Professor Mitchell went on to comment, presciently: The courts will have to look elsewhere for the means of reining in the rule in Re Hastings Bass, most probably to the equitable bars to unwinding a transaction that would come into play if it were decisively recognised that the rule renders transactions voidable rather than void. This court now has the opportunity of confirming the Court of Appeals recognition of that essential point. THE HASTINGS BASS RULE The three strands of the problem appeals as In the Court of Appeal [2012] Ch 132, para 227 Longmore LJ described the . examples of that comparatively rare instance of the law taking a seriously wrong turn, of that wrong turn being not infrequently acted on over a 20 year period but this court being able to reverse that error and put the law back on the right course. If the law did take a seriously wrong turning it was because a number of first instance judges were persuaded that three separate strands of legal doctrine, all largely associated with practice in the Chancery Division, should be spun or plaited together so as to produce a new rule. The first strand of legal doctrine starts with the entirely familiar proposition that trustees, in the exercise of their fiduciary discretions, are under constraints which do not apply to adult individuals disposing of their own property. I made some uncontroversial observations about this in Scott v National Trust for Places of Historic Interest or Natural Beauty [1998] 2 All ER 705, 717: Certain points are clear beyond argument. Trustees must act in good faith, responsibly and reasonably. They must inform themselves, before making a decision, of matters which are relevant to the decision. These matters may not be limited to simple matters of fact but will, on occasion (indeed, quite often) include taking advice from appropriate experts, whether the experts are lawyers, accountants, actuaries, surveyors, scientists or whomsoever. It is, however for advisers to advise and for trustees to decide: trustees may not (except in so far as they are authorised to do so) delegate the exercise of their discretions, even to experts. This sometimes creates real difficulties, especially when lay trustees have to digest and assess expert advice on a highly technical matter (to take merely one instance, the disposal of actuarial surplus in a superannuation fund). The same principles apply, at least in a modified manner, to other persons acting in a fiduciary capacity. There are superficial similarities between what the law requires of trustees in their decision making and what it requires of decision makers in the field of public law. This was noted by the Court of Appeal in its judgment, delivered by Chadwick LJ, in Edge v Pensions Ombudsman [2000] Ch 602, 628 629. It was also noted by Lord Woolf MR in Equitable Life Assurance Society v Hyman [2002] 1 AC 408, para 20. The analogy cannot however be pressed too far. Indeed it was expressly disapproved by the Court of Appeal in these appeals (Lloyd LJ at para 77 and Mummery LJ at para 235). In Abacus Trust Co (Isle of Man) v Barr [2003] Ch 409, para 29 Lightman J identified three important differences as the discretionary nature of relief on judicial review, a different approach to nullity, and strict time limits. The second strand is that a voluntary disposition (typically a gift, outright or in settlement) may be set aside on the ground of mistake. As already noted, this branch of equitable jurisdiction is distinct from the Hastings Bass rule, but similar issues arise as to the nature and gravity of the relevant error or inadvertence, and in practice they sometimes overlap. The mistake jurisdiction was considered as a separate issue in paras 164 to 220 of Lloyd LJs judgment. He identified the correct test as derived in part from the judgment of Lindley LJ in Ogilvie v Littleboy (1897) 13 TLR 399, 400 (approved by the House of Lords as Ogilvie v Allen (1899) 15 TLR 294), a case which emerged from the shadows to be cited to the court after a century of obscurity. He also considered recent decisions including Gibbon v Mitchell [1990] 1 WLR 1304 and In re Griffiths decd [2008] EWHC 118 (Ch), [2009] Ch 162. The third strand of legal doctrine, and the most abstruse one, is concerned with the partial validity of an instrument which cannot be entirely valid because it infringes some general rule of law. It is an issue which arises, often under the rubric of severance, in many different areas of law. One example is contract law, especially in the context of illegal restraints on trade (see the judgment of Jonathan Sumption QC in Marshall v NM Financial Management Ltd [1995] 1 WLR 1461, upheld by the Court of Appeal [1997] 1 WLR 1527). Another example is bye laws held to be partly ultra vires (see the speech of Lord Bridge in Director of Public Prosecutions v Hutchinson [1990] 2 AC 783). In the field of trust law the most common invalidating factor, until the Perpetuities and Accumulations Act 1964, was the unreformed rule against perpetuities, or remoteness of vesting. This applied relentlessly both to dispositions of property made by settlors or testators of property at their free disposal, and to dispositions made in the exercise of special (that is, restricted) powers of appointment over settled property. Special powers of appointment might be exercisable either by individual donees (for instance, by a parent with a life interest in favour of children with interests in expectancy) or by the trustees as a body. But in either case the power could be exercised only within the limits, and for the purposes, marked out by the donor of the power. And in either case the interests appointed had to conform to the rule against perpetuities as it applied to lives in being at the time of the creation of the power (that is, the date of the original settlement, or the date of the testators death). These matters were once familiar (indeed, elementary) to almost all chancery practitioners. Law and practice at the chancery bar have moved on. The rule against perpetuities has lost its terrors since the Perpetuities and Accumulations Act 1964 (which was almost completely non retrospective) gradually came to apply to more and more trusts, followed by the Perpetuities and Accumulations Act 2009. Family trusts are now a shrinking enclave designated as private client work, and pensions trusts, burdened by increasingly complex regulatory statutes, are another enclave reserved for pensions specialists. But in order to investigate the origins of the disputed rule in In re Hastings Bass it is necessary to revisit, without much nostalgia, this area of trust law as it was about 50 years ago. There was a body of fairly arid case law, now almost entirely obsolete, about the validity of interests in settled property which were ulterior to but not dependent on antecedent interests which infringed the rule against perpetuities. In re Hubbards Will Trusts [1963] Ch 275 and In re Bucktons Settlement Trusts [1964] Ch 497 are examples from just before the enactment of the reforming statute. In re Abrahams Will Trusts [1969] 1 Ch 463 and In re Hastings Bass, decd [1975] Ch 42, discussed below, can be seen as a final chapter in that case law. There is one further background matter to be noted. Under traditional family settlements, when the modern type of discretionary settlement was still fairly rare, the most common dispositive power exercisable by trustees was the power of advancement. This is a power to accelerate the interest of a beneficiary interested in capital, exercisable with the consent of any beneficiary with a prior interest (typically a parent with a prior life interest). Such powers were so much common form that section 32 of the Trustee Act 1925 provided a default power, which could be excluded or (as often happened) extended by the trust instrument. The power was typically exercisable by a payment or transfer to or for the advancement or benefit of the beneficiary. In In re Pilkingtons Will Trusts [1964] AC 612 the House of Lords, differing from the judge on one point and from the Court of Appeal on another, held that a power in those terms could (in principle, and apart from the rule against perpetuities) be exercised for the benefit of a minor beneficiary (the testators nephews daughter, who was only two years old when the proceedings started in 1959) by a transfer of up to half of her expectant share, with her fathers consent, to the trustees of a new settlement under which she would attain a vested interest in capital at 30. This would lawfully avoid estate duty on her fathers death if he lived for a further five years. But the House of Lords also held that the new settlement must, for the purposes of the rule against perpetuities, be treated as if it were an appointment made under a special power conferred by the testators will. The trusts of the new settlement did not meet that requirement as the child was not a life in being at the testators death in 1935. But valid trusts to much the same effect could have been achieved (and may eventually have been put in place) by referring to the alternative contingency of survival until 21 years after her fathers death, as he was alive in 1935. Vestey, Abrahams and Hastings Bass In the Court of Appeal Lloyd LJ correctly identified the decision of the Court of Appeal in In re Vesteys Settlement [1951] Ch 209 and that of Cross J in In re Abrahams Will Trusts [1969] 1 Ch 463 as the most important precursors to the decision of the Court of Appeal in In re Hastings Bass [1975] Ch 25. Lloyd LJ analysed these three cases very thoroughly at paras 33 to 67 of his judgment. Because his analysis is so full and accurate I can deal with the cases more briefly, especially as to the facts. It is worth noting that although all three cases had an important tax element, in each case the trustees misunderstanding was not about tax law. It was about the general law: in the first case about the effect of section 31 of the Trustee Act 1925, and in the other two about the effect of the rule against perpetuities. In Vestey the trustees of a large settlement made by Lord Vestey and his brother Sir Edmund Vestey exercised their discretion over the allocation of income with the apparent intention of income being accumulated during the minorities of a number of beneficiaries. They set out to do this by a sort of framework resolution that income should belong to the minor beneficiaries in specified shares, followed by further half yearly resolutions to the effect that income was not required for the beneficiaries maintenance, and should therefore be accumulated under section 31 of the Trustee Act 1925. The difficulty was that the language of section 31 did not really fit such a situation. At first instance Harman J held that the resolutions were ineffective. That result would have avoided surtax but left the income in limbo (Evershed MRs suggestion in the Court of Appeal that the income would have been held on a resulting trust for the settlors seems, with respect, very doubtful). But the minor beneficiaries appealed, and the Court of Appeal gave effect to the framework resolution, treating the references to accumulation under section 31 as peripheral. Evershed MR stated ([1951] Ch 209, 220 to 221): I do not think it can or ought to be said that if, as I hold, the trustees wrongly thought that section 31 would operate, then a result is produced substantially or essentially different from that which was intended. The result was that for the period covered by the trustees resolutions, the minor beneficiaries got their income, but the Revenue got their surtax on that income. Abrahams and Hastings Bass were both cases about plans to save estate duty by terminating a life interest and passing on settled property to the next generation. The plans (carried out in 1957 and 1958 respectively) were on the same general lines as that in Pilkington, the first instance decision in which ([1959] Ch 699, Danckwerts J) had provided an encouraging precedent (the Revenue were joined in the proceedings and given leave to appeal in 1960). The Revenue were also parties to the Abrahams and Hastings Bass cases, and in each case (ironically, in view of later developments, as Norris J pointed out) it was the Revenue which argued for the complete invalidation of the resettlement, partly through the direct operation of the rule against perpetuities, and partly (as an argument against severance) because the effect of the operation of the rule is wholly to alter the character of the settlement, as Cross J put it in Abrahams at p 485. Cross J rejected an argument approximating an advancement by way of resettlement to the exercise of a power of appointment. Although they were treated in the same way for perpetuity purposes, in his view the similarity ended there (p. 485 D E): The interests given to separate objects of an ordinary special power are separate interests, but all the interests created in Caroles fund were intended as part and parcel of a single benefit to her. Cross J held, therefore, that there was no valid exercise of the power of advancement. In Hastings Bass the Court of Appeal, in a single judgment delivered by Buckley LJ, took a different view of a similar duty saving transaction. The true ratio of the decision has been much debated, both in forensic argument and by legal scholars. It has been considered twice by Lloyd LJ, first in Sieff v Fox [2005] EWHC 1312 (Ch), [2005] 1 WLR 3811 paras 43 and 44 (his last first instance case before his promotion to the Court of Appeal) and again, at much greater length, in his judgment in this case (paras 46 to 67). It is perhaps simplest to start with what Hastings Bass did not decide. It was not about mistake. Although one case on mistake (Wollaston v King (1869) LR 8 Eq 165) was cited, it was not referred to in the judgment. It would not have been enough for the Revenue to establish that the exercise of the trustees power might have been voidable at the instance of a beneficiary. The Revenue could succeed only by establishing that there had been no valid advancement at all. Nor did the decision turn on any inquiry into what was actually in the minds of the trustees in exercising the power of advancement. There seems to have been no evidence of this, and in Buckley LJs discussion at pp 39 41 (extensively quoted by Lloyd LJ at paras 53 56) the recurrent theme is what the trustees, as reasonable trustees, should or would have considered or intended. The third negative point to make is that Hastings Bass did not overrule Abrahams. It was distinguished on the basis that in Abrahams the attenuated residue of the sub settlement not struck down by the rule against perpetuities may not have been for the benefit of the beneficiary in question. But Buckley LJ did differ from Cross Js view that the benefit conferred by an advance by way of resettlement was of a monolithic character, preferring the view that it was a bundle of benefits of different characters. If and so far as it is an issue of severability, it is obviously easier to sever part of a bundle than part of a monolith. Buckley LJs own statement of the principle of the decision in Hastings Bass seems to be the passage at p 41 which has often been cited in later cases: To sum up the preceding observations, in our judgment, where by the terms of a trust (as under section 32) a trustee is given a discretion as to some matter under which he acts in good faith, the court should not interfere with his action notwithstanding that it does not have the full effect which he intended, unless (1) what he has achieved is unauthorised by the power conferred upon him, or (2) it is clear that he would not have acted as he did (a) had he not taken into account considerations which he should not have taken into account, or (b) had he not failed to take into account considerations which he ought to have taken into account. Lloyd LJ did not accept that as the true ratio. He thought that the Court of Appeal had already decided the case on the ground that the advancement, so far as not struck down by the rule against perpetuities, must stand unless it could not, in that attenuated form, reasonably be regarded as beneficial to the advancee. That is an objective test which does not call for an inquiry into the actual states of mind of the trustees. Lloyd LJ expanded this line of thought in para 66: If the problem to be resolved is what is the effect on an operation such as an advancement of the failure of some of the intended provisions, because of external factors such as perpetuity, it is not useful to ask what the trustees would have thought and done if they had known about the problem. The answer to that question is almost certainly that they would have done something different, which would not have run into the perpetuity or other difficulty. It is for that reason that the test has to be objective, by reference to whether that which was done, with all its defects and consequent limitations, is capable of being regarded as beneficial to the intended object, or not. If it is so capable, then it satisfies the requirement of the power that it should be for that persons benefit. Otherwise it does not satisfy that requirement. In the latter case it would follow that it is outside the scope of the power, it is not an exercise of the power at all, and it cannot take effect under that power. On this analysis, limb (1) of Buckley LJs statement of principle covers the whole ground, and limb (2) adds nothing. I respectfully agree with Lloyd LJs criticism of the statement of principle. I think it is also open to criticism for the generality of its reference to unintended consequences (notwithstanding that it does not have the full effect which he intended). That is a far reaching extrapolation from one case about section 31 of the Trustee Act 1925 and two cases about the rule against perpetuities. It set ajar a door that was pushed wide open in Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587 and other later cases. Mettoy In Mettoy Warner J applied the supposed new principle in the context of an occupational pension scheme, and in circumstances where the trustees exercise of a discretionary power was within the scope of that power. There was no invalidating factor, such as the rule against perpetuities, applicable under the general law. In doing so Warner J dismissed two significant arguments for limiting the scope of the new principle. The employer, Mettoy Co Plc, and the trustees of its pension scheme had in 1983 executed a deed to replace a 1980 deed (and some supplementary deeds) which were ineffective because of an error about the trusteeship. The rules scheduled to the 1980 deed included rule 13, providing for the winding up of the scheme in certain circumstances, the priority of claims in the winding up and the disposal of any ultimate surplus. This rule differed from an earlier winding up rule in several respects. Most materially, the discretion to use any ultimate surplus in augmenting benefits was to be exercisable by the employer (instead of by the trustees, as provided by the earlier rule). Moreover, in 1983 Mettoys financial position was precarious (as a result of an ill advised diversification from die cast model vehicles into personal computers) so that winding up of the scheme was much more than a remote possibility. In the event the scheme had to be wound up in 1984. The trustees issued an originating summons raising a number of questions, the most important being (in effect) whether the 1983 deed was wholly invalid, or valid except for rule 13, or valid except that the power of augmentation remained exercisable by the trustees. These questions arose because the trustees had admittedly not considered, or been advised about, the significance of rule 13. In response to another question raised by the originating summons, Warner J held that the power of augmentation was, even when exercisable by the employer, a fiduciary power. On that basis it was not clear that the trustees, if they had fully considered the matter, would have objected to the change effected by rule 13 ([1990] 1WLR 1587, 1628A 1630A). But by then Warner J had upheld (in a passage from pp1621G to 1626A) the existence of a principle which may be labelled the rule in Hastings Bass. He took Buckley LJs statement of principle in that case (set out at para 24 above) and reformulated it in positive terms, and so far as relevant to the facts of the case, as follows (p 1621H): where a trustee acts under a discretion given to him by the terms of the trust, the court will interfere with his action if it is clear that he would not have acted as he did had he not failed to take into account considerations which he ought to have taken into account. Warner J rejected the submissions of Mr Edward Nugee QC, recorded at pp 1622G to 1623G, that the principle, although existent, was of very narrow scope, and that the cases of Vestey, Abrahams and Hastings Bass (together with Pilkington, where there was a proposal for a resettlement rather than a completed transaction): . were about the consequences of what [Mr Nugee] referred to as an excessive execution of a power, ie the purported exercise of a power in a way that the law rendered partially ineffective. Warner J dismissed this argument at p1624B C: If, as I believe, the reason for the application of the principle is the failure by the trustees to take into account considerations that they ought to have taken into account, it cannot matter whether that failure is due to their having overlooked (or to their legal advisers having overlooked) some relevant rule of law or limit on their discretion, or is due to some other cause. Warner J also dismissed what he called Mr Nugees all or nothing argument (pp 1624H 1625A). In some cases the court would have to declare void the whole of some purported exercise of discretion by trustees. But in other cases (for instance where the trustees would have decided, had they thought about it properly, to omit some particular provision from a deed) the appropriate course would be to declare that provision alone to be void. At p 1626D Warner J referred to the all important third question: what would the trustees have done if they had considered the matters that they failed to consider? His meticulous review of the oral and documentary evidence, including the cross examination of Mr Lillyman (who was at all material times closely involved as the employers company secretary and a director of the corporate trustee) shows that he was concerned to establish, so far as he could, what these particular trustees (and not some hypothetical reasonable trustees) would have done. His approach was subjective, not objective. I respectfully agree with Lloyd LJs view that the basis on which Mettoy was decided cannot be found in the reasoning which led to the decision in Hastings Bass. It can claim to be an application of Buckley LJs summary statement of principle, but only if that statement is taken out of context and in isolation from the earlier part of the judgment. If the principle applied by Warner J merits a name at all, it should be called the rule in Mettoy. But the rule as formulated by Warner J has given rise to many difficulties, both in principle and in practice. From Mettoy to Sieff Mettoy was not much considered by the court during the 1990s. It was cited but not referred to in the judgment of the Court of Appeal in Edge v Pensions Ombudsman [2000] Ch 602. That decision, on an appeal by the Pensions Ombudsman from the judgment of Sir Richard Scott V C [1998] Ch 512, was largely concerned with the jurisdiction of the Pensions Ombudsman under Part X of the Pension Schemes Act 1993. The general tenor of the Court of Appeals judgment is that neither the Ombudsman nor the court has power to intervene in decisions made by trustees unless they have acted in breach of duty. That can be seen as putting down a marker that Lloyd LJ has since recognised. In Stannard v Fisons Pension Trusts Ltd [1991] Pen LR 225, in which Hastings Bass but not Mettoy was cited, the Court of Appeal modified Buckley LJs formulation, without any full discussion of the point, by putting the test in terms of what the trustees might, rather than would, have done if fully informed. The facts were that trustees had taken a decision about transfer values on the basis of an out of date valuation of the pension fund. The Court of Appeals modification of the test seems questionable since the legal significance of the error must have depended on the scale of the change in market value rather than on the precise nature of the trustees hypothetical second thoughts. It was not until about the year 2000 that Hastings Bass and Mettoy began to be called in aid in cases where tax planning arrangements involving trusts had gone wrong. The first case seems to have been Green v Cobham, decided by Jonathan Parker J in January 2000 but reported at [2002] STC 820, followed by Abacus Trust Co (Isle of Man) v National Society for the Prevention of Cruelty to Children [2001] STC 1344 (Patten J) and Breadner v Granville Grossman [2001] Ch 523 (Park J). Breadner was an unsuccessful attempt to extend the principle so as to circumvent a missed time limit for the exercise of a power of appointment. Park J observed at para 61: There must surely be some limits. It cannot be right that whenever trustees do something which they later regret and think that they ought not to have done, they can say that they never did it in the first place. The most important decisions, prior to the present appeals, are the decisions of Lightman J in Abacus Trust Co (Isle of Man) v Barr [2003] Ch 409 and Lloyd LJ in Sieff v Fox [2005] 1 WLR 3811. In the former case Mr Barr had participated in a management buy out of an engineering company and in 1992 he had settled his shares in the buy out vehicle, held through an Isle of Man holding company, in a settlement of which Abacus Trust Co (Isle of Man) (Abacus) was trustee. Abacus was administered by the Isle of Man firm of Coopers & Lybrand (C&L (IoM)). C&L (IoM) had close links with the English firm of Coopers & Lybrand, which advised on the buy out. Mr Ward Thompson of the English firm was Mr Barrs main contact. Under the settlement Mr Barr had a life interest, but Abacus as trustee had an overriding power of appointment in favour of a wide class of beneficiaries. Very soon after the creation of the settlement Mr Barr told Mr Ward Thompson that he wished 40% of the trust fund to be appointed on discretionary trusts in favour of his sons and their families, to the exclusion of himself and any wife of his. Through some misunderstanding this was conveyed to C&L (IoM) as a wish for 60% of the fund to be appointed, and on 22 April 1992 an appointment in that form was made. The mistake was discovered in August 1992 but nothing was done to try to remedy it until 2002. In the meantime, in 1994 the buy out vehicle was floated on the London Stock Exchange and the holding company controlled by Abacus embarked on a programme of sales of its shares. The judgment of Lightman J is impressively brief and incisive. He pointed out that Abacus was not seeking either rectification or rescission for mistake, and added in relation to the Hastings Bass rule (para 13): But in considering the ambit of the rule it is necessary to bear in mind that it is only one of the protections afforded to beneficiaries in respect of the due administration of the trust by the trustees. It is also important to have in mind that equity does not afford a trustee or a beneficiary a free pass to rescind a decision which subsequently proves unpalatable or unfortunate and substitute another. Relief is only available if the necessary conditions for its grant are satisfied. He referred to the authorities already discussed and observed that he did not need to resolve the issue posed by Stannard, since (para 20) clearly the trustee would not have appointed 60% of the trust fund if it had known of the settlors true wishes. He then addressed four issues: (1) whether there had to be a fundamental mistake; (2) whether the rule applied if there was any relevant mistake or ignorance on the part of the trustee, regardless of how it arose (and in particular, regardless of any breach of duty on the part of the trustee); (3) following from the last point, whether the rule applied on the facts of the case before him; and (4) whether, if the rule applied, the appointment was void or voidable. On the first issue Lightman J decided, correctly in my view, that a fundamental mistake was not necessary. A fundamental, or at least serious mistake may be necessary for rescission on the ground of mistake (that is relevant to the second ground of appeal in Pitt), but for the rule which Abacus was invoking (para 21): the rule does not require that the relevant consideration unconsidered by the trustee should make a fundamental difference between the facts as perceived by the trustee and the facts as they should have been perceived. All that is required in this regard is that the unconsidered relevant considerations would or might have affected the trustees decision, and in a case such as the present that the trustee would or might have made a different appointment or no appointment at all. But as his decision on the second point shows, it must be sufficiently serious as to amount to a breach of duty. On the second issue, Lightman J held that a breach of duty on the part of the trustee is essential to the application of the rule (para 23): What has to be established is that the trustee in making his decision has, in the language of Warner J in Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587, 1625, failed to consider what he was under a duty to consider. If the trustee has in accordance with his duty identified the relevant considerations and used all proper care and diligence in obtaining the relevant information and advice relating to those considerations, the trustee can be in no breach of duty and its decision cannot be impugned merely because in fact that information turns out to be partial or incorrect. That is in my view a correct statement of the law, and an important step towards correcting the tendency of some of the earlier first instance decisions. If in exercising a fiduciary power trustees have been given, and have acted on, information or advice from an apparently trustworthy source, and what the trustees purport to do is within the scope of their power, the only direct remedy available (either to the trustees themselves, or to a disadvantaged beneficiary) must be based on mistake (there may be an indirect remedy in the form of a claim against one or more advisers for damages for breach of professional duties of care). This serves to emphasise that the so called rule in Hastings Bass was not in play in that case, or in Abrahams. In those two cases the trustees were not at fault in failing to foresee the House of Lords decision in Pilkington several years later. But they purported to exercise their power of advancement in a way that was beyond the scope of that power, since it was contrary to the general law (that is the rule against perpetuities as clarified in Pilkington). The issue (resolved differently in Abrahams and Hastings Bass) was whether the parts of the resettlement not void for perpetuity were sufficient to amount to a proper exercise of the power of advancement. In Mettoy and Barr, by contrast, it was never in doubt that the relevant deed fell within the scope of the trustees power. This point is clearly made in paras 92 and 93 of Lloyd LJs judgment in the Court of Appeal. On the third issue Lightman J held that Abacus was in breach of duty, mainly because it had to take responsibility for Mr Ward Thompson, who (para 27) has declined to give evidence and answer the case made or suggest a different scenario. This part of the judgment turns on the particular facts of the case, but they are typical of many such cases, and I shall return to them in discussing the difficulties that still beset this area of the law. On the fourth issue Lightman J held that in cases where the rule applies (as opposed to cases of equitable non est factum such as Turner v Turner [1984] Ch 100) it makes the trustees disposition voidable, not void. The Court of Appeal agreed with his analysis, and so do I. The rule, properly understood, depends on breach of duty in the performance of something that is within the scope of the trustees powers, not in the trustees doing something that they had no power to do at all. Beneficiaries may lose their right to complain of a breach of trust by complicity, by laches or acquiescence or in other ways. Lightman J adjourned the case, expressing the hope (para 34) that a compromise would be possible. The absence of any further reported decision suggests that his hope was realised. In Sieff v Fox [2005] 1 WLR 3811 Lloyd LJ (as he had become by the time he handed down his lengthy reserved judgment) fully considered all the authorities mentioned above, and other authorities on mistake. I can take his judgment fairly briefly because he had occasion to reconsider it, and on one important point to depart from it, in his judgment in the Court of Appeal in these appeals. The case related to valuable land and chattels comprised in the Bedford settled estates, and the facts as to the trusts, and their tax implications, are very complicated. It is sufficient to note two points. First, the critical appointment (made in 2001 by the trustees in favour of Lord Howland, and with a view to a resettlement by him) required the consent of Lord Howland himself. In deciding whether or not to give consent Lord Howland was not acting in a fiduciary capacity. His consent (given in ignorance of some of the implications, including adverse tax consequences) was challenged, successfully, on the ground of mistake (see paras 115 and 119 (vii) of the judgment of Lloyd LJ). In his discussion of mistake, Lloyd LJ relied (paras 98 to 101) on Ogilvie v Littleboy (1897) 13 TLR 399, upheld on appeal as Ogilvie v Allen (1899) 15 TLR 294. The trustees exercise of their power of appointment was challenged, also successfully, under the Hastings Bass rule (see para 114, and compare para 119 (vi)). The second point to note is that Lloyd LJ was inclined to differ from Lightman J as to the need for the vitiating element in a fiduciary decision to amount to a breach of trust. Lloyd LJ referred to the trustees in Abrahams not being at fault in failing to foresee that the first instance decision in Pilkington would be reversed on an appeal made out of time. But Abrahams was a case in which the purported exercise of the trustees power was outside its proper scope, because it infringed the rule against perpetuities. This is the point on which Lloyd LJ has modified the provisional view which he expressed in Sieff v Fox. Futter v Futter: The facts and the first instance decision The appeal in Futter is concerned with incorrect advice given by solicitors as to the effect of provisions, primarily in section 87 of the Taxation of Chargeable Gains Act 1992 (TCGA), charging capital gains tax in respect of gains realised by non resident trustees. There were two settlements, the No 3 settlement and the No 5 settlement, made by Mr Mark Futter in 1985. Initially both settlements had non resident trustees, but in 2004 Mr Futter and Mr Cutbill, both resident in the United Kingdom, were appointed as trustees of the two settlements. Mr Cutbill was a partner in the London solicitors which gave the tax advice. At that stage both settlements had stockpiled gains that is, gains realised while the trust was not resident, and not yet distributed to the beneficiaries or brought in to charge for capital gains tax purposes. On the advice of the solicitors, the new, resident trustees on 31 March 2008 distributed the whole capital of the No 3 settlement to Mr Futter, in exercise of a power of enlargement, and on 3 April 2008 distributed 36,000 from the No 5 settlement to Mr Futters three children in equal shares, in exercise of a power of advancement. Each of these transactions was squarely within the scope of the relevant power. Mr Futter and Mr Cutbill understood (correctly) that the stockpiled gains would in consequence be attributed to Mr Futter and his children as if they were gains realised by those beneficiaries themselves. They also believed (incorrectly) that these attributed gains would be absorbed by allowable losses which they had realised so that no eventual tax liability would arise. This overlooked the effect of section 2(4) of TCGA as amended (the relevant amendment, for those interested in the fine detail, was that made by Schedule 21, para 2 of the Finance Act 1998, and not the further amendment made by Schedule 2, para 24 of the Finance Act 2008, which applied only from 5 April 2008). The result was a large capital gains tax liability for Mr Futter and a modest one for his children. Mr Futter and Mr Cutbill applied, as trustees of the two settlements, to have the deed of enlargement and the deeds of advancement declared void. The first four defendants, the beneficiaries, did not appear. The fifth defendant, the Revenue, resisted the application. Norris J began his judgment in spirited fashion, as already noted (para 3 above). However he went on to state that it was not an occasion for a first instance judge to reconsider a developed rule. He took the judgment of Lloyd LJ in Sieff v Fox as the leading authority on the rule, as had Sir Andrew Park in Smithson v Hamilton [2008] 1 WLR 1453, para 52, and as had Mr Robert Englehart QC in Pitt v Holt [2010] 1 WLR 1199, para 18. The Revenues submissions were similar to those advanced in Pitt (para 57 below), apart from the receivership point. As it happens the first instance judgment in Pitt was given on the first day of the first instance hearing in Futter, so that there was no real opportunity for revision of the Revenues case. As recorded in the judgment of Norris J the Revenue had three main lines of argument. The first was that the decision of the trustees was not in any meaningful sense different from what they intended (apart from the tax consequences). This argument echoed the distinction drawn by Millett J in Gibbon v Mitchell [1990] 1 WLR 1304, 1309 1310, between effect and consequences. Norris J rejected this argument on the ground that mistake was a different ground for relief, and that under the Hastings Bass rule tax consequences are rightly regarded as something that trustees must take into account in exercising their discretions. The Revenues second line of argument focused on the significance of the trustees error. It was to some extent a variation on the first argument, and it was rejected on similar grounds. The Revenues third submission (not pressed) was that so far from considering capital gains tax, the trustees had it in the forefront of their minds: the problem was that the advice was wrong (para 28). But wrong advice on tax consequences could, the judge said, lead to a perfectly orthodox application of the rule. Norris J held that the deeds were void, not voidable. He referred briefly (para 32) to the judgment of Lightman J in Barr, but noted that his reasoning (based on the trustees being at fault) was not accepted by Lloyd LJ in Sieff v Fox. Nevertheless Norris J considered (para 33) that the rigours of the void analysis could be mitigated by the application of equitable principles. Pitt v Holt: The facts and the first instance decision The facts relevant to the Pitt appeal are set out at length in the judgment of Lloyd LJ at paras 147 to 159, to which reference may be made for further detail. The claim was made by the personal representatives of Mr Derek Pitt, who died in 2007 aged 74. In 1990 he had suffered very serious head injuries in a road traffic accident, resulting in his mental incapacity. His wife, Mrs Patricia Pitt, was appointed as his receiver under the Mental Health Act 1983, and on his death she became one of his personal representatives, and the only beneficiary interested in his estate. Mr Pitts claim for damages for his injuries was compromised by a structured settlement, approved by the court, in the sum of 1.2m. Mrs Pitts solicitors sought advice from Frenkel Topping, a firm of financial advisers said to have specialist experience of structured settlements. They advised that the damages should be settled in a discretionary settlement, and this was done, with the authority of the Court of Protection, in 1994. The trust was referred to as the Derek Pitt Special Needs Trust (the SNT). Frenkel Topping gave their advice in a written report to Mrs Pitt (as receiver) which was made available to the Official Solicitor, who represented her husband in the application to the Court of Protection. The report referred to various advantages which the SNT was expected to secure, and it mentioned income tax and capital gains tax in its illustrative forecasts. But the report made no reference whatsoever to inheritance tax. The SNT could have been established without any immediate inheritance tax liability if (i) it had been an interest in possession trust or (ii) it had been a discretionary trust complying with section 89 of the Inheritance Tax Act 1984. In order to comply with section 89 its terms should have provided that at least half of the settled property applied during Mr Pitts lifetime was applied for his benefit. But the SNT as drafted and executed contained no such restriction. The consequence was an immediate liability to inheritance tax of the order of 100,000, with the prospect of a further tax charge on the tenth anniversary in 2004. The deputy judge (Mr Robert Englehart QC) observed that by 2010 the total tax, together with interest and penalties (if exacted) must have amounted to between 200,000 and 300,000. Mrs Pitt and her advisers became aware of the inheritance tax liabilities in 2003. In 2006 Mr Pitt (by a litigation friend) and the trustees of the SNT commenced proceedings against Frenkel Topping claiming damages for professional negligence. Mr Pitt died in 2007. After taking further advice his personal representatives (who were also two of the trustees of the SNT) commenced proceedings seeking to have the SNT set aside either under the Hastings Bass rule, or on the ground of mistake. The first defendant was the remaining trustee of the SNT (who took no part in the proceedings) and the second defendant was the Revenue (which actively opposed the application). Evidence was given in writing and there was no cross examination. In his judgment the deputy judge discussed the principal authorities on the Hastings Bass rule and observed (para 22) that three matters were not in dispute. First, it was agreed that the rule could apply without the need to identify a breach of duty on the part of the trustees or their advisers (so following Sieff v Fox rather than Barr). Second, it was unnecessary on the facts of the case to decide whether the application of the rule rendered a transaction void or voidable. Third, the rule would apply only if it was established that Mrs Pitt, if properly advised, would not have set up the SNT (rather than merely might not have done so). The principal arguments for the Revenue were that the rule did not in any case apply to a receiver (as opposed to a formally constituted trustee); that the rule applied only to a limited class of cases where the immediate purpose of the act in question was not achieved; and that tax consequences were never a sufficient basis for the application of the rule. The deputy judge rejected these submissions, holding that a receiver, as a fiduciary, was in essentially the same position as a trustee, and that the weight of the first instance authorities supported a wider version of the rule. He set aside the SNT on that ground. He indicated that he was not satisfied that there was any real mistake, as opposed to a failure to think about tax at all. Even if there was a mistake of any sort, it was only a mistake as to the consequences of the transaction, rather than its effect. Lloyd LJs judgment on the Hastings Bass rule I have already indicated my general agreement with Lloyd LJs judgment on the Hastings Bass issue. Paragraphs 1 to 28 contain an introduction and a summary of the facts of the two appeals. Paragraphs 29 to 67 consider Vestey, Abrahams and Hastings Bass. They come to the conclusion, with which I fully agree, that Buckley LJs statement of the supposed rule (para 24 above) was wider than the true principle of the actual decision in Hastings Bass. Paragraphs 68 to 91 consider more recent authorities, including Mettoy and Barr. All this is in a sense preliminary. Lloyd LJs essential reasoning and conclusions are at paragraphs 92 to 131. He then applied what he saw as the correct principle to the facts of Futter (paras 132 to 145) and Pitt (paras 146 to 163). He then dealt with the issue of mistake, raised by the respondents notice in Pitt (paras 164 to 223). The outcome was that both appeals were allowed (paras 224 to 226). Longmore LJ and Mummery LJ both gave short concurring judgments expressing full agreement. Mummery LJ added a clear summary of five salient points (paras 233 to 238). In the core of his judgment Lloyd LJ correctly spelled out the very important distinction between an error by trustees in going beyond the scope of a power (for which I shall use the traditional term excessive execution) and an error in failing to give proper consideration to relevant matters in making a decision which is within the scope of the relevant power (which I shall term inadequate deliberation). Hastings Bass and Mettoy were, as he rightly observed, cases in quite different categories. The former was a case of excessive execution and the latter might have been, but in the end was not, a case of inadequate deliberation. Lloyd LJ therefore withdrew his doubts about the conclusions that Lightman J had reached in Barr. Lloyd LJ then addressed the difficult question of how a fraudulent appointment (that is, an appointment ostensibly within the scope of a power, but made for an improper purpose) is to be fitted into the classification. The exercise of an equitable power may be fraudulent in this sense whether or not the person exercising it is a fiduciary. A well known example of trustees exercising a power for an improper purpose is provided by In Re Pauling [1964] Ch 303, in which a power ostensibly exercisable for the benefit of young adult beneficiaries was used to distribute trust capital to be frittered away on their improvident parents living expenses. There is Court of Appeal authority that a fraudulent appointment is void rather than voidable: Cloutte v Storey [1911] 1 Ch 18. In that case the appointee under an improper appointment had charged his equitable interest as security for a loan (and in doing so made two false statutory declarations as to the genuineness of the appointment). It was held that the lender had no security, even though it had no notice of the equitable fraud. It is an authority which has bedevilled discussion of the true nature of the Hastings Bass rule. Lightman J found the judgment of Farwell LJ problematic (Barr, para 31) and Lloyd LJ shared his reservations (para 98). So do I. It is hard to know what to make of Farwell LJs observations [1911] 1 Ch 18, 31: If an appointment is void at law, no title at law can be founded on it; but this is not so in equity: the mere fact that the appointment is void does not prevent a Court of Equity from having regard to it: eg, an appointment under a limited power to a stranger is void, but equity may cause effect to be given to it by means of the doctrine of election. The decision in Cloutte v Storey may have to be revisited one day. For present purposes it is sufficient to note that a fraudulent appointment (that is, one shown to have been made for a positively improper purpose) may need a separate pigeon hole somewhere between the categories of excessive execution and inadequate deliberation. In paragraphs 102 to 118, Lloyd LJ considered the duties of trustees in exercising their discretion, and in particular the relevance of tax considerations. He referred to some well known authorities including In re Badens Deed Trusts [1971] AC 424. That case was directly concerned with the correct test for certainty of objects of a discretionary trust (or trust power) but the speech of Lord Wilberforce contains, at pp 448 457, a general discussion of fiduciary discretions which has been very influential in the development of the law. This includes a passage at pp 456 457 as to the Courts intervention if trustees fail to exercise a trust power (that is, a discretion which it is their duty to exercise in some way). After referring to Lord Upjohns opinion Lord Wilberforce said: I would venture to amplify this by saying that the court, if called upon to execute the trust power, will do so in the manner best calculated to give effect to the settlors or testators intentions. It may do so by appointing new trustees, or by authorising or directing representative persons of the classes of beneficiaries to prepare a scheme of distribution, or even, should the proper basis of distribution appear by itself directing the trustees so to distribute. Lloyd LJ did not refer to that particular passage, but Warner J had done so in Mettoy [1990] 1 WLR 1587, 1617 1618, since in that case a decision as to the exercise of the power to augment benefits would have to be taken by someone. The passage serves as a reminder that where trustees have been in breach of duty by exercising a discretion with inadequate deliberation, setting aside their decision may not be the only course open to the court. In discussing what trustees should take into account, Lloyd LJ observed that the older cases tended to focus, not on what should be taken into account, but on what should not be taken into account. He instanced two cases. One was Klug v Klug [1918] 2 Ch 67, where one of the trustees strongly disapproved of her daughters choice of husband, and for that reason refused to concur with the Public Trustee in exercising a power of advancement in her favour. The court overrode her objection because she had not considered whether or not it would be for her daughters welfare that the advance should be made. She had therefore made no proper exercise of her discretion. The other case was In re Lofthouse (An Infant) (1885) 29 Ch D 921, in which income of a fund was available for the maintenance of a five year old girl whose mother had died very shortly after her birth. Her father had remarried and had three children by his second marriage. Bacon V C and the trustees (of the will of the girls maternal grandmother) evidently took very different views of how the father would spend the income if it was all paid to him for his eldest childs maintenance. The case was resolved by agreement in the Court of Appeal. The old cases as to the maintenance of children are rather exceptional, especially where the position was complicated by the child in question being a ward of court, as in In re Hodges (1878) 7 Ch D 754. Some judicial pronouncements in these cases should not be taken out of context. At para 115 Lloyd LJ reaffirmed the view that he had expressed in Sieff v Fox, para 86, that fiscal consequences may be relevant considerations which the trustees ought to take into account. I agree. In the private client world trusts are mostly established by and for wealthy families for whom taxes (whether on capital, capital gains or income) are a constant preoccupation. It might be said, especially by those who still regard family trusts as potentially beneficial to society as a whole, that the greater danger is not of trustees thinking too little about tax, but of tax and tax avoidance driving out consideration of other relevant matters. That is particularly true of offshore trusts. They are usually run by corporate trustees whose officers and staff (especially if they change with any frequency) may know relatively little about the settlor, and even less about the settlors family. The settlors wishes are always a material consideration in the exercise of fiduciary discretions. But if they were to displace all independent judgment on the part of the trustees themselves (or in the case of a corporate trustee, by its responsible officers and staff) the decision making process would be open to serious question. The Barr case (2003) Ch 409 illustrates the potential difficulties of unquestioning acceptance of the settlors supposed wishes. It is interesting, in this context, to compare the facts of some of the offshore cases with those of Turner v Turner [1984] Ch 100. That was a case in which a farmer made a discretionary settlement which he did not understand, and appointed as trustees family friends who never realised that they had any responsibility at all except to do as the settlor asked. They thought that it would be intruding into the settlors affairs if they were to read the documents that they were asked to sign (see at pp 106 108). Anyone familiar with the duties of trustees may find this hard to contemplate (as Mervyn Davies J did, at p 109). But it may be that some offshore trustees come close to seeing their essential duty as unquestioning obedience to the settlors wishes. The Barr case also illustrates another practical difficulty in the application of the Hastings Bass rule as it has developed. Lightman J was in my view right to decide that when the vitiating error is inadequate deliberation on relevant matters (rather than mistake) the inadequacy must be sufficiently serious as to amount to a breach of duty; and Lloyd LJ was right to change the contrary view which he had expressed in Sieff v Fox. It would set the bar too high (or too low, depending on the spectators point of view) to apply the Hastings Bass rule whenever trustees fall short of the highest standards of mature deliberation and judgment. Where, as in Barr, the trustee is a body corporate acting as a sort of in house facility provided by a firm of professional advisers, it may be hard to decide whether the separate juristic personality of the trustee insulates it from responsibility for the errors of individual professionals within the firm. A rather similar problem arose on the facts of Futter. It is a striking feature of the development of the Hastings Bass rule that it has led to trustees asserting and relying on their own failings, or those of their advisers, in seeking the assistance of the court. This was pointed out in no uncertain terms by Norris J in his first instance judgment in Futter, quoted in para 3 above. There may be cases in which there is for practical purposes no other suitable person to bring the matter before the court, but I agree with Lloyd LJs observation (para 130) that in general it would be inappropriate for trustees to take the initiative in commencing proceedings of this nature. They should not regard them as uncontroversial proceedings in which they can confidently expect to recover their costs out of the trust fund. Lloyd LJ stated the correct principle, as he saw it, at para 127: It seems to me that the principled and correct approach to these cases is, first, that the trustees act is not void, but that it may be voidable. It will be voidable if, and only if, it can be shown to have been done in breach of fiduciary duty on the part of the trustees. If it is voidable, then it may be capable of being set aside at the suit of a beneficiary, but this would be subject to equitable defences and to the courts discretion. The trustees duty to take relevant matters into account is a fiduciary duty, so an act done as a result of a breach of that duty is voidable. Fiscal considerations will often be among the relevant matters which ought to be taken into account. However, if the trustees seek advice (in general or in specific terms) from apparently competent advisers as to the implications of the course they are taking, and follow the advice so obtained, then, in the absence of any other basis for a challenge, I would hold that the trustees are not in breach of their fiduciary duty for failure to have regard to relevant matters if the failure occurs because it turns out that the advice given to them was materially wrong. Accordingly, in such a case I would not regard the trustees act, done in reliance on that advice, as being vitiated by the error and therefore voidable. The requirement for breach of duty In this court Mr Robert Ham QC undertook the main burden of the argument for the appellants on the Hastings Bass rule. Mr Christopher Nugee QC adopted Mr Hams submissions, and added some of his own, but concentrated his argument on the issue of mistake. Mr Hams submissions centred on whether the courts jurisdiction under the Hastings Bass rule is exercisable only if there is a breach of fiduciary duty on the part of the trustees (or other relevant fiduciary). He argued that this is a novel requirement which leads to arbitrary and unfair distinctions, especially in cases where incorrect advice on tax has been given by professional advisers who may or may not themselves be trustees. Mr Ham also had subsidiary but important arguments about the attribution to trustees of fault on the part of their advisers, and about the identification of relevant considerations for the purposes of the rule. Mr Ham contended that the supposed need for establishing a breach of fiduciary duty, before the Hastings Bass rule can come into play, was a novel requirement introduced in 2003 by Lightman J in his judgment in Barr. Reference to paras 16 to 20 of his judgment shows that Lightman J was relying on a number of earlier authorities, including the decision of the Court of Appeal in Edge [2000] Ch 602, 627 628, and the decision of Warner J in Mettoy [1990] 1 WLR 1587, 1625: In a case such as this, where it is claimed that the rule in Hastings Bass applies, three questions arise: (1) What were the trustees under a duty to consider? (2) Did they fail to consider it? (3) If so, what would they have done if they had considered it? In my view Lightman J was right to hold that for the rule to apply the inadequate deliberation on the part of the trustees must be sufficiently serious as to amount to a breach of fiduciary duty. Breach of duty is essential (in the full sense of that word) because it is only a breach of duty on the part of the trustees that entitles the court to intervene (apart from the special case of powers of maintenance of minor beneficiaries, where the court was in the past more interventionist: see para 64 above). It is not enough to show that the trustees deliberations have fallen short of the highest possible standards, or that the court would, on a surrender of discretion by the trustees, have acted in a different way. Apart from exceptional circumstances (such as an impasse reached by honest and reasonable trustees) only breach of fiduciary duty justifies judicial intervention. Mr Ham relied heavily on the decision of the Court of Appeal in Kerr v British Leyland (Staff) Trustees Ltd (1986) [2001] WTLR 1071. In that case Mr Kerr, a member of the British Leyland staff pension scheme, suffered from angina and claimed a disability benefit payable on permanent disability (defined as so that no further employment of any kind is possible). The scheme had a group policy with Legal & General, which obtained separate medical advice and indicated that it would reject the claim. The corporate trustee of the pension scheme decided to follow Legal & General in rejecting the claim. Mr Kerr took proceedings challenging the trustees decision, and was successful at first instance. The Court of Appeal dismissed the corporate trustees appeal. In doing so Fox LJ (with whom Mustill LJ and Caulfield J agreed) made plain that the corporate trustees board was not at fault. There had been a failure of communication. As to the judges declaration that Mr Kerr was entitled to a pension, Fox LJ stated (p 1080): I do not think he was entitled to do that. The decision whether to accept the claim is one for the trustee and not for the court. It seems to me that, in the present case, the decision of the trustee was simply ineffective since the board did not carry out their duty to give a properly informed consideration to the claim. That however does not entitle the Court to substitute its own view of the claim for that of the trustee. I would, therefore, discharge the order of the judge and substitute an order that the decision of the trustees on 28 June 1978 to reject Mr Kerrs claim was of no effect and that the trustee should reconsider the claim. The Kerr case is of interest since (though not reported for 15 years) it is an early example, antedating Mettoy, of the application of something like the Hastings Bass rule. But I think it is important to note that under the British Leyland scheme the corporate trustee did not have any real discretion about disability benefit. It had to exercise a judgment on an issue of fact (permanent disability from any employment). That is an issue on which the court would be much more ready to intervene if the trustee had failed to grasp the real facts. It is an intermediate situation which is arguably closer to a mistaken judgment on an issue of fact than to the defective exercise of a discretion. Kerr may be compared with Mihlenstedt v Barclays Bank International Ltd [1989] IRLR 522. That was a comparable case except that there was a preliminary issue of construction as to whether the relevant rule (which began Early retirement due to ill health will be permitted only when . ) imported a wider discretion. The Court of Appeal decided that the language of the rule was that of obligation and entitlement, and that the judge had erred in supposing that there was a wider discretion. But on the facts the majority of the Court of Appeal held that the trustee had not formed its opinion on an erroneous basis. Mr Hams fallback position was that if a breach of duty was an essential requirement, there could be a breach without fault on the part of any individual trustee being established. This general argument was developed in several different directions. I would identify these (though there was some overlap) as (1) strict liability (2) agency (3) resulting absurdity and (4) a special meaning of relevant. These points are considered below, in turn. Mr Nugee, in supporting Mr Hams position, attached most weight to the argument on strict liability. It is undoubtedly correct that trustees may be liable for breach of trust even though they have acted in accordance with skilled professional advice. Such advice cannot protect trustees from potential liability for a loss to the trust fund resulting from a decision that is, judged objectively, beyond the trustees powers and detrimental to the trust (though professional advice may lead to their obtaining relief under section 61 of the Trustee Act 1925). An example mentioned in argument is Dunn v Flood (1885) 28 Ch D 586, in which trustees had sold by auction 73 plots of freehold land at Reading, subject to special conditions which the court held to be severely depreciatory (as Fry LJ put it at p594, eminently calculated to frighten away purchasers). The Court of Appeal, upholding North J, refused to force a doubtful title on a reluctant purchaser. The fact that the trustees had consulted respectable solicitors was no excuse. It was not a reasonable exercise of discretion (Baggallay LJ and Bowen LJ at p592; Fry LJ at pp593 594). But the trustees breach of duty was not in the manner of their decision making (as to which we know nothing other than that they consulted respectable solicitors) but the loss to the trust property that their unreasonable decision appeared to have caused. Further examples are provided by the decision of the Court of Appeal in Perrins v Bellamy [1899] 1 Ch 797 and that of the Privy Council, on appeal from the Supreme Court of Victoria, in National Trustees Co of Australasia Ltd v General Finance Co of Australasia Ltd [1905] AC 373. These cases, discussed by Lloyd LJ at para 124 of his judgment, were both examples of action taken by trustees on professional advice which was unequivocally incorrect: one a sale of leaseholds when the trustees had no power of sale; the other a distribution (resulting from some extraordinary slip by solicitors of high standing) of a deceased beneficiarys vested share to persons who were not entitled to it under the intestacy law of Victoria in force at the beneficiarys death. As Lloyd LJ observed, the issue in these cases: is altogether different, as it seems to me, from the question whether, if trustees take advice properly, and act on that advice in a matter which is within their powers, the fact that the advice has misled them as to the true position in a relevant respect means that they acted in breach of fiduciary duty. I respectfully agree. Trustees may be liable, even if they have obtained apparently competent professional advice, if they act outside the scope of their powers (excessive execution), or contrary to the general law (for example, in the Australian case, the law regulating entitlement on intestacy). That can be seen as a form of strict liability in that it is imposed regardless of personal fault. Trustees may also be in breach of duty in failing to give proper consideration to the exercise of their discretionary powers, and a failure to take professional advice may amount to, or contribute to, a flawed decision making process. But it would be contrary to principle and authority to impose a form of strict liability on trustees who conscientiously obtain and follow, in making a decision which is within the scope of their powers, apparently competent professional advice which turns out to be wrong. Such a result cannot be achieved by the route of attributing any fault on the part of professional advisers to the trustees as their supposed principals. Solicitors can and do act as agents in some clearly defined functions, usually of a ministerial nature, such as the receipt and transmission of clients funds, and the giving and taking of undertakings on behalf of clients. But they do not and may not act as agents in the exercise of fiduciary discretions. As I said in Scott [1998] 2 All ER 705, 717: It is however for advisers to advise and for trustees to decide: trustees may not (except insofar as they are authorised to do so) delegate the exercise of their discretions, even to experts. Mr Ham relied on some observations of Warner J in Mettoy [1990] 1 WLR 1587, 1625 1626: But the question is not in my view to what extent trustees may in practice have to rely on professional advice. The duty to take into account all material considerations is that of the trustees. The extent of that duty is not affected by the amount or quality of the professional advice they may seek or obtain. In In Re Hastings Bass [1975] Ch 25 it was not relevant to what extent the trustees themselves were able to form an opinion on the effect of the rule against perpetuities. This passage was noted by Lloyd LJ in his discussion of the cases (para 71) but receives only a passing mention in para 124, the part of his judgment which discusses the significance of professional advice. I have difficulty with these observations of Warner J. They occur in the part of his judgment dealing with the first of the three questions that he had posed (para 72 above) and probably they must be read in that context. Moreover the last sentence at p1626 A B suggests that Warner J was not clearly distinguishing the category of excessive execution in Hastings Bass itself from the category of inadequate deliberation relevant to the issue before him. If his remarks cannot be limited to their context then I would say that Warner J was wrong in disregarding the amount or quality of professional advice obtained by trustees, when the question relates to a decision within the scope of the trustees powers. Mr Ham submitted that a refusal to attribute to trustees fault on the part of their advisers or agents leads to counter intuitive and arbitrary distinctions. He instanced an error in a letter setting out the settlors wishes (a variation of the facts in Barr). On that particular example, such an error might be a sufficient ground for a voluntary disposition to be set aside on the ground of mistake, regardless of where responsibility for the error lay. But I would accept that there have been, and no doubt will be in the future, cases in which small variations in the facts lead to surprisingly different outcomes. That is inevitable in an area where the law has to balance the need to protect beneficiaries against aberrant conduct by trustees (the policy behind the Hastings Bass rule) with the competing interests of legal certainty, and of not imposing too stringent a test in judging trustees decision making. There is indeed a striking contrast between the courts conclusions as to the position of Mr Ward Thompson in Barr and that of Mr Cutbill in Futter. Mr Ward Thompsons position was considered in detail by Lightman J [2003] Ch 409, para 27: He was the one point of contact between on the one side the settlor and on the other side C & L, C & L Isle of Man, the trustee and the protector. For all practical purposes he was the emanation and only representative of C & L, C & L Isle of Man, the trustee and the protector in all their dealings with the settlor. C & L was through itself and its associated firm, C & L Isle of Man and its vehicles, the trustee and the protector, providing the settlor with a total corporate and trust holding service. As is common ground the solicitors who drafted the appointment were acting on behalf of the trustee: Mr Ward Thompson in giving instructions for its preparation in the circumstances can only have done so acting as agent for the trustee. These findings (based, it appears, on witness statements not tested by cross examination) show that it was an unusual situation in which Mr Ward Thompson had an exceptionally important role. The judges conclusion was reinforced by another passage in para 27: I should add that my view is reinforced by the consideration that any ambiguity in the structure and arrangements ought to be resolved in favour of the settlor: (1) the C & L side were responsible for the structure and arrangements; (2) Mr Ward Thompson has declined to assist the court; and (3) the trustee perhaps surprisingly failed to seek from the settlor an expression of his wishes in documentary form or provide him with a copy of the proposed appointment before it was executed. In short, on the material before me, on the third issue I am satisfied that the trustee failed in its fiduciary duty to ascertain the true wishes of the settlor to which the appointment was intended to give effect and accordingly the rule is brought into play. Cases of this sort will call for detailed fact finding by the judge, and sometimes no doubt for cross examination. Barr may be contrasted with Abacus Trust Company (Isle of Man) Ltd v NSPCC [2001] STC 1344, in which an artificial tax avoidance scheme failed because a deed of appointment was executed on 3 April 1998, contrary to the clear advice of leading counsel that it should not be executed until after the end of the 1997 98 financial year. On Wednesday, 1 April 1998 the appointment was faxed to the corporate trustee in the Isle of Man by an English solicitor with the suggestion that it should be executed on Friday (naturally taken as 3 April). But a director of the corporate trustee had attended the consultation with leading counsel, and had received a note of it, which he did not refer to when he received the fax. Patten J applied the Hastings Bass rule without finding it necessary to reach any clear conclusion about breach of duty, which was not then recognised as an essential requirement. In Futter Mr Cutbill, a partner in a London firm of solicitors, was involved both as a trustee and as a solicitor advising the trustees. The facts as to his involvement were found at first instance by Norris J [2010] STC 982. It so happened, as already mentioned, that the judgment of Mr Engelhart QC in Pitt was given on 18 January 2010, the first day of the hearing in Futter. In Pitt it had been common ground ([2010] 1 WLR 1199, para 22) that there was no need to identify a breach of duty by the trustees. It is not clear from Norris Js judgment whether the same incorrect concession was made and accepted before him. But Norris J seems to have accepted Sieff v Fox as the leading authority from which to obtain guidance, and Barr received only a passing mention (on the void or voidable? issue) in his judgment. Norris J did not therefore make any clear finding about breach of fiduciary duty. He simply recorded and accepted Mr Cutbills written evidence, which included the statement that [Mr Futter] and I failed to pay any regard to the provisions of section 2(4) [TCGA] at the time, and therefore failed to consider the full tax implications. The Court of Appeal was therefore in as good a position as Norris J to make a finding about breach of duty on the part of the trustees. This Court has before it all the written evidence and exhibits that were before the judge, and in the absence of concurrent findings below it is also in a position to make findings, if necessary, on that issue. I will return to it below when dealing with the disposal of the Futter appeal. Finally, on this part of the case, there is the submission that the trustees duty to take account of relevant considerations is to be interpreted as a duty to act on advice only if it is correct in effect, a duty to come to the right conclusion in every case. I have left this submission until the end because it is to my mind truly a last ditch argument. It involves taking the principle of strict liability for ultra vires acts (paras 81 to 84 above) out of context and applying it in a different area, so as to require trustees to show infallibility of judgment. Such a requirement is quite unrealistic. It would tip the balance much too far in making beneficiaries a special favoured class, at the expense of both legal certainty and fairness. It is contrary to the well known saying of Lord Truro LC in In re Beloved Wilkess Charity (1851) 3 Mac & G 440, 448: . that in such cases as I have mentioned it is to the discretion of the trustees that the execution of the trust is confided, that discretion being exercised with an entire absence of indirect motive, with honesty of intention, and with a fair consideration of the subject. The duty of supervision on the part of this court will thus be confined to the question of the honesty, integrity, and fairness with which the deliberation has been conducted, and will not be extended to the accuracy of the conclusion arrived at, except in particular cases. The trustees duty does not extend to being right (the accuracy of the conclusion arrived at) on every occasion. The particular cases that the Lord Chancellor had in mind may have included cases concerned with the maintenance of minor beneficiaries. They may also have included cases (such as Kerr v British Leyland (Staff) Trustees Ltd) in which the trustees have to make a particular factual judgment, rather than exercise a wide discretion. As a first footnote on the topic of fault, I would mention that in para 128 of his judgment, Lloyd LJ observed that a claim by beneficiaries against trustees may often be precluded by an exoneration clause in the trust instrument. Mr Philip Jones QC (for the Revenue) disputed this, pointing out that even if a trustee is exonerated from liability to pay equitable compensation, he is still liable to injunctive relief to prevent a threatened breach of trust, and personal and proprietary remedies may be available against persons who receive assets distributed in breach of trust. Moreover an exoneration clause does not protect a trustee against removal from office by order of the court. The Futter No 3 and No 5 settlements contain exoneration clauses in conventional terms, stating that in the professed execution of the trusts and powers hereof no trustee shall be liable for a breach of trust arising from a mistake or omission made by him in good faith. I would not treat that clause as ousting the application of the Hastings Bass rule, if it were otherwise applicable. As a second footnote, there was some discussion in the course of argument as to the significance, in situations of this sort, of a possible claim for damages against professional advisers for financial loss caused by incorrect advice (or incorrect implementation of instructions). Mr Nugee referred to Walker v Geo H Medlicott & Son [1999] 1 WLR 727, in which a strong Court of Appeal dismissed on two grounds a claim for damages for professional negligence in preparing a will. The second ground was that the aggrieved claimants proper course was to mitigate his damage by seeking rectification of the will. That decision may reflect the courts view of the particular facts of the case, and the feeling that if the drafting of the will had gone wrong other beneficiaries under it should not obtain adventitious benefits. In principle the possibility that trustees may have a claim for damages should have no effect on the operation of the Hastings Bass rule. In practice it will be rare for trustees to have so strong a claim that they can be confident of obtaining a full indemnity for their beneficiaries loss and their own costs. In the Pitt case this court was told that the claim against Frenkel Topping has been settled. Had it gone to trial the claim, even if successful in establishing duty and breach, might have faced difficulties over causation, since Mrs Pitt executed the SNT under the authority of an order of the Court of Protection, which had considered its terms. That courts apparent lack of awareness of the importance of section 89 of the Inheritance Act 1984 is one of the most remarkable features of the whole sorry story. Would or Might? In his statement of the correct principle (para 127 of the judgment, set out in para 70 above) Lloyd LJ did not provide an answer to the would or might? debate. That was not, I think, an oversight. The Hastings Bass rule is centred on the failure of trustees to perform their decision making function. It is that which founds the courts jurisdiction to intervene if it thinks fit to do so. Whether the court will intervene is another matter. Buckley LJs statement of principle in Hastings Bass (para 24 above) cannot be regarded as clear and definitive guidance, since Buckley LJ was considering a different matter the validity of a severed part of a disposition, the other part of which was void for perpetuity. In Mettoy itself the trustees had wholly failed to consider (or even to be aware of) an important change in the new rules (affecting the destination of surplus in a winding up of the scheme), at a time when winding up was a real possibility. But Warner J (applying Buckley LJs would not formulation) declined to set aside the adoption of the new rules, because the power over surplus remained a fiduciary power. It has been suggested (partly in order to accommodate the decision of the Court of Appeal in Stannard, para 34 above) that would not is the appropriate test for family trusts, but that a different might not test (stricter from the point of view of the trustees, less demanding for the beneficiaries) is appropriate for pensions trusts, since members of a pension scheme are not volunteers, but have contractual rights. That is an ingenious suggestion, and in practice the court may sometimes think it right to proceed in that way. But as a matter of principle there must be a high degree of flexibility in the range of the courts possible responses. It is common ground that relief can be granted on terms. In some cases the court may wish to know what further disposition the trustees would be minded to make, if relief is granted, and to require an undertaking to that effect (see In re Badens Deed Trusts [1971] AC 424, referred to in para 63 above). To lay down a rigid rule of either would not or might not would inhibit the court in seeking the best practical solution in the application of the Hastings Bass rule in a variety of different factual situations. Void or Voidable? Counsel on both sides readily admitted that they had hesitated over this point, but in the end they were all in agreement that Lloyd LJ was right in holding (para 99) that, if an exercise by trustees of a discretionary power is within the terms of the power, but the trustees have in some way breached their duties in respect of that exercise, then (unless it is a case of a fraud on the power) the trustees act is not void but it may be voidable at the instance of a beneficiary who is adversely affected. In my judgment that is plainly right, and in the absence of further argument on the point it is unnecessary to add much to it. The issue has been clouded, in the past, by the difficult case of Cloutte v Storey, a case on appointments that are fraudulent in the equitable sense, that is made for a positively improper purpose. Here we are concerned not with equitable fraud, nor with dispositions which exceed the scope of the power, or infringe the general law (such as the rule against perpetuity). We are in an area in which the court has an equitable jurisdiction of a discretionary nature, although the discretion is not at large, but must be exercised in accordance with well settled principles. The working out of these principles will raise problems which must be dealt with on a case by case basis. The mistake claim in Pitt involves a problem of that sort. But it is unnecessary and inappropriate to prolong what is already a very long judgment by further discussion of problems that are not now before this court. Disposal of the Hastings Bass issues In Futter the essential issue was whether the trustees of the No 3 and No 5 settlements, in deciding to take the steps which they took in March and April 2008, failed in their duty to take relevant considerations into account. Capital gains tax was a relevant consideration. Indeed, it is fairly plain that it was the paramount consideration, and the trustees thought about it a great deal. But the tax advice which they received and acted on was wrong, because an amendment to section 2(4) of TCGA had been overlooked. As Lloyd LJ put it succinctly (para 138): They did not overlook the need to think about CGT. They were given advice on the right point. The problem was that the advice was wrong. The only complication was that Mr Cutbill (the solicitor trustee) was a member of both teams: the solicitors giving the erroneous advice, and the trustees receiving and acting on it. I agree with the Court of Appeal that it would be artificial to distinguish between the two trustees, who acted together in making and effectuating their decisions. I would if necessary go further and hold that the documentary evidence indicates that most if not all of the technical tax advice given by his firm came not from Mr Cutbill but from the assistant solicitor who was working with him, from January 2008, in a review of a number of different Futter family settlements. Until 27 March 2008 it was supposed, wrongly, that the No 3 settlements stockpiled gains were relatively small, and the fact that they amounted to about 188,000 led to a last minute change of plan. On 28 March 2008 there was a telephone conversation between the assistant solicitor and Mr Bunce, Mr Futters accountant, at which, without reference to Mr Cutbill, she definitely confirmed that Mr Futters personal losses could be set off against the section 87 gains. Mr Cutbill seems to have been, very properly, reluctant to put the blame on a junior member of his firm, and of course his firm must take legal responsibility for any actionable mistake by any of its fee earners. But the documents in exhibit CDC 1 to Mr Cutbills witness statement tend to confirm that he should not, as a trustee of the No 3 and No 5 settlements, be treated as having been personally in breach of fiduciary duty. In Pitt the position was even clearer. As her husbands receiver under the Mental Health Act 1983 Mrs Pitt was in a fiduciary position but there is no suggestion that she had any professional qualifications. She devoted herself, alternating with a carer, to looking after her disabled husband. As anyone in that position would, she took professional advice from solicitors and specialist consultants. After hearing from her legal advisers and the Official Solicitor the Court of Protection made an order on 1 September 1994 authorising (not directing) her to execute the SNT and she acted on that authority on 1 November 1994 (the date in para 161 of Lloyd LJs judgment seems to be an error; compare para 151). She had taken supposedly expert advice and followed it. There is no reason to hold that she personally failed in the exercise of her fiduciary duty. Unfortunately the advice was unsound. as it turns on the Hastings Bass rule. I would therefore dismiss the appeal in Futter, and the appeal in Pitt so far RESCISSION ON THE GROUND OF MISTAKE Mrs Ogilvies litigation In this part of his judgment Lloyd LJ began with the litigation conducted by Mrs Ogilvie at the end of the 19th century. Mrs Ogilvie was a very rich widow who had in 1887 executed two deeds settling large funds for charitable purposes. She was described by Byrne J (in the transcript included in the appendix printed for the eventual appeal to the House of Lords, pp 862 863) as undoubtedly a good woman of business, shrewd, clever and intelligent, having been accustomed to assist her husband in business matters. She had a proper sense of the responsibilities of great wealth, she was charitable and munificent. She had strong views on certain subjects, was impatient of any attempt to thwart or control her, and though perhaps at times inclined to be somewhat changeable, she was firm and decided as to her course of action when she had made up her mind and laid down what she terms her law in respect to any matter. Seven years later she brought an action to have the deeds set aside. She relied on grounds summarized by Byrne J (p 862) as follows: (1) That she had not preserved to her the absolute power of disposing of the capital, including the land, as she thought fit during her life, and that notwithstanding express instructions to the contrary. (2) That she had not a similar absolute power in respect to income. (3) That she is liable to interference by the Charity Commissioners and by her own Trustees, and to be called upon by them to account for her administration of the income and that notwithstanding express instructions to the contrary. (4) That she has not the power to apply moneys originally dedicated to London institutions to Suffolk institutions. (5) That she was not fully and properly advised and that she did not fairly understand the nature and effect of the documents she executed. These grounds were fully explored in the pleadings, in interrogatories, and in cross examination at the nine day trial. Originally there was an alternative claim for rectification but her counsel did not rely on that claim, although it seems (pp 903 905) that the Attorney General (who appeared in person at every stage of the proceedings) made an open offer for the case to be disposed of uncontentiously on that basis. Byrne J gave a judgment, over 50 pages long in the transcript, in which he said (p 901), The case is entirely wanting in any of those elements of fraud, undue influence, concealments of facts from the donor, want of separate and independent advice, surprise or pressure, which, or some of which, are commonly to be met with in cases of attempts to set aside or rectify voluntary instruments. The judge rejected almost entirely the criticisms that Mrs Ogilvie directed towards her legal advisers: The utmost that could be suggested against Mr Smith is that he misunderstood his instructions, or that he was guilty of error of judgment in not having with more insistence determined to see his client personally, and against Mr Smith, Mr Harding, Mr Sutherland, and their counsel, that possibly they allowed their natural and perfectly unselfish wish to see the charitable scheme carried through to permit them to neglect informing the plaintiff of every trouble and difficulty of detail which arose in the matter. (Mr Smith was the London solicitor of Mrs Ogilvie, who lived in Suffolk; Mr Harding was a respected member of the Society of Friends, who gave her advice; and Mr Sutherland was her late husbands confidential clerk.) Her action was dismissed. She appealed to the Court of Appeal, where in view of the trial judges clear findings the argument seems to have been more closely focused as mistake. Giving the judgment of the Court of Appeal Lindley LJ said (Ogilvie v Littleboy (1897) 13 TLR 399, 400): Gifts cannot be revoked, nor can deeds of gift be set aside, simply because the donors wish that they had not made them and would like to have back the property given. Where there is no fraud, no undue influence, no fiduciary relation between donor and donee, no mistake induced by those who derive any benefit by it, a gift, whether by mere delivery or by deed, is binding on the donor . In the absence of all circumstances of suspicion a donor can only obtain back property which he has given away by showing that he was under some mistake of so serious a character as to render it unjust on the part of the donee to retain the property given to him. Mrs Ogilvies grounds of complaint seem to have been revised a little. The alleged mistakes as to the application of capital or income for non charitable purposes, and as to the jurisdiction of the Charity Commissioners, could not be sustained on the judges findings. As to the fourth ground (relating to sales of land) the Court of Appeal held that the mistake, such as it was, cannot be regarded as so material as to affect the validity of the deeds. The fifth ground had been reformulated as a failure by her advisers to warn her that members of the Society of Friends might be unwilling to become trustees. As to this Lindley LJ observed (p 401): But, assuming the danger to be real, assuming that it was an error of judgment not to call the plaintiffs attention to it, is such an omission enough to entitle her to have the deeds set aside? We are not aware of any legal principle which goes this length or anything like it. The complaint is not that her intentions have not been carried out; it is that a possible danger known to her advisers was not pointed out to her. So the appeal was dismissed, as was a further appeal to the House of Lords (Ogilvie v Allen (1899) 15 TLR 294). Lord Halsbury LC said (p 295): The appellant, a lady, was desirous of establishing certain charities, and she now contends that, though she did intend to devote her money to charity, certain specific intentions as to management, control, independence of control, and the like were such essential and important considerations to her mind that in these respects she was misled, and now seeks to get rid of the effect of her deeds upon that allegation. Such questions, doubtless, may arise under circumstances where misunderstanding on both sides may render it unjust to the giver that the gift should be retained. It appears to me that there are no such circumstances here. I entirely concur with the judgment delivered by the present Master of the Rolls . So did Lord Macnaghten, who said that Lindley LJs judgment deals with the case so fully and so satisfactorily that there is nothing more to be added. Lord Morris concurred. Lloyd LJ reviewed and discussed other 19th century and modern authorities, including the first instance decisions in Gibbon v Mitchell [1990] 1 WLR 1304 and In re Griffiths, decd [2009] Ch 162. He questioned the result in the latter case. The framework of his conclusion (paras 210 and 211) was that for the exercise of the equitable jurisdiction to set aside a voluntary disposition there must be (1) a mistake, which is (2) of the relevant type and (3) sufficiently serious to satisfy the Ogilvie v Littleboy test. That is a convenient framework against which to consider the authorities, although there is obviously some overlap between the three heads. In general a mistake as to the essential nature of a transaction is likely to be more serious than a mistake as to its consequences. What is a mistake? For present purposes a mistake must be distinguished from mere ignorance or inadvertence, and also from what scholars in the field of unjust enrichment refer to as misprediction (see Seah, Mispredictions, Mistakes and the Law of Unjust Enrichment [2007] RLR 93; the expression may have first received judicial currency in Dextra Bank & Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193). These distinctions are reasonably clear in a general sort of way, but they tend to get blurred when it comes to facts of particular cases. The editors of Goff and Jones, The Law of Unjust Enrichment, 8th ed. (2011) para 9 11 comment that the distinction between mistake and misprediction can lead to some uncomfortably fine distinctions, and the same is true of the distinction between mistake and ignorance. Forgetfulness, inadvertence or ignorance is not, as such, a mistake, but it can lead to a false belief or assumption which the law will recognise as a mistake. The Court of Appeal of Victoria has held that mistake certainly comprehends a mistaken belief arising from inadvertence to or ignorance of a specific fact or legal requirement: Ormiston JA in Hookway v Racing Victoria Ltd [2005] VSCA 310, (2005) 13 VR 444, 450. That case was on the borderline between voluntary disposition and contract. It concerned prize money for a horse race which was paid to the wrong owner because the official in charge of prize money was ignorant of a recent change in the rules of racing (permitting an appeal against disqualification after a drugs test). He made a mistake as to the real winner. The best known English authority on this point is Lady Hood of Avalon v Mackinnon [1909] 1 Ch 476. Under a settlement Lord and Lady Hood had a joint power of appointment, and later Lady Hood as the survivor had a sole power of appointment, in favour of the children and remoter issue of their marriage. They had two daughters. In 1888 half the trust fund had been appointed (subject to the prior life interests of Lord and Lady Hood) to their elder daughter on her marriage, and had been resettled by her. In 1902 and 1904, after Lord Hoods death, Lady Hood appointed a total of 8,600 to her younger daughter. Then, wishing to achieve equality, as she thought, between her daughters, and entirely forgetting the 1888 appointment, she appointed a further 8,600 to her elder daughter (so inevitably producing inequality, unless the appointment were set aside). The elder daughter did not oppose Lady Hoods action for rescission of the last appointment, but the trustees of the resettlement (which contained an after acquired property covenant) did oppose it. Eve J granted relief, stating (pp 483 484): Having regard to the facts which I have stated, I must assume that Lady Hood, intending only to bring about equality between her daughters, was labouring under a mistake when she thought that equality would be brought about by the execution of the deed appointing 8,600 to her elder daughter. It was obviously a mistake, because the effect of the execution of that deed was to bring about that which Lady Hood never intended and never contemplated. In his judgment Eve J referred at length to the decision of the Court of Appeal in Barrow v Isaacs & Son [1891] 1 QB 417. In that case the Court of Appeal declined to grant relief, on the ground of mistake, from forfeiture of a lease for breach of a covenant against underletting. The solicitors acting for a respectable tenant had overlooked the covenant and the premises had been sublet to a respectable sub tenant. Both Lord Esher MR and Kay LJ commented that there was no legal definition of mistake. Lord Esher MR said (at pp 420 421) that the head tenant had had a mere passive state of mind: I should say that mere forgetfulness is not mistake at all in ordinary language. I cannot find any decision in Courts of Equity which has ever stated that mere forgetfulness is mistake against which equity would relieve. But Kay LJ (with whom Lopes LJ agreed) seems to have taken the view that there was a mistake which equity had power to relieve, although in the circumstances of the case the court declined to grant relief. The power to relieve would, it seems, have been based on the conscious belief or tacit assumption that the underletting was lawful. The fullest academic treatment of this topic is in Goff & Jones at paras 9 32 to 9 42. The editors distinguish between incorrect conscious beliefs, incorrect tacit assumptions, and true cases of mere causative ignorance (causative in the sense that but for his ignorance the person in question would not have acted as he did). The deputy judges first instance decision in Pitt [2010] 1 WLR 1190, para 50 is suggested as an example of mere causative ignorance: If someone does not apply his mind to a point at all, it is difficult to say that there has been some real mistake about it. The Court of Appeal adopted a different view of the facts, treating the case (para 216) as one of an incorrect conscious belief on the part of Mrs Pitt that the SNT had no adverse tax consequences. The editors of Goff & Jones are, on balance, in favour of treating mere causative ignorance as sufficient. They comment (at para 9 41, in answering a floodgates objection): . denying relief for mere causative ignorance produces a boundary line which may be difficult to draw in practice, and which is susceptible to judicial manipulation, according to whether it is felt that relief should be afforded with the courts finding or declining to find incorrect conscious beliefs or tacit assumptions according to the courts perception of the merits of the claim. It may indeed be difficult to draw the line between mere causative ignorance and a mistaken conscious belief or a mistaken tacit assumption. I would hold that mere ignorance, even if causative, is insufficient, but that the court, in carrying out its task of finding the facts, should not shrink from drawing the inference of conscious belief or tacit assumption when there is evidence to support such an inference. I shall return (paras 127 and 128 below) to the suggestion that this may involve judicial manipulation. A misprediction relates to some possible future event, whereas a legally significant mistake normally relates to some past or present matter of fact or law. But here too the distinction may not be clear on the facts of a particular case. The issue which divided the House of Lords in Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 was whether (as Lord Hoffmann put it at p398) the correct view was that, a person who pays in accordance with what was then a settled view of the law has not made a mistake and that his state of mind could be better described as a failure to predict the outcome of some future event (sc a decision of this House) than a mistake about the existing state of the law. There is another interesting discussion of this point in the judgments given in the Court of Appeal in Brennan v Bolt Burdon [2005] QB 303. A problem about the boundary between mistake and misprediction arose in In re Griffiths, decd [2009] Ch 162, a decision of Lewison J. Like Sieff v Fox and some other cases on the Hastings Bass rule, it was a case in which the Revenue was invited to intervene but declined to do so, despite the large sum of inheritance tax at stake. The case was therefore heard without adversarial argument as to the law or the facts. Lloyd LJ commented (para 198) that he did not criticise the judge, given the limited argument before him, but that he did question his conclusion. I agree with both limbs of that comment. It is important to note the sequence of events in In re Griffiths. Mr Griffiths had a valuable holding in Iota, a property company (whose shares did not attract business assets relief). He was aged 73 when, in January 2003, he and his wife took advice about tax planning. They received a lengthy report setting out various options. Most involved making potentially exempt transfers, which progressively reduce inheritance tax on qualifying gifts if the donor survives for three years, and avoid tax entirely if the donor survives for seven years after making the gift. The report recommended that seven year term insurance cover should be obtained. Mr Griffiths decided to take various steps, the most important of which was a settlement of Iota shares worth over 2.6m. This was effected by a two stage process which was completed in February 2004. He decided not to obtain term insurance. Unfortunately he was diagnosed with lung cancer in October 2004, and died in April 2005. Had he done nothing, the Iota shares would have formed part of his residuary estate, in which his wife took a life interest, and no inheritance tax would have been payable on his death. In those circumstances his executor commenced proceedings asking that the dispositions should be set aside on the ground of mistake ([2009] Ch 162, para 6): The relevant mistake on which they rely is that Mr Griffiths mistakenly believed, at the time of the transfers, that there was a real chance that he would survive for seven years, whereas in fact at that time his state of health was such that he had no real chance of surviving that long. The medical evidence (in the form of letters from his general practitioner, from a consultant oncologist and from a consultant rheumatologist) was inconclusive, but the GP expressed the view that it was extremely unlikely that the cancer was present in April 2003. On this evidence the judge found that in April 2003 Mr Griffiths had a life expectancy of between seven and nine years. He went on to observe (para 18): It is unfortunate that in a case involving 1m worth of tax a proper medical report was not placed before the court and that the claimants are compelled to rely on a single sentence in a letter from [the oncologist]. Although I have hesitated about this finding, I am prepared to find, by a narrow margin that he was suffering from lung cancer on 3 February 2004; and that following the onset of lung cancer at that time his life expectancy did not exceed three years in February 2004. Had the facts been contested, I might not have felt able to make this finding. On the rather uncertain foundation of that finding the judge decided that the assignment of 3 February 2004 should be set aside (para 30): By that time Mr Griffiths was suffering from lung cancer about which he was unaware. He did therefore make a mistake about his state of health. Had he known in February 2004 that he was suffering from lung cancer he would also have known that his chance of surviving for three years, let alone for seven years, was remote. In those circumstances I am persuaded that he would not have acted as he did by transferring his reversionary interest in the shares to trustees. The judge did not say whether this was (in the Goff & Jones formulation) an incorrect conscious belief or an incorrect tacit assumption. The editors of that work (para 9 36) treat it as a tacit assumption but it seems close to the residual category of mere causative ignorance. Had the judge not made his hairs breadth finding about the presence of cancer in February 2004 it would have been a case of misprediction, not essentially different from a failure to predict a fatal road accident. Lloyd LJ observed (para 198) that it was strongly arguable that, having declined to follow the financial consultants recommendation of term insurance, Mr Griffiths was taking the risk of deterioration of his health and failure to survive the statutory period. What type of mistake? Some uncontroversial points can be noted briefly. It does not matter if the mistake is due to carelessness on the part of the person making the voluntary disposition, unless the circumstances are such as to show that he deliberately ran the risk, or must be taken to have run the risk, of being wrong. (There is an illuminating discussion of this point in Lord Hoffmanns speech in Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558, paras 24 30). Nor need the mistake be known to (still less induced by) the person or persons taking a benefit under the disposition. The fact that a unilateral mistake is sufficient (without the additional ingredient of misrepresentation or fraud) to make a gift voidable has been attributed to gifts being outside the laws special concern for the sanctity of contracts (OSullivan, Elliott and Zakrzewski, The Law of Rescission (2007) para 29.22): It is apparent from the foregoing survey that vitiated consent permits the rescission of gifts when unaccompanied by the additional factors that must be present in order to render a contract voidable. The reason is that the laws interest in protecting bargains, and in the security of contracts, is not engaged in the case of a gift, even if made by deed. Conversely, the fact that a purely unilateral mistake may be sufficient to found relief is arguably a good reason for the court to apply a more stringent test as to the seriousness of the mistake before granting relief. The Revenues printed case (paras 70 to 74) seeks to play down the distinction between mistake in the law of contract and its role in equitable rescission of voluntary dispositions. It seeks to build boldly on the decision of the Court of Appeal in Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd (The Great Peace) [2002] EWCA Civ 1407, [2003] QB 679, which did not follow (and has effectively overruled) Solle v Butcher [1950] 1 KB 671. The argument is that logic requires that a deed which transfers property for no consideration can be set aside only for a mistake of a fundamental nature that would render a contract void. Mr Jones did not cite any authority for this heterodox submission, and there is high authority (starting with Ogilvie v Allen) against it. Equity will grant specific performance of a covenant only if it is supported by valuable consideration. This includes the marriage consideration, but only if the covenant is being enforced by or on behalf of a person or persons within the scope of the marriage consideration. The traditional rules of equity were considered and explained by the Court of Appeal in Attorney General v Jacobs [1895] 2 KB 341, an account duty case, and In re Cooks Settlement Trusts [1965] Ch 902, a decision of Buckley J, illustrates their application within living memory. They are necessary to the understanding of cases like Ellis v Ellis (1909) 26 TLR 166, where the after acquired property covenant in Mrs Elliss marriage settlement was enforceable in equity, because there were children of the marriage. But the notion that any voluntary disposition should be accorded the same protection as a commercial bargain, simply because it is made under seal, is insupportable. Leaving aside for the present the degree of seriousness of the mistake, there is also controversy about its nature (or characteristics), especially as to the distinction between effect and consequences drawn by Millett J in Gibbon v Mitchell [1990] 1 WLR 1304. In that case two funds (Mays fund and Henrys fund) were settled in 1946 by Mr Henry Gibbons parents on the occasion of the marriage of his sister May. The funds were settled on May and Henry respectively for life, on the statutory protective trusts in section 33 of the Trustee Act 1925 (with a modification in the case of Henrys fund), but with power for May to surrender her protected life interest so as to accelerate the interests of her children once they had attained vested interests. For some unknown reason there was no corresponding power in respect of Henrys fund. The consequence was that a purported surrender by Mr Gibbon would cause a forfeiture of his fixed interest and bring into operation a discretionary trust affecting income during the rest of his life. In 1987 Mr Gibbon was a prosperous farmer aged 69, with two adult children. He wished to take steps to save inheritance tax and was advised by his accountants and solicitors to surrender his life interest, and at the same time release two powers of appointment, so as to accelerate his childrens interests. This advice was expressed in terms of enabling Henrys fund to pass immediately to the two children. His professional advisers failed to recognise, until after the deed of surrender had been executed, that the protective trusts provided a trap. Mr Gibbon applied to the court to have the deed of surrender set aside on the ground of mistake, and also for relief under the Variation of Trusts Act 1958. Millett J set the surrender aside, and varied the trust by lifting the protective trusts. In his judgment he referred to several of the older authorities, in most of which solicitors had misunderstood or gone beyond their instructions: Meadows v Meadows (1853) 16 Beav 401, Walker v Armstrong (1856) 8 De G M & G 531, Ellis v Ellis (1909) 26 TLR 166 and In re Waltons Settlement [1922] 2 Ch 509. Ogilvie v Littleboy was not cited. Millett J set out the principle which he drew from them at p1309: In my judgment, these cases show that, wherever there is a voluntary transaction by which one party intends to confer a bounty on another, the deed will be set aside if the court is satisfied that the disponor did not intend the transaction to have the effect which it did. It will be set aside for mistake whether the mistake is a mistake of law or a fact, so long as the mistake is as to the effect of the transaction itself and not merely as to its consequences or the advantages to be gained by entering into it. It will be observed that this formulation does not include the Ogilvie v Littleboy requirement of seriousness, except so far as it might be argued that any mistake as to the effect of a disposition is likely to be relatively serious. Millett Js judgment has been very influential. It is a mark of the high respect in which he is held that an extempore first instance judgment, not (so far as appears from the judgment) based on much adversarial argument, is cited as one of the key authorities in most of the standard works on equity and trusts, including Snell, 32nd ed. (2010) 11 008, 22 052; Lewin, 18th ed. (2008) 4 58, 29 231; Underhill and Hayton, 18th ed. (2010) 15 28 to 15 34; and Thomas and Hudson, 2nd ed. (2010) 20.37. But the source from which Millett Js statement of principle is derived is far from clear and it has been the subject of some criticism, both from legal scholars and in more recent decisions of the court. It is generally agreed that effect must mean legal effect (in the sense of the legal character or nature of a transaction). In Dent v Dent [1996] 1 WLR 683, 693 the deputy judge (David Young QC) understood it as the purpose or object of a transaction. Several other first instance judges have commented that the distinction between effect and consequences is not always clear, including Davis J in Anker Petersen v Christensen [2002] WTLR 313, 330. Lawrence Collins J went further in AMP (UK) plc v Barker [2001] WTLR 1237, para 70, saying of the distinction: If anything, it is simply a formula designed to ensure that the policy involved in equitable relief is effectuated to keep it within reasonable bounds and to ensure that it is not used simply when parties are mistaken about the commercial effects of their transactions or have second thoughts about them. On that view it comes close to Lindley LJs more general requirement for the mistake to be serious. In Wolff v Wolff [2004] STC 1633, Mann J considered (para 23) that the test was not a limiting factor, and (para 26) noted that Lawrence Collins J had referred to commercial consequences, not legal consequences. Lloyd LJ has now reviewed Gibbon v Mitchell twice, first in Sieff v Fox and then in Pitt v Holt. In Sieff v Fox, Ogilvie v Littleboy was brought to light after a long period of obscurity (though it is mentioned in Peter Birks Introduction to the Law of Restitution, first published in 1985). Lloyd LJ noted (para 106) that a test based on the legal effect of a transaction could not cover the tax consequences of a transaction, but that Lindley LJs more general test in Ogilvie v Littleboy might do so. He expressed no final view because of the special circumstances of the case before him ([2005] 1 WLR 3811, para 116). In Pitt v Holt Lloyd LJ went further. He expressed the view (para 208) that some recent cases about offshore trusts did not accord with English law: Clarkson v Barclays Private Bank and Trust (Isle of Man) Ltd [2007] WTLR 1703; In re Betsam Trust [2009] WTLR 1489; and In re A Trust [2009] JLR 447. He accepted the distinction made by Millett J in Gibbon v Mitchell but extended it (para 210) by formulating it as a requirement . that, for the equitable jurisdiction to set aside a voluntary disposition for mistake to be invoked, there must be a mistake on the part of the donor either as to the legal effect of the disposition or as to an existing fact which is basic to the transaction. This extension seems to have been primarily to accommodate cases such as Lady Hood of Avalon, where there was (para 206) a fundamental error of fact, in relation to a point which lay at the heart of the transaction. He also seems to have had in mind the New Zealand case of University of Canterbury v Attorney General [1995] 1 NZLR 78, which is discussed at para 199 of his judgment. The special feature of that case was that the University had to some extent encouraged, or at least failed to correct, the donors error; it wished to return the gift but the Attorney General, representing the public interest in charity, opposed that course. In addition, the mistake must, Lloyd LJ said, meet the Ogilvie v Littleboy test of sufficient gravity. This approach has been criticised by the editors of Goff & Jones, paras 9 101 to 9 106. I do not agree with all these criticisms of what the editors refer to as the Court of Appeals stricter, hybrid approach. But I can see no reason why a mistake of law which is basic to the transaction (but is not a mistake as to the transactions legal character or nature) should not also be included, even though such cases would probably be rare. If the Gibbon v Mitchell test is further widened in that way it is questionable whether it adds anything significant to the Ogilvie v Littleboy test. I would provisionally conclude that the true requirement is simply for there to be a causative mistake of sufficient gravity; and, as additional guidance to judges in finding and evaluating the facts of any particular case, that the test will normally be satisfied only when there is a mistake either as to the legal character or nature of a transaction, or as to some matter of fact or law which is basic to the transaction. To confirm the Gibbon v Mitchell test as formulated by Millett J would in my view leave the law in an uncertain state, as the first instance decisions mentioned in para 119 above tend to demonstrate. It would also be contrary to the general disinclination of equity to insist on rigid classifications expressed in abstract terms. Equity, unlike many continental systems, has not adopted Roman laws classification of mistakes: error in negotio (the nature of the intended transaction), error in corpore (the subject matter of the transaction), error in persona (the identity of the other party to the transaction) and error in substantia (the quality of the subject matter). The Gibbon v Mitchell test, at any rate if applied narrowly, would cover only the first of these categories. But in some situations errors in other categories may be just as basic and just as serious in their consequences. The conscience test Lindley LJs test in Ogilvie v Littleboy, quoted at para 101 above, requires the gravity of the causative mistake to be assessed in terms of injustice or, to use equitys cumbersome but familiar term, unconscionableness. Similarly Millett J said in Gibbon v Mitchell [1990] 1 WLR 1304, 1310: Equity acts on the conscience. The parties [in] whose interest it would be to oppose the setting aside of the deed are the unborn future children of Mr Gibbon and the objects of discretionary trusts to arise on forfeiture, that is to say his grandchildren, nephews and nieces. They are all volunteers. In my judgment they could not conscionably insist upon their legal rights under the deed once they had become aware of the circumstances in which they had acquired them. The evaluation of what is or would be unconscionable must be objective. Millett J identified precisely the class of beneficiaries in whose interest it would be for the forfeiture to stand (apart from tax considerations which made it disadvantageous for the whole family), but he did not do so in order to embark on the impossible task of establishing the state of the consciences of minor and unborn beneficiaries. Nor (apart from a defence of change of position) would the relative prosperity of the donor and the donees be relevant, except so far as it was part of the mistake (as in Lord Scotts example in Deutsche Morgan Grenfell Group Plc v Inland Revenue Courts [2007] 1 AC 558, para 87: A gift of 1,000 by A to B where B is believed to be impecunious but is in fact a person of substantial wealth). The gravity of the mistake must be assessed by a close examination of the facts, whether or not they are tested by cross examination, including the circumstances of the mistake and its consequences for the person who made the vitiated disposition. Other findings of fact may also have to be made in relation to change of position or other matters relevant to the exercise of the courts discretion. Justice Paul Finn wrote in a paper, Equitable Doctrine and Discretion in Remedies published in Restitution: Past, Present and Future (1998): The courts quite consciously now are propounding what are acceptable standards of conduct to be exhibited in our relationships and dealings with others . A clear consequence of this emphasis on standards (and not on rules) is a far more instance specific evaluation of conduct. The injustice (or unfairness or unconscionableness) of leaving a mistaken disposition uncorrected must be evaluated objectively, but with an intense focus (in Lord Steyns well known phrase in In re S (A Child) [2005] 1 AC 593, para 17) on the facts of the particular case. That is why it is impossible, in my view, to give more than the most tentative answer to the problems posed by Professor Andrew Burrows in his Restatement of the English Law of Unjust Enrichment (2013) p 66: we simply do not know enough about the facts. I add a postscript as to the criticism made by the editors of Goff & Jones (para 9 41), already quoted at para 108 above, of a boundary line which may be difficult to draw in practice, and which is susceptible to judicial manipulation, according to whether it is felt that relief should be afforded with the courts finding or declining to find incorrect conscious beliefs or tacit assumptions according to the courts perception of the merits of the claim. There is some force in this, although the term manipulation is a bit harsh. The fact that a unilateral mistake is sufficient means that the court may have to make findings as to the state of mind, at some time in the past, of a claimant with a lively personal interest in establishing that there was a serious causative mistake. This will often be a difficult task. But as a criticism of the Court of Appeal in Pitt I would reject it. The case was heard on affidavit evidence, without cross examination, and the Court of Appeal was in as good a position as the deputy judge to draw inferences and make findings of fact. More generally, the apparent suggestion that the court ought not to form a view about the merits of a claim seems to me to go wide of the mark. In a passage in Gillett v Holt [2001] Ch 210, 225, since approved by the House of Lords (see especially the speech of Lord Neuberger, with which the rest of the House agreed, in Fisher v Brooker [2009] 1 WLR 1764, para 63) I said in discussing proprietary estoppel that although its elements (assurance, reliance and detriment) may have to be considered separately they cannot be treated as watertight compartments: . the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine. In the end the court must look at the matter in the round. In my opinion the same is true of the equitable doctrine of mistake. The court cannot decide the issue of what is unconscionable by an elaborate set of rules. It must consider in the round the existence of a distinct mistake (as compared with total ignorance or disappointed expectations), its degree of centrality to the transaction in question and the seriousness of its consequences, and make an evaluative judgment whether it would be unconscionable, or unjust, to leave the mistake uncorrected. The court may and must form a judgment about the justice of the case. Mistakes about tax In this court Mr Jones applied for and obtained permission to raise two points which had not been raised below. The first (to be found in paras 80 to 95 of the Revenues case) was that a mistake which relates exclusively to tax cannot in any circumstances be relieved. This submission, for which no direct authority was cited, was said to be based on Parliaments general intention, in enacting tax statutes, that tax should be paid on some transaction of a specified type, whether or not the taxpayer is aware of the tax liability. Mistake of law is not a defence, Mr Jones submitted, to tax lawfully due and payable. In my opinion that submission begs the question, since if a transaction is set aside the Court is in effect deciding that a transaction of the specified description is not to be treated as having occurred. In the case of inheritance tax, this is expressly provided by section 150 of the Inheritance Tax Act 1984. That section is expressed in general terms as applying where a transfer has by virtue of any enactment or rule of law been set aside as voidable or otherwise defeasible, and the effect is that tax which would not have been paid or payable if the relevant transfer had been void ab initio is to be repaid, or cease to be payable. There is no exception in section 150 for avoidance on the ground of a mistake about tax. More generally, Mr Joness submission that tax is somehow in a different category is at odds with the approach of the House of Lords in Deutsche Morgan Grenfell [2007] 1 AC 558: see the speech of Lord Hope at para 44 and my own observations at paras 133 and 140. So far as Mr Jones cites any authority for his submission, he has referred, but only as an aside, to the decision of the Court of Appeal in Racal Group Services Ltd v Ashmore [1995] STC 1151. That was a claim to rectification. Rectification is a closely guarded remedy, strictly limited to some clearly established disparity between the words of a legal document, and the intentions of the parties to it. It is not concerned with consequences. So far as anything in Racal is relevant to the different equitable remedy of rescission on the ground of mistake, it is relevant, not to establishing the existence of a mistake, but to the courts discretion to withhold relief in cases where it would be inappropriate for the court to grant it. That is Mr Joness second new point and it is considered below. I would therefore reject the first new point as much too wide, and unsupported by principle or authority. But it is still necessary to consider whether there are some types of mistake about tax which should not attract relief. Tax mitigation or tax avoidance was the motive behind almost all of the Hastings Bass cases that were concerned with family trusts (as opposed to pensions trusts). In Gibbon v Mitchell there was a mistake as to the legal effect of the transaction, which was to plunge the family into the trap of forfeiture under the protective trusts, rather than to achieve the immediate acceleration of the adult childrens interests. But the seriousness of the consequences of the mistake was greatly enhanced by the inheritance tax implications. On the test proposed above, consequences (including tax consequences) are relevant to the gravity of a mistake, whether or not they are (in Lloyd LJs phrase) basic to the transaction. In Pitt the special tax advantage available under section 89 of the Inheritance Tax Act 1984 was a valuable one, and its loss was certainly a serious matter for Mrs Pitt, both as her husbands receiver and on her own account as his wife and carer and as the eventual beneficiary of his estate. Lloyd LJ accepted that (para 215). He was also prepared to accept (para 216) that Mrs Pitt had an incorrect conscious belief, or made an incorrect tacit assumption, that the proposed SNT (which had been the subject of advice from two professional firms, and approved by the Court of Protection) had no adverse tax effects. It was on the issue of mistake as to effect or as to consequence? (para 217) that Lloyd LJ felt obliged to withhold relief. He saw the tax liability, even though it was immediate and backed by a statutory charge (imposed by section 237 of the Inheritance Tax Act 1984) on the property of the SNT, as no more than a consequence (para 218): The legal effect [of the disposition] was the creation of the Special Needs Trust, on its particular terms, and the fact that the lump sum and the annuity were settled upon those terms. An irony of the situation is that if the SNT had been framed so as to comply with section 89 (requiring at least half of the property applied during Mr Pitts lifetime to be applied for his benefit) it would most probably have made no difference to the distribution of capital or income during his lifetime (as the deputy judge noted in para 13 of his judgment, in dismissing a Revenue argument that Mrs Pitt might have decided not to take advantage of section 89). It has not been suggested that the primary purpose of the SNT was other than Mr Pitts welfare and benefit, and the maintenance of his wife as his carer. The SNT could have complied with section 89 without any artificiality or abuse of the statutory relief. It was precisely the sort of trust to which Parliament intended to grant relief by section 89. In Futter this court declined to permit the appellants to raise for the first time the issue of mistake, primarily because there was no sufficient evidential basis for considering that issue for the first time on a second appeal. Gibbon v Mitchell received a passing mention in the judgment of Norris J [2010] STC 982, para 20, but only for the purpose of rejecting the Revenues argument that the distinction between effect and consequences was relevant to the Hastings Bass rule. Had mistake been raised in Futter there would have been an issue of some importance as to whether the Court should assist in extricating claimants from a tax avoidance scheme which had gone wrong. The scheme adopted by Mr Futter was by no means at the extreme of artificiality (compare for instance, that in Abacus Trust Co (Isle of Man) v NSPCC [2001] STC 1344) but it was hardly an exercise in good citizenship. In some cases of artificial tax avoidance the court might think it right to refuse relief, either on the ground that such claimants, acting on supposedly expert advice, must be taken to have accepted the risk that the scheme would prove ineffective, or on the ground that discretionary relief should be refused on grounds of public policy. Since the seminal decision of the House of Lords in WT Ramsay Ltd v IRC [1982] AC 300 there has been an increasingly strong and general recognition that artificial tax avoidance is a social evil which puts an unfair burden on the shoulders of those who do not adopt such measures. But it is unnecessary to consider that further on these appeals. Equity does not act in vain Mr Joness second new point was that Mrs Pitt should be refused relief because the granting of relief would serve no practical purpose, other than saving inheritance tax. He cited Sir Nicolas Browne Wilkinson V C in the Spycatcher case, Attorney General v Guardian Newspapers Ltd [1987] 1 WLR 1248, 1270: It is an old maxim that equity does not act in vain. To my mind that is good law and the court should not make orders which would be ineffective to achieve what they set out to do. In the event the House of Lords took a different view, by a bare majority, as to whether the continuation of the interlocutory injunctions would serve any useful purpose. The maxim exists, but as Mason CJ and McHugh J said in Corin v Patton (1990) 169 CLR 540, 557, Like other maxims of equity, it is not a specific rule or principle of law. It is a summary statement of a broad theme which underlies equitable concepts and principles. The fund subject to the SNT had many calls on its resources, with heavy professional costs and expenses as well as making provision for the welfare and care of Mr Pitt and the maintenance of his wife. On his death on 25 September 2007 there was only 6,259 in the trust (the deputy judge added, para 15, that that was on Mrs Pitts case but he had earlier stated, para 4, that the material facts were not in dispute at all). On Mr Pitts death this sum, subject to any outstanding liabilities, vested in his personal representatives under Clause 3 of the SNT. Any remaining value in the fund was therefore in the same beneficial ownership as if the SNT had been set aside by the court. On 22 November 2011, after this court had granted permission for Mrs Pitt to appeal from the Court of Appeals decision, her solicitors wrote to the Solicitors Office of the Revenue drawing attention to a submission in the Revenues skeleton argument before the Court of Appeal, para 105: But, in any event, the settlement should not be set aside after this period of time, especially when the Court does not know what proprietary claim would vest in the estate against third parties. Apparently with a view to avoiding any doubt on this point, Mrs Pitts solicitors set out the factual position as it was at that time and stated in the last paragraph of their letter: Please note that Mrs Pitt and Mr Shores [her co executor] have irrevocably instructed us to indicate, that if the Supreme Court orders that Mr Pitts settlement is set aside, no further claim (to monies or other relief), will be made by them in their capacity as Mr Pitts personal representatives, or by Mrs Pitt in her capacity as sole beneficiary of his estate, whether against the trustees (from time to time) of Mr Pitts settlement or the recipients of distributions or other payments from the trustees. Our clients will be satisfied with the effect of section 150 IHTA 1984 (consequent on the order setting aside Mr Pitts settlement). In these circumstances Mr Jones has submitted that it would be pointless, and so contrary to equitys practical approach, to grant relief that would achieve nothing, apart from a tax advantage to Mrs Pitt. He has relied on the approval by Peter Gibson LJ (with whom Sir Iain Glidewell and Kennedy LJ agreed) in Racal Group Services Ltd v Ashmore [1995] STC 1151, 1157 of what Vinelott J had said below [1994] STC 416, 425: In my judgment the principle established by these cases is that the court will make an order for the rectification of a document if satisfied that it does not give effect to the true agreement or arrangement between the parties, or to the true intention of a grantor or covenantor and if satisfied that there is an issue, capable of being contested, between the parties or between a covenantor or a grantor and the person he intended to benefit, it being irrelevant first that rectification of the document is sought or consented to by them all, and second that rectification is desired because it has beneficial fiscal consequences. On the other hand, the court will not order rectification of a document as between the parties or as between a grantor or covenantor and an intended beneficiary, if their rights will be unaffected and if the only effect of the order will be to secure a fiscal benefit. But Peter Gibson LJ went on to differ from Vinelott J in applying this principle. He held that there was an issue capable of being contested. The appeal was dismissed on another ground, that is because of the inadequacy of the evidence to satisfy the high standard of proof required for rectification. What the Court of Appeal decided in Racal was that it is sufficient, even for the closely guarded remedy of rectification, that there is a genuine issue capable of being contested, even if the parties decide that they will not in fact contest it. The test for rescission on the ground of mistake cannot be stricter than that. Until the solicitors letter of 22 November 2011 there was at least a possibility of third party claims arising, and the Revenue placed reliance on that as a reason for refusing relief. But for the letter, the Court might, if minded to grant relief, have required an undertaking to the same effect as the one that Mrs Pitt and Mr Shores have volunteered. Moreover the Revenues argument ignores the fact that unless and until the SNT is set aside, there are potentially contestable issues between the Revenue and any persons who, not being purchasers for value without notice, have received distributions from the SNT. The statutory charge under section 257 of the Inheritance Tax Act 1984 would prima facie give the Revenue a proprietary claim against such third parties. For these reasons I would reject the Revenues second new point also. The mistake claim in Pitt v Holt ground of mistake is that set out in para 126 above, and it is satisfied in Pitt v Holt. There would have been nothing artificial or abusive about Mrs Pitt establishing the SNT so as to obtain protection under section 89 of the Inheritance Tax Act 1984. There was a considerable delay in the commencement of the proceedings, but the Revenue do not rely on the delay. They do rely on rescission being pointless and therefore inappropriate, but I would reject that submission for the reasons set out above. The deputy judge found ([2010] 1 WLR 1199, para 15) that the setting aside of the settlement would have no effect on any third party (plainly he was not here treating the Revenue as a third party). I would discharge the orders below and set aside the SNT on the ground of mistake. In my opinion the test for setting aside a voluntary disposition on the |
Counsel for the respondent, Jonathan Crow QC, boldly asserted at the outset of his submissions that this case is in fact bristling with simplicity. The issue is certainly a simple one. The claim is brought by a company (through its liquidators) against its investment bank and broker for breach of the so called Quincecare duty of care. In Barclays Bank plc v Quincecare Ltd [1992] 4 All ER 363, Steyn J held that it was an implied term of the contract between a bank and its customer that the bank would use reasonable skill and care in and about executing the customers orders; this was subject to the conflicting duty to execute those orders promptly so as to avoid causing financial loss to the customer; but there would be liability if the bank executed the order knowing it to be dishonestly given, or shut its eyes to the obvious fact of the dishonesty, or acted recklessly in failing to make such inquiries as an honest and reasonable man would make; and the bank should refrain from executing an order if and for so long as it was put on inquiry by having reasonable grounds for believing that the order was an attempt to misappropriate funds. The issue in this case is whether such a claim is defeated if the companys instructions were given by the companys Chairman and sole share holder who was the dominant influence over the affairs of the company. Can his fraud be attributed to the company? And if so, is the claim then defeated, whether on grounds of illegality, of causation, or by an equal and opposite claim against the company in deceit? The background The respondent company, Singularis, is a company registered in the Cayman Islands, set up to manage the personal assets of a Saudi Arabian business man, Maan Al Sanea, separately from his business group. At all times material to this claim, Mr Al Sanea was its sole shareholder, a director and also its chairman, president and treasurer. There were six other directors, who were reputable people, but did not exercise any influence over the management of the company. Very extensive powers were delegated to Mr Al Sanea to take decisions on behalf of the company, including signing powers over the companys bank accounts. The company had a substantial and legitimate business, carried out over a number of years before the relevant events, for which it borrowed substantial sums of money under a variety of funding arrangements. The appellant, Daiwa, is the London subsidiary of a Japanese investment bank and brokerage firm. In 2007, it entered into a stock financing arrangement with Singularis. Daiwa provided Singularis with loan financing to enable it to purchase shares which were the security for the repayment of the loan. In June 2009, all the shares were sold, the loan was repaid, and Daiwa was left holding a cash surplus for the account of Singularis. Together with a sum of US$80m deposited by Singularis in June 2009, the total held to Singularis account was approximately US$204m. Between 12 June and 27 July 2009, Daiwa was instructed by Singularis to make eight payments, totalling approximately US$204,500,000, out of the money held to Singularis account. Five of those payments were to the Saad Specialist Hospital Company. Three of them were to or for the benefit of Saad Air (A320 No 2) Ltd and Saad Air (A340 600) Ltd (together, Saad Air). Those instructions were given with the approval of Mr Al Sanea who, as between Singularis and Daiwa, had authority to give instructions to make the payments. Daiwa made those payments. The judge held that each of the payments was indeed a misappropriation of Singularis funds because there was no proper basis for any of them. There has been no appeal against that finding. On 20 August 2009, Mr Al Sanea placed Singularis in voluntary liquidation. On 18 September 2009 the Grand Court of the Cayman Islands made a compulsory winding up order and joint liquidators were appointed. On 18 July 2014, Singularis, acting through its joint liquidators, brought a claim against Daiwa for the full amount of the payments (less any sums recovered either from Mr Al Sanea or the recipients of the payments). There were two bases for the claim: (1) dishonest assistance in Mr Al Saneas breach of fiduciary duty in misapplying the companys funds; and (2) breach of the Quincecare duty of care to the company by giving effect to the payment instructions. In the Chancery Division of the High Court, Rose J dismissed the dishonest assistance claim because Daiwas employees had acted honestly. However, she upheld the negligence claim, while making a deduction of 25% under the Law Reform (Contributory Negligence) Act 1945 to reflect the contributory fault of Mr Al Sanea and the companys inactive directors, for which the company was responsible: [2017] EWHC 257 (Ch); [2017] Bus LR 1386. Singularis did not appeal against the dismissal of the dishonest assistance claim. Daiwa did appeal against the finding of liability on the negligence claim. The Court of Appeal unanimously dismissed the appeal: [2018] EWCA Civ 84; [2018] 1 WLR 2777. In brief, it held (1) that Mr Al Saneas fraudulent state of mind could not be attributed to the company; but (2) even if it could, the claim would still have succeeded the banks negligence had caused the loss, it was not defeated by a defence of illegality, or by an equal and opposite claim by the bank for the companys deceit; and (3) the judges finding of 25% contributory negligence was a reasonable one. Daiwa now appeals to this Court on the question of attribution and its consequences. Two broad issues arise. (1) When can the actions of a dominant personality, such as Mr Al Sanea, who owns and controls a company, even though there are other directors, be attributed to the company? (2) If they are attributed to the company, is the claim defeated (i) by illegality; (ii) by lack of causation because the banks duty of care does not extend to protecting the company from its own wrongdoing or because the company did not rely upon its performance; or (iii) by an equal and countervailing claim in deceit? The starting point The starting point must be the judges findings, none of which is under appeal. She held that there was no good reason to make the payments to Saad Air and that it was a breach of fiduciary duty for Mr Al Sanea to direct Singularis to make them (para 120). She also held that the agreement made between Singularis and the hospital to pay the expenses of the hospital was a sham and the five payments were a misappropriation of the companys money by Mr Al Sanea in breach of his fiduciary duty (paras 121 127). As sole shareholder he was not entitled to ratify the misappropriation of company funds because he must have known that the company was on the verge of insolvency and his duty as director was to act in the best interests of the companys creditors. This precluded making gratuitous payments to other companies in the Saad group to the detriment of Singularis creditors (paras 128 137). She went on to hold that Daiwa was in breach of the Quincecare duty on the facts of the case. Any reasonable banker would have realised that there were many obvious, even glaring, signs that Mr Al Sanea was perpetrating a fraud on the company. He was clearly using the funds for his own purposes and not for the purpose of benefiting Singularis (para 192). First, Daiwa was well aware of the dire financial straits in which Mr Al Sanea and the Saad group found themselves at the end of May and in early June 2009 (paras 193 196). Second, it was aware that Singularis might have other substantial creditors with an interest in the money (para 197). Third, there was plenty of evidence to put Daiwa on notice that there was something seriously wrong with the way that Mr Al Sanea was operating the Singularis account (para 199). Fourth, it was alive to the possibility that the agreement with the hospital was a front or a cover rather than a genuine obligation (para 200). Fifth, there was a striking contrast between the way in which some payment requests were processed and how the disputed payments were handled (para 201). In short Everyone recognised that the account needed to be closely monitored But no one in fact exercised care or caution or monitored the account themselves and no one checked that anyone else was actually doing any exercising or monitoring either (para 202). On the basis of those findings, the judge held that there was a clear breach of Daiwas Quincecare duty of care to Singularis. That is incontrovertible. The issue for this Court, as in the courts below, is whether Daiwa has any defence to that claim. The issue of attribution has to be seen in the context of the possible defences to which it might give rise. Were attribution to be established, Daiwa raises three possible defences. It is worth giving a brief account of each of these before turning to the question of attribution. It will be seen that, even if attribution were established, none of them is a very promising basis for denying liability. Illegality Both the judge and the Court of Appeal rejected the illegality defence raised by Daiwa on two grounds: first, that Mr Al Saneas fraud could not be attributed to the company ie held to be the companys fraud for this purpose (Rose J, paras 208 to 215; CA, paras 50 to 60); and second, in any event, the test for a successful illegality defence, laid down by this Court in Patel v Mirza [2016] UKSC 42; [2017] AC 467, was not met (Rose J, paras 216 to 220; CA, paras 61 to 67). Patel v Mirza was a restitution claim. Mr Patel agreed to pay 620,000 to Mr Mirza on the basis that Mr Mirza would use it to bet on the price of shares using inside information that Mr Mirza expected to receive. This was a conspiracy to commit the offence of insider dealing contrary to section 52 of the Criminal Justice Act 1993. However, the inside information was not forthcoming and the bets were never placed. Mr Patel asked for his money back and Mr Mirza refused. He argued that the claim was barred by illegality because Mr Patel would have to prove the illegal agreement under which the money was paid in order to prove that the purpose had failed and he should get it back. A panel of nine Supreme Court Justices was convened to hear the appeal, because of the perceived conflict between the decisions of this Court in Hounga v Allen [2014] UKSC 47; [2014] 1 WLR 2889, Les Laboratoires Servier v Apotex Inc [2014] UKSC 55; [2015] AC 430, and Bilta (UK) Ltd v Nazir (No 2) [2015] UKSC 23; [2016] AC 1. By a majority of six to three, the Court rejected the approach of the House of Lords in Tinsley v Milligan [1994] 1 AC 340, which depended on whether or not the claimant had to plead the illegal agreement in order to succeed. Instead it adopted the approach summed up by Lord Toulson, who gave the leading judgment, at para 120: The essential rationale of the illegality doctrine is that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system In assessing whether the public interest would be harmed in that way, it is necessary (a) to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim, (b) to consider any other relevant public policy on which the denial of the claim may have an impact and (c) to consider whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts. In that case, it was not contrary to the public interest to allow Mr Mirza to recover the money which he had paid for an illegal purpose but which had not been used for that purpose. In wanting it back he was seeking to unwind the arrangement, not to profit from it. In this case, the illegality relied on was, in relation to some of the payments, Mr Al Saneas provision of documents which he knew to be false and, in relation to all of the payments, his breach of his fiduciary duty towards Singularis. The judge held that the purpose of the prohibition of breach of fiduciary obligation was to protect the company from becoming the victim of the wrongful exercise of power by officers of the company. That purpose would certainly not be enhanced by preventing the company from getting back the money which had been wrongfully removed from its account. The purpose of the prohibition of making false statements was both to protect the bank from being deceived and the company from having its funds misappropriated. Although the purpose of protecting the bank would be enhanced by denial of the claim, that purpose was achieved by ensuring that the bank was only liable to repay the money if the Quincecare duty was breached: that duty struck a careful balance between the interests of the customer and the interests of the bank. It would not enhance the integrity of the law to undermine that balance by denying the claim on grounds of illegality in a case where, ex hypothesi, the exceptional circumstances needed for the duty to arise and be breached are found to be present. (para 218) Turning to whether there might be any other relevant public interests, she held that denial of the claim would have a material impact upon the growing reliance on banks and other financial institutions to play an important part in reducing and uncovering financial crime and money laundering. If a regulated entity could escape from the consequences of failing to identify and prevent financial crime by casting on the customer the illegal conduct of its employees that policy would be undermined (para 219). Finally, denial of the claim would be an unfair and disproportionate response to any wrongdoing on the part of Singularis. The possibility of making a deduction for contributory negligence on the customers part enables the court to make a more appropriate adjustment than the rather blunt instrument of the illegality defence (para 220). The Court of Appeal took the view that there was no error in the judges approach. Barring Singularis claim would serve to undermine the carefully calibrated Quincecare duty and would not be a proportionate response, particularly where Daiwas breaches were so extensive and the fraud was so obvious (para 66). Mr John McCaughran QC, who appears for Daiwa, argues that the judge went wrong at each stage of the analysis. The purpose of the prohibition of deceit is to encourage honest dealing. The integrity of the legal system is not enhanced by allowing fraudulent companies to recover damages in respect of their fraud. If this is adequately addressed by the carefully calibrated Quincecare duty, it leaves no room for the application of the illegality defence. As to the public policy of enlisting banks and financial institutions in the fight against financial crime and money laundering, there already existed important incentives in the regulatory regime for banks and brokers to detect financial crime. There was no need for a further incentive in the form of a damages claim by the company. Denying the claim would be a proportionate response to the companys wrongdoing. Daiwas arguments necessarily depend upon a finding that Mr Al Saneas fraud was the companys fraud, an issue which is discussed later. But even if it was, in my view the judges conclusion was correct for the reasons she gave. I should, however, record my reservations about the view expressed by the Court of Appeal as to the role of an appellate court in relation to the illegality defence: that an appellate court should only interfere if the first instance judge has proceeded on an erroneous legal basis, taken into account matters that were legally irrelevant, or failed to take into account matters that were legally relevant (para 65). Daiwa point out that applying the defence is not akin to the exercise of discretion (citing Lord Neuberger in Patel v Mirza, at para 175) and an appellate court is as well placed to evaluate the arguments as is the trial judge. It is not necessary to resolve this in order to resolve this appeal and there are cases concerning the illegality defence pending in the Supreme Court where it should not be assumed that this Court will endorse the approach of the Court of Appeal. Causation Daiwa argues that, if the fraud is attributed to the company, the companys loss is caused by its own fault and not by the fault of Daiwa. In Reeves v Comr of Police of the Metropolis [2000] 1 AC 360, at 368, Lord Hoffmann referred to the sound intuition that there is a difference between protecting people against harm caused to them by third parties and protecting them against harm which they inflict upon themselves People of full age and sound understanding must look after themselves and take responsibility for their actions. This was a case, argues Daiwa, in which the company inflicted the harm upon itself. Against that, Lord Hoffmann went on to say that This philosophy expresses itself in the fact that a duty to protect a person of full understanding from causing harm to himself is very rare indeed. But, once it is admitted that this is the rare case in which such a duty is owed, it seems to me self contradictory to say that the breach could not have been a cause of the harm because the victim caused it to himself. This is just such a case: the purpose of the Quincecare duty is to protect a banks customers from the harm caused by people for whom the customer is, one way or another, responsible. Hence Mr Crow argues that the loss was caused, not by the dishonesty, but by Daiwas breach of its duty of care. Had it not been for that breach, the money would still have been in the companys account and available to the liquidators and creditors. This was not a case where the companys act came after Daiwas breach of duty (unlike Reeves, where the prisoners suicide came after the polices breach of duty). The fraudulent instruction to Daiwa gave rise to the duty of care which the bank breached, thus causing the loss. Countervailing claim in deceit Daiwa argues that because it would have an equal and countervailing claim in deceit against the company, the companys claim in negligence should fail for circularity. They paid out because of the companys deceit and therefore have a claim against the company for any loss suffered by their exposure to Singularis claim. This cancels out the companys claim against them for negligence in failing to detect the fraud. This is a variant of the causation argument and the judge answered it by reference to two decisions of Evans Lombe J in Barings plc v Coopers & Lybrand (No 2) [2002] EWHC 461 (Ch); [2002] 2 BCLC 410 and [2003] EWHC 1319 (Ch); [2003] PNLR 34. These were proceedings brought by Barings against their auditors for failing to detect the dealings of Mr Nick Leeson which led to the downfall of the bank. The first decision concerned the allegation of the auditors that they had been deceived by Barings finance director into accepting figures which he knew to be false. That claim failed on the facts, but had it succeeded, the judge would have held that Barings were vicariously responsible for the deception and this would have defeated the negligence claim. The second decision concerned the activities of Mr Leeson. Fraudulent though they were, they did not defeat the banks claim because it was the very duty of the auditors to detect the fraud. Thus, in this case, the judge held that Daiwa owed Singularis a duty to guard against being misled into paying away Singularis money by just such fraudulent instructions. Their breach, and not Mr Al Saneas misrepresentations, is the cause of their exposure to the claim for Singularis loss (Rose J, para 228). Daiwa sought to distinguish Barings on the basis that Barings were merely vicariously liable for Mr Leesons fraud, whereas, if it is right about attribution, in this case the fraud is the fraud of the company itself and not just one of its employees. The Court of Appeal rejected this argument and upheld the reasoning of the judge: The existence of the fraud was a precondition for Singularis claim based on breach of Daiwas Quincecare duty, and it would be a surprising result if Daiwa, having breached that duty, could escape liability by placing reliance on the existence of the fraud that was itself a pre condition for its liability (CA, para 79). Attribution Daiwa argues that, as Singularis was effectively a one man company and Mr Al Sanea was its controlling mind and will, his fraud is to be attributed to the company, with the consequence that its Quincecare claim against Daiwa is defeated, either by illegality, or for lack of causation, or because of an equal and opposite claim for the companys deceit. To examine such an assertion, it is necessary to go back to basic principles. The starting point has to be the principle established by the House of Lords in Salomon v A Salomon and Co Ltd [1897] AC 22, that a properly incorporated company has an identity and legal personality quite separate from that of its subscribers, shareholders and directors. Mr Salomon had established the company, with his family, to buy his boot and shoe manufacturing business at a time when it was solvent. When it later became insolvent, he was entitled to enforce the debentures granted by the company in part payment of the price and he was not obliged to indemnify the company against the claims of its creditors. It is also worth recalling the words of Lord Macnaghten, at p 53, that It has become the fashion to call companies of this class one man companies. That is a taking nickname, but it does not help one much in the way of argument. Companies being fictional persons, they have of course to act through the medium of real human beings. So the issue is when the acts and intentions of real human beings are to be treated as the acts and intentions of the company. The classic exposition is to be found in the Opinion of the Judicial Committee of the Privy Council in Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500, delivered by Lord Hoffmann. He identified three levels of attribution (at pp 506 507). The primary rule is contained in the companys constitution, its articles of association, which will typically say that the decisions of the shareholders or of the board of directors are to be the decision of the company on certain matters. But this will not cover the whole field of the companys decision making. For this, the ordinary rules of agency and vicarious liability, which apply to natural persons just as much as to companies, will normally supply the answer. However there will be some particular rules of law to which neither of these principles supplies the answer. The question is not then one of metaphysics but of construction of the particular rule in question. In seeking to establish attribution in this case, Daiwa prays in aid the decision of the House of Lords in Stone & Rolls Ltd v Moore Stephens [2009] UKHL 39; [2009] 1 AC 1391. The claimant company was owned, controlled and managed by a Mr Stojevic, who had procured the company to engage in frauds upon banks. The company was sued for deceit by one of the banks and went into liquidation. The company then brought proceedings against its auditors, alleging that they had been negligent in failing to detect and prevent Mr Stojevics activities. The auditors applied to strike out the claim on the basis that Mr Stojevics fraud was to be attributed to the company. The trial judge refused to strike it out, on the basis that such fraud was the very thing that the auditors were employed to detect. The Court of Appeal held that, as the company had to rely upon the illegality to found its claim, the defence of illegality was made out (this was, of course, before Patel v Mirza). The House of Lords, by a majority, held that, as Mr Stojevic was the beneficial owner and directing mind and will of the company, knowledge of his fraudulent activities was to be attributed to the company, so the company could not complain that the auditors had failed to detect it. Lord Mance, dissenting, pointed out that this deprived the companys creditors of a remedy, as it was only the company which could sue the auditors for their negligence. It appears that what principally divided their lordships was whether the auditors had to have regard to the interests of creditors even though they owed them no duty of care. Stone & Rolls has prompted much debate and criticism. It was analysed in detail by a panel of seven Justices of this Court in Bilta (UK) Ltd v Nazir (No 2) [2015] UKSC 23; [2016] AC 1. The company and its liquidators brought claims against its directors and others who were alleged to have dishonestly assisted the directors in a conspiracy to defraud the company. The claim was defended on the basis that the fraud of its directors was attributable to the company which could not then make a claim against the other conspirators relying on its own illegality. This court held unanimously that where a company has been the victim of wrongdoing by its directors, the wrongdoing of the directors cannot be attributed to the company as a defence to a claim brought against the directors and their co conspirators by the companys liquidator for the loss suffered by the company as a result of the wrongdoing. The court explained that the key to any question of attribution was always to be found in considerations of the context and the purpose for which the attribution was relevant. Where the purpose was to apportion responsibility between the company and its agents so as to determine their rights and liabilities to one another, the answer might not be the same as where the purpose was to apportion responsibility between the company and a third party. Stone & Rolls was a case between a company and a third party. Lords Toulson and Hodge, after analysing the judgments in detail, reached the conclusion (para 154) that it should be regarded as a case which has no majority ratio decidendi. It stands as authority for the point which it decided, namely that on the facts of that case no claim lay against the auditors, but nothing more. Lord Sumption identified three points for which it was authority (para 80), but Lord Neuberger, with whom Lord Clarke and Lord Carnwath agreed, agreed with only two of these (para 26). The first was that an illegality defence cannot be run by a third party against a company where there are innocent shareholders or directors. The second was that the defence was available, albeit only on some occasions, where there are no innocent directors or shareholders. Lord Mance agreed with the first of these but as to the second he commented that it appears [to be] a factually correct representation of the outcome of Stone & Rolls, though the present appeal does not raise the correctness in law of that outcome, which may one day fall for reconsideration (para 50). Subject to the two points with which he agreed, Lord Neuberger said this: [T]he time has come in my view for us to hold that the decision in Stone & Rolls should as Lord Denning MR graphically put it in relation to another case in In re King, decd [1963] Ch 459, 483, be put on one side in a pile and marked not to be looked at again. Without disrespect to the thinking and research that went into the reasoning of the five Law Lords in that case, and although persuasive points and observations may be found from each of the individual opinions, it is not in the interests of the future clarity of the law for it to be treated as authoritative or of assistance save as already indicated. (para 30) Unfortunately, the majoritys acceptance of the second point has been treated as if it established a rule of law that the dishonesty of the controlling mind in a one man company could be attributed to the company with the consequences discussed earlier whatever the context and purpose of the attribution in question. Thus there was much argument in this case about what was meant by innocent directors and whether this included innocent but inactive directors who should have been paying more attention to what Mr Al Sanea was doing. The judge found that Singularis was not a one man company in the sense that the phrase was used in Stone & Rolls and Bilta (Rose J, para 212). The company had a board of reputable people and a substantial business. There was no evidence to show that the other directors were involved in or aware of Mr Al Saneas actions. There was no reason why they should have been complicit in his misappropriation of the money (para 189). The Court of Appeal held that, on those findings of fact, she had made no error of law (CA, para 54). I agree. But in any event, in my view, the judge was correct also to say that there is no principle of law that in any proceedings where the company is suing a third party for breach of a duty owed to it by that third party, the fraudulent conduct of a director is to be attributed to the company if it is a one man company. In her view, what emerged from Bilta was that the answer to any question whether to attribute the knowledge of the fraudulent director to the company is always to be found in consideration of the context and the purpose for which the attribution is relevant (para 182). I agree and, if that is the guiding principle, then Stone & Rolls can finally be laid to rest. The context of this case is the breach by the companys investment bank and broker of its Quincecare duty of care towards the company. The purpose of that duty is to protect the company against just the sort of misappropriation of its funds as took place here. By definition, this is done by a trusted agent of the company who is authorised to withdraw its money from the account. To attribute the fraud of that person to the company would be, as the judge put it, to denude the duty of any value in cases where it is most needed (para 184). If the appellants argument were to be accepted in a case such as this, there would in reality be no Quincecare duty of care or its breach would cease to have consequences. This would be a retrograde step. Daiwa makes two further arguments essentially policy arguments against this conclusion. First, it argues that it is odd if the claim of a company arising out of the dishonest activities of its directing mind and will against a negligent auditor fails (as in Stone & Rolls and in Berg Sons & Co Ltd v Adams [1993] BCLC 1045) but a claim against a negligent bank or broker succeeds. But (quite apart from the difficulties of Stone & Rolls) this ignores the fact that the duties of auditors are different from the duties of banks and brokers. The auditors duty is to report on the companys accounts to those having a proprietary interest in the company or concerned with its management and control. If the company already knows the true position (as in Berg) then the auditors negligence does not cause the loss. Second, Daiwa argues that the law should not treat a company more favourably than an individual. In Luscombe v Roberts (1962) 106 SJ 373, a solicitors claim against his negligent accountants failed because he knew that what he was doing transferring money from his clients account into his firms account and using it for his own purposes was wrong. But companies are different from individuals. They have their own legal existence and personality separate from that of any of the individuals who own or run them. The shareholders own the company. They do not own its assets and a sole shareholder can steal from his own company. I therefore see nothing in those arguments to detract from the conclusion reached that, for the purpose of the Quincecare duty of care, the fraud of Mr Al Sanea is not to be attributed to the company. However, even if it were, for the reasons given earlier, none of the defences advanced by Daiwa would succeed. Conclusion In reaching this conclusion in such short order, I mean no disrespect to the lengthy arguments of counsel or to the impressive judgments in the courts below. But Mr Crow was correct to say that this case is bristling with simplicity. A company with a substantial business traded for some years and ran up debts in doing so. It also had a substantial sum of money standing to its credit, as a result of its legitimate business activities, with its broker bankers. When it appeared that the company was running into difficulties, its directing mind and sole shareholder fraudulently deprived the company of that money by directing Daiwa to pay it away. Daiwa should have realised that something suspicious was going on and suspended payment until it had made reasonable enquiries to satisfy itself that the payments were properly to be made. The company (and through the company its creditors) has been the victim of Daiwas negligence. This appeal should be dismissed and the judges order should stand. |
These appeals are concerned with a little used provision in article 1F(c) of the Geneva Convention on the Status of Refugees (the Refugee Convention). This excludes from refugee status and protection any person with respect to whom there are serious reasons for considering that . he has been guilty of acts contrary to the purposes and principles of the United Nations. For the time being at least, however, the Home Secretary accepts that these appellants cannot be returned to their home countries because they face a real risk of torture or inhuman or degrading treatment or punishment there. It is the grant of refugee status, rather than the right to stay in this country, which is in issue in these proceedings. The issues in the two cases are different. In Al Sirri, the question is whether all activities defined as terrorism by our domestic law are for that reason alone acts contrary to the purposes and principles of the United Nations, or whether such activities must constitute a threat to international peace and security or to the peaceful relations between nations. In DD, the question is whether armed insurrection is contrary to the purposes and principles of the United Nations if directed, not only against the incumbent government, but also against a United Nations mandated force supporting that government, specifically the International Security Assistance Force (ISAF) in Afghanistan. Although the issues are different, many of the relevant materials are the same, as must be the general approach to article 1F(c), and so we deal with them in one judgment to avoid unnecessary repetition. In all article 1F cases, there is also the issue of the standard of proof: what is meant by serious reasons for considering a person to be guilty of the acts in question? (1) The general approach Relevant treaty and legislative provisions Article 1F of the Refugee Convention excludes three types of person from the definition of refugee: 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. It will be apparent that a particular act may fall within more than one of these categories. In particular, terrorism may be both a serious non political crime and an act contrary to the purposes and principles of the United Nations. Member States of the European Union are, moreover, bound to observe the standards laid down in Council Directive 2004/83/EC 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). Its main objective is to ensure common standards in the identification of people genuinely in need of international protection and a minimum level of benefits for them in all Member States (recital 6). Recital 22 deals with article 1F(c): Acts contrary to the purposes and principles of the United Nations are set out in the preamble and articles 1 and 2 of the Charter of the United Nations and are, amongst others, embodied in the United Nations Resolutions relating to measures combating terrorism, which declare that acts, methods and practices of terrorism are contrary to the purposes and principles of the United Nations and that knowingly financing, planning and inciting terrorist acts are also contrary to the purposes and principles of the United Nations. Article 12 of the Qualification Directive both reflects and expands slightly upon article 1F of the Refugee Convention (the changes and additions are italicised): 2. A third country national or a stateless person is excluded from being a refugee where there are serious reasons for considering that: (a) he or she 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 or she has committed a serious non political crime outside the country of refuge prior to his or her admission [to that country] as a refugee; which means the time of issuing a residence permit based on the granting of refugee status; particularly cruel actions, even if committed with an allegedly political objective, may be classified as serious non political crimes; (c) he or she has been guilty of acts contrary to the purposes and principles of the United Nations as set out in the Preamble and articles 1 and 2 of the Charter of the United Nations. 3. Paragraph 2 applies to persons who instigate or otherwise participate in the commission of the crimes or acts mentioned therein. The Qualification Directive is transposed into United Kingdom law by the Refugee or Person in Need of International Protection (Qualification) Regulations 2006 (SI 2006/2525). Regulation 2 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. The Immigration Rules provide, in paragraph 334, that a person will be granted asylum, inter alia, if (ii) he is a refugee, as defined in regulation 2 of The Refugee or Person in Need of International Protection (Qualification) Regulations 2006. However, section 54 of the Immigration, Asylum and Nationality Act 2006 (the 2006 Act), provides: (1) In the construction and application of article 1F(c) of the Refugee Convention the reference to acts contrary to the purposes and principles of the United Nations shall be taken as including, in particular (a) acts of committing, preparing or instigating terrorism (whether or not the acts amount to an actual or inchoate offence), and (b) acts of encouraging or inducing others to commit, prepare or instigate terrorism (whether or not the acts amount to an actual or inchoate offence). (2) In this section the Refugee Convention means the Convention relating to the Status of Refugees done at Geneva on 28 July 1951, and terrorism has the meaning given by section 1 of the Terrorism Act 2000. There is no need to set out the definition of terrorism contained in section 1 of the 2000 Act. The essence is the use or threat of certain dangerous actions designed to influence this or any other government or intimidate the public for the purpose of advancing a political, religious, racial or philosophical cause. But if firearms or explosives are involved, the act or threat need not be designed to influence the government or intimidate the public. Terrorism designed solely to achieve political change within the United Kingdom, with no international repercussions, is clearly covered, as is terrorism committed here with a view to achieving internal political change in another country. The Preamble to the Charter of the United Nations recites the determination of the peoples of the United Nations to save succeeding generations from the scourge of war; to reaffirm faith in fundamental human rights, in the dignity and worth of the human person, in the equal rights of men and women and of nations large and small; to maintain justice and respect for international law; and to promote social progress and better standards of life in larger freedom; and for these ends to live together in peace, unite to maintain international peace and security, ensure that armed force is used only in the common good, and employ international machinery for the economic and social advancement of all peoples. The purposes of the United Nations are set out in article 1 of the Charter. The first purpose is 1. To maintain international peace and security, and to that end: to take effective collective measures for the prevention and removal of threats to the peace, and for the suppression of acts of aggression or other breaches of the peace, and to bring about by peaceful means, and in conformity with the principles of justice and international law, adjustment or settlement of international disputes or situations which might lead to a breach of the peace. The second is to develop friendly relations among nations based on respect for the principle of equal rights and self determination of peoples, and to take other appropriate measures to strengthen universal peace; the third is to achieve international cooperation in solving international problems of an economic, social, cultural, or humanitarian nature, and in promoting and encouraging respect for human rights and for fundamental freedoms for all; and the fourth is to be a centre for harmonising the actions of nations in the attainment of these common ends. Article 2 of the Charter requires the United Nations and its Member States to act in accordance with the seven Principles set out therein. These are: the sovereign equality of all Members; the duties of all Members to fulfil their obligations under the Charter in good faith; to settle their disputes by peaceful means; to refrain from the threat or use of force against the territorial integrity or political independence of any state; to give the United Nations every assistance in taking action in accordance with the Charter and to refrain from assisting any state against which it is taking action; the duty of the United Nations to ensure that non member states act in accordance with these principles so far as may be necessary to maintain international peace and security; and, finally, that Nothing contained in the present Charter shall authorise the United Nations to intervene in matters which are essentially within the domestic jurisdiction of any state . The general approach to article 1F(c) The appellants, with the support of the UNHCR, argue that article 1F must be interpreted narrowly and applied restrictively because of the serious consequences of excluding a person who has a well founded fear of persecution from the protection of the Refugee Convention. This was common ground in R (JS (Sri Lanka)) v Secretary of State for the Home Department [2010] UKSC 15, [2011] 1 AC 184, in the context of article 1F(a), and must apply a fortiori in the context of article 1F(c). Concern was expressed during the drafting of the Convention that the wording was so vague as to be open to misconstruction or abuse. Professor Grahl Madsen comments that It seems that agreement was reached on the understanding that the phrase should be interpreted very restrictively: The Status of Refugees in International Law, 1966, p 283. Secondly, article 1F(c) is applicable to acts which, even if they are not covered by the definitions of crimes against peace, war crimes or crimes against humanity as defined in international instruments within the meaning of article 1F(a), are nevertheless of a comparable egregiousness and character, such as sustained human rights violations and acts which have been clearly identified and accepted by the international community as being contrary to the purposes and principles of the United Nations. The appellants rely on Pushpanathan v Canada, Minister of Citizenship and Immigration (Canadian Council for Refugees intervening) [1998] 1 SCR 982 (Pushpanathan) per Bastarache J at para 65: .In my view, attempting to enumerate a precise or exhaustive list [of acts contrary to the purposes and principles of the United Nations] stands in opposition to the purpose of the section and the intentions of the parties to the Convention. There are, however, several types of acts which clearly fall within the section. The guiding principle is that where there is consensus in international law that particular acts constitute sufficiently serious and sustained violations of fundamental human rights as to amount to persecution, or are explicitly recognised as contrary to the purposes and principles of the United Nations, then article 1F(c) will be applicable. On the other hand, not every act which is condemned by the United Nations is for that reason alone to be deemed contrary to its purposes and principles. In Pushpanathan itself, the majority held that international drug trafficking did not fall within article 1F(c), despite the co ordinated efforts of the international community to suppress it, through United Nations treaties, declarations and institutions. As the UNHCR explains, in its Background Note on the Application of the Exclusion Clauses: Article 1F (September 2003), at para 47: The principles and purposes of the United Nations are reflected in myriad ways, for example by multilateral conventions adopted under the aegis of the UN General Assembly and in Security Council resolutions. Equating any action contrary to such instruments as falling within article 1F(c) would, however, be inconsistent with the object and purpose of this provision. Rather, it appears that article 1F(c) only applies to acts that offend the principles and purposes of the United Nations in a fundamental manner. Article 1F(c) is thus triggered only in extreme circumstances by activity which attacks the very basis of the international communitys co existence under the auspices of the United Nations. The key words in article 1F(c) acts contrary to the purposes and principles of the United Nations should therefore be construed restrictively and its application reserved for situations where an act and the consequences thereof meet a high threshold. This threshold should be 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. Thus, crimes capable of affecting international peace, security and peaceful relations between states would fall within this clause, as would serious and sustained violations of human rights. Thirdly, for exclusion from international refugee protection to be justified, it must be established that there are serious reasons for considering that the person concerned had individual responsibility for acts within the scope of article 1F(c): see the detailed discussion at paras 50 to 75 of the UNHCR Background Note. This requires an individualised consideration of the facts of the case, which will include an assessment of the persons involvement in the act concerned, his mental state and possible grounds for rejecting individual responsibility. As a general proposition, individual responsibility arises where the individual committed an act within the scope of article 1F(c), or participated in its commission in a manner that gives rise to individual responsibility, for example through planning, instigating or ordering the act in question, or by making a significant contribution to the commission of the relevant act, in the knowledge that his act or omission would facilitate the act. In Bundesrepublik Deutschland v B and D (Joined Cases C 57/09 and C 101/09) [2011] Imm AR 190 (B and D) the Grand Chamber of the Court of Justice of the European Union confirmed the requirement of an individualised assessment and held that it was not justifiable to base a decision to exclude solely on a persons membership of a group included in a list of terrorist organisations. This too is consistent with the approach adopted by this Court in R (JS (Sri Lanka)) v Secretary of State for the Home Department [2011] 1 AC 184. In our view, this is the correct approach. 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. However, those general observations are not enough in themselves to resolve the questions raised by the two cases before us, to which we now turn. (2) The case of Al Sirri The facts The appellant is a citizen of Egypt. He arrived in the United Kingdom in April 1994 and claimed asylum then. His claim was eventually turned down on 11 October 2000, on the ground that article 1F(c) of the Refugee Convention applied to him, but he was told that he would be granted exceptional leave to enter the United Kingdom. That never happened, but on 1 April 2004 he was granted discretionary leave to enter which has been extended for periods of six months at a time ever since. Under section 83 of the Nationality, Immigration and Asylum Act 2002, the grant of discretionary leave for an aggregate of more than a year also gave him the right to appeal against the refusal of asylum. This he did in September 2006. On 2 August 2007, the Asylum and Immigration Tribunal (the AIT) (Hodge J, President, Senior Immigration Judge Lane and Immigration Judge Woodhouse) dismissed his appeal. On 18 March 2009, the Court of Appeal (Sedley, Arden and Longmore LJJ) set aside the Tribunals determination and remitted the case to be determined afresh by a differently constituted tribunal: [2009] EWCA Civ 222, [2009] INLR 586. Nevertheless, the appellant has appealed to this Court because he takes issue with some aspects of the leading judgment given by Sedley LJ. The Home Secretary relied upon seven matters to show that there are serious reasons for considering that the appellant has been guilty of acts contrary to the purposes and principles of the United Nations. Four of these are accepted facts: (i) that the appellant had published and written the Foreword to an Arabic language book, Bringing to light some of the most important judgments in Islam; the author, Rifai Ahmed Musa, has been credibly named as having been a member of the Egyptian organisation, al Gamma al Islamiyya; the AIT pointed out that that organisation is proscribed under the Terrorism Act 2000, and also in Canada and the United States and within the European Union by Council Common Position 2005/936/CFSP; (ii) that the appellant was in possession of an unpublished Arabic manuscript, Expectations of the Jihad Movement in Egypt; the author, Ayman Al Zawahiri, is a former leader of the organisation, Egyptian Islamic Jihad; (iii) that the appellant possesses books and videos relating to Osama bin Laden and Al Qaeda; (iv) that the appellant had transferred money to and from foreign countries, allegedly in sums greater than his known income could explain. The AIT relied upon a long and detailed statement from Acting Detective Inspector Dingemans of the Counter Terrorism Command at Scotland Yard, containing what Sedley LJ described as a damaging account and analysis of the material found at Mr Al Sirris premises (para 67). Sedley LJ commented that the preferable course would have been for the AIT to be shown the documentary material supporting the allegations, to hear what both sides had to say about it, to consider any explanations given by the appellant, and to make up their own mind about it. The Court of Appeal was not satisfied that this material, together with the more serious allegation referred to in para 22 below, would inevitably have led the AIT to conclude that the appellant fell within article 1F(c); it follows that they would not have been so satisfied on the basis of the above material alone. Two of the matters relied upon were more serious, but the Court of Appeal ruled that the AIT was required by law to give them no weight, and the Home Secretary has not appealed against that ruling: (i) that the appellant has twice been convicted in his absence by the Supreme Military Court of Egypt: in March 1994, when he was sentenced to death for conspiracy to kill Dr Atef Sidqi, Prime Minister of Egypt; and in January 1999, when he was sentenced to 15 years imprisonment for membership of a terrorist organisation. These convictions cannot be relied upon because they were probably secured by the use of torture. Although the AIT placed little weight upon them, the Court of Appeal correctly ruled that this was a serious error of law, and the only principled way of dealing with them was to afford them no weight at all (para 44); (ii) that a grand jury in the United States District Court for the Southern District of New York had indicted him for allegedly providing material support to a terrorist organisation, al Gamma al Islamiyya, and soliciting the commission of a crime of violence. The AIT had accorded this substantial weight, although none of the evidence on which the indictment was based had been disclosed, and as a result (under extradition law as it then stood) the Home Secretary had declined to authorise an extradition request based upon the indictment to proceed. The Court of Appeal ruled that it should be accorded no evidential weight whatsoever. This leaves the most important matter relied upon: that the appellant had conspired in the murder of General Ahmad Shah Masoud in Afghanistan on 9 September 2001, just two days before the atrocities of 11 September 2001. The background to this is common knowledge, some of which is confirmed by the witness statement of General Masouds brother, Charg dAffaires in London for the Islamic State of Afghanistan. This was then the recognised government of Afghanistan and General Masoud was its Vice President and Defence Minister. But at the time the Taliban were in control of most of the country, apart from the territory in the north east of the country which was under the control of the Northern Alliance. General Masoud was leader of the Northern Alliance. Earlier that year he had travelled to Europe to address the European Parliament on the situation in Afghanistan and it is said that he had warned of an impending Al Qaeda attack upon the United States on a larger scale than the bombing of the US embassies in Kenya and Tanzania in 1998. It is also believed that his assassination may have been ordered by Osama bin Laden to cut off the most obvious source of support for US retaliation against such an attack. Be that as it may, the appellant was indicted at the Old Bailey for conspiracy to murder General Masoud. The case against him was described by the Common Serjeant as follows. The General had been murdered by two Arab suicide bombers posing as a journalist and photographer who had been granted an interview with him. A letter of introduction, purportedly signed by the appellant, from the Islamic Observation Centre (IOC) which was run by the appellant in London, and informing the reader that the two were journalists of Arab News International, a TV subsidiary of the IOC, had played a part in securing this interview. However, the letters actually carried by the assassins at the time of the murder were in fact, as the Common Serjeant put it, careful and elaborate forgeries of the letters that the appellant had created. So did the appellant know that the letters which he created were to be used to secure an interview with the General at which he would be killed? Or were they used by the assassins as a template for the letters which they would forge, the appellant being an innocent fall guy who knew nothing of their intended use? The Common Serjeant concluded that the evidence was as consistent with the innocence of the accused (who had made no secret of his authorship of the templates which could easily be traced to him and had not destroyed any of the relevant documentation in his possession) as it was with his guilt. Accordingly, on 16 May 2002, he dismissed the charge on the ground that the evidence would not be sufficient for a jury properly to convict. The AIT reminded themselves that the standard of proof in criminal proceedings is not the same as that under article 1F(c). They concluded that the evidence seriously points to some knowing involvement of the appellant in the events which led to the death of General Masoud (para 46). Sedley LJ considered whether this conclusion, together with the Dingemans evidence referred to in para 19 above, would have been bound to lead to a finding adverse to the appellant (para 62). He concluded that there was a realistic possibility that a tribunal of fact, confining itself to the admissible evidence and excluding the two items ruled inadmissible by the Court of Appeal, might have rejected the submission that the appellant fell within article 1F(c) (para 64). Hence the case was remitted to be determined afresh on the basis of the admissible evidence. Why then this appeal? The appellant originally took issue with the Court of Appeal on three matters: (1) The Court of Appeal rejected his argument that article 1F was aimed only at state actors people who had in some way abused the powers of a sovereign state. Although this had the support both of academic commentators on the Refugee Convention and of the UNHCR, it had been rejected as an absolute rule by the Supreme Court of Canada in Pushpanathan. The appellant was originally given permission to argue the point in this Court, but has now abandoned it in the light of the later decision of the Court of Justice of the European Union in B and D. In these proceedings, Mr Fordham QC, who appears for the UNHCR, has accepted that it is possible for non state actors to be guilty of acts contrary to the purposes and principles of the United Nations. (2) Sedley LJ saw the force of the appellants submission that terrorism must have an international character or aspect in order to come within article 1F(c) (paras 29 and 32). However, he did not think that this helped the appellant. On the face of it, the assassination was in support of a domestic Afghan quarrel. The international repercussions were referred to but not described by the AIT. But what in his view gave it a dimension which brought it within the purposes and principles of the United Nations was that, if true, it involved the use of a safe haven in one state to destabilise the government of another by the use of violence (para 51). The appellant wishes, therefore: (i) clearly to establish that the act in question must have an international character, because the relevant purposes and principles of the United Nations are limited to matters which significantly affect international peace and security; and (ii) clearly to establish that it is not enough to supply that international character that actions are taken in one state to destabilise the government of another. (3) Sedley LJ rejected the submission that serious reasons for considering the appellant to be guilty of acts falling within article 1F(c) imported the criminal standard of proof (paras 33 to 35). The appellant was originally refused permission to appeal on this ground. But he now wishes to appeal on the different ground that, for there to be such serious reasons, it must be found more likely than not that the appellant is guilty of the relevant acts. This is of particular importance in his case, because of the Common Serjeants finding that the evidence was as consistent with his innocence as with his guilt. An international dimension? The question is whether labelling an act as terrorism or a person as a terrorist is sufficient to bring the act or the person within the scope of article 1F(c). Before the Court of Appeal, Mr Eicke QC, on behalf of the Home Secretary, did not dispute that article 1F(c) was not as wide as the definition of terrorism in section 1 of the Terrorism Act 2000 (see para 29). Further, by common consent the Qualification Directive conditions and qualifies the application of section 1 of the Terrorism Act to article 1F proceedings (see para 28). Before this Court, Mr Eicke has withdrawn any such concession and argues that, because the United Nations has condemned terrorism but not defined it, Member States are free to adopt their own definitions and that, therefore, acts falling within the domestic definition of terrorism will also be acts contrary to the purposes and principles of the United Nations, whether or not they have any international dimension or repercussions for international peace and security. In support of his argument, he cites the numerous General Assembly and Security Council resolutions on the subject of terrorism, sometimes with and sometimes without the adjective international. In 1994, the General Assembly of the United Nations adopted, by resolution 49/60, the annexed Declaration on Measures to Eliminate International Terrorism. By article 1: The States Members of the United Nations solemnly reaffirm their unequivocal condemnation of all acts, methods and practices of terrorism, wherever and by whomever committed, including those which jeopardise the friendly relations among states and peoples and threaten the territorial integrity and security of states. By article 2: Acts, methods and practices of terrorism constitute a grave violation of the purposes and principles of the United Nations, which may pose a threat to international peace and security, jeopardise friendly relations among states, hinder international cooperation and aim at the destruction of human rights, fundamental freedoms and democratic bases of society. And by article 3: Criminal acts intended or calculated to provoke a state of terror in the general public, a group of persons or particular persons for political purposes are in any circumstance unjustifiable, whatever the considerations of a political, philosophical, ideological, racial, ethnic, religious or any other nature that may be invoked to justify them. By article 5(f), states were required to take effective measures before, among other things, granting asylum to ensure that the asylum seeker has not engaged in terrorist activities. In 1996, the General Assembly adopted, by resolution 51/210, the Declaration to Supplement the 1994 Declaration on Measures to Eliminate International Terrorism. By article 3: The States Members of the United Nations reaffirm that States should take appropriate measures in conformity with the relevant provisions of national and international law, including international standards of human rights, before granting refugee status, for the purpose of ensuring that the asylum seeker has not participated in terrorist acts, . and, after granting refugee status, for the purpose of ensuring that that status is not used for the purpose of preparing or organising terrorist acts intended to be committed against other states or their citizens. Declarations are not, of course, binding in international law. Resolution 51/210 referred to the possibility of considering in the future the elaboration of a comprehensive convention on international terrorism and established an ad hoc committee to that end; a draft text has been prepared for discussion but as yet no such Convention has been agreed. In the meantime, a number of specific Conventions requiring states to criminalise certain particular acts of terrorism have been agreed. The Security Council has passed numerous resolutions concerning threats to international peace and security caused by acts of terrorism, including Resolution 1624 of 2005. Paragraph 8 of the Preamble to this reaffirms that acts, methods, and practices of terrorism are contrary to the purposes and principles of the United Nations, as is knowingly financing, planning and inciting terrorist acts. But paragraph 2 also stresses that States must ensure that any measures taken to combat terrorism comply with all their obligations under international law, and should adopt such measures in accordance with international law, in particular international human rights law, refugee law, and humanitarian law. Mr Fitzgerald QC, on behalf of the appellant, argues that an act of terrorism can only be contrary to the purposes and principles of the United Nations if it impacts in some significant way upon international peace and security. In the Guidelines on International Protection: Application of Exclusion Clauses: Article 1F of the 1951 Convention relating to the Status of Refugees, 2003, para 17, the UNHCR takes a view of terrorism which is consistent with the general principles quoted above at para 14: In cases involving a terrorist act, a correct application of article 1F(c) involves an assessment as to the extent to which the act impinges on the international plane in terms of its gravity, international impact, and implications for international peace and security. This position is maintained in the UNHCRs Note on the Impact of Security Council Resolution 1624 (2005) on the Application of Exclusion under Article 1F of the 1951 Convention relating to the Status of Refugees: The focus should . continue to be on the nature and impact of the acts themselves. In many cases, the acts in question will meet the criteria for exclusion as serious non political crimes within the meaning of article 1F(b). In others, such acts may come within the scope of article 1F(a), for example as crimes against humanity, while those crimes whose gravity and international impact is such that they are capable of affecting international peace, security and peaceful relations between states would be covered by article 1F(c) of the 1951 Convention. Thus, the kinds of conduct listed in [preambular paragraph] 8 of Resolution 1624 ie acts, methods and practices of terrorism and knowingly financing, planning and inciting terrorist acts qualify for exclusion under article 1F(c), if distinguished by these larger characteristics. (Emphasis supplied) B and D was decided by the Grand Chamber of the CJEU after the decision of the Court of Appeal in Al Sirri. The principal question referred by the Bundesverwaltungsgericht was whether mere membership of or support for an organisation listed in the Annex to the Council Common Position of 17 June 2002 on the application of specific measures to combat terrorism constituted a serious non political crime within article 12(2)(b) or an act contrary to the purposes and principles of the United Nations within article 12(2)(c) of the Qualification Directive. The Advocate General drew a distinction between terrorist acts in general, which depending upon the circumstances were likely to be categorised as serious non political crimes, and terrorist acts which were contrary to the purposes and principles of the United Nations. As to the latter, in his view, the UNHCR Guidelines and Background Note suggested that it is nevertheless necessary to verify whether they have an international dimension, especially in terms of their seriousness and their impact and implications for international peace and security. Within those limits, it therefore seems permissible to make a distinction between international terrorism and domestic terrorism (para 70, Adv Gen). The Grand Chamber confirmed that terrorist acts, even if committed with a purportedly political objective, fall to be regarded as serious non political crimes (para 81). Coming on to acts contrary to the principles and purposes of the United Nations, the Grand Chamber thought it clear from the Security Council Resolutions that the Security Council takes as its starting point the principle that international terrorist acts are generally speaking, and irrespective of any state participation, contrary to the purposes and principles of the United Nations (para 83). It is for that reason that the appellant has conceded that non state actors can be guilty of such acts. The Grand Chamber continued (para 84): It follows that as is argued in their written observations by all the governments which submitted such observations to the court, and by the European Commission the competent authorities of the Member States can also apply article 12(2)(c) of Directive 2004/83 to a person who, in the course of his membership of an organisation which is on the list forming the Annex to Common Position 2001/931, has been involved in terrorist acts with an international dimension. The B and D case is prayed in aid on each side of the argument. Mr Eicke, for the Secretary of State, correctly points out that the international dimension was not what the case was all about. The principal issue was whether mere membership of and support for a listed organisation was sufficient for either article 12(2)(b) or (c) to apply. The answer to this question was clearly no. The national authorities had first to consider whether the acts committed by the organisation fell within those provisions and secondly whether individual responsibility for carrying out those acts could be attributed to the persons concerned. In that context, little weight could be attached to the references to international terrorism and terrorist acts with an international dimension. Against that, argues Mr Fitzgerald, it is clear that both the Advocate General and the Grand Chamber were drawing a distinction between paragraphs (b) and (c) of article 12(2). There is no mention of an international element in the terrorist acts which could fall within paragraph (b), whereas the international element is referred to whenever reference is made to paragraph (c). Discussion and conclusions Approaching the matter in the light of the general principles discussed earlier, it is clear that the phrase acts contrary to the purposes and principles of the United Nations must have an autonomous meaning. It cannot be the case that individual Member States are free to adopt their own definitions. As Lord Steyn said in R v Secretary of State for the Home Department, Ex p Adan [2000] UKHL 67, [2001] 2 AC 477, In principle, there can be only one true interpretation of a treaty. There is, at least as yet, no specialist international court or other body to adjudicate upon Member States compliance with the Refugee Convention. The guidance given by the UNHCR is not binding, but should be accorded considerable weight, in the light of the obligation of Member States under article 35 of the Convention to facilitate its duty of supervising the application of the provisions of the Convention (see R v Asfaw [2008] AC 1061, per Lord Bingham at para 13, and R v Uxbridge Magistrates Court, Ex p Adimi [2001] QB 667, 678). Within the European Union the Qualification Directive is designed to lay down minimum standards with which Member States must comply. Sedley LJ correctly concluded that the adoption by section 54(2) of the 2006 Act of the meaning of terrorism contained in the 2000 Act has where necessary to be read down in an article 1F[(c)] case so as to keep its meaning within the scope of article 12(2)(c) of the Directive. The United Nations Security Council has declared that acts, methods, and practices of terrorism are contrary to the purposes and principles of the United Nations and this is repeated in recital 22 to the Qualification Directive. But it has done so in a context where there is as yet no internationally agreed definition of terrorism, no comprehensive international Convention binding Member States to take action against it, and where the international declarations adopted by the General Assembly are headed Measures to eliminate international terrorism. Above all, however, the principal purposes of the United Nations are to maintain international peace and security, to remove threats to that peace, and to develop In those circumstances, it is our view that the appropriately cautious and friendly relations among nations. It is also noteworthy that the CJEU, despite recital 22 to the Directive, consistently referred to international terrorism, when discussing article 12(2)(c) in B and D. restrictive approach would be to adopt para 17 of the UNHCR Guidelines: Article 1F(c) is only triggered in extreme circumstances by activity which attacks the very basis of the international communitys coexistence. Such activity must have an international dimension. Crimes capable of affecting international peace, security and peaceful relations between states, as well as serious and sustained violations of human rights would fall under this category. The essence of terrorism is the commission, organisation, incitement or threat of serious acts of violence against persons or property for the purpose of intimidating a population or compelling a government or international organisation to act or not to act in a particular way (see, for example, the definition in article 2 of the draft comprehensive Convention), as Sedley LJ put it in the Court of Appeal, the use for political ends of fear induced by violence (para 31). It is, it seems to us, very likely that inducing terror in the civilian population or putting such extreme pressures upon a government will also have the international repercussions referred to by the UNHCR. In this particular case, the AIT did not consider that any such repercussions were required, but commented that if we are wrong about that we consider the killing itself to be an act of terrorism likely to have significant international repercussions, as indeed it appears to have done (para 47). When the case returns to the Tribunal, the Tribunal will have to consider the totality of the evidence and apply the test set out above. Finally, is it enough to meet that test that a person plots in one country to destabilise conditions in another? This must depend upon the circumstances of the particular case. It clearly would be enough if the government (or those in control) of one state offered a safe haven to terrorists to plot and carry out their terrorist operations against another state. That is what the Taliban were doing by offering Osama bin Laden and Al Qaeda a safe haven in Afghanistan at the time. As the UNHCR says, this would have clear implications for inter state relations. The same may not be true of simply being in one place and doing things which have a result in another. The test is whether the resulting acts have the requisite serious effect upon international peace, security and peaceful relations between states. (3) The case of DD The facts The appellant is a citizen of Afghanistan. He arrived in the United Kingdom on 18 January 2007 and applied for asylum on the same day. The basis of his claim was that he feared persecution because of his association with his brother AD, who was a well known Jamiat e Islami commander in Afghanistan. Following the fall of the Najibullah government in 1992, the appellants brother became responsible for other commanders in the north of Afghanistan and formed a number of strategic alliances, ultimately allying himself with the Taliban. The appellant acted as his deputy and commanded between 50 and 300 men. He was later demoted and reduced to the command of no more than 20 men. Following US military intervention in Afghanistan, the appellant and his brother fled to Pakistan. In 2004, the appellants brother was assassinated in Pakistan by his enemies who held positions in the Karzai government of Afghanistan. The appellant was also a target of the assassination attempt and sustained gunshot injuries. After about a month, he returned to Afghanistan and sought protection from his enemies by joining a military grouping, Hizb e Islami. He commanded 10 15 people and engaged in both offensive and defensive military operations against both the Afghan government and the forces of ISAF. The appellants nephew (the son of his deceased brother) was killed in Peshawar in about September 2006. The appellant was ordered to fight in his home area. He decided that it would be too dangerous for him to do so as he had enemies there who were high ranking members of the Karzai government. He fled once again to Pakistan and arrangements were made through an agent for him to travel from there to the United Kingdom. He claimed asylum saying that he feared that, if he were returned to Afghanistan, he would be killed by his deceased brothers enemies or by Hizb e Islami as a traitor. By letter dated 27 April 2007, the Secretary of State refused the claim on the grounds that the appellants account was not credible. In particular, he did not accept the account that he gave of his role in Hizb e Islami. By letter dated 6 August 2007, the Secretary of State gave supplementary reasons for the refusal. These were that, even if the appellants claimed activities in Afghanistan were substantiated, he was not entitled to asylum in any event. This was because his claim that he had fought against ISAF, if accepted, meant that he had been guilty of acts contrary to the purposes and principles of the United Nations and was therefore excluded from the definition of refugee by reason of article 1F(c) of the Refugee Convention. The appellant appealed to the Asylum and Immigration Tribunal (AIT). IJ Morgan found the appellant to be credible and allowed his appeal under the Refugee Convention and under article 3 of the European Convention on Human Rights (ECHR). He had a well founded fear of persecution by his brothers enemies some of whom were members of the Karzai government. The judge was not persuaded that the appellant had been guilty of acts contrary to the purposes and principles of the United Nations. For reasons that are immaterial to the present appeal, a second stage reconsideration was ordered by SIJ Moulden. The second stage reconsideration was conducted by IJ Simpson who, by a determination promulgated on 28 August 2008, allowed the appellants appeal on both asylum and article 3 of the ECHR grounds. The judge found the appellant to be credible, except that she rejected his assertion that his actions with Hizb e Islami in Afghanistan were defensive. He had a longstanding history of military involvement in Afghanistan, including at a high level, deputy to his Commander brother, and independently a Commander in Hizb e Islami Hekmatayar in Kunar. There were prima facie grounds for considering his actions were both offensive and defensive. As regards article 1F(c), the judge concluded that section 54 of the 2006 Act (see para 7 above), which came into effect on 31 August 2006, appeared to have effected a substantive change in the law and that, as a matter of natural justice, it applied only to acts after it came into force, that is from September 2006. She concluded at para 151: Having regard to the combined lack of specificity of evidence of the appellants conduct with Hizb e Islami and the highly reasonable likelihood, given the chronology, that his involvement with Hizb e Islami was at its end stage after September 2006 and the coming into effect of section 54, I find in sum there are not serious grounds for considering he committed a barred act(s). I find article 1F(c) does not apply. The Court of Appeal The issues before the Court of Appeal concerned (i) the interpretation and applicability of the 2006 Act and (ii) whether and, if so, to what extent on the AITs findings the appellant had been guilty of acts contrary to the purposes and principles of the United Nations within the meaning of article 1F(c) of the Refugee Convention. Pill LJ (with whom Rimer and Black LJJ agreed) allowed the Secretary of States appeal. He held that, on the findings of the AIT, the appellant had not committed any acts of terrorism within the meaning of section 54 of the 2006 Act. The nub of the courts reasoning on the article 1F(c) point is contained in para 64 of Pill LJs judgment: The UN Security Council has mandated forces to conduct operations in Afghanistan. The force is mandated to assist in maintaining security and to protect and support the UNs work in Afghanistan so that its personnel engaged in reconstruction and humanitarian efforts can operate in a secure environment. Direct military action against forces carrying out that mandate is in my opinion action contrary to the purposes and principles of the United Nations and attracts the exemption provided by article 1F(c) of the Convention. As we explain below, we substantially agree with this conclusion. The Court of Appeal nevertheless remitted the case for reconsideration by the Upper Tribunal because the AIT had failed to consider the appellants individual responsibility as required by this Court in JS (Sri Lanka) (and by the CJEU in B and D) and whether he had been guilty of acts contrary to the purposes and principles of the United Nations. The United Nations and Afghanistan Ever since the Soviet withdrawal from Afghanistan in 1989, the United Nations has been trying to bring an end to the fighting that has been taking place in that country. As long ago as 28 August 1998, Security Council Resolution 1193 called for a ceasefire and expressed grave concern about the continuing Afghan conflict and the Taliban forces offensive which was causing a serious and growing threat to regional and international peace and security, as well as extensive human suffering. Similar resolutions followed. For security reasons, all international United Nations personnel were withdrawn from Afghanistan in September 2001. On 5 December 2001, the participants in the United Nations Talks on Afghanistan entered into the Bonn Agreement on Provisional Arrangements in Afghanistan Pending the Re establishment of Permanent Government Institutions. The participants pledged their commitment to do all within their means and influence to ensure that security was provided in Afghanistan. They agreed that an Interim Authority should be established (to be the repository of Afghan sovereignty) and that, pending the establishment and training of new Afghan security and armed forces, they would request the United Nations Security Council to consider authorising the early deployment in Afghanistan of a United Nations mandated force to assist in the maintenance of security in Kabul and its surrounding areas. By Resolution 1383 (6 December 2001), the Security Council endorsed the Bonn Agreement. By Resolution 1386 (20 December 2001), acting under Chapter VII of the United Nations Charter, the Security Council authorised the establishment for 6 months of ISAF to assist the Afghan Interim Authority in the maintenance of security in Kabul and its surrounding areas, so that the Afghan Interim Authority as well as the personnel of the United Nations can operate in a secure environment. The resolution (i) authorised the Member States participating in ISAF to take all necessary measures to fulfil its mandate; called upon ISAF to work in close consultation with the Afghan Interim Authority in the implementation of the force mandate; (ii) called upon all Afghans to cooperate with ISAF; and (iii) called upon the Member States participating in ISAF to provide assistance to help the Afghan Interim Authority in the establishment and training of new Afghan security and armed forces. On 18 March 2002, the Secretary General submitted a long report entitled The situation in Afghanistan and its implications for international peace and security. The report contained a good deal of detail about the situation and expressed the hope that the Security Council would support the wish of the Afghan people for the expansion of the operation of ISAF. At para 95, it said: the next step, to ensure that all United Nations efforts are harnessed to fully support the implementation of the Bonn Agreement, would be to integrate all the existing United Nations elements in Afghanistan into a single mission, the United Nations Assistance Mission in Afghanistan (UNAMA). The missions mandate would be (i) to fulfil the tasks and responsibilities, including those related to human rights, the rule of law and gender issues, entrusted to the United Nations in the Bonn Agreement, which were endorsed by the Security Council in its resolution 1383 (2001); (ii) to promote national reconciliation and rapprochement throughout the country; and (iii) to manage all United Nations humanitarian relief, recovery and reconstruction activities in Afghanistan under the overall authority of the United Nations Special Representative and in coordination with the Interim Authority and successor administrations of Afghanistan. By Resolution 1401 (28 March 2002), the Security Council endorsed the establishment of UNAMA for an initial period of 12 months with the mandate and structure set out in the Secretary Generals report of 18 March 2002. By Resolution 1413 (23 May 2002), the Security Council extended the mandate of ISAF for a further 6 months from 20 June 2002, authorising the Member States participating in ISAF to take all necessary steps to fulfil its mandate. By one of its recitals, the Security Council determined that the situation in Afghanistan still constituted a threat to international peace and security. The mandate was extended for a further year beyond 20 December 2002 by Resolution 1444 (27 November 2002). Once again, the threat to international peace and security posed by the situation in Afghanistan was recorded. The mandate of UNAMA was extended for a further period of 12 months by Resolution 1471 (28 March 2003). On 23 July 2003, the Secretary General reported on the situation in Afghanistan and its implications for international peace and security. At para 67 of his report, he said that the consequences of failing to provide for sufficient security for the Bonn process to succeed may have implications far beyond Afghanistan. On 11 August 2003, NATO assumed command of ISAF. By Resolution 1510 (13 October 2003), the Security Council extended ISAFs mandate for a further 12 months to allow it, as resources permit, to support the Afghan Transitional Authority and its successors in the maintenance of security in areas of Afghanistan outside Kabul and its environs, so that the Afghan Authorities as well as the personnel of the United Nations and other international civilian personnel engaged, in particular in reconstruction and humanitarian efforts, can operate in a secure environment, and to provide security assistance for the performance of other tasks in support of the Bonn Agreement. It called upon ISAF to continue to work in close consultation with the Afghan Transitional Authority and its successors as well as the Special Representative of the Secretary General. By its recitals, the Security Council recognised that the responsibility for providing security and law and order throughout the country resided with the Afghans themselves and welcomed the continuing cooperation of the Afghan Transitional Authority with ISAF. Yet again, the resolution recorded that the situation still constituted a threat to international peace and security. By Resolution 1536 (26 March 2004), the Security Council extended the mandate of UNAMA for a further 12 months. By Resolution 1563 (17 September 2004), the mandate of ISAF was extended for a further 12 months beyond 13 October 2004. In subsequent years, the mandates of UNAMA and ISAF were again extended for periods of 12 months at a time. As will become apparent, the differences between ISAF and UNAMA have assumed some importance in this case. ISAF is an armed force, but it is not a United Nations force. It has never been under direct United Nations command. It was initially under the lead command of single nations (starting with the United Kingdom). Since August 2003 it has been under the command of NATO. On the other hand, UNAMA is an assistance mission under United Nations control. It is not an armed force. But the objectives of ISAF and UNAMA are essentially the same, although the means by which they seek to achieve them differ. In particular, they both aim to promote the Bonn Agreement and to maintain peace and security in Afghanistan, thereby reducing the threat to international peace and security posed by the situation in Afghanistan. Some of the more recent Security Council resolutions explicitly make the link between the two organisations. Thus, recital 7 to Resolution 1776 (19 September 2007) is in these terms: Stressing the central role that the United Nations continues to play in promoting peace and stability in Afghanistan, noting, in the context of a comprehensive approach, the synergies in the objectives of the United Nations Assistance Mission in Afghanistan (UNAMA) and of ISAF, and stressing the need for further sustained cooperation, coordination and mutual support, taking due account of their respective designated responsibilities (underlining added). Similar language appears in the recitals to Resolution 1806 (20 March 2008), Resolution 1833 (22 September 2008), Resolution 1868 (23 March 2009) and subsequent resolutions. The appellants case on article 1F(c) Mr Drabble QC, on behalf of DD, relies upon the general approach to article 1F(c) discussed earlier. In particular, he argues that participation in an armed attack against forces operating under and carrying out a United Nations mandate does not without more engage article 1F(c). Armed insurrection is not, in itself, contrary to the purposes and principles of the United Nations. Internal armed conflict is now covered by international humanitarian law, in the shape of the 1949 Geneva Conventions. United Nations mandated forces are often deployed during or after an armed conflict, where international humanitarian law provides the appropriate legal framework for determining the lawfulness of armed attacks against them. The distinction between ISAF and UNAMA is crucial to the argument. Armed attacks on UNAMA could be characterised as contrary to the purposes and principles of the United Nations. UNAMA is a non combatant peacekeeping force which is protected under the 1994 Convention and the 2005 Protocol on the Safety of United Nations and Associated Personnel, whereas ISAF is not. Article 1(a)(i) of the 1994 Convention defines United Nations Personnel as persons engaged or deployed by the Secretary General of the United Nations as members of the military, police or civilian components of a United Nations operation. Article 1(c) defines a United Nations operation as an operation established by the component organ of the United Nationsand conducted under United Nations authority and control. Article 9 provides that various specified acts against any United Nations or associated personnel (including murder or other attacks) shall be made by each State Party a crime under its national law. But article 2(2) provides that the Convention is not to apply to a United Nations operation authorised by the Security Council as an enforcement action under Chapter VII of the Charter of the United Nations in which any of the personnel are engaged as combatants against organised armed forces and to which the law of international armed conflict applies. Article 2(2) is consistent with the broad principle that the laws of war apply to UN forces engaged in hostilities, and therefore such forces do not have immunity from attack: p 624 of Documents on the Laws of War, ed Roberts and Guelff, 3rd ed (2000). The distinction between combatants and peacekeeping personnel was considered by the Special Court for Sierra Leone in Prosecutor v Issa Hassan Sesay, Morris Kallon & Augustine Gbao (Case No SCSL 04 15T, 2 March 2009). In that case, the Special Court handed down the first convictions for the war crime of attacking personnel involved in a peacekeeping operation, namely members of the United Nations Assistance Mission in Sierra Leone, who were entitled to the protection given to civilians under the international law of armed conflict. Therefore, it is argued, military activities against United Nations mandated forces should only provide a basis for exclusion under article 1F(c) where (i) the act or acts in question constitute a crime in international law; or (ii) the act or acts, which must be of sufficient gravity to have a negative impact on international peace and security, have been specifically identified as contrary to the purposes and principles of the United Nations, either by clear decision of the Security Council acting within its competence, or by way of agreement or consensus among states at large; and (iii) there are serious reasons for considering that the individual concerned was personally responsible for the act or acts in question. Discussion and conclusions The acts relied on by the Secretary of State are acts of violence by the appellant against ISAF, the international force that was mandated by the United Nations for the express purpose of maintaining peace and security in Afghanistan, thereby assisting in the maintaining of international peace and security. Time and again, the resolutions of the Security Council recorded that the role and responsibility of ISAF was to assist in the maintaining of international peace and security. This is one of the most important purposes set out in article 1 of the United Nations Charter (see para 10 above). In these circumstances, it might be thought to be obvious at first sight that such acts are contrary to the purposes and principles of the United Nations. It is noteworthy that Mr Drabble (rightly) accepts that, if the appellant had been guilty of fighting UNAMA, he would in principle have been guilty of acts contrary to the purposes and practices of the United Nations. We say in principle, because it would still be necessary to examine all the facts (as per B and D). So why does it make any difference that the appellant was fighting ISAF rather than attacking UNAMA? That the aims and objectives of ISAF and UNAMA are congruent is amply borne out by the Security Council Resolutions: see para 58 above. The answer given by Mr Drabble and Mr Fordham is that the 1994 Convention and 2005 Protocol would apply to attacks on UNAMA, but not to attacks on ISAF. Peacekeeping forces, unlike combat forces, are entitled to the same protection against attack as that accorded to civilians under international humanitarian law, as long as they are not taking a direct part in hostilities. Under the Statute of the International Criminal Court (articles 8(2)(b)(iii) and 9(e)(iii)), intentionally directed attacks against personnel involved in a peacekeeping mission in accordance with the Charter of the United Nations constitute a war crime: see rule 33 in Customary International Humanitarian Law vol 1:Rules (2005, International Committee of the Red Cross). We accept the points made by Mr Drabble and Mr Fordham about the differences between ISAF and UNAMA which are summarised at paras 60 and 61 above. These differences are not in doubt. But they are not material to the issue of whether the appellant is excluded from the refugee status by article 1F(c). The question which rules of law apply to attacks on ISAF and UNAMA is categorically different from (and irrelevant to) the question whether an attack against either body is contrary to the purposes and principles of the United Nations. This latter question must be determined on an examination of all the relevant facts. These include the terms of the Security Council Resolutions by which ISAF was mandated in the first place, and by which its mandate was renewed from time to time. Mr Drabble submits that it is relevant to the issue in this case that, although the Security Council has mandated many military enforcement operations, it has never sought to characterise opposition, even armed opposition, as contrary to the purposes and principles of the United Nations. In some cases, a United Nations resolution explicitly states that a particular activity is contrary to the purposes and principles of the United Nations. (One example is the condemnation of international terrorism in General Assembly resolution 49/60, referred to in para 27 above.) However, it is not suggested, either by the UNHCR or by the Supreme Court of Canada in Pushpanathan, that this is the only criterion. In our view, the principled test is that put forward by the UNHCR in para 17 of its Guidelines and quoted at para 38 above. In Pushpanathan, the court did not have to consider whether an attack on a United Nations body or a United Nations mandated body constitutes acts contrary to the purposes and principles of the United Nations. We conclude that there is no basis for the view that such an attack can only be regarded as an act contrary to the purposes and principles of the United Nations in circumstances where (i) it is by consensus in international law explicitly recognised as being contrary to these purposes and principles, or (ii) it amounts to a serious and sustained violation of fundamental human rights. This conclusion is consistent with Mr Drabbles acceptance that an attack on UNAMA is in principle capable of satisfying article 1F(c), despite the fact that there appears to be no United Nations resolution (or other formal international decision) which explicitly recognises that an attack against UNAMA would be contrary to the purposes and principles of the United Nations. In short, an attack on ISAF is in principle capable of being an act contrary to the purposes and principles of the United Nations. The fundamental aims and objectives of ISAF accord with the first purpose stated in article 1 of the United Nations Charter. By attacking ISAF, the appellant was seeking to frustrate that purpose. To hold that his acts are in principle capable of being acts contrary to the purposes and principles of the United Nations accords with common sense and is correct in law. This conclusion accords with that of Hogan J in the High Court of Ireland in B v Refugee Appeals Tribunal and others [2011] IEHC 198 at para 56. For these reasons, we agree with the conclusion of the Court of Appeal, quoted in para 47 above. (4) Standard of proof This issue arises in an acute form in Al Sirri but could arise in any proposed exclusion under article 1F. The article requires that there be serious reasons for considering that the individual asylum seeker has committed the crimes referred to in article 1F(a) or (b) or been guilty of the acts referred to in article 1F(c). In Al Sirri, it was argued in the Court of Appeal that this imported the criminal standard of proof beyond reasonable doubt. In rejecting that submission, Sedley LJ said this, at para 33: . it clearly sets a standard above mere suspicion. Beyond this, it is a mistake to try to paraphrase the straightforward language of the Convention: it has to be treated as meaning what it says. In JS (Sri Lanka), at para 39, Lord Brown was inclined to agree with this passage, having also pointed out that . serious reasons for considering obviously imports a higher test for exclusion than would, say, an expression like reasonable grounds for suspecting. Considering approximates rather to believing than to suspecting. In Al Sirri, the Common Serjeant had considered that the evidence admissible in a criminal trial for conspiracy to murder General Masoud was as consistent with innocence as with guilt. Thus he, at least, was not satisfied of Al Sirris guilt even on the balance of probabilities. Mr Fitzgerald QC argues that it is not possible to have serious reasons for considering a person to have committed a crime or be guilty of a particular act unless you can be satisfied that it is more likely than not that he did it. In this he is less ambitious than the UNHCR. Its 2003 Guidelines, at para 35, state that clear and credible evidence is required. It is not necessary for an applicant to have been convicted of a criminal offence, nor does the criminal standard of proof need to be met. However, the 2003 Background Note, at para 107, also states that: . in order to ensure that article 1F is applied in a manner consistent with the overall humanitarian objective of the 1951 Convention, the standard of proof should be high enough to ensure that bona fide refugees are not excluded erroneously. Hence, the balance of probabilities is too low a threshold. He also relies upon the Australian case of W97/164 v Minister for Immigration and Multicultural Affairs [1998] AATA 618, in which Mathews J said this at para 42: The article provides a direction to decision makers in words that are clear of meaning and relatively easy of application. To re state this test in terms of a standard of proof is unnecessary and may in some cases lead to confusion and error. But she went on in para 43 to say this: I find it difficult to accept that the requirement that there be serious reasons for considering that a crime against humanity has been committed should be pitched so low as to fall, in all cases, below the civil standard of proof. The seriousness of the allegation itself and the extreme consequences which can flow from an alternative finding upon it would, in my view, require a decision maker to give substantial content to the requirement that there be serious reasons for considering (emphasis added) that such a crime has been committed. On the other hand, in Arquita v Minister for Immigration and Multi cultural Affairs [2000] FCA 1889, 106 FCR 465, at para 54, Weinberg J disagreed. There must be evidence available upon which it could reasonably and properly be concluded that the applicant has committed the crime alleged. To meet that requirement, the evidence must be capable of being regarded as strong. But evidence could properly be characterised as strong without meeting either the criminal or the civil standard of proof. He did, however, say at para 58 that it would have to go beyond establishing merely that there was a prima facie case. The New Zealand courts have followed the Court of Appeal in Al Sirri in taking the view that the Refugee Convention simply means what it says and that adding glosses by analogy with civil litigation or criminal prosecution simply confuses matters: see Hammond J in Tamil X v Refugee Status Appeals Authority; Attorney General (Minister of Immigration) v Y [2009] NZCA 488, [2009] 2 NZLR 73, paras 77, 79; upheld by the Supreme Court in Attorney General (Minister of Immigration) v Tamil X [2010] NZSC 107, [2011] 1 NZLR 721, para 39. In Canada, the courts have adopted a lower standard of proof than the balance of probabilities: see Ramirez v Minister of Employment and Immigration (1992) 89 DLR (4th) 173, para 5. But in Cardenas v Canada (Minister of Employment and Immigration) [1994] FCJ No 139, it was said that the Board must base its decision to exclude only on clear and convincing evidence, not simply on suspicion and speculation. And the German Bundesverwaltungsgericht has said that as a rule, reasons are good when there is clear, credible evidence that such crimes have been committed (BVerwG 10 C 2.10). We are, it is clear, attempting to discern the autonomous meaning of the words serious reasons for considering. We do so in the light of the UNHCR view, with which we agree, that the exclusion clauses in the Refugee Convention must be restrictively interpreted and cautiously applied. This leads us to draw the following conclusions: (1) Serious reasons is stronger than reasonable grounds. (2) The evidence from which those reasons are derived must be clear and credible or strong. (3) Considering is stronger than suspecting. In our view it is also stronger than believing. It requires the considered judgment of the decision maker. (4) The decision maker need not be satisfied beyond reasonable doubt or to the standard required in criminal law. (5) It is unnecessary to import our domestic standards of proof into the question. The circumstances of refugee claims, and the nature of the evidence available, are so variable. However, if the decision maker is satisfied that it is more likely than not that the applicant has not committed the crimes in question or has not been guilty of acts contrary to the purposes and principles of the United Nations, it is difficult to see how there could be serious reasons for considering that he had done so. The reality is that there are unlikely to be sufficiently serious reasons for considering the applicant to be guilty unless the decision maker can be satisfied on the balance of probabilities that he is. But the task of the decision maker is to apply the words of the Convention (and the Directive) in the particular case. (5) Disposal We would dismiss the appeal in DD. The object of his argument was to establish that his activities could not be contrary to the principles and purposes of the United Nations. In this he has failed. However, the Court of Appeal were correct to hold that there were material errors of law in the AITs findings in that they failed to examine the appellants conduct in the manner prescribed by this court in JS and to consider whether he had been guilty of acts contrary to the purposes and principles of the United Nations. The order remitting the case to the Upper Tribunal for reconsideration should stand. The appeal in Al Sirri is rather different. Technically, the appellant has challenged the decision of the Court of Appeal to remit his case to the tribunal, rather than to find that he was not excluded from the status of refugee. We would dismiss that appeal. But the reality is that he was challenging certain aspects of the guidance given to the tribunal which would hear the remitted case. In that he has succeeded to some extent. Consideration will also have to be given to whether it is more appropriate for the case to be remitted to the First tier or to the Upper Tribunal, given that the evidence will have to be examined afresh. The parties therefore have 14 days from the date of judgment to file their submissions as to the precise form of the order and as to costs. |
This is a test case brought against the Commissioners for Her Majestys Revenue and Customs (HMRC) by the Prudential Assurance Co Ltd (PAC). PAC is a typical United Kingdom-resident recipient of dividends on portfolio investments overseas, representing less (usually much less) than 10% of the relevant overseas companies share capital. The issues originate from two features of the UK tax position in the period 1990 to 1 July 2009. First, throughout that period dividend income received from overseas investments was in principle taxable, subject (as will appear) to certain reliefs. Second, until 6 April 1999 Advance Corporation Tax (ACT) was levied on dividends distributed to UK companies shareholders. The scope of the issues arising from these features and open on this appeal is, as will appear, itself in some dispute, but the appeal on any view involves a number of conceptually difficult points. The principal issues on this appeal can be summarised as follows: I. Does EU law require a tax credit in respect of overseas dividends to be set by reference to the overseas tax actually paid, or by reference to the foreign nominal tax rate (FNR)? II. Is PAC entitled to compound interest in respect of tax which was levied in breach of EU law, on the basis that HMRC were unjustly enriched by the opportunity to use the money in question? III. Subject to HMRCs being granted permission to argue the point, does a claim in restitution lie to recover lawful ACT which was set against unlawful mainstream corporation tax (MCT)? IV. If the answer to (I) is that EU law requires a tax credit to be set by reference to the overseas tax actually paid, PAC seeks permission to cross- appeal on the following question: should the charge to corporation tax on the foreign dividend income under Case V of Schedule D (Income and Corporation Taxes Act 1988 (ICTA), section 18) (DV tax) be disapplied, or should PAC be allowed to rely on FNRs, or on consolidated effective tax rates, as a simplification or proxy for tax actually paid? If HMRC are granted permission to argue Issue III, PAC seek V. permission to cross-appeal on the following questions: (a) where ACT from a pool which includes unlawful and lawful ACT is utilised against an unlawful MCT liability, should the unlawful ACT be treated as a pre-payment of the unlawful MCT liability, or is the ACT so utilised to be treated as partly lawful and partly unlawful; and (b) where domestic franked investment income (FII) was carried back to an earlier quarter, is it to be treated as having been applied to relieve the lawful and unlawful ACT pro rata, or only lawful ACT? Issue I The first issue - Issue I - arises from the approach adopted by UK law in order to avoid or mitigate double taxation of dividends. It is now clear that this was inconsistent with EU law, but in what precise respects and what is due by way of restitution or compensation are live issues. The inconsistency with EU law arose as follows. Domestically, dividends received by one UK-resident company, the source of which was a distribution made by another UK-resident company, were exempt from tax under section 208 of ICTA. The effect is that corporation tax was only levied once, on the latter company which made the profit out of which it distributed the dividend to the former company. In contrast, dividends received by a UK-resident company, the source of which was an overseas company, were in principle subject to DV tax. But where the UK-resident company controlled a certain percentage of the voting power of the relevant overseas company (typically 10%), certain relief was given for foreign tax paid on the underlying profits out of which such dividends were paid. This was done either pursuant to a double taxation treaty or unilaterally under ICTA, section 790. No relief against DV tax was however afforded in respect of portfolio investments, that is investments involving lesser percentage holdings. In Metallgesellschaft Ltd v Inland Revenue Comrs; Hoechst v Inland Revenue Comrs (Joined Cases C-397/98 and C-410/98) EU:C:2001:134; [2001] ECR I-1727; [2001] Ch 620, the European Court of Justice (CJEU) held that the unharmonized domestic tax regime fell under the EC Treaty, and could therefore be challenged if inconsistent with a Treaty provision. Pursuant to a group litigation order dated 30 July 2003, PAC was on 13 November 2003 appointed to conduct the present test case, in which PACs primary contention has been that the UK tax position is inconsistent with article 63 of the FEU Treaty. Article 63FEU (ex article 56 of the EC Treaty) provides: 1. Within the framework of the provisions set out in this Chapter, all restrictions on the movement of capital between member states and between member states and third countries shall be prohibited. 2. Within the framework of the provisions set out in this Chapter, all restrictions on payments between member states and between member states and third countries shall be prohibited. At an early stage in the present case, a reference to the CJEU was found necessary. But, before that reference was heard, the CJEU determined a separate UK reference, in Test Claimants in the FII Group Litigation v Inland Revenue Comrs (Case C-446/04) EU:C:2006:774; [2006] ECR I-11753; [2012] 2 AC 436 (FII ECJ I - FII standing for franked investment income). In it, the CJEU held, at paras 1 and 2 of the operative part: 1. where a member state has a system for preventing or mitigating the imposition of a series of charges to tax or economic double taxation as regards dividends paid to residents by resident companies, it must treat dividends paid to residents by non-resident companies in the same way. [The Treaty provisions] do not preclude legislation of a member state which exempts from corporation tax dividends which a resident company receives from another resident company, when that state imposes corporation tax on dividends which a resident company receives from a non-resident company in which the resident company holds at least 10% of the voting rights, while at the same time granting a tax credit in the latter case for the tax actually paid by the company making the distribution in the member state in which it is resident, provided that the rate of tax applied to foreign-sourced dividends is no higher than the rate of tax applied to nationally- sourced dividends and that the tax credit is at least equal to the amount paid in the member state of the company making the distribution, up to the limit of the amount of the tax charged in the member state of the company receiving the distribution. Article [63FEU] precludes legislation of a member state which exempts from corporation tax dividends which a resident company receives from another resident company, where that state levies corporation tax on dividends which a resident company receives from a non-resident company in which it holds less than 10% of the voting rights, without granting the company receiving the dividends a tax credit for the tax actually paid by the company making the distribution in the state in which the latter is resident. 2. [The Treaty provisions] preclude legislation of a member state which allows a resident company receiving dividends from another resident company to deduct from the amount which the former company is liable to pay by way of advance corporation tax the amount of that tax paid by the latter company, whereas no such deduction is permitted in the case of a resident company receiving dividends from a non-resident company as regards the corresponding tax on distributed profits paid by the latter company in the state in which it is resident. This ruling was re-affirmed in the Reasoned Order by which the CJEU disposed of the reference made by the High Court in the present case: Test Claimants in the CFC and Dividend Group Litigation v Inland Revenue Comrs (Case C- 201/05) EU:C:2008:239; [2008] ECR I-2875; [2008] STC 1513. The issue of a Reasoned Order, without a formal Advocate Generals opinion and with the same juge rapporteur involved as in FII ECJ I, indicates that the CJEU saw the position as relatively straightforward. In the light of these two decisions of the CJEU, it is common ground that the UKs treatment of overseas dividends was incompatible with EU law. In a judgment in the present case, Prudential Assurance Co Ltd v Revenue and Customs Comrs [2013] EWHC 3249 (Ch); [2014] STC 1236, Henderson J held (para 148) that the appropriate means of rectifying this was for PAC to be accorded an appropriate tax credit. (This was on the basis that a complete exemption from UK corporation tax would go further than the CJEU had stated that EU law required.) HMRC also accept that PAC is entitled to repayment or restitution of any corporation tax unlawfully charged as a result of the incompatibility: Amministrazione delle Finanze dello Stato v SpA San Giorgio (Case C-199/82) [1983] ECR 3595 (San Giorgio). However, the amount to be awarded depends significantly on issues of EU law and domestic law which are either open or which HMRC seek to raise on this appeal. Issue I is whether the credit in respect of overseas dividends should under EU law be set by reference to the overseas tax actually paid, as HMRC submit, or by reference to the foreign nominal tax rate (FNR), as PAC submits. HMRC rely in this connection upon the CJEUs judgments in FII ECJ I and on its Reasoned Order in the present case, as well as upon a further judgment of the CJEU in Haribo Lakritzen Hans Riegel BetriebsgmbH v Finanzamt Linz and sterreichische Salinen AG v Finanzamt Linz (Joined Cases C-436/08 and C-437/08) EU:C:2011:61; [2011] ECR I-355; [2011] STC 917. In all three cases, the juge rapporteur was Judge Lenaerts, now the President of the CJEU. In HMRCs submission, these cases demonstrate, first, a difference in principle between portfolio investments, such as PAC held, and non-portfolio investments, conferring a significant measure of control, and, secondly, that at any rate in relation to portfolio investments the credit to be imputed to PAC is in respect of the actual tax incurred overseas. In response, PAC relies upon a later CJEU decision in the FII litigation, Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs) (Case C-35/11) EU:C:2012:707; [2013] Ch 431 (FII ECJ II). Judge Lenaerts was once again the juge rapporteur. In this judgment, PAC submits, the CJEU refined its jurisprudence to require the use of the FNR in respect of all dividends received by PAC from overseas. HMRC in reply point out that FII ECJ II was concerned essentially with non-portfolio dividends, and criticise some aspects of its reasoning, particularly its treatment of Haribo. Finally, HMRC submit that the European legal position is unclear, and requires a further reference to the CJEU. There are further issues which HMRC seek to attach to Issue I. The first, identified before us as issue 4 CA, is whether, when considering the relevant overseas tax position, attention should focus on the overseas company directly responsible for the remission of the dividend to the UK (the overseas waters edge company) or on the overseas company (or companies) responsible for generating the profits out of which such dividend was paid and on which it (or they) paid tax overseas. The second issue, which HMRC submit that the Supreme Court should take into account, was identified as issue 6 CA, and is whether any difference has been shown to exist between the effective rate incurred by domestic companies declaring dividends to PAC and the nominal rate payable by UK companies. This is relevant, HMRC submit, because the existence of such a difference was a reason why the CJEU indicated in FII ECJ II that it was appropriate to give a credit for the FNR, rather than the actual tax, incurred on an overseas dividend. PAC submits that neither of issues 4 CA and 6 CA is open in this court. The Court of Appeal refused permission for either issue to be raised before it, and neither issue is properly part of or essential to the resolution of Issue I. The CJEU in FII ECJ I and in its Reasoned Order in the present case clearly established that the discrimination involved in the UKs arrangements for taxation of dividends sourced domestically and from overseas could be resolved by a mixed system, whereby dividends with a domestic source remained exempt, while credit was given against DV tax for tax actually incurred overseas on dividends received from overseas. HMRC point out that the CJEU in FII ECJ I addressed separately the position of dividends received from non-portfolio and from portfolio companies. In relation to the former, the question arose whether a mixed system of exemption in respect of domestically sourced dividends coupled with a credit in respect of dividends received from overseas was compatible with EU law. The CJEU dealt with this at paras 46 to 57. The claimants drew attention to the situation arising if, under the relevant UK legislation, such an exemption was granted in respect of a nationally- sourced dividend received from a company which for some reason had no corporation tax liability or paid corporation tax at a lower rate than the normal UK rate (para 54). The CJEU understood the UK Government to explain that this arose only exceptionally (para 55), and on that basis contented itself with saying (para 56): In that respect, it is for the national court to determine whether the tax rates are indeed the same and whether different levels of taxation occur only in certain cases by reason of a change to the tax base as a result of certain exceptional reliefs. The inference seems to be that, were a significant difference to exist between the effective rate of tax paid by the UK source of the dividend (eg because of some relief or allowance available to the company which was the source of the dividend) and the nominal rate of tax to which the exemption under section 208 of ICTA applied, then a system of credit in respect of overseas-sourced dividends which limited the tax credit to tax actually paid overseas (ie the effective rate of tax) would not be consistent with EU law - because the overseas-sourced dividend would remain liable for any DV tax chargeable after the credit had been taken into account. In other words, the overseas-sourced dividend would not be enjoying, under the tax credit system, any relief or allowance which had reduced the tax actually paid on it, whereas the UK-sourced dividend would enjoy any such relief or allowance. In respect of portfolio dividends, the CJEU faced a more fundamental objection. The UK system was inherently discriminatory, because it failed to give any credit at all for overseas tax paid (paras 61 to 72). The CJEU gave short shrift to the UK Governments argument that practical difficulties in ascertaining the tax actually paid justified a different system for portfolio dividends. It does not however follow from the separate treatment of non-portfolio and portfolio holdings in FII ECJ I that the CJEU saw any significant difference between them regarding the manner in which the deficiencies in the UK tax system needed to be addressed. It is true that the judgment in Haribo in February 2011 concerned portfolio dividends; following FII ECJ I and the Reasoned Order in the present case, it spoke of the need to credit tax actually paid. But it was only in FII ECJ II, where the focus was on non-portfolio holdings, that the CJEU identified the FNR as a more relevant criterion in any context. That therefore in no way indicates that the FNR is not also relevant to portfolio investments. As a matter of logic and principle, there seems no basis in this connection for any distinction between portfolio and non-portfolio holdings, when applying the mixed system of domestic exemption coupled with a credit in respect of overseas- sourced dividends to each. Rather than concentrating on the practical difficulties advanced before the CJEU in FII ECJ II, HMRC now suggest that there are important differences in the approaches and expectations which investors would have with regard to portfolio investments, when compared with non-portfolio investments. There are of course differences between holdings giving a degree of control and smaller holdings, but it is not obvious what relevance they have to the question of central interest on this appeal: that is, the proper treatment of domestically-sourced and overseas-sourced dividends so as to avoid unfair discrimination between them. The CJEUs change of approach in FII ECJ II arose from correction of the misunderstanding evidenced in paragraph 54 in FII ECJ I. Far from being exceptional, it had been established conclusively that it was commonly the position in the UK that a companys effective rate of tax was (due for example to group relief, or the carry forward of trading losses or other reasons) less than the nominal tax rate, and on that basis it was held that the UK tax system infringed what is now article 63: Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2008] EWHC 2893 (Ch); [2009] STC 254 (FII High Court I), affirmed [2010] EWCA Civ 103; [2010] STC 1251 (FII CA). Pursuant to an order for a further reference made by Henderson J on 20 December 2010, it became necessary for the CJEU to address the implications. The European Commission in written submissions in FII ECJ II said (para 28) that in circumstances where the effective rate borne by the company making the profits from which the dividend came was lower than the nominal rate: 28. to exempt domestic dividends (which in effect amounts to giving credit for the full amount of tax at the statutory rate even where this full amount has not been paid) while giving credit only for the actual amount of tax paid in respect of the profits giving rise to foreign dividends results in more favourable treatment for domestic dividends. The Commission drew from this (para 29) that: 29. It can no longer be said that the credit method is equivalent to exemption, because foreign dividends receive less favourable treatment than domestic dividends. To understand why, let us imagine identical resident and non- resident companies which each have revenues of 100 and have, say, a loss carry-forward of 50. The tax rate is 30% in both the source and residence states. A company which is a shareholder in the resident company and receives a dividend from it will have no further tax obligation, even though that company has paid only 15 in tax (that is, has an effective rate of 15%). A shareholder in the non-resident company will receive a credit equivalent to only 15% and will have to pay an additional 15%. The same result will ensue where both states grant, for example, an identical research and development incentive. That is not equal treatment, and it constitutes a serious obstacle to outward investment. The Commission then discussed how the problem might be addressed (paras 31-34): 31. In such circumstances there seem to the Commission to be two ways of ensuring equal treatment. One is to exempt both domestic and foreign dividends. That solution has the drawback, as outlined above, that it may permit excessively favourable treatment of foreign dividends where the tax rate in the source state is lower than in the United Kingdom. The other, which is wholly consistent with the courts reasoning in Case C-446/04 [FII ECJ I], is to have regard solely to the nominal rate of tax in calculating the tax credit on foreign dividends. 32. That is to say, recipients of such dividends should receive a tax credit representing the amount which would flow from the application of the nominal rate of tax in the source state to the accounting profits of the distributing company. Such a measure would correspond more truly to the exemption of domestic dividends, since the latter amounts in effect to the grant of a credit for tax at the nominal rate. The court has seen and approved a measure of this kind in Joined Cases C-436/08 and C-437/08 Haribo, judgment of 10 February 2011 see point 99 of the judgment. It would no doubt be desirable for a member state applying such a measure to insert a safeguard clause limiting its scope to dividends distributed by a company which is subject to the normal system of taxation in the source state. 33. It should be noted that such a measure would also alleviate to a very large extent the administrative burden faced by taxpayers in relation to foreign dividends, especially taxpayers with small shareholdings. 34. Such a solution does not ensure substantive equal treatment in all cases. In particular, where the tax system in the source state is a simple one in which the effective rate is systematically the same as the nominal rate (because the tax base is constituted by accounting profits, with no modifications), foreign dividends will treated less favourably than domestic dividends, since the latter will benefit from any tax advantages enjoyed by the distributing company. However, to ensure full substantive equal treatment would require systematic re-calculation of the tax position of the foreign company - essentially a simulation of the tax which it would have paid were it resident in the United Kingdom. Such an approach seems impractical. The solution advocated by the Commission ensures formal equality of treatment, is easy to apply and achieves a fair result. It is worth noting in passing para 33. The Commission evidently had no doubt about the relevance of its proposed solution to overseas portfolio holdings. It was a neat solution which evidently appealed to the juge rapporteur, who (according to the informal transcript with which the Supreme Court has been supplied) put to counsel for the UK a series of points, starting with this very simple question: does such an exemption system not in fact come down to as Mr Lyal said, tantamount to a credit system applied at the normal rate of tax applicable to the taxing of those dividends with the shareholding company? Judge Lenaerts went on to put that an exemption system does more than a system crediting tax actually paid, because It gives more relief than the tax actually paid by the distributing company and when you say that you have an exemption system, in fact, you exonerate from any tax liability, you exempt from any tax liability, the shareholding companies at the rate applicable to the taxing of dividends with that shareholding company. The reasoning was the same as the Commissions. Subsequently various questions were put by Advocate General Jskinen to Mr Lyal for the Commission. The Advocate General expressed some doubt whether the Commissions proposed solution was really consistent with the CJEUs previous judgment. He suggested that it would seem to work if there was equivalence of both the domestic and the overseas nominal and effective tax rates, but pointed to a risk of distortion if the nominal and effective tax rates were similar in one state, but diverged significantly in the other. Mr Lyals response was: Yes, my Lord, thats quite right. Thats a danger. It is a danger that can be minimised, if what I said a moment ago about recognizing only the type of tax benefits or discounts or manners of calculation that are recognized in the state of residence of the parent. The practical likelihood of the problem is to some extent limited to the extent that there is something of a correlation between higher taxes, higher company tax rates and lots of discounts, and equally a correlation between lower company tax rates and broad tax bases. So, if there is a source company in Slovakia, say, which has set their tax at, whatever their rate now is, 17%, perhaps, one can be pretty sure that its 17% on accounting profits. And thirdly, this is after all said to be a rough equivalent because the only other practical option that I can see for a rough equivalent of the domestic exemption is exemption for foreign-source dividends as well which would compound the problem that your Lordship refers to. That is to say you would not only have the freedom from taxation represented by the difference between the lower rate, the lower effective rate and [?in] the source state, but also the difference between the statutory rate in the UK and the lower statutory rate. So, again, the problem that your Lordship advances is certainly a correct one, but in circumstances in which the resident state applies an exemption system, we need to find something that gives substantive equivalent taxation for inbound dividends, a measure of which focuses on the actual tax, the effective rate of tax borne by inbound dividends simply is not equivalent. Against this background, the CJEU in FII ECJ II addressed the problem as follows. First, it pointed out (paras 43 to 48) that the tax rate applied to foreign- sourced dividends would be higher than that applied to domestic-sourced dividends, and their equivalence compromised, if the resident company generating the dividends was subject to either a nominal or an effective rate of tax below that to which the resident company receiving the dividends was subject, since in a case where an overseas company generating dividends was subject to an effective tax rate lower than the UK nominal rate, the difference would be chargeable to DV tax. On this basis, it explained that in its judgment in FII ECJ I, para 56, the reference to the tax rates related to the nominal rate of tax while the reference to the different levels of taxation by reason of a change to the tax base related to the effective levels of taxation. The CJEU in FII ECJ II, after stating why such discrimination could not be justified under EU law as necessary to preserve the cohesion of the domestic tax system, then adopted use of the FNR as an acceptable solution in the following paragraphs: 61. The tax exemption to which a resident company receiving nationally-sourced dividends is entitled is granted irrespective of the effective level of taxation to which the profits out of which the dividends have been paid were subject. That exemption, in so far as it is intended to avoid economic double taxation of distributed profits, is thus based on the assumption that those profits were taxed at the nominal rate of tax in the hands of the company paying dividends. It thus resembles grant of a tax credit calculated by reference to that nominal rate of tax. 62. For the purpose of ensuring the cohesion of the tax system in question, national rules which took account in particular, also under the imputation method, of the nominal rate of tax to which the profits underlying the dividends paid have been subject would be appropriate for preventing the economic double taxation of the distributed profits and for ensuring the internal cohesion of the tax system while being less prejudicial to freedom of establishment and the free movement of capital. It is to be observed in this connection that in the Haribo 63. case [2011] ECR I-305, para 99, the court, after pointing out that the member states are, in principle, allowed to prevent the imposition of a series of charges to tax on dividends received by a resident company by applying the exemption method to nationally-sourced dividends and the imputation method to foreign-sourced dividends, noted that the national rules in question took account, for the purpose of calculating the amount of the tax credit under the imputation method, of the nominal rate of tax applicable in the state where the company paying dividends was established. 64. It is true that calculation, when applying the imputation method, of a tax credit on the basis of the nominal rate of tax to which the profits underlying the dividends paid have been subject may still lead to a less favourable tax treatment of foreign-sourced dividends, as a result in particular of the existence in the member states of different rules relating to determination of the basis of assessment for corporation tax. However, it must be held that, when unfavourable treatment of that kind arises, it results from the exercise in parallel by different member states of their fiscal sovereignty, which is compatible with the Treaty 65. In light of the foregoing, the answer to the first question is that articles 49FEU and 63FEU must be interpreted as precluding legislation of a member state which applies the exemption method to nationally-sourced dividends and the imputation method to foreign-sourced dividends if it is established, first, that the tax credit to which the company receiving the dividends is entitled under the imputation method is equivalent to the amount of tax actually paid on the profits underlying the distributed dividends and, second, that the effective level of taxation of company profits in the member state concerned is generally lower than the prescribed nominal rate of tax. These paragraphs are generally stated, and there is no reason why they should not be as applicable to portfolio holdings as they are to non-portfolio holdings. There is no hint of any distinction between portfolio and non-portfolio holdings. If any had been intended, one would have expected it to be mentioned, particularly when the same juge rapporteur was active in all four of the key decisions, covering between them both types of holding. Instead, in para 63 of FII ECJ II, quoted above, reliance is actually placed on Haribo, a case of portfolio holdings, in support of the use of the FNR. The reliance may, as Mr David Ewart QC for HMRC submitted, be misplaced, achieving a coherence in the development of the jurisprudence that is more apparent than real - because the reference to FNR in Haribo was in the context of a simplified method permitted by the Austrian tax authorities to show the tax actually paid. But that is presently irrelevant. What matters is that the CJEU in FII ECJ II presented its development of the law in the context of non-portfolio holdings as being in line with, and supported by, its previous jurisprudence in the context of portfolio holdings. It is inconceivable that it contemplated any material distinction in the principles applicable to both. It follows that, subject to one reservation, the CJEUs jurisprudence establishes clearly that the credit for foreign dividends in the present case should be by reference to the FNR, rather than by reference to the actual or effective tax incurred overseas. The one reservation arises from the assumption made throughout the discussion in FII ECJ II, that, in the Commissions words (para 20 above): to exempt domestic dividends in effect amounts to giving credit for the full amount of tax at the statutory rate even where this full amount has not been paid; or in Judge Lenaerts words (para 23 above) that an exemption system does more than a system crediting tax actually paid by the distributing company. This assumption is readily understandable, if one also assumes that the domestic company which is the source of and distributes the dividend has an effective tax rate less than the nominal tax rate, while the receiving company which is exempted from tax would, but for the exemption, pay tax at the full nominal rate. There is then a benefit from the exemption, which would have no parallel if the credit in respect of overseas-sourced dividends was by reference only to the actual tax incurred overseas. However, in the UK domestic context, there appears to be no reason to think that companies receiving domestically-sourced dividends are any less able to reduce the effective tax rate they would have borne on such dividends than are the companies from which the dividend is sourced. In other words, the evidence appears to have been that all UK companies are generally taxed at an effective level below the nominal rate. That being so, the domestic exemption does not confer a benefit at the nominal rate, but at their effective rate. It follows that to give a credit for overseas dividends at the FNR may confer a benefit on overseas dividends, compared with domestic dividends. By way of example, given by HMRC, one can suppose an overseas waters edge company with a nominal tax rate of 20% and an effective rate of 10%, which makes a profit after tax of 100 and distributes a dividend of 100. The UK recipient company has a nominal rate of 30%, but an effective tax rate of 20%. One would expect the UK company to bear a 10% charge on the dividend to reflect the higher tax rate charged in the UK (and that is so, whether one is looking at and comparing the nominal or the effective tax rate in this connection). But a tax credit can necessarily only reduce the tax which would actually otherwise be charged. Here, since the UK companys effective tax rate is only 20%, the effect of giving credit to the UK company for the FNR of 20% is in fact to eliminate any UK tax charge. Does this reservation about the rationale and solution adopted by the CJEU mean that we should once again refer the case back to the CJEU, for it to reconsider once again whether its approach is appropriate? In our opinion, it does not. It is clear that the CJEU was well aware that the adoption of the FNR would not eliminate all inequities or incongruities: see the Commissions written observations, para 34, cited in para 22 above, the Advocate Generals question put to Mr Lyal and Mr Lyals answer cited in para 24 above and the CJEUs own judgment, para 64, cited in para 26 above. There could, depending on the incidence of nominal and effective tax rates, be swings and roundabouts in the equivalence achieved by a mixed system of domestic exemption combined with overseas credits. But the ideal alternative of a comparison between two tax systems to ensure equivalence (subject only to each states right to set its own nominal tax levels) was consciously rejected as wholly impractical. In these circumstances, such inequity as may arise from the reservation discussed in the previous three paragraphs is not in our view a reason for referring the matter yet again to the CJEU. The prospect that the CJEU would, at this stage in history, contemplate revising yet again its jurisprudence appears to us negligible to the point where it can be discarded. We turn finally to the two further issues which HMRC suggest should be taken into account, and should lead to or encourage the making of a reference. The short answer in relation to each is that permission to raise it before the Court of Appeal was specifically refused by that court: [2016] EWCA Civ 376; [2016] STC 1798. In these circumstances, there is no constitutional basis for consideration of either before the Supreme Court: Access to Justice Act 1999, section 54(4), Supreme Court Practice Direction No 1 para 1.2.5. Issue I at first instance might have been wide enough to embrace one or both of issues 4 CA and 6 CA, since it asked inter alia what the appropriate amount of any tax credit required was, but in fact neither issue was raised at the trial before Henderson J. Issue 6 CA was first raised six weeks after the trial by letter to the judge, who refused permission to appeal on it. Issue 4 CA only emerged as ground 2 in HMRCs Grounds of Appeal to the Court of Appeal. The Court of Appeal expressly refused permission to appeal to it on Issues 4 and 6 CA, and the declaration it made read simply that (para 99): the effect of the rulings of the CJEU is that the foreign dividend should be afforded equivalent treatment, taking the form of the imputation method according to which credit should be given for the relevant foreign tax at the effective rate [ie the actual tax paid] or the nominal rate (whichever is the higher), subject to a cap at the rate of the UKs nominal rate of ACT [ie the corporation tax rate or the rate of ACT as applicable]. This declaration does not address or require the Supreme Court to address either of Issues 4 and 6 CA. (In the event, the Supreme Court has not even been asked to address the question whether the Court of Appeal was right to declare that credit required to be given for the higher of the effective and nominal foreign rate, that issue being we were told of no present relevance, but reserved for a further instalment of the FII litigation.) Issue IV It is however appropriate at this point to deal with Issue IV which is before the Supreme Court. That is whether, if PAC had no entitlement under EU law to a credit by reference to the FNR, effect should, in the light of what is said to be the impossibility of showing the tax actually borne by its portfolio holdings, be given to the CJEUs judgments either: (a) by disapplying the DV charge; or (b) by allowing PAC to rely on FNRs (or consolidated effective tax rates) as a simplification or proxy for tax actually paid. The short answer to this issue is that it does not arise or need answering, having regard to our conclusion that PAC is entitled to credit in respect of overseas-sourced dividends by reference to the FNR. Issue II: Introduction PAC seeks restitution, on the ground of unjust enrichment, of an amount calculated on the basis of compound interest, in respect of each category of claim which has succeeded. The amounts on which interest is sought, and the periods over which it is submitted that interest should be compounded, are as follows: (a) unlawfully levied ACT which was subsequently set off against lawfully levied MCT, from the date of payment by PAC to the date of set- off; (b) all other unlawfully levied tax (including unlawfully levied ACT which was never set off against lawful MCT, and unlawfully levied ACT which was set off against unlawfully levied MCT), from the date of payment by PAC to the date of repayment by HMRC; and (c) date of set-off to the date of payment by HMRC. the time value of utilised ACT (resulting from (a) above), from the PAC submits that the interest should be compounded at conventional rates calculated by reference to the rates of interest, and rests, applicable to borrowings by the Government in the market during the relevant period, that being the approach favoured by a majority of the House of Lords in Sempra Metals Ltd v Inland Revenue Comrs (formerly Metallgesellschaft Ltd) [2007] UKHL 34; [2008] 1 AC 561. HMRC have accepted that compound interest is payable in respect of the utilised ACT falling within category (a) above, since that is what the House of Lords decided in Sempra Metals. PAC submits that the principles set out in Sempra Metals entail that the same approach should also apply to the amounts falling within categories (b) and (c) above. HMRC, on the other hand, submit that only simple interest should be awarded, in accordance with section 35A of the Senior Courts Act 1981 (the 1981 Act), inserted by the Administration of Justice Act 1982, section 15(1) and Schedule 1, Part I. An award of interest on that basis would, they argue, be compatible with the requirement under EU law that PAC should receive an adequate indemnity, in accordance with the decision of this court in Littlewoods Ltd v Revenue and Customs Comrs [2017] UKSC 70; [2017] 3 WLR 1401. Although the difference between simple and compound interest is modest in the present case, the point also arises in other cases which are pending against HMRC, and the total amount at stake, on HMRCs estimate, is of the order of 4-5 billion. The point is also one of considerable importance from a legal perspective, since it raises some fundamental issues in the law of unjust enrichment. The approach of the courts below In a careful judgment, Henderson J held that compound interest should be awarded in respect of all three categories of claim, on the basis that, applying the reasoning of the majority in Sempra Metals, PAC was entitled on the ground of unjust enrichment to compound interest on all its claims: [2013] EWHC 3249 (Ch); [2014] STC 1236, paras 242-246. His Lordship subsequently followed that decision in other proceedings, concerned with the recovery of VAT paid under a mistake: Littlewoods Retail Ltd v Revenue and Customs Comrs [2014] EWHC 868 (Ch); [2014] STC 1761, para 417. That paragraph was then expressly approved by the Court of Appeal in the Littlewoods proceedings: Littlewoods Ltd v Revenue and Customs Comrs [2015] EWCA Civ 515; [2016] Ch 373; [2015] STC 2014, paras 203-204. When the present case reached the Court of Appeal, it dismissed the appeal on this issue on the basis that it was bound by its previous decision in the Littlewoods case. So the only detailed consideration of this issue, in the context of the present case, has been that of Henderson J. It is only necessary to add that, following the decision of this court in the Littlewoods proceedings (Littlewoods Ltd v Revenue and Customs Comrs [2017] UKSC 70; [2017] 3 WLR 1401), which reversed the decision of the Court of Appeal, it is no longer argued that there is a right to compound interest under EU law. A preliminary point As a preliminary point, PAC submits that HMRC should not be permitted to advance an argument to the effect that the opportunity to use money mistakenly paid is not a benefit obtained at the expense of the person who made the mistaken payment. They point out that HMRC did not advance any argument along these lines at the trial before Henderson J in 2013. On the contrary, it was conceded in advance of the trial that PAC was entitled to compound interest in respect of the claims in category (a), following Sempra Metals, and that position was maintained in the agreed Statement of Facts and Issues. Although HMRC do not seek to withdraw that concession, PAC submits that the proposed argument challenges the reasoning in Sempra Metals, and therefore the basis on which the concession was made. Against this background, it is submitted that HMRC should not be permitted to advance this argument for the first time in this court. In so far as HMRC wish to advance submissions questioning the soundness of the reasoning in Sempra Metals, the court is not inclined to prevent them from doing so, in the particular circumstances of this case. As will be explained, there have been some significant developments in the law of unjust enrichment since the trial before Henderson J, and indeed since the present appeal was brought. In particular, the concept of a benefit being obtained at the expense of the claimant, and the related concept of a transfer of value, were considered by this court only relatively recently. In this appeal, PAC invites the court to extend the reasoning in Sempra Metals beyond the scope of that decision itself, albeit PAC submits that the extension is the logical consequence of that decision. The appeal therefore involves analysing the reasoning in Sempra Metals, and unavoidably requires the court to consider whether that reasoning is consistent with the approach which it has more recently adopted, so as to form part of a coherent body of law. As we explain later, there is indeed a difficulty involved in reconciling Sempra Metals with this courts more recent case law. Accordingly, even if HMRC had not wished to subject the decision in Sempra Metals to critical analysis, that is an exercise which this court could not have avoided. In addition, it is important to bear in mind that this appeal has to be decided in the context of a group litigation order, and also that the point of law which HMRC wish to argue is undoubtedly one of general public importance. We do not consider that allowing these matters of law to be argued involves unfairness to PAC. The essence of HMRCs argument was set out in the written case which they submitted in advance of the hearing of the appeal, although, as often happens, the argument was refined during the hearing. What did Sempra Metals decide? The issue in Sempra Metals was how effect should be given in domestic law to the judgment of the CJEU in the Metallgesellschaft case (Metallgesellschaft Ltd v Inland Revenue Comrs (Joined Cases C-397/98 and C-410/98) EU:C:2001:134; [2001] Ch 620; [2001] ECR I-1727) (Sempra Metals Ltd being the same company, under a new name, as Metallgesellschaft Ltd). The case concerned claims for compound interest in respect of unlawfully levied ACT which had been set off against lawful MCT: in other words, claims falling within category (a) above. The CJEU made it clear that it was for domestic law to determine the juridical basis of the claims: in particular, whether they lay in restitution or in damages. On the hypothesis that, under domestic law, the appropriate basis was restitution, the CJEU stated: 87 In such circumstances, where the breach of Community law arises, not from the payment of the tax itself but from its being levied prematurely, the award of interest represents the reimbursement of that which was improperly paid and would appear to be essential in restoring the equal treatment guaranteed by article 52 of the [EC] Treaty. 88. The national court has said that it is in dispute whether English law provides for restitution in respect of damage arising from loss of the use of sums of money where no principal sum is due. It must be stressed that in an action for restitution the principal sum due is none other than the amount of interest which would have been generated by the sum, use of which was lost as a result of the premature levy of the tax. Equally, on the hypothesis that the claim properly lay in damages, the argument that the claimants could not be awarded interest could not be accepted. Giving effect to the judgment of the CJEU, the lower courts held that the claimants were entitled to recover compound interest on the ACT in respect of the period between the date of payment and the date of set-off. They also expressed the view, obiter, that the same principles should apply to claims in respect of unutilised ACT, falling within category (b) above. HMRCs appeal to the House of Lords was dismissed ([2008] AC 561). For varying reasons, the House held, by a majority, that a claim would lie in unjust enrichment for restitution of compound interest on money which had been paid prematurely as the consequence of a mistake, and that the appropriate measure of restitution in the instant case was compound interest calculated on a conventional basis applicable to government borrowing. The House also held that compound interest was available as damages, where it was the measure of the loss foreseeably suffered by the claimant from the loss of the use of his funds. That aspect of the decision is not in issue in the present case and need not be considered. Lord Nicholls of Birkenhead and Lord Hope of Craighead, who were in the majority on the question of unjust enrichment, emphasised that the interest was not ancillary to a claim for the recovery of a principal sum: rather, the interest was itself the principal sum, claimed as restitution of the time value of money. They interpreted the CJEUs judgment in Metallgesellschaft as meaning that EU law required, as Lord Hope put it at para 9, that the companies must be provided with a remedy in domestic law which will enable them to recover a sum equal to the interest which would have been generated by the advance payments from the date of the payment of the ACT until the date on which the MCT became chargeable: see also, to the same effect, the speech of Lord Nicholls at para 60. In that regard, both Lord Hope and Lord Nicholls referred to para 88 of the judgment of the CJEU, cited above. Lord Nicholls identified the crux of the dispute, at paras 71-73, as being whether the provision English law made for the payment of interest satisfied the EU principle of effectiveness. Lord Hope and Lord Nicholls adopted similar analyses of the basis of the claim in unjust enrichment, at paras 33 and 102 respectively. Lord Hope described the Revenues enrichment at para 33 as the opportunity to turn the money to account during the period of the enrichment. Lord Nicholls analysed the issue in terms of Professor Birkss theory of unjust enrichment by subtraction (that is, at the expense of the claimant), and stated at para 102: The benefits transferred by Sempra to the Inland Revenue comprised, in short, (1) the amounts of tax paid to the Inland Revenue and, consequentially, (2) the opportunity for the Inland Revenue, or the Government of which the Inland Revenue is a department, to use this money for the period of prematurity. The Inland Revenue was enriched by the latter head in addition to the former. The payment of ACT was the equivalent of a massive interest free loan. Restitution, if it is to be complete, must encompass both heads. Restitution by the Revenue requires (1) repayment of the amounts of tax paid prematurely (this claim became spent once set off occurred) and (2) payment for having the use of the money for the period of prematurity. Since the enrichment which had to be undone was the opportunity to turn the money to account during the period before it was lawfully due, it followed that the measure of the enrichment did not depend on what HMRC actually did with the money during that period (Lord Hope at para 33, Lord Nicholls at para 117). In that connection, Lord Nicholls drew an analogy at para 116 with the award of user damages, although such awards are based on wrongdoing and are designed to compensate for loss: One Step (Support) Ltd v Morris-Garner [2018] UKSC 20; [2018] 2 WLR 1353, para 30. In the ordinary course, the market value of the benefit arising from having the use of money was said to be the cost the defendant would have incurred in borrowing the amount in question for the relevant period: a sum which, like all borrowings, would inevitably be calculated in terms of compound interest (Lord Nicholls at para 103). The court could however depart from the market value approach if it were established that it would produce an unjust outcome (Lord Hope at para 48, Lord Nicholls at para 119). Lord Hope and Lord Nicholls proceeded on the basis of a presumption that the innocent recipient of a mistaken payment has benefited from the use of the money, the value of the benefit being the market cost of borrowing the money over the relevant period. The onus is on the defendant to displace that presumption. The innocent recipient, rather than the mistaken payer, is thus exposed to the risks of litigation. Lord Nicholls acknowledged at para 125 that the decision might have serious consequences for public finances, because of the extended limitation period available in cases of mistake, but considered that the issue had been addressed by legislation: The seriously untoward consequences this may have for the Inland Revenue flow from the open-ended character of the extended limitation period prescribed by section 32(1)(c) of the Limitation Act 1980. Parliament has now recognised this extended period should not apply to payments of tax made by mistake: see section 320 of the Finance Act 2004. Lord Walker of Gestingthorpe stated that he was essentially in agreement with Lord Hope and Lord Nicholls (para 154), and that he too would dismiss the appeal, largely for the reasons which they give. He also observed that the crucial insight in their speeches was the recognition that income benefits were more accurately characterised as an integral part of the overall benefit obtained by a defendant who is unjustly enriched (para 178). He went on, however, to state that he must confess that his own inclination would be to extend the equitable jurisdiction to award compound interest, rather than to recognise a restitutionary remedy available as of right at common law (para 184). He added that he felt some apprehension about the suggested conclusion that compound interest should be available as of right, subject only to an exception for subjective devaluation. The other members of the Appellate Committee disagreed with the majority. Lord Scott of Foscote rejected the view that the mere possession of mistakenly paid money - and accordingly the ability to use it if minded to do so - is sufficient to justify not simply a restitutionary remedy for recovery of the money, but a remedy also for recovery of the wholly conceptual benefit of an ability to use the money (para 145). A restitutionary remedy could not in his view encompass the recovery of anything other than the money which the defendant had actually received. In reality, in his view, Sempra was asserting a claim for compensation for its loss of the use of the money, dressed up as a claim in restitution in order to take advantage of the more generous limitation period allowed by section 32(1)(c) of the Limitation Act 1980 (the 1980 Act). Lord Mance also noted the practical context of the issue. The basis on which Sempra principally put their claim was that they had paid the ACT under a mistake of law. On that basis, section 32(1)(c) of the 1980 Act would postpone the commencement of the limitation period until the time when Sempra discovered or could with reasonable diligence have discovered that the ACT was not due: a time which they identified with the date in 2001 when the CJEU issued its judgment in the Metallgesellschaft case. Lord Mance commented (para 200) that the appropriateness of an extended time limit in this context was questionable. As he noted, Lord Hoffmann had recognised in the Kleinwort Benson case (Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, 401) that allowing recovery for mistake of law without qualification, even taking into account the defence of change of position, may be thought to tilt the balance too far against the public interest in the security of transactions, adding that the most obvious problem is the Limitation Act, which as presently drafted is inadequate to deal with the problem of retrospective changes in law by judicial decision. Like Lord Nicholls, Lord Mance noted that, as regards the future (although not as regards the instant case), section 320 of the Finance Act 2004 meant that section 32(1)(c) of the 1980 Act would no longer apply to mistakes of law relating to a taxation matter under the care and management of HMRC. Like Lord Walker, Lord Mance cautioned against a radical reshaping of the law, observing at para 205 that we must navigate using the reference points of precedent, Parliamentary intervention and analogy, and we should bear in mind the limitations of judicial knowledge and the assistance offered by a series of Law Commission reports. European law left it, in his view, to national law to provide an effective remedy and did not prescribe that this should be by way of compound, rather than simple, interest (paras 201-204). The common law had recognised a claim for money had and received, but not a claim for the use of money had and received. A claim of the latter kind faced a long line of authority over a period of nearly 200 years, including the recent decision of the House in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 (paras 203-220). The common law rule had been recognised and effectively endorsed by the Law Revision Committee, whose recommendations on interest in their Second Interim Report, 1934 (Cmd 4546) were implemented by provisions of the Law Reform (Miscellaneous Provisions) Act 1934 (later replaced by section 35A of the 1981 Act) (paras 211-212), by the Law Commission in all its reports on the subject (paras 222-224), and most importantly by Parliament, which had legislated in recent times for the payment of interest, but invariably on a simple basis (paras 212 and 221). There were in addition policy reasons making it unwise to introduce an absolute right to compound interest in restitution. As the Law Commission had noted, compound interest evoked deep-seated fears, because it increased in an exponential rather than a linear way, especially during periods of high inflation (para 222). In the light of such concerns, the Law Commission had made a number of recommendations relating to the introduction of a right to compound interest on a restricted basis. Those recommendations had not been acted on (para 224). The decision of the House on the issues relevant to the present appeal can therefore be summarised as follows: (1) By a majority consisting of Lord Hope, Lord Nicholls and Lord Walker, the House held that the court had jurisdiction at common law (Lord Hope and Lord Nicholls) or at least in equity (Lord Walker) to make an award on the ground of unjust enrichment in respect of the time value of money which was paid prematurely as the consequence of a mistake. The basis of the award was that the benefit by which the recipient of the money was enriched was the time value of the money. The benefit was presumptively quantified as the market value of the use of the money during the period before it was lawfully due, that is, the cost of borrowing an equivalent amount in the market. (2) The same majority held that: in the instant case, the presumption that the Government had (a) benefited from the premature payment of the tax had not been displaced; but (b) the Government was in a different position from ordinary commercial borrowers, in that it could borrow at more favourable rates; and accordingly the claims should be quantified on a conventional basis (c) applicable to Government borrowing. Legal developments since Sempra Metals A number of relevant developments in the law have occurred since Sempra Metals. First, the jurisprudence of the CJEU has developed since its Metallgesellschaft judgment. As was noted above, that judgment described the sum due under EU law, where tax was paid prematurely, and on the hypothesis that the appropriate remedy in domestic law lay in restitution, as the amount of interest which would have been generated by the sum, use of which was lost as a result of the premature levy of the tax (para 88). More recent judgments have provided greater clarity. For example, in Littlewoods Retail Ltd v Revenue and Customs Comrs (Case C-591/10) EU:C:2012:478; [2012] STC 1714, the CJEU stated at para 27 that it is for the internal legal order of each member state to lay down the conditions in which such interest [that is, interest on amounts levied in breach of EU law] must be paid, particularly the rate of that interest and its method of calculation (simple or compound interest). The CJEU also made it clear, in relation to the principle of effectiveness, that national rules in relation to the calculation of interest should not lead to depriving the taxpayer of an adequate indemnity for the loss occasioned (para 29). In Littlewoods Ltd v Revenue and Customs Comrs [2017] 3 WLR 1401, this court held that an award of simple interest was sufficient to comply with that requirement, and that an award of compound interest on overpaid tax was therefore not required by the EU law principle of effectiveness. Recognition that an award of compound interest is not necessary in order to comply with the EU principle of effectiveness affects the context in which these issues have to be considered. Secondly, the Littlewoods case also revealed a conflict between the decision in Sempra Metals and prior legislation. Long before Sempra Metals was decided, Parliament had created a scheme for the repayment of overpaid VAT, currently set out in section 80 of the Value Added Tax Act 1994 (the 1994 Act), with provision for the payment of simple interest in section 78. That section requires HMRC to pay interest on the repaid tax if and to the extent that they would not be liable to do so apart from this section. Entitlement to interest under section 78 is subject to limitations which would be defeated if it were possible for taxpayers to bring a common law claim for interest on mistaken payments. Until Sempra Metals, it had been settled law for about 200 years that no such claim could be brought. In enacting section 78, Parliament legislated on that basis. In deciding Sempra Metals as it did, however, the House of Lords failed to have regard to the scheme which Parliament had established. Nor did it take account of section 826 of ICTA, which also provides for the payment of simple interest on overpaid tax, and covers a range of direct taxes, including ACT and MCT. These provisions are matched by corresponding provisions limiting the liability of taxpayers towards HMRC to simple interest on underpaid tax: see section 74 of the 1994 Act and section 826 of ICTA. The persuasiveness of the majoritys approach in Sempra Metals is diminished by their failure to have regard to these provisions. As Lord Hoffmann observed in Johnson v Unisys Ltd [2001] UKHL 13; [2003] 1 AC 518, para 37: judges, in developing the law, must have regard to the policies expressed by Parliament in legislation ... The development of the common law by the judges plays a subsidiary role. Their traditional function is to adapt and modernise the common law. But such developments must be consistent with legislative policy as expressed in statutes. The courts may proceed in harmony with Parliament but there should be no discord. Against the background of the 1994 Act, in particular, the effect of Sempra Metals, was to create discord of a serious character: it rendered section 78 a dead letter, if that provision were given its natural construction. This court therefore decided in Littlewoods that, in order for section 78 to have the effect which Parliament had intended, it was necessary to depart from its natural construction. Thus the approach of the majority in Sempra Metals led, as Lord Mance had predicted, to a dislocation in a related area of the law which the Appellate Committee had not considered. Thirdly, in Kleinwort Benson [1999] 2 AC 349 it was realised that allowing recovery of payments made under a mistake of law could create problems as the law of limitation then stood, since section 32(1)(c) of the 1980 Act would enable claims to be brought within six years of the mistake being discovered, no matter how long in the past the payment had been made. For that reason, Lord Browne-Wilkinson considered that the correct course would be for the House to indicate that an alteration in the law is desirable but leave it to the Law Commission and Parliament to produce a satisfactory statutory change in the law which, at one and the same time, both introduces the new cause of action and also properly regulates the limitation period (p 364). The majority, however, were unpersuaded that reform of the law of restitution should be delayed, and assumed that legislation could be enacted if Parliament considered it desirable to address the limitation question (see, for example, Lord Hoffmann at p 401). Parliament duly enacted such legislation. By the time of the decision in Sempra Metals, the majority therefore considered that the seriously untoward consequences for HMRC (as Lord Nicholls described them at para 125) of claims arising from mistaken payments of tax in the distant past were guarded against by section 320 of the Finance Act 2004, which provided that section 32(1)(c) of the 1980 Act should 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. What has become apparent since Sempra Metals, however, is that the problems in relation to limitation which arise from the retrospective effect of that decision, and the decision in Kleinwort Benson, are incapable of being fully addressed by legislation. Repeated attempts by Parliament to address the retrospective impact of those decisions by introducing a limitation period with retrospective effect have been held to be incompatible with EU law: section 80 of the Value Added Tax Act 1994, as originally enacted, in Fleming (trading as Bodycraft) v Revenue and Customs Comrs [2008] UKHL 2; [2008] 1 WLR 195; section 320 of the Finance Act 2004 in Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (Case C-362/12) EU:C:2013:834; [2014] AC 1161; and section 107 of the Finance Act 2007 in Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2012] UKSC 19; [2012] 2 AC 337. This problem, of which the House of Lords was unaware at the time when Kleinwort Benson and Sempra Metals were decided, illustrates the risks of effecting major changes to the law of restitution by judicial decision. By applying the declaratory theory of adjudication, the law as altered by the decisions was deemed always to have applied, and the previously settled understanding of the law was treated as a mistake for the purposes of limitation. Consistently with that theory, in Kleinwort Benson the House of Lords held that a right of action had arisen when payments were made under a mistake of law, notwithstanding that no such right of action was recognised by the courts at that time. Similarly in Sempra Metals, the right of action in unjust enrichment arose when the defendant obtained the opportunity to use the money mistakenly paid, notwithstanding that no such right was understood to exist at that time. The tension inherent in the decisions is that the House adhered to the declaratory theory for the purpose of finding that a cause of action based on unjust enrichment had accrued in the past, based on a mistake of law capable of invoking section 32(1)(c) of the 1980 Act, while straining the premise of the theory, namely the need for judicial development of the law to be justifiable by reference to existing legal principles. The consequence was that the rights established by those decisions were deemed to have vested in the claimants before the decisions were reached, with the result that, under EU law, they could not be taken away by retrospective legislation excluding or restricting the operation of section 32(1)(c) without a reasonable transitional period during which claims could be made. The position would have been different if the changes had been effected by legislation, since legislation can, and normally does, take effect prospectively. Fourthly, decisions subsequent to Sempra Metals have demonstrated the degree of disruption to public finances which the decision in that case, taken together with Kleinwort Benson, is capable of causing. The decision in Kleinwort Benson enabled claims to be brought for the repayment of tax which had been paid in ignorance of the fact that the UK law under which it was levied was incompatible with EU law. Since the limitation period did not begin to run until the mistake was or could reasonably have been discovered, such claims could in principle be backdated to the UKs entry into the EU in 1973. Not only could the principal amounts go back, in principle, for a period of several decades, but they had earned interest over that period. If, following Sempra Metals, the interest was compounded over that period, the resultant claims were potentially enormous. The Littlewoods case, for example, concerned overpaid VAT on goods supplied to agents employed to make catalogue sales, as a form of commission paid in kind. Like the present appeal, it was a test case. The amount turning on the outcome of that appeal was estimated by HMRC at 17 billion. That was not the amount of the overpaid tax, or even the amount of the interest on the overpaid tax. It was the difference between compound interest and simple interest. In the present case, as we have explained, the total amount turning on the outcome is estimated by HMRC at 4-5 billion. Even in the context of public finances, these are very large sums. Fifthly, the law of unjust enrichment has developed since Sempra Metals in ways which cannot easily be reconciled with the reasoning of the majority in that case. The development of greatest significance has been a more detailed analysis of the at the expense of question, in Investment Trust Companies v Revenue and Customs Comrs [2017] UKSC 29; [2018] AC 275. It is necessary next to consider that issue. At the expense of assuming for the present that an enrichment arises from having the opportunity to use money mistakenly paid, the question whether it is obtained at the expense of the claimant can best be answered by reference to the analysis of that question in the Investment Trust case. Lord Reed explained at para 42 that the law of unjust enrichment is designed to correct normatively defective transfers of value, usually by restoring the parties to their pre-transfer positions. He went on at para 44 to endorse Lord Clydes dictum in Banque Financire de la Cit v Parc (Battersea) Ltd [1999] 1 AC 221, 237 that the principle of unjust enrichment: requires at least that the plaintiff should have sustained a loss through the provision of something for the benefit of some other person with no intention of making a gift, that the defendant should have received some form of enrichment, and that the enrichment has come about because of the loss. Lord Reed also explained at para 50 that, as a general rule, a cause of action based on unjust enrichment is only available in respect of a benefit which the claimant has provided directly to the defendant (the only true exception identified being subrogation following the discharge of a debt, which is arguably based on a different principle). A causal connection between the claimants incurring a loss (in the relevant sense) and the defendants receiving a benefit was not enough to establish a transfer of value. When money is paid by mistake, the claimant normally provides a benefit directly to the defendant: he pays him the money. He normally does so at his own expense: he is less wealthy by virtue of the payment. The transaction is normatively defective: the benefit is provided as the result of a mistake. In those circumstances, an obligation arises immediately under the law of unjust enrichment to reverse the enrichment by repaying the money (or an equivalent amount). The cause of action accrues when the money is mistakenly paid. The majority in Sempra Metals considered that there was also an additional and simultaneous transfer of value, comprising the opportunity to use the money, which also gave rise to a cause of action based on unjust enrichment. That enrichment had to be reversed by the payment of compound interest. This analysis has a number of questionable features, which can be illustrated by an example. If on 1 April the claimant mistakenly pays the defendant 1,000, with the result that the defendant is on that date obliged to repay the claimant 1,000, the defendants repayment of 1,000 on that date will effect complete restitution. Restitution of the amount mistakenly paid in itself restores to the claimant the opportunity to use the money: there is no additional amount due in restitution. That is because there has been only one direct transfer of value, namely the payment of the 1,000. The opportunity to use the money mistakenly paid can arise as a consequence of that transfer, but a causal link is not sufficient to constitute a further, independent, transfer of value. Contrary to the analysis of Lord Nicholls in Sempra Metals (at para 102), the recipients possession of the money mistakenly paid to him, and his consequent opportunity to use it, is not a distinct and additional transfer of value. The position is essentially the same if the 1,000 is repaid not on 1 April but on 1 May. There has been no transfer of value subsequent to 1 April, when the mistaken payment was made. The only transfer of value needing to be reversed remains the payment of the 1,000. The claimant can however be awarded, in addition to the 1,000, simple interest on that amount under section 35A of the 1981 Act. That is because the obligation which arose under the law of unjust enrichment on 1 April, upon the making of the mistaken payment, created a debt. Interest can normally be awarded on a debt under section 35A of the 1981 Act. That interest is intended to compensate the claimant for the loss of the use of the money to which he became entitled to restitution on 1 April. There is no right to interest on the basis of unjust enrichment: failure to pay a sum which is legally due is not a transfer of value, and does not give rise to an additional cause of action based on unjust enrichment. If there was no distinct cause of action for restitution of the opportunity to use the money on the date of the mistaken payment (as explained above), a cause of action based on unjust enrichment cannot have subsequently accrued, since no further defective transfer of value has taken place. The point can also be illustrated by an example used by HMRC. If D owes C 1,000 under a contract, a claim also lies against D for interest under section 35A, from the date when the contractual payment became due. There is no claim against D for interest on the ground of unjust enrichment (even if an unjust factor is present). That is because any benefit obtained by D from his failure to pay the debt on time is not obtained at the expense of C in the relevant sense. There has been no transfer of value from C to D. The latters opportunity to use the money which remains in his possession is the result of his failure to pay the contractual debt. The same analysis applies where the debt is imposed by the law of unjust enrichment, for example as the result of a mistaken payment of 1,000. Any benefit obtained by D as a consequence of his possession of the 1,000 is derived from his failure to pay that debt. It cannot be said to have been transferred from C to D. All this is consistent with a long-established understanding of, first, the nature of the cause of action based on a mistaken payment, and secondly, the basis on which interest is payable. As to the first of these, Lord Mansfield stated in the classic case of Moses v Macferlan (1760) 2 Burr 1005, 1010, that the defendant in an action for money had and received can be liable no further than the money he has received. That approach was followed in many later authorities, until Sempra Metals: see, to give only a few examples, Walker v Constable (1798) 1 Bos & P 306, 307 (The court were of opinion, on the authority of Moses v Macferlan, 2 Burr 1005, that in an action for money had and received the plaintiff could recover nothing but the net sum received without interest), Depcke v Munn (1828) 3 C & P 111 per Lord Tenterden CJ ( the courts have held again and again that interest cannot be recovered in an action for money had and received This has been decided so often, that I cannot now venture to allow the question to be agitated.), Johnson v The King [1904] AC 817 and the Westdeutsche case [1996] AC 669. As to the basis on which interest is payable, a clear explanation was provided by Lord Wright, a judge who was well aware of unjust enrichment (see, for example, Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32), and had also had to consider interest as a member of the Law Revision Committee which reported in 1934, mentioned earlier. In Riches v Westminster Bank Ltd [1947] AC 390, 400, he stated: 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. Once it is understood that the claim to interest is not truly based on unjust enrichment but on the failure to pay a debt on the due date, the conclusion inevitably follows that interest can be awarded on the claims within categories (b) and (c) under section 35A of the 1981 Act: see BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783, and Sempra Metals at paras 104 (Lord Nicholls) and 175 (Lord Walker). On a literal reading of section 35A, no such interest could have been awarded on the claims under category (a). That is because section 35A applies only where there are proceedings for the recovery of a debt (or damages), and therefore does not apply where the defendant has repaid the debt (or has set it off) before the creditor has commenced proceedings for its recovery. An award of interest is nevertheless required in such circumstances by EU law, if an effective restitutionary remedy is to be available under English law in respect of San Giorgio claims: that was the point decided in Metallgesellschaft. It is unnecessary to decide in this appeal how an award of interest should be made available in those circumstances (and the court has heard no argument on the point). But there are a number of potential solutions. For the foregoing reasons, we therefore depart from the reasoning in Sempra Metals so far as it concerns the award of interest in the exercise of the courts jurisdiction to reverse unjust enrichment. As mentioned earlier, it is unnecessary for us to consider the reasoning in that case so far as it concerns the award of interest as damages, and nothing in this judgment is intended to question that aspect of the decision. Since the award of compound interest to PAC by the courts below was based on the application of the reasoning in Sempra Metals which we have disapproved, it follows that HMRC succeed on Issue II, and PACs claims to compound interest under categories (b) and (c) must be rejected. PACs claim to compound interest under category (a) would also have been rejected, if it had not been accepted by HMRC. Finally, in relation to this aspect of the appeal, it is worth adding that the view of the majority in Sempra Metals that the opportunity to use money mistakenly paid should be regarded as an enrichment also raises a number of questions, particularly in relation to the method by which, and the date or dates as at which, the enrichment is to be measured. In addition, if one stands back and considers the realism, and also the fairness, of the approach to enrichment adopted by the majority in Sempra Metals, the results which it produces are concerning. As Professor Burrows has written, in relation to the decision of Henderson J in the Littlewoods case, in his contribution to Commercial Remedies: Resolving Controversies, eds Virgo and Worthington (2017), p 266: if one were to step back from the complex detail, the result of Henderson J applying compound interest on all the mistaken payments from the date of receipt appears to be tantamount to saying that, had the Revenue not been paid those sums, it would have borrowed the same sums at a compound interest rate for five decades. Surely that cannot be right. These issues were not, however, discussed in argument in the present appeal, and in the circumstances it is inappropriate to consider them further. The remaining issues There remain two issues which are relevant to the computation of the amounts which EU law requires HMRC to repay. In order to understand those issues it is necessary to recollect how, under the legislation which was in force in the relevant years, ACT was charged on distributions by a UK-resident company and was set against the paying companys subsequent liability to MCT. Under section 14 of ICTA, ACT was charged when a UK-resident company paid a qualifying distribution, which included the payment of a dividend (section 209). Under section 231 of ICTA, when a UK-resident company made a qualifying distribution, the recipient of the distribution was entitled to a tax credit equal to the proportion of the amount of the distribution which corresponded to the rate of ACT in force when the distribution was made. Under section 238, when a UK-resident company made a qualifying distribution, the sum of the amount of that distribution together with the proportion of that amount which corresponded to the rate of ACT in force when the distribution was made was known as a franked payment (FP). Section 238 also provided that when a UK-resident company received a distribution, in respect of which it was entitled to receive a tax credit, the aggregate of the distribution and the amount of the tax credit was franked investment income (FII). When the recipient company itself made a qualifying distribution in the same accounting period as it received FII, it paid ACT only on the excess of FP over FII (section 241). The UK-resident company (company A) had to make a return and account to HMRC for the ACT quarterly by disclosing the FPs which it made and the FII which it received, foreign income dividends paid and received, and the ACT payable on the FPs and the foreign income dividends: paragraphs 1 and 3(1) of Schedule 13 to ICTA. The ACT which company A paid during an accounting period was then set against its liability (if any) to MCT on its profits in the accounting period by the operation of section 239 of ICTA, which we discuss below. Thus, if company A received a distribution from another UK-resident company (company B) it would not be liable to pay MCT on that distribution (section 208). If company A, having received a distribution from company B, itself made a distribution, it would be liable to pay ACT on the excess of its FP over its FII. When company A came to pay MCT on its profits in the same accounting period it would have been entitled to set off the ACT which it had paid (section 239). The illegality under EU law, which was caused by the UKs failure to match the exemption conferred on dividends received from UK-resident companies by an equivalent credit in respect of overseas-sourced dividends, is to be remedied by a credit for foreign dividends by reference to the FNR, as we have held under Issue I above. Applying the example above but with the receipt by company A of overseas- sourced dividends in place of UK-sourced dividends, under EU law the FNR credit would fall to be applied to its payment of MCT. Thus the MCT which company A paid was unlawful to the extent that the credit had not been given. If company A had itself paid a dividend, the FNR credit should have been applied to reduce the ACT which it had paid. With that introduction we turn to Issue III. Issue III Issue III, on which HMRC seek permission to appeal, is whether a claim for restitution lies to recover lawful ACT, which has been set against unlawful MCT. By the expression lawful ACT we refer to the element within an undifferentiated ACT charge which did not represent unduly levied tax on overseas- sourced dividends. Lawful ACT on the (UK-resident) Company As distribution refers to such ACT as is due after giving effect to (i) the exemption given to income from dividends of UK-resident companies and (ii) (in light of our answer to Issue I) the tax credit which EU law requires to be given to income from dividends from overseas companies. Unlawful MCT in this context refers to such part of the charge to MCT as is attributable to the failure to give the overseas-sourced dividends, which company A received, a tax credit at the FNR to achieve equivalence to the exemption which section 208 gave to dividends received from UK-resident companies. This issue was not argued in the courts below because Henderson J and the Court of Appeal, when considering this case, were bound by the Court of Appeals earlier decision in Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2010] EWCA Civ 103; [2010] STC 1251 (FII CA). In that judgment the Court of Appeal held that a taxpayer was entitled to reimbursement of lawful ACT, which HMRC had retained because it had been set against an unlawful MCT charge. The court held that such ACT related directly to the unlawful MCT because the CJEU treated ACT as an advance payment of MCT: FII CA paras 148- 151. The statutory provisions governing the set-off of ACT against MCT were as follows. Section 239(1) of ICTA provided for the automatic set-off of ACT against MCT, thereby reducing company As liability to pay MCT. It provided: advance corporation tax paid by a company (and not repaid) in respect of any distribution made by it in an accounting period shall be set against its liability to corporation tax on any profits charged to tax for that accounting period and shall accordingly discharge a corresponding amount of that liability. Where the tax-paying company did not have a sufficient liability to MCT on its profits to use up the ACT by way of set-off in the same accounting period, the unused ACT could be carried back under section 239(3) which provided: Where in the case of any accounting period of a company there is an amount of surplus advance corporation tax, the company may, within two years after the end of that period, claim to have the whole or any part of that amount treated for the purposes of this section (but not of any further application of this subsection) as if it were advance corporation tax paid in respect of distributions made by the company in any of its accounting periods beginning in the six years preceding that period and corporation tax shall, so far as may be required, be repaid accordingly. In this subsection surplus advance corporation tax in relation to any accounting period of a company, means advance corporation tax which cannot be set against the companys liability to corporation tax for that period because the company has no profits charged to corporation tax for that period The surplus ACT could also be carried forward automatically under section 239(4) which provided: Where in the case of any accounting period of a company there is an amount of surplus advance corporation tax which has not been dealt with under subsection (3) above, that amount shall be treated for the purposes of this section (including any further application of this subsection) as if it were advance corporation tax paid in respect of distributions made by the company in the next accounting period. Section 239(5) explained how the set-off operated under both subsections (1) and (4). It provided: Effect shall be given to subsections (1) and (4) above as if on a claim in that behalf by the company and, for that purpose, a return made by the company under section 11 of the Management Act containing particulars of advance corporation tax or surplus advance corporation tax which falls to be dealt with under those subsections shall be treated as a claim. Company A could also surrender its ACT to its subsidiary in accordance with section 240, with the result that the ACT would be treated as ACT paid by the subsidiary and set against the subsidiarys liability to pay MCT. HMRCs case is simple. They argue that if a taxpaying company included relevant details of ACT paid in its tax return, sections 239(1) and (5) mandated an automatic set-off of the ACT against the companys liability for MCT. If, on a proper understanding of the law, the company did not owe sufficient MCT in the relevant accounting period, the ACT remained surplus and available to be set off in the next accounting period under section 239(4). In other words, HMRC argue that the law treats an unlawful MCT charge as a nullity, with the result that there is no set off under section 239(1) and no enrichment of HMRC by the payment of the ACT, which remained available to offset the taxpaying companys lawful MCT in other accounting periods. PAC opposes the grant of permission to HMRC on this issue and submits that it is a detailed issue of computation which is likely only to affect the appeal in PACs case if PACs approach to Issue V is correct. If this court were to give permission to appeal, PAC advances three arguments. First, it submits that the courts approach should be governed by the principle that the taxpayer should be entitled to recover unduly levied tax. Secondly, it argues that, because the CJEU has characterised ACT as nothing more than a payment of corporation tax in advance (eg FII ECJ I para 88), ACT could only lawfully be charged where it is itself a pre-payment of a lawful charge to MCT. As a result, it contends that the correct analysis is that a payment of ACT, which is subsequently set against an excessive liability to MCT, is an advance payment of an excessive tax liability and is itself the payment of an excessive tax liability. As such, it is liable to be recovered in a claim in restitution. Alternatively, PAC contends that the payment of the ACT relates directly to the unlawfully levied MCT and so is recoverable in a claim in restitution. In support of those contentions PAC relies on dicta of the CJEU in FII ECJ I and FII ECJ II. PACs third argument is that, if it had been aware that it did not have any liability for a substantial part of the MCT, it would have not have paid the ACT. PAC was a subsidiary of Prudential plc and it had no subsidiaries of its own which generated profits giving rise to a liability to corporation tax against which PACs ACT could have been used. It would therefore have paid dividends to its parent company within a group income election so that the ACT was paid at the level of the parent company and would have been available for set-off against the MCT of other subsidiary companies within the group. This, it submits, would have been the only sensible course to avoid the ACT being stranded in PACs accounts. Analysis In our view it is appropriate to give HMRC permission to raise this issue as it is a point of law of general public importance in an appeal to this court in the context of a group litigation order. While PAC submits that it alone is likely to be affected by the determination of this issue, the court is not in a position to assess whether or not that is so. The matter also arises in the FII litigation. HMRC had applied for permission to appeal the Court of Appeals ruling on this issue in FII CA but the determination of that application was postponed by this court by orders dated 8 November 2010 and 9 May 2017. The issue, which will be of relevance to the final determination of the FII litigation, therefore comes to this court in this appeal before this court has addressed the application to appeal in that litigation. In addressing this issue, the starting point is to recall that an entitlement to repayment or restitution in this context requires that there has been an unlawful charge to tax as a result of incompatibility with EU law: San Giorgio. The question we are asked to consider is in substance: have HMRC unlawfully levied ACT by setting it against MCT which has been unlawfully charged? But there is a logically prior question, which is whether there has been any set-off. Company A may have received income which has funded its distribution from UK-resident companies and also from companies resident elsewhere in the EU. In this computational issue the court is not concerned with unlawful ACT, which has been charged on a distribution by company A derived from income which it has received from an overseas-resident company in the absence of sufficient credit for foreign tax on the latter companys distributions. We are concerned with ACT which is unquestionably lawful but which has purportedly been set against an unlawful MCT charge on company A. PAC relies on dicta in FII ECJ I and FII ECJ II to argue that this prima facie lawful charge on company As dividend is tainted by its being merely an advance payment of an unlawful MCT charge. But the CJEU, when it characterised ACT as constituting a form of advance payment of corporation tax (FII ECJ I para 88 and FII ECJ II paras 68 and 110), was well aware of the provisions of ICTA which allowed the taxpaying company to utilise the ACT which it had paid in different ways. Thus, in FII ECJ II at para 6, the CJEU stated: A company had the right to set the ACT paid in respect of a distribution made during a particular accounting period against the amount of mainstream corporation tax for which it was liable in respect of that accounting period, subject to certain restrictions. If the liability of a company for corporation tax was insufficient to allow the ACT to be set off in full, the surplus ACT could be carried back to a previous accounting period or carried forward to a later one, or surrendered to subsidiaries of that company, which could set it off against the amount for which they themselves were liable in respect of corporation tax. (The reference to the surrender of ACT to a subsidiary is a reference to section 240 of ICTA.) As we have shown, section 239 of ITCA did not confine the MCT, against which the ACT could be set, to MCT due for the same accounting period as that in which the ACT was paid (the same accounting period). If there was insufficient MCT due in the same accounting period, the surplus ACT was carried forward automatically to the next accounting period, unless company A elected to use it otherwise, such as by carry back under section 239(3). If the company did not so elect, and if in the same accounting period and subsequent accounting periods company A did not have sufficient MCT to use up the ACT which it had paid, or if Company A did not surrender the ACT under section 240, the ACT was, in PACs words, stranded. But that stranding of the ACT, were it to have occurred, would not affect the lawfulness of the ACT charge. In our view, HMRC are correct in their submission that, if an apparent charge to MCT was unlawful, that charge was a nullity. The ACT could not have been set against a nullity but remained available to be carried back if a claim were made under section 239(3) or for automatic set-off against lawful MCT in a subsequent accounting period under section 239(4) or otherwise to be utilised. Being so available, the lawful ACT did not directly relate to the unlawful MCT in the same accounting period in the sense that penalties and interest may relate to an unlawfully levied tax. Accordingly, HMRC in receiving payment of the lawful ACT did not receive unlawfully levied tax which gave rise to a San Giorgio claim. Further, PAC was obliged by ICTA to pay the lawful ACT. The payment of the ACT did not entail a defective transfer of value which falls to be corrected: the ACT was due when it was paid, and was available to PAC to utilise thereafter. PACs loss in the context of Issue III (ie in relation to lawful ACT) is the result of the levying of unlawful MCT, and, through the misunderstanding of the law which it shared with HMRC, of its not having been able to set the unutilised ACT against its liability for lawful MCT in the same or other accounting periods or otherwise to utilise the ACT to reduce its liability to tax. Its loss in that sense does not support a claim in restitution: Investment Trust Companies v Revenue and Customs Comrs, especially paras 41-45 per Lord Reed. We are informed that PACs corporation tax liabilities in its accounting periods from 1994 to 1998 are not finalised as PACs returns in those years are still open and that therefore it may be possible for PAC to carry forward unutilised ACT to set against its MCT liabilities in those periods. But, whether or not that is the case, in agreement with Henderson J in FII High Court 1 ([2008] EWHC 2893) we consider that an enquiry into whether, and if so how, surplus ACT would otherwise have been used within a group of companies cannot give rise to a claim in restitution but would form part of a claim for damages if the criteria for such a claim were met. We therefore, in agreement with Henderson J in the FII litigation, answer the question raised in Issue III (Does a claim in restitution lie to recover lawful ACT set against unlawful corporation tax?) in the negative. Issue V PAC seeks permission to cross-appeal if (as we have done) we grant HMRC permission to appeal on Issue III. Again, the issue arises in the context of a GLO and we are unable to assess its significance in other cases within the GLO. But it is closely connected with Issue III and has significant consequences for PACs claim for interest. It is appropriate that we address it in the context of this appeal. We therefore grant permission for the issue to be raised. Issue V comprises two related questions concerning the utilisation of ACT on a hypothesis that an undifferentiated fund of lawful and unlawful ACT was purportedly set off against an amount of MCT which was in part lawful and in part unlawful. The first question (Issue V(a)) which the parties have raised is: Where ACT from a pool which includes unlawful and lawful ACT is utilised against an unlawful corporation tax liability, is the unlawful ACT regarded as a pre-payment of the unlawful corporation tax liability or is the ACT so utilised regarded as partly lawful and unlawful pro rata? PAC contends that the unlawful ACT which company A has paid is to be regarded as utilised first against the unlawful MCT. HMRC have argued for a pro rata approach by which the unlawful MCT is regarded as having been met by the utilisation of lawful and unlawful ACT in the same proportion as the unlawful MCT bears to the overall MCT charge. The background is that in so far as unlawful ACT has been utilised against lawful MCT, HMRC have conceded that the time value of the prematurely-paid ACT is recoverable in compound interest, as explained earlier in the discussion of Issue II. In so far as the unlawful ACT has purportedly been utilised against unlawful MCT, the unlawful ACT which the taxpaying company has paid is recoverable together with interest under section 35A of the 1981 Act, as explained in relation to Issue II, as both the ACT charge and the MCT charge were nullities. Henderson J in his second judgment in this case ([2015] EWHC 118 (Ch); [2015] STC 1119) addressed this issue at paras 34-37. He expressed an initial inclination to adopt the pro rata approach as everyone at the time had assumed that the whole of both the ACT and the MCT had been lawfully charged. He decided however that PACs approach was correct because, if the unlawful ACT was regarded as a prepayment of the unlawful MCT, the end result reflected precisely the credit for foreign tax which EU law required, whereas on HMRCs approach company A would have an additional and unnecessary claim to recover the element of lawful ACT which had been utilised against the unlawful MCT. His ruling was made expressly on the basis that he was bound by the Court of Appeals ruling on Issue III above, a ruling which we have now overturned. The Court of Appeal (paras 113-127) disagreed with Henderson Js approach. It stated that the issue was how to determine the extent of the benefit for HMRC in money terms from the payment or bringing into account of an unlawful MCT charge for the purpose of determining the extent of HMRCs unjust enrichment. The court looked for a fair way of determining that enrichment in a situation where an undifferentiated fund of lawful and unlawful ACT had purportedly been set against an apparent liability to MCT, which in fact comprised both lawful and unlawful MCT. The court attached weight to the fact that both PAC and HMRC were unaware of the meaning and effect of the relevant EU law at the time; neither was to blame for the situation; both were disabled by their ignorance of the true state of affairs from applying their minds at the time to the allocation of lawful and unlawful ACT as between the lawful and unlawful elements of MCT. As a result, the court sought to strike a fair balance between their interests by adopting an objective standard. That standard was the pro-rating approach which Henderson J had earlier favoured in his judgment in Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2014] EWHC 4302 (Ch); [2015] STC 1471 (FII (High Court) Quantification), para 205. We are not able to reconcile the Court of Appeals ruling with our decision on HMRCs appeal on Issue III, which is inconsistent with the ruling in FII CA by which the Court of Appeal in this case was bound. As HMRC have submitted and we have held under that issue, section 239 has the effect that lawful ACT is not set against unlawful MCT, which is a nullity. The pro rata method, which involves unlawful MCT being met in part by unlawful ACT and in part by lawful ACT, cannot therefore work. Instead, lawful ACT, which was not utilised against lawful MCT, remained available to be claimed against lawful MCT in the same or other accounting periods. The unlawful ACT, which company A paid, was not set against the unlawful MCT charge in a given accounting period because both the unlawful ACT charge and the unlawful MCT charge are nullities. The principled answer is therefore that the unlawful ACT, which company A has paid, must be treated as having been utilised first against the unlawful MCT charge. Where there is no unlawful MCT against which to set the unlawful ACT which has been paid, the residual unlawful ACT is to be treated as utilised against lawful MCT. Because both of the unlawful charges are nullities, the unlawful ACT is itself recoverable, unless it has been set against a lawful MCT charge. When unlawful ACT has been set against lawful MCT, company A has a claim for interest on the ACT so used, as stated in para 78 above. The second question under Issue V relates to the carry back to an earlier quarter of domestic FII received in a later quarter in the same accounting period. To address this, it is necessary to explain the operation of paragraph 4 of Schedule 13 to ICTA. Rather than set out the provision we gratefully adopt the explanation of its effect which Henderson J gave in FII (High Court) Quantification at para 209: The effect of these rather densely worded provisions may be summarised by saying that FII received in a later quarterly return period must first be applied in franking any dividends paid by the company in that period, but that any surplus may then be carried back to frank unrelieved dividends paid in an earlier quarter, thus generating a repayment of ACT. If there has been a change of ACT rates in the meantime, the repayment is not to exceed the amount of the tax credit comprised in the FII which is carried back. If the excess FII was not so used in repayment of ACT paid in the earlier quarter, it was carried forward into the next annual accounting period to set against FPs in the same way (section 241(3)). Issue V(b) asks: Where domestic FII was carried back to an earlier quarter is it to be regarded as having been applied to relieve lawful and unlawful ACT pro rata or only lawful ACT? Henderson J in his second judgment in this case discussed the issue briefly in paras 40-43 after hearing full argument on the point. He decided, with considerable hesitation, that the FII was to be regarded as having been applied to relieve only lawful ACT in the earlier quarter because otherwise FII from UK-sourced dividends, which was entirely lawful, would be used to cancel out part of the credit which EU law requires on foreign income. In reaching this conclusion he departed from the view which he had reached on essentially the same issue in FII (High Court) Quantification at paras 207-211. The Court of Appeal disagreed and (paras 128-133) adopted an approach similar to that which it took on Issue V(a). Again, the court laid stress on the fact that at the time nobody appreciated that the ACT against which the FII was carried back might comprise both lawful and unlawful elements and no-one was to blame. The fair course therefore was to adopt the pro rata approach which the court had taken in relation to Issue V(a). The effect of that approach would be that the primary period of unjust enrichment of HMRC through receipt of the unlawful ACT would be brought to an end and HMRCs enrichment would be measured by the time value of the ACT payment. The court did not see this as cancelling out any part of the credit which EU law required on overseas-sourced dividends. In this appeal PAC renews the arguments which Henderson J favoured. The UK tax system was unlawful because credits were not given under section 231 for tax on overseas-sourced dividends in order to relieve an ACT liability. The use of carried-back FII to relieve unlawful ACT deprived company A of the credits which it should have had for the overseas-sourced dividends. The carried-back FII should therefore be regarded as having been applied to relieve only lawful ACT. HMRCs answer in their written case is that EU law does not mandate a form of credit for overseas-sourced dividends. They quote the statement of the CJEU in para 72 of FII ECJ II: As is clear from para 62 [of the present judgment], the obligation presently imposed on the resident company by national rules, such as those at issue in the main proceedings, to pay ACT when profits from foreign-sourced dividends are distributed is, in fact, justified only in so far as that advanced tax corresponds to the amount designed to make up the lower nominal rate of tax to which the profits underlying the foreign- sourced dividends had been subject compared with the nominal rate tax applicable to the profits of the resident company. HMRC, unexceptionably, interpret this statement as meaning that it is lawful to charge ACT on a dividend paid by company A only to the extent that it was lawful to charge MCT on the profits out of which that dividend was paid. But HMRC go on to say that the relief required was not in the form of a credit which was the equivalent of further FII. We do not accept HMRCs submission on Issue V(b) for the following three reasons. First, it follows from the answer which we have given on Issue I that we reject the contention that no particular form of credit is mandated by EU law. What the CJEU said in para 72 of FII ECJ II must be construed in the light of what it said in paras 61-65 which we have quoted in para 26 above. That in turn falls to be understood against the earlier ruling of the CJEU in FII ECJ I, which we have quoted in para 7 above. In other words, EU law requires a tax credit by reference to the FNR to which the profits of the overseas company have been subject. As a result, the UK can charge ACT in relation to company As dividends so far as they comprise profits from overseas-sourced dividends only to the extent that there is tax due in respect of those dividends after it has given company A that tax credit. Secondly, the consequence of this is that PAC is correct in its contention that HMRCs approach would result in depriving company A of the tax credits on overseas-sourced dividends which EU law mandates. Using the example which PAC gave in its written case, suppose that company A paid ACT of 100 in the first quarter when it had received overseas-sourced dividends which (if EU law had been applied correctly) would have entitled it to a credit of 25. If EU law had been applied correctly in that quarter, the ACT paid would have been 75. Suppose then that in the third quarter company A received FII for UK-sourced dividends which carried credits of 75 which it carried back to the first quarter. On PACs approach, the carried back FII would result in the repayment of all the ACT which had properly been paid. If, as on HMRCs approach, the 75 of FII, which is carried back from the third quarter, were utilised pro rata between the lawful and unlawful ACT which comprised the 100 paid in the first quarter, 18.75 (1/4 of the 75) would be attributed to the unlawful ACT, thereby cancelling to that extent the credit to which company A was entitled in EU law. Thirdly, we are not persuaded by the arguments as to fairness which influenced the Court of Appeal in relation to both of Issues V(a) and V(b). As unlawful ACT is a nullity, the principled answer is that domestic FII carried back to an earlier quarter is to be regarded as having been applied to relieve only lawful ACT so that any excess FII remained available for carry forward under section 241(3). We therefore answer Issue V(b) by holding that domestic FII which is carried back to an earlier quarter under paragraph 4 of Schedule 13 of ICTA is to be regarded as having been applied to relieve only lawful ACT. In further written submissions HMRC and PAC disagree on factual matters which may affect the working out of the rulings which we have made. This court is not in a position to resolve these matters. We will invite submissions in response to our judgment as to how our rulings may be applied. Conclusions For the foregoing reasons, we allow HMRCs appeal on Issues II and III, and dismiss it on Issue I. PACs proposed cross-appeal on Issue IV does not arise, as a result of its success on Issue I, and it also succeeds in its cross-appeal on Issue V(a). In relation to Issue V(b), the court holds that FII carried back to an earlier quarter is to be treated as having been applied to relieve only lawful ACT. |
The main issue in this appeal concerns the meaning and effect of a short, innocent sounding, phrase in article 221(4) of the (now superseded) Customs Code of the EU, contained in Council Regulation (EEC) No 2913/92 of 12 October 1992. The Customs Code regulated the collection of, and accounting for, customs duty throughout the EU (in 1992, the EEC). As is spelt out in the recitals to Regulation No 2913/92, the purposes of the Customs Code include securing a balance between the needs of the customs authorities in ensuring the correct application of customs legislation, on the one hand, and the rights of traders to be treated fairly, on the other, the establishment of uniform rules and procedure within the internal market, and the prevention of fraud or irregularity which would be liable adversely to affect the General Budget of the EU. In order to understand the main issue about the meaning and effect of article 221(4) as inserted by Council Regulation (EC) No 2700/2000 of 16 November 2000, it is necessary first to explain some of the basic concepts used within the Customs Code. At the heart of it lies the concept of customs debt which is defined in article 4(9), in relation to imports, as follows: Customs debt means the obligation on a person to pay the amount of the import duties (customs debt on importation) or export duties (customs debt on exportation) which apply to specific goods under the Community provisions in force. By article 4(12) debtor means any person liable for payment of a customs debt. In relation to imports, article 201(2) provides that a customs debt shall be incurred at the time of acceptance of the customs declaration in question, and article 201(3) identifies as the debtor the person making the declaration, and (if relevant) the person on whose behalf the declaration is made. Recovery of the amount of the customs debt is governed by Chapter 3 of the Customs Code. Section 1 deals with entry of the debt in the accounts and communication of the amount of duty to the debtor (in both cases by the customs authority of each member state). Articles 218 to 220 lay down strict time limits for the accounting by customs authorities for customs debts including, in article 220, correcting the accounts where a customs debt has originally been entered at a level lower than the amount legally owed. Article 221 provides for the communication to the debtor of the amount of duty as soon as it has been entered into the accounts. Section 2, which begins with article 222, provides time limits and procedures for payment of the duty by the debtor. Those time limits run from the date of communication to the debtor of the amount of duty owed. Thus, although the debtor incurs a customs debt at the time of importation (when making the customs declaration), liability to pay it occurs only upon receipt of communication of the amount by the relevant customs authority. Returning to article 221, it provided (at the material time) so far as is relevant as follows: Article 221 1. As soon as it has been entered in the accounts, the amount of duty shall be communicated to the debtor in accordance with appropriate procedures. 2. 3. Communication to the debtor shall not take place after the expiry of a period of three years from the date on which the customs debt was incurred. This period shall be suspended from the time an appeal within the meaning of article 243 is lodged, for the duration of the appeal proceedings. 4. Where the customs debt is the result of an act which, at the time it was committed, was liable to give rise to criminal court proceedings, the amount may, under the conditions set out in the provisions in force, be communicated to the debtor after the expiry of the three year period referred to in paragraph 3. I have italicised the phrase which falls to be interpreted and applied on this appeal. By article 4(23) provisions in force include both Community and national provisions. The issue may be summarised as follows. For the importer FMX Food Merchants Import Export Co Ltd, the respondent, which is the relevant customs debtor, it is said that article 221(4) confers an option on each member state to provide, in advance, an alternative fixed time limit in substitution for the three year time limit for communication of the amount of duty, where the qualifying condition (namely an act which was liable to give rise to criminal court proceedings) is satisfied. I will call it the criminal proceedings condition. If the member state does not do so (and the UK did not) then the three year time limit provided by article 221(3) remains in force, because any other outcome would offend against the EU principle of legal certainty. For HMRC, the appellant, it is submitted that the three year time limit in article 221(3) is automatically displaced wherever the criminal proceedings condition is satisfied. In such a case the requirement for legal certainty may be met either by a member states provision of a substitute fixed time limit, or by the combination of a number of specific provisions of the national law which, together, satisfy the requirement for legal certainty or, as a last resort, by the general requirement of EU law that the communication should take place within a reasonable time. The relevant provisions of national law, it is argued, include one or more of the UKs provisions about abuse of process, the equitable doctrine of laches, or the provisions of the Limitation Act 1980. Thus far, FMXs arguments have been broadly accepted by the First tier Tribunal (the FtT) and by the Court of Appeal, whereas the Upper Tribunal (the UT) found in favour of HMRC. The Facts The facts which gave rise to the present dispute are not (now at least) contentious and may be briefly stated. Between August 2003 and January 2004, FMX imported ten consignments of garlic, which were declared to be of Cambodian origin, thus purportedly entitling them to exemption from all import duties under the Everything But Arms amendment to the EUs generalised system of preferences made in favour of, amongst other countries, Cambodia in 2001. In fact, the consignments all originated in China, so that (being outside the relevant quota for fresh garlic) they were subject both to ad valorem duty of 9.6% and additional anti dumping duty of 120 per 100kg. The duty which should have been paid was 503,577.63. The false declarations as to origin came to light in the course of HMRCs investigation of later imports, occurring after January 2004, leading to post clearance demands in February 2007 for duty of 370,872.50 issued within three years from the relevant importations. The FtT dismissed FMXs appeal against those demands in December 2010, holding that the imports had all originated in China. Following that outcome HMRC issued the post clearance demand for duty in respect of the August 2003 January 2004 series of imports in March 2011, long after the expiry (if applicable) of the three year time limit for communication in article 221(3), but only just over three months after the FtTs decision about the later imports. It was found by the FtT and is now common ground that, in relation to the 2003 04 imports, all the garlic originated in China, that the makers of the certificates of origin knew that they were false, and would be used for the purposes of UK import declarations, that FMX presented these certificates to HMRC and that, although not implicated in the underlying fraud, FMX thereby committed an act that was liable to give rise to criminal court proceeding under section 167(3) of the Customs and Excise Management Act 1979, which creates a strict liability offence. The result of those factual findings is that the criminal proceedings condition for disapplication of the three year time limit for communication set out in article 221(4) was satisfied. It is, in passing, common ground that it is not necessary for HMRC to show that criminal court proceedings actually ensued or that the customs debtor was the person who or which committed the relevant criminal act: see Gilbert Snauwaert v Belgium (Joined Cases C 124/08 and C 125/08) [2009] ECR I 6793. Conditions set out in the provisions in force It is common ground that this phrase is apt to describe both EU provisions and applicable provisions of any relevant member state. The UK has not in fact enacted or prescribed any provisions taking the form of a substitute time limit for communicating a customs debt where the criminal proceedings condition in article 221(4) is satisfied. The UK has, of course, a substantial body of statutory limitation provisions, now consolidated in the Limitation Act 1980 (for England and Wales), but section 37(2)(a) provides that the 1980 Act shall not apply to any proceedings by the Crown for the recovery of any tax or duty, or interest thereon. The result is that there were no provisions in force in England and Wales at the material time which imposed any specific or fixed time limit for the communication of a customs debt in circumstances where the criminal proceedings condition in article 221(4) applied. If, as FMX contends, article 221(4) gives member states the option to prescribe a substitute time limit, failing which the three year time limit in article 221(3) remains in force, that option has not been exercised in respect of England and Wales. The principle of legal certainty In Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs) [2012] UKSC 19; [2012] 2 AC 337, 394, Lord Sumption, after mentioning the EU principles of effectiveness and equivalence, continued at para 146: 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. Later, at para 149, he continued: 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, at 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 taxpayer 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 Abenra Havn (Case C 90/94) [1997] ECR I 4085, para 45. Subject to the overriding principles of effectiveness and equivalence, EU law recognises 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. Two potentially conflicting strands of EU jurisprudence have been identified by the parties to this appeal as emerging from decisions of the Court of Justice of the European Union (the CJEU). The first is that, where the provisions in force appear to have a lacuna which, because of the absence of any time limit, would appear to permit a relevant body to pursue a claim or take action against a person without any limit of time, then the principle of legal certainty will require that the claim be made or action be taken within a reasonable time. The second strand is that where the principle of legal certainty calls for the provision of a time limit, or permits a member state to prescribe a time limit of its own by way of derogation from an EU wide time limit, then nothing other than a time limit which is both fixed in its duration, and laid down in advance, will do. Central to the outcome of this appeal is the question which of those strands of EU jurisprudence best illuminates the meaning and effect of article 221(4). The earliest case which the court was shown in the first strand of EU authority is Sanders v Commission of the European Communities (Case T 45/01) [2004] ECR II 3315, CFI (Sanders). This was a claim for damages for loss sustained as a result of the alleged failure to recruit the applicants as temporary servants of the European Communities during the time they worked for the Joint European Torus (JET) Joint Undertaking. It was, in essence, a complaint of discrimination by the Commission made by 95 of its employees. The procedural rules governing such an application, contained in the Staff Regulations of Officials of the European Communities, imposed no time limit for the bringing of such claims. Nonetheless, the court held that the applicants were under a duty to do so within a reasonable time after becoming aware of the relevant facts, and that this duty arose from the general principles of Community Law, in particular the principle of legal certainty: see paras 59 61 and 66 of the judgment. At para 59 it was held that: There is an obligation to act within a reasonable time in all cases where, in the absence of any statutory rule, the principles of legal certainty or protection of legitimate expectation preclude Community institutions and natural persons from acting without any time limits, thereby threatening, inter alia, to undermine the stability of legal positions already acquired. At para 60, the court held that, for Community institutions, the duty to act within a reasonable time is an aspect of good administration and derives from the fundamental need for legal certainty. In Allen v Commission of the European Communities (Case T 433/10) EU:T:2011:744, EGC (Allen), another case about the JET project, 110 employees brought discrimination claims under the Staff Regulations of Officials of the European Communities, which were dismissed by the European Union Civil Service Tribunal (First Chamber) as having been brought out of time. On appeal to the General Court, the applicants argued that there was no time constraint for the bringing of such claims. In rejecting that argument the court held, at para 26, as follows: In that regard, it must be held that the appellants argument that the absence of a time limit automatically means that it is possible to bring a claim for damages without any time limit cannot succeed. It should be noted on that point that, contrary to what the appellants contend, there is an obligation to act within a reasonable time in all cases except those where the legislature has expressly excluded or expressly laid down a specific time limit. The legal basis for setting a reasonable time limit, in the absence of any statutory rule, is the principle of legal certainty, which precludes institutions and natural persons from acting without any time limits, thereby threatening to undermine the stability of legal positions already acquired Thus, in the absence of any statutory rule, it is for the judicature to decide on the length of the reasonable period for submitting a claim for damages, in the light of the circumstances of the case Nencini v European Parliament (Case C 447/13P) EU:C:2014:2372 (Nencini) was a case about recovery of expenses over claimed by an MEP, by the European Parliament. Although the relevant procedural rules imposed a five year limitation period running from the notification of such a claim to an MEP, no time limit was specified for the making of that notification itself. The communication was made to the MEP more than five years after the Parliament had become aware of the relevant facts. The General Court and the Second Chamber on appeal held that the reasonable time principle applied to the communication by the Parliament of such a claim, because the fundamental requirement of legal certainty prevented Community institutions from indefinitely delaying the exercise of their powers. The CJEU concluded that, in the circumstances, a delay of more than five years from becoming aware of the relevant facts, before communicating the claim, was to be presumed to be unreasonable, in the absence of special facts, such as conduct by the debtor causing delay or other time wasting manoeuvres or bad faith. I turn now to the cases cited to this court in the second strand of EU authority, again in chronological order. The most important of those, heavily relied upon by the Court of Appeal in the present case, is Ze Fu Fleischhandel GmbH v Hauptzollamt Hamburg Jonas (Joined Cases C 201/10 and C 202/10) [2011] ECR I 3545, CJEU (Fleischhandel). It concerned the interpretation of article 3(1) and (3) of Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities financial interests and of the principles of proportionality and legal certainty. The underlying claim was for repayment by Fleischhandel of wrongly claimed export refunds in relation to goods which had been cleared for export to Jordan but, in fact, transported to Iraq. Article 3 of Regulation No 2988/95 provided (so far as relevant) as follows: 1. The limitation period for proceedings shall be four years as from the time when the irregularity referred to in article 1(1) was committed. However, the sectoral rules may make provision for a shorter period which may not be less than three years. 3. Member states shall retain the possibility of applying a period which is longer than that provided for in [paragraph] 1 The exports in question had taken place in 1993, and the claim for repayment was made, in proceedings in the German courts, in 1999, after the discovery of the true export destination during an inspection carried out early in 1998. The first instance court, the Finanzgericht Hamburg, decided that the claim was out of time under article 3(1) of Regulation No 2988/95, but the Bundesfinanzhof stayed the proceedings of the Hauptzollamts appeal, and referred the matter to the CJEU. The referring courts provisional view was that a general 30 year limitation period in German law could be applied by analogy and, if unreasonably long, could in principle be reduced by judicial decision, but not so as to have rendered the claim in that case time barred. The CJEU held that, in principle, a national limitation period as long as 30 years would not offend the principle of legal certainty, but that it would be disproportionately long. If the national court sought to reduce a disproportionate period to one which satisfied the requirements of proportionality this would not satisfy the principle of legal certainty unless the reduced period was fixed in advance so as to be sufficiently foreseeable by a person affected by it: see para 52 of the judgment. The result was that, no such reduced period having been laid down by the German courts in advance, there was no national limitation period which satisfied the principles of legal certainty and proportionality sufficient to displace the four year period prescribed by article 3(1) of Regulation No 2988/95, by reference to article 3(3). It was not argued in that case that there was a lacuna which could be filled by an obligation on the claimant to proceed within a reasonable time, no doubt because, in accordance with the clear language of article 3, the four year limitation period prevailed in the absence of any shorter or longer period which complied with the requirements of EU law. Firma Ernst Kollmer Fleischimport und export v Hauptzollamt Hamburg Jonas (Case C 59/14) EU.C:2015:660 (Kollmer) was also about article 3 of Regulation No 2988/95. At para 30 of his opinion Advocate General Cruz Villaln said that: If a four year limitation period were to appear, from the national authorities point of view, too short to enable them to bring proceedings in respect of irregularities displaying a certain complexity, it would always be open to the national legislature to adopt a longer limitation rule suited to irregularities of that type, which would have to meet the requirements of foreseeability and proportionality deriving from the principle of legal certainty. He thus analysed article 3(3) as conferring a form of option enabling member states to substitute the four year period with a longer period of their own choosing, provided that the longer period was compliant with the principle of legal certainty. Failing a compliant exercise of that option, the four year period would prevail. Valsts iemumu dienests v Veloserviss SIA (Case C 427/14) EU:C:2015:803 was relied upon by the Court of Appeal and by FMX in this court as affording some additional support for the proposition that a taxpayer or customs debtor is entitled, under the principle of legal certainty, not to have his position open to challenge indefinitely: see para 31 of the judgment. It was a case about the Customs Code, but it was more concerned with national rules about the time for the conduct of post clearance examinations, than time limits for the communication of a customs debt. Article 221(4) of the Customs Code is referred to in passing, but it is not a case in which the criminal proceedings condition for the application of article 221(4) was satisfied. The importer in that case was neither implicated in the false declaration of Cambodian origin of the bicycles concerned, nor found to have acted otherwise than in good faith (ie, in the context, without reasonable care). There was therefore no issue as to whether the three year time limit for communication of a customs debt was inapplicable in the circumstances. I must finally mention Agra Srl v Agenzia Dogane Ufficio delle Dogane di Alessandria (Case C 75/09) [2010] ECR I 5595. Although it does not fall squarely into either of the streams of European authority to which I have thus far referred, it is specifically about article 221(4) of the Customs Code, and sheds some light on the purpose behind the criminal proceedings exception from the generally applicable three year time limit for the communication of customs debts. The case concerned an irregular import declaration made by Agra for the purpose of obtaining licences for the import of frozen boned meat, submitted in June 2002, which was found to have been false during an inspection in 2007, leading to a subsequent criminal investigation, and communication of a reassessment of the duty payable in March 2008. The relevant provisions of the Italian Customs Code in force at the time provided for a five year limitation period for the recovery of customs duties but, where the failure to pay duties had its origins in a criminal offence, time for the purposes of that period was to run from the date on which the order or judgment in the criminal proceedings became final. The question referred to the CJEU was whether a time limit prescribed to run from the date of the conclusion of the criminal proceedings complied with article 221(3) and (4) of the Customs Code. The CJEU ruled that it did. At paras 34 35 of the judgment the CJEU held: 34. Secondly, it should be observed that, by merely referring to the conditions set out in the provisions in force article 221(4) of the Customs Code defers to national law as regards the rules governing the extinction of the customs debt through the passage of time, where that debt arises as a result of an act which, at the time it was committed, was liable to give rise to criminal court proceedings. 35. Accordingly, in so far as EU law does not lay down common rules in this field, it is for each member state to determine the rules governing the extinction, through the passage of time, of customs debts which it has not been possible to assess because of an act which could give rise to criminal court proceedings (see, by analogy, Case C 91/02 Hannl Hofstetter [2003] ECR I 12077, paras 18 to 20, and Molenbergnatie, para 53). That was, of course, a case in which a national provision in force dealt in express terms with the time limit for pursuing a customs debt in circumstances where the criminal proceedings condition in article 221(4) applied rather than, as in the present case, where there is no such specific national provision in force. It may readily be supposed that, if what may loosely be called the Fleischhandel test had by then been enunciated, the Italian provision would have complied with it even though the limitation period was set to run from a date (namely when the criminal proceedings became final) which could not be ascertained by the taxpayer in advance of factual matters specific to his case. Nonetheless it is of some assistance that the language chosen by the CJEU speaks in terms of the complete disapplication of any community wide time limit (or other common rules) where the act creating the customs debt could give rise to criminal court proceedings, treating the matter as entirely governed by the rules put in place by the relevant member state. In short, the disapplication of the three year time limit in article 221(3) is treated as the automatic result of the likelihood of criminal court proceedings, rather than the result of an election by a member state to choose a different time limit for that already prescribed by the EU as appropriate for those circumstances. Analysis The starting point for an understanding of the meaning and effect of article 221(4) is an examination of its purpose. It describes the second of two circumstances in which the ordinary three year time limit for communication of a customs debt is not to apply. The first, in article 221(3), is where the liability for duty is subject to an appeal, within the meaning of article 243. Then, the three year period is suspended for the duration of the appeal proceedings. The second is where the debt is the result of an act which, at the time it was committed, was liable to give rise to criminal court proceedings. The purpose of the first exception is because, in the event of an appeal, the amount of the customs debt has not been finally determined as it would otherwise be by its amount being entered in the accounts. The purpose of the second exception is not so clear. Under the legal systems of some member states it may be that the amount of the customs debt arising from the potentially criminal act may be determined in the criminal proceedings themselves, with a similar consequence in the unsuitability of the ordinary three year time limit as would flow from the lodging of an appeal. In other member states, and in the UK in particular, it may be because civil proceedings for the determination of the amount of the debt may be liable to be stayed until the determination of the criminal proceedings, so as to preserve the integrity of the criminal process. This would render the ordinary three year period equally inappropriate, but would not necessarily make a simple suspension of the period until the end of the criminal proceedings a satisfactory substitute. It is easy to see why, there being likely divergences in the consequences of criminal proceedings as between different member states, that the decision was taken to leave the conditions (including time limits) for communication of a customs debt, where the criminal proceedings condition applies, to each member state. The important point for present purposes is that it is reasonably clear from the language and purpose of article 221(4), read in its context, that the three year period in article 221(3) is regarded as inappropriate for cases where there is a prospect of criminal court proceedings, rather than as a prima facie appropriate period from which, nonetheless, member states are given the option to depart. This is consistent with a plain reading of the language of article 221(4), which simply provides that communication of the debt may be made after the expiry of the three year period, where the debt is the result of an act which was liable to give rise to criminal court proceedings. The permission given to communicate such a debt after the expiry of the three year period is, nonetheless, subject to any relevant conditions in the provisions in force which, as appears from article 4(23), includes Community or national provisions. There is a sharp difference therefore between this case and the circumstances under review in the Fleischhandel and Kollmer cases, both of which concerned article 3 of Regulation No 2988/95. There, member states had the possibility of applying a longer period than the four year EU wide time limit, not in special circumstances where that time limit was disapplied, but in every situation to which it did apply, namely the commission of a relevant irregularity. The disapplication of the EU wide time limit was therefore triggered precisely by the exercise of an option conferred upon member states to prescribe a longer time limit. If that option was not exercised in accordance with EU law then, leaving aside the provision for a shorter period in article 3(1), there is nothing in that article, or elsewhere in Regulation No 2988/95, which would make it appropriate to disapply the four year time limit in favour of a longer one. There was therefore no lacuna in the provisions in force which needed to be filled by reference to an obligation to act within a reasonable time. Returning to the present case, the next question is whether there was any provision of UK law in force sufficient to prevent communication of the customs debt arising from the false declaration of origin of the garlic being able to be given without any limit of time, contrary to the principle of legal certainty which the existence of such a liberty on the part of HMRC would involve. In my view, there is none. In the UT Birss J considered that there were relevant provisions. At para 34 he said: The common law (and rules of equity) already equip the courts to prevent procedural unfairness in proper cases and, for example, go as far striking out a claim as abusive as a result of inordinate delay which would make a fair trial impossible. To take an extreme example, if HMRC knew all the relevant facts but still waited a further 20 years before issuing a communication and seeking to enforce the debt claim, that sort of conduct would very likely make a fair trial impossible and would be abusive. Such a case would very probably be struck out. In para 35 he identified the relevant UK law principles as being abuse of process and laches, and HMRC has supported that analysis in its submissions to this court. I respectfully disagree. Both abuse of process and laches are concerned with the conduct of, or delayed institution of, legal proceedings. But this case is concerned with the need, recognised by the EU principle of legal certainty, for there to be some control upon the timing of the communication of a customs debt, rather than upon the institution of subsequent legal proceedings if, after communication of it, the debt has not paid. The doctrine of laches suffers from the additional difficulty that it relates to the pursuit of equitable relief: see Snells Equity, 33rd ed (2015), para 5 011. The recovery of a post clearance customs debt is far removed from the class of equitable claims. An attempt was made by HMRC to argue that, if UK law was otherwise deficient it would be necessary to reinstate the protection to debtors afforded by the Limitation Act 1980, by disapplying section 37(2)(a) of that Act, which renders the Act inapplicable to tax or duty claims by the Crown. Again, I disagree. There are two difficulties with that analysis. The first is whether, even if the provisions of the Limitation Act 1980 were by that route to be re instated for the purpose of protecting debtors from late claims for post clearance customs duty, they would in fact serve that purpose. The second is whether, even if they would, section 37(2)(a) would be sufficiently inconsistent with the requirements of EU law for it to have to be disapplied. The Limitation Act 1980 provides limitation periods under which (subject to suspension or postponement) time runs against claimants from the moment when they have a complete cause of action. The Act is, in short, about limitation of action, rather than time limits for the taking of steps which make the claimants cause of action complete, or steps which would remove a procedural bar to the taking of proceedings. In the present context the ability to take proceedings for recovery of a post clearance customs debt depends upon the communication of the debt, followed by non payment during the period prescribed for payment thereafter: see articles 221, 222 and 232 of the Customs Code. While it is true that the debt is incurred at the time of the acceptance of the relevant declaration under article 201(2), I consider it unreal to suppose that HMRC is therefore entitled to sue for or enforce the debt before the time when, under the Customs Code as summarised above, it becomes due and payable, and timely payment has not been made. Furthermore it would be strange indeed for the Customs Code to have made detailed provision in relation to the time permitted for communication of the debt, if the relevant national customs authority of a member state could nonetheless sue for it regardless of communication, and, in particular, where communication had been made out of time. The provision for communication to be made in a timely fashion in article 221 must at least have been designed to prevent the debtor from exposure to liability to proceedings for the enforcement of a debt which had not been communicated to him at all. But the existence of a requirement to take certain steps before bringing proceedings for the enforcement of a statutory debt does not always mean that there is no cause of action until those steps have been taken: see Swansea City Council v Glass [1992] QB 844. Whether the taking of those steps is a part of the cause of action or simply a procedural requirement is a question of construction of the statute in question; see per Taylor LJ at p 852B C, applying Coburn v Colledge [1897] 1 QB 702 and Sevcon Ltd v Lucas CAV Ltd [1986] 1 WLR 462. In written submissions at the courts request following the hearing, both parties were of one accord in asserting that the cause of action in the present case was complete on the date when, pursuant to article 201(1), the customs debt was incurred, rather than upon, or following, the communication of it under article 221. I am not at all sure that this is correct, and there may have been tactical reasons behind what, on FMXs case, would appear to amount to a concession. It seems to me to be well arguable that communication of the debt to the debtor is part of the cause of action for recovery, so that HMRC would have to plead both communication of the debt and (perhaps) non payment within the prescribed time, as part of its cause of action for recovery. This is, in particular, because article 222(1) speaks not merely of the right of HMRC to take proceedings for recovery, but of the obligation of the debtor to pay, as following upon the communication of the debt. But for the purposes of what follows I will assume that the parties agreement about this is correct. Plainly, on that basis, the application of the Limitation Act 1980 would go some way to alleviate the otherwise open ended ability of HMRC to recover the debt at any time, where article 221(4) disapplies the three year time limit. Communication of the debt, as a procedural pre condition to bringing proceedings, would have to be made within the relevant limitation period. But section 37(2)(a) of the Act is not lightly to be disapplied. There must be a real inconsistency with EU law: see Fleming (trading as Bodycraft) v Revenue and Customs Comrs [2008] UKHL 2; [2008] 1 WLR 195, para 25, per Lord Walker of Gestingthorpe. Plainly no process of construction can be employed to make section 37(2)(a) mean the exact opposite of what it plainly says. The supposed inconsistency with EU law is said to be that, without the three year time limit in article 221(3) HMRC could delay until the crack of doom before communicating the debt, there being no provisions in force to the contrary. But EU law has its own remedy for the filling of just such a lacuna, namely the requirement that communication be made within a reasonable time, if otherwise the principle of legal certainty would be offended. It is precisely to fill such a lacuna that the EU law requirement to take relevant steps within a reasonable time exists, as is explained and exemplified in the Sanders, Allen and Nencini cases which I have summarised above. It was submitted for FMX that this solution had been created only for cases between institutions and national authorities, so that it had no application to a claim by a national authority against a private person such as a customs debtor. Again, I disagree. That analysis is not born out by those authorities, which apply the duty to act within a reasonable time not only to EU institutions, but also to private individuals, such as employees bringing a discrimination claim against the Commission for which there is no prescribed time limit. Since the principle of legal certainty is one of those fundamental principles of general application in EU law I can see no good reason why it should not be generally applicable to fill any lacuna constituted by the absence of a sufficient time limit in relevant provisions in force, whether that is attributable to a failure by EU legislators to provide one (as in the discrimination cases) or to what I regard as a failure by the UK to provide one in the context of the Customs Code, where the prospect of criminal court proceedings leads to the disapplication of the three year time limit in article 221(3). It follows that there is no need or requirement to disapply section 37(2)(a) of the Limitation Act 1980 to remedy an inconsistency with EU law. If, as I conclude, EU law has its own way of dealing with the need to avoid communication of the debt being delayed to an extent which undermines the principle of legal certainty, by the imposition of the requirement that it be made within a reasonable time, then there is no inconsistency in the Limitation Act 1980 regime being made unavailable, by section 37(2)(a), for that purpose. Disposition I would allow the appeal. I have considered whether this court should make a reference to the CJEU but in my view the above analysis demonstrates a clear answer to the question how article 221(4) is to be interpreted and applied in a situation where there are no national provisions in force which limit the time for the communication to the debtor of the amount of duty, where the three year time limit in article 221(3) is displaced. The communication must be made within a reasonable time. I have also considered whether the question whether this communication was made within a reasonable time needs to be referred back to the FtT or to the UT so that it can be decided. It has yet to be decided as a discrete issue, at any level, because the Court of Appeal and the tribunals all decided the appeal on different grounds. Neither of the parties invited this court to take that course, in the event that the reasonable time analysis should prevail. Furthermore, it is not a case in which further facts need to be decided. HMRC made the relevant communication within four months of the outcome of the related appeal to the FtT concerning the post January 2004 imports, which raised similar issues about their provenance. It has not been suggested by FMX that this was outside a reasonable time for such a communication and, in my view, it clearly was not. It was reasonable for HMRC to delay issuing a communication under article 221 in relation to the pre January 2004 imports while the closely related litigation about the later imports remained on foot. The result is that I would restore the decision of the UT, albeit for slightly different reasons. LADY ARDEN: I agree with Lord Briggs that this appeal should be allowed but, as appears below, in part by a different route, which places more reliance on domestic law. The starting point, as I see it, is the interpretation of article 221(4) of the Customs Code as in force at the material time, set out at para 5 above. This does not require member states to adopt legislation extending the three year period for communicating the amount of a customs debt if it is the result of an act which when committed was liable to give rise to criminal court proceedings. In this Lord Briggs and I agree: see the final sentence of para 31 above. It would be odd if member states had to decide to extend the period for communicating a post clearance customs demand resulting from a potentially criminal act since the purpose of article 221(4) is to protect the finances of the EU on whose behalf member states collect customs duties: see, in this connection, the last recital to the Customs Code which states that when adopting measures to implement the Code, the utmost care must be taken to prevent any fraud or irregularity liable to affect adversely the General Budget of the European Communities. Article 221(4) provides that such communication may take place, semble without there having to be any enabling member state legislation, under the conditions set out in the provisions in force. That means that a communication of a post clearance customs debt is not permitted if it does not comply with the conditions for a valid communication set out in the relevant national law or in EU law. Those conditions can trump the extension of time. EU law therefore defers to national law. For these conditions to apply, there must be some provision of EU law or national law which prevents the communication from taking place with operative effect. That would be the case if under national law the customs debt had been extinguished by effluxion of time, for example because of some general provision of the law preventing the state from pursuing claims after a specified period: see Agra Srl v Agenzia Dogane Ufficio delle Dogane di Alessandria (Case C 75/09) [2010] ECR I 5595 (Agra), paras 34 and 35, set out at para 30 above. These paragraphs are very important because in them the Court of Justice of the European Union (the CJEU) takes what may be thought to be an unusual step of stating in terms that EU law defers to national law. The structure of article 221(4) is quite distinct from the equivalent provision of Regulation No 2988/95 in issue in Ze Fu Fleischhandel GmbH v Hauptzollamt Hamburg Jonas (Joined Cases C 201/10 and C 202/10) [2011] ECR I 3545 (Fleischhandel) (para 23 above), which gave member states the option of providing a limitation period and so the principles of EU law applied to any exercise of that member state option. Lord Briggs makes this point, and other points with which I agree, at paras 32 to 37 of his judgment. Contrary to FMXs submission, it is in my judgment beyond the reach of a purposive interpretation to read a similar provision into article 221(4). The principle of legal certainty applies to acts done by EU institutions and member states in exercise of the powers conferred by them under EU rules: see Valsts iemumu dienests v Veloserviss SIA (Case C 427/14) EU:C:2015:803 (Veloserviss), para 30 and see Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs) [2012] UKSC 19; [2012] 2 AC 337, para 146 per Lord Sumption. Legal certainty may apply to the imposition of criminal offences when done under a power conferred by the treaties or EU legislation: see Hannl + Hofstetter Internationale Spedition GmbH v Finanzlandesdirektion fr Wien, Niedersterreich und Burgenland (Case C 91/02) [2003] ECR I 12077 which contrary to the submission of FMX, is therefore distinguishable from article 221(4). Proceedings to recover payments exacted in breach of EU law also stand in a different category because they are required by EU law to give effect to EU law. On that basis, I would distinguish the decisions of the CJEU in Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs) (Case C 362/12) [2014] AC 1161, Marks & Spencer plc v Customs and Excise Comrs (Case C 62/00) [2003] QB 866 and Halifax plc v Customs and Excise Comrs (Case C 255/02) [2006] Ch 387, on which FMX relies as showing that EU principles apply even to domestic proceedings. It follows that the Court of Appeal were wrong to extract from Fleischhandel a principle of EU law that, where a remedy was left to domestic law, there always had to be a finite limitation period fixed in advance. Firma Ernst Kollmer Fleischimport und export v Hauptzollamt Hamburg Jonas (Case C 59/14) EU:C:2015:660, discussed by Lord Briggs in para 28 above, is similarly distinguishable. Article 221(4) leaves it to domestic law to determine whether the communication of a post clearance demand under that sub article is valid. The provisions referred to in article 221(4) include provisions contained in EU law as well as national law (article 4(23) of the Customs Code). Moreover, the term provisions has an extended meaning and is not limited to provisions in legislation. This may be seen from article 221(1). One of the conditions applying to the communications is that they must follow appropriate procedures (see article 221(1)). In Belgische Staat v Molenbergnatie NV (Case C 201/04) [2006] ECR I 2049, para 53 the CJEU held that, in the absence of EU legislation or national law setting out appropriate procedures, the competent authorities in the member states had to ensure that the communication would allow persons liable for customs debts to have full knowledge of their rights. That decision clearly indicates that the provisions mentioned in article 221(4) need not be rules of law but may be administrative practices. But there still has to be a provision: a principle of EU law is not enough because EU law under article 221(4) defers to national law. section 37(2)(a) of the Limitation Act 1980 (para 15 above). The CJEU has accepted that national law may not impose a limitation period in the context of the recovery of state aid: see, for example, Italian Republic v Commission of the European Communities (Case C 298/00 P) [2004] ECR I 4087, paras 82 to 91. There is no reason to suggest that it would not similarly accept the notion in other areas. Likewise the Court of Appeal in Revenue and Customs Comrs v GMAC (UK) plc [2016] EWCA Civ 1015; [2017] STC 1247, para 150 (a decision in which the leading judgment was given by Floyd LJ, with which Theis J and I agreed) held that, where proceedings were governed by national law, it was possible for there to be no period of limitation. I do not accept FMXs submission that this holding is inapplicable because the case concerned a claim by the taxpayer and not one, as here, by the state since, as HMRC points out, the need for certainty would exist so far as the taxpayer is concerned in both situations. In England and Wales, there is no statutory limitation period because of There was a further ruling by the Court of Appeal in GMAC (UK) plc which is not relevant in this case. The court concluded, in agreement with the earlier decision of the Court of Appeal in British Telecommunications plc v Revenue and Customs Comrs [2014] EWCA Civ 433; [2014] STC 1926, that the EU reasonable time rule could not be applied to defeat the taxpayers claims for recovery of overpaid VAT because HMRC had invalidly imposed a condition that the taxpayer had to prove in an insolvency in order to claim bad debt relief and there was no indication in the domestic legislation that a reasonable time limit for making a claim was being imposed. That ruling turned on the domestic law provisions and has no resonance for this appeal. Contrary to Lord Briggs at para 29 above, I consider that some minor assistance can be gained in the present case from Veloserviss since at para 37 the CJEU made it clear that customs authorities could act under article 221(4) after expiry of the three year period, and made no reference to the need for any limitation period in domestic law. Even applying the extended meaning of provision explained above, there is, so far as this court has been informed, no relevant provision of EU law stipulating the limit of the period within which a communication must be made. As the CJEU held in Agra, EU law defers to domestic law. Contrary to FMXs submissions, nothing in that case requires a member state to adopt a limitation period. All the CJEU holds is that the question of the effect of the elapse of time is a matter for national law. The timeliness of a communication of the post clearance demand is only a relevant issue in connection with proceedings for enforcement of the customs debt, and therefore logically it falls to be determined for that purpose under the domestic law governing the time bar. It follows that it is not, as I see it, relevant whether there was any finding of fact in these proceedings as to reasonable time or whether a reasonable time rule fulfils the EU principle of legal certainty. So far as the law of England and Wales is concerned, it has been said that there is a general duty to exercise statutory powers within a reasonable time: see R (S) v Secretary of State for the Home Department [2007] EWCA Civ 546; [2007] Imm AR 781, para 51 per Carnwath LJ. However, reasonableness is a flexible standard. If HMRC were to delay unreasonably in communicating a customs debt, it might also be said that its failure to make a decision was irrational in judicial review proceedings: see, for example, R v Inland Revenue Comrs, Ex p Opman International UK [1986] 1 WLR 568. It is not necessary to express a final view on these points and there may be a difference of approach between myself and Lord Briggs on this point (cf paras 38 to 39 above). It follows that, for the purpose of determining whether HMRC is time barred from recovering a post clearance customs debt under domestic law, I consider that the reasonable time principle in Sanders v Commission of the European Communities (Case T 45/01) [2004] ECR II 3315 (cf paras 45 to 46 above) is inapplicable. Under the principle of conferral, the reasonable period principle of EU law can only apply to any incidental issue of law concerning that communication to which EU law applies. It cannot restrict the operation of a domestic law to which EU law has been held by the CJEU to defer. Thus, in my judgment, it does not so apply in the circumstances under consideration. There may be other control mechanisms under domestic law, such as that of judicial review, as already mentioned. This may be one of the reasons why article 221(4) has now been revised. I need not question the parties agreement as to when the cause of action for a customs debt is complete (cf para 43 above). The question does not arise because there is no limitation period. Nor do I consider that any question of disapplying section 37(2)(a) arises (cf paras 40 44 above). In conclusion, for the reasons given above, which differ in part from those given by Lord Briggs, it is no answer to HMRCs case that they have duly communicated a post clearance customs debt for FMX, which seeks to uphold the decision of the Court of Appeal, to contend that in breach of EU law there is no limitation period fixed by the law of England and Wales for communicating a post clearance customs debt under article 221(4) of the Customs Code. I would also therefore allow this appeal. |
This is the judgment of the Court on the issue of whether a bribe or secret commission received by an agent is held by the agent on trust for his principal, or whether the principal merely has a claim for equitable compensation in a sum equal to the value of the bribe or commission. The answer to this rather technical sounding question, which has produced inconsistent judicial decisions over the past 200 years, as well as a great deal of more recent academic controversy, is important in practical terms. If the bribe or commission is held on trust, the principal has a proprietary claim to it, whereas if the principal merely has a claim for equitable compensation, the claim is not proprietary. The distinction is significant for two main reasons. First, if the agent becomes insolvent, a proprietary claim would effectively give the principal priority over the agents unsecured creditors, whereas the principal would rank pari passu, ie equally, with other unsecured creditors if he only has a claim for compensation. Secondly, if the principal has a proprietary claim to the bribe or commission, he can trace and follow it in equity, whereas (unless we develop the law of equitable tracing beyond its current boundaries) a principal with a right only to equitable compensation would have no such equitable right to trace or follow. The facts On 22 December 2004, FHR European Ventures LLP purchased the issued share capital of Monte Carlo Grand Hotel SAM (which owned a long leasehold interest in the Monte Carlo Grand Hotel) from Monte Carlo Grand Hotel Ltd (the Vendor) for 211.5m. The purchase was a joint venture between the claimants in these proceedings, for whom FHR was the vehicle. Cedar Capital Partners LLC provided consultancy services to the hotel industry, and it had acted as the claimants agent in negotiating the purchase. It is common ground that Cedar accordingly owed fiduciary duties to the claimants in that connection. Cedar had also entered into an agreement with the Vendor (the Exclusive Brokerage Agreement) dated 24 September 2004, which provided for the payment to Cedar of a 10m fee following a successful conclusion of the sale and purchase of the issued share capital of Monte Carlo Grand Hotel SAM. The Vendor paid Cedar 10m on or about 7 January 2005. On 23 November 2009 the claimants began these proceedings for recovery of the sum of 10m from Cedar (and others). The trial took place before Simon J, and the main issue was whether, as it contended, Cedar had made proper disclosure to the claimants of the Exclusive Brokerage Agreement. Simon J gave a judgment in which he found against Cedar on that issue [2012] 2 BCLC 39. There was then a further hearing to determine what order should be made in the light of that judgment, following which Simon J gave a further judgment [2013] 2 BCLC 1. In that judgment he concluded that he should (i) make a declaration of liability for breach of fiduciary duty on the part of Cedar for having failed to obtain the claimants fully informed consent in respect of the 10m, and (ii) order Cedar to pay such sum to the claimants, but (iii) refuse to grant the claimants a proprietary remedy in respect of the monies. The claimants appealed to the Court of Appeal against conclusion (iii), and it allowed the appeal for reasons given in a judgment given by Lewison LJ, with supporting judgments from Pill LJ and Sir Terence Etherton C [2014] Ch 1. Accordingly, the Court of Appeal made an order which included a declaration that Cedar received the 10m fee on constructive trust for the claimants absolutely. Cedar now appeals to the Supreme Court on that issue. There is and was no challenge by Cedar to the Judges conclusions (i) and (ii), so the only point on this appeal is whether, as the Court of Appeal held, the claimants are entitled to the proprietary remedy in respect of the 10m received by Cedar from the Vendor. Prefatory comments The following three principles are not in doubt, and they are taken from the classic summary of the law in the judgment of Millett LJ in Bristol and West Building Society v Mothew [1998] Ch 1, 18. First, an agent owes a fiduciary duty to his principal because he is someone who has undertaken to act for or on behalf of [his principal] in a particular matter in circumstances which give rise to a relationship of trust and confidence. Secondly, as a result, an agent must not make a profit out of his trust and must not place himself in a position in which his duty and his interest may conflict and, as Lord Upjohn pointed out in Boardman v Phipps [1967] 2 AC 46, 123, the former proposition is part of the [latter] wider rule. Thirdly, [a] fiduciary who acts for two principals with potentially conflicting interests without the informed consent of both is in breach of the obligation of undivided loyalty; he puts himself in a position where his duty to one principal may conflict with his duty to the other. Because of the importance which equity attaches to fiduciary duties, such informed consent is only effective if it is given after full disclosure, to quote Sir George Jessel MR in Dunne v English (1874) LR 18 Eq 524, 533. Another well established principle, which applies where an agent receives a benefit in breach of his fiduciary duty, is that the agent is obliged to account to the principal for such a benefit, and to pay, in effect, a sum equal to the profit by way of equitable compensation. The law on this topic was clearly stated in Regal (Hastings) Ltd v Gulliver (Note) (1942) [1967] 2 AC 134, 144 145, by Lord Russell, where he said this: The rule of equity which insists on those, who by use of a fiduciary position make a profit, being liable to account for that profit, in no way depends on fraud, or absence of bona fides; or upon such questions or considerations as whether the profit would or should otherwise have gone to the plaintiff, or whether the profiteer was under a duty to obtain the source of the profit for the plaintiff, or whether he took a risk or acted as he did for the benefit of the plaintiff, or whether the plaintiff has in fact been damaged or benefited by his action. The liability arises from the mere fact of a profit having, in the stated circumstances, been made. The principals right to seek an account undoubtedly gives him a right to equitable compensation in respect of the bribe or secret commission, which is the quantum of that bribe or commission (subject to any permissible deduction in favour of the agent eg for expenses incurred). That is because where an agent acquires a benefit in breach of his fiduciary duty, the relief accorded by equity is, again to quote Millett LJ in Mothew at p 18, primarily restitutionary or restorative rather than compensatory. The agents duty to account for the bribe or secret commission represents a personal remedy for the principal against the agent. However, the centrally relevant point for present purposes is that, at least in some cases where an agent acquires a benefit which came to his notice as a result of his fiduciary position, or pursuant to an opportunity which results from his fiduciary position, the equitable rule (the Rule) is that he is to be treated as having acquired the benefit on behalf of his principal, so that it is beneficially owned by the principal. In such cases, the principal has a proprietary remedy in addition to his personal remedy against the agent, and the principal can elect between the two remedies. Where the facts of a particular case are within the ambit of the Rule, it is strictly applied. The strict application of the Rule can be traced back to the well known decision in Keech v Sandford (1726) Sel Cas Ch 61, where a trustee held a lease of a market on trust for an infant, and, having failed to negotiate a new lease on behalf of the infant because the landlord was dissatisfied with the proposed security for the rent, the trustee negotiated a new lease for himself. Lord King LC concluded at p 62 that, though I do not say there is a fraud in this case and though it may seem hard, the infant was entitled to an assignment of the new lease and an account of the profits made in the meantime a conclusion which could only be justified on the basis that the new lease had been beneficially acquired for the infant beneficiary. Since then, the Rule has been applied in a great many cases. The question on this appeal is not so much concerned with the application of the Rule, as with its limits or boundaries. Specifically, what is in dispute is the extent to which the Rule applies where the benefit is a bribe or secret commission obtained by an agent in breach of his fiduciary duty to his principal. On the one hand, Mr Collings QC contends for the appellant, Cedar, that the Rule should not apply to a bribe or secret commission paid to an agent, because it is not a benefit which can properly be said to be the property of the principal. This has the support of Professor Sir Roy Goode, who has suggested that no proprietary interest arises where an agent obtains a benefit in breach of his duty unless the benefit either (i) flows from an asset which was (a) beneficially owned by the principal, or (b) intended for the principal, or (ii) was derived from an activity of the agent which, if he chose to undertake it, he was under an equitable duty to undertake for the principal. Sir Roy suggested that to treat [a principal] as having a restitutionary proprietary right to money or property not derived from any asset of [the principal] results in an involuntary grant by [the agent] to [the principal] from [the agents] pre existing estate Proprietary Restitutionary Claims in Restitution: Past, Present and Future (1998) ed Cornish, p 69 and see more recently (2011) 127 LQR 493. Professor Sarah Worthington has advanced a slightly different test. She suggests (summarising at the risk of oversimplifying) that proprietary claims arise where benefits are (i) derived from the principals property, or (ii) derived from opportunities in the scope of the agents endeavours on behalf of the principal, but not (iii) benefits derived from opportunities outside the scope of those endeavours Fiduciary Duties and Proprietary Remedies: Addressing the Failure of Equitable Formulae (2013) 72 CLJ 720. On the other hand, it is suggested by Mr Pymont QC on behalf of the respondent claimants in this appeal, that the Rule does apply to bribes or secret commissions received by an agent, because, in any case where an agent receives a benefit, which is, or results from, a breach of the fiduciary duty owed to his principal, the agent holds the benefit on trust for the principal. This view has been supported by Lord Millett writing extra judicially. In Bribes and Secret Commissions [1993] Rest LR 7, he suggested that, on grounds of practicality, policy and principle, a principal should be beneficially entitled to a bribe or secret commission received by his agent and see more recently, (2012) 71 CLJ 583. He bases his conclusion on the proposition that equity will not permit the agent to rely on his own breach of fiduciary duty to justify retaining the benefit on the ground that it was a bribe or secret commission, and will assume that he acted in accordance with his duty, so that the benefit must be the principals. This approach is also supported by Lionel Smith, Constructive trusts and the no profit rule (2013) 72 CLJ 260, whose view, in short, is that the basic rule should be that an agent who obtains a benefit in breach of his fiduciary duty to his principal holds that benefit on trust for his principal. The decision as to which view is correct must be based on legal principle, decided cases, policy considerations, and practicalities. We start by summarising the effect of many of the cases which touch on the issue; we then turn to the policy and practical arguments, and finally we express our conclusion. The decided cases There is a number of 19th century cases not involving bribes or secret commissions, where an agent or other fiduciary makes an unauthorised profit by taking advantage of an opportunity which came to his attention as a result of his agency and judges have reached the conclusion that the Rule applied. Examples include Carter v Palmer (1842) 8 Cl & F 657, where a barrister who purchased his clients bills at a discount was held by Lord Cottenham to have acquired them for his client. The Privy Council in Bowes v City of Toronto (1858) 11 Moo PC 463 concluded that the mayor of a city who bought discounted debentures issued by the city was in the same position as an agent vis vis the city, and was to be treated as holding the debentures on trust for the city. Bagnall v Carlton (1877) 6 Ch D 371 involved complex facts, but, pared to a minimum, agents for a prospective company who made secret profits out of a contract made by the company were held to be trustees for the company of those profits (per James, Baggallay and Cotton LJJ). In the Privy Council case of Cook v Deeks [1916] 1 AC 554, a company formed by the directors of a construction company was held to have entered into a contract on behalf of the construction company as the directors only knew of the contractual opportunity by virtue of their directorships. In Phipps v Boardman [1964] 1 WLR 993 (affirmed [1965] Ch 992, and [1967] 2 AC 46), where agents of certain trustees purchased shares, in circumstances where they only had that opportunity because they were agents, Wilberforce J held that the shares were held beneficially for the trust. More recently, in Bhullar v Bhullar [2003] 2 BCLC 241, the Court of Appeal reached the same conclusion on similar facts to those in Cook (save that the asset acquired was a property rather than a contract). Jonathan Parker LJ said this at para 28: [W]here a fiduciary has exploited a commercial opportunity for his own benefit, the relevant question, in my judgment, is not whether the party to whom the duty is owed (the company, in the instant case) had some kind of beneficial interest in the opportunity: in my judgment that would be too formalistic and restrictive an approach. Rather, the question is simply whether the fiduciarys exploitation of the opportunity is such as to attract the application of the rule. Turning now to cases concerned with bribes and secret commissions, the effect of the reasoning of Lord Lyndhurst LC in Fawcett v Whitehouse (1829) 1 Russ & M 132 was that an agent, who was negotiating on behalf of a prospective lessee and who accepted a loan from the lessor, held the loan on trust for his principal, the lessee. In Barker v Harrison (1846) 2 Coll 546, a vendors agent had secretly negotiated a sub sale of part of the property from the purchaser at an advantageous price, and Sir James Knight Bruce V C held that that asset was held on trust for the vendor. In In re Western of Canada Oil, Lands and Works Co, Carling, Hespeler, and Walshs Cases (1875) 1 Ch D 115, the Court of Appeal (James and Mellish LJJ, Bramwell B and Brett J) held that shares transferred by a person to individuals to induce them to become directors of a company and to agree that the company would buy land from the person, were held by the individuals on trust for the company. In In re Morvah Consols Tin Mining Co, McKays Case (1875) 2 Ch D 1, the Court of Appeal (Mellish and James LJJ and Brett J) decided that where a company bought a mine, shares in the vendor which were promised to the companys secretary were held by him for the company beneficially. The Court of Appeal (Sir George Jessel MR and James and Baggallay LJJ) in In re Caerphilly Colliery Co, Pearsons Case (1877) 5 Ch D 336 concluded that a company director, who received shares from the promoters and then acted for the company in its purchase of a colliery from the promoters, held the shares on trust for the company. In Eden v Ridsdale Railway Lamp and Lighting Co Ltd (1889) 23 QBD 368, a company was held by the Court of Appeal (Lord Esher MR and Lindley and Lopes LJJ) to be entitled as against a director to shares which he had secretly received from a person with whom the company was negotiating. There are a number of other 19th century decisions to this effect, but it is unnecessary to cite them. Inducements and other benefits offered to directors and trustees have been treated similarly. In Sugden v Crossland (1856) 2 Sm & G 192, Sir William Page Wood V C held that a sum of money paid to a trustee to persuade him to retire in favour of the payee was to be treated as a part of the trust fund. Similarly, in Nant y glo and Blaina Ironworks Co v Grave (1878) 12 Ch D 738, shares in a company given by a promoter to the defendant to induce him to become a director were held by Sir James Bacon V C to belong to the company. In Williams v Barton [1927] 2 Ch 9, Russell J decided that a trustee, who recommended that his co trustees use stockbrokers who gave him a commission, held the commission on trust for the trust. The common law courts were meanwhile taking the same view. In Morison v Thompson (1874) LR 9 QBD 480, Cockburn CJ, with whom Blackburn and Archibald JJ agreed, held that a purchasers agent who had secretly agreed to accept a commission from the vendor of a ship, held the commission for the benefit of his principal, the purchaser, in common law just as he would have done in equity see at p 484, where Cockburn CJ referred to the earlier decision of Lord Ellenborough CJ to the same effect in Diplock v Blackburn (1811) 3 Camp 43. In Whaley Bridge Calico Printing Co v Green (1879) 5 QBD 109, Bowen J (albeit relying on equity at least in part) held that a contract between the vendor and a director of the purchaser, for a secret commission to be paid out of the purchase money, was to be treated as having been entered into for the benefit of the purchaser without proof of fraud. It is fair to say that in the majority of the cases identified in the previous five paragraphs it does not appear to have been in dispute that, if the recipient of the benefit had received it in breach of his fiduciary duty to the plaintiff, then he held it on trust for the plaintiff. In other words, it appears to have been tacitly accepted that the Rule applied, so that the plaintiff was entitled not merely to an equitable account in respect of the benefit, but to the beneficial ownership of the benefit. However, many of those cases contain observations which specifically support the contention that the Rule applies to all benefits which are received by an agent in breach of his fiduciary duty. In Sugden at p 194, Sir William Page Wood V C said that it is a well settled principle that if a trustee make a profit of his trusteeship, it shall enure to the benefit of his cestuique trusts. And in McKays Case at p 5, Mellish LJ said that it was quite clear that, according to the principles of a Court of Equity, all the benefit which the agent of the purchaser receives under such circumstances from the vendor must be treated as received for the benefit of the purchaser. In Carlings Case at p 124, James LJ said the arrangement amounted to a a simple bribe or present to the directors, constituting a breach of trust on their part and that the company would be entitled to get back from their unfaithful trustees what the unfaithful trustees had acquired by reason of their breach of trust. In Pearsons Case Sir George Jessel MR said at pp 340 341 that the director as agent could not retain that present as against the actual purchasers and must be deemed to have obtained [the benefit] under circumstances which made him liable, at the option of the cestuis que trust, to account either for the value or for the thing itself . In Eden, Lord Esher said at p 371 that if an agent put[s] himself in a position which the law does not allow [him] to assume he commit[s] a wrong against his principal, and [i]f that which the agent has received is money he must hand it over to his principal, if it is not money, but something else, the principal may insist on having it. Lindley and Lopes LJJ each said that they were of the same opinion as Lord Esher, and Lindley LJ observed at p 372 that it would be contrary to all principles of law and equity to allow the plaintiff to retain the gift. It is also worth noting that in Morison at pp 485 486, Cockburn CJ quoted with approval from two contemporary textbooks. First, he cited Story on Agency, para 211, where it was said that it could be laid down as a general principle, that, in all cases when a person is an agent for other persons, all profits and advantages made by him in the business, beyond his ordinary compensation, are to be for the benefit of his employers. Secondly, he referred to Paley on Principal and Agent, p 51, which stated that not only interest, but every other sort of profit or advantage, clandestinely derived by an agent from dealing or speculating with his principals effects, is the property of the latter, and must be accounted for. The cases summarised in paras 13 17 above and the observations set out in paras 19 20 above are all consistent with the notion that the Rule should apply to bribes or secret commissions paid to an agent, so that the agent holds them on trust for his principal, rather than simply having an equitable duty to account to his principal. It is true that in many of those cases there was apparently no argument as to whether the benefit obtained by the fiduciary was actually held on trust for the principal. However, in some of the cases there was a dispute on the nature of the relief; in any event, the fact that it was assumed time and again by eminent barristers and judges must carry great weight. However, there is one decision of the House of Lords which appears to go the other way, and several decisions of the Court of Appeal which do go the other way, in that they hold that, while a principal has a claim for equitable compensation in respect of a bribe or secret commission received by his agent, he has no proprietary interest in it. The House of Lords decision is Tyrrell v Bank of London (1862) 10 HL Cas 26. The facts of the case are somewhat complex and the reasoning of the opinions of Lord Westbury LC, Lord Cranworth and Lord Chelmsford is not always entirely easy to follow. The decision has been carefully and interestingly analysed by Professor Watts, Tyrrell v Bank of London an Inside Look at an Inside Job (2013) 129 LQR 527. In very brief terms, a solicitor retained to act for a company in the course of formation secretly arranged to benefit from his prospective clients anticipated acquisition of a building called the Hall of Commerce by obtaining from the owner a 50% beneficial interest in a parcel of land consisting of the Hall and some adjoining land. After the client had purchased the Hall from the owner, it discovered that the solicitor had secretly profited from the transaction and sued him. Sir John Romilly MR held that the solicitor had held on trust for the client both (i) his interest in (and therefore his subsequent share of the proceeds of sale of) the Hall, and (ii) with very considerable hesitation, his interest in the adjoining land (1859) 27 Beav 273, especially at p 300. On appeal, the House of Lords held that, while the Master of the Rolls was right about (i), he was wrong about (ii): although the client had an equitable claim for the value of the solicitors interest in the adjoining land, it had no proprietary interest in that land. Lord Westbury LC made it clear at pp 39 40 that the fact that the client had not been formed by the time that the solicitor acquired his interest in the land did not prevent the claim succeeding as the client had been conceived, and was in the process of formation. He also made it clear at p 44 that, in respect of the profit which the solicitor made from his share of the Hall (which he described as the subject matter of the transaction, and, later at p 45, that particular property included in the [clients] contract), the solicitor must be converted into a trustee for the [client]. However, he was clear that no such trust could arise in relation to the adjoining land, which was outside the limit of the agency, and so there [was] no privity, nor any obligation, although the solicitor must account for the value of that property p 46. Lord Cranworth agreed, making it clear that the financial consequences for the solicitor were no different from those that followed from the Master of the Rolls order, although he had thought that possibly we might arrive at the conclusion that the decree was, not only in substance, but also in form, perfectly correct p 49. Lord Chelmsford agreed, and discussed bribes at pp 59 60, holding that the principal had no right to a bribe received by his agent. Although there have been suggestions that, with the exception of Lord Chelmsfords obiter dicta about bribes, the decision of the House of Lords in Tyrrell was not inconsistent with the respondents case on this appeal, it appears clear that it was. If, as the House held, the solicitor was liable to account to the client for the profit which he had made on the adjoining land, that can only have been because it was a benefit which he had received in breach of his fiduciary duty; and, once that is established, then, on the respondents case, the Rule would apply, and that profit would be held on trust for the client (or, more accurately, his share of the adjoining land would be held on trust), as in Fawcett, Sugden, Carter, Bowes and Barker, all of which had been decided before Tyrrell, and of which only Fawcett was cited to the House. We turn to the Court of Appeal authorities which are inconsistent with the notion that the Rule applies to bribes or secret commissions. In Metropolitan Bank v Heiron (1880) 5 Ex D 319, the Court of Appeal held that a claim brought by a company against a director was time barred: the claim was to recover a bribe paid by a third party to induce the director to influence the company to negotiate a favourable settlement with the third party. It was unsuccessfully argued by the bank that its claim was proprietary. Brett LJ said at p 324 [n]either at law nor in equity could this sum be treated as the money of the company, but he apparently considered that, once the company had obtained judgment for the money there could be a trust. Cotton LJ expressed the same view. James LJ simply thought that there was an equitable debt and applied the Limitation Acts by analogy. This approach was followed in Lister & Co v Stubbs (1890) 45 Ch D 1, where an agent of a company had accepted a bribe from one of its clients, and an interlocutory injunction was refused on the ground that the relationship between the company and its agent was that of creditor and debtor not beneficiary and trustee. Cotton LJ said at p 12 that the money which [the agent] has received cannot be treated as being the money of the [company]. Lindley LJ agreed and said at p 15 that the notion that there was a trust startle[d] him, not least because it would give the company the right to the money in the event of the agents bankruptcy. Bowen LJ agreed. Lister was cited with approval by Lindley LJ in In re North Australian Territory Co, Archers case [1892] 1 Ch 322, 338, and it was followed in relation to a bribe paid to an agent by Sir Richard Henn Collins MR (with whom Stirling and Mathew LJJ agreed) in Powell & Thomas v Evan Jones & Co [1905] 1 KB 11, 22, where the principal was held entitled to an account for the bribe, but not to a declaration that the bribe was held on trust. The same view was taken in the Court of Appeal in Attorney Generals Reference (No 1 of 1985) [1986] QB 491, 504 505, where Lord Lane CJ quoted from the judgments of Cotton and Lindley LJJ in what he described as a powerful Court of Appeal in Lister, and followed the reasoning. In Regal (Hastings), the decision in Lister was referred to by Lord Wright at p 156, as supporting the notion that the relationship in such a case is that of debtor and creditor, not trustee and cestui que trust. However, that was an obiter observation, and it gets no support from the other members of the committee. More recently, in 1993, in Attorney General for Hong Kong v Reid, the Privy Council concluded that bribes received by a corrupt policeman were held on trust for his principal, and so they could be traced into properties which he had acquired in New Zealand. In his judgment on behalf of the Board, Lord Templeman disapproved the reasoning in Heiron, and the reasoning and outcome in Lister, and he thought his conclusion inconsistent with only one of the opinions, that of Lord Chelmsford, in Tyrrell. In Daraydan Holdings Ltd v Solland International Ltd [2005] Ch 119, paras 75ff, Lawrence Collins J indicated that he would follow Reid rather than Lister, as did Toulson J in Fyffes Group Ltd v Templeman [2000] 2 Lloyds Rep 643, 668 672. But in Sinclair Investments Ltd v Versailles Trade Finance Ltd [2012] Ch 453, in a judgment given by Lord Neuberger MR, the Court of Appeal decided that it should follow Heiron and Lister, and indeed Tyrrell, for a number of reasons set out in paras 77ff, although it accepted that this Court might follow the approach in Reid. In this case, Simon J considered that he was bound by Sinclair, whereas the Court of Appeal concluded that they could and should distinguish it. Legal principle and academic articles As mentioned above, the issue raised on this appeal has stimulated a great deal of academic debate. The contents of the many articles on this issue provide an impressive demonstration of penetrating and stimulating legal analysis. One can find among those articles a powerful case for various different outcomes, based on analysing judicial decisions and reasoning, equitable and restitutionary principles, and practical and commercial realities. It is neither possible nor appropriate to do those articles justice individually in this judgment, but the court has referred to them for the purpose of extracting the principle upon which the Rule is said to be based. In addition to those referred to in paras 10, 11 and 23 above, those articles include Hayton, The Extent of Equitable Remedies: Privy Council versus the Court of Appeal [2012] Co Law 161, Swadling, Constructive trusts and breach of fiduciary duty (2012) 18 Trusts and Trustees 985, Virgo, Profits Obtained in Breach of Fiduciary Duty: Personal or Proprietary Claim? (2011) 70 CLJ 502, Edelman Two Fundamental Questions for the Law of Trusts (2013) 129 LQR 66 and others listed by Sir Terence Etherton, The Legitimacy of Proprietary Relief, (2014) Birkbeck Law Review vol 2(1), 59, at p 60. At p 62 Sir Terence refers to this relentess and seemingly endless debate, which, in the Court of Appeal in this case, Pill LJ described as revealing passions of a force uncommon in the legal world [2014] Ch 1, para 61. The respondents formulation of the Rule, namely that it applies to all benefits received by an agent in breach of his fiduciary duty to his principal, is explained on the basis that an agent ought to account in specie to his principal for any benefit he has obtained from his agency in breach of his fiduciary duty, as the benefit should be treated as the property of the principal, as supported by many judicial dicta including those in para 19 above, and can be seen to be reflected in Jonathan Parker LJs observations in para 14 above. More subtly, it is justified on the basis that equity does not permit an agent to rely on his own wrong to justify retaining the benefit: in effect, he must accept that, as he received the benefit as a result of his agency, he acquired it for his principal. Support for that approach may be found in Mellish LJs judgment in McKays Case at p 6, and Bowen Js judgment in Whaley Bridge at p 113. The appellants formulation of the Rule, namely that it has a more limited reach, and does not apply to bribes and secret commissions, has, as mentioned in para 10 above, various different formulations and justifications. Thus, it is said that, given that it is a proprietary principle, the Rule should not apply to benefits which were not derived from assets which are or should be the property of the principal, a view supported by the reasoning of Lord Westbury in Tyrrell. It has also been suggested that the Rule should not apply to benefits which could not have been intended for the principal and were, rightly or wrongly, the property of the agent, which seems to have been the basis of Cotton LJs judgment in Heiron at p 325 and Lister at p 12. In Sinclair, it was suggested that the effect of the authorities was that the Rule should not apply to a benefit which the agent had obtained by taking advantage of an opportunity which arose as a result of the agency, unless the opportunity was properly that of the [principal] para 88. Professor Worthingtons subsequent formulation, referred to in para 10 above, is very similar but subtly different (and probably more satisfactory). Each of the formulations set out in paras 30 and 31 above have their supporters and detractors. In the end, it is not possible to identify any plainly right or plainly wrong answer to the issue of the extent of the Rule, as a matter of pure legal authority. There can clearly be different views as to what requirements have to be satisfied before a proprietary interest is created. More broadly, it is fair to say that the concept of equitable proprietary rights is in some respects somewhat paradoxical. Equity, unlike the common law, classically acts in personam (see eg Maitland, Equity, p 9); yet equity is far more ready to accord proprietary claims than common law. Further, two general rules which law students learn early on are that common law legal rights prevail over equitable rights, and that where there are competing equitable rights the first in time prevails; yet, given that equity is far more ready to recognise proprietary rights than common law, the effect of having an equitable right is often to give priority over common law claims sometimes even those which may have preceded the equitable right. Given that equity developed at least in part to mitigate the rigours of the common law, this is perhaps scarcely surprising. However, it underlines the point that it would be unrealistic to expect complete consistency from the cases over the past 300 years. It is therefore appropriate to turn to the arguments based on principle and practicality, and then to address the issue, in the light of those arguments as well as the judicial decisions discussed above. Arguments based on principle and practicality The position adopted by the respondents, namely that the Rule applies to all unauthorised benefits which an agent receives, is consistent with the fundamental principles of the law of agency. The agent owes a duty of undivided loyalty to the principal, unless the latter has given his informed consent to some less demanding standard of duty. The principal is thus entitled to the entire benefit of the agents acts in the course of his agency. This principle is wholly unaffected by the fact that the agent may have exceeded his authority. The principal is entitled to the benefit of the agents unauthorised acts in the course of his agency, in just the same way as, at law, an employer is vicariously liable to bear the burden of an employees unauthorised breaches of duty in the course of his employment. The agents duty is accordingly to deliver up to his principal the benefit which he has obtained, and not simply to pay compensation for having obtained it in excess of his authority. The only way that legal effect can be given to an obligation to deliver up specific property to the principal is by treating the principal as specifically entitled to it. On the other hand, there is some force in the notion advanced by the appellant that the Rule should not apply to a bribe or secret commission paid to an agent, as such a benefit is different in quality from a secret profit he makes on a transaction on which he is acting for his principal, or a profit he makes from an otherwise proper transaction which he enters into as a result of some knowledge or opportunity he has as a result of his agency. Both types of secret profit can be said to be benefits which the agent should have obtained for the principal, whereas the same cannot be said about a bribe or secret commission which the agent receives from a third party. The respondents formulation of the Rule has the merit of simplicity: any benefit acquired by an agent as a result of his agency and in breach of his fiduciary duty is held on trust for the principal. On the other hand, the appellants position is more likely to result in uncertainty. Thus, there is more than one way in which one can identify the possible exceptions to the normal rule, which results in a bribe or commission being excluded from the Rule see the differences between Professor Goode and Professor Worthington described in paras 10 and 32 above, and the other variations there described. Clarity and simplicity are highly desirable qualities in the law. Subtle distinctions are sometimes inevitable, but in the present case, as mentioned above, there is no plainly right answer, and, accordingly, in the absence of any other good reason, it would seem right to opt for the simple answer. A further advantage of the respondents position is that it aligns the circumstances in which an agent is obliged to account for any benefit received in breach of his fiduciary duty and those in which his principal can claim the beneficial ownership of the benefit. Sir George Jessel MR in Pearsons Case at p 341 referred in a passage cited above to the agent in such a case having to account either for the value or for the thing itself . The expression equitable accounting can encompass both proprietary and non proprietary claims. However, if equity considers that in all cases where an agent acquires a benefit in breach of his fiduciary duty to his principal, he must account for that benefit to his principal, it could be said to be somewhat inconsistent for equity also to hold that only in some such cases could the principal claim the benefit as his own property. The observation of Lord Russell in Regal (Hastings) quoted in para 6 above, and those of Jonathan Parker LJ in Bhullar quoted in para 14 above would seem to apply equally to the question of whether a principal should have a proprietary interest in a bribe or secret commission as to the question of whether he should be entitled to an account in respect thereof. The notion that the Rule should not apply to a bribe or secret commission received by an agent because it could not have been received by, or on behalf of, the principal seems unattractive. The whole reason that the agent should not have accepted the bribe or commission is that it puts him in conflict with his duty to his principal. Further, in terms of elementary economics, there must be a strong possibility that the bribe has disadvantaged the principal. Take the facts of this case: if the vendor was prepared to sell for 211.5m, on the basis that it was paying a secret commission of 10m, it must be quite likely that, in the absence of such commission, the vendor would have been prepared to sell for less than 211.5m, possibly 201.5m. While Simon J was not prepared to make such an assumption without further evidence, it accords with common sense that it should often, even normally, be correct; indeed, in some cases, it has been assumed by judges that the price payable for the transaction in which the agent was acting was influenced pro rata to account for the bribe see eg Fawcett at p 136. The artificiality and difficulties to which the appellants case can give rise may be well illustrated by reference to the facts in Eden and in Whaley Bridge. In Eden, the promoter gave 200 shares to a director of the company when there were outstanding issues between the promoter and the company. The Court of Appeal held that the director held the shares on trust for the company. As Finn J said in Grimaldi v Chameleon Mining NL (No 2) (2012) 287 ALR 22, para 570, the effect of that decision, if Heiron and Lister were rightly decided, would appear to be that where a bribe is paid to an agent, the principal has a proprietary interest in the bribe if it consists of shares but not if it consists of money, which would be a serious anomaly. In Whaley Bridge, a director of a company who negotiated a purchase by the company for 20,000 of a property was promised but did not receive 3,000 out of the 20,000 from the vendor. The outcome according to Bowen J was that the vendor was liable to the company for the 3,000, because the company was entitled to treat the contract between the vendor and the director as made by the director on behalf of the company. Bowen J held that it could not be successfully denied that if the 3,000 had been paid to the director he would have held it on trust for the company. Mr Collings suggested that the decision was correct because, unlike in this case, the director and vendor had agreed that the 3,000 would come out of the 20,000 paid by the company. Not only is there no trace of such reasoning in Bowen Js judgment, but it would be artificial, impractical and absurd if the issue whether a principal had a proprietary interest in a bribe to his agent depended on the mechanism agreed between the briber and the agent for payment of the bribe. The notion that an agent should not hold a bribe or commission on trust because he could not have acquired it on behalf of his principal is somewhat inconsistent with the long standing decision in Keech, the decision in Phipps approved by the House of Lords, and the Privy Council decision in Bowes. In each of those three cases, a person acquired property as a result of his fiduciary or quasi fiduciary position, in circumstances in which the principal could not have acquired it: yet the court held that the property concerned was held on trust for the beneficiary. In Keech, the beneficiary could not acquire the new lease because the landlord was not prepared to let to him, and because he was an infant; in Boardman, the trust could not acquire the shares because they were not authorised investments; in Bowes, the city corporation would scarcely have been interested in buying the loan notes which it had just issued to raise money. The respondents are also able to point to a paradox if the appellant is right and a principal has no proprietary right to his agents bribe or secret commission. If the principal has a proprietary right, then he is better off, and the agent is worse off, than if the principal merely has a claim for equitable compensation. It would be curious, as Mr Collings frankly conceded, if a principal whose agent wrongly receives a bribe or secret commission is worse off than a principal whose agent obtains a benefit in far less opprobrious circumstances, eg the benefit obtained by the trustees agents in Boardman. Yet that is the effect if the Rule does not apply to bribes or secret commissions. Wider policy considerations also support the respondents case that bribes and secret commissions received by an agent should be treated as the property of his principal, rather than merely giving rise to a claim for equitable compensation. As Lord Templeman said giving the decision of the Privy Council in Attorney General for Hong Kong v Reid [1994] 1 AC 324, 330H, [b]ribery is an evil practice which threatens the foundations of any civilised society. Secret commissions are also objectionable as they inevitably tend to undermine trust in the commercial world. That has always been true, but concern about bribery and corruption generally has never been greater than it is now see for instance, internationally, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions 1999 and the United Nations Convention against Corruption 2003, and, nationally, the Bribery Acts 2010 and 2012. Accordingly, one would expect the law to be particularly stringent in relation to a claim against an agent who has received a bribe or secret commission. On the other hand, a point frequently emphasised by those who seek to justify restricting the ambit of the Rule is that the wide application for which the respondents contend will tend to prejudice the agents unsecured creditors, as it will serve to reduce the estate of the agent if he becomes insolvent. This was seen as a good reason in Sinclair for not following Reid see at [2012] Ch 453, para 83. While the point has considerable force in some contexts, it appears to us to have limited force in the context of a bribe or secret commission. In the first place, the proceeds of a bribe or secret commission consists of property which should not be in the agents estate at all, as Lawrence Collins J pointed out in Daraydan, para 78 (although it is fair to add that insolvent estates not infrequently include assets which would not be there if the insolvent had honoured his obligations). Secondly, as discussed in para 37 above, at any rate in many cases, the bribe or commission will very often have reduced the benefit from the relevant transaction which the principal will have obtained, and therefore can fairly be said to be his property. Nonetheless, the appellants argument based on potential prejudice to the agents unsecured creditors has some force, but it is, as we see it, balanced by the fact that it appears to be just that a principal whose agent has obtained a bribe or secret commission should be able to trace the proceeds of the bribe or commission into other assets and to follow them into the hands of knowing recipients (as in Reid). Yet, as Mr Collings rightly accepts, tracing or following in equity would not be possible, at least as the law is currently understood, unless the person seeking to trace or follow can claim a proprietary interest. Common law tracing is, of course, possible without a proprietary interest, but it is much more limited than equitable tracing. Lindley LJ in Lister at p 15 appears to have found it offensive that a principal should be entitled to trace a bribe, but he did not explain why, and we prefer the reaction of Lord Templeman in Reid, namely that a principal ought to have the right to trace and to follow a bribe or secret commission. Finally, on this aspect, it appears that other common law jurisdictions have adopted the view that the Rule applies to all benefits which are obtained by a fiduciary in breach of his duties. In the High Court of Australia, Deane J said in Chan v Zacharia (1984) 154 CLR 178, 199 that any benefit obtained in circumstances where a conflict . existed or by reason of his fiduciary position or of opportunity or knowledge resulting from it is held by the fiduciary as constructive trustee. More recently, the Full Federal Court of Australia has decided not to follow Sinclair: see Grimaldi, where the decision in Reid was preferred see the discussion at paras 569 584. Although the Australian courts recognise the remedial constructive trust, that was only one of the reasons for not following Sinclair. As Finn J who gave the judgment of the court said at para 582 (after describing Heiron and Lister as imposing an anomalous limitation on the reach of Keech v Sandford at para 569), Australian law in this connection matches that of New Zealand , Singapore, United States jurisdictions and Canada. As overseas countries secede from the jurisdiction of the Privy Council, it is inevitable that inconsistencies in the common law will develop between different jurisdictions. However, it seems to us highly desirable for all those jurisdictions to learn from each other, and at least to lean in favour of harmonising the development of the common law round the world. Conclusions The considerations of practicality and principle discussed in paras 33 44 above appear to support the respondents case, namely that a bribe or secret commission accepted by an agent is held on trust for his principal. The position is perhaps rather less clear when one examines the decided cases, whose effect we have summarised in paras 13 28 above. However, to put it at its lowest, the authorities do not preclude us adopting the respondents case in that they do not represent a clear and consistent line of authority to the contrary effect. Indeed, we consider that, taken as a whole, the authorities favour the respondents case. First, if one concentrates on the issue of bribes or secret commissions paid to an agent or other fiduciary, the cases, with the exception of Tyrrell, were consistently in favour of such payments being held on trust for the principal or other beneficiary until the decision in Heiron which was then followed in Lister. Those two decisions are problematical for a number of reasons. First, relevant authority was not cited. None of the earlier cases referred to in paras 13, 14 or 16 above were put before the court in Heiron (where the argument seems to have been on a very different basis) or in Lister. Secondly, all the judges in those two cases had given earlier judgments which were inconsistent with their reasoning in the later ones. Brett LJ (who sat in Heiron) had been party to the decision in McKays and Carlings Cases; Cotton LJ (who sat in Heiron and Lister) had been party to Bagnall (which was arguably indistinguishable), James LJ (who sat in Heiron) was party to Pearsons and McKays Cases, as well as Bagnall; Lindley LJ (who sat in Lister) had been party to Eden; and Bowen LJ (who sat in Lister) had decided Whaley Bridge. Thirdly, the notion, adopted by Cotton and Brett LJJ that a trust might arise once the court had given judgment for the equitable claim seems to be based on some sort of remedial constructive trust which is a concept not referred to in earlier cases, and which has authoritatively been said not to be part of English law see per Lord Browne Wilkinson in Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, 714 716. Fourthly, the decisions in Heiron and Lister are difficult to reconcile with many cases not concerned with bribes or secret commissions paid to agents, such as those set out in paras 12, 13 and 15 above. If the reasoning in Heiron and Lister is correct, then either those other cases were wrongly decided or the law is close to incoherent in this area. As for the domestic cases subsequent to Lister, they are all explicable on the basis that it was either conceded or decided that the reasoning in the Court of Appeal in Lister was binding. Further, even after Lister, cases were being decided in which it seems to have been accepted or decided by Chancery Judges that where an agent or other fiduciary had a duty to account for a benefit obtained in breach of his fiduciary duty, the principal was entitled to a proprietary interest in the benefit examples include Wilberforce J in Phipps, Lord Templeman in Reid, and Lawrence Collins J in Daraydan Holdings Ltd. Were it not for the decision in Tyrrell, we consider that it would be plainly appropriate for this Court to conclude that the courts took a wrong turn in Heiron and Lister, and to restate the law as being as the respondents contend. Although the fact that the House of Lords decided Tyrrell in the way they did gives us pause for thought, we consider that it would be right to uphold the respondents argument and disapprove the decision in Tyrrell. In the first place, Tyrrell is inconsistent with a wealth of cases decided before and after it was decided. Secondly, although Fawcett was cited in argument at p 38, it was not considered in any of the three opinions in Tyrrell; indeed, no previous decision was referred to in the opinions, and, although the opinions were expressed with a confidence familiar to those who read 19th century judgments, they contained no reasoning, merely assertion. Thirdly, the decision in Tyrrell may be explicable by reference to the fact that the solicitor was not actually acting for the client at the time when he acquired his interest in the adjoining land hence the reference in Lord Westburys opinion to the limit of the agency and the absence of privity [or] obligation as mentioned in para 24 above. In other words, it may be that their Lordships thought that the principal should not have a proprietary interest in circumstances where the benefit received by the agent was obtained before the agency began and did not relate to the property the subject of the agency. Quite apart from these three points, we consider that, the many decisions and the practical and policy considerations which favour the wider application of the Rule and are discussed above justify our disapproving Tyrrell. In our judgment, therefore, the decision in Tyrrell should not stand in the way of the conclusion that the law took a wrong turn in Heiron and Lister, and that those decisions, and any subsequent decisions (Powell & Thomas, Attorney Generals Reference (No 1 of 1985) and Sinclair), at least in so far as they relied on or followed Heiron and Lister, should be treated as overruled. In this case, the Court of Appeal rightly regarded themselves as bound by Sinclair, but they managed to distinguish it. Accordingly, the appeal is dismissed. |
The short issue raised by this appeal is whether the respondent (SL), a failed asylum seeker, was at the relevant time in need of care and attention, requiring the provision of accommodation by the local authority under section 21(1)(a) of the National Assistance Act 1948. Burnett J decided that he was not, but that decision was reversed by the Court of Appeal, Laws LJ giving the only substantive judgment. As Baroness Hale of Richmond explained in the leading authority (R (M) v Slough Borough Council [2008] UKHL 52, [2008] 1 WLR 1808 (Slough)), this section of the 1948 Act has for the most part been a relatively peaceful backwater of the law. She observed: until 1996, it would not have occurred to anyone that section 21(1)(a) might cover this sort of case. There was no need for it to do so. And it was not designed to do so. (para 7) That peace was shattered in the 1990s by the pressures of tighter immigration control, and the recognition by the courts of the potential role of local authorities under section 21(1)(a) in meeting the resulting needs (see R v Hammersmith and Fulham London Borough Council, ex parte M (1997) 30 HLR 10). The Immigration and Asylum Act 1999, which followed a 1998 White Paper, sought to redefine the respective responsibilities of national and local government (Slough paras 22 24). It established a national scheme of last resort, initially administered by a new body, the National Asylum Support Service (NASS) (later administered by the UK Border Agency on behalf of the Secretary of State), and at the same time introduced amendments limiting the application of section 21 in the case of those subject to immigration control. There followed what one commentator called an unseemly turf war (Slough, para 28) over responsibility for homeless asylum seekers as between, on the one hand, local authorities under section 21(1)(a) of the 1948 Act and, on the other, central government under the new national scheme. That led in due course to two cases in the House of Lords: R (Westminster City Council) v National Asylum Support Service [2002] UKHL 38, [2002] 1 WLR 2956 (NASS), and the Slough case. Between the two came the important decision of the House of Lords in R (Limbuela) v Secretary of State for the Home Department [2005] UKHL 66, [2006] 1 AC 396, which established that even those deprived of support under the national scheme, because they had not claimed asylum as soon as reasonably practicable (see Nationality, Immigration and Asylum Act 2002, s 55(1)), must not be left subject to such a level of deprivation as would amount to inhuman or degrading treatment under human rights law (Slough para 23). In the present case, happily, there has been no unseemly dispute between different parts of government, it having been accepted throughout, as I understand it, that if section 21(1)(a) of the 1948 Act did not apply, responsibility would fall on the Home Secretary under the national scheme. When these proceedings began, the difference was regarded as significant because of the more limited protection thought to be available under the national scheme (including the possibility of dispersal to a different area). There has been concern about the accommodation and support provided for asylum seekers since at least the Report of the Joint Committee on Human Rights on The Treatment of Asylum Seekers (Tenth Report of Session 2006 07, HL Paper 81 I, HC 60 I), and repeated, for example, in the Report of the Parliamentary Inquiry into Asylum Support for Children and Young People (The Children's Society, January 2013). That remained a potentially live issue at the time of the hearing before Burnett J in November 2010. However, it became academic following the grant in March 2011 of indefinite leave to remain. The Court of Appeal agreed to hear the appeal on the basis of the broader questions of principle involved. It has proceeded to this court on the same basis. Statutory provisions and Asylum Act 1999) provides: Section 21 of the 1948 Act (as amended in particular by the Immigration (1) Subject to and in accordance with the provisions of this Part of this Act, a local authority may with the approval of the Secretary of State, and to such extent as he may direct shall, make arrangements for providing: (a) residential accommodation for persons aged eighteen or over who by reason of age, illness, disability or any other circumstances are in need of care and attention which is not otherwise available to them; and (aa) residential accommodation for expectant and nursing mothers who are in need of care and attention which is not otherwise available to them. (1A) A person to whom section 115 of the Immigration and Asylum Act 1999 (exclusion from benefits) applies may not be provided with residential accommodation under subsection (1)(a) if his need for care and attention has arisen solely (a) because he is destitute; or (b) because of the physical effects, or anticipated physical effects, of his being destitute (Sub section (1B) provides that destitute for these purposes is defined in accordance with section 95 of the 1999 Act.) By section 21(8), nothing in section 21 is to be taken as authorising or requiring the making of any provision authorised or required to be made under any enactment not contained in this Part of this Act (that is, Part III of the 1948 Act), or under the National Health Service Acts. Section 29, also in Part III of the 1948 Act, deals with welfare arrangements, unrelated to the provision of accommodation. It provides for authorities, subject to approvals or directions of the Secretary of State, to make arrangements for promoting the welfare of persons aged eighteen or over who are blind, deaf or dumb or who suffer from mental disorder of any description (and certain other specified categories). The duties under section 29 are supplemented by section 2 of the Chronically Sick and Disabled Persons Act 1970. Apart from the 1948 Act, local social services authorities also have a range of caring responsibilities under other statutes (eg National Health Service Act 2006, sched 20 para 3: home help and laundry facilities for households which include a person who is ill, aged or handicapped). It is convenient at this stage to note certain points which I understand to be common ground in the light of the authorities. First, the requirements of section 21(1)(a) of the 1948 Act can be expressed as three cumulative conditions: first, the person must be in need of care and attention; secondly, the need must arise by reason of age, illness, disability or 'other circumstances' and, thirdly, the care and attention which is needed must not be available otherwise than by the provision of accommodation under section 21. (see Slough, per Lady Hale at para 31 citing R (Wahid) v Tower Hamlets London Borough Council [2002] LGR 545, para 30), Only the first and third conditions are in issue in this case. Secondly, it is clear that the words not otherwise available in section 21(1)(a) govern care and attention, not accommodation (Slough, para 16, per Lady Hale; para 50 52, per Lord Neuberger of Abbotsbury). It is equally clear now (whatever the intention of the framers of the 1948 Act) that ordinary, as opposed to special, accommodation, is not excluded: It may well be that those who drafted section 21(1)(a) in 1948 assumed that it only applied to people who needed extra care and attention which could not be provided in their own homes Be that as it may, we are required, by [the NASS case], to accept that people who need care and attention which could be provided in their own homes, if they had them, can fall within section 21(1)(a). (Slough, para 30, per Lady Hale) Finally, the national scheme is designed to be a scheme of last resort. The regulations require the Secretary of State, in deciding whether an asylum seeker is destitute, to take into account any other support available to the asylum seeker, including support available under section 21 of the 1948 Act (Asylum Support Regulations 2000 (SI 2000/704), reg 6(4)(b); Slough, para 27). Conversely, the local authority, in answering the questions raised by that provision, must disregard the support which might hypothetically be available under the national scheme (see eg R (SO) v London Borough of Barking and Dagenham [2011] 1 WLR 1283, para 40). The facts SL, who is now aged 22, arrived in this country in 2006. He claimed asylum, because of fear of persecution in Iran on account of his sexual orientation, but the claim was refused in January 2007. He became homeless in October 2009. Following his attempted suicide in December 2009, SL was admitted as a patient at the St Charles Hospital Mental Health Unit and was discharged in April 2010. He was diagnosed as suffering from depression and post traumatic stress disorder. Since then, his condition has been kept under review, and various psychological and other assessments have been carried out. Continuing supervision was provided by his care co ordinator, Mr Adam Wyman, a social worker employed by the council. SL was accommodated at the councils expense pursuant to an interim order made by Saunders J on 16 April 2010 until April 2011, when he began to be accommodated under housing legislation following the grant of indefinite leave to remain. There is no material dispute as to SLs state of health at the time of the relevant decision. An occupational therapists report prepared in March 2010 had concluded that he was independent in all self care needs, had no cognitive or motor difficulties, and was sociable and able to form positive relationships. Mr Wyman himself had found that SL was an intelligent and creative young man, and that his problems centred round his post traumatic stress disorder, depression and anxiety. He had concluded Certainly S's mental state is fluctuating and he continues to experience genuine emotional distress, including symptoms of depression, anxiety and low confidence. Unfortunately, S also exhibits broadly emotionally immature and histrionic personality symptoms that combine with his distress to put him at some risk of self harm. In my view, however, this risk does not warrant the need for S to be looked after. In my experience, and also the view of Dr Clarke, S's consultant at St Charles, confirms that such support will likely be counter effective to that which would be considered therapeutic, associating in S's mind his recovery with the provision of dedicated mental health services, rather than coming to understand his responsibilities (with the availability of social work and counselling services) to manage both the distress he is experiencing and the set of (difficult) social circumstances he is currently facing . He will continue to receive social work support if he will accept it. On 14 April 2010 the council gave notice of its decision that SL was not in need of care and attention for the purpose of section 21(1)(a) of the 1948 Act. The letter stated that social work support would be available for SL if he wanted it; that such support would be in the form of practical assistance in arranging activities for him during the day, and also monitoring his mental state at regular appointments which would not involve visits to his home (unless a total absence of contact with any member of the Community Mental Health Team led to concerns about his mental health). The arrangements subsequently put in place for SL are described in the judgment of Laws LJ [2012] PTSR 574 (paras 11 14). They included links with counselling groups, who were organisations working with gay men and women, and regular meetings with a befriender (under a service provided by the council) who saw him once a week and took him to activities he enjoys. Laws LJ summarised the position: 13. Looking at the factual material in the round, the support furnished by the local authority may be summarised much as Mr Knafler summarised it: at his weekly meetings with the claimant the care co ordinator Mr Wyman offers advice and encouragement and generally monitors his condition and progress. He has also been instrumental in arranging contact (or the renewal of contact) with the counselling groups to which I have referred, and the claimants befriender. He noted that SL also received medical attention including prescribed medicines, but accepted that this was excluded from consideration by section 21(8) of the 1948 Act. The authorities Laws LJ reviewed the line of cases in the higher courts following R v Hammersmith and Fulham London Borough Council, ex p M (1997) 30 HLR 10, and the enactment of the 1999 Act. As he explained, the courts attempts to draw a line between section 21(1)(a) of the 1948 Act and the national scheme had led to a distinction between the able bodied destitute and the infirm destitute, the former but not the latter being excluded from consideration under section 21(1)(a). Shortly after the enactment of section 21(1A), its effect was considered by the Court of Appeal in R v Wandsworth London Borough Council, ex p O [2000] 1 WLR 2539 (ex p O). The applicants were over stayers with no right to accommodation unless they could bring themselves within section 21(1)(a) of the 1948 Act. They both had health problems and were destitute. The court rejected an argument that they were excluded from consideration under section 21(1)(a) by virtue of subsection (1A). Simon Brown LJ (with whom Hale and Kay LJJ agreed) summarised the applicants argument which he accepted: [I]f an applicant's need for care and attention is to any material extent made more acute by some circumstance other than the mere lack of accommodation and funds, then, despite being subject to immigration control, he qualifies for assistance. Other relevant circumstances include, of course, age, illness and disability, all of which are expressly mentioned in section 21(1) itself. If, for example, an immigrant, as well as being destitute, is old, ill or disabled, he is likely to be yet more vulnerable and less well able to survive than if he were merely destitute." (p 2548F G) This was followed in R (Mani) v Lambeth London Borough Council [2003] EWCA Civ 836, [2004] LGR 35. The applicant, a destitute asylum seeker, suffered from a disability to one leg which impaired his mobility and led to the need for help in tasks such as bed making, cleaning and carrying shopping. The council disclaimed responsibility on the grounds that his needs were not such as to require the provision of accommodation. The courts disagreed. At the beginning of his judgment Simon Brown LJ adopted Wilson Js formulation of the relevant question: Does a local authority have a duty to provide residential accommodation for a destitute asylum seeker who suffers a disability which, of itself, gives rise to a need for care and attention which falls short of calling for the provision of residential accommodation? (para 1) He summarised the authoritys argument: . the care and attention referred to means care and attention of a kind calling for the provision of residential accommodation. Unless the applicants disability or infirmity is such as to give rise to an accommodation related need for care and attention, it cannot be a disability or infirmity entitling the applicant in any circumstances to subsection 21 accommodation. (para 16) He rejected that argument and answered the question posed by Wilson J in the affirmative. Although echoing the doubts which he had expressed in the NASS case (see below), Simon Brown LJ thought that the council were well and truly caught in the coils of the existing authorities, and, like Wilson J, he felt bound to apply the logic of his own judgment in ex p O (para 20). In the NASS case, the applicant was at the relevant time an infirm destitute asylum seeker, suffering from spinal cancer, and living with her 13 year old daughter. The dispute arose when NASS refused responsibility for the cost of her accommodation, and the council began judicial review proceedings. It is helpful to refer to the statement of assessed needs as described by Simon Brown LJ in the Court of Appeal (para 3): Mrs Y A is not merely destitute but suffers also from spinal myeloma for which she has been, and continues to be, treated at St Mary's Hospital, Paddington. On 23 November 2000, the appellant Council's social services department assessed her as requiring (on her discharge from hospital) assistance from a carer with her mobility indoors and outdoors, with transfer between bed, chair, bath and wheelchair, and with personal care in respect of washing, dressing and toilet. She also requires accommodation with disabled access and its own bathroom as close to St Mary's Hospital as possible and which has at least two rooms, one of them large enough to allow a carer to work around her. Unsurprisingly, on these facts, there was no dispute that she was in need of care and attention. The only issue was whether it was otherwise available Lord Hoffmann summarised the effect of section 21(1A): The use [in section 21(1A) of the 1948 Act] of the word 'solely' makes it clear that only the able bodied destitute are excluded from the powers and duties of section 21(1)(a). The infirm destitute remain within. Their need for care and attention arises because they are infirm as well as because they are destitute. They would need care and attention even if they were wealthy. They would not of course need accommodation, but that is not where section 21(1A) draws the line. (NASS, para 32) He rejected the councils argument that the applicants need for care and attention could be satisfied in private accommodation and did not entail a need for local authority accommodation: The difficulty about this argument is that it seems to me to run counter to the reasoning in R v Hammersmith and Fulham London Borough Council, Ex p M 30 HLR 10. The able bodied destitute asylum seekers in that case would never have been given Part III accommodation if they had not been subject to immigration control. They would have been given income support and Housing Act accommodation. They had to be given accommodation because otherwise there was nowhere else they could receive care and attention. Mr Pleming did not challenge the correctness of Ex p M and I do not think it would be open to him to do so, because the whole of Part VI of the 1999 Act proceeds on the assumption that it is correct. But the present seems to me an a fortiori case. (para 43) At the time that the NASS case came before the House of Lords, Mani had been decided at first instance but had not reached the Court of Appeal. In the NASS case itself, in the Court of Appeal, Simon Brown LJ had expressed concerns about the unforeseen implications of his judgment in ex p O (echoed by Lady Hale in Slough, paras 27). Lord Hoffmann noted these concerns (para 46). He also summarised the criticisms made by counsel of the decision in ex p O in the light of the first instance judgment in Mani: Mr Pleming said that this case (Mani) demonstrated the absurd consequences of the decision of the Court of Appeal. If Mr Mani had been an ordinary resident, his disability would never have entitled him to accommodation under a statute intended to provide institutions for the old and retreats for the mentally handicapped. His entitlement as found by Wilson J arises simply from the fact that he is an asylum seeker. Such a conclusion is inconsistent with the policy of having a national support system specifically for asylum seekers. Furthermore, the decision undermines the policy of dispersal followed by NASS, which is intended to prevent asylum seekers from gravitating to London boroughs or other local authority areas of their choice. An asylum seeker who can produce a disability, physical or mental, which makes his need for care and attention to any extent more acute than that which arises merely from his destitution, can play the system and secure accommodation from the local authority of his choice. (para 48) Lord Hoffmann accepted that these concerns were not without substance, but thought that they did not arise in the case before them: But the issues before your Lordships are narrow. The present case has been argued throughout on the footing that Mrs Y Ahmed has a need for care and attention which has not arisen solely because she is destitute but also (and largely) because she is ill. It is also common ground that she has no access to any accommodation in which she can receive care and attention other than by virtue of section 21 or under Part VI of the 1999 Act. (para 49) Accordingly, it was not necessary in the NASS case to decide the correctness of the test laid down in ex p O, and applied in Mani, for determining whether the claimants need had arisen solely because he is destitute. Lord Hoffmann declined to express any view on this point, because it would affect the rights of everyone subject to immigration control, whether an asylum seeker or not (para 50). In the Slough case, the principal issue was the meaning of the expression care and attention. The claimant, who was HIV positive, and needed various prescribed medicines and a refrigerator in which to store them, was held not to be within section 21(1)(a) of the 1948 Act. As already noted, Lady Hale (who gave the leading speech) reviewed the history of the legislation and the authorities. Concerning the expression care and attention, she noted the submissions (and concessions) of Mr Howell, for the council : Mr Howell argues that there must be some meaningful content in the need for care and attention. He was at first disposed to argue that it must mean care and attention to physical needs, such as feeding, washing, toileting and the like, and not simply shopping, cooking, laundry and other home help type services. But he accepted that it had also to cater for people who did not need personal care of this sort but did need to be watched over to make sure that they did not do harm to themselves or others by what they did or failed to do. The essence, he argued, was that the person needed someone else to look after him because there were things that he could not do for himself. (para 31) She rejected his first approach as incompatible with the authorities and with practice over the years. It was also clear from a comparison with other statutes that care and attention was a wider concept than nursing or personal care (para 32). She then gave her own view: I remain of the view which I expressed in R (Wahid) v Tower Hamlets London Borough Council [2002] LGR 545, para 22, that the natural and ordinary meaning of the words care and attention in this context is looking after. Looking after means doing something for the person being cared for which he cannot or should not be expected to do for himself: it might be household tasks which an old person can no longer perform or can only perform with great difficulty; it might be protection from risks which a mentally disabled person cannot perceive; it might be personal care, such as feeding, washing or toileting. This is not an exhaustive list. The provision of medical care is expressly excluded (para 33) That approach was consistent with the authorities and draws a reasonable line between the able bodied and the infirm. It was consistent in particular with Mani, of which she said: That case [i.e. Mani] was argued on the assumption that the claimant did have a need for care and attention, but not a need which required the provision of residential accommodation. Mr Mani had one leg which was half the length of the other. He had difficulty walking and when in pain he could not undertake basic tasks such as bed making, vacuum cleaning and shopping. He did need some looking after, going beyond the mere provision of a home and the wherewithal to survive. (para 34) She noted a possible discrepancy with the statement of Lord Woolf MR in ex p M (30 HLR 10, 21) that the authorities could anticipate the deterioration which would otherwise take place and intervene before a person's health had been damaged. That was to be interpreted, not as giving power to intervene before there was a need for care, but as recognising the need for some sensible flexibility, allowing the authorities to intervene before a present need becomes a great deal worse (para 35). Lord Neuberger agreed, adding: As for care and attention, while again it is right to caution against the risks of reformulating the statutory language, it appears to me that Hale LJ was right to say that in this context, the expression means looking after and that ordinary housing is not in itself care and attention see R (Wahid) v Tower Hamlets London Borough Council [2002] LGR 545, para 32. I do not consider that care and attention can extend to accommodation, food or money alone (or, indeed, together) without more. As a matter of ordinary language, care and attention does not, of itself, involve the mere provision of physical things, even things as important as a roof over one's head, cash, or sustenance. Of course, if a person has no home or money, or, even more, if he has no access to food, he may soon become in need of care and attention, but, as already explained, that is beside the point. (para 56) Finally I should refer to the judgment of Laws LJ himself in R (Zarzour) v Hillingdon London Borough Council [2009] EWCA Civ 1529, on which he relied in the present case. The applicant was an asylum seeker awaiting a decision on his claim. He was totally blind, and needed help with dressing and laundry, with finding his way around his accommodation, and with shopping; he could not go out safely on his own. The judge upheld his claim to judicial review, and the Court of Appeal agreed. Laws LJ said: [T]he real question here is whether the council's own findings. compel a conclusion that the claimant was in need of care and attention within the meaning of section 21(1)(a) or, to put it in conventional public law terms, whether that conclusion was one which, on the facts, no reasonable council could reach. (para 13) Applying the approach of Lady Hale in the Slough case, he agreed that the applicant was in need of care and attention, and that it was at least in part accommodation specific (para 18). But he added: It is important to note that it has been accepted in [Mani], approved by Lady Hale at paragraph 34 of [R (M) v Slough BC], and in [NASS] that the need of care and attention spoken of in section 21 was not such as necessarily to call for the provision of residential accommodation notwithstanding the fact that such provision is made by the statute the principal medium for meeting the need, and notwithstanding the further fact that, as other parts of Part III of the 1948 show, section 21 typically entails a move into local authority accommodation. (para 18) The courts below At first instance, Burnett J dismissed the application for judicial review. As is now common ground, he erred on one point (para 18), in that he took account of the Secretary of States acceptance of responsibility to accommodate under the national scheme. However, this does not seem to me to undermine the remainder of his reasoning on the two live issues. He concluded that, important as was the social work support to SLs well being, it did not amount to care and attention for the purposes of section 21(1)(a) of the 1948 Act: To suggest that the claimant needs looking after would stretch the meaning of those words beyond their proper limit. In my judgment, it would be more accurate to say that the support that the claimant needs amounts to keeping an eye on him. That is a rather different matter. It imports the notion that whilst keeping an eye on him, if circumstances change, different or further interventions might become necessary. It is not, however, in my view, care and attention. (para 31) On the other issue, he noted the rejection, in the NASS case, of the submission that section 21 did not apply where the care and attention could be provided in the claimants own accommodation. However, he thought the argument in the present case was different, because Assistance to this claimant is provided outside of his home, wherever that home happens to be. It is provided when he visits the Abbey Road Centre. Mrs Y Ahmed [the claimant in NASS] needed the care in her own home. She had no home. (para 19) Similarly, the applicants in ex p M had to be housed under the 1948 Act to enable them to receive the care and attention that they needed (para 21). That was not so in respect of SL. In the Court of Appeal, Laws LJ reached the opposite result on both issues. He dealt shortly with the care and attention issue. Having quoted the Burnett Js conclusion, he said: 22. The judge has, I think, understated the nature of the support provided by the local authority through Mr Wyman. As Mr Knafler submitted, Mr Wyman is doing something for the claimant which he cannot do for himself: he is monitoring his mental state so as to avoid if possible a relapse or deterioration. He is doing it, no doubt, principally through their weekly meetings; but also by means of the arrangements for contact (or the renewal of contact) with the two counselling groups, and with the befriender. It is to be noted that care and attention within the subsection is not limited to acts done by the local authority's employees or agents. And I have already made it clear that the subsection does not envisage any particular intensity of support in order to constitute care and attention. 23. I acknowledge that the question is to some extent a matter of impression; and also that the claimant must show that the local authoritys determination was not open to a reasonable decision maker But in my judgment that test is met. The support provided by the local authority to the claimant qualifies as care and attention. He regarded the second issue as altogether more problematic (para 24ff). He had earlier identified certain broader questions left unresolved by the speeches in Slough: Must it be shown that the necessary care and attention cannot be given without the provision of residential accommodation? Or should the expression be construed as meaning that the provision of accommodation is reasonably required in order for care to be furnished in a way that fully meets the claimant's needs?. Or are there other possible meanings? (para 15) Of the cases following ex p M and the 1999 Act, he said: What has happened since is that the cases seem to have proceeded on the basis that all destitute persons are liable to be accommodated under section 21(1)(a) unless they are able bodied. Only the able bodied destitute are excluded by section 21(1A). There is, so to speak, no undistributed middle between the two subsections. (para 27) He cited the test adopted by Simon Brown LJ in ex p O (para 15 above), which in his view reflects, indeed exemplifies, the division of destitute asylum seekers into two mutually exclusive classes, able bodied and infirm. All members of the first class are covered by section 21(1A), and all members of the second by section 21(1)(a); there is no third class, no undistributed middle. (para 36) He noted (para 32) that in the NASS case Lord Hoffmann had declined to comment on the correctness of the decision in ex p O because of its wide implications. Accordingly, the approach in ex p O must be taken as remaining the law for his purposes, there being nothing in Slough to suggest otherwise (para 35). Following his own judgment in Zarzour, Laws LJ accepted that there must be at least some nexus between the care and attention and the accommodation (para 34). However, he thought that the strict distinction drawn by the cases between able bodied and infirm destitute applicants gave no weight to the third criterion in section 21(1)(a) of the 1948 Act not otherwise available (para 37). He continued: 38. However some force must be given to those words. The undistributed middle cannot be quite what it seems. Now, a nexus between a claimant's destitution and his infirmity may mean different things. At para 15 above I suggested two possible ways in which the expression care and attention which is not otherwise available might be understood. First, it might mean that the necessary care and attention unequivocally requires the provision of residential accommodation. Secondly, it might mean that the provision of accommodation is reasonably required in order for care to be furnished in a way that fully meets the claimant's needs. As I stated, Mr Knafler, supported by the interveners, urges the latter approach. A third possibility, though perhaps little more than a variant of the second, would be that care and attention is not otherwise available unless it would be reasonably practicable and efficacious to supply it without the provision of accommodation. 39. In my judgment this third sense of not otherwise available most closely reconciles the statutory condition which those words exemplify with the exhaustive division of destitute asylum seekers between the infirm and the able bodied the undistributed middle. As I have shown, this court in R (Mani) v Lambeth London Borough Council [2004] LGR 35 rejected the local authority's submission that care and attention in section 21(1)(a) means "care and attention of a kind calling for the provision of residential accommodation". I take that submission in effect to mirror the first of the three meanings I have identified. As Simon Brown LJ indicated in Manis case, it cannot stand with the other authorities, not least R v Wandsworth London Borough Council, Ex P O [2000] 1 WLR 2359. But the second meaning, favoured by Mr Knafler and the interveners, is in my judgment too far distant from the statutory language. The subsection's terms do not suggest a legislative policy by which accommodation is to be provided in order to maximise the effects of care and attention. However the third meaning, that care and attention is not otherwise available unless it would be reasonably practicable and efficacious to supply it without the provision of accommodation, can in my judgment live with existing authority. Indeed it is, I think, an implicit assumption made in the course of the learning's evolution. He made clear that his conclusion was one constrained by the authorities, rather than arising from his own view of the statutory language: 41. I should say, however, that I am troubled by this conclusion as to the proper interpretation of section 21(1)(a). The natural and ordinary meaning of the statutory words seems to me to be closer to that advanced but rejected in Manis case care and attention of a kind calling for the provision of residential accommodation, so that the need for care and attention is accommodation related (Manis case [2004] LGR 35, para 16): the first of the three meanings I have identified. But the learning, so much of whose focus has been on the inverted and unseemly turf war between local and national government, has barred such a construction. Having referred again to the services provided by Mr Wyman, he concluded: On the view of the law which I favour the question is whether it would be reasonably practicable and efficacious, for the purpose in hand, to supply these services without the provision of accommodation; and in asking the question the assumption has to be made that the claimant is destitute (because the potential availability of NASS accommodation has to be ignored). Approaching the matter thus, the question admits of only one sensible answer. Given the evidence of the claimants condition which was before the local authority it would, as Mr Knafler submitted, be absurd to provide a programme of assistance and support through a care co ordinator "without also providing the obviously necessary basis of stable accommodation. (para 44) As I read the judgment, the interpretation adopted by Laws LJ was his attempt to reconcile the effect of the authorities which were binding on him, with the words of section 21(1)(a). The requirement that the care and attention should be not merely available, but practical and efficacious, was necessary to offer a logical explanation, consistent with those authorities, for the inclusion of the infirm destitute as a class within section 21(1)(a), whether or not the needs of particular individuals were accommodation related in the sense discussed in Mani. Submissions I turn to the submissions to this court. I shall not attempt more than a short summary of what I understand to be the main points, in over 100 pages of written submissions by the parties and the interveners, as developed in oral submissions. Mr Howell QC, for the council, and Mr Knafler QC for SL, have both shown notable industry in researching the highways and byways of the legislative history, going back even to the presentation of the National Assistance Bill to Parliament (by Mr Aneurin Bevan MP) in November 1947. I hope I shall be forgiven for not following them on that journey. It seemed a distraction from the task of construing section 21(1)(a) in the light of its modern context, and of the relevant authorities, all of which are relatively recent. Such emphasis on the history is unlikely to be helpful in relation to provisions which must be read in the light of changing social conditions (see Wahid, para 31), particularly where (as here) they have been forced into service to deal with a problem wholly unforeseeable at the time of the passing of the Act. Lady Hales speech in the Slough case gives us all the history we need to understand the evolution of the statute and its present legal and social context. It is in that context that the simple statutory words must be interpreted and applied. Confined to their essentials, the respective submissions can I hope be fairly summarised as follows. Mr Howell submitted that: i) Monitoring (or assessing) an individual's condition at a weekly meeting is not itself care and attention for this purpose. It is rather a means of ascertaining what care and attention or other services (if any) the individual may need in the future. ii) Care and attention means more than monitoring, or doing something for a person which he cannot do for himself. As Dunn LJ said in the comparable statutory context of attendance allowance (R v National Insurance Commissioner ex p Secretary of State for Social Services [1981] 1 WLR 1017 at 1023F) the word attention itself indicates something involving care, consideration and vigilance for the person being attended a service of a close and intimate nature. iii) On the second issue, the services provided by the council, other than accommodation, could be provided under other statutory provisions; they were therefore otherwise available, and thus excluded from consideration by section 21(8) of the 1948 Act. iv) Alternatively, in line with the reservations expressed by Laws LJ (para 41), and contrary to the decision of the Court of Appeal in Mani, the court should hold that the section applies, not to all those who need care and attention, but only to those who have an accommodation related need, that is those who need care and attention of a kind which is only available to them through the provision of residential accommodation (Mani, para 16). In any event, as the judge found, there was no link between any need for accommodation and the services needed by SL, which were being v) provided wholly independently of the place where SL was or might be living. Mr Knafler submitted in summary that: i) ii) Care and attention or looking after included not only intimate personal care, but any other forms of personal care or practical assistance. It is enough, in Lady Hales words, that the council is doing something for the person being cared for which he cannot or should not be expected to do for himself. Monitoring SLs mental state was indeed doing something for him, and was no different in principle from watching over as described by Mr Howells concession in Slough. Care and attention is not an accommodation related need. Care and attention can be provided to persons in residential accommodation under section 21(1)(a), and also to persons in their own homes under section 29 or other enactments. Longstanding local authority practice is to provide care and attention in residential accommodation when it can no longer be provided reasonably practicably and efficaciously in a persons home, or elsewhere, having regard to all the circumstances, including cost. iii) Not otherwise available means, as Laws LJ held, not otherwise available in a reasonably practicable and efficacious way. In this case, SL needed care and attention because he needed accommodation, basic subsistence, personal care and practical assistance. That package was not available at all, otherwise than by the provision of residential accommodation. Alternatively, looking simply at the care he needed for his mental illness, and given that he was homeless and destitute, the necessary care was not available to him in any reasonably practicable and efficacious way, otherwise than by providing him with accommodation as a stable base. The written submissions for the two interveners, Mind and Freedom From Torture, supported by evidence from expert witnesses, sought generally to uphold the approach of the Court of Appeal, and to counter some of the arguments put forward by the council. I note the following points: i) Care and attention must be interpreted in the light of modern medical research, in particular giving equal weight to the needs of those with mental health problems as to those with physical health problems, and attributing to social recovery as much importance as clinical recovery. In that context it should be read as including all the services directed to monitoring a persons mental health, preventing decline and promoting recovery, and facilitating independence and social inclusion. The services provided by the council to SL fell into these categories, and were thus properly accepted by the Court of Appeal as coming within section 21(1)(a) of the 1948 Act. ii) The Court of Appeals approach to the nexus issue rightly reflected the important role of residential accommodation in securing the effective provision of care and attention to people with mental health problems. Delivering effective care to someone who does not have stable accommodation is almost impossible. Lack of such accommodation can aggravate the problems and lead to the need for more intensive intervention or hospitalisation. iii) Section 21(1)(a) of the 1948 Act should be interpreted in the light of the UN Convention on the Rights of Persons with Disabilities (ratified by the UK in June 2009). Article 26 of that treaty, in particular, requires States Parties to take effective measures to enable those with disabilities to to attain and maintain maximum independence, full physical, mental, social and vocational ability, and full inclusion and participation in all aspects of life. iv) These considerations apply particularly to victims of torture, for whom relevant care includes psychological counselling and support provided outside accommodation, and for whom stable and appropriate accommodation are essential to make any such care effective. Discussion Applying the agreed reformulation of section 21(1)(a) of the 1948 Act, there were two questions for the council: (1) was SL in need of care and attention? (2) if so, was that care and attention available otherwise than by the provision of accommodation under section 21? They answered the first in the negative, and the second in the affirmative. The issue for the courts, applying ordinary judicial review principles, was whether they were reasonably entitled to take that view. In agreement with the judge on both issues, I would hold that they were. In reaching this conclusion I do not in any way seek to question the evidence of the interveners as to the importance of the services they describe, including stable accommodation, both for those with mental health problems generally, and for victims of torture in particular, nor the relevance in that context of the UN Convention and the other texts to which they refer. However, acknowledgement of the importance of the services does not compel the view that they fall within the responsibilities imposed on local authorities by section 21(1)(a) of the 1948 Act. That must depend on the true construction of the words of the section in their context. On the first issue, authoritative guidance as to the meaning of the expression care and attention is given by Lady Hales speech in the Slough case. I would also read Lord Neubergers speech as offering some helpful elaboration of the same idea. Mr Howell asked us to adopt a more restrictive approach, put in various ways, but in substance limiting it to personal care, or service of a close and intimate nature. These submissions seemed to turn the clock back not just on previous authority, but on his own concessions (albeit, on behalf of a different council) in the Slough case. I do not accept that such limitations are supported by an ordinary reading of the statutory words. Even if I did, I would not regard it as appropriate for us to revisit an issue considered so recently at the highest level. On the other side, Mr Knafler relies on Lady Hales reference to doing something for the person being cared for which he cannot or should not be expected to do for himself. Echoing Laws LJ, he submits that those words are wide enough to encompass monitoring SLs condition to avoid a relapse, and arranging contact with counselling groups and befrienders. This approach divorces the concept of care and attention from the overall context of section 21(1)(a). Thus isolated, the term can be given an artificially wide scope. That danger is exemplified by Mr Knaflers argument that care and attention covers all forms of social care and any form of practical assistance. This could lead to absurd results. Providing a refrigerator for M would in one sense have been doing something for him which (if he had no money) he could not do for himself. But as Lord Neuberger said, care and attention does not involve the mere provision of physical things, even things as important as food and accommodation. It is wrong to elevate the words of Lady Hale in Slough that care and attention involves doing something for the person which he cannot or should not be expected to do for himself into a compendious statement of all the elements of the care and attention or looking after concept. These words were merely illustrative of an aspect of the notion of what is meant by the stipulation. Nor in my view is Mr Knafler assisted by Lady Hales reference in the Slough case to watching over (an expression attributed to Mr Howell, rather than in terms adopted by her). Even if taken literally, that to my mind implies a more direct and regular involvement than Mr Wymans weekly sessions, which were aptly characterised by the judge as keeping an eye on him. Mr Wymans view was that the risk of self harm did not warrant the need for SL to be looked after; rather, he thought that it would be counter effective for the council to do so, because it would detract in SLs mind from his responsibility to manage for himself. That assessment cannot be regarded as irrational. What is involved in providing care and attention must take some colour from its association with the duty to provide residential accommodation. Clearly, in light of the authorities already discussed, it cannot be confined to that species of care and attention that can only be delivered in residential accommodation of a specialised kind but the fact that accommodation must be provided for those who are deemed to need care and attention strongly indicates that something well beyond mere monitoring of an individuals condition is required. Turning to the second issue, and assuming for this purpose that Mr Wyman was meeting a need for care and attention, was it available otherwise than by the provision of accommodation under section 21? Although it is unnecessary for us to decide the point, or to consider the arguments in detail, it seems to me that the simple answer must be yes, as the judge held. The services provided by the council were in no sense accommodation related. They were entirely independent of his actual accommodation, however provided, or his need for it. They could have been provided in the same place and in the same way, whether or not he had accommodation of any particular type, or at all. The Court of Appeals contrary view depended on reading the word available as meaning not merely available in fact, but as implying also a requirement for the care and attention to be reasonably practicable and efficacious. Thus, even the limited services provided by Mr Wyman could not be expected in practice to achieve their objectives unless combined with a degree of stability in his living arrangements. That indeed is the theme of the submissions for the interveners. Such a loose and indirect link is not in my view justified by the statutory language. In a slight variation on the theme, Mr Knafler submitted that in SLs case the provision of accommodation was a critical part of his social rehabilitation and that this was, by definition, an aspect of his care and attention. However, Slough has decided affirmatively that the need for accommodation cannot, in itself, constitute a need for care and attention. As I have explained, the line of reasoning advanced by the interveners and adopted by Laws LJ did not represent his preferred interpretation of section 21(1)(a), but was one to which he felt logically driven by authorities binding on him. At this level, it is open to us to hold that, on this part of section 21, the Court of Appeal took a wrong turning in Mani following the lead thought to have been given by ex p O. On one view the issue in ex p O was simply whether the infirm destitute were excluded by section 21 (1A), not whether they satisfied the other requirements of section 21(1)(a). However, Simon Brown LJ appears to have endorsed the proposition that if an applicants need for care and attention is to any extent made more acute by circumstances other than the lack of accommodation and funds, he qualifies for assistance [under section 21(1)(a)] ([2000] 1 WLR 2539 at 2548F H). Similarly, the question in Mani was posed in terms which assumed that, if answered in the affirmative, it would result, without more, in the local authority being under a duty to provide residential accommodation. I agree with Laws LJ that, to this extent, the judgments failed to give proper weight to the words otherwise available . in section 21(1)(a). In other words, there is a class of people who do have a need for care and attention which is made more acute by circumstances other than the lack of accommodation and funds but who nevertheless do not qualify for accommodation under section 21(2)(a) (what Laws LJ referred to as an undistributed middle). The need has to be for care and attention which is not available otherwise than through the provision of such accommodation. As any guidance given on this point in this judgment is strictly obiter, it would be unwise to elaborate, but the care and attention obviously has to be accommodation related. This means that it has at least to be care and attention of a sort which is normally provided in the home (whether ordinary or specialised) or will be effectively useless if the claimant has no home. So the actual result in Mani may well have been correct. The analysis may not be straightforward in every case. The matter is best left to the good judgement and common sense of the local authority and will not normally involve any issue of law requiring the intervention of the court. I agree with Burnett J that the present case is clearly distinguishable on the facts from the NASS case. That case had been argued on the footing that the applicants need for care and attention had arisen not solely because she was destitute but also (and largely) because she (was) ill Lord Hoffmann, para 49); and it was common ground that she had access to no other accommodation in which she could receive that care and attention (Lord Hoffmann, para 43). Furthermore, her needs (see para 17 above) affected both the nature and the location of the accommodation. In the present case, by contrast, care and attention can be, and is provided, independently of SLs need for accommodation or its location. Indeed, it was not in dispute that similar support services could be provided anywhere in the country. Conclusion For these reasons, I consider that Burnett J reached the right result for substantially the right reasons. I would accordingly allow the appeal and restore his order. |
This is another round in a long drawn out saga between HMRC and Marks and Spencer plc (M&S). It was last before the Supreme Court on 22 May 2013 when Lord Hope gave judgment on the first of five issues. Only Lord Hope gave a judgment. The other members of the Court, namely Lord Neuberger, Lord Mance, Lord Reed and Lord Carnwath simply agreed with Lord Hope. I have, as it were, replaced Lord Hope, who has now retired. For the purposes of corporation tax, M&S claims group relief in respect of losses sustained by two of their subsidiaries, namely Marks & Spencer (Deutschland) GmbH ("MSD"), which was resident in Germany and Marks & Spencer (Belgium) NV ("MSB"), which was resident in Belgium. As Lord Hope observed at para 1 of his judgment, the claims were originally made and refused by HMRC over ten years ago and raise questions about the availability of cross border group relief and the method of quantifying such relief as is available which, despite having been the subject of nine separate hearings since the case was first considered in December 2002, have still not yet been resolved. This is thus the tenth such hearing. As will be seen, one of the striking features of the various hearings is the number of distinguished tax lawyers who have taken part. As to the losses in respect of which relief is sought, the earliest losses relied upon extend back to 1997 in the case of MSD and back to 1998 in the case of MSB. The issues The five issues were summarised by Moses LJ in the Court of Appeal when (as appears below) the dispute came to the Court of Appeal for the second time. He summarised them thus at [2012] STC 231, para 4: (i) Is the test that the ECJ established to identify those circumstances in which it would be unlawful to preclude cross border relief for losses, the 'no possibilities' test, to be applied (as the Revenue contend) at the end of the accounting period in which the losses crystallised rather than (as M&S contends) the date of claim? This question involves deciding whether the Court of Appeal in the first appeal reached a binding decision on that issue and whether it remains binding on this court in light of subsequent decisions of the ECJ. (ii) Can sequential/cumulative claims be made (as M&S contends) by the same company for the same losses of the same surrendering company in respect of the same accounting period? The Revenue assert that that is not a question decided by the Court of Appeal and is precluded both by UK fiscal rules and by the underlying jurisprudence of the ECJ. (iii) If a surrendering company has some losses which it has or can utilise and others which it cannot, does the no possibilities test (as the Revenue contend) preclude transfer of that proportion of the losses which it has no possibility of using? (iv) Does the principle of effectiveness require M&S to be allowed to make fresh 'pay and file' claims now that the ECJ has identified the circumstances in which losses may be transferred cross border, when at the time M&S made those claims there was no means of foreseeing the test established by the court? (v) What is the correct method of calculating the losses available to be transferred? As Lord Hope observed in para 10, those issues have been restated in a slightly amended form in the statement of facts and issues prepared for the appeals to this Court. I will return to the facts and issues as so formulated so far as necessary below. The reference to the no possibilities test established by the ECJ is a reference to the decision of the ECJ in a ruling in a judgment of 13 December 2005 in Case C 446/03, Marks & Spencer plc v Halsey [2006] Ch 184, [2005] ECR I 10837. In order to be able to follow the thinking of the Court of Appeal and of this Court it is necessary to say something about the history and background which I can take largely from paras 2 to 14 of the judgment of Lord Hope. History and background M&S began to expand its business into other countries in 1975. By the end of the 1990s it had sales outlets in more than 34 countries, with a network of subsidiaries and franchises. But by that date it had already begun to incur losses, and in March 2001 decided to withdraw from its continental European activity. It was able to sell its French and Spanish subsidiaries to third parties, but no purchasers could be found for MSD or MSB. MSD ceased trading in August 2001 and was dissolved following liquidation on 14 December 2007. MSB ceased trading on 22 December 2001 and was dissolved following liquidation on 27 December 2007. The first group relief claims were made between 2000 and 2003 at a time when neither subsidiary was in liquidation. They concerned MSG's losses for the years 1998 to 2001 and MSB's losses for the years 2001 and 2002. Claims in respect of the same losses by the same companies for the same years were made on three subsequent occasions in response to what (as Lord Hope put it) M&S described as factual and jurisprudential developments: on 20 March 2007, when both companies were in liquidation; on 12 December 2007, just before the companies were dissolved; and on 11 June 2008, in respect of MSB following the dissolution of that company. The claims for the years from 2000 onwards were governed by the self assessment rules in Schedule 18 to the Finance Act 1998 and (it is now agreed) were within the statutory time limits, to which I will return below. HMRC maintain that the claims for years prior to 2000, which were governed by the corporation tax pay and file rules in Schedule 17A to the Income and Corporation Taxes Act (ICTA) 1988, were out of time when they were included in the claims that were made on the three occasions subsequent to the making of the first claims between 2000 and 2003. As Lord Hope observed at para 5, M&Ss basic contention underlying all these claims was that the provisions in United Kingdom legislation which restricted group relief claims to losses of UK resident companies and, after the Finance Act 2000, losses of UK branches of non resident companies were contrary to article 43 EC (now article 49 TFEU) on the freedom of establishment, and were thus unlawful. On I7 December 2002 the special commissioners, who were Dr John Avery Jones and Mr Malcolm Gammie QC, held that there had been no breach of that article: Marks & Spencer plc v Halsey [2003] STC (SCD) 70. On appeal, Park J decided to refer the matter to the ECJ: [2003] EWHC 1945 (Ch). He sought a preliminary ruling on two questions, namely (1) the compatibility of the UK provisions with article 43 EC and (2) what difference the facts of M&S's case might make to the answer to the first question. As stated above, the ECJ gave its ruling in its judgment of 13 December 2005. It ruled that the answer to the first question was that article 43 EC did not preclude provisions of a member state which prevented a resident parent company from claiming group relief for losses incurred by a subsidiary established in another member state. The restriction was justified by three grounds when taken together, namely (1) preserving the balanced allocation of the power to impose taxes between member states; (2) preventing losses being taken into account twice in different member states; and (3) preventing the risk of tax avoidance if the taxpayer were to be free to choose the member state in which to claim relief: paras 41 51. In particular, at para 51 it was said that in principle such restrictive provisions pursue legitimate objectives which are compatible with the Treaty and constitute overriding objectives in the public interest and that they are apt to ensure the attainment of those objectives. However the Court noted in effect at para 53 that, in order to be lawful, the measures must not go beyond what is necessary to attain the objectives pursued. In short the measures must be proportionate. For present purposes the critical paragraphs are paras 55 and 56: 55. In that regard, the court considers that the restrictive measure at issue in the main proceedings goes beyond what is necessary to attain the essential part of the objectives pursued where: the non resident subsidiary has exhausted the possibilities (i) available in its state of residence of having the losses taken into account for the accounting period concerned by the claim for relief and also for previous accounting periods, if (ii) necessary by transferring those losses to a third party or by offsetting the losses against the profits made by the subsidiary in previous periods, and there is no possibility for the foreign subsidiarys losses to be taken into account in its State of residence for future periods either by the subsidiary itself or by a third party, in particular where the subsidiary has been sold to that third party. 56. Where, in one member state, the resident parent company demonstrates to the tax authorities that those conditions are fulfilled, it is contrary to articles 43 EC and 48 EC to preclude the possibility for the parent company to deduct from its taxable profits in that member state the losses incurred by its non resident subsidiary. The matter then returned before Park J in April 2006. In Marks & Spencer plc v Halsey (No 2) [2006] STC 1235 he held that the no possibilities test referred to in para 55 required an analysis of the recognised possibilities legally available given the objective facts of the company's situation at the relevant time, and that the test was to be applied at the date when the group relief claim was made. He remitted the case to the special commissioners, but both parties appealed against his decision. The Court of Appeal, comprising Chadwick, Tuckey and Jacob LJJ, upheld the judge's findings: [2008] STC 526. The case then returned to the Tax Chamber of the First tier Tribunal (FTT), which comprised Judge Avery Jones and Judge Gammie (as they had by then become): Marks and Spencer plc v Revenue and Customs Comrs [2009] UKFTT 64 and 231 (TC) and proceeded from there to the Upper Tribunal (UT), which comprised the President, Warren J, and Judge Edward Sadler: [2010] STC 2470 and thence to a second Court of Appeal, comprising Lloyd, Moses and Etherton LJJ [2012] STC 231. It was in his judgment in that second appeal that Moses LJ, with whom Lloyd and Etherton LJJ agreed, set out the issues as quoted above. The Court of Appeal dismissed HMRCs appeal on issues one, two and five and dismissed M&Ss appeal on issue four. It gave both parties permission to appeal to this Court. When the matter first came before the Court, as Lord Hope observed at para 2, M&S had intended that issue one would be referred to the ECJ but, in the event, on 21 February 2013, the ECJ gave judgment in the case of A Oy (Case C 123/11). M&S submitted that any doubt that might have existed on the first issue had been dispelled by that ruling, that a reference was no longer necessary and that it could now be answered in their favour. HMRC had objected to M&S's application for a reference on the ground that the answer to the first issue was already clear, although in the event they simply invited the Court to determine this issue in their favour. So the hearing on M&S's application for a reference became a substantive hearing of the appeal on the first issue. In retrospect it is perhaps a pity that all five issues were not all considered together on the first occasion because in this appeal, which is concerned with issues two, four and five (issue three having in effect been resolved by the determination of issue one), there has been much debate as to the inferences that can be drawn from the judgment on issue one. It is of course easy to be wise after the event but the experience of this case shows that, where there are or may be a number of inter related issues of law, it may be better to consider them all together rather than to consider them one by one. In the event I do not think that this course has affected the result and I recognise that each case must be managed in accordance with its own circumstances but it is something to be borne in mind in the future. Issues one and three Issue one was restated in the statement of facts and issues as follows: In Case C 446/03 Marks & Spencer plc v Halsey, did the ECJ decide that it was contrary to article 43 EC to preclude cross border loss relief in the member state of the claimant company (a) only where the taxpayer can show, on the basis of the circumstances existing at the end of the accounting period in which the losses in question arose, that there was no possibility of the losses in question being utilised in the member state of the surrendering company in that accounting period, in any previous accounting period or in future accounting period (as HMRC contend), or (b) where the taxpayer can show, on the basis of the circumstances existing at the date of the claim, that there has been no possibility of utilising the losses in the member state of the surrendering company in any accounting period prior to the date of the claim and no possibility of such utilisation in the accounting period in which the claim is made or in future accounting periods (as M&S contend)? The date of the claim was of course the date which both Park J and the first Court of Appeal had held to be the correct date, which was the answer proposed in (b) above: see as to their reasoning paras 11 and 12 of Lord Hopes judgment respectively. Although the second Court of Appeal did not agree (see Lord Hope at para 13), it held that it was bound by the decision of the first Court of Appeal (see Lord Hope at para 14). In para 30 Lord Hope rejected the case for HMRC that the correct answer was that proposed as alternative (a) above, namely that it is contrary to article 43 EC to preclude cross border loss relief in the member state of the company claiming relief only where the taxpayer can show, on the basis of the circumstances existing at the end of the accounting period in which the losses in question arose, that there was no possibility of the losses in question being utilised in the member state of the surrendering company in that accounting period, in any previous accounting period or in future accounting periods. Lord Hope rejected Mr Ewart QCs submission on behalf of HMRC that to take a later date than the end of the accounting period would give the taxpayer a choice, which would upset the balanced allocation of the power to impose taxes. Mr Milne did not dispute the need to avoid upsetting that balance but submitted that the taxpayer ought to be given an opportunity to deal with it in as realistic a manner as possible. Lord Hope accepted that submission. He said that the approach contended for by HMRC would mean that there would be no realistic chance of satisfying the para 55 conditions at all. It would hardly ever be possible, if regard were had only to how matters stood at the end of the relevant accounting period, to exclude entirely the possibility that the losses in question might be utilised in the member state of the surrendering company unless, of course, this was prevented by its local law. The balanced allocation principle did not require to be supported by an approach which restricts the company to that extent. He said that that was clear from the way the issue was dealt with by the ECJ in A Oy at para 48. In the course of the oral argument in this Court Mr Milne QC submitted on behalf of M&S that the relevant date was, not the date of the claim, but the later date when the facts were considered, namely the date of the hearing before the FTT. In para 31 Lord Hope rejected that submission. However Mr Milne had not abandoned his original submission, which was now put in the alternative, that the date to be taken was the date of the claim, which was of course the date chosen by Park J and the first Court of Appeal. Such a date would have the advantage of certainty. Lord Hope accordingly opted for option (b). It is important to note that Lord Hope expressly pointed out at the end of para 31 that the questions whether successive claims could be made and, if so, with what effect, must be left over for consideration under issue two. He also stressed in para 32 that the national court must be alert to the possibility that the company may simply be choosing in which member state it should be taxed. The para 55 conditions are designed to exclude that possibility. He held in para 33 that the question for inquiry is whether the company has been able to show, on the basis of the circumstances known at the date when it makes its claim, that there has been no possibility of the losses in question being utilised in the member state of the surrendering company in any accounting period prior to the date of the claim and no possibility of such utilisation in the accounting period in which the claim is made or in any future accounting periods. Finally, Lord Hope noted that that answer had the consequence that issue three need not be answered. Issue two Issue two is formulated in the statement of facts and issues in this way: If the answer to issue 1 is (b), does the date of claim include the date of sequential/cumulative/alternative claims by the same company for the same losses of the same surrendering company in respect of the same accounting period provided that the statutory time period for claiming loss relief remains open? In so far as it was suggested on behalf of the HMRC that the conclusions of Lord Hope on issue one are of some assistance in answering this question in favour of the HMRC, I would not accept the submission. As noted above, Lord Hope made it clear that he was only considering the date as at which the circumstances of a claim were to be determined. He was not considering the question whether further or alternative claims were permissible and in what circumstances. That is the question raised by issue two. Although cumulative claims are included in issue 2 as formulated, HMRC submitted that the claims are not cumulative because each of the claims is in respect of exactly the same losses. That is so but does not affect the issue of principle, which is correctly described by HMRC as whether it is open to a claimant company to make a series of sequential claims for cross border loss relief in respect of the same losses of the same surrendering company in respect of the same accounting period. For the purposes of discussion it is convenient to refer to the later claims as new claims, even though in one sense they may be said to be old claims. However described, HMRC submitted that the second, third and fourth group relief claims are not valid claims at all, whether as a matter of domestic law or, more relevantly, for the purpose of the no possibilities test, as a matter of EU law. The only valid claims are the original claims, in respect of which the FTT determined that the no possibilities test was not satisfied. Domestic law It is convenient to consider first the position as a matter of domestic law, which was not considered at all for the purposes of the resolution of issue one. The relevant statutory provisions are set out in Annex A to this judgment, which is taken from the annex to the supplementary case for M&S and is not in dispute. As noted in para 7 above, M&S made three new claims in respect of the same losses on 20 March 2007, 12 December 2007 and 11 June 2008. HMRC submit that those claims are invalid as a matter of domestic law. They rely upon para 73(2) of Schedule 18 to the Finance Act (FA) 1998, which provides that a claim for group relief may not be amended, but must be withdrawn and replaced by another claim. They say that the original claims were not withdrawn and that it follows that the new claims cannot be valid claims. Further or alternatively, they say that the new claims were not claims at all but merely repetitions of valid claims already made. I would not accept those submissions. There is in my opinion no support for them in the provisions set out in Annex A below. As drafted, those provisions do not expressly contemplate cross border relief. On the contrary, they refer to the surrendering companys tax return in terms that show that the draftsman had in mind the tax return of an English company: paras 69(3), 70(3)(b), 72(1) (3) and 75. More importantly, there is no support for the conclusion that only one claim can be made. On the contrary, the provisions contemplate that successive claims can be made. Thus para 69(2) provides that a claim is ineffective if the amount exceeds the amount available for surrender at the time the claim is made; para 70(4) provides that a claim is ineffective unless it is accompanied by a copy of the notice of consent to surrender given by the surrendering company; and para 70(3) provides that the claim is ineffective if the necessary consents are not given. Importantly, para 73(2) provides that a claim for group relief may not be amended but must be withdrawn and replaced by another claim. Those provisions are, in my opinion, inconsistent with the proposition that only one claim can be made. So too are the time limitation provisions in the self assessment rules. It is common ground that under para 74(1) the time limit for making or withdrawing a claim for group relief does not expire until the latest of the four periods referred to in (a) to (d) (set out in Annex A below), which might take some years where, as is not uncommon, there is an enquiry into the relevant tax return. Those provisions seem to me to be inconsistent with the notion that there can only be one claim. The UT discussed the structure of the domestic legislation in some detail between paras 67 and 86, in the last of which they expressed their overall conclusion thus: Our overall conclusion with regard to the group relief provisions as they apply in the domestic context under the self assessment regime is that, whilst they are detailed and prescriptive, they are nevertheless both flexible and dynamic: in broad terms, the mechanics of Schedule 18 FA 1998 are directed so as to achieve the result that, in their final form, the tax returns of the claimant and surrendering companies accurately reflect amounts eventually shown to be available for surrender, as supported by corresponding notices of consent. Further, the processes and adjustments required to reach that final result may continue throughout the period during which it is open for a group company to make a group relief claim (which in practice, under self assessment, is a generous period). That is all that is required in a self assessment regime, and the flexibility and dynamism are required where, in large groups of companies with complex tax affairs, adjustments and consequential changes are likely to be inevitable and frequent. I agree. In short, simply as a matter of construction of the relevant provisions, without any manipulation made necessary by the fact that the draftsman did not have cross border relief in mind, there is no support for the conclusion that only one claim can be made. Para 73(2) makes that clear. It does not provide that successive claims cannot be made. On the contrary, it expressly provides that a claim for group relief may not be amended but must be withdrawn and replaced by another claim and thus necessarily contemplates that successive claims may be made. The EU context It is common ground that, as the UT put it at para 87, in order to give effect to M&Ss Community law rights, some adjustment or remoulding of the domestic legislation was required: Autologic plc v Inland Revenue Comrs [2006] 1 AC 118, per Lord Nicholls at paras 16 17 and 29 30. The legislation must be construed so as to ensure that those rights are effective in the sense that they are not practically impossible or excessively difficult to exercise and also so as to ensure that the statutory code provides an effective remedy. The UT identified the problem posed by para 69(2). It concluded at para 107 that para 69(2) makes no sense if applied literally in the context of a claim for relief in respect of a foreign surrendering company. The amount available for surrender is not well defined in the context of the no possibilities test by reference to the definition in para 69(3). Even if the reference to the tax return can be read as the equivalent document in a member state to the UK tax return, that document will only provide information relevant to ascertaining the loss according to the law of that state and not UK tax law and will not reveal what, if any, part of the loss satisfies the no possibilities principle. In these circumstances, at para 108 the UT identified what it described as at least two approaches to the necessary disapplication or moulding of para 69(2) and, for the reasons specified in paras 109 to 111 concluded that the appropriate solution was to disregard para 69(2). The UT expressed its conclusions thus at para 112: To summarise: in our view, a claimant company seeking group relief in respect of the losses of a foreign group company can make successive claims, provided that all those claims are made within the time limit for claims specified by paragraph 74. It does not have to withdraw an earlier claim before making another claim. The validity of the later claim depends on the facts as they are at the time of the later claim. If the first claim results in no relief being given because at the time that first claim is made the no possibilities test is not fulfilled in respect of any part of the losses in respect of which relief is claimed, a later claim can be made for such amount of those losses as satisfies the no possibilities test as at the time of the later claim. If an earlier claim is valid in respect of part of the losses (because the no possibilities test is satisfied in respect of part) then a later claim can be made for the balance. This, in our view puts the company claiming group relief for the losses of a foreign group company in effectively the same position as though it were claiming such relief for domestic losses, after taking account of those factors and difficulties which are not present in the domestic context. It does not put the claimant company in any better a position (save possibly and if so, legitimately in relation to cash flow) than if it waits until the last possible moment within the time limit period to make its claim, that is, the point at which it is most likely to be able to satisfy the no possibilities test. That reasoning is not entirely consistent with that of the FTT, which held in its para 36 that the no possibilities test was not satisfied so the claim did not validly claim anything at all. It added: Accordingly, we find that the first claims were not valid claims at all. If we are wrong and they had some validity, the Appellant has undertaken to withdraw them and we proceed on that basis. As I read it, it was not part of the Upper Tribunals reasoning that the first claims were not valid claims at all. However, whether they were or not, the taxpayer is entitled to withdraw any unnecessary claims and advance a new claim at any time before such a claim becomes time barred. Moreover, on the facts, I would accept M&Ss submission that it made it clear from the outset that, once the courts had determined which claims were valid, it would withdraw the other claims. The correspondence amply supports the conclusion that M&S made it clear that their successive claims were made in the alternative to their original claims and that, if the original claims succeeded, they would withdraw their later claims and vice versa. HMRC did not accept that approach but in my view the FTT was entitled to proceed on the basis that, if the first claims failed, M&S had undertaken to withdraw them. See, to the same effect, the UT at paras 103 and 104. The second Court of Appeal upheld the decision and reasoning of the Upper Tribunal. Moses LJ summarised their conclusions in paras 57 and 58 in this way: 57. M&S, which made its first claims at a time when the conditions were not satisfied, and when it could not have known whether the conditions could be satisfied since it could not know what those conditions were, can surely not be worse off than if it had made no claim at all. On the [first] Court of Appeal's understanding of the ECJ's decision, it makes no sense to deprive M&S of the ability to claim cross border losses merely because its claims were premature. If it should have waited until it could satisfy the paragraph 55 conditions, and it was still in time to make claims to cross border losses, it is difficult to see why it should lose that opportunity because it made its claims too soon. If the Revenue are correct in their essential argument that the conditions must be applied at the time the losses crystallised then the problem does not arise; no advantage is to be gained by making successive claims. But once it is accepted, as the [first] Court of Appeal accepted, that a claimant may wait between the end of the accounting period in which the losses crystallised and the expiry of the time for making a claim, there is no reason why a claimant should forfeit the right to make a claim merely because it makes the claim too soon. The [first] Court of Appeal has recognised a right to claim based on facts which arise after the end of the accounting period, and before the expiry of the time for making a claim. Since there is no restriction against withdrawing a claim and advancing a new claim within that period, there is no good reason to prevent M&S doing so for the purpose of satisfying the paragraph 55 conditions. To refuse M&S the right to withdraw its earlier claims would put it at an unjustifiable disadvantage as against other potential claimants who have made no claim at all. If the only inhibition on waiting is the time limit for bringing claims, there can be no reason for refusing to allow M&S to withdraw such claims made at a time when the facts do not satisfy the paragraph 55 conditions, and rely on a claim made at a time when they do. The only time limit for such withdrawal is that which is consequent on the time limits within paragraph 74. 58. That result may be achieved, in compliance with paragraph 73, by M&S withdrawing the earlier claims and amending its return to make the claim at a time when the facts do satisfy the conditions in paragraph 55 pursuant to paragraph 75(6) of Schedule 18. I agree. In addition, at paras 59 to 62 the Court of Appeal expressly approved the mechanics adopted by the UT. See in particular para 60, where Moses LJ gave his reasons for agreeing that para 69(2) should be ignored as the UT proposed. Moses LJ added at para 61: 61. The issue, however, is not one of mechanics but of principle. The Revenue's objection is that a claimant should not be permitted to delay making a claim until it can satisfy the paragraph 55 test and, accordingly should not be permitted to withdraw earlier claims, which do not satisfy that test. But, like the Upper Tribunal, I see no reason why it should not. Either the Schedule permits such a course or it must be moulded for that purpose. Once it is acknowledged, as the Court of Appeal decided, that a claim may be delayed from the accounting period in which the losses claimed crystallised to the end of the time for making a claim, there can be no reason not to permit a series of claims being made. It seems to me that the Revenue's objection can only succeed if they are correct in their essential argument that a claimant cannot rely upon any facts other than those which exist at the time when the losses claimed crystallised. Once it is accepted that facts which arise subsequently, and up to the expiry of the period for making a claim, are relevant, the objection becomes a mere question of machinery. Again, I agree. I also agree with Moses LJs conclusion at para 62 that the decision of the first Court of Appeal dictates that the claimant M&S is permitted to make successive claims to the same loss and rely on the claim which satisfies the para 55 criteria, and then withdraw any earlier claims in respect of the same surrendered losses. In these circumstances I would answer the question posed in issue two in the affirmative, subject to a consideration of a somewhat different point taken by HMRC that this approach offends the principle of legal certainty and jeopardises the preservation of the balanced allocation of taxing rights. However, there is nothing in the conclusion which I have reached so far that offends against the principle of legal certainty. The taxpayer is entitled to advance claims for cross border relief provided that it is in time to do so. I will return to this under issue four below in connection with time bar. As to the importance of the preservation of the balanced allocation of taxing rights, as indicated above, it was and is correctly accepted on behalf of M&S this is an important principle, as indeed Lord Hope accepted at paras 29 and 30. The question is essentially a factual question which involves practical considerations. In reaching these conclusions Lord Hope took account both of Oy AA (Case C 231/05) [2008] STC 991 and of A Oy (Case C 123/11). He concluded at para 30 that, in carrying out the factual exercise, the taxpayer should be given the opportunity of proceeding in as realistic a manner as possible and that the balanced allocation principle does not require to be supported by an approach as narrow as that proposed by HMRC under issue one. It was in the light of those considerations that this court held that the facts should be considered as at the date of the claim. For my part I see no reason why the same approach should not be adopted as at the date of the relevant claim, which for the reasons given above may be made at any time before it becomes time barred. I would accept Mr Milnes submission that there is no inconsistency between that approach and the principle of the balanced allocation of the power to impose taxes. As stated above, Lord Hope made it clear at para 32 that the taxpayer may simply be choosing in which member state it should be taxed. Again Mr Milne correctly accepts the validity of that principle but submits that there was no question here of M&S making such a choice and that the FTT resolved this issue in favour of M&S. He also relies upon para 32 more widely: The national court will, of course, be alert to the possibility that the company may simply be choosing in which member state it should be taxed. The para 55 conditions are designed to exclude that possibility. But the judgment in A Oy shows that the mere fact that losses can be carried forward at the end of the accounting period in which they arose does not mean that the para 55 conditions cannot be met. Moreover the fact that the merger that was contemplated in that case was not seen as a ground for denying the possibility of taking the losses into account, on the ground that it allowed the parent company to choose freely from one year to the next the tax scheme applicable to its subsidiary's losses, shows that the decisions to wind up MSD and MSB are not open to objection on that ground either. What M&S was doing can be attributed to the fact that the companies had ceased trading six years earlier, and not to the exercise of an option to choose where to seek relief for the losses that had been incurred. There is no reason to think that what it did must be seen as a threat to the balanced allocation of taxing powers. The principle that lies behind HMRC's approach must, of course, be respected. But it does not justify the choice of date for which they contend which, as Park J said, is too soon to give the company a reasonable opportunity of showing that the para 55 conditions are satisfied. I appreciate that those views were expressed in the context of issue one but they are to my mind consistent with the findings of fact made by the FTT. The FTT held at para 29 that at the time of the first group relief claims there was nothing to prevent the losses being used by continuing to trade or starting another trade or business and that it followed that the no possibilities test was not satisfied at the time of any of the first group relief claims. However, the FTT reached different conclusions in the case of the second, third and fourth group relief claims. As to the second relief claims it said this at para 30: The second group relief claims were all made during the liquidation. In both Germany and Belgium no new activities can be started once the company is in liquidation; the liquidators functions are to pay the liabilities and distribute the assets. In both countries losses can be carried forward to the liquidation and set against income arising during the liquidation. As we have concluded in paragraph 25 above, so far as it can be estimated that there will be such income this can be used to offset the losses, but we find that any losses in excess of such estimated income will satisfy the no possibilities test. In para 31 it notes that the third group relief claims were also made during the liquidation but closer to the end of it, two days before final dissolution for MSG and about two weeks before for MSB. As to the fourth claim, which related only to MSB, they noted in para 32 that it was made after the dissolution of the company. In these circumstances the FTT held that the position was the same in the case of each of the second, third and fourth group relief claims because, unlike the first claim, they in principle satisfy the no possibilities test. I can see no realistic basis upon which those conclusions of fact can be challenged. It follows that, in the light of the answer to the question posed by issue two, the subsequent alternative claims are in principle valid against the event of the prior claims failing under the no possibilities test, subject to the answer to the question posed by issue four. Issue four questions: As formulated in the statement of facts and issues, issue four asks these Does the principle of effectiveness require M&S in the particular circumstances of the present case to be allowed: (i) to make fresh pay and file or self assessment claims once the ECJ identified the circumstances in which losses had to be permitted to be transferred cross border; and/or (ii) to make sequential/cumulative/alternative self assessment claims while the statutory time period for making claims remained open as the legal position became clearer? Although issue four is formulated in that way, the conclusions set out above in connection with issue two to the effect that it is permissible to have sequential claims and that they are in principle valid so long as they are brought within the relevant time limits resolves the position with regard to self assessment claims. As already stated, it is common ground that all the self assessment claims are in time, so that it follows that, at any rate in my opinion, those claims can in principle be pursued. The position of the pay and file claims is different. As the UT observed at para 156, it was said that it was not until the judgment of the ECJ in December 2005 that M&S could have anticipated that a test such as the no possibilities test would be introduced. Accordingly, M&S should not only be given time after the decision to make its claim, it should be given time to put itself into a position where it could make an effective claim. It was said that M&S should have been given time, say, to put the surrendering companies into liquidation and to have them dissolved. However, the UT rejected that argument. They held that the principle of effectiveness is concerned with giving effect to Community rights. It is concerned with ensuring that such rights as a person has under Community law are recognised and given effect to in a member state which has not properly reflected such rights in its own domestic law. It was no part of that principle that a person should be given the opportunity to bring about a new state of affairs giving rise to the existence of new rights which he does not already have, in order to enforce them under Community law when they would be unenforceable under domestic law. In those circumstances, the principle of effectiveness could not be invoked since there was no right under Community law in respect of which a claim could be made within the time limit and, for reasons the UT had given in para 158, it is not part of the principle of effectiveness that a company must be given an opportunity to create a new situation so as to allow it to assert a right which it would not otherwise have. That analysis seems to me to be correct. It was accepted by Moses LJ in para 63 of his judgment in the Court of Appeal, where he added that a period of six years and three months was reasonable. He then discussed the problem in some detail between paras 63 and 68. He set out the differing conclusions of the FTT and UT in paras 64 and 65 respectively and in para 66 he noted (a) that the relevant jurisprudence establishes that a Member State may impose a reasonable time limit in the interests of legal certainty: Aprile Srl v Amministrazione delle Finanze dello Stato (No 2) (Case C 228/96) [2001] 1 WLR 126, [1998] ECR 1 7141 at para 19 and Fleming (trading as Bodycraft) v Revenue and Customs Comrs [2008] 1 WLR 195 at para 79(a) and (b) that such a time limit must not render virtually impossible or excessively difficult the exercise of rights conferred by Community law: Aprile at para 19. He concluded, in my opinion correctly, that the line of cases concerned with the reduction of a time limit which has the effect of taking a right away without adequate transitional arrangements, as for example Case C 62/00, Marks & Spencer plc v Customs and Excise Comrs (M&S 1) [2003] QB 866) has no relevance to these claims. As he explained, the time limit of 6 years and 3 months was in place, M&Ss claims were made within that period and were found not to have satisfied the paragraph 55 conditions. Moses LJ recognised at para 67 that M&S could not have foreseen the contents of para 55 of the ECJ judgment but held that the critical question was whether at the expiry of the time limit for making a claim M&S had a right to claim the MSG losses. He then expressed his conclusion in para 68 thus: At the time M&S made its claim to the losses sustained by MSG, it had no community law right to make such a claim. The prohibition against such a claim was lawful because M&S did not satisfy the conditions identified by the ECJ in paragraph 55. The ECJ has espoused the principle that, provided that the time limits are not discriminatory and do not render the exercise of Community law rights virtually impossible or excessively difficult in practice, a Member State may lay down reasonable time limits even if their effect is to deprive a claimant of such a right (Haahr Petroleum v Abenra Havn and Others [(Case C 90/94)] [1997] ECR 1 4085, para 48). That case concerned, like Aprile and M&S 1, the propriety of a time limit for claims to repayment. There is no principle that a reasonable time must be afforded to a claimant in which to bring about the circumstances which would generate the Community law right. The error of the FTT lay in the assumption that M&S had a right at the time it made its claim; on the findings of fact, at that time it had no such right and the principle of effectiveness cannot be invoked to create one. In my view the Upper Tribunal was correct and the 'pay and file' claim in respect of MSG is time barred. I would uphold the decision of the Upper Tribunal. I agree with that reasoning and would uphold the decision of the UT and the Court of Appeal that, unlike the self assessment claims, the relevant pay and file claims are time barred. That appears to me to be a sufficient answer to the question relating to those claims raised by issue four. Issue five This issue asks what is the correct method of calculating the losses available to be surrendered. Before the FTT (at both the liability and quantum hearings) the essential issue was whether the losses should be calculated (a) under the rules of a single country and, if so, whether it should be a local country (Method A) or the UK (Method C); (b) by converting to UK rules the unutilised losses as determined under local rules (Method E); or (c) by taking the lower each year of the amounts calculated and utilised either under local rules or after conversion to UK rules (Method F). The FTT held that Method E was the correct method and its decision was upheld by the UT and by the Court of Appeal. HMRC however contend that Method F is correct. The question in this appeal is thus whether the correct method is E or F. The essential difference between the methods is this. Method E begins by applying the local rules to determine whether there is a loss in a particular period and, if so, the amount of the loss that remained unutilised. The unutilised loss calculated by reference to the local rules is then converted to UK principles. M&S says that this conversion to UK principles ensures that M&S only obtains the same relief as a UK resident group would obtain. So, for example, if a loss calculated under local rules included a capital (rather than a trading) loss, that loss would be eliminated from the claim on conversion to UK principles because in the UK group relief is only available for trading losses. It says that the conversion process also ensures that the relief is given in the same year as that in which it would be given to a UK resident group. In some cases the process of converting the loss to UK principles has the effect of moving the loss from one period to the next. For example, the whole or part of a loss incurred in Year 1 under local rules may after conversion to UK principles be incurred in Year 0 or Year 2 under UK rules. This does not involve a permanent difference between the two sets of rules. The total amount of the loss over the period remains the same but the loss now occurs in Year 0 or 2. M&S say that this is an essential part of ensuring equal treatment. Were the group a UK resident group the loss would occur in those years. M&S says that Method E is to be preferred to Method F because it is the more equitable approach. HMRC, on the other hand, contend that no system of quantification can be permitted which allows a loss to be claimed in a period in which, in Germany no loss was sustained, as for example in 2002. They say that no principle of EU law requires the German losses to be relieved to a greater extent than would be the case if they were claimed in Germany. Like the UT, the Court of Appeal preferred Method E. It did so for the reasons concisely put by Moses LJ in paras 86 to 88 of his judgment. I agree with his reasoning and could not put it better. It is in these terms: 86. M&S seeks to set against its UK profits losses sustained by its subsidiary in Germany, as if those losses were sustained by a subsidiary resident in the UK. It claims no more and no less. If the losses had been sustained in the UK, it seems to me that there would be no question of timing differences leading to the loss of relief in respect of a proportion of unutilised losses. The effect of the application of UK tax rules may be to shift losses sustained in Year 2 under German tax rules into Year 1, if the subsidiary had been resident in the UK. Those losses should be afforded relief in Year 1 under UK rules. It is nothing to the point that that would not be the appropriate year under German tax rules. The effect of the application of UK tax rules is to convert the German losses into losses sustained in year 1 to be set against UK profits in the same accounting period, ie year 1. That is not to cut across UK tax principles but to apply them. 87. The consequence of the Revenue's method is to deprive M&S of relief for losses sustained in Germany in circumstances where it would not be refused relief had those losses been sustained in the UK. Method E does not give the parent greater relief than would have been available had its subsidiary been resident in the same state as the parent, whether in Germany or in the UK. It does not seem to me to matter that the losses are allowed in different accounting periods from those in which they would be allowed in Germany. No relief is to be afforded to losses which would not be relieved in the UK. As the FTT put it: Once you move from identifying the local losses (computed under local rules) to identifying their equivalent under UK rules, you also have to move from local time of recognition to UK timing of recognition (para 7) 88. Method E does not result in a group relief claim for an amount more than could be claimed were the subsidiary to have been resident in the UK. The re allocation of losses to a different period in the UK is merely the result of the application of UK tax law. I would dismiss the Revenue's appeal on this point. For the same reasons, I would dismiss the HMRCs appeal under this head. I would answer the question posed by issue five by holding that the correct method of calculating the losses available to be surrendered is Method E. CONCLUSION For these reasons I would dismiss the appeals of the HMRC on issues 2 and 5 and I would dismiss the appeal of M&S on issue 4. I would answer issue two in the affirmative and would hold that M&S is entitled to advance all its self assessment claims. Under issue 4, I would hold that the relevant pay and file claims are time barred, as contended for by the HMRC. Finally, under issue five, I would hold that the correct method of calculation of the claims is Method E. I would like to conclude by saying how much I appreciate the clarity with which all the tribunals and courts have expressed their reasoning and conclusions on the many different points that have confronted them in the light of the jurisprudence of the ECJ. ANNEX A STATUTORY FRAMEWORK 1. Group relief is dealt with in chapter 4 of part X of ICTA 19881. The basic provisions are section 402(1) and section 403(1), which provide so far as material that: 402 (1) relief for trading losses and other amounts eligible for relief from corporation tax may be surrendered by a company (the surrendering company) and, on the making of a claim by another company (the claimant company), may be allowed to the claimant company by way of a relief from corporation tax called group relief. 403 (1) If in an accounting period (the surrender period) the surrendering company has (a) trading losses, excess capital allowances or a non trading deficit on its loan relationships, or (b) [certain other charges and expenses] which are available for group relief, the amount may, subject to the provisions of this Chapter, be set off for the purposes of corporation tax against the total profits of the claimant company for its corresponding accounting period. (A) The self assessment regime (applicable to accounting periods ending on or after 1 July 1999) 2. Part VIII of Schedule 18 FA 1998 lays down more detailed provisions on claims under the self assessment regime. So far as is material the relevant provisions are as follows: Claim to be included in company tax return 67(1) A claim for group relief must be made by being included in the claimant company's company tax return for the accounting period for which the claim is made. (2) It may be included in the return originally made or by amendment. Content of claims 68(1) A claim for group relief must specify (a) the amount of relief claimed, and (b) the name of the surrendering company. 1 Post Finance Act 1998 version (2) The amount specified must be an amount which is quantified at the time the claim is made. Claims for more or less than the amount available for surrender 69(1) A claim for group relief may be made for less than the amount available for surrender at the time the claim is made. (2) A claim is ineffective if the amount claimed exceeds the amount available for surrender at the time the claim is made. (3) For these purposes the amount available for surrender at any time is calculated as follows. First step Determine the total amount available for surrender under section 403 of the Taxes Act 1988 (a) on the basis of the information in the company's company tax return, and (b) disregarding any amendments whose effect is deferred under paragraph 31(3). Second step Then deduct the total of all amounts for which notices of consent have been given by the company and not withdrawn. Consent to surrender 70(1) A claim for group relief requires the consent of the surrendering company. (2) (3) The necessary consent or consents must be given (a) by notice in writing, (b) to the officer of the Board to whom the surrendering company makes its company tax returns, (c) at or before the time the claim is made. Otherwise the claim is ineffective. (4) A claim for group relief is ineffective unless it is accompanied by a copy of the notice of consent to surrender given by the surrendering company. (5) Notice of consent 71(1) Notice of consent by the surrendering company must contain all the following details (a) the name of the surrendering company; (b) the name of the company to which relief is being surrendered; (c) the amount of relief being surrendered; (d) the accounting period of the surrendering company to which the surrender relates; (e) the tax district references of the surrendering company and the company to which relief is being surrendered. Otherwise the notice is ineffective. (2) Notice of consent may not be amended, but it may be withdrawn and replaced by another notice of consent. (3) Notice of consent may be withdrawn by notice to the officer of the Board to whom the notice of consent was given. (4) Except where the consent is withdrawn under paragraph 75 (withdrawal in consequence of reduction of amount available for surrender), the notice of withdrawal must be accompanied by a notice signifying the consent of the claimant company to the withdrawal. Otherwise the notice is ineffective. (5) The claimant company must, so far as it may do so, amend its company tax return for the accounting period for which the claim was made so as to reflect the withdrawal of consent. Notice of consent requiring amendment of return 72(1) Where notice of consent by the surrendering company is given after the company has made a company tax return for the period to which the surrender relates, the surrendering company must at the same time amend its return so as to reflect the notice of consent. (2) Where notice of consent by the surrendering company relates to a loss in respect of which relief has been given under section 393(1) of the Taxes Act 1988 (carry forward of trading losses), the surrendering company must at the same time amend its company tax return for the period or, if more than one, each of the periods in which relief for that loss has been given under section 393(1) so as to reflect the new notice of consent. For this purpose relief under section 393(1) is treated as given for losses incurred in earlier accounting periods before losses incurred in later accounting periods. (3) The time limits otherwise applicable to amendment of a company tax return do not prevent an amendment being made under sub paragraph (1) or (2). (4) If the surrendering company fails to comply with sub paragraph (1) or (2), the notice of consent is ineffective. Withdrawal or amendment of claim 73(1) A claim for group relief may be withdrawn by the claimant company only by amending its company tax return. (2) A claim for group relief may not be amended, but must be withdrawn and replaced by another claim. Time limit for claims [See under (B) below] Reduction in amount available for surrender 75(1) This paragraph applies if, after the surrendering company has given one or more notices of consent to surrender, the total amount available for surrender is reduced to less than the amount stated in the notice, or the total of the amounts stated in the notices, as being surrendered. (2) The company must within 30 days withdraw the notice of consent, or as many of the notices as is necessary to bring the total amount surrendered within the new total amount available for surrender, and may give one or more new notices of consent. (3) The company must give notice in writing of the withdrawal of consent, and send a copy of any new notice of consent (a) to each of the companies affected, and (b) to the Inland Revenue. (4) If the surrendering company fails to act in accordance with sub paragraph (2), the Inland Revenue may by notice to the surrendering company give such directions as they think fit as to which notice or notices are to be ineffective or are to have effect in a lesser amount. This power shall not be exercised to any greater extent than is necessary to secure that the total amount stated in the notice or notices is consistent with the total amount available for surrender. (5) The Inland Revenue must at the same time send a copy of the notice to the claimant company, or each claimant company, affected by their action. (6) A claimant company which receives (a) notice of the withdrawal of consent, or a copy of a new notice of consent, under sub paragraph (3), or (b) a copy of a notice containing directions by the Inland Revenue under sub paragraph (4), must, so far as it may do so, amend its company tax return for the accounting period for which the claim is made so that it is consistent with the new position with regard to consent to surrender. (B) Time limits 3. The time limits for making group relief claims under the self assessment regime are set out at paragraph 74(1) of Schedule 18 to FA 1998 as follows: (1) A claim for group relief may be made or withdrawn at any time up to whichever is the last of the following dates (a) the first anniversary of the filing date for the company tax return of the claimant company for the accounting period for which the claim is made; (b) if notice of enquiry is given into that return, 30 days after the enquiry is completed; (c) if after such an enquiry [an officer of Revenue and Customs] [amends] the return under paragraph 34(2), 30 days after notice of the amendment is issued; (d) if an appeal is brought against such an amendment, 30 days after the date on which the appeal is finally determined. (2) A claim for group relief may be made or withdrawn at a later time if the Inland Revenue allow it. (C) Pay and file regime 4. The procedural requirements for making group relief claims for accounting periods ending before 1st July 1999 (the pay and File years) are set out in Schedule 17A ICTA 1988, paragraphs 2 to 5 of which provide: 2(1) No claim for an accounting period of a company may be made if (a) the company has been assessed to corporation tax for the period, and (b) the assessment has become final and conclusive. (2) Sub paragraph (1) above shall not apply in the case of a claim made before the end of 2 years from the end of the period. (3) This paragraph applies to the withdrawal of a claim as it applies to the making of a claim. 3(1) No claim for an accounting period of a company may be made after the end of 6 years from the end of the period, except under paragraph 5 below. (2) This paragraph applies to the withdrawal of a claim as it applies to the making of a claim. 4 Where under paragraph 2 or 3 above a claim may not be made after a certain time, it may be made within such further time as the Board may allow. 5(1) A claim for an accounting period of a company may be made after the end of 6 years from the end of the period if (a) the company has been assessed to corporation tax for the period before the end of 6 years from the end of the period, (b) the company has appealed against the assessment, and (c) the assessment has not become final and conclusive. (2) No claim for an accounting period of a company may be made after the end of 6 years and 3 months from the end of the period. Easter Term [2013] UKSC 30 On appeal from: [2011] EWCA Civ 1156 JUDGMENT (Appellant) Commissioners for Her Majesty's Revenue and Customs (Respondent) v Marks and Spencer plc Commissioners for Her Majesty's Revenue and Customs (Appellant) v Marks and Spencer plc (Respondent) before Lord Neuberger, President Lord Hope, Deputy President JUDGMENT GIVEN ON Lord Mance Lord Reed Lord Carnwath 22 May 2013 Heard on 15 April 2013 Appellant David Milne QC Nicola Shaw QC (Instructed by Hage Aaronson Ltd) Appellant David Ewart QC Sarah Ford (Instructed by HMRC Solicitors Office) Respondent David Ewart QC Sarah Ford (Instructed by HMRC Solicitors Office) Respondent David Milne QC Nicola Shaw QC (Instructed by Hage Aaronson Ltd) LORD HOPE (with whom Lord Neuberger, Lord Mance, Lord Reed and Lord Carnwath agree) 1. This litigation concerns claims by Marks and Spencer plc (M&S) for group relief in respect of losses sustained by two of their subsidiaries: Marks and Spencer (Deutschland) GmbH (MSD), which was resident in Germany; and Marks and Spencer (Belgium) NV (MSB), which was resident in Belgium. The claims were originally made and refused by the Revenue (HMRC) more than ten years ago. They raise questions about the availability of cross border group relief and the method of quantifying such relief as is available which, despite having been the subject of nine separate hearings since the case was first considered in December 2002, have still not yet been resolved. 2. The appeals come before the Court at this stage on an application by M&S for a reference to the Court of Justice of the European Communities. On 14 October 2011 the Court of Appeal gave judgment on five issues which had been identified as arising in the case: Marks and Spencer plc v Revenue and Customs Commissioners [2011] EWCA Civ 1156, [2012] STC 231. The Court of Appeal found in favour of M&S on four of these issues and in favour of HMRC on the other one. It gave the parties permission to appeal on all issues. M&S had intended to seek a reference on the first issue, but on 21 February 2013 the CJEU gave judgment in Case C 123/11 Proceedings brought by A Oy. M&S submit that any doubt that might have existed on the first issue has been dispelled by that ruling, that a reference is no longer necessary and that it can now be answered in their favour. HMRC had objected to M&Ss application for a preliminary ruling on the ground that the answer to the first issue was already clear. As matters now stand, however, they simply invite this Court to determine this issue in their favour. So the hearing on M&Ss application for a reference became a substantive hearing of the appeal on the first issue. Background 3. M&S began to expand its business into other countries in 1975. By the end of the 1990s it had sales outlets in more than 34 countries, with a network of subsidiaries and franchises. But by that date it had already begun to incur losses, and in March 2001 it decided to withdraw from its continental European activity. It was able to sell its French and Spanish subsidiaries to third parties, but no purchasers could be found for MSD and MSB. MSD ceased trading in August 2001 and was dissolved following liquidation on 14 December 2007. MSB ceased trading on 22 December 2001 and was dissolved following liquidation on 27 December 2007. 4. The first group relief claims were made between 2000 and 2003 at a time when neither subsidiary was in liquidation. They concerned MSDs losses for the years 1998 to 2001 and MSBs losses for the years 2001 and 2002. Claims for the same losses by the same companies for the same years were made on three subsequent occasions in response to what M&S describe as factual and jurisprudential developments: on 20 March 2007, when both companies were in liquidation; on 12 December 2007, just before the companies were dissolved; and on 11 June 2008, on behalf of MSB following the dissolution of that company. The claims for the years from 2000 onwards were governed by the self assessment rules in Schedule 18 to the Finance Act 1998 and were within the statutory time limits. HMRC maintain that the claims for years prior to 2000, which were governed by the corporation tax pay and file rules in Schedule 17A to the Taxes Act 1988, were out of time when they were included in the claims that were made on the three occasions subsequent to the making of the first claims between 2000 and 2003. 5. The basic contention underlying all these claims was that the provisions in United Kingdom legislation which restricted group relief claims to losses of UK resident companies and, after the Finance Act 2000, losses of UK branches of non resident companies were contrary to article 43 EC (now article 49 TFEU) on the freedom of establishment, and were thus unlawful. On 17 December 2002 the Special Commissioners held that there had been no breach of that article: Marks and Spencer plc v Halsey (Inspector of Taxes) [2003] STC (SCD) 70. Park J on appeal decided to refer the matter to the ECJ: [2003] EWHC 1945 (Ch). He sought a preliminary ruling on two questions. The first was the compatibility of the UK provisions with article 43 EC. The second was what difference the facts of M&Ss case might make to the answer to the first question. 6. The ECJ gave its ruling in its judgment of 13 December 2005: Case C 446/03 Marks & Spencer plc v David Halsey (Her Majestys Inspector of Taxes) [2005] ECR I 10837. It ruled that the answer to the first question was that article 43 EC did not preclude provisions of a Member State which prevented a resident parent company from claiming group relief for losses incurred by a subsidiary established in another Member State. The restriction was justified by three grounds when taken together: preserving the balanced allocation of the power to impose taxes between Member States; preventing losses being taken into account twice in different Member States; and preventing the risk of tax avoidance if the taxpayer were to be free to choose the Member State in which to claim relief: paras 42 51. 7. As to the proportionality of the restriction, however, the ECJ went on to say this: 55 In that regard, the Court considers that the restrictive measure at issue in the main proceedings goes beyond what is necessary to attain the essential part of the objectives pursued where: the non resident subsidiary has exhausted the possibilities available in its State of residence of having the losses taken into account for the accounting period concerned by the claim for relief and also for previous accounting periods, if necessary by transferring those losses to a third party or by offsetting the losses against the profits made by the subsidiary in previous periods, and there is no possibility for the foreign subsidiarys losses to be taken into account in its state of residence for future periods either by the subsidiary itself or by a third party, in particular where the subsidiary has been sold to that third party. 8. The debate then returned to the United Kingdom. Park J gave effect to the ruling of the ECJ on 10 April 2006: Marks and Spencer plc v Halsey (Inspector of Taxes) [2006] EWHC 811 (Ch), [2006] STC 1235. He held that the no possibilities test referred to in para 55 of the ECJs judgment required an analysis of the recognised possibilities legally available given the objective facts of the companys situation at the relevant time, and that the test was to be applied at the date when the group relief claim was made. He remitted the case to the Special Commissioners, but both parties appealed against his decision. The Court of Appeal upheld the judges findings: [2007] EWCA Civ 117, [2008] STC 526. The case then returned to the Tax Chamber of the First Tier Tribunal: Marks and Spencer plc v Revenue and Customs Commissioners [2009] UKFTT 64 (TC); [2009] UKFTT 231 (TC); [2009] SFTD 757, and proceeded from there to the Upper Tribunal [2010] UKUT 213 (TCC), [2010] STC 2470 and then to a second Court of Appeal, whose decisions are now under appeal to this court. 9. The issues that arose in the second Court of Appeal were summarised by Moses LJ in [2012] STC 231, para 4 as follows: (i) Is the test that the ECJ established to identify those circumstances in which it would be unlawful to preclude cross border relief for losses, the no possibilities test, to be applied (as the Revenue contend) at the end of the accounting period in which the losses crystallised rather than (as M&S contends) the date of claim? This question involves deciding whether the Court of Appeal in the first appeal reached a binding decision on that issue and whether it remains binding on this court in light of subsequent decisions of the ECJ. (ii) Can sequential/cumulative claims be made (as M&S contends) by the same company for the same losses of the same surrendering company in respect of the same accounting period? The Revenue assert that that is not a question decided by the Court of Appeal and is precluded both by UK fiscal rules and by the underlying jurisprudence of the ECJ. (iii) If a surrendering company has some losses which it has or can utilise and others which it cannot, does the no possibilities test (as the Revenue contend) preclude transfer of that proportion of the losses which it has no possibility of using? (iv) Does the principle of effectiveness require M&S to be allowed to make fresh pay and file claims now that the ECJ has identified the circumstances in which losses may be transferred cross border, when at the time M&S made those claims there was no means of foreseeing the test established by the court? (v) What is the correct method of calculating the losses available to be transferred? 10. The Court of Appeal refused HMRCs appeal on the first, second, third and fifth issues. It refused M&Ss appeal on the fourth issue. As both parties sought and obtained permission to appeal to this court, all five issues remain to be decided. They have been re stated in a slightly amended form in the statement of facts and issues. For present purposes only the first issue need be set out here. It is in these terms: In Case C 446/03 Marks & Spencer v Halsey, did the ECJ decide that it was contrary to article 43 EC to preclude cross border loss relief in the Member State of the claimant company (a) only where the taxpayer can show, on the basis of the circumstances existing at the end of the accounting period in which the losses in question arose, that there was no possibility of the losses in question being utilised in the Member State of the surrendering company in that accounting period, in any previous accounting period or in future accounting periods (as HMRC contend), or (b) where the taxpayer can show, on the basis of the circumstances existing at the date of the claim, that there has been no possibility of utilising the losses in the Member State of the surrendering company in any accounting period prior to the date of the claim and no possibility of such utilisation in the accounting period in which the claim is made or in future accounting periods (as M&S contend)? Issue 1 in the courts below 11. The question which Park J had to resolve, when the case returned to him after the ECJ had given its ruling, was whether the facts by reference to which the conditions set out in para 55 had to be satisfied were those which existed or could be foreseen at the end of the accounting period in which the losses arose, or those which existed at the date of the claim. He held that the relevant time was the date of the claim: [2006] STC 1235, paras 44 46. He said that the end of the accounting period was too soon. It would be likely to rule out virtually every case. He found it hard to imagine any case in which German or Belgian law would not provide for some possibility of relief for the losses at the end of an accounting period in which MSD or MSB made a loss and was still carrying on its trade. The date of the claim provided a rational basis for applying para 55, and if a company claimed group relief at a time when those criteria are satisfied it should get the relief. 12. The first Court of Appeal also held that the relevant time was the date when the claim was made: [2008] STC 526, para 32 42. Chadwick LJ said in para 36 that he could find no support in the reasoning which underlay the approach of the ECJ for the proposition that the para 55 conditions must be satisfied at the end of the surrender period: It is important to keep in mind, as it seems to me, that the question whether the United Kingdom tax authorities are precluded by Community law from applying the restriction on group relief imposed by domestic law does not arise until a claim for group relief is made by the claimant company. The claim must be accompanied by a notice from the surrendering company. At the least the surrendering company must consent to the use of its losses by the claimant company; and (as I have said) it may well be that the claimant company can be required to provide some formal confirmation from the surrendering company that the losses are not available in its state of residence. The question whether the United Kingdom tax authorities are precluded by Community law from applying the restriction on group relief imposed by domestic law turns on whether the para 55 conditions are satisfied. I can see no reason in principle why the latter question whether the para 55 conditions are satisfied should not be answered by reference to the facts as they are when the former question arises. 13. The second Court of Appeal did not agree: [2012] STC 231. Moses LJ said in para 29 that the principled objection to allowing the question whether the para 55 conditions are satisfied to be answered by reference to the facts as they are at the time of the claim is that it gives an option or choice as to where the losses may be relieved, and that that option was recognised by the ECJ as substantially jeopardising fiscal sovereignty. In other words, the claimant company should not be given an opportunity to take steps that might bring about a situation in which it could make a cross border claim. Placing the relevant moment at the end of the accounting period in which the losses were made denied it that opportunity. In paras 30 and 31 he gave further reasons for disagreeing with the reasoning of Park J and the first Court of Appeal. But in para 33 he recognised that there was a question as to whether it was open to his court to do so. HMRC contended that it was open to his court to depart from the decision in the first Court of Appeal because subsequent decisions of the ECJ demonstrated that it fell into error, and that his court should follow those subsequent decisions. 14. Moses LJ said that he was more than happy to follow the approach of Chadwick LJ in Cond Nast Publications Ltd v Customs and Excise [2006] EWCA Civ 976; [2006] STC 1721, para 44, that the Court of Appeal could refuse to follow its own earlier decision where the judgment of the ECJ under consideration in the earlier case had been the subject of further consideration, and consequent interpretation, explanation or qualification, by the Court in a later judgment. But he was unable to find anything in Case C 231/05 Proceedings brought by Oy AA [2007] ECR I 6373; [2008] STC 991 or Lidl Belgium GmbH & Co KG v Finanzamt Heilbronn Case C 414/06 [2008] ECR I 3601; [2008] STC 3229 which followed the ruling in Marks & Spencer v Halsey that suggested that the Court thought that it was departing from or going beyond what it had previously decided, although it had every opportunity to do so. He concluded therefore that his court was bound by the decision of the first Court of Appeal, and that its decision as to the date for assessment of the para 55 conditions was binding on his court: paras 46 48. The subsequent cases in the Court of Justice 15. In Oy AA [2007] ECR I 6373 a Finnish parent company wished, for non fiscal and genuine commercial reasons, to support an ailing subsidiary which was established in the United Kingdom by transferring profits to secure its financial position. The question was whether it could deduct those transfers from its taxable income in Finland. Finnish law limited a companys right to make intra group transfers from its taxable business income to cases where a national parent company holds at least nine tenths of the shares of another national company. The ECJ said that restricting the deductibility of intra group transfers in this way was apt to safeguard the allocation of powers to impose taxes between Member States, and to combat tax avoidance by deliberately transferring income by means of intra group transfers to companies resident in low taxation jurisdictions. It ensured that profits earned by group companies in Finland were subject to taxation there according to the principle of territoriality: para 65. 16. Two of the three justifications referred to in para 51 of Marks & Spencer were therefore satisfied. Safeguarding the allocation of the power to impose taxes could not be achieved by a corresponding, less restrictive national provision, and the law in question was proportionate. So article 43 EC did not preclude a system such as that in issue in that case: para 67. There is nothing in this ruling that departs from, or modifies, the justifications referred to in Marks & Spencer or its view in para 46, which it repeated in para 55 of Oy AA, that to give companies the option to have their losses taken into account in the Member State in which they are established or in another Member State would significantly jeopardise a balanced allocation of power to impose taxes between Member States. 17. In Lidl Belgium GmbH & Co KG [2008] ECR I 3601 the parent company, Lidl Belgium, was resident in Germany and had a permanent establishment in Luxembourg. Its permanent establishment incurred a loss which the parent company sought to deduct from its tax base in Germany. This was contrary to German law, as the permanent establishment was not subject to taxation in Germany. The question was whether the national tax regime was precluded by article 43 EC. The Court followed the same approach as it had adopted in Marks & Spencer and Oy AA. As in Oy AA, it held that the national legislation could be justified by the need to safeguard the allocation of power to tax between the Member States and the need to prevent tax avoidance: para 41. It recognised, as it did in Marks & Spencer, para 55, that a measure which restricted the freedom of establishment goes beyond what is necessary to obtain the objectives pursued where a non resident subsidiary has exhausted the possibilities for having the losses incurred in the Member State where it is situated taken into account for the accounting period concerned and previous accounting periods, and where there is no possibility for that subsidiarys loss to be taken into account in that State for future periods. But Luxembourg tax legislation provided for the possibility of deducting a taxpayers losses in future tax years, and the claimant had not shown that the conditions laid down in para 55 of Marks & Spencer were satisfied. 18. Here again there is a straightforward application of the principles established by Marks & Spencer. Once again the Court recognised the legitimate interest which the Member States have in preventing conduct which is liable to undermine the right to exercise the powers of taxation which are vested in them, and that to give a company the right to elect to have its losses taken into account in the Member State in which it has its seat or in another Member State would seriously undermine a balanced allocation of the power to impose taxes between the Member States concerned. In Case C 337/08 X Holding BV v Staatssecretaris van Financin [2010] ECR I 01215 a tax scheme which permitted a parent company to form a single tax entity with its resident subsidiary, but prevented it from doing this with a non resident subsidiary, was held to be justified on the application of the principles established in Marks & Spencer and applied in Oy AA and Lidl. As Moses LJ found when he examined these cases in the Court of Appeal, there is nothing in them which assists, either one way or the other, in the determination of the question raised by the first issue. 19. Moses LJ did not, of course, have the benefit of considering the Courts judgment of 21 February 2013 in A Oy. It is this judgment which is said by M&S to confirm the soundness of their submission that the question whether cross border relief in the Member State of the claimant company is precluded should be determined on the basis of the circumstances existing at the date of the claim and not at the end of the accounting period in which the losses arose. They say that it shows that the contrary view by Moses LJ is no longer tenable. A Oy 20. A was a Finnish undertaking with a subsidiary in Sweden, referred to as B. Following trading losses, B closed its sales outlets but remained bound by two long term leases. A planned to merge with B for reasons that could be justified commercially and to make it possible for Bs leases to be transferred to A. The effect of that operation would be that the assets, liabilities and residual obligations of B would be transferred to A and that the Finnish parent would no longer have a subsidiary in Sweden. A sought an advance decision as to whether, once the operation had been carried out, it would be able to deduct Bs losses in accordance with the Finnish law on income tax. When it received a negative answer it sought a preliminary ruling from the CJEU on the question whether article 49 TFEU, as it now is, precluded legislation under which that deduction could not be made while allowing for that possibility if the merger was with a resident subsidiary. 21. Advocate General Kokott was of the opinion that further development of the courts case law since Marks & Spencer had altered the scope of the justifications referred to in that judgment, that they could be referred to for examining the need for a national measure only if the prevention of double use of losses was recognised as an independent justification, that a justification based on the allocation of taxation powers among the Member States alone was no longer appropriate and that the possibility that the Swedish subsidiary might have its accumulated losses taken into account in its State of residence was irrelevant: paras 47 54. But she went on nevertheless in paras 55 59 to consider whether the conditions in Marks & Spencer for the losses of a non resident subsidiary to be taken into account in the parent companys Member State were fulfilled. 22. In her opinion the Marks & Spencer exception was formulated very restrictively, so that there must be no possibility for the foreign subsidiarys losses to be taken into account in its State of residence for past or future periods either by itself or a third party. In A Oys case the merger arose from a free decision of the parent company. The taxable company still had the option of using the Swedish losses in the future by resuming trading and through the resulting profits. Cessation of trading raised the possibility of choosing the tax scheme applicable to those losses which, according to the courts case law, the taxable company did not have. The Finnish provision was necessary for attaining the objective of preserving the allocation of taxing powers among Member States, and the disadvantages it caused were reasonably proportionate: para 68. 23. The Court did not follow either of the two approaches indicated by the Advocate General. The task which it set itself was to consider whether the difference in treatment between resident and non resident companies was appropriate for ensuring the objective pursued and did not go beyond what was necessary to achieve that objective: para 39. It considered all three of the justifications referred to in para 43 of Marks & Spencer taken together, and concluded that the legislation pursued legitimate objectives compatible with the Treaty which were justified by overriding interests in the public interest: paras 40 46. It then turned in para 48 to the question whether the legislation was necessary to attain those objectives: 48. With respect to the proportionality of the obstacle to freedom of establishment, it must be observed, first, that granting the parent company the possibility of taking into account the losses of its non resident subsidiary in connection with a cross border merger is not a priori such as to allow the parent company to choose freely from one year to the next the tax scheme applicable to the subsidiarys losses (see, a contrario, X Holding, para 31). 49. It follows, secondly, from the courts case law that a restrictive measure such as that at issue in the main proceedings goes beyond what is necessary to attain the essential part of the objectives pursued in a situation in which the non resident subsidiary has exhausted the possibilities available in its State of residence of having the losses taken into account (see, to that effect, Marks & Spencer, para 55). It is for the parent company to show that that is the case (see, to that effect, Marks & Spencer, para 56). 24. As for the facts of that case, As argument was that, once the merger had been carried out, B would be liquidated and A would no longer have a subsidiary or permanent establishment in Sweden. So neither of those two companies would appear to have the possibility of relying in Sweden, after the merger, on the losses incurred in Sweden before the merger. The Courts response to this argument in para 52 was that those specific circumstances were not in themselves capable of showing that there was no possibility of taking into account the losses that exist in the subsidiarys State of residence: 53. Thus several Member States which have intervened in the case consider, on the contrary, that the possibility of taking Bs losses into account in Sweden continues to exist. The German Government submits that those losses can be deducted from the income, admittedly very small, which B continues to receive in Sweden. It adds that B is still involved in leases which could be assigned. The French Government also submits that Swedish law allows companies to take losses into account in previous tax years or on the occasion of the taxation of capital gains made on the assets and liabilities of the merged company. The Italian Government submits that Sweden is entitled to evaluate the assets transferred and to tax the merged company on the profit thus realised. 54. It is therefore for the national court to determine whether A has in fact proved that B has exhausted all the possibilities of taking account of the losses which exist in Sweden. 25. The Court observed in para 55 that, were the referring court to reach the conclusion that such proof had been produced, denial to A of the possibility of deducting from its taxable profits the losses incurred by its non resident subsidiary, in the context of the proposed merger, would be contrary to articles 49 TFEU and 56 TFEU. It held in para 56 that those articles did not preclude national legislation to that effect. But it added this qualification: Such national legislation is none the less incompatible with European Union law if it does not allow the parent company the possibility of showing that its non resident subsidiary has exhausted the possibilities of taking those losses into account and that there is no possibility of their being taken into account in its State of residence in respect of future tax years either by itself or by a third party. 26. M&S submit that there are several points in this judgment that are relevant to the first issue. First, it held that the fact that A exercised a free choice in undertaking the merger did not preclude relief: para 48. In other words, the principle that a taxpayer should not be able to choose the country in which to relieve losses does not extend to steps which pose no threat to an entitlement to cross border relief. Steps which are taken simply in order to show that the para 55 conditions are met do not threaten the balanced allocation of taxing powers. Secondly, the judgment suggests that the mere fact that losses could be carried forward under local law at the end of the accounting period does not of itself mean that the para 55 conditions are not met. Reference was made to this possibility in para 50 of the judgment, but this did not lead to a conclusion that the para 55 conditions were not met. It was still necessary for the national court to examine whether, on the facts, all possibilities of using the losses had been exhausted: para 54. That being so, there was no principled reason for insisting that the relevant date should be the end of the accounting period in which the losses were incurred. Discussion 27. The point which the first issue raises comes down, in the end, to a choice between what Moses LJ described as the principled approach contended for by HMRC and the one contended for by M&S. The approach for which M&S contend looks instead to the practical consequences if the relevant date is to be taken to be the end of the accounting period in which the losses in question arose. Park J identified the objection to HMRCs approach in the judgment which he delivered when the case returned to him after the ECJ had given its ruling: [2006] STC 1235, para 46. He said that the end of the accounting period was too soon. As he saw it, the choice of that date would be likely to rule out virtually every case. So he held that it should be the date when the claim was made. On the other hand, there is Moses LJs point that to prefer the date of the claim would afford the claimant company the opportunity to bring about a situation in which the para 55 conditions would be satisfied. That would mean that in the period up to the appeal the claimant would be free to choose whether to bring about a situation in which the losses could be transferred cross border: [2012] STC 231, para 30. The CJEUs judgment in A Oy has made it easier to decide between the two alternatives. 28. Mr Ewart QC for HMRC said that giving the claimant a choice, for whatever reason, as to where its profits were to be taxed would upset the balanced allocation of the power to impose taxes. That was the critical justification for the rule in Marks & Spencer that provisions of the kind in issue were not precluded by Community law. M&S had not shown that there was any principled reason for selecting the date of the claim. To choose that date would open up the possibility of choice as to where to seek relief for losses that crystallised in the accounting period. A line had to be drawn somewhere, and the date to which to look was the date when the loss crystallised. A Oy had to be approached with caution, as it was a pre transaction case. In any event the balanced allocation rule was not just about tax avoidance. To allow losses to be brought in from another Member State was bound to upset that balance. It would require a quite extreme case to justify upsetting that balance, and voluntary acts such as liquidation after the loss had crystallised should be excluded. 29. Mr Milne QC for M&S did not dispute the need to avoid upsetting the balanced allocation of the power to impose taxes. He agreed that the para 55 conditions were designed to ensure that there was no double use of the claim for relief. The questions that had to be addressed were essentially practical questions. It was a factual exercise. During the course of the hearing he altered his position as to the date as at which the entitlement to relief was to be determined. In its written case M&S said that the most obvious date was, as Chadwick LJ held, the date of the claim. But Mr Milne suggested that the facts should be examined at the time when the question was asked, which was the date when the claim was being scrutinised. A Oy had clarified the landscape. The Advocate Generals approach was very similar to that of Moses LJ, but that was not what the CJEU decided. The facts of the case showed that B was involved in leases that could still be assigned, so there were assets that could be realised. Yet the Court still left it to the national court to determine whether A had in fact proved that B had exhausted all the possibilities of taking account of the losses and that there was no possibility of their being taken into account in respect of future tax years: paras 54, 56. That was best done, said Mr Milne, by looking to the facts as they were at the date of the first instance hearing. 30. I agree with Mr Milne that the exercise that is to be carried out is essentially a factual one, and the claimant company ought to be given an opportunity to deal with it in as realistic a manner as possible. The approach contended for by HMRC would mean that there would be no realistic chance of satisfying the para 55 conditions at all. It would hardly ever be possible, if regard is had only to how matters stood at the end of the relevant accounting period, to exclude entirely the possibility that the losses in question might be utilised in the Member State of the surrendering company unless, of course, this was prevented by its local law. The balanced allocation principle does not require to be supported by an approach which restricts the claimant company to that extent. This is made clear by the way the issue was dealt with in A Oy: see para 48. 31. The use of the present tense in the Courts description of the matters to be determined by the national court in paras 54 and 56 might be taken as suggesting that the facts that are to be examined are the facts as they are at the date of the inquiry. But they are equally consistent with the proposition that, while the date of the inquiry is the date when the facts are being considered, the date as at which they are to be taken to be established is the date when the proceedings are commenced. Mr Milne did not present any detailed argument for preferring the date of the inquiry to the date that both Park J and the first Court of Appeal held to be the correct date, which was the date of the claim. The First Tier Tribunal at [2009] UKFTT 64 (TC), para 42 and the Upper Tribunal at [2010] STC 2470, paras 56 57 took the same view, holding that the date of the claim was appropriate in relation to the pay and file years: see also para 69(2) of Schedule 18 to the Finance Act 1998 which, for self assessment years, uses the phrase at the time the claim is made. There is no indication in any of these judgments that selecting the date of the claim is likely in practice to give rise to any difficulty. On the contrary, that date has the advantage of certainty, as the facts to be inquired into will not be susceptible to change between the making of the claim and the commencement of the inquiry. For these reasons I would reject the choice that Mr Milne made in the course of the hearing and hold that the entitlement to cross border relief is to be examined, as stated in alternative (b) in the first issue, on the basis of the circumstances existing at the date of the claim. The question whether successive claims can be made, and with what effect, must be left over for consideration under the second issue. 32. The national court will, of course, be alert to the possibility that the claimant company may simply be choosing in which Member State it should be taxed. The para 55 conditions are designed to exclude that possibility. But the judgment in A Oy shows that the mere fact that losses can be carried forward at the end of the accounting period in which they arose does not mean that the para 55 conditions cannot be met. Moreover the fact that the merger that was contemplated in that case was not seen as a ground for denying the possibility of taking the losses into account, on the ground that it allowed the parent company to choose freely from one year to the next the tax scheme applicable to its subsidiarys losses, shows that the decisions to wind up MSD and MSB are not open to objection on that ground either. What M&S was doing can be attributed to the fact that the companies had ceased trading six years earlier, and not to the exercise of an option to choose where to seek relief for the losses that had been incurred. There is no reason to think that what it did must be seen as a threat to the balanced allocation of taxing powers. The principle that lies behind HMRCs approach must, of course, be respected. But it does not justify the choice of date for which they contend which, as Park J said, is too soon to give the claimant company a reasonable opportunity of showing that the para 55 conditions are satisfied. Conclusion I would answer the first issue by rejecting the alternative contended for 33. by HMRC. I would hold that the question for inquiry is whether the claimant company has been able to show, on the basis of the circumstances known at the date when it makes its claim, that there has been no possibility of the losses in question being utilised in the Member State of the surrendering company in any accounting period prior to the date of the claim and no possibility of such utilisation in the accounting period in which the claim is made or in any future accounting periods. The consequence of this finding is that the third issue does not need to be answered. The parties will be heard as to the answers to be given to the three remaining issues at a later date. 56 Where, in one Member State, the resident parent company demonstrates to the tax authorities that those conditions are fulfilled, it is contrary to article 43 EC and 48 EC to preclude the possibility for the parent company to deduct from its taxable profits in that Member State the losses incurred by its non resident subsidiary. |
This appeal is about the rights of the owner of a time chartered ship after the ship has been lawfully withdrawn for non payment of hire. The question must often have arisen in practice but, oddly enough, there is no direct authority upon it. The MT Kos is a 301,000 mt VLCC. She was time chartered by her owners to Petroleo Brasileiro SA on 2 June 2006 for 36 months plus or minus 15 days at charterers option. The charterparty, which was on the Shelltime 3 Form, contained a standard form of withdrawal clause providing that if hire was not paid when due, the owners should have the right to withdraw the vessel without prejudice to any claim owners may otherwise have on charterers under this charter. It is increasingly common for such contracts to include anti technicality clauses requiring notice to be given before this right is exercised. But for whatever reason no anti technicality clause was included in this case. So when, on 31 May 2008, charterers failed to make the advance payment required for the month of June, the owners were entitled to withdraw the MT Kos, and did so at 14.41 GMT on 2 June 2008. It is agreed between the parties to the appeal that the charterers failure to pay hire was not a repudiatory breach of contract. At the time of the withdrawal, the MT Kos was at Angra dos Reis in Brazil, where she had just completed the loading of a parcel of cargo for the charterers account in accordance with their orders. She was awaiting a second parcel, which in the event was not loaded. There were no bills of lading in the hands of third parties. On 2 and 3 June there was a number of exchanges between the parties. The charterers tried to persuade the owners to cancel the withdrawal. The owners refused. Their position was set out in a message at 11.30 GMT on 3 June 2008. They said that they would be willing to reinstate the charterparty or continue on a voyage basis, but only at the current market rate, which was much higher than the charterparty rate. Otherwise, they required the charterers to make prompt arrangements to receive back their cargo. Ultimately, after further fruitless exchanges, the charterers told the owners at 21.36 GMT on 3 June 2008 that they would arrange for the terminal to receive back the cargo. The arrangements were duly made, and discharge of the cargo was completed at 06.00 GMT on 5 June 2008. It is agreed that if the charterers had begun to make arrangements for the discharge of their cargo as soon as they received the owners notice of withdrawal, the vessel would have been detained at Angra dos Reis for one day. As it was, she was detained there for 2.64 days. The issue before us is whether the owners are entitled to be paid for the service of the vessel during that 2.64 days, and for bunkers consumed in the same period. Leaving to one side points which have fallen by the wayside at earlier stages of these proceedings, their claim is put forward on four bases: (i) under clause 13 of the charterparty; (ii) under an express or implied new contract made after the vessel was withdrawn, to pay for the time and bunkers; (iii) on the ground of unjust enrichment; and (iv) under the law of bailment. The judge, Andrew Smith J, held that they were entitled to succeed on basis (iv), but rejected every other basis which they put forward. The Court of Appeal (Longmore and Smith LJJ and Sir Mark Waller) rejected the claim on all four bases, except that they allowed the owners to recover the value of bunkers consumed in actually discharging the cargo. New contract after withdrawal The argument that there was a new contract turns entirely on the facts and can be shortly dealt with. Once the charterparty came to an end, the owners no longer had any obligation to carry the cargo to its destination or to discharge it. Their duty was to make it available to the charterers. It was then for the charterers to make any necessary arrangements for discharge. For a day and a half after the notice of withdrawal, they did nothing because they declined to accept that the owners were entitled to withdraw the vessel. Each party was trying to persuade the other to resume the contractual service (or a variant of it) on its own terms. Each of them rejected the others terms. On the footing that the owners were not willing to treat the old contract as subsisting and that no agreement could be reached upon a new one, both parties then submitted to the inevitable. Owners called on charterers to take delivery of their cargo, as charterers in any event were bound to do. The charterers then got on with it. Both courts below held that it was impossible to spell a new contract out of these facts. I agree. Implications of the owners decision to withdraw Under all the remaining heads of claim, the charterers argument is substantially the same, namely that any delay or loss arising from the need to discharge the cargo results from the owners decision to withdraw. That was a decision made at their own election and for their own commercial purposes. The owners, it is said, must bear the adverse as well as the beneficial consequences of an optional decision made in their own interest. It is clear that this consideration influenced both courts below, and that it was decisive in the minds of the Court of Appeal. The factual premise of the argument is of course correct. It is axiomatic that a withdrawal clause operates at the election of owners, and not automatically. Two main consequences follow from this. The first is that owners will not exercise their right of withdrawal unless it is in their commercial interest to do so. Usually, this will be because market rates of hire have risen. But it may be in owners interest to withdraw the vessel even if they have not risen, for example, where the charterers are insolvent or owners depend on prompt payment to fund payments under a head charter or charterers payment record occasions administrative or other difficulties. The second consequence is that any failure on the part of the charterers to pay hire when it falls due will not of itself entitle the owners to damages representing the loss of the bargain or the expenses of termination simply because the owners respond by withdrawing the vessel. This is because the non payment does not itself destroy the bargain or occasion the expenses, unless in the circumstances it is a repudiation which owners have accepted as such. But the present claim is not a claim for damages, and the non payment of the June 2008 hire payment in this case was not a repudiation. This, however, is as much as can usefully be said. The fact that rather than perform the contract the owners found it more advantageous to exercise an express right of termination is morally and legally neutral. There are no standards by which the owners reasons may be judged, other than those to be found in the contract. There is no legal policy specific to termination rights restricting their availability or the consequences of their exercise more narrowly than does the language of the contract or the general law. More generally, the reasons for any particular withdrawal cannot affect the principle to be applied in resolving an issue like the present one. Clause 13 Clause 13 provides, so far as relevant: The master (although appointed by owners) shall be under the orders and direction of charterers as regards employment of the vessel, agency or other arrangements. Bill[s] of lading are to be signed as charterers or their agents may direct, without prejudice to this charter. charterers hereby indemnify owners against all consequences or liabilities that may arise from the master, charterers or their agents signing bills of lading or other documents, or from the master otherwise complying with charterers or their agents orders. Clause 13 is the employment and indemnity clause which is found in most modern forms of time charter. The indemnity reflects the breadth of the powers conferred on the charterers as to the employment of the vessel. As Devlin J observed in Royal Greek Government v Minister of Transport (1949) 83 Ll L Rep 228, 234, if [the owner] is to surrender his freedom of choice and put his master under the orders of the charterer, there is nothing unreasonable in his stipulating for a complete indemnity in return. Indeed, the courts have held that, subject to the express terms of any particular charterparty and to the limitations which I shall consider below, the indemnity is not just not unreasonable. It is necessary. It will generally be implied even in forms of time charter (such as the New York Produce Exchange Form) where it is not expressed. The scope of the indemnity in clause 13, like that of the corresponding implied term, is very wide (all consequences or liabilities that may arise). But it is not complete, nor is it unlimited. In the first place, it has to be read in the context of the owners obligations under the charterparty as a whole. The owners are not entitled to an indemnity against things for which they are being remunerated by the payment of hire. There is therefore no indemnity in respect of the ordinary risks and costs associated with the performance of the chartered service. The purpose of the indemnity is to protect them against losses arising from risks or costs which they have not expressly or implicitly agreed in the charterparty to bear. What risks or costs the owners have agreed to bear may depend on the construction of other relevant provisions of the contract, or on an informed judgment of the broad range of physical and commercial hazards which are normally incidental to the chartered service, or on some combination of the two. The classic example of a loss within the indemnity, and probably the commonest in practice, is one which arises from the master complying with the charterers direction to sign bills of lading on terms of carriage more onerous than those of the charterparty. But the indemnity has been held to be applicable in principle to a wide variety of other circumstances, including compliance with an order to load cargo which is dangerous even on the footing that appropriate care is taken of it, or an order to proceed to a legally unsafe port. On the other hand, the indemnity will not apply to risks which the owners have contractually assumed, which will usually be the case where they arise from, for example, their own negligence or breach of contract or consequences such as marine fouling which are incidental to the service for which the vessel was required to be available. Secondly, clause 13 itself limits the indemnity to losses which were caused by complying with the charterers orders. Like all questions of causation, this one is sensitive to the legal context in which it arises. It depends on the intended scope of the indemnity as a matter of construction, which is necessarily informed by its purpose. We are not therefore concerned with questions of remoteness and foreseeability of the kind which would arise in the law of damages, where the object is to limit the range of consequences for which a wrongdoer may be said to have assumed responsibility in the eyes of the law. Indeed, as Sir Donald Nicholls V C pointed out in Triad Shipping Co v Stellar Chartering & Brokerage Inc (The Island Archon) [1994] 2 Lloyds Rep 227, 238, the more foreseeable the owners loss, the more likely it is to be an ordinary incident of the chartered service and therefore outside the scope of the indemnity. The real question is whether the charterers order was an effective cause of the owner having to bear a risk or cost of a kind which he had not contractually agreed to bear. I use the expression effective cause in contrast to a mere but for cause which does no more than provide the occasion for some other factor unrelated to the charterers order to operate. If the charterers order was an effective cause in this sense, it does not matter whether it was the only one. For present purposes, the relevant order of the charterers was the order to load the parcel of cargo which was on board the vessel when it was withdrawn. In my judgment the loss claimed by owners was the consequence of that order. The need to discharge the cargo in the owners time arose from the combination of two factors, namely (i) that the cargo had been loaded, and (ii) that the purpose for which it had been loaded (ie carriage under the charterparty to its destination) had come to an end with the termination of the charterparty. In other words, the cargo which charterers had ordered the vessel to load was still on board when the charterparty came to an end. On any realistic view, this was because the charterers had put it there. The analysis would have been exactly the same if the charterparty had come to an end for any other reason with cargo still on board, for example by frustration or expiry at the end of the contractual term. Andrew Smith J and the Court of Appeal both rejected the claim under clause 13 on the ground that the true cause was the owners withdrawal of the vessel. The judge said at para 35 of his judgment that the owners claims were too remote from the order to load. Longmore LJ, giving the reasons of the Court of Appeal, observed at para 15 that it was not a natural consequence of ordering [the cargo] to be loaded that it would have to be discharged at the self same port. The true cause of the necessity for the discharge of the cargo was the fact that, in the light of the withdrawal, the owners required the charterers to discharge the cargo. In effect, therefore, both courts below found that the withdrawal of the vessel was an independent cause of the loss, breaking the chain of causation between the order to load the cargo and the detention of the vessel after withdrawal. The difficulty about this is that because the cargo had been loaded, it had to be discharged somewhere, if not at the port of loading then at its destination or possibly at an intermediate port. The owners decision to withdraw the vessel or, to be precise, the adventitious timing of that decision, merely determined the place at which the discharge of the cargo occurred. If the owners were to withdraw the vessel, they had to do it promptly upon hire going into default, and it so happened this was when the vessel was still at the port of loading. But the precise timing of the withdrawal and location of the discharge are irrelevant to the owners loss. If the vessel had been withdrawn immediately before discharge at the destination, the consequence would have been exactly the same. It is of course true that discharge at the destination would have been a great deal more beneficial to the charterers than discharge at the port of loading. This is a point that seems to have influenced the Court of Appeal. But a claim under clause 13 does not depend on the benefit conferred on the charterers. It depends on the detriment to the owners. They would have suffered a detriment of much the same kind wherever the vessel had discharged. It is fair to say that it was only because of the withdrawal of the vessel that the subsequent discharge of the cargo at Angra dos Reis had to be done in the owners time and without earning contractual hire. But that is the very reason why the detention of the vessel falls within the indemnity. The need to discharge the cargo in their own time and at their own expense was not an ordinary incident of the chartered service and was not a risk that the owners assumed under the contract. It arose after the chartered service had come to an end in accordance with the withdrawal clause in the contract. Mr Baker QC for the charterers asked rhetorically whether, in that case, the owners would be entitled to claim the cost of sending the vessel in ballast from Angra dos Reis to somewhere else where she could start employment under a new charterparty. But a claim like that, although ultimately dependent on its particular facts, would be likely to fall on the other side of the line. The need for a ballast voyage before a vessel can begin her next employment is an ordinary commercial risk associated with the trading of the vessel under a time charter. case: (1) In my judgment the whole of the 2.64 days during which the vessel was detained resulted from the cargo being on board on the charterers orders at the time of the withdrawal. The time required to remove it was unnecessarily prolonged by the charterers refusal to recognise the owners right to withdraw the vessel or to make immediate arrangements for the removal of their cargo from a ship that was no longer at their disposal contractually, but that does not alter the character or cause of the delay. It remains to consider the measure of the indemnity on the facts of this (2) It is not suggested that there is any difference, in the circumstances of this case, between (i) the measure of the owners loss in having to await discharge and then discharge in their own time, and (ii) reasonable remuneration for involuntarily making their ship available during that period. On the face of it, the opportunity cost to the owners of the detention of their ship is the market rate of hire at the time. In the absence of any subsisting contractual obligation to make her available at any other rate, the owners loss is the market rate of hire for 2.64 days. (3) Although the Court of Appeal distinguished between the owners right to the value of bunkers consumed (in actually discharging the cargo) and the rest of the owners claim, it seems to me that the two heads of loss must stand or fall together. The owners are therefore entitled to the value of bunkers consumed during the whole period of detention. Bailment Strictly speaking, this makes it unnecessary to address any of the other legal bases put forward by the owners in support of their claim. But I propose to deal with the question whether the owners were also entitled to succeed at common law as non contractual bailees of the cargo after the withdrawal of the vessel. I do so partly out of respect for the trial judge who decided the case on that basis, and partly because I think that the commercial and legal logic of the claim in bailment is close to the logic which brings it within clause 13 and would bring it within any corresponding implied term. On the whole, one would expect a coherent system of law to produce a consistent answer under both heads, and in my judgment it does. Unlike many civil law systems, English law does not allow a general right of recovery for benefits conferred on others or expenses incurred in the course of conferring them. In the pejorative phrase which has become habitual, there is no recovery for benefits officiously conferred. In Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234, 248 Bowen LJ said: The general principle is, beyond all question, that work and labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to repay the expenditure. Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will. While this remains the general principle, the exceptions have over the years become more important than the rule. The particular feature of the present case which makes it difficult to apply the general rule is that the original bailment of the cargo had occurred under a previous contractual relationship. The bailment was therefore consensual, albeit that after the withdrawal of the MT Kos from the time charter, it was no longer contractual. It is common ground, and clear on the authorities that in these circumstances, the owners had a continuing duty to take reasonable care of the cargo, which they could not escape except by retaining it until arrangements were made to discharge it. But the owners had in no sense officiously put themselves in this position, nor had they (as the charterers put it in argument), voluntarily assumed possession of the goods. There is a thin, but consistent line of authority which deals with the legal consequences of this situation. In Gaudet v Brown (1873) LR 5 PC 134 (Cargo ex Argos), petroleum was shipped in London on the Argos under a bill of lading providing for delivery at Le Havre. The vessel arrived at Le Havre in the later stages of the Franco Prussian war, when the port was full of munitions, and the landing of flammable cargoes was forbidden. The master therefore discharged the petroleum into lighters in the outer harbour, and it seems that the shippers (who had retained the bill of lading) could have taken delivery of it there and transported it elsewhere. But they failed to present the bill of lading or to make any arrangements to receive it. Having waited for as long as the port authorities would allow him to, the master reshipped the cargo and carried it back to London. The owners then successfully sued the shippers for freight for the return voyage. The case appears to have been decided on the footing that the contract of carriage was at an end when the Argos left Le Havre for London, either because the contractual service had been completed or because the contract was frustrated at Le Havre. The ground of the decision was expressed at pp 165 166 as follows: . not merely is a power given, but a duty is cast on the master in many cases of accident and emergency to act for the safety of the cargo, in such manner as may be best under the circumstances in which it may be placed; and that, as a correlative right, he is entitled to charge its owner with the expenses properly incurred in so doing. In a case like the present, where the goods could neither be landed nor remain where they were, it seems to be a legitimate extension of the implied agency of the master to hold that, in the absence of all advices, he had authority to carry or send them on to such other place as in his judgment, prudently exercised, appeared to be most convenient for their owner; and if so, it will follow from established principles that the expenses properly incurred may be charged to him. The authority of the master being founded on necessity would not have arisen if he could have obtained instructions from the defendant or his assignees. But under the circumstances this was not possible. A year later, the Court of Exchequer reached a very similar conclusion in Great Northern Railway Co v Swaffield (1874) LR 9 Ex 132. Mr Swaffield sent his horse by railway to a station at Sandy. The horse arrived late at night, and the railway company lodged the horse overnight for their own account at a livery stable. Mr Swaffield failed to collect it on the following morning. The only basis on which he was prepared to give any instructions about the fate of his horse was that the railway company assumed all responsibility for storing and delivering it to him from the time of its arrival at Sandy. After four months of this, the railway company lost patience. They unilaterally delivered the horse to Mr Swaffields farm and then sued him for the livery charges to date. As in Cargo ex Argos, the case was decided on the footing that the contract of carriage had come to an end, in this case on the day after the arrival of the horse at Sandy, when the performance required of them as carriers was completed. Counsel did not refer to Cargo ex Argos. But Baron Pollock drew attention to it in the course of argument and based his judgment upon it. Having referred to previous authority to the effect that the railway company was bound to take reasonable care of the horse notwithstanding the termination of the contract of carriage, he observed (p 138) that if there were that duty without the correlative right, it would be a manifest injustice. In his concurring judgment, at page 136, Kelly CB treated the principle as applying because it was necessary for the railway company to incur the expenditure. They had no choice unless they would leave the horse at the station or in the high road to his own danger and the danger of other people. The principle applied in these cases has commonly been analysed as depending on the agency of necessity of the carrier, which indeed is how Longmore LJ analysed it in his judgment in this case. The existence of a coherent doctrine of agency of necessity has occasionally been doubted: see Goff & Jones, The Law of Unjust Enrichment, 8th ed (2011), para. 18 50, where it is suggested that the cases in which it has been invoked are now best understood in other ways. But so far as the doctrine does have a coherent existence, the case law requires that a bailee of goods should have taken steps in an emergency for the sole benefit of the cargo in circumstances where it was impossible to communicate with the owners of the goods. On that ground, the Court of Appeal held that the doctrine had no application to the present case, and that that was the end of the matter. It is true that in Cargo ex Argos the Privy Council used the language of agency and necessity. But the master of the Argos was not in fact acting as the cargo owners agent, as he would have been if (for example) he had purported to bind him to a contract with a third party, such as a lighterman or a warehouseman. On the face of it, he was simply carrying the goods back to London on behalf of his owners, in circumstances where there was no contract to do so but no reasonable or practical alternative. His claim was for additional remuneration for his own services, in excess of the performance required of him under the contract. As for Swaffield, although Baron Pollock cited authority on agency of necessity, on its facts there was no emergency and no agency. The true basis of the judgments in Swaffield was that where the property was originally bailed under a contract of carriage and the carrier had no choice but to remain in possession after the contract had ended, the existence of a continuing duty to care for the cargo was a sufficient basis for imposing on its owner an obligation to pay. Pollock B, I think rightly, regarded this as the principle on which Cargo ex Argos was really founded. This view of the matter was accepted by the House of Lords in China Pacific SA v Food Corpn of India (The Winson) [1982] AC 939. The facts were that the Winson, bound for Bombay with a cargo of wheat, stranded on a reef in the South China Sea. Salvors retained on behalf of the ship and cargo interests off loaded the wheat into barges and took it to Manila, where it was stored for their account in warehouses. It was common ground that storage under cover was necessary to prevent deterioration of the wheat, and that upon its arrival at the warehouse the salvage services came to an end. Some time after that, the owners gave notice that they were abandoning the voyage and the contract of carriage thereupon came to an end. The salvors wrote to the cargo owners solicitors asking them to take delivery of their property, but received no answer. On these facts the salvors were bailees under the salvage agreement from the time that the cargo was taken off the stranded vessel until it reached the warehouse, and were thereafter non contractual bailees until the cargo owners finally took possession of the wheat from the warehouse. The issue was whether the cargo owners were liable to the salvors for warehouse charges incurred up to the time when the owners gave notice that they abandoned the voyage. The cargo owners accepted liability for the charges after that point, but contended that while the contract of carriage subsisted the warehouse charges were the responsibility of the carriers alone. It was held that the salvors were entitled to succeed. The leading speech was given by Lord Diplock, with whom the rest of the House agreed. Lord Diplock considered (p 957) that the case turned on the application of well known and basic principles of the common law of salvage, of bailment and of lien. He expressed the principle (at p 960) as follows: the bailment which up to the conclusion of the salvage services had been a bailment for valuable consideration became a gratuitous bailment; and so long as that relationship of bailor and bailee continued to subsist the salvors, under the ordinary principles of the law of bailment too well known and too well established to call for any citation of authority, owed a duty of care to the cargo owner to take such measures to preserve the salved wheat from deterioration by exposure to the elements as a man of ordinary prudence would take for the preservation of his own property. For any breach of such duty the bailee is liable to his bailor in damages for any diminution in value of the goods consequent upon his failure to take such measures; and if he fulfils that duty he has, in my view, a correlative right to charge the owner of the goods with the expenses reasonably incurred in doing so. He regarded this as being the principle applied in Cargo ex Argos and Swaffield in which the decisive facts, on his analysis, had been (i) that the bailee was left in possession of the goods after the termination of the contract under which the bailment had originally been made, and (ii) that in the absence of any contrary instructions from the cargo owner, the warehousing of the goods was necessary for their preservation: see p 960G H. Lord Diplock added, at p 961: It is, of course, true that in English law a mere stranger cannot compel an owner of goods to pay for a benefit bestowed upon him against his will; but this latter principle does not apply where there is a pre existing legal relationship between the owner of the goods and the bestower of the benefit, such as that of bailor and bailee, which imposes upon the bestower of the benefit a legal duty of care in respect of the preservation of the goods that is owed by him to their owner. Lord Diplock went on to consider the doctrine of agency of necessity, because it had been submitted on behalf of the cargo owners that a bailee in possession of goods could have authority on that basis only if it was impossible to communicate with the owner of the goods. The argument was that although the cargo owners were not very communicative, they were never actually out of contact. This submission was rejected because the restrictions placed by the case law on a bailees authority as an agent of necessity applied only where the bailee was acting as a true agent, ie by purporting to bind the bailor to arrangements with third parties. They did not apply to a bailees right to reimbursement of his own expenses. It was sufficient for that purpose that the bailor should have failed to give instructions: see pp 961G 962B. It is clear that the relevance of this last point was that if the owner of the goods had given instructions, the salvor could by complying with them have relieved himself of any further responsibility. The decisive point, and the sense in which the word necessity is used in these cases, is that if the bailee is in a position where he has no way of discharging his responsibility to care for the goods without incurring loss or expense, then the loss or expense is for the account of the goods owner. Lord Simon of Glaisdale, who delivered a concurring judgment, took the same view. He thought (p 965E) that to confine agency of necessity to cases where the issue was the bailees authority to bind the bailor to contracts with third parties was justified by the fact that the law of bailment will often resolve any issue between alleged principal and agent of necessity, as it has done here. The Winson was a decision about the law of bailment. It was not a decision about agency of necessity. The circumstances which entitle the owners to recover in the present case correspond to those which were decisive in The Winson. They are (i) that the cargo was originally bailed to the owners under a contract which came to an end while the cargo was still in their possession, (ii) that as a matter of law their obligation to look after the cargo continued notwithstanding the termination of the charterparty, and (iii) that the only reasonable or practical option open to them once the charterparty had come to an end was to retain the cargo until it could be discharged at the port where the vessel was then located. The Winson was a claim for expenses incurred by the salvors, although Lord Diplocks adoption of the decision in Cargo ex Argos suggests that he would have applied the same principle to a claim for remuneration where the claimant stored and handled the goods with his own facilities. In principle, that seems right. The opportunity cost of retaining the vessel in Angra dos Reis while the charterers cargo remained on board was a true cost even if it was not an out of pocket expense. However, it is unnecessary to go any further into that question because in this context as in that of clause 13, no point is taken about the difference between expenses and remuneration. Smith J. Unjust enrichment It may well be that in the light of recent developments in this area of law, the owners might be entitled to succeed on this basis also, although the measure of recovery would not necessarily be the same. This, however, raises larger issues which would be better decided in a case where they arise, and possibly in a less specialised context than a dispute about carriage by sea. Conclusion In the result, I agree with the conclusion reached on this point by Andrew I would allow the appeal and restore the order of Andrew Smith J. LORD PHILLIPS I agree, for the reasons given by Lord Sumption, that this appeal should be allowed. I wish only to add a brief explanation of why I agree with him and Lord Clarke that the express indemnity provided by Clause 13 applied to the facts of this case. I do not view the issue as turning upon a choice between competing causes of the requirement to discharge the cargo. The obligation to discharge a cargo loaded under a time charter will normally be proximately caused by the order to load the cargo. The reason why the consequences of the obligation to discharge are not normally covered by an indemnity clause such as clause 13 of the charter in this case is that those consequences form part of the services that the owners has contracted to provide under the charter and for which hire is being paid. Where, however, the charter comes to an end before the cargo has been discharged in circumstances where the consequences are not expressly covered by the charter, those consequences fall naturally within the scope of the indemnity clause. I accept that the application of the indemnity clause in such circumstances appears to be a novelty, but I can see no argument of principle that precludes this. LORD MANCE I agree with the result reached by the majority, but I do so not under clause 13, but on the basis of the principle in The Winson (China Pacific SA v Food Corpn of India [1982] AC 939), with which Lord Sumption deals in paras 18 30. As he notes (para 29), the charterers in the present case have expressly disclaimed any reliance upon the distinction between reimbursement of expenses and remuneration (as to which, see eg The Principles of the Law of Resitution by Graham Virgo 2nd ed (2006), p 290). They have done this on the basis that the two would on the facts here equate (ie it cost the owners the market rate to wait in Angra dos Reis). It is unnecessary to consider the correctness of this concession, and I do not do so. There is much case law on time charter indemnities. They may be express, as in the time charters which were the subject of Larrinaga Steamship Co Ld v The King [1945] AC 246, 253 and Royal Greek Government v Minister of Transport (The Ann Stathatos) (1949) 83 Ll L Rep 228 and in the Shelltime 3 form of charter in issue in the present case. They may also be implied, as in the case of the New York Produce Exchange form of charter, in which the only relevant express obligation is that the owners or master shall be under the orders and directions of the charterers as regards employment, agency and other arrangements. The existence of an implied time charter indemnity in respect of compliance with charterers orders and direction has long been recognised: see The Athanasia Comninos [1990] 1 Lloyds Rep 277, 290 per Mustill J, and Triad Shipping Co v Stellar Chartering & Brokerage Inc (The Island Archon) [1994] 2 Lloyds Rep 227, 234 per Evans LJ. The scope and application of an indemnity clause depends upon its precise terms read in the context of the contract as a whole. Other terms of the contract may mean that it is necessarily or impliedly limited in its scope. In addition to that, an indemnity clause in the form of clause 13 will not cover matters of navigation or in respect of which owners can by the contract be taken to have assumed the risk. Within its scope, the present clause also only applies to consequences or liabilities that may arise from [here] the master complying with charterers or their agents orders. This raises a question of causation. The search is for the proximate or determining cause. This was stated in relation to a materially identical clause in Larrinaga Steamship Co Ltd v The King [1945] AC 246, 253 by Viscount Simon LC, with whose speech Lord Thankerton and Wright agreed at pp 253 254. The issue of causation was considered in depth by Devlin J in The Ann Stathatos 83 Ll L Rep 228. The decision is at the root of the modern jurisprudence on time charter indemnity clauses, and Lord Sumption cites it in para 9. One particular passage is worth citing in full, because it bears on an argument advanced by owners in the present appeal, which the majority might otherwise be thought to be accepting. In The Ann Stathatos the vessel had been damaged by an explosion resulting from an explosive atmosphere created by the cargo of coal and some unidentified act during repair work causing a flame or spark leading to a series of explosions. The arbitrator selected as the direct or immediate or effective cause of the explosions the latter act. Owners argued that it was enough that the explosive atmosphere generated by the cargo was a cause. The argument mirrors a submission made by owners on the present appeal, which was rejected in the following passage: This conclusion clears the ground for consideration of a further submission on behalf of the owner. The loading, if not the proximate cause, was at any rate, it is argued, a cause of the explosion, and that is sufficient for the purpose of clause 9. Sir Robert Aske does not in this contention rely on the phrase all consequences; in this I think he is right, having regard to the dictum of Willes J in Ionides v Universal Marine Insurance Co (1863) 14 CB (NS) 259, 289. He relies on the principle applicable in cases of tort, and he referred again to Burrows v March Gas and Coke Co LR 7 Ex 96, though Baron Pigott, in the court below (LR 5 Ex 67, 73) hardly supports the contention. He referred also to Minister of Pensions v Chennell [1947] KB 250, where Denning J discusses the whole matter. As against this, Sir William McNair argues that the term a cause can properly be used only when there are two or more causes equal in proximity, as in Reischer v Borwick [1894] 2 QB 548. I need not consider this last contention, for I think it is clear that clause 9 is concerned with the proximate cause. It is a contract of indemnity, and I can see no reason for treating it differently from any other contract of insurance. The observations of Lord Shaw in The Ikaria [1918] AC 350, 368 and the dicta he there cites are also in point. The search is therefore for the proximate cause. Devlin J cited Reischer v Borwick [1894] 2 QB 548 as indicating that there can be situations in which two causes are so closely matched that both are identified as proximate causes. That is a largely theoretical analysis which finds little practical application in the authorities, and has achieved any prominence only in discussion about exception clauses. Reischer v Borwick itself was a case on a marine insurance policy covering only . collision, and so not perils of the seas. The vessel was holed by collision, the hole was temporarily plugged, but the plug failed as she was being towed to safety and she sank due to the inflow of water. Not surprisingly, the claim succeeded. Only Lindley LJ addressed the possibility that this situation could and should be analysed as one of concurrent proximate causes (although even he in his concluding remarks identified the injury by collision as really the cause of the loss the causa causans and not merely the causa sine que non). Both Lopes and Davey LJJ analysed the position throughout in what one would have thought to be more conventional terms as involving a single proximate cause of the sinking (the collision holing the vessel). Another of the few cases in which courts have discussed the possibility of concurrent causes is Wayne Tank and Pump Co Ltd v Employers Liability Assurance Corpn Ltd [1974] QB 57. The case involved an insurance claim following on from the decision in Harbutts Plasticine Ltd v Wayne Tank and Pump Co Ltd [1970] 1 QB 447. Harbutts factory was burnt down in a fire. The fire occurred because Wayne Tank had installed a pipeline made of unsuitable and dangerous plastic material and wrapped in heating tape attached to a useless thermostat, and had then switched on the heating and left it unattended overnight without testing. Wayne Tanks policy contained an exclusion of damage caused by the nature or condition of any goods which they sold or supplied. Again not surprisingly, both Lord Denning MR (pp 66G 67B and 68A) and Roskill LJ (p 74 B C) preferred to analyse the situation as one of a single effective, dominant and proximate clause (the defective plastic material and thermostat supplied), while only Cairns LJ (p 69A) preferred an analysis of approximately equal causes. All three member of the Court also indicated that the claim anyway failed (because of the exclusion) even if analysed as one of two concurrent proximate causes (pp 67B 68A, 69B D and 74D 75E). In both Reischer v Borwick and Wayne Tank, the courts further noted that merely because one can identify concurrent causes does not mean that both are in law proximate causes. The same point had been made by Lord Shaw fifty years earlier in another leading authority on proximate cause, Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society [1918] AC 350, 370, when he said: Where various factors or causes are concurrent, and one has to be selected, the matter is determined as one of fact, and the choice falls upon the one to which may be variously ascribed the qualities of reality, predominance, efficiency. That reasoning was followed and applied in Yorkshire Dale Steamship Co Ltd v Minister of War Transport [1942] QC 691. The issue in that case was whether a vessel lost by stranding in the course of a warlike operation was lost by reason of the warlike operation. Viscount Simon LC said: Most results are brought about by a combination of causes, and a search for the cause involves a selection of the governing explanation in each case (p 698), Lord Macmillan said: it is not enough that the casualty arose in the course of a warlike operation. It must also arise out of, and be proximately caused by the warlike operation (p 702), and Lord Wright underlined the point in a well known passage, including the statements that This choice of the real or efficient cause from out of the whole complex of the facts must be made by applying commonsense standards. The question always is what is the cause, not merely what is a cause (p 706). Another case involving an exceptions clause where the possibility of rival causes was considered briefly and obiter was Handelsbanken v Dandridge [2002] EWCA Civ 577. [2002] CLC 1227, where in para 47 Potter LJ remarked that the first task of the court is to look to see whether one of the causes is plainly the proximate cause of the loss and that It is only if the court is driven to the conclusion that there was not one dominant cause, but two causes which were equal or nearly equal in their efficiency in bringing about the damage one being a period, the other an exception, that the exception prevails, citing in support Wayne Tank, p 67. That dictum may go further to blur lines than I would in referring to causes nearly equal in their efficiency, but, once again, the Courts actual view was that this was not the situation on the facts. The position regarding exclusion clauses in situations where two causes might be said to be operating concurrently was most recently discussed in Global Process Systems Inc and another (Respondents) v Syarikat Takaful Malaysia Berhad [2011] UKSC 5, para 88. As Devlin J pointed out in The Ann Stathatos at p 237, bottom left, the existence of an exceptions clause is itself likely to affect what falls to be regarded as dominant, proximate or relevant; this is because the whole of what one might call the area naturally appurtenant to the excepted area must be granted to it. Indemnity clauses are not subject to such considerations. They cover consequences proximately caused, no more and no less. This is underlined by another way in which the scope of time charter indemnities is delimited in the case law. Implied time charter indemnities and indemnities like clause 13 apply only where there is a direct causal link between the orders and the consequences. The phrase and the emphasis are Lord Hobhouse of Woodboroughs in the leading speech, with which all other members of the House agreed, in Whistler International Ltd v Kawasaki Kisen Kaisha Ltd (The Hill Harmony) [2001] 1 AC 638, 656. Lord Hobhouse made the comment in the course of discussion of the decision in Larrinaga Steamship Co Ltd v The King [1945] AC 246, a case like the present of an express indemnity. He cited in support The White Rose [1969] 1 WLR 1098, another case of an express indemnity. As to implied indemnities: see The Hill Harmony itself and Triad Shipping Co v Stellar Chartering & Brokerage Ltd. (The Island Archon) [1994] 2 Lloyds Rep 227, 238, where Sir Donald Nicholls V C noted that the underlying principle is that the implied indemnity extends only to certain consequences flowing from a shipowner complying with charterers orders, one limitation being that to be within the implied indemnity the loss must arise directly from the charterers instruction (another being that it must also be one which, on a fair reading of the charter party, the shipowner cannot be taken to have accepted: see para 37 above). In The White Rose, Donaldson J had the benefit of the formidable advocacy of Mr Anthony Evans for owners and Mr Robert Goff QC and Mr Davenport for charterers. He recited Mr Goffs submission that one vital element had been omitted from Mr Evanss case: namely, that the right to indemnity only arises if and in so far as the loss suffered by the shipowners can be proved to have been caused by compliance with the time charterers instructions (p 1107). Donaldson J went on to note Mr Goffs further observation that causation is rarely a live issue in cases where an owner has on charterers instructions signed bills of lading committing him to liabilities over and above his charterparty liabilities, but that causation is all important in other cases. Donaldson J accepted Mr Goffs submission, holding that it was necessary in every case to establish an unbroken chain of causation, and that: A loss may well arise in the course of compliance with the time charterers orders, but this fact does not, without more, establish that it was caused by and is in law a consequence of such compliance and, in the absence of proof of such causation, there is no right to indemnity. (p 1108) The facts in The White Rose were that a Finnish vessel had been ordered to load in Duluth, Minnesota, where Mr de Chambeau, an employee of charterers stevedores was injured while on board. He had left his proper place for purposes unconnected with his work, but owners were liable to him under Minnesota law on the ground that the part of the ship where he had gone lacked fencing. The owners were, it seems, in breach of Finnish law in this respect, but that was expressly disregarded as being irrelevant. Donaldson J nonetheless agreed with the umpire that owners indemnity claim failed because what connected the accident with, and gave rise to, a potential liability and an actual loss was the provisions of Minnesota law. There was lacking the necessary causal connection between the order to load and the loss (p 1108). The selection of the proximate, determining or, in the more modern terminology, real or efficient cause for the purposes of an indemnity has traditionally been described as involving a choice to be made by applying common sense standards as the man in the street or a business or seafaring man would apply them: The Ann Stathatos 83 Ll L Rep 228, 236 per Devlin J, citing Lord Wright in Yorkshire Dale Steamship Co Ltd v Minister of War Transport [1942] AC 691, 706. Lord Wrights words were more recently cited under the implied indemnity which was in issue under a voyage charter in Total Transport Corpn v Arcadia Petroleum Ltd (The Eurus) [1998] 1 Lloyds Rep 351, 361 362. Such an approach does not, or should not, conceal, or perhaps reveal in Lord Hoffmanns extra judicial words giving the Chancery Bar Association lecture in 1999 on Common Sense and Causing Loss a complete absence of any form of reasoning. Rather, it should involve a conclusion reached after identifying the relevant context and purpose of the question and the relevant considerations. I do not however regard it as wholly irrelevant that three experienced commercial judges have concluded, without it seems real doubt, that the present indemnity clause does not cover the present case. Perhaps more striking, since the present constitution is also heavy in commercial experience, is the fact that no previous claim like the present can be identified under any express or implied time charter indemnity; this, despite the fact that time charter clauses entitling owners to withdraw in default of payment of any hire instalment, without anti technicality provisions, have been commonplace and have given rise to other contentious issues over many past decades. Robert Goff J made no mention of any such possibility in Tropwood AG of Zug v Jade Enterprises Ltd (The Tropwind) [1982] 1 Lloyds Rep 45, when considering the nature of a shipowners right to recover from charterers remuneration for services rendered after a ship has been withdrawn from the charterers service under a time charter, pursuant to an express contractual right of withdrawal (p 53). Apart from any express request which might be found to have been made (to render such services), he thought that their liability (if any) to pay remuneration for the services so rendered can only derive from the principles of the law of restitution. Of course, if the owners were bound to third parties by bills of lading which charterers had required them to issue, the continuation of the voyage under those separate bill of lading contracts could engage the time charter indemnity, and could (despite Lord Denning MRs contrary dictum on appeal in The Tropwind [1982] 1 Lloyds Rep 232, 237) lead to charterers having to pay owners the market, rather than the charter, rate. Further, if owners were left with no practical option but to carry the cargo to its destination, then they might still have an argument that their time and money were spent in compliance with the time charterers instructions. No assistance on this latter situation is derived from the New South Wales Supreme Court decision in J Gadsden Pty Ltd v Strider 1 Ltd (The Aes Express) (1990) 20 NSWLR 57, where the owners failed in a claim against bill of lading holders, who, before the vessels withdrawal from charter, had pre paid freight to charterers under what were charterers bills. The present case differs materially from both these situations. Here, if one asks whether the loss suffered by the shipowners was caused by compliance with the time charterers instructions Robert Goff QCs words accepted by Donaldson J in The White Rose [1969] 1 WLR 1098, 1107 1108 the natural answer, it seems to me, is: certainly not. It was caused because the charter was at an end, the owners were not performing the charterers instructions and they were not receiving hire for the time wasted prior to discharge. The direct or unbroken causal link required by the authorities is lacking. The loss did not even arise in the course of compliance with charterers orders, to use Donaldson Js words quoted in paragraph 70 above. It is true, historically, that no cargo would have been on board but for charterers instructions. But that is no test of the proximate or the effective cause, as the authorities make clear: see paragraphs 37 to 47 above. It is also unrealistic to scissor up the instructions between loading and carriage to destination, and to attribute the loss to the instructions to load ignoring the failure to carry. When one engages in such a division, one is in fact recognising that subsequent events superseded charterers orders and rendered them a matter of history. The general contractual context in my view also supports a conclusion that the express indemnity clause is inapt to apply to the present situation. Clause 8 of the charterparty gives owners a simple contractual option. It is accepted that the mere late payment of one instalment did not constitute a repudiatory breach (or a breach of a condition in a sense like that used in the Sale of Goods Act 1979) which could entitle the owners to damages for loss of the charter. That loss flowed from the owners exercise of their option to withdraw. The phrase in clause 8 without prejudice to any claim owners may otherwise have on charterers under this charter does not create a right of action, and looks on its face only to pre existing claims. So there is no way in which the time spent discharging in Angra dos Reis can be claimed as damages. Yet it is submitted that, because the owners exercised an option to terminate the charter in mid flow, the charter indemnity provides them as of right not merely with the charter rate (US45,000 per day), but with the market rate (US158,864 per day) in respect of any delay before the vessel is free to move elsewhere to take advantage of the increased market rate. That would be to give them a claim by way of indemnity for loss they cannot claim by way of damages. It is also unclear where this submission could or would end. In shipping law certainty is of recognised importance and disputes not to be encouraged. The charter required redelivery at the same port as the port of delivery in the Arabian Gulf (clause 3), with hire being paid up to that point. Logically, the consequences of the charterers orders to proceed to and load cargo at Angra dos Reis could, on owners case, embrace the whole period during which the vessel was returning to the Arabian Gulf, unless she found other paid employment to take her back. The risk of having to return in ballast to her Arabian Gulf delivery port (or anywhere else) could not be described as an ordinary commercial risk which the owners were prepared to accept under this time charter (cf the last sentence of paragraph 16 of Lord Sumptions judgment), since the owners expressly stipulated against it. The silence of clause 8 regarding the position post withdrawal also contrasts with clause 18 which expressly provides that, should the vessel be on a ballast or laden voyage at the date the charter should otherwise terminate, charterers shall continue to have the use of the vessel at the charter rate or the market rate if higher. Under clause 18, the charterers are paying for completion of the services requested. Under clause 8, owners, having elected to determine the charter, are now seeking by way of indemnity to recover the market rate, without of course having to give any credit for the considerable benefit likely to have accrued to them from such termination. In conclusion, the majoritys present decision stretches the application of the express charter indemnity beyond any previous decision, without justification, without regard to the potential consequences (including the uncertainty or certainty of ever more ambitious claims) and without need. The law is capable of dealing with this situation in a more conventional manner. It will impose on charterers an obligation as bailors to reimburse the owners as bailees for their time and expense spent in looking after the cargo prior to its discharge. It would, even apart from that, probably also impose on charterers an obligation in restitution in respect of any benefit they could be said to have had through the storage on board the vessel of the cargo. But those remedies flow either from the service rendered in that respect by the owners under the compulsion of their legal obligations as bailees, or from the benefit received thereby by the charterers, and not from the express indemnity. It follows that I too would allow the appeal and restore the order of Andrew Smith J, although I would do so for the reasons and on the basis that he gave, and not those adopted by the majority. LORD CLARKE I agree with Lord Sumption that, for the reasons he gives, this appeal should be allowed on the Winson point (China Pacific SA v Food Corpn of India [1982] AC 939). I wish to add a few words of my own on the construction of clause 13 of the charterparty in the light of the sharp difference of opinion between Lord Mance and Lord Sumption. I have not found this an easy question. Lord Mance makes a powerful case for a narrower application of clause 13 than that preferred by Lord Sumption. His analysis owes much to the approach adopted in a number of decided cases. However, none of them is on facts such as these. As I see it, the question whether the owners are entitled to succeed under the indemnity provided for in clause 13 involves two sub questions. The first is one of construction of the clause and the second is whether the owners have shown that they are entitled to succeed under the clause on the particular facts of this case, which is essentially a question of causation. Construction of clause 13 In order to succeed, the owners must show that the expenses (or loss) they sustained as a result of discharging the cargo at Angra dos Reis in Brazil, which was of course the loading port, in the circumstances described by Lord Sumption, were a consequence of their complying with the charterers order to load the cargo. The relevant part of clause 13 is in these terms: charterers hereby indemnify owners against all consequences that may arise from the master complying with charterers orders . I agree with Lord Sumption in paras 10 to 12 that the clause is very wide but that it is neither complete nor unlimited. In particular, I agree with him that the indemnity is not intended to include consequences which are incidental to the service for which the vessel was required to be available under the charterparty. So, for example, it would not include any cost of or in relation to the discharge of the cargo in the ordinary course of events, which would be covered by clauses 5 and 6 of the charterparty, which provide for the services to be provided and paid for by the owners and charterers respectively, or by clause 7, which provides for hire to be paid by the charterers to the owners. Nor, as Lord Mance observes at para 37, would clause 13 cover matters of navigation or in respect of which owners can be taken to have assumed the risk by contract. I further agree with Lord Sumption that the real question under clause 13 is whether the charterers order to load the cargo was an effective cause of the owners having had to bear a risk or cost of a kind which they had not contractually agreed to bear and that, if the charterers order was an effective cause in the sense that it was not a mere but for cause which did no more than provide the occasion for some other factor unrelated to the charterers order to operate, it does not matter whether it was the only effective cause. It is not I think helpful to use other adjectives to describe the cause. Different adjectives have been used over the years, including proximate cause, dominant cause and direct cause. To my mind they are somewhat misleading because they tend to suggest that the cause must be the most proximate in time or that the search is for the sole cause. Lord Mance says at para 37 that the search is for the proximate or determining cause. However, I respectfully disagree because such a formulation suggests that there can be only one such cause, whereas there may, depending upon the circumstances, be more than one effective cause. It is true that the cases make some reference to the determining or the proximate cause. For example, in Larrinaga Steamship Co Ltd v The King [1945] AC 246, 252 Viscount Simon LC said that the proximate cause of the stranding of a vessel was not warlike operations. As he put it at p 253, the vessel was attempting to make a voyage without cargo and suffered from a marine peril when doing so. The fact that she was ordered to leave port sooner than her acting master thought was wise could not turn her disaster into the consequence of a warlike operation. He concluded that the proximate or determining cause was a misfortune in navigation, not attributable to any warlike operation at all. The House of Lords was not considering the possibility of two effective causes. Lord Mance refers (at paras 38 to 40) in some detail to the decision of Devlin J in Royal Greek Government v Minister of Transport (The Ann Stathatos) (1949) 83 Ll L Rep 228. On my reading of the arbitrator's findings in that case (as described at pp 231 232) he identified four causes of the first explosion (using the word caused in the wide sense of the word). Omitting two causes which are irrelevant for present purposes, the arbitrator found that the first explosion was caused by (a) the loading on board of gassy and dusty coal and the battening down of the hatches so as to trap the gasses and leave coal dust suspended in such air as existed in tween deck space and (d) some act on the part of the crew who were repairing the tanks, which act caused a flame or spark. Devlin J said at p 237 that by the wide sense of the word, the arbitrator meant to include all suggested or possible causes, however remote, and whether causes in the legal sense or not. He added: From these five [the arbitrator] selects the act which caused the flame or spark and the explosive atmosphere as the direct or immediate or effective causes of the first explosion. The first explosion is the only explosion which is relevant for present purposes. It would seem to follow from that conclusion that there were two effective causes and not one. It would also seem to follow that the arbitrator was choosing causes (a) and (d) as the two effective causes. However the arbitrator then held (as stated at p 232) that the loading of the coal, while one of the causes of the damage to the ship (using the word causes in its wide sense), was not the direct or immediate or effective cause of the loss or expenses claimed. It is not clear to me how these findings can be reconciled. One possibility is that the arbitrator treated cause (a) as two causes and not one, by treating the loading of the coal as a different cause from the presence of the gas. If that is correct, the arbitrator held that there were two effective causes, namely the presence of the gas and the flame or spark. It is not easy to see how that is consistent with the view later expressed by the judge that the arbitrator seems to have taken what is immediate in time, by which he must have meant the flame or spark (p 237). If the arbitrator treated (a) as one cause, namely the loading of cargo in a gaseous state, it is not easy to see how his conclusion that the flame or spark and the explosive atmosphere were the direct or immediate or effective causes of the explosion is consistent with his conclusion that the loading of the coal, while one of the causes of the damage to the ship (using the word causes in its wide sense) was not the direct or immediate or effective cause of the loss or expenses claimed. As I read the judgment of Devlin J, he concluded (at pp 237 238) that the arbitrator favoured the cause that was immediate in time, namely the initial flame or spark which ignited the gas. He rejected the submission that the arbitrator misdirected himself by confusing immediate cause with direct or effective cause. He also rejected (at p 238) the submission that the flame or spark was too remote in law to be the cause of the first explosion. He then considered whether the loading, which the arbitrator rejected as the direct cause, was too remote in law to be a cause at all. It was in the light of those conclusions that, in the passage quoted by Lord Mance at para 39, Devlin J considered, at p 238, whether, if it was not the proximate cause, loading was a cause of the explosion. This part of Devlin Js judgment must be set in the context of the facts. Perhaps naturally in the light of the arbitrators award, he started with the proximate cause, which the arbitrator had held was the flame or spark which ignited the methane gas. He considered the possibility of there being more than one proximate cause, but said that it was not necessary to consider it because the indemnity clause was concerned with the proximate cause. He then expressed his conclusion thus: So the matter comes down to this, that the arbitrator has selected one cause in preference to another as the proximate or direct cause. I cannot see that any question of law is involved in this selection. In short, Devlin J held that that conclusion was a conclusion of fact and that the arbitrator had not misdirected himself in law. In these circumstances, I do not think that the decision or reasoning in The Ann Stathatos is of any real assistance. The arbitrator had expressly held that there was a sole proximate cause. It may be that, in the light of his earlier conclusion that the direct or immediate or effective causes of the collision were both (a) the act which caused the spark or flame and (b) the explosive atmosphere, the arbitrator made an error in concluding that the spark or flame was the proximate cause, in the sense of sole proximate cause. However, if he did, on Devlin Js approach it was an error of fact, not an error of law. In all the circumstances the decision of Devlin J is an unconvincing basis for a conclusion that the search is for the proximate cause. As I see it, the question in each case, whether under a contract of insurance or under a contract of indemnity, is whether an effective cause of the alleged loss or expense was a peril insured against or an indemnifying event. By reference to Devlin Js citation of Reischer v Borwick [1894] 2 QB 548, Lord Mance accepts in para 64 that two causes may be so closely matched that both are identified as effective causes. However he says that that it is a largely theoretical analysis which finds little practical application in the authorities. It is true that the authorities do not contain much discussion of the circumstances in which there may be two effective causes. However, in my opinion, they clearly show that two effective causes can, in principle, exist. To my mind this can be clearly seen from Wayne Tank and Pump Co Ltd v Employers Liability Assurance Corpn Ltd [1974] QB 57, Lloyd (JJ) Instruments Ltd v Northern Star Insurance Co Ltd (The Miss Jay Jay) [1987] 1 Lloyds Rep 32 and Midland Mainline Ltd v Eagle Star Insurance Co Ltd [2004] EWCA Civ 1042, [2004] 2 Lloyds Rep 604. The present position can be most clearly seen from the Midland Mainline case, where Sir Martin Nourse, with whom Brooke and Jacob LJJ agreed, expressly held at para 48 that there can be more than one proximate cause of loss. He cited Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918] AC 350, Wayne Tank and The Miss Jay Jay as authority for that proposition. It is true that in Wayne Tank [1974] QB 57, on the facts (which are described by Lord Mance at para 41) the majority of the Court of Appeal, Lord Denning MR and Roskill LJ, held that the proximate cause of the fire was the defective plastic material and thermostat supplied and not the act of switching on the heating and leaving it unattended without testing. However, in a passage quoted by Sir Martin Nourse at para 10 of the Midland Mainline case, Roskill LJ said that he found it impossible to say that the latter was the sole proximate cause of the fire and, that if he was wrong to say that the defective state of the material and thermostat was the sole proximate cause of the fire, there were two effective proximate causes. Cairns LJ, whose approach Sir Martin described as different but instructive, said at p 68: But for my part I do not consider that the court should strain to find a dominant cause if, as here, there are two causes both of which can be properly described as effective causes of the loss. Mr Le Quesne recognised that if there are two causes which are approximately equal in effectiveness, then it is impossible to call one rather than the other the dominant cause. I should prefer to say that unless one cause is clearly more decisive than the other, it should be accepted that there are two causes of the loss and no attempt should be made to give one of them the quality of dominance. Those were cases in which it was held that, where the or a proximate, or effective, cause of the loss is excepted by the policy, the insurers are not liable. It is, however, clear from The Miss Jay Jay that, where there are two effective causes, neither of which is excluded but only one of which is insured, the insurers are liable. In the Court of Appeal Slade LJ underlined (at p 39) that the authorities show that the question of proximate cause has to be determined by a broad commonsense view of the whole position and that, by proximate, is meant proximate in efficiency. It was held that the faulty design and construction of the vessel, which was neither an insured peril nor an excepted cause, and perils of the seas, which was an insured peril, were both proximate causes of the loss since they were, as Slade LJ put it at p 40 equal or at least nearly equal in their efficiency in bringing about the damage. These principles are as I see it correctly summarised in McGillivray on Insurance Law, 11th ed (2008) at para 19 005 under the heading Two effective causes and in McGee on The Modern Law of Insurance 3rd ed (2011) at pp 260 261. See also to the same effect McCanns Executors v Great Lakes Reinsurance (UK) Plc [2010] CSOH 59, para 112 to 117, where Lord Hodge also stressed the importance of context; Orient Express Hotels Ltd v Assicurazioni General SpA (UK branch) (trading as Generali Global Risk) [2010] EWHC 1186 (Comm), [2011] Bus LR 7 per Hamblen J; and Global Process Systems Inc v Syarikat Takaful Malaysia Bhd [2011] UKSC 5, [2011] Bus LR 537, para 88 per Lord Mance and, in the Court of Appeal, [2009] EWCA Civ 1398, [2010] 2 All ER 248, para 32 per Waller LJ. I entirely agree with Lord Mance that there must be a causal link between the order and the consequences relied upon. In short, there must be no break in the chain of causation between the order and the consequences. This is clear from The White Rose [1969] 1 WLR 1098. As Lord Mance says at para 45, Donaldson J there accepted that it was necessary in every case to establish an unbroken chain of causation. That is the sense in which I read Lord Hobhouse of Woodboroughs reference to the necessity for a direct causal link in Whistler International Ltd v Kawasaki Kisen Kaisha Ltd (The Hill Harmony) [2001] 1 AC 638, 656. Lord Hobhouse was not considering a case like the present. I do not read him as intending a direct causal link to be different from an effective cause. I remain of the view expressed above (and in agreement with Lord Sumption) that the question is whether the relevant order was an effective cause of the alleged consequence. I agree with both Lord Sumption and Lord Mance that in deciding whether causation was established on the facts, it is important to have in mind the context in which the question is asked. I do not think that the answer can be found in the conclusions on the facts to which Lord Mance has referred. In particular, I do not think that Donaldson Js conclusion based on the vagaries of Minnesota law in The White Rose is of any assistance in deciding the relevant question of fact in this appeal. Causation on the facts Lord Sumption has identified the relevant commercial context. It is that the charterers gave an order to load the cargo in the ordinary way. The consequence of that order was that the cargo was indeed loaded and therefore had sooner or later to be discharged. The failure of the charterers to pay hire timeously triggered the owners right of withdrawal. When they exercised that right, the question was what should be done with the cargo which was still on board the vessel. It had to be discharged somewhere. As it happened, it was discharged at the port of loading but it might have been discharged at the port of discharge or at an intermediate port. I entirely agree with Lord Sumptions analysis at paras 9 to 16. In particular I agree with Lord Sumption that the owners motive for exercising the right to terminate is irrelevant. It was adventitious where and when the termination occurred. The position would have been the same if the termination had occurred for some other reason than the exercise of an option by the owners, as for example as a result of frustration. The owners would have had to procure discharge of the cargo and would have incurred expenses and perhaps loss. They would not have been able to recover such expenses and loss under any of the other provisions of the charterparty. The reason they would have to incur the expenses is that the cargo was still on board the vessel. Just as here there are two effective causes of the expenses and loss, namely the withdrawal and the fact that cargo had been loaded, so in a frustration case, there would be two such causes, namely the frustration and the fact that cargo had been loaded and was on board. I agree with the view expressed by Lord Mance at para 50 that, if the owners were bound to third parties by bills of lading which charterers had required them to issue, the continuation of the voyage under those bill of lading contracts could engage the indemnity under clause 13. Lord Mance further recognises (to my mind correctly) that if owners were left with no practical option but to carry the cargo to its destination, then they might have an argument that their time and money were spent in compliance with charterers orders. Indeed, at present I see no reason why they should not succeed under the indemnity in such circumstances. As I see it, that would be on the basis that the charterers orders would be the orders to load. In terms of causation, I see no distinction in principle between that case and the present. For these reasons and the reasons given by Lord Sumption I would allow this appeal on the indemnity point as well as the Winson point. |
When a court grants a decree of divorce, nullity of marriage or judicial separation it has the power to order ancillary relief. Ancillary relief governs the financial arrangements between the husband and the wife on the breakdown of their marriage. Sometimes the husband and wife have already made an agreement governing these matters. The agreement may have been made before the marriage (an ante nuptial agreement) or after the marriage (a post nuptial agreement). Post nuptial agreements may be made when the husband and wife are still together and intend to remain together, or when they are on the point of separating or have already separated. The latter type of post nuptial agreement can be described as a separation agreement. We shall use the generic description nuptial agreements to embrace both ante nuptial and post nuptial agreements. A court when considering the grant of ancillary relief is not obliged to give effect to nuptial agreements whether they are ante nuptial or post nuptial. The parties cannot, by agreement, oust the jurisdiction of the court. The court must, however, give appropriate weight to such an agreement. This appeal raises the question of the principles to be applied by the court when considering the weight that should be attached to an ante nuptial agreement. The Privy Council recently considered this question in relation to a post nuptial agreement in MacLeod v MacLeod [2008] UKPC 64, [2010] 1 AC 298 and it will be necessary to consider the implications of that decision. The approach of English law to nuptial agreements differs significantly from the law of Scotland, and more significantly from the rest of Europe and most other jurisdictions. Most jurisdictions accord contractual status to such agreements and hold the parties to them, subject in some cases to specified safeguards or exceptions. Under English law it is the court that is the arbiter of the financial arrangements between the parties when it brings a marriage to an end. A prior agreement between husband and wife is only one of the matters to which the court will have regard. The uncertainty as to the weight that the court will attach to such agreements has led to calls for reform. The history of steps taken towards the reform of our law is set out in the judgment of Thorpe LJ at paras 16 to 23 of his judgment in this case in the Court of Appeal. For present purposes it suffices to note the following. Families, which included the following statement in para 4.21: In 1998 the Home Office published a consultation document, Supporting The Government is considering whether there would be advantage in allowing couples, either before or during their marriage, to make written agreements dealing with their financial affairs which would be legally binding on divorce. In para 4.23 the Government proposed that any such agreement should be subject to six safeguards. It would not be legally binding: where there is a child of the family, whether or not that child was alive or a child of the family at the time the agreement was made where under the general law of contract the agreement is unenforceable, including if the contract attempted to lay an obligation on a third party who had not agreed in advance where one or both of the couple did not receive independent legal advice before entering into the agreement where the court considers that the enforcement of the agreement would cause significant injustice (to one or both of the couple or a child of the marriage) where one or both of the couple have failed to give full disclosure of assets and property before the agreement was made where the agreement is made fewer than 21 days prior to the marriage (this would prevent a nuptial agreement being forced on people shortly before their wedding day, when they may not feel able to resist). There are many, including some members of the Family Bar and Bench, who would favour a reform along the lines proposed, but the Government has not taken its proposals further. The Law Commission is, however, currently considering this area of the law and is expected to report in 2012. There can be no question of this Court altering the principle that it is the Court, and not any prior agreement between the parties, that will determine the appropriate ancillary relief when a marriage comes to an end, for that principle is embodied in the legislation. What the Court can do is to attempt to give some assistance in relation to the approach that a court considering ancillary relief should adopt towards an ante nuptial agreement between the parties. Earlier this year Resolution, an organisation of over 5,700 family lawyers, published an updated paper on Family Agreements, which proposes legislative reform to the law of ante nuptial and post nuptial agreements. This quotes statistics that show that about 45% of marriages are likely to end in divorce. It comments on the strain and expense that are involved in disputes about ancillary relief, which are increased by the uncertainty of the outcome. In order to address the facts of this particular case it will be necessary, in due course, to set these out in a little detail. At this stage we propose to give a summary that will provide a context for the consideration of the relevant principles that will follow. The appellant (the husband) is a French national. The respondent (the wife) is a German national. They signed the ante nuptial agreement in Germany on 1 August 1998. The husband was then aged 27 and the wife 29. They were married in London on 28 November 1998. They had two children, Chiara, born on 4 September 1999 and Chloe, born on 25 May 2002. In October 2006, after 8 years of marriage, they separated. The wife petitioned for divorce in the Principal Registry of the Family Division that same month. The husband cross petitioned in November. They agreed to proceed undefended on cross decrees and were divorced in July 2007. Meanwhile, the wife had applied for permission to take the girls to live in Germany. In September 2007, His Honour Judge Collins granted that application but made a shared residence order providing that the children should divide their time between their parents. Under his order, they were to spend just under one third of the time with their father and two thirds with their mother. The husband made an unsuccessful application for permission to appeal that order to the Court of Appeal. The wife took the children to live in Germany in February 2008. However, in November 2008 (after the judgment of Baron J in the ancillary relief proceedings), she applied to the German court for permission to take them to live in Monaco. The husband resisted this, but permission was granted in May 2009 and that is where they now live. The ante nuptial agreement was drawn up in Germany by a notary. It contained a choice of law clause that provided that the effects of their marriage, including the laws of matrimonial property and succession, were to be subject to the law of the Federal Republic of Germany. The main part of the agreement provided first for separation of property. In clause 3 it was declared that the statutory matrimonial regime was to be excluded, and that each party was to manage his or her assets entirely independently. By clause 4 the parties excluded the equalisation of pension rights. By clause 5 they waived claims for maintenance after the marriage was terminated. Clause 6 contained a waiver of the statutory right to a portion of the estate of the first one of them to die. The effect of the agreement was that neither party was to derive any interest in or benefit from the property of the other during the marriage or on its termination. It made no provision for what was to happen in the event of their having children. The parties entered into this ante nuptial agreement at the instigation of the wife. She came from an extremely rich family. Some of the family wealth had already been transferred to her, so that she enjoyed substantial unearned income. She expected to receive a further portion of the family wealth if, but only if, she entered into the ante nuptial agreement to protect this. Her father insisted upon this. She herself was anxious that the husband should show, by entering into the agreement, that he was marrying her for love and not for her money. The husband was working for JP Morgan & Co and, at the time of the ante nuptial agreement, was earning about 120,000 a year and had excellent prospects. These were realised inasmuch as he earned about $475,000 dollars in 2001 and about $320,000 in 2002. He then became disenchanted with banking and embarked on research studies at Oxford with the object of obtaining a D Phil in biotechnology. Despite the terms of the ante nuptial agreement the husband brought a claim for ancillary relief, seeking an order against the wife both for periodical payments and for a lump sum. The hearing of his claim began before Baron J on 23 June 2008 and she handed down her judgment on 28 July 2008: [2008] EWHC 1532 (Fam) [2009] 1 FCR 35. The issue that lay at the heart of the proceedings was the weight that should be given to the ante nuptial agreement. Baron J held that the circumstances surrounding the conclusion of the agreement fell foul of a number of the safeguards set out in para 4.23 of the Home Office consultation document (see para 5 above), and for that reason, the weight to be attached to it fell to be reduced. None the less, she held that his award should be circumscribed to a degree to reflect the fact that he had signed the agreement. Her award also had to make provision for the two children, whose arrival had not been anticipated in the agreement. In the event she awarded the husband a total of 5,560,000, on the basis that this would provide him with an annual income of 100,000 for life and enable him to buy a home in London, where the two children could visit him. She awarded him periodical payments of 35,000 a year for each child until they ceased full time education. In addition she awarded a sum to enable him to buy a home in Germany (which would remain owned by the wife) where the two children could stay with him. The wife appealed successfully to the Court of Appeal against Baron Js order. The Court held that Baron J had been wrong to find that the circumstances in which the ante nuptial agreement had been reached reduced the weight to be attached to the agreement. It was not evident that the fact of the agreement had had any significant impact on her award. In the circumstances of the case she should have given the agreement decisive weight. The award should make provision for the husbands role as the father of the two children, but should not otherwise make provision for his own long term needs. The case was remitted to Baron J. Ancillary relief The power to grant a decree of divorce was conferred on a new Court for Divorce and Matrimonial Causes by the Matrimonial Causes Act 1857. Section 32 of that Act gave the court power to order the husband to secure maintenance for the wifes life. The Matrimonial Causes Act 1866 gave the court power to order the husband to pay unsecured maintenance to the wife. Having identified this starting point of the power to award ancillary relief we can jump to 1969. The Divorce Reform Act 1969 revolutionised the English law of divorce by replacing the old grounds of divorce which were based on fault with the single ground that the marriage had irretrievably broken down. This change was accompanied by a fresh approach to the financial consequences of divorce, which was supplied initially by the Matrimonial Proceedings and Property Act 1970, the provisions of which were largely re enacted as Part II of the Matrimonial Causes Act 1973 (the 1973 Act). Significant changes were made to these provisions by the Matrimonial and Family Proceedings Act 1984 and the Family Law Act 1996. The following provisions of the 1973 Act, as amended, are particularly material. Section 23 gives the court the power, on granting a decree of divorce, of nullity of marriage or of judicial separation to make a wide variety of orders. These include an order that either party pay to the other, or pay for the benefit of any child of the family, periodical payments, and that either party pay to the other, or for the benefit of any child of the marriage, a lump sum. Section 24 gives the court power to direct a party to transfer specified property to the other party or to or for the benefit of a child. No power is given to vary a property adjustment order. Section 24B gives the court power to make a pension sharing order. Section 31 gives the court power to vary a periodical payments order but not an order to pay a lump sum. Section 25 provides that it shall be the duty of the court when deciding whether, and in what manner to exercise powers including those referred to above to have regard to: all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen The section goes on to provide that as regards the exercise of its powers in relation to a party to the marriage the court shall in particular have regard to the following matters: the standard of living enjoyed by the family before the the income, earning capacity, property and other financial (a) resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire; the financial needs, obligations and responsibilities which (b) each of the parties to the marriage has or is likely to have in the foreseeable future; (c) breakdown of the marriage; (d) marriage; (e) marriage; the contributions which each of the parties has made or is (f) likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family; the age of each party to the marriage and the duration of the any physical or mental disability of either of the parties to the (g) the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it; (h) in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring. The principles to be applied to the grant of ancillary relief have twice been considered by the House of Lords, in cases involving substantial assets. In White v White [2001] 1 AC 596 the parties had been married for 33 years, during which time they had together carried on the business of farming. Their net assets were some 4.6 million. The judge awarded the wife a lump sum of a little less than 1 million, on the basis that this would meet her reasonable needs. The Court of Appeal allowed her appeal and held that she was entitled to a lump sum of 1.5 million, reflecting her contribution both to the business and to the family. In the House of Lords, where the decision of the Court of Appeal was upheld, Lord Nicholls of Birkenhead gave the leading speech. He identified the following principles. Fairness, and indeed the 1973 Act itself, required the court to have regard to all the circumstances of the case, and there was one principle of universal application. No distinction should be drawn between the different ways in which husband and wife contributed to the welfare of the family. There should be no bias in favour of the money earner against the home maker and the child carer. As a general guide equality in the division of assets should only be departed from for good reason (p 605). Lord Nicholls went on to draw a distinction between property that one party brought to the marriage, or inherited during the marriage (inherited property) and property acquired by the labours of one or both parties during the marriage (matrimonial property). Lord Nicholls recognised that there was a case for saying that a party should be allowed to keep inherited property, but commented: Plainly, when present, this factor is one of the circumstances of the case. It represents a contribution made to the welfare of the family by one of the parties to the marriage. The judge should take it into account. He should decide how important it is in the particular case. The nature and value of the property, and the time when and circumstances in which the property was acquired, are among the relevant matters to be considered. However, in the ordinary course, this factor can be expected to carry little weight, if any, in a case where the claimants financial needs cannot be met without recourse to this property. (p 610) In Miller v Miller; McFarlane v McFarlane [2006] UKHL 24; [2006] 2 AC 618 two appeals were heard together, one in respect of a marriage that had lasted less than three years. Lord Nicholls started his judgment under the heading The requirements of fairness by observing that under the 1973 Act the first consideration had to be given to the welfare of the children of the marriage. After this a number of strands could be identified. The first was financial needs. He commented at para 11: The parties share the roles of money earner, home maker and child carer. Mutual dependence begets mutual obligations of support. When the marriage ends fairness requires that the assets of the parties should be divided primarily so as to make provision for the parties' housing and financial needs, taking into account a wide range of matters such as the parties' ages, their future earning capacity, the family's standard of living, and any disability of either party. Most of these needs will have been generated by the marriage, but not all of them. Needs arising from age or disability are instances of the latter. A second strand was compensation. This is aimed at redressing any significant prospective economic disparity between the parties arising from the way they conducted their marriage. For instance, the parties may have arranged their affairs in a way which has greatly advantaged the husband in terms of his earning capacity but left the wife severely handicapped so far as her own earning capacity is concerned. Then the wife suffers a double loss: a diminution in her earning capacity and the loss of a share in her husband's enhanced income. This is often the case. Although less marked than in the past, women may still suffer a disproportionate financial loss on the breakdown of a marriage because of their traditional role as home maker and child carer. (para 13) A third strand was sharing. Lord Nicholls postulated that marriage was a partnership. When a marriage ended each was entitled to an equal share of the assets of the partnership unless there was good reason to the contrary, albeit that the yardstick of equality was to be applied as an aid, not a rule. One good reason might be the difference between matrimonial property generated during the marriage and non matrimonial property property brought by one party to the marriage or inherited by or given to one party during the marriage. There was general agreement among the other members of the House with these propositions, although not all agreed on the precise definition of matrimonial property nor on the relevance of the length of the marriage to the principle of sharing. Lady Hale, with whom Lord Mance agreed, identified a sub category of matrimonial property, which the parties treated as separate property and which might not be subject to the sharing principle. The implications of these two decisions were considered by the Court of Appeal, Sir Mark Potter P, Thorpe and Wilson LJJ in Charman v Charman (No 4) [2007] EWCA Civ 503; [2007] 1 FLR 1246. The court observed that in Miller the House had unanimously identified three main principles which governed distribution of property in ancillary relief proceedings need (generously interpreted), compensation and sharing and that each of the matters set out in sub paragraphs (b) to (h) of section 25(2) of the 1973 Act could be assigned to one of the three (paras 68 69). As to the principle of sharing, the court said this, at para 66: To what property does the sharing principle apply? The answer might well have been that it applies only to matrimonial property, namely the property of the parties generated during the marriage otherwise than by external donation; and the consequence would have been that non matrimonial property would have fallen for redistribution by reference only to one of the two other principles of need and compensation to which we refer in para 68, below. Such an answer might better have reflected the origins of the principle in the parties' contributions to the welfare of the family; and it would have been more consonant with the references of Baroness Hale of Richmond in Miller at paras 141 and 143 to sharing the fruits of the matrimonial partnership and to the approach of roughly equal sharing of partnership assets. We consider, however, the answer to be that, subject to the exceptions identified in Miller to which we turn in paras 83 to 86, below, the principle applies to all the parties' property but, to the extent that their property is non matrimonial, there is likely to be better reason for departure from equality. It is clear that both in White at p 605 F G and p 989 respectively, and in Miller, at paras 24 and 26, Lord Nicholls of Birkenhead approached the matter in that way; and there was no express suggestion in Miller, even on the part of Baroness Hale of Richmond, that in White the House had set too widely the general application of what was then a yardstick. The exceptions identified in Miller referred to the possible exception in respect of assets that the parties had treated as separate property. As to these the court commented that the discussion about these perhaps foreshadowed future, albeit no doubt cautious, movement in the law towards a more frequent distribution of property upon divorce in accordance with what, by words or conduct, the parties appear previously to have agreed. Nuptial agreements, separation agreements and public policy It used to be contrary to public policy for a married couple who were living together, or a couple about to get married, to make an agreement that provided for the contingency that they might separate. Marriage involved a duty to live together and an agreement making provision for the possibility of separation might act as an encouragement to separate. Such agreements were void and the court would pay no regard to them: Cocksedge v Cocksedge (1844) 14 Sim 244; 13 LJ Ch 384; H v W (1857) 3 K & J 382. The same was not true of an agreement to separate or an agreement that governed a separation that had already taken place. Lord Atkin in Hyman v Hyman [1929] AC 601 at p 625 626 gave a short history of such contracts and commented on their effect: We have to deal with a separation deed, a class of document which has had a chequered career at law. Not recognized by the Ecclesiastical Courts, such contracts were enforced by the common law. Equity at first frowned. Lord Eldon doubted but enforced them: cf. St. John vs St. John (1803) Ves. 525, 529 and Bateman vs Countess of Ross (1813) 1 Dow 235; and see the arguments of Sir Fitzroy Kelly and Mr Turner and of Mr Bethell in Wilson vs Wilson (1848) 1 H. L. C. 538, 550 553, 564, 565. Finally they were fully recognized in equity by Lord Westburys leading judgment in Hunt vs Hunt (1861) 4 D. F. & J. 221, in which he followed Lord Cottenhams decision in Wilson vs Wilson 1 H. L. C. 538, 550 553, 564, 565, where his argument for the respondent had prevailed. Full effect has therefore to be given in all courts to these contracts as to all other contracts. It seems not out of place to make this obvious reflection, for a perusal of some of the cases in the matrimonial courts seems to suggest that at times they are still looked at askance and enforced grudgingly. But there is no caste in contracts. Agreements for separation are formed, construed and dissolved and to be enforced on precisely the same principles as any respectable commercial agreement, of whose nature indeed they sometimes partake. As in other contracts stipulations will not be enforced which are illegal either as being opposed to positive law or public policy. But this is a common attribute of all contracts, though we may recognize that the subject matter of separation agreements may bring them more than others into relation with questions of public policy. In Hyman v Hyman the husband had left the wife for another woman. Adultery by the husband was not at the time a ground for divorce unless there were aggravating circumstances, such as incest. The parties had entered into a deed of separation under which the husband had paid two lump sums and agreed to make weekly payments of 20 for the life of the wife. The deed included a covenant by the wife that she would not institute any proceedings to make him pay more than this. When the Matrimonial Causes Act 1923 gave the wife the right to petition for divorce on the grounds of her husbands adultery alone, the wife divorced her husband and applied to the court for maintenance pursuant to section 190(1) of the Supreme Court of Judicature (Consolidation) Act 1925. This gave the court the power, on any decree for divorce, to order the husband to pay maintenance. The husband argued that the wife was precluded by her covenant from bringing this claim. The House rejected this argument. Lord Hailsham LC held at p 614 that: the power of the court to make provision for a wife on the dissolution of her marriage is a necessary incident of the power to decree such a dissolution, conferred not merely in the interests of the wife, but of the public, and that the wife cannot by her own covenant preclude herself from invoking the jurisdiction of the court or preclude the court from the exercise of that jurisdiction. Lord Atkin made the same point at p 629. The subsequent history was set out by Lady Hale in MacLeod v MacLeod at paras 21 to 23. The same principle was applied to other statutory powers to award maintenance. In Bennett v Bennett [1952] 1 KB 249 the wife sought to enforce an agreement to pay maintenance given by her husband in consideration of her agreement not to seek a court order for maintenance. The Court of Appeal held that because that agreement was of no effect it did not constitute valid consideration for her husbands agreement and her claim failed. This unfortunate situation was remedied by the Maintenance Agreements Act 1957. The preamble to this Act stated: An Act to make provision with respect to the validity and alteration by the court of financial arrangements in connection with agreements between the parties to a marriage, whether made during the continuance or after the dissolution or annulment of the marriage, for the purposes of those parties living separately; and for purposes connected therewith. The Act provided: 1.(1) This section applies to any agreement in writing made, whether before or after the commencement of this Act, between the parties to a marriage for the purposes of their living separately, being (a) an agreement containing financial arrangements, whether made during the continuance or after the dissolution or annulment of the marriage; or (b) a separation agreement which contains no financial arrangements in a case where no other agreement in writing between the same parties contains such arrangements. (2) If an agreement to which this section applies includes a provision purporting to restrict any right to apply to a court for an order containing financial arrangements, that provision shall be void but any other financial arrangements contained in the agreement shall not thereby be rendered void or unenforceable but, unless void or unenforceable for any other reason, and subject to the next following subsection, shall be binding on the parties to the agreement: . (3) Where an agreement to which this section applies is for the time being subsisting and the parties thereto are for the time being either both domiciled or both resident in England, and on an application by either party the High Court or, subject to the next following subsection, a magistrates court is satisfied either (a) that by reason of a change in the circumstances in the light of which any financial arrangements contained in the agreement were made or, as the case may be, financial arrangements were omitted therefrom, the agreement should be altered so as to make different, or, as the case may be, so as to contain, financial arrangements; or (b) that the agreement does not contain proper financial arrangements with respect to any child of the marriage, the court may by order make such alterations in the agreement by varying or revoking any financial arrangements contained therein or by inserting therein financial arrangements for the benefit of one of the parties to the agreement or of a child of the marriage as may appear to the court to be just having regard to all the circumstances or, as the case may be, as may appear to the court to be just in all the circumstances in order to secure that the agreement contains proper financial arrangements with respect to any child of the marriage; and the agreement shall have effect thereafter as if any alteration made by the order had been made by agreement between the parties and for valuable consideration. These provisions are largely reproduced in sections 34 and 35 of the 1973 Act, albeit that the definition of a maintenance agreement does not state that it is an agreement made for the purposes of their living separately. Wilson LJ at para 134 of his judgment in this case remarks that sections 34 and 35 have been dead letters for more than 30 years. It seems likely that issues as to maintenance have, since the 1973 Act came into force, been pursued in ancillary relief proceedings. As to these section 35(6) provides For the avoidance of doubt it is hereby declared that nothing in this section or in section 34 above affects any power of a court before which any proceedings between the parties to a maintenance agreement are brought under any other enactment (including a provision of this Act) to make an order containing financial arrangements or any right of either party to apply for such an order in such proceedings. Although separation agreements do not override the powers of the Court to grant ancillary relief, they have been held to carry considerable weight in relation to the exercise of the courts discretion when granting such relief. In Edgar v Edgar [1980] 1 WLR 1410 the husband and wife had separated and in 1976, without any pressure from the husband but rather at the instigation of the wife, concluded a deed of separation which had been negotiated through solicitors. Under this the husband agreed to purchase a house for the wife, to confer on her capital benefits worth approximately 100,000, to pay her 16,000 a year and to make periodical payments for the children of the marriage. The wife agreed that if she obtained a divorce she would not seek a lump sum or property transfer orders. The husband complied with all his obligations under the separation deed but, in 1978, the wife petitioned for divorce and applied for ancillary relief, including a lump sum payment. Ormrod LJ said this about the weight to be given to the separation agreement at p 1417: To decide what weight should be given, in order to reach a just result, to a prior agreement not to claim a lump sum, regard must be had to the conduct of both parties, leading up to the prior agreement, and to their subsequent conduct, in consequence of it. It is not necessary in this connection to think in formal legal terms, such as misrepresentation or estoppel; all the circumstances as they affect each of two human beings must be considered in the complex relationship of marriage. So, the circumstances surrounding the making of the agreement are relevant. Undue pressure by one side, exploitation of a dominant position to secure an unreasonable advantage, inadequate knowledge, possibly bad legal advice, an important change of circumstances, unforeseen or overlooked at the time of making the agreement, are all relevant to the question of justice between the parties. Important too is the general proposition that formal agreements, properly and fairly arrived at with competent legal advice, should not be displaced unless there are good and substantial grounds for concluding that an injustice will be done by holding the parties to the terms of their agreement. There may well be other considerations which affect the justice of this case; the above list is not intended to be an exclusive catalogue. I agree with Sir Gordon Willmer in Wright v Wright [1970] 1WLR 1219, 1224, that the existence of an agreement, at least makes it necessary for the wife, if she is to justify an award of maintenance, to offer prima facie proof that there have been unforeseen circumstances, in the true sense, which make it impossible for her to work or otherwise maintain herself. Adapting that statement to the present case, it means that the wife here must offer prima facie evidence of material facts which show that justice requires that she should be relieved from the effects of her covenant in clause 8 of the deed of separation, and awarded further capital provision. Oliver LJ summarised his conclusions as follows at p 1424: in a consideration of what is just to be done in the exercise of the courts powers under the Act of 1973 in the light of the conduct of the parties, the court must, I think, start from the position that a solemn and freely negotiated bargain by which a party defines her own requirements ought to be adhered to unless some clear and compelling reason, such as, for instance, a drastic change of circumstances, is shown to the contrary. The court held that no good reason had been shown not to hold the wife to her agreement. Sitting in the Court of Appeal after his retirement, Sir Roger Ormrod in Camm v Camm (1982) 4 FLR 577 at p. 579, which was another case where ancillary relief was claimed in the face of the terms of a separation agreement, said: It has been stressed all through those same cases that the court must attach considerable importance, the amount of importance varying from case to case, to the fact that there was an agreement, because the court, naturally, will not lightly permit parties who have made a contractual agreement between themselves, even if it is not legally enforceable, to depart from that contractual agreement unless some good reason is shown. In that case the court did not hold the wife to her agreement, which she had entered into under great pressure and which failed to make adequate provision for her needs. In Smith v McInerney [1994] 2 FLR 1077 the husband, who had entered into a separation agreement with his wife, sought a lump sum and property adjustment order when his circumstances changed as a result of being made redundant. Thorpe J cited Edgar v Edgar and Camm v Camm and remarked at p 1081: As a matter of general policy I think it is very important that what the parties themselves agree at the time of separation should be upheld by the courts unless there are overwhelmingly strong considerations for interference. The approach of the courts to separation agreements, as evidenced by the cases cited above, differed markedly from the approach to nuptial agreements that merely anticipated the possibility of separation or divorce and which were consequently considered to be void as contrary to public policy. Contrast the statement of Thorpe J in Smith v McInerney quoted above with what he said at about the same time in F v F (Ancillary Relief: Substantial Assets) [1995] 2 FLR 45. In the latter case a rich German husband relied on a marital property regime which confined the wife to the pension of a retired German judge in the event of their divorce (the wife was in the judicial civil service at the time of the marriage). Thorpe J accepted that such agreements were commonplace in the society from which the parties came, but he did not attach any significant weight to the ante nuptial agreement, and said (at p 66): The rights and responsibilities of those whose financial affairs are regulated by statute cannot be much influenced by contractual terms which were devised for the control and limitation of standards that are intended to be of universal application throughout our society. Judges sitting in the Family Division were prepared to give some weight to ante nuptial agreements, but certainly not to the extent of holding that they should govern the terms of ancillary relief unless there were strong reasons for departing from them. In S v S (Matrimonial Proceedings: Appropriate Forum) [1997] 1 WLR 1200, Wilson J suggested at pp 1203 1204 that there might come a case where the circumstances surrounding the prenuptial agreement and the provision therein contained might, when viewed in the context of the other circumstances of the case, prove influential or even crucial. Where other jurisdictions, both in the United States and in the European Community, have been persuaded that there are cases where justice can only be served by confining parties to their rights under prenuptial agreements, we should be cautious about too categorically asserting the contrary. I can find nothing in section 25 to compel a conclusion, so much at odds with personal freedoms to make arrangements for ourselves, that escape from solemn bargains, carefully struck by informed adults, is readily available here. In N v N (Jurisdiction: Pre nuptial agreement) [1999] 2 FLR 745, 752, Wall J recognised that although they were unenforceable, ante nuptial agreements might have evidential weight in subsequent proceedings for divorce. Some weight was given to an ante nuptial agreement in C v C (Divorce: Stay of English Proceedings) [2001] 1 FLR 624 (Johnson J) (where a French ante nuptial agreement was a significant factor in staying English proceedings); M v M (Prenuptial Agreement) [2002] 1 FLR 654, para 44 (tending to guide the court to a more modest award than might have been made without it, per Connell J); and G v G (Financial Provision: Separation Agreement) [2004] 1 FLR 1011 (CA) (where parties had been married before). But contrast Haneef v Haneef [1999] EWCA Civ 803 (a decision on leave to appeal); J v V (Disclosure: Offshore Corporations) [2003] EWHC 3110 (Fam), [2004] 1 FLR 1042 (Coleridge J) (agreement signed on the eve of marriage without advice or disclosure and without allowance for arrival of children). See also X v X (Y and Z Intervening) [2002] 1 FLR 508, paras 78 103 (Munby J), and K v K (Ancillary Relief: Prenuptial Agreement) [2003] 1 FLR 120, 131 132 (R Hayward Smith QC sitting as Deputy High Court Judge) for a review of the authorities. Some judges cited dicta in Edgar v Edgar in the context of ante nuptial agreements without observing that those dicta were made in the very different context of a separation agreement see N v N at p 753; M v M at para 21, K v K at p 131. A change of attitude on the part of Thorpe LJ was apparent from his decision in Crossley v Crossley [2007] EWCA Civ 1491, [2008] 1 FLR 1467, 1472, at para 15 Thorpe LJ described the ante nuptial agreement there as a factor of magnetic importance. The marriage was a short marriage between two wealthy individuals who entered into an ante nuptial agreement after having taken legal advice. Mrs Crossley asserted that her husbands disclosure had been inadequate and therefore the agreement should be avoided. The issue before the court concerned disclosure. Thorpe LJ drew attention to these facts: the marriage was a childless marriage of very short duration, for a substantial portion of which the parties were living apart; the marriage was between mature adults, both of whom had been previously married and divorced; both parties had very substantial independent wealth; the ante nuptial agreement provided for the retention by each of the parties of their separate properties and division of joint property (of which there was in fact none). He accepted that the combination of these factors gave rise to a very strong case that a possible result of the section 25 exercise would be that the wife receives no further financial award, and concluded (at para 15): All these cases are fact dependent and this is a quite exceptional case on its facts, but if ever there is to be a paradigm case in which the court will look to the prenuptial agreement as not simply one of the peripheral factors in the case but as a factor of magnetic importance, it seems to me that this is just such a case Cases of post nuptial settlements other than separation agreements are rare. One such was NA v MA [2006] EWHC 2900 (Fam); [2007] 1 FLR 1760. That case is of interest because, on one view, it anticipated the approach of the Privy Council in MacLeod. The very wealthy husband had discovered that his wife had committed adultery with one of his friends. He pressurised her into signing an agreement that provided that she would receive a specified lump sum and annual payments if their marriage ended in divorce. The wife signed it because the husband insisted that she should do so if the marriage was to continue. Despite this, Baron J held at para 67 that as the idea of an agreement evolved it hardened into a legal, post nuptial agreement. It was on this basis, as we understand it, that the husband sought to have the agreement converted into an order of the court. When dealing with the law the judge did not distinguish clearly between ante nuptial, post nuptial and separation agreements. She said at para 12: It is an accepted fact that an agreement entered into between husband and wife does not oust the jurisdiction of this court. For many years, agreements between spouses were considered void for public policy reasons but this is no longer the case. In fact, over the years, pre nuptial contracts have become increasingly common place and are, I accept, much more likely to be accepted by these courts as governing what should occur between the parties when the prospective marriage comes to an end. That is, of course, subject to the discretion of the court and the application of a test of fairness/manifest unfairness. It may well be that Parliament will provide legislation but, until that occurs, current authority makes it clear that the agreements are not enforceable per se, although they can be persuasive (or definitive) depending upon the precise circumstances that lead to their completion. The judge went on to apply the law of undue influence, holding at paras 20 and 21 I am clear that, to overturn the agreement, I have to be satisfied that this wifes will was overborne by her husband exercising undue pressure or influence over her. I am also clear that if I do not overturn the agreement per se, I still have to consider whether it is fair and should be approved so as to become a court order. She overturned the agreement on the ground of undue influence. MacLeod v MacLeod This was an appeal to the Privy Council from the High Court of Justice of the Isle of Man. It involved a claim for ancillary relief under the Manx Matrimonial Proceedings Act 2003, which contained provisions identical to sections 23 to 25 and 34 to 36 of the 1973 Act. The husband and wife had married in Florida in 1994, after signing an ante nuptial agreement. A year later they moved to the Isle of Man. Six years and five children later the marriage ran into difficulties and the parties executed a deed which made substantial variations to the ante nuptial agreement. By August 2003 the marriage had totally broken down and in October 2004 a provisional decree of divorce was made. The wife sought ancillary relief, arguing that the deed of variation should be disregarded. The husband contended that it should be upheld, subject to one variation in favour of the wife. The Board, in an advice delivered by Lady Hale, summarised the law in relation to nuptial agreements that we have set out above and pointed out the distinction between separation agreements and agreements providing for the consequences of a possible future separation. At para 31 the Board referred to the position of ante nuptial agreements: The Board takes the view that it is not open to them to reverse the long standing rule that ante nuptial agreements are contrary to public policy and thus not valid or binding in the contractual sense. The Board has been referred to the position in other parts of the common law world. It is clear that they all adopted the rule established in the 19th century cases. It is also clear that most of them have changed that rule, and provided for ante nuptial agreements to be valid in certain circumstances. But with the exception of certain of the United States of America, including Florida, this has been done by legislation rather than judicial decision. The Board went on to draw a distinction between ante nuptial and post nuptial agreements, holding that the latter did constitute contracts. We do not agree with this distinction and, in order to explain where we part company with the reasoning of the Board, we must set this out in detail. 35 In the Boards view the difficult issue of the validity and effect of ante nuptial agreements is more appropriate to legislative rather than judicial development. It is worth noting, for example, that in the Florida case of Posner v Posner (1970) 233 So 2d 381, where such agreements were recognised, attention was drawn to the statutory powers of the courts to vary such agreements. The Board is inclined to share the view expressed by Baron J in NG v KR (Pre nuptial Contract) [2009] 1 FCR 35, para 130, that the variation power in section 50 of the 2003 Act (section 35 of the 1973 Act) does not apply to agreements made between people who are not yet parties to a marriage. Yet it would clearly be unfair to render such agreements enforceable if, unlike post nuptial agreements, they could not be varied. 36 Post nuptial agreements, however, are very different from pre nuptial agreements. The couple are now married. They have undertaken towards one another the obligations and responsibilities of the married state. A pre nuptial agreement is no longer the price which one party may extract for his or her willingness to marry. There is nothing to stop a couple entering into contractual financial arrangements governing their life together, as this couple did as part of their 2002 agreement. There is a presumption that the parties do not intend to create legal relations: see Balfour v Balfour [1919] 2 KB 571. There may also be occasional problems in identifying consideration for the financial promises made (now is not the time to enter into debate about whether domestic services constitute good consideration for such promises). But both of these are readily soluble by executing a deed, as was done here. 37 There is also nothing to stop a married couple from entering into a separation agreement, which will then be governed by sections 49 to 51 of the 2003 Act (sections 34 to 36 of the 1973 Act). As already noted, section 49 applies to any agreement in writing made at any time between the parties to a marriage. There is nothing to limit this to people who are already separated or on the point of separating. It is limited to agreements containing financial arrangements or to separation agreements which contain no financial arrangements. And financial arrangements are limited to those governing their rights and liabilities towards one another when living separately. But section 49(1)(b) provides that such financial arrangements shall be binding unless they are void or unenforceable for any other reason. 38 Leaving aside the usual contractual reasons, such as misrepresentation or undue influence, the only other such reason might be the old rule that agreements providing for a future separation are contrary to public policy. But the reasons given for that rule were founded on the enforceable duty of husband and wife to live together. This meant that there should be no inducement to either of them to live apart: see, for example, H v W 3 K & J 382, 386. There is no longer an enforceable duty upon husband and wife to live together. The husbands right to use self help to keep his wife at home has gone. He can now be guilty of the offences of kidnapping and false imprisonment if he tries to do so: see R v Reid [1973] QB 299. The decree of restitution of conjugal rights, disobedience to which did for a while involve penal sanctions, has not since the abolition of those sanctions been used to force the couple to live together: see Nanda v Nanda [1968] P 351. It was abolished by the Matrimonial Proceedings and Property Act 1970, at the same time as the Law Reform (Miscellaneous Provisions) Act 1970 abolished all the common law actions against third parties who interfered between husband and wife. 39 Hence the reasoning which led to the rule has now disappeared. It is now time for the rule itself to disappear. It has long been of uncertain scope, as some provisions which contemplate future marital separation have been upheld: see, for example, Lily, Duchess of Marlborough v Duke of Marlborough [1901] 1 Ch 165. This means that sections 49 to 51 of the 2003 Act (sections 34 to 36 of the 1973 Act) can apply to such agreements in just the same way as they do to any other. In particular, they can be varied in either of the circumstances provided for in section 50(2). The first is that there has been a change in the circumstances in the light of which any financial arrangements were made or omitted; following the amendment proposed by the Law Commission in 1969, this now includes a change which the parties had actually foreseen when making the agreement. The second is that the agreement does not contain proper financial arrangements with respect to any child of the family. 40 In the Boards view, therefore, the 2002 agreement was a valid and enforceable agreement, not only with respect to the arrangements made for the time when the parties were together, but also with respect to the arrangements made for them to live separately. However, the latter arrangements were subject to the courts powers of variation and the provisions which purported to oust the jurisdiction of the court, whether on divorce or during the marriage, were void. The existence of such powers does not deprive such agreements of their utility. Countless wives and mothers benefited from such agreements at a time when it was difficult for them to take their husbands to court to ask for maintenance. Enforcing an existing agreement still has many attractions over going to court for discretionary relief. 41 The question remains of the weight to be given to such an agreement if an application is made to the court for ancillary relief. In Edgar v Edgar [1980] 1 WLR 1410, the solution might have been more obvious if mention had been made of the statutory provisions relating to the validity and variation of maintenance agreements. One would expect these to be the starting point. Parliament had laid down the circumstances in which a valid and binding agreement relating to arrangements for the couples property and finances, not only while the marriage still existed but also after it had been dissolved or annulled, could be varied by the court. At the same time, Parliament had preserved the parties rights to go to court for an order containing financial arrangements. It would be odd if Parliament had intended the approach to such agreements in an ancillary relief claim to be different from, and less generous than, the approach to a variation application. The same principles should be the starting point in both. In other words, the court is looking for a change in the circumstances in the light of which the financial arrangements were made, the sort of change which would make those arrangements manifestly unjust, or for a failure to make proper provision for any child of the family. On top of that, of course, even if there is no change in the circumstances, it is contrary to public policy to cast onto the public purse an obligation which ought properly to be shouldered within the family. 42 The Board would also agree that the circumstances in which the agreement was made may be relevant in an ancillary relief claim. They would, with respect, endorse the oft cited passage from the judgment of Ormrod LJ in Edgar v Edgar [1980] 1 WLR 1410, 1417, in preference to the passages from the judgment of Oliver LJ, both quoted above, at para 25. In particular the Board endorses the observation that It is not necessary in this connection to think in formal legal terms, such as mispresentation [sic] or estoppel. Family relationships are not like straightforward commercial relationships. They are often characterised by inequality of bargaining power, but the inequalities may be different in relation to different issues. The husband may be in the stronger position financially but the wife may be in the stronger position in relation to the children and to the home in which they live. One may care more about getting or preserving as much money as possible, while the other may care more about the living arrangements for the children. One may want to get out of the relationship as quickly as possible, while the other may be in no hurry to separate or divorce. All of these may shift over time. We must assume that each party to a properly negotiated agreement is a grown up and able to look after him or herself. At the same time we must be alive to the risk of unfair exploitation of superior strength. But the mere fact that the agreement is not what a court would have done cannot be enough to have it set aside. We wholeheartedly endorse the conclusion of the Board in paras 38 and 39 that the old rule that agreements providing for future separation are contrary to public policy is obsolete and should be swept away, for the reasons given by the Board. But for reasons that we shall explain, this should not be restricted to post nuptial agreements. If parties who have made such an agreement, whether ante nuptial or post nuptial, then decide to live apart, we can see no reason why they should not be entitled to enforce their agreement. This right will, however, prove nugatory if one or other objects to the terms of the agreement, for this is likely to result in the party who objects initiating proceedings for divorce or judicial separation and, arguing in ancillary relief proceedings that he or she should not be held to the terms of the agreement. We now turn to explain why we would not draw the distinction drawn by the Board between ante and post nuptial agreements. The Board advances two reasons for this, one specific the other general. The specific reason is that section 35 of the 1973 Act applies to post nuptial but not to ante nuptial settlements and it would be unfair to render the latter enforceable if they could not be varied (para 35). The general reason is that post nuptial agreements are very different from ante nuptial agreements. We shall deal with each in turn. The specific reason Our first reservation in relation to this reason is that we question whether the Board was right to hold that sections 34 and 35 apply to all post nuptial agreements rather than just to separation agreements. We consider that the original provisions in the Maintenance Agreements Act 1957 applied only to separation agreements. The preamble to the Act and the statement in section 1(1) that the section applies to any agreement between the parties to a marriage for the purpose of their living separately so indicate. Furthermore post nuptial agreements of couples living together that provided for the contingency of future separation were void, so Parliament cannot have intended the Act to apply to them. When the provisions of the 1957 Act were incorporated into the 1973 Act, they did not include the preamble or the words that we have emphasised above. But it remained the case that post nuptial agreements that made provision for the contingency of separation were considered to be contrary to public policy. For this reason we find it hard to accept that Parliament intended to extend the ambit of the relevant provisions. More fundamentally, we do not accept that the protection of section 35 must be a precondition to holding that a nuptial agreement takes effect as a contract. If Wilson LJ is right to say that section 35 is a dead letter, the theoretical scope of its protection cannot be critical to the question of whether nuptial agreements have contractual effect. The general reason Is there a material distinction between ante nuptial and post nuptial agreements? Wilson LJ was not persuaded that there is (paras 125 126) and nor are we. The question should be tested by comparing an agreement concluded the day before the wedding with one concluded the day after it. Nuptial agreements made just after the wedding are not unknown and likely to become more common if the law distinguishes them from ante nuptial agreements. between ante and post nuptial agreements: In MacLeod the Board made the following comments about the differences There is an enormous difference in principle and in practice between an agreement providing for a present state of affairs which has developed between a married couple and an agreement made before the parties have committed themselves to the rights and responsibilities of the married state purporting to govern what may happen in an uncertain and unhoped for future. (para 31) This is true, but does not apply fully to a post nuptial agreement entered into at the start of married life, for that also purports to govern what may happen in an uncertain and unhoped for future. Post nuptial agreements, however, are very different from pre nuptial agreements. The couple are now married. They have undertaken towards one another the obligations and responsibilities of the married state. A pre nuptial agreement is no longer the price which one party may extract for his or her willingness to marry. (para 36) As to the last sentence, this focuses on one possible type of duress. But duress can be applied both before and after the marriage. The same principle applies in either case. In either case the duress will lead to the agreement carrying no, or less, weight. As to the first two sentences, we do not see why different principles must apply to an agreement concluded in anticipation of the married state and one concluded after entry into the married state. This is not to say that there are no circumstances where it is right to distinguish between an ante nuptial and a post nuptial agreement. The circumstances surrounding the agreement may be very different dependent on the stage of the couples life together at which it is concluded, but it is not right to proceed on the premise that there will always be a significant difference between an ante and a post nuptial agreement. Some couples do not get married until they have lived together and had children. Does contractual status matter? Is it important whether or not post nuptial or ante nuptial agreements have contractual status? The value of a contract is that the court will enforce it. But in ancillary relief proceedings the court is not bound to give effect to nuptial agreements, and is bound to have regard to them, whether or not they are contracts. Should they be given greater weight because in some other context they would be enforceable? Or is the question of whether or not they are contracts an irrelevance? This can be tested in this way. Did the identification of the fact that there were no public policy reasons not to treat post nuptial agreements as contracts alter the weight that the Board attached to them in MacLeod? The Board did not say that they had to be given more weight as a result of sweeping away the public policy objections to them. Those objections had long ceased to be relevant and had not inhibited courts from giving some and, in some circumstances, decisive weight to ante nuptial agreements. The circumstances surrounding the conclusion of a contract will either result in the contract being of full effect, or of no effect at all. The courts have always adopted a more nuanced approach to ante and post nuptial agreements. We cannot see why it mattered whether or not the agreement in MacLeod was a contract. In summary, we consider that the Board in MacLeod was wrong to hold that post nuptial agreements were contracts but that ante nuptial agreements were not. That question did not arise for decision in that case any more than in this and does not matter anyway. It is a red herring. Regardless of whether one or both are contracts, the ancillary relief court should apply the same principles when considering ante nuptial agreements as it applies to post nuptial agreements. The Boards approach to post nuptial agreements What was the approach that the Board held in MacLeod should be applied to post nuptial agreements? The Board held that the court should adopt the same approach as that laid down by Parliament for varying maintenance agreements in section 35 of the 1973 Act, looking for a change in the circumstances in the light of which the financial arrangements were made, the sort of change which would make those arrangements manifestly unjust (para 41). The Board also endorsed the oft cited passage from the judgment of Ormrod LJ in Edgar, which we have cited at para 38 above. These tests are appropriate for a separation agreement. They are not necessarily appropriate for all post nuptial agreements. A separation agreement is designed to take effect immediately and to address the circumstances prevailing at the time that it is made, as well, of course, as those contemplated in the future. It will have regard to any children of the family, to the assets of husband and wife, to their incomes and to their pension rights. Thus it makes sense to look for a significant change of circumstances as the criterion justifying a departure from the agreement. The same will be true to a lesser extent where a post nuptial agreement is made well on in a marriage, as in NA v MA and MacLeod itself, or at the start of a marriage if one or both parties bring significant property to it. But where a young couple enter into an agreement just after embarking on married life, owning no property of value, there will be no relevant circumstances prevailing at the time of their agreement. In that event change of circumstances will not be such a useful test. The circumstances will almost inevitably have changed by the time the marriage founders and the effect to be given to the post nuptial agreement will depend on wider considerations. MacLeod has done a valuable service in sweeping away the archaic notions of public policy which have tended to obfuscate the approach to nuptial agreements. But for the reasons that we have given we have not found that it assists in approaching the problem at the heart of this appeal for we have been able to accept neither its thesis that ante nuptial agreements are fundamentally different from post nuptial agreements nor, without reservation, its approach to post nuptial settlements. The issues raised The issues raised on the facts of this case can be placed under three heads: a. Were there circumstances attending the making of the agreement that detract from the weight that should be accorded to it? b. Were there circumstances attending the making of the agreement that enhance the weight that should be accorded to it; the foreign element? c. Did the circumstances prevailing when the courts order was made make it fair or just to depart from the agreement? We shall have to consider these questions in the context of the facts of this case, but at this stage we propose to address the issues of principle that they raise. Factors detracting from the weight to be accorded to the agreement If an ante nuptial agreement, or indeed a post nuptial agreement, is to carry full weight, both the husband and wife must enter into it of their own free will, without undue influence or pressure, and informed of its implications. The third and fifth of the six safeguards proposed in the consultation document (see para 5 above) were designed to ensure this. Baron J applied these safeguards, found that they were not satisfied, and accorded the agreement reduced weight for this reason. The Court of Appeal did not consider that the circumstances in which the agreement was reached diminished the weight to be attached to it. In so far as the safeguards were not strictly satisfied, this was not material on the particular facts of this case. The safeguards in the consultation document are designed to apply regardless of the circumstances of the particular case, in order to ensure, inter alia, that in all cases ante nuptial contracts will not be binding unless they are freely concluded and properly informed. It is necessary to have black and white rules of this kind if agreements are otherwise to be binding. There is no need for them, however, in the current state of the law. The safeguards in the consultation document are likely to be highly relevant, but we consider that the Court of Appeal was correct in principle to ask whether there was any material lack of disclosure, information or advice. Sound legal advice is obviously desirable, for this will ensure that a party understands the implications of the agreement, and full disclosure of any assets owned by the other party may be necessary to ensure this. But if it is clear that a party is fully aware of the implications of an ante nuptial agreement and indifferent to detailed particulars of the other partys assets, there is no need to accord the agreement reduced weight because he or she is unaware of those particulars. What is important is that each party should have all the information that is material to his or her decision, and that each party should intend that the agreement should govern the financial consequences of the marriage coming to an end. It is, of course, important that each party should intend that the agreement should be effective. In the past it may not have been right to infer from the fact of the conclusion of the agreement that the parties intended it to take effect, for they may have been advised that such agreements were void under English law and likely to carry little or no weight. That will no longer be the case. As we have shown the courts have recently been according weight, sometimes even decisive weight, to ante nuptial agreements and this judgment will confirm that they are right to do so. Thus in future it will be natural to infer that parties who enter into an ante nuptial agreement to which English law is likely to be applied intend that effect should be given to it. In relation to the circumstances attending the making of the nuptial agreement, this comment of Ormrod LJ in Edgar v Edgar at p 1417, although made about a separation agreement, is pertinent: It is not necessary in this connection to think in formal legal terms, such as misrepresentation or estoppel; all the circumstances as they affect each of two human beings must be considered in the complex relationship of marriage. The first question will be whether any of the standard vitiating factors: duress, fraud or misrepresentation, is present. Even if the agreement does not have contractual force, those factors will negate any effect the agreement might otherwise have. But unconscionable conduct such as undue pressure (falling short of duress) will also be likely to eliminate the weight to be attached to the agreement, and other unworthy conduct, such as exploitation of a dominant position to secure an unfair advantage, would reduce or eliminate it. The court may take into account a partys emotional state, and what pressures he or she was under to agree. But that again cannot be considered in isolation from what would have happened had he or she not been under those pressures. The circumstances of the parties at the time of the agreement will be relevant. Those will include such matters as their age and maturity, whether either or both had been married or been in long term relationships before. For such couples their experience of previous relationships may explain the terms of the agreement, and may also show what they foresaw when they entered into the agreement. What may not be easily foreseeable for less mature couples may well be in contemplation of more mature couples. Another important factor may be whether the marriage would have gone ahead without an agreement, or without the terms which had been agreed. This may cut either way. If the terms of the agreement are unfair from the start, this will reduce its weight, although this question will be subsumed in practice in the question of whether the agreement operates unfairly having regard to the circumstances prevailing at the time of the breakdown of the marriage. Factors enhancing the weight to be accorded to the agreement; the foreign element The issue raised under this heading is whether the foreign elements of a case can enhance the weight to be given to an ante nuptial agreement. In this case the husband was French and the wife German and the agreement had a German law clause. We have already explained why we do not consider it material in English ancillary relief proceedings whether the nuptial agreement under consideration is or is not a contract. The court can overrule the agreement of the parties, whether contractual or not, and applies the same criteria when considering whether to do so. When dealing with agreements concluded in the past, and the agreement in this case was concluded in 1998, foreign elements such as those in this case may bear on the important question of whether or not the parties intended their agreement to be effective. In the case of agreements made in recent times and, a fortiori, any agreement made after this judgment, the question of whether the parties intended their agreement to take effect is unlikely to be in issue, so foreign law will not need to be considered in relation to that question. Fairness White v White and Miller v Miller establish that the overriding criterion to be applied in ancillary relief proceedings is that of fairness and identify the three strands of need, compensation and sharing that are relevant to the question of what is fair. If an ante nuptial agreement deals with those matters in a way that the court might adopt absent such an agreement, there is no problem about giving effect to the agreement. The problem arises where the agreement makes provisions that conflict with what the court would otherwise consider to be the requirements of fairness. The fact of the agreement is capable of altering what is fair. It is an important factor to be weighed in the balance. We would advance the following proposition, to be applied in the case of both ante and post nuptial agreements, in preference to that suggested by the Board in MacLeod: The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement. That leaves outstanding the difficult question of the circumstances in which it will not be fair to hold the parties to their agreement. This will necessarily depend upon the facts of the particular case, and it would not be desirable to lay down rules that would fetter the flexibility that the court requires to reach a fair result. There is, however, some guidance that we believe that it is safe to give directed to the situation where there are no tainting circumstances attending the conclusion of the agreement. Children of the family Section 25 of the 1973 Act provides that first consideration must be given to the welfare while a minor of any child of the family who is under 18. A nuptial agreement cannot be allowed to prejudice the reasonable requirements of any children of the family. Autonomy The reason why the court should give weight to a nuptial agreement is that there should be respect for individual autonomy. The court should accord respect to the decision of a married couple as to the manner in which their financial affairs should be regulated. It would be paternalistic and patronising to override their agreement simply on the basis that the court knows best. This is particularly true where the parties agreement addresses existing circumstances and not merely the contingencies of an uncertain future. Non matrimonial property Often parties to a marriage will be motivated in concluding a nuptial agreement by a wish to make provision for existing property owned by one or other, or property that one or other anticipates receiving from a third party. The House of Lords in White v White and Miller v Miller drew a distinction between such property and matrimonial property accumulated in the course of the marriage. That distinction is particularly significant where the parties make express agreement as to the disposal of such property in the event of the termination of the marriage. There is nothing inherently unfair in such an agreement and there may be good objective justification for it, such as obligations towards existing family members. As Rix LJ put it at para 73 if the parties to a prospective marriage have something important to agree with one another, then it is often much better, and more honest, for that agreement to be made at the outset, before the marriage, rather than left to become a source of disappointment or acrimony within marriage. Future circumstances Where the ante nuptial agreement attempts to address the contingencies, unknown and often unforeseen, of the couples future relationship there is more scope for what happens to them over the years to make it unfair to hold them to their agreement. The circumstances of the parties often change over time in ways or to an extent which either cannot be or simply was not envisaged. The longer the marriage has lasted, the more likely it is that this will be the case. Once again we quote from the judgment of Rix LJ at para 73. I have in mind (and in this respect there is no real difference between an agreement made just before or just after a marriage) that a pre nuptial agreement is intended to look forward over the whole period of a marriage to the possibility of its ultimate failure and divorce: and thus it is potentially a longer lasting agreement than almost any other (apart from a lease, and those are becoming shorter and subject to optional break clauses). Over the potential many decades of a marriage it is impossible to cater for the myriad different circumstances which may await its parties. Thorpe LJ has mentioned the very relevant case of a second marriage between mature adults perhaps each with children of their own by their first marriages. However, equally or more typical will be the marriage of young persons, perhaps not yet adults, for whom the future is an entirely open book. If in such a case a pre nuptial agreement should provide for no recovery by each spouse from the other in the event of divorce, and the marriage should see the formation of a fortune which each spouse had played an equal role in their different ways in creating, but the fortune was in the hands for the most part of one spouse rather than the other, would it be right to give the same weight to their early agreement as in another perhaps very different example? The answer to this question is, in the individual case, likely to be no. Of the three strands identified in White v White and Miller v Miller, it is the first two, needs and compensation, which can most readily render it unfair to hold the parties to an ante nuptial agreement. The parties are unlikely to have intended that their ante nuptial agreement should result, in the event of the marriage breaking up, in one partner being left in a predicament of real need, while the other enjoys a sufficiency or more, and such a result is likely to render it unfair to hold the parties to their agreement. Equally if the devotion of one partner to looking after the family and the home has left the other free to accumulate wealth, it is likely to be unfair to hold the parties to an agreement that entitles the latter to retain all that he or she has earned. Where, however, these considerations do not apply and each party is in a position to meet his or her needs, fairness may well not require a departure from their agreement as to the regulation of their financial affairs in the circumstances that have come to pass. Thus it is in relation to the third strand, sharing, that the court will be most likely to make an order in the terms of the nuptial agreement in place of the order that it would otherwise have made. So far as concerns the general approach of the court to ante nuptial agreements, Wilson LJ at para 130 endorsed the following comments of Baron J at first instance 111. I am certain that English courts are now much more ready to attribute the appropriate (and, in the right case, decisive) weight to an agreement as part of all the circumstances of case [within the meaning of section 25(1) of the Act of 1973] 119. Upon divorce, when a party is seeking quantification of a claim for financial relief, it is the court that determines the result after applying the Act. The court grants the award and formulates the order with the parties agreement being but one factor in the process and perhaps, in the right case, it being the most compelling factor We also would endorse these comments. We now turn to apply these principles to the facts of this case. The background to the signing of the agreement At the time the parties met in November 1997 they were both living in London. The wife comes from a very rich German family, whose wealth is derived primarily from two very successful businesses in chromatography, filtration and the processing/refinement of paper, and the manufacture of paper. The husband comes from a family which is well off, his father having been a senior executive with IBM, at one time in charge of its European operations. He now resides in London for tax reasons, but retains property in Antibes. When the couple met the husband had been working in London for about 2 years with JP Morgan & Co, and was earning about 50,000, which was a substantial sum at that date, particularly given his age, and which had increased to about 120,000 by the time the ante nuptial agreement was executed. They became engaged in June 1998 and were married in November 1998. They made London their home. It was the wife who suggested that the parties should enter into an ante nuptial agreement. Although the judge was sure that the wife wanted her husband to love her for herself, the wife emphasised her fathers insistence, because she felt it made her seem less insensitive to her future spouse, given that the terms excluded all his potential rights (even in times of crisis). The wife did not make it obvious that she personally demanded it as a precondition of marriage. The judge found that the husband was eager to comply because he did not want the wife to be disinherited, he wanted to marry her, and he could not perceive of circumstances where he would wish to make a claim. The wifes family decided that this agreement would be drawn up in Germany by a notary, Dr N Magis, who had undertaken other work for the family. The instructions to Dr Magis came originally from the wifes mother on 6 July, 1998, who told him that the marriage was to be in London in the autumn and that neither of the parties wished to make any claim on the other in the event of divorce. Dr Magis pointed out that such a deal might leave a young mother with children in difficulty but he was informed that the daughters income was some DM500,000 a year plus other monies managed by their father and so despite the future son in law's excellent income even in the worse case scenario there would be no risk to their daughter. On the same day, 6 July, 1998, Dr Magis spoke by telephone to the wife. She confirmed the facts given by her mother. It was agreed that the draft was to be prepared as quickly as possible in order to give the husband an opportunity to prepare for the conclusion of the contract which was to be signed on the first weekend of August. Dr Magis was insistent that the husband had sufficient time so that he could take advice if he wished and fully understand the implications of what he was signing. On 17 July, 1998 Dr Magis sent by fax to the wife a draft of the agreement, under cover of a letter in which he wrote: You wanted to discuss the content of the agreement with your future spouse and have it translated into a language convenient for him. In the draft, which was in German, there was a clause for the parties to insert the approximate value of their respective assets; but the wife telephoned Dr Magis that day and said that the clause should be deleted and that she and the husband would separately notify each other of the value of their assets. A second draft was produced by 20 July, 1998 and it was sent to the wife's father. On 23 July, 1998 the wife telephoned Dr Magis and told him that she had discussed the draft with her father and he wanted additions in relation to company shares specifically that the husband should not be able to inherit them directly or circuitously via their children. It was agreed that this would be dealt with by the wifes drawing up a will. A final draft version was made available to the wife in London at about this date. The judge found that it was highly unlikely that the wife showed the husband the first draft, or that she informed him about her mothers or fathers involvement in the drawing up the terms of the agreement. But the judge rejected the husbands evidence that he did not see the draft at all. The judge found that the wife showed him the final draft which was available on about 24 July, 1998, about one week before the signing ceremony. The basic terms were made clear to the husband, but the husband was not made aware that Dr Magis wanted him to have a translation to give him a proper opportunity to consider the precise terms and see a lawyer. On 1 August, 1998 the parties attended at the office of Dr Magis near Dsseldorf. Their meeting with him lasted for between two and three hours. The husband told Dr Magis that he had seen the draft agreement but that he did not have a translation of it. Dr Magis was angry when he learned of the absence of a translation, which he considered to be important for the purpose of ensuring that the husband had had a proper opportunity to consider its terms. Dr Magis indicated that he was minded to postpone its execution but, when told that the parties were unlikely again to be in Germany prior to the marriage, he was persuaded to continue. Dr Magis, speaking English, then took the parties through the terms of the agreement in detail and explained them clearly; but he did not offer a verbatim translation of every line. The parties executed the agreement (which bears the date of 4 August, 1998) in his presence. Not only did the husband not take advantage of Dr Magis wish to postpone execution so that he could take independent legal advice, but in the 4 months or so following the execution of the agreement at the beginning of August 1998 until the marriage in London on 28 November, 1998, the husband did not take the opportunity to seek independent advice. Events leading up to the breakdown of the marriage The parties lived together in London for more than a year after the marriage. In April 2000 the husband was posted to New York by his employers, J P Morgan. The family moved there, but the wife did not find life in America congenial. So she returned to London in May 2001. The husband was transferred back to London in October of that year. Their older daughter (now 11) was born here in September 1999 before they left and their younger daughter (now 8) in May 2002 after their return. In July 2003 he left his employers and embarked on his research studies at Oxford. Both parties accepted that [he] was miserable and discontented [and] a change of tack was inevitable. He embarked upon research for a doctorate in biotechnology at Oxford University, thinking that a combination of scientific knowledge and his banking experience would put him in a good position to capitalise upon and exploit his financial expertise in future years (Baron J, paras 50 and 51). During the first five years of the marriage, while he was working for J P Morgan, the husband generated a very substantial amount of income. He had amassed about $500,000 of capital out of his earnings, but during the next two years he expended it for the benefit of the family. Meantime the wifes father had transferred to her a substantial amount of capital, which raised her shareholding in the two groups of companies to their present level. He also paid her a substantial sum in return for her surrender of any entitlement under German law to a portion of his estate on her death. The husbands work at Oxford led him to spend many nights away from home. By this time the marriage was already in difficulties. By August 2006 separation had become inevitable and the wife moved with the children from the matrimonial home, a rented flat in Knightsbridge where the husband still lives into another rented flat in Knightsbridge. From then on there was no way back, and proceedings for divorce followed soon afterwards. Wilson LJs assessment was that throughout the marriage the familys standard of living had been extremely comfortable, albeit tempered by the wifes aversion to profligacy: para 117. It was originally the husbands intention to return to the financial sector once he had obtained his doctorate, but he no longer wishes to do so and Baron J held that this course would not be open to him in any event. The foreign element and the agreement The wife was German, and the husband was French. The agreement was drafted by a German lawyer under German law. They were then living in London and London was plainly intended to be their first matrimonial home. The agreement stated (in recital 2) that (a) the husband was a French citizen and, according to his own statement, did not have a good command of German, although he did, according to his own statement and in the opinion of the officiating notary (Dr Magis), have an adequate command of English; (b) the document was therefore read out by the notary in German and then translated by him into English; (c) the parties to the agreement declared that they wished to waive the use of an interpreter or a second notary as well as a written translation; and (d) a draft of the text of the agreement had been submitted to the parties two weeks before the execution of the document. Clause 1 stated the intention of the parties to get married in London and to establish their first matrimonial residence there. By clause 2 the parties agreed that the effects of their marriage in general, as well as in terms of matrimonial property and the law of succession, would be governed by German law. Clause 3 provided for separation of property, and the parties stated: Despite advice from the notary, we waive the possibility of having a schedule of our respective current assets appended to this deed. Clause 5 provided for the mutual waiver of claims for maintenance of any kind whatsoever following divorce: The waiver shall apply to the fullest extent permitted by law even should one of us whether or not for reasons attributable to fault on that person's part be in serious difficulties. The notary has given us detailed advice about the right to maintenance between divorced spouses and the consequences of the reciprocal waiver agreed above. Each of us is aware that there may be significant adverse consequences as a result of the above waiver. Despite reference by the notary to the existing case law in respect of the total or partial invalidity of broadly worded maintenance waivers in certain cases, particularly insofar as such waivers have detrimental effects for the raising of children and/or the public treasury, we ask that the waiver be recorded in the above form Each of us declares that he or she is able, based on his or her current standpoint, to provide for his or her own maintenance on a permanent basis, but is however aware that changes may occur. Clause 7(2) recorded that Dr Magis had pointed out to the parties that, despite the choice of German law, foreign law might, from the standpoint of foreign legal systems, apply to the legal relationships between the parties, in particular in accordance with the local law of the matrimonial residence, the law of the place and/or nationality of the husband, with nationality and the place where assets were located being especially relevant to inheritance. The agreement said: The notary has pointed out that he has not provided any binding information about the content of foreign law, but has recommended that we obtain advice from a lawyer or notary practising in the respective legal system. By letter to the parties dated 3 August, 1998 Dr Magis again stressed that, before taking up permanent residence abroad, they should take the advice of a local lawyer in relation to the effect of the agreement there. The unchallenged evidence before the judge was that: (a) the agreement was valid under German law; (b) the choice of German law was valid; (c) there was no duty of disclosure under German law; (d) the agreement would be recognised as valid under French conflict of laws rules. The terms of the agreement recite that the parties intend to establish their first matrimonial residence in London and it confirms by clause 7(2) that the law of their matrimonial residence may come to apply to their legal relationship as spouses. It was therefore inherent in the agreement that another system of law might apply its terms and so it could never be regarded as foolproof. Applicable law In England, when the court exercises its jurisdiction to make an order for financial relief under the Matrimonial Causes Act 1973, it will normally apply English law, irrespective of the domicile of the parties, or any foreign connection: Dicey, Morris and Collins, Conflict of Laws, vol 2, 14th ed 2006, Rule 91(7), and e.g. C v C (Ancillary Relief: Nuptial Settlement) [2004] EWCA Civ 1030, [2005] Fam 250, at para 31. The United Kingdom has made a policy decision not to participate in the results of the work done by the European Community and the Hague Conference on Private International Law to apply uniform rules of private international law in relation to maintenance obligations. Although the United Kingdom Government has opted in to Council Regulation (EC) No 4/2009 of 18 December, 2008 on jurisdiction, applicable law and enforcement of decisions and cooperation in matters relating to maintenance obligations, the rules relating to applicable law will not apply in the United Kingdom. That is because the effect of Article 15 of the Council Regulation is that the law applicable to maintenance obligations is to be determined in accordance with the 2007 Hague Protocol on the law applicable to maintenance obligations, but only in the Member States bound by the Hague Protocol. The United Kingdom will not be bound by the Hague Protocol, because it agreed to participate in the Council Regulation only on the basis that it would not be obliged to join in accession to the Hague Protocol by the EU. The United Kingdom Governments position was that there was very little application of foreign law in family matters within the United Kingdom, and in maintenance cases in particular the expense of proving the content of that law would be disproportionate to the low value of the vast majority of maintenance claims. For the purposes of the present appeal it is worth noting that the Hague Protocol allows the parties to designate the law applicable to a maintenance obligation, but also provides that, unless at the time of the designation the parties were fully informed and aware of the consequences of their designation, the law designated by the parties shall not apply where the application of that law would lead to manifestly unfair or unreasonable consequences for any of the parties (Article 8(1), (5)). The ante nuptial agreement had provision for separation of property and exclusion of community of property of accrued gains (clause 3), in relation to which the chosen law would have governed: Dicey, Morris and Collins, vol 2, para 28 020. But although the economic effect of Miller/Macfarlane may have much in common with community of property, it is clear that the exercise under the 1973 Act does not relate to a matrimonial property regime: cf Case C 220/95 Van den Boogaard v Laumen (Case C 220/95) [1997] ECR I 1147, [1997] QB 759; Agbaje v Agbaje [2010] UKSC 13, [2010] 2 WLR 709, para 57. In summary, the issues in this case are governed exclusively by English law. The relevance of German law and the German choice of law clause is that they clearly demonstrate the intention of the parties that the ante nuptial agreement should, if possible, be binding on them (see para 74 above). The decision of the trial judge Baron J held that the ante nuptial agreement was not a valid contract under English law: paras 129, 132. Nevertheless she said that in assessing the husbands needs she would take account of all the circumstances of the case and that his award should be circumscribed to a degree to reflect the fact that at the outset he agreed to sign the agreement. As she explained in para 139: he understood the underlying premise that he was not entitled to anything if the parties divorced. In essence, he accepted that he was expected to be self sufficient. As a man of the world that was abundantly clear. His decision to enter into the agreement must therefore affect the award. Baron J found that the ante nuptial agreement fell foul of a number of the safeguards set out in para 4.23 of the Home Office consultation document and was, prima facie, unfair: para 38. She said that its preparation was very one sided and therefore was demonstrably not neutral: para 76(d). She held that it was defective under English law because the husband received no independent advice; that it deprived him of all claims to the furthest permissible legal extent even in a situation of want, which was manifestly unfair; that there was no disclosure by the wife; that there were no negotiations; and that two children had been born of the marriage: para 137. It was with these factors in mind that she conducted her assessment. In the result the judge awarded the husband 700,000 to put towards his then debts of 800,000 and 25,000 to buy a car; 2.5m to buy a home of his own in London; 630,000 to buy a home in Germany (to remain owned by the wife or an entity set up by her) for the purpose of caring for his children in accordance with a shared residence order during his periods of residence with them (for 15 years); and 2.335m as a capitalised revenue Duxbury fund to provide the husband with a total annual income for life of 100,000, taking into account an annual gross taxable earning capacity of 30,000 until retirement at age 65. Thus the husbands award amounted in total to 5.560m (excluding the award of 630,000 for housing in Germany). She also awarded him periodical payments of 35,000 for each child until they ceased full time education. No indication is given in the judgment of the extent of the discount, if any, that she made to take account of the terms of the ante nuptial agreement. The decision of the Court of Appeal The wife sought and was granted permission to appeal against this order to the Court of Appeal. On 2 July 2009 the Court of Appeal (Thorpe, Rix and Wilson LJJ) set aside the order of Baron J: [2009] EWCA Civ 649. Thorpe LJ said that, despite the appearance of the ante nuptial contract as a factor, the impression given by the judges award was of a negligible resulting discount: para 43. He held that, in order to give proper weight to the ante nuptial contract, the sum of 2.5m for housing should not be the husbands absolutely but should be held by him only for the years of parenting. The income fund should be capitalised at a rate to cover his needs only until the younger childs 22nd birthday. Thus, while he would not interfere with the awards for the car, for the payment of the husbands debts, for housing in Germany and the periodical payments for the children, the major funds should be provided for his role as a father rather than as a former husband: para 50. Wilson LJ, who delivered the leading judgment on the facts, said that the judges application of the law to the facts was plainly wrong. She erred in the exercise which she conducted under section 25 of the Matrimonial Causes Act 1973 in not giving decisive weight to the ante nuptial contract. The result was that relief should have been granted to the husband only indirectly, in his capacity as a home maker for the girls: paras 135, 149. Rix LJ, agreeing with both judgments, also said that the ante nuptial contract should be given decisive weight in the section 25 exercise: para 81. The husband cross appealed on the sum awarded for housing in Germany based on fresh evidence. His appeal on that matter was allowed and it was remitted to the judge to determine the appropriate figure in the fresh circumstances. Wilson LJ noted that the wife had conceded that, notwithstanding her success in the appeal and thus of her submission that the husbands claim should be limited to that of a home maker for the girls, it was appropriate for her to be ordered to meet the costs of the financial proceedings up to July 2008 when Baron J delivered her judgment and to clear the husbands other debts: para 152. Nevertheless the costs of the appeal were awarded to the wife. She was ordered to pay the costs of the cross appeal. Discussion The circumstances in which the ante nuptial agreement was made The Court of Appeal differed from the finding of the trial judge that the ante nuptial agreement was tainted by the circumstances in which it was made. Wilson LJ, with whom the other two members of the court agree, dealt with these matters in detail. The judge had found that the husband had lacked independent legal advice. Wilson LJ held that he had well understood the effect of the agreement, had had the opportunity to take independent advice, but had failed to do so. In these circumstances he could not pray in aid the fact that he had not taken independent legal advice. The judge held that the wife had failed to disclose the approximate value of her assets. Wilson LJ observed that the husband knew that the wife had substantial wealth and had shown no interest in ascertaining its approximate extent. More significantly, he had made no suggestion that this would have had any effect on his readiness to enter into the agreement. The judge held that the absence of negotiations was a third vitiating factor. Wilson LJ observed that the judge had given no explanation as to why this was a vitiating factor, and that the absence of negotiations merely reflected the fact that the background of the parties rendered the entry into such an agreement commonplace. We agree with the Court of Appeal that the judge was wrong to find that the ante nuptial agreement had been tainted in these ways. We also agree that it is not apparent that the judge made any significant reduction in her award to reflect the fact of the agreement. In these circumstances, the Court of Appeal was entitled to replace her award with its own assessment, and the issue for this court is whether the Court of Appeal erred in principle. Baron J had held that the ante nuptial agreement was manifestly unfair in that it made no provision for the possibility that the husband might be reduced to circumstances of real need. Wilson LJ at para 144 appears to have thought that there was nothing unfair about this and, inferentially, that had the husband been in a situation of real need the agreement would none the less have been good reason for the court to decline to alleviate this by an order of ancillary relief. We would not go so far as this. We stated at para 73 above that the question of the fairness of the agreement can often be subsumed in the question of whether it would operate unfairly in the circumstances prevailing at the breakdown of the marriage, and this is such a case. Had the husband been incapacitated in the course of the marriage, so that he was incapable of earning his living, this might well have justified, in the interests of fairness, not holding him to the full rigours of the ante nuptial agreement. But this was far from the case. On the evidence he is extremely able, and has added to his qualifications by pursuing a D Phil in biotechnology. Furthermore the generous relief given to cater for the needs of the two daughters will indirectly provide in large measure for the needs of the husband, until the younger daughter reaches the age of 22. Finally the Court of Appeal did not upset the judges order that the wife should fund the discharge of debts of 700,000 owed by the husband, only a small part of which she had challenged. In these circumstances we consider that the Court of Appeal was correct to conclude that the needs of the husband were not a factor that rendered it unfair to hold him to the terms of the ante nuptial agreement, subject to making provision for the needs of the children of the family. Compensation There is no compensation factor in this case. The husbands decision to abandon his lucrative career in the city for the fields of academia was not motivated by the demands of his family, but reflected his own preference. Sharing This dispute raises the question of whether, as a result of his marriage, the husband should be entitled to a portion of the wealth that his wife has received from her family, in part before the marriage and in part during, but quite independently of it. When he married her he agreed that he should have no such entitlement. Our conclusion is that in the circumstances of this case it is fair that he should be held to that agreement and that it would be unfair to depart from it. We detect no error of principle on the part of the Court of Appeal. For these reasons we would dismiss this appeal. LORD MANCE I concur with the conclusion reached by the majority and with most of the majoritys reasoning. I address only three specific areas: (i) whether ante and post nuptial agreements have contractual force; (ii) the starting point when considering the weight such agreements bear; and (iii) the Court of Appeals exercise of its discretion. (i) Do ante and post nuptial agreements have contractual force? In the old cases, the public policy objections, seen as existing to both ante and post nuptial agreements, were based on the policy of the law, founded upon the relation which exists between the husband and wife, and the importance to society of maintaining that relation between them: Cartwright v Cartwright (1853) de G, M & G 982 p.990; and see H v W (1857) 3 K & J 382, where a provision in an ante nuptial settlement, whereby income would be paid to the husband instead of the wife if the wife lived separately from him through any fault of her own was held void, because it might induce the husband to consent to her living apart and to refuse to take steps to enforce the restitution of conjugal rights: p.386. The reasoning in these cases is, as Lady Hale observed in MacLeod v MacLeod [2010] 1 AC 298, in legal terms obsolete. The objections thus swept away are not however the only objections which would exist to any regime which made ante or post nuptial agreements binding tout court. Parties who make such agreements are not necessarily on an equal standing, above all emotionally. They may not have a full appreciation of such an agreements significance and likely impact. Above all, they may well not foresee, or cater adequately for, the way in which not only their relationship but their whole lives and individual circumstances may change, especially over time and very often as a direct or indirect result of their marriage. In a context, like the present, where the English courts have jurisdiction and grant a decree of divorce or nullity, the further objections identified in the preceding paragraph are catered for by Part II of the Matrimonial Causes Act 1973. Hence, the majoritys description in para 63 of the legal effect of any ante or post nuptial agreement as a red herring in this case. The principle established in Hyman v Hyman [1929] AC 601, precluding the ousting of the courts statutory jurisdiction after such a decree, must in my view apply to any such agreement. Like Lady Hale, para 138 (1) and (2) and para 156, I go no further and express no view on the binding or other nature of an ante nuptial agreement. It is not difficult to envisage circumstances in which, if such an agreement were to be regarded as having contractual force, its enforcement could be sought before a court, particularly an overseas court, lacking the jurisdiction under Part II of the 1973 Act which applies only when the forum is an English divorce court. I also agree in this respect with what Lady Hale says in para 159. (ii) The starting point: The majority (para 75) and Lady Hale (para 169) both accept the overriding criterion or guiding principle for exercise of the statutory discretion as being one of fairness. But they suggest differently worded tests for approaching this exercise where there has been an ante nuptial agreement. I cannot think the difference in wording likely to be important in practice. It appears to relate primarily to the starting point or onus, when feeding into the discretionary exercise the circumstances as they currently appear compared with those that existed or were contemplated at the date of the ante nuptial agreement. The words intending it to have legal effect in Lady Hales first sentence must, in relation to any future ante nuptial agreement, be implicit in the majoritys formulation freely entered into by each party with a full appreciation of its implications. If Lady Hales second sentence had used the word unfair, rather than fair, its effect would, as I see it, match precisely that of the second part of the majoritys formulation (unless in the circumstances, etc .). My own inclination, in agreement with the majority, is that this is how the application of the overriding criterion should be approached. Given an ante nuptial agreement, made freely and with full appreciation of the circumstances, it is natural in the first instance to ask whether there is anything in the circumstances as they now appear to make it unfair to give effect to the agreement. But the ultimate question remains on any view what is fair, and the starting point or onus is, as I have said, unlikely to matter once all the facts are before the court. (iii) The Court of Appeals exercise of discretion: I agree with the majority that there is no reason to set aside the Court of Appeals re exercise of the statutory discretion, undertaken after concluding that Baron J had erred in principle. Baron J held the husband to be entitled to a house of his own (para 140(a)). The Court of Appeal limited this aspect of the award confining his entitlement to the period, generously assessed, during which he could be expected to provide a home for the children, and concluding that he had no further needs requiring him to retain such a house outright or for a longer period. Viewing the position overall, I do not see that we would be justified in concluding that the husband has or is likely after that period to have needs generated as a result of parenthood which will not be covered by the Court of Appeals order or his own resources. It follows that I agree with Rix LJs conclusion (para 81) that: The provision of a home for the husband and for his needs as a father, carer and home maker for the children will, in the circumstances, more than adequately provide him with the means to support his own needs. There is no case for making that home and financial support his to command for the whole of his life time. LADY HALE The issue in this case is simple: what weight should the court hearing a claim for ancillary relief under the Matrimonial Causes Act 1973 give to an agreement entered into between the parties before they got married which purported to determine the result? I propose to call these ante nuptial agreements because our legislation already uses the term ante nuptial to refer to things done before a marriage. I should also point out that, although our judgments talk only of marriage and married couples, our conclusions must also apply to couples who have entered into a civil partnership. The issue may be simple, but underlying it are some profound questions about the nature of marriage in the modern law and the role of the courts in determining it. Marriage is, of course, a contract, in the sense that each party must agree to enter into it and once entered both are bound by its legal consequences. But it is also a status. This means two things. First, the parties are not entirely free to determine all its legal consequences for themselves. They contract into the package which the law of the land lays down. Secondly, their marriage also has legal consequences for other people and for the state. Nowadays there is considerable freedom and flexibility within the marital package but there is an irreducible minimum. This includes a couples mutual duty to support one another and their children. We have now arrived at a position where the differing roles which either may adopt within the relationship are entitled to equal esteem. The question for us is how far individual couples should be free to re write that essential feature of the marital relationship as they choose. A further question is how far this question can and should be determined by this Court and how far it should be left to Parliament, preferably with the advice and assistance of the Law Commission. There is not much doubt that the law of marital agreements is in a mess. It is ripe for systematic review and reform. The Commission has a current project to examine the status and enforceability of agreements made between spouses and civil partners (or those contemplating marriage or civil partnership) concerning their property and finances and a consultation paper will be published shortly (see Law Commission, Annual Report 2009 10, 2010, Law Com No 323, paras 2.68 to 2.75). This is just the sort of task for which the Law Commission was established by the Law Commissions Act 1965 and in which it has had such success, particularly in the field of family law. The Commission can research and review the law over the whole area, not just the narrow section which is presented by the facts of an individual case. It can consider such research as there is into the use and abuse of marital agreements of all kinds. It can commission research into the experience and attitudes of practitioners and the public. It can identify and discuss the full range of policy arguments, including a detailed examination of the experience of legislative reform in other common law countries (see, for example, I M Ellman, Marital Agreements and Private Autonomy in the United States, where initial enthusiasm has been tempered by experience in practice). It can examine critically their economic impact, and in particular whether they can be expected to increase certainty and decrease cost, or whether in fact the reverse may happen, and in any event whether the suggested benefits will outweigh the suggested costs (see, for example, R H George, P G Harris and J Herring, Pre Nuptial Agreements: For Better or Worse? [2009] Fam Law 934). It can develop options for reform across the whole field, upon which it can consult widely. In the light of all this, it can make detailed proposals for legislative reform, which can be put before Parliament. In short, that is the democratic way of achieving comprehensive and principled reform. There is some enthusiasm for reform within the judiciary and the profession, and in the media, and one can well understand why. But that does not mean that it is right. This is a complicated subject upon which there is a large literature and knowledgeable and thoughtful people may legitimately hold differing views. Some may regard freedom of contract as the prevailing principle in all circumstances; others may regard that as a 19th century concept which has since been severely modified, particularly in the case of continuing relationships typically (though not invariably) characterised by imbalance of bargaining power (such as landlord and tenant, employer and employee). Some may regard people who are about to marry as in all respects fully autonomous beings; others may wonder whether people who are typically (although not invariably) in love can be expected to make rational choices in the same way that businessmen can. Some may regard the recognition of these factual differences as patronising or paternalistic; others may regard them as sensible and realistic. Some may think that to accord a greater legal status to these agreements will produce greater certainty and lesser costs should the couple divorce; others may question whether this will in fact be achieved, save at the price of inflexibility and injustice. Some may believe that giving greater force to marital agreements will encourage more people to marry; others may wonder whether they will encourage more people to divorce. Perhaps above all, some may think it permissible to contract out of the guiding principles of equality and non discrimination within marriage; others may think this a retrograde step likely only to benefit the strong at the expense of the weak. These difficult issues cannot be resolved in an individual case, in particular a case with such very unusual features as this one. Different people will naturally react to this particular human story in different ways, depending upon their values and experience of life. There may be some, for example, who are astonished that an intelligent young man, who was apparently happy to sign away all claims upon his bride to bes considerable fortune, should now be seeking to make any claims upon her at all. There may be others who are astonished that a fabulously wealthy young woman should begrudge what is a very small proportion of her estate to ensure that the father of her children can live in reasonable comfort for the rest of his days. Above all, perhaps, the court hearing a particular case can all too easily lose sight of the fact that, unlike a separation agreement, the object of an ante nuptial agreement is to deny the economically weaker spouse the provision to which she it is usually although by no means invariably she would otherwise be entitled (see, for example, G F Brod, Premarital Agreements and Gender Justice (1994) 6 Yale Journal of Law and Feminism 229). This is amply borne out by the precedents available in recent text books (see, for example, I Harris and R Spicer, Prenuptial Agreements: A Practical Guide (2008, Appendix D), or H Wood, D Lush, D Bishop, and A Murray, Cohabitation: Law, Practice and Precedents (2009, 4th ed, pp 583 592)). Would any self respecting young woman sign up to an agreement which assumed that she would be the only one who might otherwise have a claim, thus placing no limit on the claims that might be made against her, and then limited her claim to a pre determined sum for each year of marriage regardless of the circumstances, as if her wifely services were being bought by the year? Yet that is what these precedents do. In short, there is a gender dimension to the issue which some may think ill suited to decision by a court consisting of eight men and one woman. It is for that reason that I have chosen to write a separate judgment, for although there is much within the majority judgment with which I agree, there are some points upon which I disagree. Specifically: (1) I disagree with the view, mercifully obiter to the decision in this case, that ante nuptial agreements are legally enforceable contracts. (2) I disagree with the view, also mercifully obiter to the decision in this case, that it is open to this court to hold that they are. (3) I disagree with the view that, in policy terms, there are no relevant differences between agreements made before and agreements made after a marriage. (4) I disagree with the way in which the majority have formulated the test to be applied by a court hearing an application for financial relief, which I believe to be an impermissible gloss upon the courts statutory duties. However, I agree that the court must consider the agreement in the light of the circumstances as they now exist and that the way the matter was put by the Privy Council in MacLeod v MacLeod [2008] UKPC 64, [2010] 1 AC 298, was too rigid, and in some cases, too strong; and I broadly agree with the majority upon the relevant considerations which the court should take into account. (5) I disagree with the approach of the Court of Appeal to the actual outcome of this case, which the majority uphold. In my view it is inconsistent with the continued importance attached to the status of marriage in English law. This is independent of the weight to be attached to the agreement in this case. (6) I consider that the reform of the law on ante and post nuptial agreements should be considered comprehensively, not limited to agreements catering for future separation or divorce. I understand that Lord Mance shares my misgivings on points (1) and (2) above. He also takes the view that the difference between our formulations of the test, referred to in point (4) above, is unlikely to be important in practice. As the ultimate question is what is fair, the starting point is unlikely to matter once all the facts are before the court. I hope that he is right. The story so far: the different types of agreement between husband and wife It may be helpful to give a brief account of how the law has got into its current mess (for which I must take some of the blame). The common law regarded husband and wife as one person, and that person was the husband. He acquired ownership or control over all his wifes property and income, along with liability for her pre marriage debts. She had no contractual capacity of her own and so of course they could not make contracts with one another. If the wifes family had property, it became common to make a marriage settlement which would preserve property for the wifes separate use. This was for the purposes of avoiding the property getting into her husbands hands, providing some security for the wife, and preserving it for their children or to revert to the wifes family if the couple were childless. Legislation in the 19th century progressively extended the concept of the wifes separate property, so that after the Married Womens Property Act 1882 everything which a woman owned on marriage or acquired thereafter remained or became her separate property. The system of separate property thus established remains the only matrimonial property regime applicable in the law of England and Wales. It also meant that the wife eventually acquired full contractual capacity and so a husband and wife could now make contracts with one another as well as with third parties. Agreements between a husband and a wife fall into three broad categories: (a) those made during their cohabitation, (b) those made upon or during their separation, and (c) those made in connection with current matrimonial proceedings. Of these, separation (type (b)) agreements have the longest history. Unlike modern ante nuptial agreements, their original purpose was usually to make some sort of provision for the wife rather than to deprive her of it. At common law, the husband did have an obligation to support his wife, but until statute intervened she could only enforce this by pledging his credit for necessaries. There is no need here to trace the evolution of the statutory remedies but two points are worth noting: first, the obligation to maintain while living apart generally depended upon the husband either having committed a matrimonial offence or having agreed to maintain his wife in a separate household; and secondly, the obligations of husband and wife only became fully mutual with the major reforms which came into force in 1971 and are now largely contained in the Matrimonial Causes Act 1973. Moreover, until then there were many more people who lived apart for a long time without ever taking divorce or other matrimonial proceedings. An enforceable contractual obligation was therefore usually a great advantage for the wife. There is nothing to stop a husband and wife from making legally binding arrangements, whether by contract or settlement, to regulate their property and affairs while they are still together (type (a) agreements). These days, the commonest example of this is an agreement to share the ownership or tenancy of the matrimonial home, bank accounts, savings or other assets. Agreements for housekeeping or personal allowances, on the other hand, might run into difficulties. In Balfour v Balfour [1919] 2 KB 571, a husband agreed to pay his wife 30 per month when he returned to his work in Ceylon while she remained in England for medical reasons. Duke LJ doubted whether the wife had given consideration for the husbands promise. Atkin LJ would have had no difficulty in finding that her promise to spend the money for its intended purposes was consideration, but held that the couple had never intended that the arrangement should have contractual force: . the small courts of this country would have to be multiplied one hundredfold if these arrangements were held to result in legal obligations (p 579). But any problems posed by the doctrine of consideration or the need to express contractual intent could be solved by making the agreement by deed. However, agreements between husband and wife were also subject to two quite separate rules, each of which has a basis in public policy. The first rule (public policy rule 1) was that agreements between husband and wife (or indeed between third parties and husband and/or wife) which provided for what was to happen in the event of their future separation or divorce were contrary to public policy and therefore void. This rule was developed in the context of agreements or settlements which made some or better financial provision for the wife if she were to live separately from her husband (for a comparatively recent example, see Re Johnsons Will Trusts [1967] Ch 387). Such an agreement could be seen as encouraging them to live apart for example, by encouraging her to leave him, if it was sufficiently generous or more than she would get if she stayed with him, or encouraging him to leave her, or to agree to her going, if it were not so generous. Such encouragement was seen as inconsistent with the fundamental, life long and enforceable obligation of husband and wife to live with one another. The second rule (public policy rule 2) was developed in the context of separation agreements (type (b) agreements). Agreements for an immediate or existing separation between the spouses were not caught by public policy rule 1. Their purpose was usually two fold. They relieved the couple of the duty to live together: this meant that neither was guilty of the matrimonial offence of desertion and neither could petition for or enforce a decree of restitution of conjugal rights. They might also make provision for the wife and any children. In return she might agree not to go to court for a maintenance order. However, in the leading case of Hyman v Hyman [1929] AC 601 it was firmly established that such agreements could not oust the statutory powers of the courts to award financial provision should the couple divorce. As recounted in MacLeod v MacLeod [2008] UKPC 64, [2010] 1 AC 298, at paras 20 to 24, that rule was later held to apply to other statutory powers to award maintenance. But in Bennett v Bennett [1952] 1 KB 249, it was held that, at least if the wifes promise not to go to court was the main consideration for the husbands promise to pay and could not be severed, the whole agreement (although made by deed) was contrary to public policy and therefore the husbands promise to pay was unenforceable. Following consideration by the Royal Commission on Marriage and Divorce 1951 1955 (see Report, (1956) (Cmd) 9678, pp 192 195), that problem was resolved, and the rule in Hyman v Hyman confirmed, by the Maintenance Agreements Act 1957. The promise not to go to court was void but this did not render void or unenforceable the other financial arrangements in the agreement. Recognising that this might cause hardship to the payer as well as the payee, the quid pro quo was a power to vary or revoke those arrangements, if there was a change in the circumstances in the light of which they were made or the agreement did not contain proper financial arrangements for a child of the family. The provisions in the 1957 Act were later amended in two significant respects by the Matrimonial Proceedings and Property Act 1970 and are now consolidated in the Matrimonial Causes Act 1973, ss 34 to 36. First, while the 1957 Act applied only to agreements made between husband and wife for the purposes of their living separately, sections 34 to 36 of the 1973 Act apply to any agreement in writing made [at any time] between the parties to a marriage. Secondly, the agreement may be varied even if the change in circumstances is one which the parties had foreseen when making the agreement. Subject to this, agreements for a present or immediate separation were and remain valid and enforceable like any other contract. The Court of Appeal in this case suggested (at para 134) that the power to vary such agreements has become a dead letter. It is easy to see why this might be so. Matrimonial practice has changed out of all recognition since the days of the 1957 Act. In those days, many couples separated without ever obtaining a divorce. A divorce could only be obtained if one of the parties had been guilty of a matrimonial offence (or had been incurably of unsound mind for at least five years). The theory was that the innocent spouse was punishing the guilty one by divorcing him or her. There could be no question of divorce by consent. Until 1963, collusion was an absolute bar to obtaining the relief which, often enough, both parties desperately wanted. So the parties had to be very cautious about anything which made it look as if they had agreed terms for their divorce. And the powers of the divorce court to award financial provision were much more limited than they are now. The parties might well agree terms in a separation agreement which were quite different from, and perhaps more generous than, anything which the court might order. All of that has now changed. One of the first priorities of the Law Commission was the reform of family law, and their efforts led to the radical changes brought about by the Divorce Reform Act 1969, the Matrimonial Proceedings and Property Act 1970, and the Law Reform (Miscellaneous Provisions) Act 1970. All of these came into force on 1 January 1971. The first two were consolidated in the Matrimonial Causes Act 1973. The sole ground for divorce is now that the marriage has irretrievably broken down; separation and consent to a divorce is one of the ways of proving this. The theory of the innocent party punishing the guilty has gone. Divorce has become a great deal simpler and easier to obtain. It is fair to assume that there are now far fewer married couples living apart for long periods without divorcing than there were in the 1950s. The court also has comprehensive powers to award financial provision, to transfer and settle property, and to share out pension rights. So the court can now do most things that the couple might want to agree. Divorcing spouses are actively encouraged to agree between themselves what the consequences of their divorce should be. Indeed, despite the impression given in the high profile cases which reach the press, that is what the great majority of people do (see, for example, J Eekelaar, M Maclean and S Beinart, Family Lawyers: The Divorce Work of Solicitors (2000); M Maclean and J Eekelaar, Family Law Advocacy (2009)). If they do reach agreement, it is standard practice to embody its terms in a consent order. This is, on the one hand, because public policy rule 2 means that they cannot oust the jurisdiction of the court in any event and, on the other hand, because a properly drafted court order can finally dispose of the parties claims against one another (see, for example, Dinch v Dinch [1987] 1 WLR 252). So another type of marital agreement (a type (c) agreement) has come on the scene, an agreement to compromise the parties mutual financial and property claims on divorce. Unlike orders made by consent in ordinary civil proceedings, however, the matrimonial order derives its authority from the court and not from the parties agreement, even if embodied in a deed (see, for example, de Lasala v de Lasala [1980] AC 546). The court has an independent duty to check the agreed arrangements and to approve them (see Xydhias v Xydhias [1999] 2 All ER 386, at p 394). As Butler Sloss LJ put it in Kelley v Corston [1998] QB 686, at p 714, The court has the power to refuse to make the order although the parties have agreed to it. The fact of the agreement will, of course, be likely to be an important consideration but would not necessarily be determinative. The court is not a rubber stamp. In fact, as Xydhias itself showed, this too can cut both ways. The fact that the order derives its authority from the court rather than the parties agreement also means that the court can treat them as having agreed upon the essentials of their arrangements, even if their agreement would not be contractually binding because they have not agreed upon all the details. The court may therefore decide to give effect to these, even though it is not a legally binding contract. Thus it is not surprising if practitioners have forgotten about the power to vary marital agreements. Most couples can be persuaded to get a divorce instead. The focus has therefore changed, away from the technical question of whether or not the agreement between the spouses is enforceable as an ordinary contract, in favour of the broader question which is before us now: what is the weight to be given to an agreement between a husband and a wife as to the financial consequences of their separation or divorce by a court which is invited to make orders about it? But before turning to that question, it is necessary to consider the fate of the public policy rule 1 (see para 143 above) and the decision of the Judicial Committee of the Privy Council in MacLeod v MacLeod [2008] UKPC 64, [2010] 1 AC 298. MacLeod was concerned with an agreement made by deed between a married couple while they were still living together. It provided partly for what was to happen while they were still together and partly for what was to happen in the (by then not unlikely) event of their divorcing in the future. Its terms were similar, but not identical, to the terms of an ante nuptial agreement entered into before the couple married in the State of Florida, where such agreements are legally binding. The Board held that the rationale for the first rule of public policy no longer held good. Since the abolition of the decree of restitution of conjugal rights by the Matrimonial Proceedings and Property Act 1970, s 20, the spouses no longer have a legally enforceable obligation to live together. Providing for what is to happen in the event of a future separation or divorce no longer conflicts with the legally enforceable obligations of marriage. Hence the Board held that a post nuptial agreement providing for future separation was valid and enforceable in the same way as any other contract between spouses. The Board would not, however, have felt able to take that step had there not been a power to vary such a contract in the light of changes in the circumstances since it was made or for the sake of the children for whom they were responsible. The injustice of enforcing maintenance agreements without any power of variation had been recognised by Parliament when it enacted the 1957 Act and confirmed in what is now section 35 of the 1973 Act. Secondly, the Board held that these powers of alteration applied, not only to agreements for a current or immediate separation, but also to agreements for a future separation. Although the financial arrangements contained in the agreement must relate to a period when the couple are living separately, section 34(2) defines a maintenance agreement as any agreement in writing made . between the parties to a marriage. It was no longer limited to agreements made for the purpose of their living separately. The Board did express the view, obiter, that sections 34 to 36 did not apply to agreements made between people who were not yet husband and wife and offered some observations, again obiter, about why the matter should be left to Parliament. To sum up the position relating to agreements between husband and wife: (1) There is nothing to stop husbands and wives from making legally enforceable agreements about their property and finances which are to operate while they are living together, subject to the normal contractual requirements. (2) There is nothing to stop husbands and wives who are on the point of separating, or who are already separated, from making legally enforceable agreements about their financial rights and obligations while they are living apart. (3) Following MacLeod v MacLeod, there is also nothing to stop husbands and wives who are not yet separated from making legally enforceable agreements about their financial rights and obligations while they are living apart. (4) However, the court has power to vary the financial arrangements for their separation, made in agreements between husbands and wives, under sections 35 and 36 of the 1973 Act. (5) None of these agreements can oust the jurisdiction of the court to make financial orders should the parties separate or divorce. (6) Even if the parties have agreed what the courts order should be, the order derives its authority from the court and not from the parties agreement. (7) The court therefore has its own independent duty to check the arrangements agreed between the parties and to evaluate them in the light of its statutory duties under section 25 of the 1973 Act. Ante nuptial agreements So where does this leave ante nuptial agreements, made, not between husband and wife, but in contemplation of the couples impending marriage, and providing, perhaps among other things, for the possibility of their eventual separation or divorce? If the rationale for public policy rule 1 no longer applies to post nuptial agreements, following MacLeod, it is hard to see how it can still apply to ante nuptial agreements. So why should these not also be regarded as valid and enforceable in the same way as separation agreements and, if MacLeod is right, other post nuptial agreements? It was not necessary for the Board to decide that question in MacLeod and it is not necessary for this Court to decide it now. The Court of Appeal in this case accepted that the law could only be changed by legislation and neither party has suggested otherwise to this Court. Without legislation, it is not self evident what the right answer should be. There are many different permutations. (i) It could be that MacLeod was right to hold that sections 34 to 36 of the 1973 Act apply to post nuptial agreements providing for a future separation and also right to express the view, obiter, that they do not apply to such agreements made before marriage. (ii) It could be that MacLeod was wrong to hold that sections 34 to 36 apply to any post nuptial agreement, other than an agreement for a present or immediate separation. (iii) It could be that the Board was wrong to consider that the words made between the parties to a marriage in section 34(2) apply only to agreements made while the parties are in fact married. (iv) It could be that the existence of a power of variation is not as important as the Board thought that it was, in assessing whether there are still public policy objections to holding such agreements contractually binding. It will come as little surprise that I adhere to the views expressed by the Board in MacLeod. They accord with the wording of the Act. This was not a particularly adventurous piece of statutory construction, once it is realised that the change in the definition of the agreements covered by sections 34 to 36 was made in the same Act of Parliament, the Matrimonial Proceedings and Property Act 1970, which also swept away the basis of public policy rule 1, the enforceability of the duty to live together. Indeed, that change of wording may be said to strengthen the Boards construction. Making such agreements enforceable, subject to a power of variation, would be entirely logical and consistent. It would, however, have been considerably more adventurous to interpret the words made between the parties to a marriage, in section 34(2) of the 1973 Act, to include a couple who were not yet husband and wife when the agreement was made. After all, another feature of the reforms which came into force on 1 January 1971 was the abolition of the action for breach of promise of marriage. Furthermore, without a power of variation, there remain serious policy objections, albeit different from the original ones, to recognising ante nuptial agreements as valid and enforceable in the contractual sense. Is it to be assumed that, although section 34(1) does not apply, public policy rule 2 (the rule in Hyman v Hyman) does? If it does, what is the answer to the Bennett v Bennett problem if the beneficiary spouse wishes to sue upon the agreement? If it does not, can it be right that the intending spouses can oust the jurisdiction of the courts before their marriage but are unable to do so afterwards? If, on the other hand, either of the spouses wishes to enforce the agreement without going to the family court, can it be right that they should be able to do so without any power of variation no matter what the circumstances? It is no answer to these questions, it seems to me, that these days most people do go to the divorce courts. They should not be obliged to do so. The existence of a power of variation means that they are likely to agree a variation for themselves without going to court. There are still people with conscientious objections to divorce. There are still people who are reluctant to accept that their marriage is over even though there may be temporary difficulties. There are other people who will not be able to go to the divorce courts here because they have been pipped to the post by the first to file jurisdictional rules in the Brussels II Revised Regulation (Council Regulation (EC) No 2201/2003). But in any event, this Court should not be developing the common law in such a way as to produce an injustice and thus to encourage people to seek a divorce when they would not otherwise wish to do so. Even if the old rationale for public policy rule 1 has gone, I still believe that it is the public policy of this country to support marriage and to encourage married people to stay married rather than to encourage them to get divorced. A better answer, it may be, is that MacLeod did not need to decide whether post nuptial contracts providing for a future separation were legally binding either. It too was a case about the weight to be given to such an agreement when the couple came to divorce. Some may think that the question whether an agreement is contractually binding has little if any relevance to the weight which it should be given by the court. Others, however, may think differently, especially if the agreement contains provisions to be implemented during cohabitation which have in fact been honoured. At all events, as the author of (but not the only contributor to) the Boards unanimous advice in MacLeod, I must accept some of the blame for the mess in which we now find ourselves. All of this is to emphasise that this Court is not deciding whether ante nuptial agreements are contractually binding. Nor is it overruling MacLeod on the question of post nuptial agreements. The matter is obviously one for the Law Commission to sort out. My only plea is for a comprehensive and rational approach. Should public policy rule 2 (the rule in Hyman v Hyman) apply to all marital agreements, before or after marriage, before or after separation, and to all its terms, whether operating during cohabitation or after the couple have separated? Or if that rule is to be disapplied to any or all of them, to what extent and in what circumstances? Should there be a power to vary all marital agreements and all their terms, and if so in what circumstances and on what grounds? Should all, some or none of their terms be legally enforceable? By what rules of private international law should such agreements be governed? This last is a particularly complicated question, particularly in a case such as this, where the agreement included both a choice of matrimonial property regime and also a choice of applicable law. It would be a great help if we could clarify our choice of law rules relating to matrimonial property regimes. All of these questions require careful consideration. Once again, I adhere to the view expressed in MacLeod, that there may be important policy considerations justifying a different approach as between agreements made before and after a marriage. This is recognised in those jurisdictions which have legislated to make ante nuptial agreements enforceable. It is, for example, common for them to contain safeguards which do not apply to agreements made after the marriage. Most important is whether, and if so in what circumstances, couples should be allowed to contract out of the fundamental obligations of the married state which they are about to enter. Taking the agreement into account It follows from the well established principles outlined in paragraph 149 above that, as the court always has to exercise its own discretion, if there is to be a starting point for the exercise of that discretion it has to be the statutory duty under section 25 of the 1973 Act. This applies to all applications for orders for financial provision, property adjustment and pension provision ancillary to divorce, judicial separation and nullity decrees. It is in mandatory terms (see paras 20 and 21 above). Furthermore, the same rules and considerations apply to (now almost unheard of) applications to the divorce court under section 27 of the 1973 Act for financial provision in cases of neglect to maintain (see section 27(3)) and to applications for financial provision in magistrates courts under the Domestic Proceedings and Magistrates Courts Act 1978 (see section 3(1) and (2) of that Act, which mirror section 25(1) and (2)(a) to (g) of the 1973 Act). Corresponding provisions also apply between civil partners (see Civil Partnership Act 2004, s 72(1) and (2) and Scheds 5 and 6). Until 1984, as is well known, section 25 contained a tailpiece which directed the court as to the overall objective of its discretion. This was so to exercise its powers: . as to place the parties, so far as it is practicable . to do so, in the financial position in which they would have been if the marriage had not broken down and each had properly discharged his or her financial obligations and responsibilities towards the other. This was deleted from section 25 by the Matrimonial and Family Proceedings Act 1984. Implicitly, as Lord Nicholls of Birkenhead said in White v White [2001] 1 AC 596, at p 604, the objective must be to achieve a fair outcome. But in deciding what was fair, the courts had, perforce, to work out some principled reasons for making any order at all, in the context of a separate property regime. The House of Lords eventually did so in the trio of cases, White v White (above) and Miller v Miller, McFarlane v McFarlane [2006] UKHL 24, [2006] 2 AC 618. Put simply, the House discerned three possible rationales for making an order: the sharing of matrimonial assets, meeting needs arising from or during the marriage, and compensating for sacrifices made because of the marriage. I do not understand the majority judgment in this Court to be casting any doubt, either on the overall objective of a fair outcome, or upon the three possible reasons for the redistribution. White is important for another reason. The leading opinion, with which Lord Hoffmann, Lord Hope of Craighead and Lord Hutton agreed, was delivered by Lord Nicholls. He emphasised that there should be no discrimination between the different contributions of the spouses to the welfare of the family which should be seen as equally valuable. But he also emphasised at pp 605 606: This is not to introduce a presumption of equal division under another guise. a presumption of equal division would go beyond the permissible bounds of interpretation of section 25. In this regard section 25 differs from the applicable law in Scotland. A presumption of equal division would be an inpermissible judicial gloss on the statutory provision. That would be so even though the presumption would be rebuttable. It is largely for this reason that I do not accept [counsels] invitation to enunciate a principle that in every case the starting point in relation to a division of the assets of the husband and wife should be equality. He sought to draw a distinction between a presumption and a starting point. But a starting point principle of general application would carry a risk that in practice it would be treated as a legal presumption, with formal consequences regarding the burden of proof. [My emphasis] These observations are, in my opinion, equally applicable to the consideration of any nuptial or ante nuptial agreement in the mandatory exercise under section 25. It would be an inadmissible judicial gloss to introduce a presumption or a starting point or anything which suggested that there was a burden of proof upon either party. In any event, the concept of an onus or burden of proof is inapplicable in a discretionary exercise such as this. He or she who asserts a fact must, of course, prove it. But it is for the court to carry out the exercise of discretion in the way in which Parliament requires it to do. In my opinion, the test adopted by the majority (in para 75) comes close to introducing such a presumption. For this once again I must accept some responsibility. In MacLeod v MacLeod , at para 41, the Board said this: It would be odd if Parliament had intended the approach to such agreements in an ancillary relief claim to be different from, and less generous than, the approach to a variation application. The same principles should be the starting point in both. In other words, the court is looking for a change in the circumstances in the light of which the financial arrangements were made, the sort of change which would make those arrangements manifestly unjust, or for a failure to make proper provision for any child of the family. On top of that, of course, even if there is no change in the circumstances, it is contrary to public policy to cast onto the public purse an obligation which ought properly to be shouldered within the family. (emphasis supplied) This may have come as a surprise to those former practitioners, such as Wilson LJ, who (for the reasons explained earlier) had never had occasion to look at section 35. But it would of course have been odd for Parliament to adopt one test when looking at the variation of a legally enforceable contract and another test when looking at the weight which should be given to such a contract in proceedings for ancillary relief. With the benefit of hindsight, I would qualify that statement heavily in two ways. First, and most important, there seems no warrant for the inclusion of the word manifestly before unjust. That is nowhere to be found in the legislation. Secondly, in so far as it may be derived from cases on separation agreements, such as Edgar v Edgar [1980] 1 WLR 1410, it fails to acknowledge the manifold factual differences which there may be between the different types of marital agreement. It is, as the majority point out, one thing to look for a very significant change of circumstances in a case such as Edgar, which concerned a deed of separation made when the parties were already separated and quite shortly before the divorce proceedings were begun, or indeed in MacLeod, where the marriage was already in serious trouble and the parties had the possibility of early separation and divorce very much in mind. It is another to adopt the same approach when the agreement was made many years ago, before there was any question of the couple separating, and there are bound to have been many changes in the circumstances in which it was made. In this respect, therefore, I agree with the majority that the MacLeod test was too strict. It seems to me clear that the guiding principle in White, Miller and McFarlane is indeed fairness: but it is fairness in the light of the actual and foreseeable circumstances at the time when the court comes to make its order. Those circumstances include any marital agreement made between the parties, the circumstances in which that agreement was made, and the events which have happened since then. The test to be applied to such an agreement, it seems to me, should be this: Did each party freely enter into an agreement, intending it to have legal effect and with a full appreciation of its implications? If so, in the circumstances as they now are, would it be fair to hold them to their agreement? That is very similar to the test proposed by the majority, but it seeks to avoid the impermissible judicial gloss of a presumption or starting point, while mitigating the rigours of the MacLeod test in an appropriate case. It allows the court to give full weight to the agreement if it is fair to do so and I adhere to the view expressed in MacLeod that it can be entirely fair to hold the parties to their agreement even if the outcome is very different from what a court would order if they had not made it. It may well be that Lord Mance is correct in his view that the difference between my formulation and that of the majority is unlikely to be important in practice. I would prefer not to take that risk. As Lord Nicholls emphasised in Miller, at paras 26 to 29, there can be no inflexible rule about how a judge should approach the task. It may be that a judge, if called upon to decide matters, will find it convenient to conduct the usual section 25 exercise before deciding what weight to give to the agreement. He or she will then have a view of how the usual principles would apply to the particular facts of the case. It may be, on the other hand, that the case is so clear cut, as in Crossley v Crossley [2007] EWCA Civ 1491, [2008] 1 FLR 1467, that it is more convenient to begin with the agreement. If, for example, all the agreement seeks to do is to preserve property acquired before the marriage for the benefit of the spouse to whom it belongs, the court would be most unlikely to interfere unless the outcome would put a spouse or children in real need. It is not for this Court to be prescriptive about how a trial judge should conduct the statutory exercise. In principle, though, I agree that the test should be the same, whether the agreement is a compromise of the proceedings, a separation agreement, a post nuptial agreement made while the couple are together, or an ante nuptial agreement. But the way in which it works out may be very different, depending upon the facts of the case. I therefore also agree that it is difficult to be prescriptive about the factors to be taken into account, and the weight to be given to them, because this would be to fetter the flexibility that the court requires to reach a just result (para 76, above). It may be, however, that the court will generally attach more weight to a separation agreement, made to cater for the existing and future separation of the parties, than to a post nuptial agreement, made while the parties are still together but also to cater for the possibility of a future separation, and more weight to such an agreement than to an ante nuptial agreement, catering for a marriage which has not yet taken place and for a separation which the parties neither want nor expect to happen. The circumstances in which the agreement was made The court will be looking first for a clear indication that the parties intended a divorce court to give effect to their agreement. The textbook and other precedents which I have seen certainly do their best to make this clear. The court should also take into account the parties understanding as to the legal effect of their agreement. This is bound to change as a result of MacLeod and this case. People who entered into separation agreements should always have been advised that they were legally binding as contracts unless and until varied and although not binding upon the divorce court would often be respected on the Edgar principles. People who entered into post nuptial agreements in England and Wales will have been given rather different legal advice until MacLeod and people who enter into ante nuptial agreements will have been given rather different advice until this case. People who have entered into such agreements in other countries will also have been given different advice. The parties expectations and understandings as to the effect of their agreement should they later divorce will therefore be an important factor in deciding what is fair. If the parties did expect the court to give effect to their agreement, the court will then ask whether there were any vitiating factors, such as fraud, duress or misrepresentation, which would make a contract voidable in English law. If there were, the agreement should in principle be ignored. But that is not all. It would be wrong to take a more legalistic view of such factors in the case of ante and post nuptial agreements than has long been taken in the case of separation agreements. Hence the wise words of Ormrod LJ in Edgar v Edgar [1980] 1 WLR 1410, 1417 (quoted in para 38 above) that it is not necessary in this connection to think in formal legal terms, such as misrepresentation or estoppel. There may be something in the circumstances in which the agreement was made which, while falling short of a vitiating factor in the usual contractual sense, indicates that one party has taken an unfair advantage over the other. Relevant to whether one party has taken advantage of the other will be whether there were the safeguards which have generally been regarded as essential in those countries in the common law world which have legislated to give validity to such agreements. These normally include mutual disclosure of assets, independent legal advice, and a degree of distance in time between the agreement and the wedding. These were also included in the safeguards proposed in the Home Office Consultation Paper referred to in the majority judgment at para [5]. These factors should be taken into account in deciding how much weight should be given to the agreement whether or not they are sufficient to vitiate it in the Edgar sense. On the other hand, in the case of an ante nuptial agreement, the court cannot avoid also asking itself whether the marriage would have taken place at all without it, difficult though it may be to discern an accurate answer to that question in the light of later events. This too can cut both ways, because it may or may not indicate that one has taken an unfair advantage of the other. Later events The focus both of my test and that of the majority is upon whether it is now fair to give effect to the agreement. The longer it is since the agreement was made, the more likely it is that later events will have overtaken it. Marriage is not only different from a commercial relationship in law, it is also different in fact. It is capable of influencing and changing every aspect of a couples lives: where they live, how they live, who goes to work outside the home and what work they do, who works inside the home and how, their social lives and leisure pursuits, and how they manage their property and finances. A couple may think that their futures are all mapped out ahead of them when they get married but many things may happen to push them off course misfortunes such as redundancy, bankruptcy, illness, disability, obligations to other family members and especially to children, but also unexpected opportunities and unexplored avenues. The couple are bound together in more than a business relationship, so of course they modify their plans and often compromise their individual best interests to accommodate these new events. They may have no choice if their marriage is to survive. And these are events which take place while it is still hoped that the marriage will survive. There may be people who enter marriage in the belief that it will not endure, but for most people the hope and the belief is that it will. There is also a public interest in the stability of marriage. Marriage and relationship breakdown can have many damaging effects for the parties, their children and other members of their families, and also for society as a whole. So there is also a public interest in encouraging the parties to make adjustments to their roles and life styles for the sake of their relationship and the welfare of their families. All of this means that it is difficult, if not impossible, to predict at the outset what the circumstances will be when a marriage ends. It is even more difficult to predict what the fair outcome of the couples financial relationship will be. A couple who always thought that one would be the breadwinner and one would be the homemaker may be astonished to find that the homemaker has become a successful businesswoman who is supporting her homemaker husband rather than the other way about. A couple who assumed that each would run their own independent professional life and keep their finances entirely separate may find this quite impossible when they have children, especially if they have more than one or one of them has special needs. An older couple who marry a second time round may think it fair at the time to preserve their assets for the sake of the children of their first marriages, but may find that one has to become a carer for the other and will be left homeless and in reduced circumstances if the grown up children take priority even though they are now well established in life and have no pressing need of their inheritance. All of these are changes which would entitle the court to vary a separation (or post nuptial) agreement which turned out to be unfair, even if the parties had foreseen them, and should now be taken into account in deciding whether it is fair to uphold their agreement. On the other hand, if things have indeed turned out much as the parties expected and intended, it could well be fair to give effect to their agreement. Some of the precedents I have seen are of comparatively wealthy couples making a prediction of comparatively generous sums which ought to provide for the reasonable requirements of the recipient spouse in a way which might well have attracted the millionaires defence in the days before White v White. In effect, therefore, they are contracting out of sharing but not out of compensation and support. Provided that the provision made is adequate, why should they not be able to do so? On the one hand, the sharing principle reflects the egalitarian and non discriminatory view of marriage, expressly adopted in Scottish law (in section 9(1)(a) of the Family Law (Scotland) Act 1985 and adopted in English law at least since White v White. On the other hand, respecting their individual autonomy reflects a different kind of equality. In the present state of the law, there can be no hard and fast rules, save to say that it may be fairer to accept the modification of the sharing principle than of the needs and compensation principles. The relevance of conduct? It must also be borne in mind that these are often complicated agreements, providing not only for what is to happen on divorce or death, but also for what is to happen during the marriage. The parties subsequent conduct in relation to the agreement must be among the relevant circumstances when considering what weight should be given to it. Both parties may have conducted, and continued to conduct, their lives on the basis that their affairs are and will be governed by their agreement. In MacLeod, for example, the agreement made provision for the wife while they were still together and the husband had put this into effect. In this case, the wife acquired further assets from her father, which would not have happened had the agreement not been in place. Such factors obviously increase the weight which should be given to the agreement. Conduct in relation to the agreement itself is one thing. But what about conduct in the relationship generally? In the section 25 exercise, the courts do not take conduct into account unless there is a substantial imbalance between the parties, such that it would be inequitable to disregard it. Such cases are very rare. But what if the agreement were to provide for different outcomes, depending upon how the parties have behaved during the marriage? What, for example, if the precedent referred to earlier, providing for the wife to have a predetermined sum for each year of marriage, were also to provide that she should only have this if she has been a good housewife? These are deep waters indeed, but in my view the court would be just as reluctant to enter into such an inquiry in relation to a nuptial agreement as it is now in relation to the section 25 exercise and correspondingly reluctant to hold the couple to their agreement. All the examples that I have seen, both in textbooks and in real cases, are scrupulous in making no reference to marital conduct. The foreign element In strict legal terms the so called foreign element is irrelevant. If the proceedings take place in England and Wales, the applicable law is that of England and Wales, irrespective of where the parties come from, how long they have been here, or how close their connection is with this jurisdiction. The United Kingdom has made a deliberate choice not to adopt the Hague Protocol on the law applicable to maintenance obligations and has only agreed to participate in the Council Regulation (EC) No 4/2009 on the basis that it would not be required to do so. English family lawyers seem to have a horror of having to apply foreign law which must appear strange to European lawyers who are quite used to doing so. Anyone who chooses to divorce here must be advised that the court will apply English law and not the law of the country which the parties have chosen or with which the marriage has the closest connection. In another sense, however, the foreign element cannot be totally irrelevant. It may affect the relevant considerations in a number of ways. It may be a crystal clear indication that the parties intended their agreement to be legally binding, not only upon themselves, but also on the court. On the other hand, a foreign couple may have been warned, as this couple were warned, that their agreement might not have the same effect in other countries as it did in the country where it was made. But it means that their expectations may have been very different. The agreement may also have affected their later behaviour to a greater extent than it would have done had they not regarded it as legally binding. None of this is to suggest that evidence of foreign law will be necessary in a foreign case. The relevance is not as to the effect of a foreign agreement in English law because, by the time the case gets to the divorce court, it has none. The relevance is as to the parties intentions and expectations at the time when they entered into it. This case The agreement with which we are concerned was ante nuptial, in the sense that it was made before the marriage. However, it did more than provide for what was to happen should the couple separate or divorce. It purported to choose German law as the law applicable to all aspects of the marriage; it determined the matrimonial property regime which would govern the marriage, in this case separation of property rather than the deferred community of property which is the default position in German law; it excluded the statutory equalisation of their German pension rights; each party waived the right to a compulsory portion of the estate of the first to die which they would otherwise have under German law; and each party waived any claim to maintenance of any kind whatsoever in the event of their divorce. Most of this is already English law. The matrimonial property regime of England and Wales has to all intents and purposes been a separate property regime since 1882. English law does not provide for the compulsory equalisation of pension rights or for the survivor automatically to inherit a compulsory portion of the estate of a deceased spouse. The difficulty lies with the exclusion of all claims to maintenance on divorce, because in English law this cannot be done (nor, it appears, is it entirely effective in German law). No one has argued that this agreement should be ignored. That might have been a tenable view while public policy rule 1 survived (and even while it was still thought to have survived, the courts were increasingly inclined to take these agreements into account) but that view is no longer tenable now that the rule has gone. Equally no one has argued in this Court that the agreement should be presumptively dispositive. As we have seen, that would be inconsistent with the statutory regime governing financial relief. As may often be the case with these agreements, if the judge had first asked herself what would have been the fair outcome without the agreement and then asked herself what difference the agreement should make, she might well have come closer to the solution adopted by the Court of Appeal. She would have asked herself whether any of the three principles identified by the House of Lords in White, Miller, and McFarlane would justify an award to the husband. She would have concluded that there was no scope for the sharing of matrimonial assets, because in effect there were none. Unusually, this couple had acquired no matrimonial home or other property together. The wife was already independently wealthy before they married and was given even greater wealth during the marriage. But this was undoubtedly intended for her alone. It would not have come to her had her family not been confident that it would remain her separate property. The judge might well also have concluded that there was no scope for compensating the husband for sacrifices made for the sake of the marriage and the family, although I have some reservations about this. The husband had (perhaps) sacrificed a career in investment banking for a much less lucrative career in scientific research. But it could be said that that was for his own sake rather than for the sake of the family. In the circumstances, he was probably right to concede that the basis of any award should be needs rather than sharing or compensation. However, needs is a convenient shorthand for a rather more complicated concept, which is the (now) mutual commitment which each spouse makes to support the other. Under the former tailpiece or statutory objective, this was a life long commitment, surviving divorce although ending on the receiving partys remarriage. Under the present law, it is no longer life long. Each party has a responsibility to try to adjust to living without such support. But they may still be entitled to support for requirements which arose as a result of or during the marriage. Usually, of course, this is because of the demands of child rearing and the (often life long) financial disadvantage which results. But among the statutory factors is disability. If this arises during the marriage, it may be entirely proper to expect the normal support commitment to continue after the marriage ends. In some cases, the support requirement generated by the marriage might go further than this. Most spouses want their partners to be happy partly, of course, because they love them and partly because it is not much fun living with a miserable person. So, choices are often made for the sake of the overall happiness of the family. The couple may move from the city to the country; they may move to another country; they may adopt a completely different life style; one of them may give up a well paid job that she hates for the sake of a less lucrative job that she loves; one may give up a dead end job to embark upon a new course of study. These sorts of things happen all the time in a relationship. The couple will support one another while they are together. And it may generate a continued need for support once they are apart. Whether this is seen as needs or compensation may not matter very much. It can only be for this reason that the husband in this case had any real claim upon his wife apart from his claims as the father of her children. In those circumstances, is it fair to give effect to their agreement? First, did the parties intend it to have legal effect? There can be no doubt that they did. Second, were there any contractually vitiating circumstances? There is nothing to suggest that there were. Thirdly, is there anything in the circumstances in which it was made to suggest that the wife to be was taking an unfair advantage of her husband to be? I think not. He did not have an English translation and he did not have independent legal advice. He was presented with a take it or leave it agreement. This must have been what the judge meant when she referred to the lack of negotiations, and it could be an indication that an unfair advantage has been taken. But in this case the husband did know the essence of what he was agreeing to and there is nothing at all to suggest that he wanted to negotiate for something different. He was not a nave young person in a vulnerable position. He was a financially sophisticated and highly educated young man. He was marrying for love and not for money. In common with the Court of Appeal, therefore, I see nothing in the circumstances in which the agreement was made to make it unfair to hold the parties to it (although I worry that this very experienced and thoughtful judge who had the advantage of seeing and hearing the parties may have seen something which we have not). However, that does not inevitably mean that it is fair to give the agreement its full weight in the circumstances as they now are. We would not, for example allow this wife to cast the burden of supporting her husband onto the state. More relevantly, the agreement did not cater for the fact that they might have children together. It is common ground that provision must be made for their two children. His Honour Judge Collins CBE decided that it is in their best interests to spend time living with each of their parents. These are the children of an extremely rich mother, although she did not want the family to have an unduly lavish life style. Nevertheless, since there are ample means available to enable them to do so, the children should be able to enjoy the same standard of living while they are with their father as they have when they are with their mother. Hence it was accepted that he should have a home for them, not only in England, but also when they were spending time with him in Germany or (now) near the mothers home in Monaco, and also the means to support them generously in their homes with him. The issue is whether this should all come to an abrupt end when the youngest child grows up. When unmarried parents separate, the court has no power to make provision for the parents. It can only provide for the child and indirectly for the parent by taking the childs need for care into account when making provision for the child. Provision for the child has to cease when the child ceases education or vocational training, unless there are special circumstances (Children Act 1989, Sched 1, para 3(2)). And the courts have held that capital payments, or property settlements, to provide the child with a home should revert to the other parent when the child grows up. There is therefore no power to provide for an unmarried parent whose financial position has been irredeemably compromised by the demands of bringing up children or looking after the family. Married parents are different, in that the court has power to make provision, not only for the child, but also for the parent. There is no reason in principle why the court should limit its support in the same way that it has to limit its support for the unmarried parent. Quite the reverse: this is what distinguishes marriage from cohabitation in our law. Where parents are married, the court can look beyond the needs of the child while growing up and look independently at the needs of the parent, and in particular those generated as a result of parenthood. Not only this, these days parents often expect to continue to be a resource for their grown up children, a base to which they can return and a source of the unconditional love and support which is what parenthood is all about. That may well be why the wife agreed to discharge most of the husbands debts and also acknowledged before Baron J that the husband should have a house, not just while the children were growing up, but for life. The Court of Appeal appeared so anxious to disagree with the obiter views of the Board in MacLeod that it decided to treat these parents as if they had never been married. That cannot be the right approach. This couple were married in England. They intended to make their matrimonial home in England. They had been advised that their agreement might not be effective under the laws of another country where they chose to live. The main concern of the wife and her family was to ensure that the husband acquired no proprietary claim to shares in the wifes family companies which might then become forfeit. This was in no way prejudiced, as the judge made clear, by a lump sum order which the wife could readily meet out of her cash income. In my view the Court of Appeal erred in principle in treating a parent who has been married to the other parent in the same way as they would treat a parent who has not. If, for example, a parent has irredeemably compromised her position in the labour market as a result of her caring responsibilities, she is entitled to at least some provision for her future needs, even after the children have grown up. It would not be fair for an ante or post nuptial agreement to deprive her of that. Where parents are not married to one another, there is nothing the court can do to compensate her. But where they are, there is. A nuptial agreement should not stand in the way of producing a fair outcome. I would therefore have varied the judges order so that the husband was entitled to his English home, or any home bought to replace it, for life. I would also have asked myself whether there were likely to be any continuing support needs attributable to his parental status after the children grew up. The answer to that is probably no although I also consider that the husbands decision to leave his lucrative career in banking and acquire further qualifications with a view to changing direction was not as completely selfish as some may have thought it to be. The wife appears to have agreed with it at the time. And why should she not? The couple were rich enough each to be able to pursue their own dreams. She had not been happy in New York and perhaps she understood why her husband was no longer happy in banking. If the decision was taken for the good of the family as a whole, this would have been for the benefit of the children as well as their parents. Happy parents make for happy children. Discontented parents make for discontented children. The judge found that, once that step had been taken, there was no going back. It may be that the case should have gone back to the judge on this basis, as well as on the cross appeal, for we are not in a position to make findings of fact which she did not make. But while I am clear that she did not give enough weight to the agreement in this case, I am equally clear that the Court of Appeal erred in equating married with unmarried parenthood. Marriage still counts for something in the law of this country and long may it continue to do so. |
On 8 November 2006 the appellant and his two co accused were convicted of the racially aggravated abduction and murder of a 15 year old boy, who was selected at random and abducted from a public street, repeatedly stabbed, and set alight with petrol. The appalling nature of that crime was reflected in the sentences imposed. The appellant was extradited from Pakistan in order to stand trial, and on 6 October 2005 was remanded in custody pending his trial. On 7 October 2005 he was removed from association with other prisoners and placed in solitary confinement, otherwise described as segregation. Apart from the period immediately prior to and during his trial, when he was accommodated in mainstream conditions, he remained in continuous segregation until 13 August 2010. Altogether, he spent 56 months in segregation. For a prisoner in Scotland to spend almost five years in segregation is exceptional. The situation of the appellant and his co accused was exceptional primarily because of the media coverage which they attracted as a result of the nature of their crime. They were notorious as the perpetrators of a crime which, because of its racist nature, and the fact that the victim was a child, was liable to result in their being attacked by other prisoners. In consequence, there were persistent fears for their safety if they were accommodated in mainstream conditions. In these proceedings, the appellant seeks orders declaring that certain periods of his segregation were contrary to the relevant Prison Rules, and that there were violations of his Convention rights under articles 3 and 8 of the European Convention on Human Rights (ECHR), as given effect by the Human Rights Act 1998. He also seeks an award of damages as just satisfaction under section 8 of that Act. The Ministers expressly acknowledge that the nature of the crime committed does not justify a contravention of the appellants Convention rights. As Lord Steyn observed in R (Roberts) v Parole Board [2005] UKHL 45; [2005] 2 AC 738, para 84, even the most wicked of men are entitled to justice at the hands of the state. The appellant first applied for legal aid to bring this application for judicial review in February 2007, when he had been in segregation for about 15 months. Legal aid was finally granted in June 2010, when he had been in segregation for about four and a half years. The application was heard a year later, by which time his segregation had ended. Following a four day hearing, the Lord Ordinary, Lord Malcolm, refused the application on 18 November 2011: [2011] CSOH 192; 2012 SLT 178. An appeal was refused by an Extra Division, comprising Lord Menzies, Lord Drummond Young and Lord Wheatley, on 31 January 2014: [2014] CSIH 18A; 2014 SC 490. The Prison Rules It may be helpful to begin with the relevant Prison Rules. Section 39 of the Prisons (Scotland) Act 1989 allows the Scottish Ministers to make rules for the regulation and management of prisons. The rules that are relevant to this appeal are the Prisons and Young Offenders Institutions (Scotland) Rules 1994 (SI 1994/1931) as amended (the 1994 Rules), which were in force when the appellant entered the prison system on 7 October 2005, and the Prisons and Young Offenders Institutions (Scotland) Rules 2006 (SSI 2006/94) (the 2006 Rules), which replaced them on 26 March 2006. They were in turn replaced by the Prison and Young Offenders Institutions (Scotland) Rules 2011 (SSI 2011/331) (the 2011 Rules) with effect from 1 November 2011. It is common ground that it is sufficient for the purposes of this appeal to refer to the 2006 Rules, the relevant provisions of which are identical to the corresponding provisions of the 1994 Rules as they stood at the material time. Rule 94(1) of the 2006 Rules confers a power on the governor (an expression defined for this purpose, by rule 5, as including any authorised unit manager) to order the segregation of a prisoner for specified purposes: (1) Where it appears to the Governor desirable for the purpose of (a) maintaining good order or discipline; (b) protecting the interests of any prisoner; or ensuring the safety of other persons, (c) the Governor may order in writing that a prisoner shall be removed from association with other prisoners, either generally or during any period the prisoner is engaged or taking part in a prescribed activity. The governor is required by rule 94(4) to specify in the order the reasons why it is made and to record in the order the date and time it is made. He is also required to explain to the prisoner the reasons why the order is made and provide the prisoner with a copy of the order. Rule 94(5) is critical to one of the issues in this appeal. It provides: (5) A prisoner who has been removed from association generally or during any period that the prisoner is engaged in or taking part in a prescribed activity by virtue of an order made by the Governor in terms of paragraph (1) shall not be subject to such removal for a period in excess of 72 hours from the time of the order, except where the Scottish Ministers have granted written authority on the application of the Governor, prior to the expiry of the said period of 72 hours. Rule 94(6) is also critical. It provides: (6) An authority granted by the Scottish Ministers under paragraph (5) shall have effect for a period of one month commencing from the expiry of the period of 72 hours mentioned in paragraph (5) but the Scottish Ministers may, on any subsequent application of the Governor, renew the authority for further periods of one month commencing from the expiry of the previous authority. Finally, in relation to rule 94, it is relevant to note that, under rule 94(9), any order under rule 94(1), or any authority under rule 94(5), ceases to have effect when a prisoner is transferred from one prison to another. Under rule 94(10), a prisoner who has been removed from association under rule 94 must be visited by a medical officer as soon as practicable and as often as is necessary, but at least once every seven days. Rule 80(1), (5), (6) and (9) of the 1994 Rules corresponded to rule 94(1), (5), (6) and (9) of the 2006 Rules respectively. The non observance of time limits The first issue in the appeal arises from the failure of the authorities, on a number of occasions, to comply with the time limits imposed by rule 94 and its predecessor. It is common ground that three of the orders made on behalf of the Ministers, authorising the appellants continued segregation under rule 94(5), were granted after the 72 hour period had expired. On each occasion, authority for continued segregation was purportedly granted with effect from the time when the 72 hours had expired. It is also common ground that 11 of the renewals of authority on behalf of the Ministers under rule 94(6) or its predecessor were granted after the previous authority had expired. The renewals again purported to be backdated so as to leave no interval when authorisation was absent. It is argued on behalf of the appellant that the late authorisations under rule 94(5) were invalid, and that the appellants segregation during the period purportedly authorised was therefore unlawful. Furthermore, it is argued, the purported renewals of the invalid authorisations under rule 94(6) were equally invalid. In addition, it is argued, all late renewals under rule 94(6) were invalid, and all subsequent renewals following upon a late renewal were also invalid. On that basis, it is argued that the appellants segregation was unauthorised for periods totalling 32 months: about 14 months arising from invalid authorisations under rule 94(5), and a further 18 months arising from late renewals under rule 94(6). On behalf of the Ministers, on the other hand, it is argued that the lateness of the orders had no effect upon their validity. The courts below accepted the Ministers submissions on this point. They focused upon the limited extent to which the orders were late, when considered in the context of the appellants segregation as a whole, and took the view that, notwithstanding their lateness, they achieved the intended purpose of ensuring that segregation was maintained only for so long as was necessary, and that the position of the prisoner was regularly reviewed. In those circumstances, they inferred that the legislator could not have intended the lateness of the authorisations to invalidate continued segregation. The critical issue is the construction of the legislation. Considering rule 94(5) in the first place, it plainly means that segregation by virtue of an order made under rule 94(1) should not continue beyond the initial 72 hours from the time of the order, unless authority has been granted before the 72 hours have expired: A prisoner . shall not be subject to such removal for a period in excess of 72 hours from the time of the order, except where the Scottish Ministers have granted written authority on the application of the Governor, prior to the expiry of the said period of 72 hours. The words shall not be subject to such removal . except mean that what follows is a pre condition to lawful segregation for a period in excess of 72 hours from the time of the order. The words have granted . prior to the expiry of the said period mean that, in order for the condition to be satisfied, authority must have been granted before the 72 hour period expires. Rule 94(5) has to be read together with the provision in rule 94(6) that an authority granted under paragraph (5) shall have effect for a period of one month commencing from the expiry of the period of 72 hours mentioned in paragraph (5). Rule 94(6) does not specify when the authority must be granted, but it makes it clear when it must take effect, namely from the expiry of the 72 hour period beginning when the governors order was made under rule 94(1). The apparent effect of the provisions is therefore (1) that a late authority under rule 94(5) cannot operate so as to authorise segregation more than 72 hours after the initial order under rule 94(1), since that would be contrary to the requirement in rule 94(5) that the prisoner should not be segregated beyond the expiry of the 72 hour period unless authority has been granted prior to its expiry, and (2) that a late authority under rule 94(5) cannot therefore be of any effect, since rule 94(6) provides that a (valid) authority must take effect from the expiry of the 72 hour period, but we know from rule 94(5) that a late authority cannot do so. The implication is that authority under rule 94(5) cannot be granted late. On a natural reading of rule 94(5) and (6), there must be a seamless sequence of authorisations: the governors order under rule 94(1), effective for the first 72 hours, and the Ministers authority, granted prior to the expiry of that period, and effective for the succeeding month. That reading of the legislation establishes a logical structure. It is also consistent with its purpose. The reason for requiring the Ministers authority under rule 94(5), as explained by the House of Lords in Somerville v Scottish Ministers (HM Advocate General for Scotland intervening) [2007] UKHL 44; 2008 SC (HL) 45; [2007] 1 WLR 2734, and reiterated by this court in relation to the corresponding English rule in Bourgass and Hussain v Secretary of State for Justice (Howard League for Penal Reform intervening) [2015] UKSC 54; [2015] 3 WLR 457, is to provide a safeguard for the protection of the prisoner. The requirement that local prison management must obtain the authority of the Ministers within 72 hours ensures that the need for segregation is reviewed within a short time by officials external to the prison, on the basis of information which is up to date, and that segregation is maintained only for as long as is necessary. Authorisations which are 17, 44 or 47 hours late, as occurred in this case, defeat the intention of the legislation. The courts below were concerned about the practical consequences of the legislation, so understood. The Lord Ordinary gave the example of a prisoner being held in segregation for his own safety, where the documentation in support of an application under rule 94(5) was received one hour late. Was there nonetheless a continuing duty on the Ministers to consider the governors request? Or must the prisoner be returned to the mainstream population, even if he might be killed or seriously assaulted there? The Lord Ordinary commented that most people would consider it quite unreal that, if the Ministers decided to go ahead and grant the authority, both it and all subsequent renewals would be rendered unlawful. I shall return to that example. In the light of considerations of that kind, the courts below concluded that purposive arguments favoured treating a late authorisation as valid, within reasonable limits. No amount of purposive interpretation can however entitle the court to disregard the plain and unambiguous terms of the legislation. The consequence of the failure to obtain authority for continued segregation prior to the expiry of the 72 hour period is ineluctably spelled out by the legislation itself: the prisoner shall not be subject to removal for a period in excess of 72 hours from the time of the order. That consequence cannot be avoided by relying, as the courts below sought to do, upon such authorities as R v Soneji [2005] UKHL 49; [2006] 1 AC 340. Those authorities were concerned with situations where the legislation was silent as to the consequences of failure to comply with a time limit, and where the intended consequences therefore had to be inferred from the underlying purpose of the legislation. The present case is fundamentally different. The only principle of statutory interpretation which might enable the plain meaning of legislation to be circumvented is that it can be given a strained interpretation where that is necessary to avoid absurd or perverse consequences: see, for example, Inland Revenue Comrs v Hinchy [1960] AC 748, 768 (Lord Reid), and R (Edison First Power Ltd) v Central Valuation Officer [2003] UKHL 20; [2003] 4 All ER 209, paras 25 (Lord Hoffmann) and 116 (Lord Millett). Indeed, even greater violence can be done to statutory language where it is plain that there has been a drafting mistake: Federal Steam Navigation Co Ltd v Department of Trade and Industry [1974] 1 WLR 505, 509 (Lord Reid), and Inco Europe Ltd v First Choice Distribution [2000] 1 WLR 586, 592 (Lord Nicholls of Birkenhead). In the present case, however, there has not been any drafting mistake. Nor does the legislation have absurd or perverse consequences. On the contrary, as I have explained, the plain meaning of the legislation is consistent with its purpose. The problem which concerned the Lord Ordinary that the prison management might be compelled to return a prisoner to the mainstream even though the result might be to endanger his safety or that of another prisoner nevertheless had a straightforward solution, as I shall explain. I say had because the 2006 Rules are no longer in force: as explained earlier, they have been replaced by the 2011 Rules. The corresponding provision in the 2011 Rules, namely rule 95, is expressed differently from rule 94 of the 2006 Rules, and no question arises in these proceedings (and this court has heard no argument) as to its meaning or effect. In relation to rule 94 of the 2006 Rules, the Lord Ordinary considered that in practice, if the 72 hours expired without authority for continued segregation having been granted, and if it then remained necessary for the prisoner to be segregated, the governor would make a fresh order under rule 94(1). A new period of 72 hours would then begin, and a fresh application could be made under rule 94(5). That view may or may not be correct. Rule 94 does not expressly preclude the making of more than one order under rule 94(1) on the same grounds, and it is arguable that such an order would be valid if it were made reasonably and in good faith, in the event of a failure to comply with the timetable envisaged by rule 94. It might on the other hand be argued that the repeated use of rule 94(1) in such circumstances is impliedly precluded, on the view that the safeguards created by rule 94(5) could otherwise be circumvented. It has also to be noted that rule 80(7) of the 1994 Rules originally conferred on the governor an express power to make a further order under rule 80(1) on the expiry of the 72 hour period; but that power was confined to removal from association in relation to a prescribed activity only, and was in any event repealed by amendment in 1998: the Prisons and Young Offenders Institutions (Scotland) Amendment Rules 1998 (SI 1998/1589), rule 32(4). The court has heard no argument on the question whether a further order might be made as the Lord Ordinary suggested, and it would be inappropriate to determine it without inviting further submissions. Since another solution exists to the problem which concerned the Extra Division, as I shall shortly explain, and bearing in mind that the 2006 Rules have been superseded and no longer raise any live problem, it is unnecessary to determine the question. An analogous question may arise under the 2011 Rules, but, as I have explained, the relevant rule is differently expressed, and no question as to its effect is raised in these proceedings. What is however clear is that any duty arising under the 2006 Rules would be overridden by a conflicting duty imposed by primary legislation. In particular, the governors duty under section 6(1) of the Human Rights Act to protect the safety of prisoners, in accordance with their article 2 and 3 Convention rights, would override any duty arising from rule 94 to return a prisoner to mainstream conditions, where that would involve a serious risk to life or limb. This is another issue on which the court was not addressed, but the point is too clear to admit of argument. The precise mechanism by which rule 94 would be overridden is open to argument: it may be that it should be read down so as to be consistent with Convention rights, or it may be that it is simply to be disregarded in so far as it is inconsistent with those rights. The practical result is the same in either case. So far as renewals of authority are concerned, rule 94(6) provides that the Ministers may, on any subsequent application of the governor, renew the authority for further periods of one month commencing from the expiry of the previous authority. The power of renewal is predicated upon there being a valid grant of authority, but no time limit is imposed on the decision to renew that authority, other than the general implication that it must be made within a reasonable period. On the facts of the present case, there were, as I have explained, three occasions when authority under rule 94(5) was purportedly granted after the 72 hour period had expired. No attempt has been made to rely upon the Human Rights Act as providing a lawful basis for the continuation of the appellants segregation on those occasions. In these circumstances, the only conclusion open is that the authority was invalid and, as such, was incapable of renewal. The consequence is that the appellants segregation during periods totalling about 14 months lacked authorisation under the rules. That conclusion does not in itself entitle the appellant to any remedy in damages. Rule 94 does not confer on a prisoner any right to damages in the event that his segregation is unauthorised: R v Deputy Governor of Parkhurst Prison, Ex p Hague [1992] 1 AC 58; Bourgass and Hussain v Secretary of State for Justice [2015] 3 WLR 457. Furthermore, it is responsibly accepted on behalf of the appellant that he suffered no prejudice as a result of authority being granted late. The breaches of rule 94(5) bear, however, on the issues arising under article 8 of the ECHR, to which I shall return. Article 3 of the ECHR Article 3 provides: No one shall be subjected to torture or to inhuman or degrading treatment or punishment. On behalf of the appellant, it was submitted that his segregation violated that guarantee. As the European Court of Human Rights said in Ahmad v United Kingdom (2012) 56 EHRR 1, para 205, the circumstances in which the solitary confinement of prisoners will violate article 3 are now well established in its case law: 207. Solitary confinement is one of the most serious measures which can be imposed within a prison and, as the Committee for the Prevention of Torture has stated, all forms of solitary confinement without appropriate mental and physical stimulation are likely, in the long term, to have damaging effects, resulting in deterioration of mental faculties and social abilities. Indeed, as the Committees most recent report makes clear, the damaging effect of solitary confinement can be immediate and increases the longer the measure lasts and the more indeterminate it is. 208. At the same time, however, the court has found that the prohibition of contact with other prisoners for security, disciplinary or protective reasons does not in itself amount to inhuman treatment or punishment. In many states parties to the Convention more stringent security measures, which are intended to prevent the risk of escape, attack or disturbance of the prison community, exist for dangerous prisoners. 209. Thus, whilst prolonged removal from association with others is undesirable, whether such a measure falls within the ambit of article 3 of the Convention depends on the particular conditions, the stringency of the measure, its duration, the objective pursued and its effects on the person concerned. 210. In applying these criteria, the court has never laid down precise rules governing the operation of solitary confinement. For example, it has never specified a period of time, beyond which solitary confinement will attain the minimum level of severity required for article 3. The court has, however, emphasised that solitary confinement, even in cases entailing relative isolation, cannot be imposed on a prisoner indefinitely In the present case, it is accepted that the conditions of the appellants segregation were not such as in themselves to breach article 3. The space and layout of the cells were satisfactory, and there was integral sanitation, although it was not screened. Although a report lodged on behalf of the appellant concluded that the ventilation in the relevant segregation units (including the one at HMP Barlinnie) fell short of accepted standards, and that the level of natural light also fell below desirable standards, that view might be contrasted with the report by the European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment (CPT), following a visit to Barlinnie in 2012, that the cells in the segregation unit had adequate lighting, including access to natural light, and adequate ventilation (Report to the Government of the United Kingdom on the Visit to the United Kingdom carried out from 17 to 28 September 2012). On any view, the conditions were compatible with respect for the appellants human dignity, and adequate to secure his health and well being. It is also accepted that the measures imposed on the appellant did not in themselves breach article 3. Although the regime prevented contact with the general prison population, it did not involve the appellants total isolation from other prisoners or from other human contacts. He was confined to his cell for between 20 and 22 hours per day. He was permitted to associate with other prisoners at times when he was released from his cell. He generally had access to one hour of exercise per day in the segregation unit yard. He often had access, for about an hour at a time, to a gym located in the segregation unit. He was entitled to receive visits and to use prison telephones. He had daily access to showers and newspapers. He occasionally had his hair cut. He was occasionally visited by an Imam. He occasionally attended court. After March 2008 all the cells in which he was accommodated had electric power, and a television was provided. Prior to that date, he was provided with a battery powered television in his cell. The impression conveyed by the documentation is that the staff of the various segregation units generally did their best to treat him as well as they could within the restrictions inherent in the rule 94 regime. On the other hand, no work or other occupation was provided or permitted in his cell, and education courses were not generally available. He was not permitted to attend religious services, although from May 2009 he attended a class for Muslim prisoners at HMP Glenochil. The objective pursued was the protection of the appellant from attack by other prisoners, in accordance with the duties imposed on the prison authorities both by domestic law and under the ECHR. It is not disputed that the intelligence received by the authorities was such as to give rise to a genuine and reasonable concern that he was at risk of serious injury or worse. The duration of the segregation was 56 months in total, divided into two periods of 11 and 45 months. The prison authorities were aware of the risks which segregation, especially for a prolonged period, can pose to mental health. The effects on the appellant were regularly monitored. Prison medical officers visited him at least once every seven days. They did not find that he was medically unfit to be segregated. He was examined in January 2007 by a psychologist at Barlinnie, who reported that he appeared to be coping well. When interviewed by a psychologist instructed by his lawyers for the purpose of these proceedings in May 2010, towards the end of his period in segregation, his demeanour indicated low mood. He reported anxiety about going outside the segregation unit, hearing voices, which the psychologist considered to be a reaction to his environment, and a loss of confidence. Without under estimating the unpleasantness of the symptoms reported by the appellant, it is not suggested in the report, or in any other evidence before the court, that he suffered any severe or permanent injury to his health. Considering the facts of this case against the criteria applied in the case law of the European Court, the treatment of the appellant did not attain the minimum level of severity required for a violation of article 3. It is important to bear in mind that the isolation which he experienced was partial and relative. The fact that his segregation was imposed in the interests of his own safety is also relevant. There is no doubt that the duration of his segregation was undesirable, and indeed exceptional by the standards of prisons in the United Kingdom. There are also respects in which his conditions might have been improved, in particular by making greater provision for the pursuit of purposeful activities. The procedural protections available were not as effective as they should have been, particularly as a result of the prolonged delay in obtaining legal aid. Nevertheless, comparison with such cases as Ramirez Sanchez v France (2006) 45 EHRR 1099, where the applicant was held for eight years in solitary confinement, under much more stringent conditions than the appellant, indicates that segregation of the duration experienced by the appellant, under the conditions in which he was held, does not entail a violation of article 3. Article 8 of the ECHR Article 8 provides: 1. Everyone has the right to respect for his private and family life, his home and his correspondence. 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic wellbeing 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. It is accepted on behalf of the Ministers that segregation is an interference with the right to respect for private life guaranteed by article 8(1), and therefore requires to be justified under article 8(2). That concession reflects the approach adopted by the European Court in Munjaz v United Kingdom [2012] 1 MHLR 351. The questions that arise are accordingly (1) whether the appellants segregation pursued a legitimate aim, (2) whether it was in accordance with the law, and (3) whether it was necessary and proportionate in order to achieve the legitimate aim pursued. The Ministers bear the burden of establishing that these requirements were met. Legitimate aim There is no doubt that the segregation pursued a legitimate aim, namely the protection of the appellants safety. In accordance with the law Whether the segregation was in accordance with the law is a more difficult question. In the first place, as I have explained, there were periods during which the appellant was held in segregation without valid authorisation under the Prison Rules. During those periods, his segregation was not in accordance with the law, and accordingly his rights under article 8 were breached. It was also argued that his segregation was not in accordance with the law because the protections provided by the law were not effective in practice. Two related points were made. First, it was argued that the reasons given for the decisions to segregate the respondent, or to apply for the continuation of his segregation, were formulaic and repetitive, and did not indicate that genuine consideration had been given to the question whether it was necessary for his segregation to continue. Secondly, many of those decisions appeared to have given formal effect to prior decisions taken by a body with no status under the Prison Rules, namely the Executive Committee for the Management of Difficult Prisoners (ECMDP). In order to address these arguments, it is necessary to consider the history of the appellants segregation. First, however, it may be helpful to explain the nature and role of the ECMDP (subsequently re named the Prisoner Monitoring and Assurance Group). It is a non statutory body, composed of prison governors and chaired by a senior official of the Scottish Prison Service (SPS), whose terms of reference include: 1. To manage the location, movement and progression of all prisoners . held out of association for three months or more under rule 80 of the [1994 Rules, and] 2. To monitor the provision of appropriate accommodation and regimes for difficult prisoners . The guidance on segregation issued by the SPS in November 2006 states: ECMDP also carry out an important corporate monitoring role of the rule 94 process. The membership of the above committee comprises senior managers from all mainstream establishments and its role is to consider the management of difficult prisoners, some of whom are held for lengthy periods of time on rule 94 conditions. The committee regularly reviews the progress of such prisoners and at times recommends action to assist with the progress and re integration of difficult prisoners to mainstream conditions. According to a report by the Scottish Public Services Ombudsman on the appellants case, to which it will be necessary to return, the ECMDP determines where such prisoners are to be held, and is accountable to the SPS Director of Custody, who has executive authority for the placement of all prisoners held out of association for three months or more under rule 94 and for the management policy applicable to them. On 6 October 2005 the appellant was remanded in custody at Barlinnie pending his trial. The following day, he was segregated under rule 95(2) of the 1994 Rules, pending adjudication of a charge of assaulting another prisoner in his hall. It was noted that he had declined protection. On 10 October 2005, he was segregated under rule 80(1) of the 1994 Rules. Numerous applications for authority to continue his segregation were subsequently made. The same reasons for making the applications were generally repeated verbatim, or with minor changes. They were to the effect that the crime with which the appellant was charged had caused highly racial motivated feelings within the local prisoner population and had rendered the appellant a target for retribution. There does not appear to have been any specific intelligence report indicating a risk to the appellants safety during this period, other than a threat, on 7 October 2005, of revenge by the victim of the assault that day. During this period, the appellant was discussed at a meeting of the ECMDP on 12 January 2006. The minute records that he was to remain within segregation unit until trial commences. That minute pre dated the start of the trial by almost nine months. On its face, it recorded a decision as to how rule 94 or its predecessor would be applied during the intervening period. On 18 September 2006 the appellant was transferred to HMP Edinburgh in anticipation of his trial. He was accommodated in the mainstream regime there until the conclusion of the trial on 8 November 2006. No incidents between the appellant and other prisoners were recorded during this period. On his return from court after his conviction, he was placed in segregation. On 9 November 2006 the appellant was returned to HMP Barlinnie and was immediately segregated, for the same reasons as previously. He remained in segregation there until 28 January 2007, the necessary applications for authority being made by the local management and granted by officials. The last such application, granted on 12 January 2007, stated that to admit the appellant to a mainstream regime at that time would result in disorder. The only specific intelligence report during this period dated from 9 November 2006, and was to the effect that the appellant and his co accused would be killed if they were located at HMP Glenochil. It was also recorded on 25 January 2007 that there had been a heated exchange of words between the appellant and another prisoner, with threats being made. During this period, the cases of the appellant and his co accused were discussed at a meeting of SPS senior management on 15 November 2006. It was minuted that reliable intelligence indicated that they were at very real risk of attack were they to be located in mainstream circulation in any prison in Scotland. Their location in a protection regime would not offer a significantly diminished prospect of violence. It was decided that they would be held out of circulation under rule 94 while consideration was given to their medium and longer term management. It was agreed that they should be held in segregation units that offered a similar range of facilities, namely Edinburgh, Glenochil, Kilmarnock, Perth and Shotts. The regime to be delivered in the units would need to be coordinated. A further meeting would therefore be held to identify a model approach and a process for coordinating and monitoring delivery. On the face of this document, it had been decided that the appellant would continue to be held in segregation, in advance of formal decisions being made under rule 94. A meeting was then held on 22 November 2006 of the managers responsible, as the minute stated, for the segregation units within HM Prisons Shotts, Glenochil, Barlinnie, Perth and Edinburgh where these prisoners will be held. A timetable was agreed for their transfers between segregation units. In relation to the appellant, it was agreed that he would spend December 2006 and January 2007 in the segregation unit at Barlinnie, February and March 2007 in the segregation unit at Edinburgh, April and May 2007 in the segregation unit at Perth, June and July 2007 in the segregation unit at Shotts, August and September 2007 in the segregation unit at Glenochil, October and November 2007 in the segregation unit at Edinburgh, December 2006 and January 2008 in the segregation unit at Barlinnie. The segregation unit manager where he was currently held would submit the next application for authorisation with an agreed content, and would circulate it to the other segregation units to ensure consistency. The minutes of the meeting were to be supplied to the assistant director of prisons and to the official at SPS headquarters who subsequently granted many of the authorisations. On the face of this document, the managers agreed in advance that their powers under rule 94 would be exercised to keep the appellant in segregation for a further period of over a year. At a meeting of the ECMDP on 5 December 2006 it was agreed that the appellant would be dealt with through the ECMDP for all future management and progression issues. On 17 January 2007 a meeting was held of SPS officials and the relevant segregation unit managers. It was agreed that the appellant and his co accused would be transferred as per the plan. On 28 January 2007 the appellant was transferred to Edinburgh and immediately segregated. The reason given was that he is managed through ECMDP and the rule 94 is applied for to keep him in Edinburgh segregation unit. It was during this period in Edinburgh that authority for segregation beyond the first 72 hours was, for the first time, granted late and subsequently renewed. The applications stated that to admit the appellant to mainstream would result in disorder. The last of the applications included a note of a case conference which stated that the appellant would be held in segregation until a decision was taken by the ECMDP to relocate [him] to a mainstream regime. On its face, that implied that local management regarded themselves as required to maintain the appellants segregation unless and until the ECMDP decided otherwise. During this period, an intelligence report was received on 9 March 2007 to the effect that the appellant and his co accused would be stabbed if they went into the mainstream at Glenochil. There was also a report of the appellant being racially abused by other prisoners while on his way to the gym. On 3 April 2007 the appellant was transferred to Perth and immediately segregated. The application for authority for continued segregation beyond the initial 72 hours stated that the appellant is managed by the ECMDP and any major decisions on his management are currently made by them. When that was renewed in May 2007, the reason given for the application was that the appellant remains in segregation subject to a national directive. Authority was renewed again in June 2007, the reason for the application being that the appellant remains subject to removal from general association subject to HQ direction. The application included a letter from the manager of the segregation unit, who stated that the appellant was admitted there as part of a national agreed programme. The apparent implication of these documents is again that local management did not regard it as their responsibility to make an independent judgment under rule 94. On 2 July 2007 the appellant was transferred to Shotts and immediately segregated. The reasons given narrated that the appellant was transferred to HMP Shotts segregation unit, and referred to the need for time to determine his future management at Shotts so as to protect his safety. This period in Shotts was the second during which authority for continued segregation was granted late and subsequently renewed. The application for authorisation included a note of a case conference recording that Shotts was looking at integration into the mainstream, possibly at the National Induction Centre or NIC, which was located there. It was also noted that the appellant would receive his visits in the main visiting room, so that the reactions of other prisoners towards him could be monitored. The authorisation was renewed in August 2007, when the application stated that a protocol had been formulated and would be implemented to allow his phased integration into the NIC. During this period, there were intelligence reports to the effect that the appellant would be killed if he were admitted to a particular hall. A further renewal was granted in September 2007. The application stated that attempts at reintegration within the NIC had resulted in protests and information that prisoners were prepared to assault the appellant should the attempts be continued. The appellant had also attempted to assault a prisoner. Local management did not consider it safe to try any further integration at that time. Further renewals were granted during October, November and December 2007. The applications stated that the appellant was held under ECMDP conditions due to concerns about his safety and the safety of others. A further renewal was granted on 7 January 2008. A note of a case conference stated that his case would be discussed at an ECMDP meeting on 8 January 2008, and that future decisions were dependent on outcome of that meeting. At that meeting, it was noted that Barlinnie had agreed to take the appellant. On 15 January 2008 the appellant was returned to Barlinnie and was immediately segregated. The reason given was that he had been admitted into the segregation unit as part of an agreement at the recent ECMDP, and that there remained considerable bad feeling from a lot of the prison population. Segregation was felt to be appropriate until a long term management plan be put in place via ECMDP. Authority for continued segregation was granted later in January and February 2008, when the application included a note of a case conference stating that the appellant was to remain in Barlinnie under rule 94 conditions, and that this was the decision by ECMDP. Further renewals were granted during March and April 2008. The notes of the most recent case conference stated that the decision that he should remain in Barlinnie under rule 94 conditions was a decision by ECMDP, and that the future action required was the responsibility of ECMDP. On their face, these documents bear the same implication as those discussed earlier. At a meeting of the ECMDP on 12 March 2008, it was minuted that the appellant would remain on long term rule [94], and that there would be a need for periodical transfers between establishments. On its face, that again confirms that the appellants continued long term segregation was pre determined. At the meeting of ECMDP on 14 May 2008, it was decided that he should be kept at Barlinnie. A further renewal was granted on 16 May 2008, the reason for the application stating that the appellants admission into the segregation unit at Barlinnie was part of an agreement at the recent ECMDP, and that there was still considerable bad feeling towards the appellant. In the meantime, the appellant had complained to the Scottish Prisons Complaints Commissioner (the SPCC), who exercised a statutory jurisdiction under Part 12 of the 2006 Rules. On 2 June 2008 the SPCC wrote to the ECMDP, expressing disappointment that there had been little or no progress since he had first looked at the case, 16 months earlier. He asked the ECMDP to consider the mental suffering and irreparable harm which many prisoners experienced through extended periods of segregation. He asked the ECMDP to treat the matter as a priority and to make a decision on the most appropriate placement for the appellant outside of a segregation unit. There was no response from the ECMDP, and its minutes contain no indication that the matter was discussed. SPS however replied to the effect that the appellant continued to be held appropriately on rule 94 conditions. Further authorisations were granted during June, July, August and September 2008. It was reported that threats had been made by other prisoners when the appellant was being escorted from the segregation unit for legal visits. There was a further renewal on 17 October 2008, when the note of the case conference stated that it had been decided by ECMDP that the appellant was to remain in Barlinnie on rule 94 conditions until further notice. On 21 October 2008 the ECMDP minuted that a move to mainstream conditions cannot be considered at this time. There was a further renewal on 17 November 2008, when the application recorded that the appellants brother, one of his co accused, had been placed in normal circulation in HMP Dumfries, but that the ECMDP had decided that the appellant should remain at Barlinnie. The case conference note recorded the ECMDPs decision that the appellant was to remain under rule 94 conditions. On 26 November 2008 the SPCC elicited the information that his recommendations had not been considered by the ECMDP. There was a further renewal in December 2008, when the appellant stated that both his co accused were now in normal circulation in Dumfries and had not experienced any problems. On 13 January 2009 the ECMDP agreed that Barlinnie will initiate discussions with Glenochil to arrange a smooth transition to their segregation unit, and that the move would take place during the coming weeks. In the meantime, there were further renewals. On 13 March 2009 the appellant was transferred to Glenochil and immediately placed in segregation. The segregation units profile for the appellant recorded that he came there as a result of ECMDP under rule 94 conditions. Authorisation for continued segregation was granted, and renewed in April 2009, when it was reported that the appellant had been verbally abused by other prisoners. It was also reported that local management were carrying out risk assessments in order to assess whether the appellant could be located in association with other prisoners. A further exchange between the appellant and other prisoners, involving threats, occurred later in April 2009. In May 2009 he began attending a class with other Muslim prisoners. An ECMDP meeting that month minuted, in relation to the appellant: Stay Glenochil segregation. Further renewals were granted during May, June, July and August 2009. During that period, there was a further report, in July 2009, of threats of violence towards the appellant. At an ECMDP meeting on 2 September 2009 it was noted that Glenochil had difficulty integrating the appellant into the mainstream, and that Shotts had agreed to take him in the hope of his being moved to the NIC. On 9 September 2009 the appellant was transferred to Shotts and immediately segregated. This period in Shotts was the last during which authority for continued segregation was granted late and subsequently renewed. The application for renewal in November 2009 included a note of a case conference earlier that month, when the appellant was told that his case management had been referred back to the ECMDP, which was meeting that day, and depending on the recommendations a rule 94 extension will be applied for. In the event, the ECMDP noted a recent increase in intelligence regarding risks to his safety if he were returned to a mainstream hall. Several intelligence reports of threats to the appellants safety, if he were moved to the NIC, were received during this period. Further renewals were granted during December 2009, and January and February 2010, when it was reported that there was resistance by other prisoners to the appellants integration into the mainstream. Further orders were made during March, April and May 2010. It was explained that the feasibility of reintegration at the NIC had again been explored but was considered to be unsafe. The papers also record that the appellant had indicated his unwillingness to be subject to a protection regime. There was further intelligence of a threat to his safety during that period. By this time, the appellant had complained to the Scottish Public Services Ombudsman. In its report, dated 21 April 2010, it found that it was clear that the ECMDP was not regularly reviewing the appellants case, and that there was no evidence of its having been reviewed at all between May 2007 and January 2008. It recommended that the SPCC should urgently establish from the SPS whether there was any long term plan for the appellants management and reintegration. At an ECMDP meeting on 18 May 2010 it was noted that the attempts made at Shotts to integrate the appellant into mainstream conditions had not gone well, and that Edinburgh had agreed to take him. On 11 June 2010 the appellant was returned to Edinburgh and immediately segregated. Authority for continued segregation was granted during June and July 2010. As I have explained, the Scottish Public Services Ombudsman had recommended that the SPCC urgently establish whether there was any long term plan for the appellants management and reintegration. During June 2010, legal aid was also granted for the present proceedings. Following the appellants transfer to Edinburgh, management there undertook an appraisal of how he might be integrated into the mainstream. On 7 July 2010 a management plan for the appellant was prepared. It set out a carefully staged series of measures, designed to result in the appellants integration during August 2010. As counsel for the Ministers acknowledged, no similar plan had been drawn up earlier. It was successfully implemented. The appellant gradually spent greater amounts of time in the mainstream over a period of weeks, with appropriate supervision and support from staff, until he was ultimately able to be integrated into the mainstream on 13 August 2010. Before this court, counsel for the Ministers explained that the appellant had been successfully integrated on that occasion, unlike the previous attempt at Shotts during 2007, in part because there was an active judicial review challenge. As he put it, the judicial review proceedings forced the authorities hand. Having summarised the factual background, it is necessary to return to the argument that the decisions made by local prison management under rule 94 were essentially a formality, the true decision making function being exercised by the ECMDP. In considering this argument, the Lord Ordinary accepted that the role of the ECMDP did not fit easily within the Prison Rules, and that it was clear that the local governors were looking to that body for guidance. He also expressed the view, however, that it was plain that the local governors and the Ministers were satisfied that the appellant should not be in the mainstream prison environment, and that the appropriate procedure was followed at the end of each month. He concluded that, even if the role adopted by the ECMDP was outside the Prison Rules, it did not amount to a violation of article 8. It is not entirely clear whether the Lord Ordinary accepted that the local management had not regarded it as their responsibility to make an independent judgment, but he appears to have considered that they had in any event shared the ECMDPs view that continued segregation was appropriate. The Extra Division expressed their view somewhat more clearly, describing the role of the ECMDP as essentially advisory. In relation to these conclusions, it should be noted that they were inferences drawn from the same documents as are before this court: no other evidence was adduced in relation to this matter, either orally or by affidavit. The starting point, in considering this issue, is the rule of domestic administrative law that a statutory power of decision making must be exercised by the person on whom the power has been conferred. The point is illustrated by R v Deputy Governor of Parkhurst Prison, Ex p Hague. The case arose from the fact that the governor of one prison had purported to authorise the segregation of a prisoner on his arrival at another prison to which he was being transferred, as required by an instruction issued by the Home Office. The prisoners continued segregation at his new prison, after the initial period of segregation expired, was then automatically authorised on behalf of the Secretary of State, in accordance with the same instruction. Both authorisations were held by the Court of Appeal to be ultra vires: [1992] 1 AC 58, 102 et seq. The governor of one prison had no power to order the segregation of a prisoner held in another prison: the decision could only be taken by the governor of the prison where the prisoner was currently held. Nor could the Secretary of State lawfully authorise segregation as a matter of routine, without a genuine exercise of his discretion both as to whether his authority should be given and, if so, for how long. The point is also illustrated by Leech v Deputy Governor of Parkhurst Prison [1988] AC 533, 563, where the House of Lords explained that the Home Office had no authority to direct a prison governor as to how to exercise his disciplinary functions. The same is true, mutatis mutandis, of the SPS and the ECMDP vis vis the powers of the governor under rule 94. In the present case, where neither party has sought to rely on any evidence other than the documents before the court, one has to draw reasonable inferences from those documents. In the light of the documents, relevant extracts from which have been quoted, it would be unrealistic to view the role of the ECMDP as merely advisory, or to maintain that decisions whether it was appropriate for segregation to continue were left to the independent judgment of local management. Counsel for the Ministers frankly described the ECMDP minutes as unsatisfactory, and indefensible if looked at in isolation. I have quoted the minute of the meeting on 12 January 2006, recording, several months before the appellants trial, that he was to remain within segregation unit until trial commences. I have quoted the minute of its meeting on 11 November 2008, recording a move to mainstream conditions cannot be considered at this time. I have also quoted the minute of its meeting in May 2009: Stay Glenochil segregation. Other documents appear to imply that transfers between segregation units were pre arranged, sometimes several months in advance. Other documents imply that local management at some of the prisons proceeded on the basis that their decisions to segregate the appellant, or to apply for authority to continue his segregation, implemented decisions taken by the ECMDP, and that any change in his status had to be initiated by that committee. For example, Edinburgh recorded that the appellant would be held in segregation until a decision was taken by the ECMDP to relocate [him] to a mainstream regime. Perth recorded that he was admitted to its segregation unit as part of a national agreed programme and remained there subject to a national directive. Barlinnie recorded more than once that the appellants admission into its segregation unit was part of an agreement at the recent ECMDP, and that the decision that he should remain under rule 94 conditions was a decision by ECMDP. At the same time, it also appears from the documents that, at some prisons, during some periods of the appellants segregation, local management made independent assessments of the appropriateness of continued segregation in the light of the current risks to his safety. The first period which the appellant spent at Shotts is not the only example, but it is the clearest. It may not be coincidental that there was no consideration of the appellants case by the ECMDP during that period. In these circumstances, it would be inappropriate to generalise. The only reasonable conclusion which can be drawn, however, in the light of what was written by those involved, and in the absence of any other evidence, is that some of the decisions taken by local management to segregate the appellant under rule 94(1) or its predecessor, to apply for authority for his segregation to continue under rule 94(5), and to apply for the renewal of such authority under rule 94(6), were not taken in the exercise of their own independent judgment, but proceeded on the basis that the relevant judgment had already been made, or would be made, by the ECMDP. They proceeded, in other words, not on the basis that the ECMDP was performing an advisory function, but that it was taking decisions which they were expected to follow. Whether or not the ECMDP expected its decisions to be viewed in that way is beside the point. What matters is whether the power of decision was in reality exercised independently by the person to whom it was entrusted by the legislation. Nor does it matter if the subsequent decision to grant or renew authority was properly taken on behalf of the Ministers: their power of decision was predicated upon a valid application to them, which depended on the lawful exercise of the power conferred on local management. Like the failure to obtain valid authorisation for some of the time spent in segregation, this breach of domestic law results in a violation of article 8. It has not however been established that it caused any prejudice to the appellant. Whenever local management carried out an independent assessment, the invariable conclusion was that segregation was necessary in order to protect the appellants safety. When attempts were made by local management to reintegrate the appellant at Shotts and Glenochil, they were abandoned in the light of the hostile response of other prisoners and threats of violence. It has not been argued, let alone established, that the appellants segregation might have been ended earlier if local management had not deferred to the ECMDP. Proportionality There is no doubt that the appellants case presented the SPS management with a very difficult problem. Nevertheless, they had to apply their minds to find an appropriate solution. In view of the length of the appellants segregation, a rigorous examination is called for by the court to determine whether the measures taken were necessary and proportionate compared with practicable alternative courses of action. In its judgment in Razvyazkin v Russia (Application No 13579/09) given 3 July 2012, the European Court cited at para 89 the discussion of proportionality in the 21st General Report of the CPT, of 10 November 2011: Given that solitary confinement is a serious restriction of a prisoners rights which involves inherent risks to the prisoner, the level of actual or potential harm must be at least equally serious and uniquely capable of being addressed by this means. This is reflected, for example, in most countries having solitary confinement as a sanction only for the most serious disciplinary offences, but the principle must be respected in all uses of the measure. The longer the measure is continued, the stronger must be the reason for it and the more must be done to ensure that it achieves its purpose. (para 55) The last sentence in that passage is reflected in a statement which the European Court has often repeated, for example in the Grand Chamber judgment in Ramirez Sanchez at para 139: that the reasons for segregation will need to be increasingly detailed and compelling the more time goes by. The Extra Division commented that they had difficulty understanding what this meant: if a threat remained the same, it was difficult to see how greater detail could be given. What is meant, as it appears to me, is that because the actual or potential harm which segregation may cause to the prisoner increases the longer that segregation is prolonged, the seriousness of the risk of harm required to justify his segregation becomes correspondingly greater. In addition, the court will become correspondingly more demanding in scrutinising whether segregation is the only means of addressing the risk, given the increasing risk that segregation will itself cause serious harm to the prisoner. The serious risks to the mental health of prisoners who are subject to prolonged segregation are well known, and are recognised both in international standards and domestically. An interim report submitted to the UN General Assembly in August 2011 by Juan E Mndez, the Special Rapporteur of the Human Rights Council on torture and other cruel, inhuman or degrading treatment or punishment, expressed particular concern about prolonged solitary confinement (or segregation, as it was also termed), which he defined as solitary confinement in excess of 15 days. He noted that after that length of time, according to the literature surveyed, some of the harmful psychological effects of isolation can become irreversible (para 26). He also noted that lasting personality changes often prevent individuals from successfully readjusting to life within the broader prison population and severely impair their capacity to reintegrate into society when released from prison (para 65). The previous Special Rapporteur, Manfred Nowak, annexed to an earlier report, submitted in July 2008, the Istanbul Statement on the Use and Effects of Solitary Confinement, adopted on 9 December 2007. It stated, in a passage cited by the Special Rapporteur: It has been convincingly documented on numerous occasions that solitary confinement may cause serious psychological and sometimes physiological ill effects. Research suggests that between one third and as many as 90% of prisoners experience adverse symptoms in solitary confinement. A long list of symptoms ranging from insomnia and confusion to hallucinations and psychosis has been documented. Negative health effects can occur after only a few days in solitary confinement, and the health risks rise with each additional day spent in such conditions. Similar conclusions were reached by the CPT in its 21st General Report of 10 November 2011. It referred to evidence that solitary confinement can have an extremely damaging effect on the mental, somatic and social health of those concerned, which increases the longer the measure lasts and the more indeterminate it is (para 53). It considered the maximum period for which solitary confinement should be imposed as a punishment to be 14 days (para 56(b)). The dangers of prolonged segregation have also been accepted by government within the United Kingdom. In relation to England and Wales, the relevant Prison Service Order (PSO 1700, first issued in 2003) states at p 29: Research into the mental health of prisoners held in solitary confinement indicates that for most prisoners there is a negative effect on their mental wellbeing and that in some cases the effects can be serious. A study by Grassian & Friedman (1986) stated that, Whilst a term in solitary confinement would be difficult for a well adjusted person, it can be almost unbearable for the poorly adjusted personality types often found in a prison. The study reported that the prisoners became hypersensitive to noises and smells and that many suffered from several types of perceptual distortions (eg hearing voices, hallucinations and paranoia). The risks involved in prolonged segregation are also acknowledged by the SPS. The guidance document issued in November 2006, referred to earlier, states that there should be awareness of the impact that segregation may have on a prisoners mental health. It states that it is an established principle that segregation should be used sparingly and for the minimum time necessary, in order to protect the physical and mental health of segregated prisoners. Every prison system has prisoners who are unable, for a variety of reasons, to serve their sentences in the mainstream. This may be because they require protection from other prisoners, because of the nature of their offence, their co operation with the criminal justice authorities, inter gang rivalries, debts inside or outside the prison, or the general vulnerability of the person. It may be because they themselves present a threat to the safety of other prisoners, or because their behaviour is liable to jeopardise the good order of the prison. In the first instance, such prisoners can be removed from association under rule 94 and located in a segregation unit. As the European Court has emphasised, however, they cannot be held in segregation indefinitely: Ramirez Sanchez, para 145. The basic obligation which the prison system attempts to secure by the segregation of prisoners for the purpose of protection to provide a safe environment for those confined to prison is ultimately inconsistent with the use of segregation as a long term measure. There are however ways in which states can fulfil this obligation over the long term, in respect of prisoners who remain at risk of harm. One option is to identify particular locations as accommodation for prisoners who are likely to be unsuitable for mainstream accommodation for a prolonged period. Such locations might accommodate small groups of prisoners with reduced levels of association and increased officer supervision. Locations of that nature existed in Scottish prisons until relatively recently, at the Barlinnie Special Unit and similar units at Perth, Peterhead and Shotts. Broadly analogous locations continue to exist in England and Wales, in the form of High Supervision Units and Close Supervision Centres. In the absence of any such unit in Scotland during the period in question, the only option considered in the appellants case was his segregation until a long term management plan [is] put in place via ECMDP, as the applications for authority repeatedly stated. There was however no meaningful plan put in place until the appellant had been in segregation for 55 months. Whether a successful plan might have been put in place earlier is uncertain, but by no means impossible. It is noteworthy that the appellant was accommodated safely in the mainstream remand population at Edinburgh between September and November 2006, and that he was able to be integrated into the mainstream population there within a short time of his transfer there in June 2010. The possibility cannot be excluded that he might have been integrated there earlier, if a suitable plan had been devised and implemented. It is also noteworthy that his co accused were integrated into the mainstream at Dumfries while the appellant continued to be segregated in establishments in west central Scotland, where attitudes towards him might have been expected to be most hostile. It has not been explained why the appellant could not have joined his co accused, or indeed could not have been placed with them during the years when all three were in segregation. Quite apart from the possibility of the appellants being successfully transferred to a prison in another part of Scotland, it is also accepted that no consideration was given to the possibility of transferring him to a prison elsewhere in the United Kingdom, under the provisions of Schedule 1 to the Crime (Sentences) Act 1997. In deciding whether the Ministers have complied with the standards laid down in the Convention, the scope for them to find appropriate accommodation for prisoners elsewhere in the United Kingdom has to be borne in mind (Mathew v The Netherlands (2005) 43 EHRR 444, para 204). It is however unnecessary to speculate about these and other possibilities. What is apparent is that no meaningful plan was devised until a very late stage. It is for the Ministers to establish that the appellants segregation for 56 months was proportionate. In my judgment, in the absence of any evidence that serious steps were taken by the SPS management to address the issues arising from his segregation until four and a half years after it had begun, they have failed to do so. Just satisfaction Where the court finds that an act of a public authority is unlawful under section 6(1) of the Human Rights Act, as in the present case, section 8(1) of the Act enables the court to grant such relief or remedy, or make such order, as it considers just and appropriate. Under section 8(3) of the Act, no award of damages is to be made unless, taking account of all the circumstances of the case, including any other relief or remedy granted, the court is satisfied that the award is necessary to afford just satisfaction to the person in whose favour it is made. Section 8(4) requires the court, in determining whether to award damages, or the amount of an award, to take into account the principles applied by the European Court under article 41 of the Convention. The approach which should be adopted was explained by the House of Lords in R (Greenfield) v Secretary of State for the Home Department [2005] UKHL 14; [2005] 1 WLR 673, and by this court in R (Faulkner) v Secretary of State for Justice; R (Sturnham) v Parole Board of England and Wales (Nos 1 and 2) [2013] UKSC 23 and 47; [2013] 2 AC 254. The European Court has considered the application of article 41 in a number of cases concerned with violations of article 8 where prisoners were subject to segregation. In some cases, modest awards have been made in respect of non pecuniary damage arising not from the segregation itself, but from other restrictions imposed. For example, in Glmez v Turkey (Application No 16330/02) given 20 May 2008, an award was made in respect of a restriction on the prisoners right to receive family visits. In other cases, the court declined to make an award in respect of non pecuniary damage, holding that the finding of a violation of the Convention in itself constituted sufficient just satisfaction: see, for example, Messina v Italy (No 2) (Application No 25498/94) given 28 September 2000. On general principles, however, there is no doubt that an award may be made in respect of the costs and expenses necessarily incurred in order to establish the violation, or for its prevention or redress. In the present case, it is not suggested that the appellant was prejudiced by the breaches of the time limit under rule 94(5), which invalidated the authorisation of 14 months of his segregation. His segregation would without doubt have continued during those periods even if the procedures had been carried out timeously. Nor has it been established that the deference of local management to the ECMDP was prejudicial to the appellant. Whether the failure to develop a management plan for his integration into the mainstream, or to consider possible transfers, resulted in the prolongation of his segregation is possible but uncertain. Three matters are however clear. One is that it is not suggested that he suffered any severe or permanent injury to his health as a consequence of the prolongation of his segregation. Another is that the degree of interference with his private life which resulted from his removal from association with other prisoners was relatively limited, given the attitude of the other prisoners towards him. The third is that he was not isolated from all contact with other prisoners, and remained entitled to receive visits and to make telephone calls. In these circumstances, just satisfaction can be afforded by making a declaratory order, establishing that the appellants Convention rights were violated, and by making an appropriate award of costs. Conclusion For these reasons, I would allow the appeal and grant declarator (1) that the appellant was segregated without lawful authority (a) between 11.15 am on 31 January 2007 and 9.55 am on 3 April 2007, (b) between 6 pm on 5 July 2007 and 4 pm on 15 January 2008, and (c) between 4.30 pm on 12 September 2009 and 4.30 pm on 13 March 2010, and (2) that the circumstances of the appellants segregation violated his Convention rights under article 8. I would in addition find the appellant entitled to the costs of this appeal, and invite submissions in relation to the expenses of the proceedings in the Court of Session. |
Her Majestys Attorney General for England and Wales has referred to this Court under section 112(1) of the Government of Wales Act 2006 (GWA 2006) the question of whether, on the proper construction of section 108 and Schedule 7 to the GWA 2006, the Agricultural Sector (Wales) Bill 2013 (the Bill) is within the legislative competence of the National Assembly of Wales (the Assembly). The Bill was passed on 17 July 2013 primarily to establish a scheme for the regulation of agricultural wages in Wales. As we shall explain in more detail, the Agricultural Wages Act 1948 had until 2013 provided a regime for regulating agricultural wages for England and Wales under the superintendence of the Agricultural Wages Board. The Board made its last Order in July 2012. In 2013 the United Kingdom Parliament enacted the Enterprise and Regulatory Reform Act. Section 72 of that Act abolished the Agricultural Wages Board for England and Wales. Schedule 20 repealed or amended many of the provisions of the Agricultural Wages Act 1948 and other statutory provisions and subordinate legislation relating to the agricultural wages regime. The Welsh Assembly Government (the Welsh Government) decided that it wished to retain a regime for the regulation of agricultural wages in Wales. The Assembly seeks through the Bill to implement this policy by establishing for Wales such a regime through an Agricultural Advisory Panel for Wales. The Assembly considers that it has the legislative competence to do so, relying on section 108 of, and Schedule 7 to, the GWA 2006, which give it competence to make legislation which relates to: Agriculture. Horticulture. Forestry. Fisheries and fishing. Animal health and welfare. Plant health. Plant varieties and seeds. Rural development. The submission of the Attorney General and the Counsel General is that the GWA 2006 has to be interpreted against the legislative background of the regulation of agricultural wages in the United Kingdom and the development of the devolution settlement for Wales. When so considered, the Attorney General submits that in reality the Bill does not relate to agriculture but to employment and industrial relations, which have not been devolved. In the submission of the Counsel General, the Bill relates to agriculture; and that is sufficient to bring it within the legislative competence of the Assembly, as a matter of the proper interpretation of section 108 and Schedule 7. For the reasons explained below, the Bill falls in our judgment within the competence of the Assembly. The approach to the construction of the GWA 2006 The sole issue before the court is the proper interpretation of the GWA 2006. It is common ground that the principles to be adopted are those set out by Lord Hope in Local Government Byelaws (Wales) Bill 2012 reference by the Attorney General for England and Wales [2012] UKSC 53; [2013] 1 AC 792, paras 78 81, following on from the guidance given in Martin v Most [2010] UKSC 10; 2010 SC (UKSC) 40, paras 44 53 and Imperial Tobacco v Lord Advocate [2012] UKSC 61; 2013 SC (UKSC) 153 paras 7 15. Those principles can be summarised as follows: The question whether a provision is outside the competence of the i) Assembly must be determined according to the particular rules that section 108 of, and Schedule 7 to, the GWA 2006, have laid down: see the Local Government Byelaws (Wales) Bill 2012 case at para 79. ii) The description of the GWA 2006 as an Act of great constitutional significance cannot be taken, in itself, to be a guide to its interpretation. The statute must be interpreted in the same way as any other statute: Local Government Byelaws (Wales) Bill 2012, para 80. iii) When enacting the GWA 2006 Parliament had to define, necessarily in fairly general and abstract terms, permitted or prohibited areas of legislative activity. The aim was to achieve a constitutional settlement. It is proper to have regard to that purpose if help is needed as to what the words mean: see the Local Government Byelaws (Wales) Bill 2012 case at para 80. The legislative background: the regulation of agricultural wages It is convenient first to set out the legislative background relating to the regulation of agricultural and other wages in the United Kingdom and the operation of the Agricultural Wages Act 1948 (the 1948 Act) in relation to Wales between 1964 and 1998. The early legislation An Agricultural Wages Board was first established under the Corn Production Act 1917. Provisions of that Act imposed on an Agricultural Wages Board the duty to set a minimum wage for agricultural workers and gave it other powers and duties. Prior to that Act the Board of Trade had been given power under the Trade Boards Act 1909 to regulate wages in certain specified trades in the clothes making and related industries, and to establish a Wages Board to fix minimum wages in any branch of such trades where an exceptionally low wage was paid. The Corn Production Act 1917 incorporated some of the provisions of the Trade Boards Act 1909. Between 1917 and 1948 there were several statutes which provided for amended schemes for agricultural wages. Trade boards were also established to regulate wages in other industries. It is not necessary to refer to the amendments to the agricultural wages schemes or to the schemes for other industries. It is sufficient to note that the Agriculture Act 1920 provided that separate powers should apply with respect to Wales but, unlike Scotland, no separate Board of Agriculture was established for Wales; the functions in Wales were carried out by the Minister for Agriculture and Fisheries. That Act also established a Central Agricultural Wages Committee for Wales which was to exercise the powers of the Agricultural Wages Board in Wales. Those provisions did not survive long, as the Agricultural Wages (Regulation) Act 1924 set up agricultural wages committees in each of the counties of England and Wales and an Agricultural Wages Board for England and Wales. The function of the county agricultural wages committees was to set minimum rates of pay which were then to be notified to the Board, which made an order to carry out the decisions of such committees. In the immediate aftermath of the 1939 45 war the Wages Councils Act 1945 provided for the replacement of trade boards by wages councils across a large number of industrial sectors and the scheme for agricultural wages was further changed. The 1948 Act The 1948 Act consolidated the changes. The scheme as established under that Act was that the Agricultural Wages Board for England and Wales had a duty to set a minimum wage for workers employed in agriculture and also had the power to set other terms and conditions of employment. Agricultural wages committees for counties or combinations of counties in England and Wales had various functions but gradually the functions of these committees became minimal. Under section 16 the Minister was given power to make regulations for giving effect to or modifying the Act so far as it related to holidays and holiday pay. The Act did not extend to Scotland or Northern Ireland. The Act was amended by various Acts including the Agriculture Act 1967, the Equal Pay Act 1970 and the Employment Protection Act 1975. There was separate legislation for Scotland from 1937. It made provision for an Agricultural Wages Board for Scotland and a Scottish Department of Agriculture. The legislation for Scotland was consolidated in the Agricultural Wages (Scotland) Act 1949, with the Secretary of State for Scotland exercising ministerial powers under that Act. By 1993 the scheme for regulating agricultural wages under the 1948 Act was the only scheme for the regulation of wages in industry which remained. In the 1960s and 1970s some wages councils were abolished, and the powers of the remaining wages councils were reduced by the Wages Act 1986. The Trade Union Reform and Employment Rights Act 1993 abolished all the remaining wages councils. With effect from April 1999 the 1948 Act was amended by the National Minimum Wage Act 1998, and the functions and powers of the Agricultural Wages Board were revised. The exercise of powers under the 1948 Act as regards Wales from 1964 to 1998 In October 1964 the Prime Minister created the post of Secretary of State for Wales and the Welsh Office. From that time forward various executive powers of the departmental Secretaries of State and ministries in Whitehall were transferred to the Secretary of State for Wales. Under these arrangements the Transfer of Functions (Wales) (no. 1) Order 1978 (SI 1978/272) transferred to the Secretary of State for Wales with effect from 1 April 1978 many of the functions of the Minister of Agriculture, Fisheries and Food in respect of Wales, to be exercised either solely or concurrently with the Minister. The powers transferred included the enforcement of agricultural wages legislation in Wales, the establishing of agriculture wages committees in Wales, and other powers that were to be exercised jointly with the Minister for Agriculture Fisheries and Food. The assumption of these functions by the Secretary of State for Wales was reflected in the fact that the consultation paper on Agricultural Pay and Conditions: the Operation of the Agricultural Wages Board was published in July 1993 jointly by the Minister of Agriculture, Fisheries and Food and the Welsh Office. As a result of that consultation it was acknowledged that the Agricultural Wages Board had wide acceptance from both sides of the agricultural industry. A further review took place in December 1999, but the Agricultural Wages Board continued to set wages, terms and conditions under the 1948 Act. Before considering the further changes to the 1948 Act and further transfers of functions, it is necessary to refer to the development of devolution to Wales. The first phase of devolution: executive devolution under the Government of Wales Act 1998 The Government of Wales Act 1998 (the GWA 1998) established the first phase of devolution to Wales in the form of what has been described as executive devolution. That Act established the Assembly as a single body corporate. It was given the function to make subordinate legislation in place of the Secretary of State and to elect an Assembly First Secretary who with Assembly Secretaries appointed by him were to exercise administrative functions. Schedule 2 of the GWA 1998 set out 18 fields in which the function to make subordinate legislation was to be transferred to the Assembly either by Orders in Council or new statutory provisions. These were the broad subject areas within which specific powers under UK legislation were to be transferred. The Schedule described the fields in the following terms: 1. Agriculture, forestry, fisheries and food. 2. Ancient monuments and historic buildings. 3 Culture (including museums, galleries and libraries). 4. Economic development. 5. Education and training . Section 22 of the GWA 1998 enabled such functions so far as exercisable by a Minister of the Crown in relation to Wales to be transferred wholly to the Assembly by Order in Council or to be exercisable by the Assembly concurrently with a Minister of the Crown, or to be retained by the Minister on the basis that they could only be exercised with the agreement of, or after consultation with, the Assembly. Acting under section 22 and other provisions of the GWA 1998, Her Majesty in Council made the National Assembly for Wales (Transfer of Functions) Order 1999 (SI 1999/672). It transferred most of the functions that the Secretary of State for Wales had accumulated in the period from 1964. Included among the functions transferred were powers to appoint to the Agricultural Wages Board and to appoint inspectors. The function of setting wages remained with the Board. As a result of amendments effected by the Employment Relations Act 2004, section 11A was inserted into the 1948 Act. This gave the Secretary of State for Agriculture power to appoint officers for the enforcement of the Act within England and the Assembly power to do the same within Wales. The second phase of Welsh devolution: the GWA 2006, the split of legislative and executive functions and the competence to legislate under Legislative Competence Orders In 2004 a Commission under Lord Richard of Ammanford recommended significant changes to the scheme of devolution for Wales. As a result the Secretary of State for Wales published in June 2005 a White Paper, Better Governance for Wales (Cm 6582). It proposed a second phase of devolution by separating the legislative and executive functions of the Assembly and creating powers under which the Assembly could be enabled by Orders in Council to make or modify primary legislation. The White Paper also proposed provision for a possible move to a third phase of devolution: 3.22 However, it may prove in the future that even these additional powers are still insufficient to address the Assemblys needs and the option of providing the Assembly with further enhanced law making powers needs to be available. 3.23 This would mean transferring primary legislative powers over all devolved fields direct to the Assembly. The Government is clear that this would represent a fundamental change to the Welsh settlement and would have to be endorsed in a referendum. The Government has no current plans for such a referendum but, in order to avoid the necessity of a third Government of Wales Bill, it proposes to provide for the possibility in this legislation. 3.26 Conferring primary legislative powers on the Assembly would mean that, like the Scottish Parliament, it would be able to make law on all the matters within its devolved fields. This would not include those subjects which remain the responsibility of Whitehall Departments for Wales as well as for England. Like Scotland, these would include Fiscal and Monetary Policy, Immigration and Nationality and Social Security. Also excluded would be fields where the Scottish Executive, and the Secretary of State for Scotland before devolution, have functions but the Assembly does not, such as civil and criminal law, the administration of justice, police and the prison service. The GWA 2006 gave effect to each of these proposals. Parts 1 and 2 separated and redefined the functions of the Assembly i) and the Welsh Assembly Government. ii) Part 3 provided for the second phase of devolution by giving the Assembly competence to make Assembly Measures which could amend primary UK legislation or take effect as primary legislation within the conditions set out in sections 94 95 and Schedule 5. Section 94 enabled the Assembly to make Assembly Measures which related to one or more of the matters specified in Schedule 5. Section 95 enabled Schedule 5 to be amended by Order in Council so as to add, vary or remove matters relating to the fields listed in Schedule 5, and so as to add, vary or remove such fields. As originally enacted, Schedule 5 contained the field agriculture, fisheries, forestry and rural development, but no matters were specified within that field. iii) Section 103 of Part 4 and Schedule 6 provided for a referendum to take place in the future on the question of whether the remaining provisions of Part 4 providing for the Assembly to have power to make Acts within the competence set out in sections 107 109 and Schedule 7 should come into force. The separation of the functions of the Assembly and the Welsh Government came into effect on 4 May 2007 and the powers under Part 3 and Schedule 5 took effect then. Between then and May 2011, during the second phase of devolution, Schedule 5 was amended by Orders in Council, commonly known as Legislative Competence Orders, to provide more specific powers to make Assembly Measures within the fields set out in the Schedule. In particular, the National Assembly for Wales (Legislative Competence) (Agriculture and Rural Development) Order 2009 (SI 2009/1758) inserted into the field of agriculture, fisheries, forestry and rural development Matter 1.1, described as follows: The red meat industry, in relation to (a) increasing efficiency or productivity in the industry; (b) improving marketing in the industry; (c) improving or developing services that the industry provides or could provide to the community; (d) improving the ways in which the industry contributes to sustainable development. The Assembly was thus given competence within the field of agriculture to make Assembly Measures in relation to a variety of aspects of the red meat industry. As is evident from Schedule 5 as amended by the Legislative Competence Orders, the terms on which the Assembly was given legislative competence were narrow and specific. The referendum in 2011 In June 2010 a decision was made to hold a referendum under section 103. Following the referendum in March 2011, the remaining provisions of Part 4 of the GWA 2006 were brought into force on 6 May 2011, giving effect to the third phase of devolution. The third phase of devolution: the power of the Assembly to make Acts under Part 4 and Schedule 7 The legislative scheme for the third phase of devolution under Part 4 of, and Schedule 7 to, the GWA 2006 did not follow the scheme of devolution for Scotland and Northern Ireland. Under those schemes, often referred to as reserved powers models, competence is given to the devolved legislatures in respect of all matters, unless the matter is excepted by way of reservation to the UK Parliament. The GWA 2006, despite the recommendation of the Richard Commission that the reserved powers model of Scotland and Northern Ireland be adopted, gave legislative competence only in respect of enumerated matters, in other words what is referred to as a conferred powers model. Legislative competence under section 108 The legislative method adopted to confer powers on the Assembly is essentially that provided for under section 108. Subsection (1) enables an Act of the Assembly to make any provision that could be made by an Act of Parliament, subject to the qualification, under subsection (2), that an Act of the Assembly is not law so far as any provision of the Act is outside the Assemblys legislative competence. Under subsection (3), a provision is within the Assemblys legislative competence only if it falls within subsection (4) or (5). The material subsection in the present case is subsection (4), which provides: (4) A provision of an Act of the Assembly falls within this subsection if (a) it relates to one or more of the subjects listed under any of the headings in Part 1 of Schedule 7 and does not fall within any of the exceptions specified in that Part of that Schedule (whether or not under that heading or any of those headings), and (b) it neither applies otherwise than in relation to Wales nor confers, imposes, modifies or removes (or gives power to confer, impose, modify or remove) functions exercisable otherwise than in relation to Wales. Subsection (7) provides a definition of the term relates to: (7) For the purposes of this section the question whether a provision of an Act of the Assembly relates to one or more of the subjects listed in Part 1 of Schedule 7 (or falls within any of the exceptions specified in that Part of that Schedule) is to be determined by reference to the purpose of the provision, having regard (among other things) to its effect in all the circumstances. Subsection (6) imposes additional limits on the legislative competence of the Assembly, including incompatibility with EU law or the Convention rights (defined in section 158(1)), and breach of the restrictions set out in Part 2 of Schedule 7, having regard to the exceptions from those restrictions in Part 3 of that Schedule. Schedule 7 Part 1 of Schedule 7 sets out 20 headings under which subjects falling within the legislative competence of the Assembly, and exceptions falling outside its competence, are listed. The first heading, as amended in December 2010 by SI 2010/2968, is Agriculture, forestry, animals, plants and rural development. The paragraph under that heading provides: Agriculture. Horticulture. Forestry. Fisheries and fishing. Animal health and welfare. Plant health. Plant varieties and seeds. Rural development. In this Part of this Schedule animal means (a) all mammals apart from humans, and (b) all animals other than mammals; and related expressions are to be construed accordingly. Exceptions Hunting with dogs. Regulation of scientific or other experimental procedures on animals. Import and export control, and regulation of movement, of animals, plants and other things, apart from (but subject to provision made by or by virtue of any Act of Parliament relating to the control of imports or exports) (a) the movement into and out of, and within, Wales of animals, animal products, plants, plant products and other things related to them for the purposes of protecting human, animal or plant health, animal welfare or the environment or observing or implementing obligations under the Common Agricultural Policy, and (b) the movement into and out of, and within, Wales of animal feedstuff, fertilisers and pesticides (or things treated by virtue of any enactment as pesticides) for the purposes of protecting human, animal or plant health or the environment. Authorisations of veterinary medicines and medicinal products. As section 108(4) excludes from the competence of the Assembly all exceptions specified in Part 1 of Schedule 7, it is necessary to refer briefly to the heading Economic development as illustrative of the way in which the Schedule was drafted. The paragraph under this heading, as amended in December 2010 by SI 2010/2968, provides: Economic regeneration and development, including social development of communities, reclamation of derelict land and improvement of the environment. Promotion of business and competitiveness. It then lists the exceptions, which include: Fiscal, economic and monetary policy and regulation of international trade. Intellectual property, apart from plant varieties. Product standards, safety and liability, apart from in relation to food (including packaging and other materials which come into contact with food), agricultural and horticultural products, animals and animal products, seeds, fertilisers and pesticides (and things treated by virtue of any enactment as pesticides). Consumer protection, including the sale and supply of goods to consumers, consumer guarantees, hire purchase, trade descriptions, advertising and price indications, apart from in relation to food (including packaging and other materials which come into contact with food), agricultural and horticultural products, animals and animal products, seeds, fertilisers and pesticides (and things treated by virtue of any enactment as pesticides). Financial services, including investment business, banking and deposit taking, collective investment schemes and insurance. Occupational and personal pension schemes (including schemes which make provision for compensation for loss of office or employment, compensation for loss or diminution of emoluments, or benefits in respect of death or incapacity resulting from injury or disease), apart from schemes for or in respect of Assembly members, the First Minister, Welsh Ministers appointed under section 48, the Counsel General or Deputy Welsh Ministers and schemes for or in respect of members of local authorities. In the context of the present case, it is relevant to note the exception of occupational pension schemes, including schemes which make provision for loss of office or employment, compensation for loss or diminution of emoluments, or benefits in respect of death or incapacity. This exception relates to specific aspects of employment, and in particular of the remuneration of employees. There is however no general exception in respect of employment or the remuneration of employees. Other matters relating to interpretation Before turning to the issue of interpretation of section 108 and Part 1 of Schedule 7, it is necessary to refer to three other matters which it was argued were relevant to interpretation. Ministerial statements in Parliament The Attorney General referred us to a statement made by the Parliamentary Under Secretary of State for Wales on 23 January 2006 (Hansard (HC Debates), 23 January 2006, col 1248) in a debate on the Bill which became the GWA 2006. In that statement the Minister stated that the purpose of the Bill was not to broaden devolution but to deepen it. The same phrase was used by a Minister in the House of Lords in a debate on 6 June 2006 (Hansard (HL Debates) 6 June 2006 cols 1142 1143). We do not think that the use by the Minister of such a general and ambiguous phrase can properly be of any assistance in the interpretation of the GWA 2006. Correspondence prior to the introduction of the GWA 2006 The Attorney General also sought to rely in aid of interpretation on correspondence between the Wales Office, the Welsh Government and Parliamentary Counsel in October and November 2005 prior to the introduction into Parliament of the Bill that became the GWA 2006. The correspondence set out views of the Secretary of State for Wales and the then Ministers of the Welsh Government as to the scope of the subject Agriculture and whether it should include specific references to legislative competence in respect of the Agricultural Wages Board. This correspondence was never referred to in Parliament. It represented the views of the Welsh Government and the Government in Westminster which were never made public or disclosed to Parliament. In our view it would be wholly inconsistent with the transparent and open democratic process under which Parliament enacts legislation to take into account matters that have passed in private between two departments of the Executive or between the Executive of the UK and a devolved Executive. We therefore refused in the hearing of the reference to admit the correspondence. We refer to it no further. The distribution of powers prior to the third phase of devolution Both the Attorney General and the Counsel General contended that it was helpful to look at the way in which powers were distributed in the first and second phases of Welsh devolution. For example, the Attorney General contended that no power in respect of regulating agricultural wages had been transferred to the Assembly; the function remained with the Agricultural Wages Board; the power under section 16 of the 1948 Act to which we referred at para 11 was simply a power to make regulations, not a power to set agricultural wages. However, although we consider that the Attorney General was correct in his contention as to the effect of section 16 of the 1948 Act, we cannot accept the Attorney Generals further submission that the fact that a power was not transferred under the first or second phases of devolution to Wales should weigh heavily against the intention to transfer such a power in the third phase set out in Part 4 and Schedule 7 to the GWA 2006. In our view each of the successive phases of Welsh devolution significantly increased the legislative competence of the Assembly. The distinction is most marked between the second and third phases of devolution, having regard to the way in which Parliament intended to confer legislative competence on the Assembly and the way in which the second phase of devolution in fact operated. The current legislative competence of the Assembly has to be determined by an interpretation of the terms of Part 4 and Schedule 7 and not by reference to the way in which functions may have been distributed between the UK Parliament and UK Ministers on the one hand and the Assembly on the other in the first and second phases of Welsh devolution. There are therefore no additional matters or materials to be taken into account in the interpretation of section 108 and Schedule 7 in accordance with the principles we have set out at paras 5 and 6 above. The interpretation of section 108 and Schedule 7 the issues As is apparent from the terms of section 108(4), it is necessary to examine whether the Bill relates to one or more of the subjects listed under the headings in Part 1 of Schedule 7, and then whether it falls within any of the exceptions specified in that Part of Schedule 7. It is also necessary to consider whether it is outside the Assemblys legislative competence by reason of any other provisions of the GWA 2006. It is convenient to deal first with the exceptions and other limitations on legislative competence. No one contended that any of the exceptions specified in Schedule 7, or any limitation on competence set out in any of the other provisions of the GWA 2006, applied. This is a matter of real significance as we explain at paras 61 68 below. The sole question therefore is whether the Bill relates to one of the subjects in Schedule 7. This question gives rise to four issues. What is the meaning of agriculture in Schedule 7? The first issue is the determination of the meaning of the relevant subject within Schedule 7, in this case Agriculture as set out in paragraph 1 of the Schedule. No definition of agriculture is set out in the GWA 2006. It was submitted that assistance was to be derived from the dictionary definitions of agriculture. These included the science or occupation of cultivating land or rearing livestock; the science or practice of cultivating the soil or rearing animals. This is not however a case in which the court has to turn to a dictionary in order to find out the meaning of an unfamiliar word. The problem is to decide what Parliament meant by the subject of Agriculture in this specific context: in particular, in the context of the other subjects listed in the schedule. Each is intended to designate a subject matter which is the object of legislative activity. In this context, it is clear to us that agriculture cannot be intended to refer solely to the cultivation of the soil or the rearing of livestock, but should be understood in a broader sense as designating the industry or economic activity of agriculture in all its aspects, including the business and other constituent elements of that industry, as it is to that broader subject matter that legislative activity is directed. The Legislative Competence Order to which we referred in para 27, covering such matters as marketing and the provision of services by the red meat industry, is an example of such activity, and would appear to have been based on a similarly broad understanding of the term agriculture where used in Schedule 5 of the GWA 2006. Does the purpose and effect of the Bill relate to agriculture? The second issue that has to be considered is whether the Bill relates to agriculture. As Lord Walker observed in Martin v Most [2010] UKSC 10; 2010 SC (UKSC) 40, para 49, the expression relates to indicates more than a loose or consequential connection. The issue as to whether a provision relates to a subject is to be determined under section 108 (7) by reference to the purpose of the provision, having regard (among other things) to its effect in all the circumstances. As the section requires the purpose of the provision to be examined it is necessary to look not merely at what can be discerned from an objective consideration of the effect of its terms. The clearest indication of its purpose may be found in a report that gave rise to the legislation, or in the report of an Assembly committee; or its purpose may be clear from its context: Imperial Tobacco v Lord Advocate [2012] UKSC 61; 2013 SC (UKSC) 153, para 16. In its Consultation Document, The Future of the Agricultural Wages Board, issued on 1 May 2013 after the decision of the UK Government to abolish the Agricultural Wages Board, the Welsh Government set out the circumstances relating to agriculture in Wales. 84% of the total land area of Wales was used for agricultural purposes. It was distinct from other sectors in Wales as it was mainly comprised of small employment units. There were 13,300 agricultural workers out of a total number of persons engaged in the agricultural sector of 58,400. There had been a decline in the number of agricultural workers. The Welsh Government set out its objective of protecting the agricultural sector and supporting a sustainable and well trained agricultural workforce in Wales. It sought views as to whether to establish a modernised Agricultural Wages Board for Wales. In the light of the responses to the consultation the Welsh Government decided to introduce the Bill. It appears therefore from the consultation process that led to the Bill that its purpose was to regulate agricultural wages so that the agricultural industry in Wales would be supported and protected. The legal and practical effects of the Bill are consistent with that purpose. An objective examination of its provisions shows that, among other effects, it will regulate agricultural wages and will have a direct effect on the agricultural industry in Wales. The Bill establishes an Agricultural Advisory Panel for Wales with the function of promoting careers in agriculture, preparing agricultural wages orders in draft and submitting them to Ministers for approval and advising Ministers on other matters relating to agriculture. Section 3 provides: (1) An agricultural wages order is an order making provision about the minimum rates of remuneration and other terms and conditions of employment for agricultural workers. (2) An agricultural wages order may, in particular, include provision (a) specifying the minimum rates of remuneration to be paid to agricultural workers (including rates for periods when such workers are absent in consequence of sickness or injury); (b) about any benefits or advantages which, for the purposes of a minimum rate of remuneration, may be reckoned as remuneration in lieu of payment in cash; (c) requiring employers of agricultural workers to allow such workers to take such holidays and other leave as may be specified in the order. (3) An agricultural wages order may specify different rates and make different provision for different descriptions of agricultural workers. (4) An agricultural wages order may not include any provision about the pensions of agricultural workers. (5) No minimum rate of remuneration may be specified in an order under this section which is less than the national minimum wage. The Bill provides by section 4 that Welsh Ministers can make agricultural wages orders. Enforcement powers are given by section 5 and by section 6 powers in respect of holiday entitlement. Thus, although different in detail to the 1948 Act, its purpose and effect, as derived from a consideration of both the purpose of those introducing it and the objective effect of its terms, are to establish a statutory regime for the regulation of agricultural wages and other terms and conditions of employment within the agricultural industry in Wales. The purpose and effect of such a regime are to operate on the economic activity of agriculture by promoting and protecting the agricultural industry in Wales. Like the 1948 Act, the Bill is aptly classified as relating to agriculture. Does the Bill relate to subjects which are not devolved? Although the purpose and effect of the Bill in relation to agriculture are clear, it is necessary as the third issue to consider whether it also relates to other subjects. The Attorney General submitted that the Bill will have an effect on employment and on industrial relations. Although he accepted that the effect would be on employment and industrial relations in the agricultural industry, the consequence of regulating wages and other terms and conditions in that industry would be to differentiate the industry in Wales from that in England (though not in Scotland and Northern Ireland) and also to differentiate it from other industries in Wales and in England. The Bill could also have the effect that employers in that industry could lose flexibility as regards terms and conditions and there could be a patchwork of different regulations in different sectors of the labour market. We accept that the Attorney General is broadly correct in his submission as to these effects. The Attorney General next submitted that the usual approach to employment and industrial relations for most industries is to set minimum standards across the UK. The purpose of that approach is to create a level playing field so that wherever an employer is situated in the UK, and whatever the industry in which he is operating, that employer will be subject to the same employment law as regards pay, terms and conditions. Thus no employer could obtain a competitive advantage by locating in a particular nation within the UK. We accept the general import of that submission. Employment and industrial relations are commonly recognised subjects of legislative activity. They are, for example, matters specifically reserved under the heading employment and industrial relations in section H1 of Part 2 of Schedule 5 to the Scotland Act 1998, though it is be noted that the subject matter of the Agricultural Wages (Scotland) Act 1949 is excepted from the reservation. We therefore accept the contention of the Attorney General that the Bill might in principle be characterised as relating to employment and industrial relations. As the Attorney General pointed out, neither employment nor industrial relations is listed in Schedule 7 to the GWA 2006 as a subject in respect of which the Assembly has legislative competence. The fact that the Welsh Government has the power to fix the terms and conditions and wages of those employed by it or bodies it controls (such as the Welsh NHS) is not relevant. Such powers relate to those within the direct or indirect employment of the Welsh Government; they are not powers which regulate the employment of those employed by other employers. On the other hand, employment and industrial relations are not specified in Schedule 7, or elsewhere in the Act, as exceptions to the legislative competence of the Assembly. Certain aspects of employment are specified as exceptions, as we have explained in para 33, but the very fact that those particular aspects are specified tends to suggest that there was no intention to create a more general limitation on legislative competence. Does the Bill relate to agriculture if it also relates to other subjects which are neither listed as devolved nor specified as exceptions? The model of devolution to Wales in the third phase of devolution, as we have briefly explained at para 29, was to give the Assembly legislative competence only in relation to subjects expressly listed. Whether a provision relates to a listed subject is, as we have explained, to be determined under section 108 by considering the purpose and effect of the provision. In the present case, for the reasons we have given, the Bill might in principle be regarded not only as relating to a subject listed as devolved, but also as relating to subjects which are not mentioned at all in the legislation. Employment and industrial relations are neither listed as devolved subjects, nor specified as exceptions. It is therefore necessary to consider as the fourth issue the position where a Bill which relates to a listed subject might also be regarded as relating to other subjects of legislative activity which, although not specified as exceptions, are not listed as devolved. Is the consequence that such a Bill is not within the legislative competence of the Assembly? It appears unlikely that this issue will frequently arise in relation to Welsh devolution. That is because Schedule 7, although briefer than the schedule of reserved matters in the Scotland Act 1998, contains a considerable number of exceptions which are applicable irrespective of the heading under which the exception is specified. The issue only arises in this reference because there is no exception of employment or industrial relations specified in the GWA 2006. The Attorney General contended that the court should in a case such as this determine the real purpose and objective effect of the Bill. He submitted that in reality the purpose and objective effect of the Bill did not relate to agriculture but to employment and industrial relations. It should therefore be so characterised. This was the way that the UK Ministry, the Department of the Environment Food and Rural Affairs, had characterised the issue when consulting on the future of the Agricultural Wages Board in October 2012. The Government is committed to providing an environment for all sectors of the economy in which private enterprise and businesses can flourish. To do so, the Government wishes to remove unnecessary red tape and administrative burden. A key coalition commitment is a cross Government review of employment related law which is taking forward a number of measures aimed at reducing burdens on business by simplifying employment legislation to give employers the flexibility to run their business effectively and have the confidence to take on staff and grow. The proposed abolition of the agricultural minimum wage and the Agricultural Wages Board is part of that overall wider review. We cannot accept that this is the approach which the language of the GWA 2006 requires or permits. We acknowledge that, in principle, there may be more than one way in which the purpose and effect of a Bill may be capable of being characterised. The present is a case in point. A Bill which establishes a scheme for the regulation of agricultural wages can in principle reasonably be classified either as relating to agriculture or as relating to employment and industrial relations. Which classification is the more apt depends on the purpose for which the classification is being carried out, and on the classificatory scheme which has to be employed. As we explained in para 6, the question whether a provision is outside the competence of the Assembly must be determined according to the particular rules that section 108 of, and Schedule 7 to, the GWA 2006, have laid down. The rules must be interpreted according to the ordinary meaning of the words used. In that way, a coherent, stable and workable outcome can be achieved. As we have explained, the scheme of the conferred powers model adopted for Welsh devolution, as embodied in the GWA 2006, is to limit the legislative powers of the Assembly in relation to subjects listed in Schedule 7 by reference to the express exceptions and limitations contained in the Act, rather than via some dividing up of the subjects in Schedule 7 along lines not prescribed in the legislation. Under section 108(4) and (7), the Assembly has legislative competence if the Bill relates to one of the subjects listed in Part 1 of Schedule 7, provided it is not within one of the exceptions. In most cases, an exception will resolve the issue. Where however there is no exception, as in the present case, the legislative competence is to be determined in the manner set out in section 108. Provided that the Bill fairly and realistically satisfies the test set out in section 108(4) and (7) and is not within an exception, it does not matter whether in principle it might also be capable of being classified as relating to a subject which has not been devolved. The legislation does not require that a provision should only be capable of being characterised as relating to a devolved subject. The Attorney Generals submission would in effect compel us to re write section 108 to make it operate in such a way as to add to the exceptions specified in Schedule 7. Instead of the specific exception which Parliament created in respect of occupational pension schemes, the court would create a much wider exception in respect of the remuneration of employees, or perhaps employment generally. Not only is that impermissible in principle, but it would in practice restrict the powers of the Assembly to legislate on subjects which were intended to be devolved to it: as the present case demonstrates, a Bill which undoubtedly relates to a devolved subject may also be capable of being classified as relating to a subject which is not devolved. Such an interpretation of section 108 would therefore give rise to an uncertain scheme that was neither stable nor workable. In contrast, the application of the clear test in section 108 provides for a scheme that is coherent, stable and workable. Conclusion As we have concluded for the reasons we have set out that the Bill relates to agriculture, it follows that it is within the legislative competence of the Assembly. |
As a result of the experience of the pre war dictatorships, the right to free elections was emphasised during and immediately following the Second World War as an essential element of personal freedom and equality before the law. As Professor Hersch (later Sir Hersch) Lauterpacht put it in 1945: the right of self government which in developed society means government by persons freely chosen by and accountable to the electors is in itself an expression and a condition of freedom. No individual is free if he is governed against his will, that is, if the persons who exercise authority are not chosen by and accountable to the community at large. (Lauterpacht, An International Bill of the Rights of Man (1945), 135) Five years later Lauterpacht said: Without an effective guarantee of these political rights of freedom, personal freedom and equality before the law must be, at best, precarious; at worst they may be meaningless The insistence on an International Bill of Rights and the proclamation of the enthronement rights of man as a major purpose of the Second World War were prompted by the experience of dictatorships the essence of which was the denial of the political right of freedom. There is no intrinsic reason why the right to free, secret and periodic elections should not be recognised by law and declared enforceable. (Lauterpacht, International Law and Human Rights (1950), 281 2) Consequently the right to free elections as an essential element of the developing international law of human rights was recognised in Lauterpachts own draft International Bill of the Rights of Man (Article 10), in the American Law Institutes 1944 draft Statement of Essential Human Rights (Article 16), in the Inter American Juridical Committees 1946 draft Declaration of the International Rights and Duties of Man (Article XIII), and in the Universal Declaration of Human Rights adopted by the General Assembly in 1948 (Article 21(1)), and later in the International Covenant on Civil and Political Rights (1966) (Article 25) and the American Convention on Human Rights (1969) (Article 23). The Preamble to the European Convention on Human Rights states that fundamental freedoms are best ensured by (inter alia) an effective political democracy. In Bowman v United Kingdom (1998) 26 EHRR 1, para 42, the European Court of Human Rights said: Free elections and freedom of expression, particularly freedom of political debate, together form the bedrock of any democratic system. In United Communist Party of Turkey and Others vs Turkey (1998) 26 EHRR 121, para 45, it was said: Democracy is without doubt a fundamental feature of the European public order . The Preamble goes on to affirm that European countries have a common heritage of political traditions, ideals, freedom and the rule of law. The Court has observed that in that common heritage are to be found the underlying values of the Convention; it has pointed out several times that the Convention was designed to maintain and promote the ideals and values of a democratic society. The First Protocol to the European Convention on Human Rights was signed in Paris on March 20, 1952. The Protocol was ratified by the United Kingdom in November 1952, and entered into force on May 18, 1954. By Article 3 of the Protocol: Right to free elections The High Contracting Parties undertake to hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature. Background to the appeal Sark is a small island in the Channel Islands, with a population of about 600. appeal from the Court of Appeal (Pill, Jacob and Etherton LJJ: [2008] EWCA Civ 1319, [2009] 2 WLR 1205) principally concerns the application of Article 3 of the First Protocol to the constitutional changes introduced on Sark under the Reform (Sark) Law, 2008 (the Reform Law) in relation to the composition of the Chief Pleas, which is its legislature (and also its executive). Under the Reform Law the members of the electorate (consisting of some 500 voters) each vote for 28 Conseillers, and the 28 candidates with the largest number of votes are elected. After approval of the Reform Law by Order in Council, the first election of the 28 Conseillers took place on December 10, 2008. Sir David Barclay and Sir Frederick Barclay, the first and second appellants (the Barclay brothers), own property on Sark. The third appellant, Dr Slivnik, lives on Sark and wants to stand for election to the Chief Pleas. The appellants have two complaints. First, they claim that because of the position under the Reform Law of two office holders and prominent members of the community, the Seigneur (or Lord) of Sark and the Seneschal (or Steward), the Reform Law is incompatible with Article 3. Each of them is an ex officio, unelected, member of the Chief Pleas, and the Seneschal is the president of the Chief Pleas. Neither of them has the right to vote, but the Seigneur may speak in debate, and has the right of temporary veto of certain legislation. Second, the appellants claim that the Reform Law is incompatible with Article 3 (read alone or in conjunction with the prohibition on discrimination in Article 14 of the Convention) because Dr Slivnik is prevented from standing for election: as a resident he has the right to vote, but he is ineligible to stand because, as a citizen of Slovenia, he is an alien for the purposes of the Reform Law. Dr Slivnik also made a number of complaints about the conduct of the Seigneur and the Seneschal, but they are not relevant to the outcome of the appeal. The Channel Islands The Channel Islands consist of two Bailiwicks, Jersey and Guernsey. The Channel Islands are Crown dependencies but they are not part of the United Kingdom nor are they colonies. When King Philippe Auguste retook possession of continental Normandy in 1204, King John retained the Channel Islands. His right as Duke of Normandy lapsed, and a separate title grew up by force of occupation, which attached to him as King of England. This was confirmed by the Treaty of Bretigny in 1360. See Matthews (1999) 3 Jersey L Rev 177; Minquiers and Ecrehos Case (France v United Kingdom) 1953 ICJ Rep 47, 56 57. The Channel Islands are not represented in the United Kingdom Parliament. Acts of Parliament do not extend to them automatically, but only if they expressly apply to the Islands or to all HM Dominions or do so by necessary implication. By convention Parliament does not legislate for the Islands without their consent in matters of taxation or other matters of purely domestic concern. The United Kingdom Government is responsible for their international relations and for their defence. It is the practice for the Island authorities to be consulted before an international agreement is reached which would apply to them. The Crown has ultimate responsibility for the good government of the Islands. The Secretary of State for Justice and Lord Chancellor (the Secretary of State), the first respondent, has departmental responsibility for the constitutional relationship between the Crown and the Channel Islands. The second respondent, the Committee for the Affairs of Jersey and Guernsey, is a committee of the third respondent, the Privy Council. It is the practice for such a Committee to be appointed at the start of each sovereigns reign to deal with the affairs of the Channel Islands. The Committee consists of three Privy Counsellors: the Secretary of State, a Minister in the Department of Justice, and the Lord President of the Council. The Privy Councils main business in connection with the Islands is to deal with legislative measures submitted for ratification by Order in Council. The Crown acts through the Privy Council on the recommendation of the Committee. In 1565, acting by letters patent, Queen Elizabeth I appointed Helier de Carteret as the Seigneur of Sark (or Lord of Sark), and granted it to him as a royal fief as a reward for his having secured the island against the French. Inheritance of the fief and any land sublet by the Seigneur is by male primogeniture in the manner of the Crown. The Seigneur has always been free to sell the fief subject to royal consent. The present Seigneur is John Michael Beaumont. His family acquired the fief with Crown permission in 1852. He inherited it on the death of his grandmother Dame Sibyl Hathaway in 1974. The letters patent granted in 1565 required the Seigneur to keep the island continually inhabited or occupied by 40 men who had to be English subjects or swear allegiance to the Crown. To achieve and to maintain the islands defences, Helier de Carteret leased 40 parcels of land (known as tenements) at a low rent on condition that a house was built and maintained on each parcel and that the Tenant provided one man, armed with a musket, for the defence of the island. The 40 tenements still exist, with minor boundary changes. There are 36 Tenants because some Tenants own more than one tenement. In 1675 the office of Seneschal (or Steward) was created by the Crown. The main function of the Seneschal was to dispense justice, as Sarks chief judge. The present Seneschal is Lieutenant Colonel Reginald Guille MBE. Sark is part of the Bailiwick of Guernsey, but has a large measure of independence from Guernsey. The States of Guernsey may legislate for Sark on criminal matters without the consent of the Chief Pleas and on any other matter with their consent. The European Convention on Human Rights and Sark The European Convention on Human Rights provided in Article 63 (now Article 56, since the Eleventh Protocol) that a Contracting State could declare that the Convention should extend to all or any of the territories for whose international relations it was responsible, with the effect that the provisions of the Convention would be applied in such territories with due regard, however, to local requirements. The Convention was extended in this way to the Bailiwick of Guernsey in 1953, and the First Protocol, which contains a similar power to extend in Article 4, was extended to the Bailiwick of Guernsey in 1988. One of the questions canvassed on this appeal is whether the remedies under the Human Rights Act 1998 are available to the appellants. In the course of the passage of the 1998 Act the House of Lords rejected an amendment to apply the Act to the Channel Islands and the Isle of Man, and a similar amendment was withdrawn in the House of Commons: Human Rights Law and Practice, 3rd ed 2009, ed Lester et al, para 2.22.4. Instead the Convention was applied by local legislation. The Human Rights (Bailiwick of Guernsey) Law 2000 has given effect to Convention rights and came into force in November 2006. Legislation in Sark The Chief Pleas legislates by two methods, Laws and Ordinances. It can legislate for Sark on any matter by Projet de Loi, which requires the Royal Assent. After the Chief Pleas passes a Law, it is remitted as a Projet de Loi to departmental officials at the Ministry of Justice to be referred to the Committee for the Affairs of Jersey and Guernsey for its consideration and report. If the Committee recommends that Royal Assent be granted, the Projet de Loi is presented to the next available meeting of the Privy Council, together with a report on any petitions which have been received. The Projet de Loi will not go to the Privy Council if the Committee decides not to recommend it for Royal Assent. Her Majesty in Council then gives Royal Assent (by Order in Council) to any Projet de Loi presented by the Privy Council pursuant to a recommendation by the Committee. She will also dismiss any petitions as appropriate. The evidence in these proceedings was that, in considering whether or not to recommend approval, the Committee will in general respect the decision of the Chief Pleas, and there would tend to be a presumption in favour of recommending Royal Assent. But consideration is given to the Crowns responsibilities, so that if a Projet de Loi violates the Crowns international obligations or any fundamental constitutional principle, or if it is clearly not in the public interest for it to become law, then a recommendation may be made to withhold Assent. The Chief Pleas also legislates on a range of local affairs by Ordinance. The Royal Court of Guernsey may annul an Ordinance on the ground that it is unreasonable or ultra vires the Chief Pleas, but the Chief Pleas may appeal to the Privy Council against the annulment. The Seigneur had (and continues to have) power to veto an Ordinance, but it must be placed before the Chief Pleas again (not more than 21 days later), and the Chief Pleas will then consider whether the Ordinance should be confirmed. The Seigneur had (and has) no power to veto Laws. Between meetings, the business of the Chief Pleas is conducted through various Committees which function in effect as the executive government of Sark. The Reform (Sark) Law 1951 (the 1951 Law) Until the Reform Law became law in 2008, the majority of the members of the Chief Pleas were unelected Tenants, whose entitlement to sit derived from their status as landowners. Until 1922 the Seigneur and the Tenants were the only members, together with a Seneschal chosen by the Seigneur. The Sark Reform Law of 1922 introduced adult suffrage for the election of 12 Peoples Deputies. Under the 1951 Law the Chief Pleas consisted of the Seigneur, the Seneschal (who was appointed for a three year term of office by the Seigneur with the approval of the Lieutenant Governor and was ex officio President of the Chief Pleas), the Tenants, and 12 Deputies of the People elected triennially. In the case of a tenement jointly owned by two or more persons, one of those persons was appointed as the Tenant, by those owners or a majority of them. Both the Seigneur and the Seneschal had the right to vote in the Chief Pleas. The Seneschal was entitled, in the event of an equality of votes, to a casting vote in addition to his original vote, but following McGonnell vs United Kingdom (2000) 30 EHRR 289 (involving the compatibility of the judicial functions of the Bailiff of Guernsey with Article 6(1) of the Convention), the Seneschal agreed not to exercise his casting vote pending further reform. Under the 1951 Law, aliens were not eligible to vote or stand for election to the Chief Pleas. Reform process Sark has been considering constitutional reform since 1999. In March 2006, the Chief Pleas voted for a reform which would have provided for a legislature to consist of 16 Tenants elected by the Tenants and 16 Deputies elected by the rest of the population. In April 2006 the Chief Pleas withdrew its support for that option. On May 7, 2006, the Secretary of State (at that time Lord Falconer) wrote to the Seigneur to say that he was pleased with the decision of the Chief Pleas to withdraw the plan to reserve 16 seats in the Chief Pleas for Tenants because he would not have been able to recommend for Royal Assent legislation about which there are serious or substantial ECHR compliance issues". He said that [a]ny option which falls short of a wholly democratic process would cause me serious difficulties. I am concerned that Sark should give itself, and the UK, the best protection it can from ECHR challenge and its possible consequences [i]t is the UK which is vulnerable to an ECHR challenge. The UK cannot stand by and give that situation its tacit approval by doing nothing". In April 2007, the Chief Pleas approved another version of a new law would still reserve seats in the Chief Pleas for Tenants, but with those Tenants elected by universal suffrage. The Secretary of State (by then Mr Jack Straw) decided not to submit that proposal to the Privy Council, because there were some aspects of the proposed law which he considered not to be unquestionably compliant with international law and the United Kingdoms obligations, having regard to the Crowns responsibility for the good government of the Crown Dependencies. In particular, there were concerns that (a) the composition of the legislature was not consistent with modern democratic principles; (b) the dual role of the Seneschal as judge in Sarks sole court of justice and President of Chief Pleas might cast doubt on the judicial impartiality of a person subsequently called upon to determine a dispute concerning legislation with which he had been involved; and (c) the role of the Seigneur, his membership of the Chief Pleas and his wider functions, sat uneasily with democratic principles. On February 21, 2008, the Chief Pleas approved a new version of a Reform Law. Under that Law, the reserved seats for Tenants are removed. The Seigneur and the Seneschal remain members, but without the right to vote. The Seigneurs right of temporary veto of Ordinances is preserved. The Seneschal can now only speak for the purposes of exercising his role as President. Neither is now entitled to sit on Committees of the Chief Pleas. The Barclay brothers presented several Petitions opposing the reform proposals as they evolved, and in particular a Petition dated March 3, 2008, asking that the Privy Council withhold approval of the Reform Law as enacted. The Petition complained, so far as is now material, that (a) in violation of Article 3 of the First Protocol, the Seigneur would be an unelected member of Chief Pleas, with a right to address it and with a power to veto Ordinances; (b) the membership of the Seneschal as President of Chief Pleas was incompatible with Article 3; (c) the prohibition on non British nationals standing for election was incompatible with Article 3 and with Article 14 of the Convention. The Committee for the Affairs of Jersey and Guernsey rejected the Petitions. Schedule to an Order in Council dated April 9, 2008 notes that the Committee recommended that the Petitions be dismissed and that the Reform Law should receive Royal Assent at the next meeting of the Privy Council on April 9, 2008. The Schedule then gave a summary of the Committees conclusions, which included: The Reform Law would not violate any of the Crown's international obligations, and that therefore those international obligations provided no basis for refusing Royal Assent". The Reform Law The following are the principal features of the Reform Law which are relevant on this appeal. The Chief Pleas All legislative and executive functions which may be exercised within Sark are exercisable by the Chief Pleas, or by the relevant Committee of the Chief Pleas or other body on which the function is imposed or conferred: section 1. The Chief Pleas consists of the Seigneur, the Seneschal, and 28 elected Conseillers, with elections to take place every fourth year: section 21(1). The number of Conseillers may be varied by ordinance: section 21(5). A person is entitled to have his name inscribed in the register of electors if he is ordinarily resident in Sark and has been for 12 months: section 28(4). A person who is registered in the Cadastre (rating register) as the possessor of real property in Sark is deemed to be ordinarily resident: section 28(5). A person is eligible to be elected a Conseiller if he is entitled to vote and he is not an alien within the meaning of the law in force in the United Kingdom (section 28(3)(b)). By section 50(1) of the British Nationality Act 1981, an alien is: a person who is neither a Commonwealth citizen nor a British protected person nor a citizen of the Republic of Ireland. Both the Seigneur and the Seneschal are now prohibited from being members of a Committee of the Chief Pleas: section 45(3). Thus, neither can be directly concerned in the day to day running of Sarks Executive Government. The 1951 Law did not prevent the Seneschal and the Seigneur from sitting on executive Committees of Chief Pleas, and they exercised their right to do so. The Seigneur The Seigneur is a member of the Chief Pleas: section 21(1)(a). The Seigneur has the right to speak at any meeting of the Chief Pleas but does not have the right to vote: section 35(3). He cannot be a member of a Committee of the Chief Pleas: section 45(3). The Seigneur has the power temporarily to veto Ordinances made by the Chief Pleas. Section 38 provides: (1) Subject to subsections (2) and (3), the Seigneur may, during any meeting of the Chief Pleas at which an Ordinance is made, veto any Ordinance made at that meeting. (2) Where an Ordinance has been vetoed pursuant to subsection (1), it shall not be registered but shall again be laid before the Chief Pleas not earlier than 10 days, and not later than 21 days, after the meeting at which it was made. (3) Where an Ordinance is laid before the Chief Pleas pursuant to subsection (2), the Chief Pleas may either (a) confirm the Ordinance, whereupon the veto shall cease to be operative and the Ordinance shall take effect from the date of its registration, or otherwise in accordance with its provisions, as if it had not been vetoed; or refuse to confirm the Ordinance, whereupon it shall not be registered and shall not take effect". (b) The Seigneur has other powers and responsibilities under the Reform Law. The most significant for the purposes of this appeal are these: (1) the Seigneur appoints the Seneschal (with the approval of the Lieutenant Governor): section 6(1); (2) the Seigneurs consent is needed for the Seneschal to summon an extraordinary meeting of the Chief Pleas: section 32(2)(b); (3) the Seigneur is a Trustee (section 56), making him responsible, together with the other three Trustees (the Seneschal, Prvt and Greffier) for all Island Properties, i.e. schools, teachers houses, the medical centre, and administrative offices. The Seneschal The Seneschal continues to be appointed by the Seigneur with the approval of the Lieutenant Governor: section 6(1). He is no longer appointed for a limited 3 year term: his appointment is for life. The reason is that it was thought that a Seneschal with a three year term might not give a fair trial in litigation involving the Crown or the Seigneur if he were seeking re appointment. By section 6(2), the Seneschal may only be removed by the direction of the Lieutenant Governor for good cause (formerly, he was simply subject to removal by the direction of the Crown: section 22(1) of the 1951 Law). The Seneschal is an unelected member of the Chief Pleas: section 21(1)(b). The Seneschal continues to be the ex officio President of the Chief Pleas: section 35(1). He is a Trustee of Island property (section 56). Meetings of the Chief Pleas are convened by the Seneschal by the publication of an Agenda (section 32(1)). He has power (if the Seigneur consents) to summon an extraordinary meeting of the Chief Pleas, and a discretion to determine whether an extraordinary meeting will be held at the request of at least nine Conseillers (section 32(2)(b) and (c)). The Seneschal has no right to speak or to vote at any meeting of the Chief Pleas (section 35(4)). It was common ground that he may speak insofar as is necessary to enable him to preside over the Chief Pleas. But he cannot speak in favour of or against the substance of any matter raised by the Conseillers. Seneschals procedural powers The Chief Pleas has power to make rules of procedure (section 36(1)) but the Rules of Procedure under the 1951 Law have been applied by the Chief Pleas under the Reform Law. New rules were adopted in April 2009. The procedural powers of the Seneschal under the rules which were current when the decisions of the Committee for the Affairs of Jersey and Guernsey and the Privy Council were taken are these. He convenes meetings by means of an agenda: rule 1(2). He may, on grounds of public interest, decline to allow a question to be put or rule that the question need not be answered: rule 8. He is responsible for maintaining order at a meeting and, subject to the provisions of the Rules, regulates the conduct of business: rule 10(1). He may direct a member to discontinue his speech if he considers it irrelevant or tedious repetition of the member's arguments: rule 10(4). Where he considers that grave disorder has arisen in a meeting he may adjourn the meeting: rule 10(7). He decides whether to allow an amendment to be moved in the case of non compliance with the requisite notice period (rule 11(2)). He decides whether or not a member's oral contribution to the debate is relevant and therefore permissible (rule 11(6)), and he decides the order of proposed amendments (rule 11(8)). He provides clarification on the Rules: rule 13. The proceedings: jurisdiction By claim form dated April 4, 2008, the appellants sought judicial review of (1) the decision dated March 19, 2008 of the Committee for the Affairs of Jersey and Guernsey to recommend that Royal Assent be granted to the Reform Law; and (2) the decision of the Privy Council to advise Her Majesty, on April 9, 2008, to grant Royal Assent in accordance with the first decision, which resulted in an Order in Council of that date. There is no issue on this appeal about jurisdiction to determine the legality of the decisions of the Committee and the Privy Council. Wyn Williams J held in the Administrative Court [2008] 3 WLR 867, paras 98 102, and the respondents accepted in the Court of Appeal [2009] 2 WLR 1205 (see Pill LJ at paras 19 21) that to the extent that the Reform Law is in breach of Convention rights, then the appellants are entitled to appropriate relief in these proceedings. That is because the respondents expressly advised Her Majesty the Queen to approve the Reform Law on the ground that it did not involve any breach of the obligations of the United Kingdom under the Convention. It will, however, be necessary to revert to the question of jurisdiction because of the appellants contention that the courts of this country also have jurisdiction to grant relief on the basis that the respondents were acting as public authorities for the purposes of section 6 of the Human Rights Act 1998 when recommending the Order in Council by which the Reform Law was given Royal Assent. The judgments below Wyn Williams J decided that the comparatively limited rights and powers conferred upon the Seigneur and the Seneschal did not impair the essence of the rights conferred under Article 3 of the First Protocol. Neither was entitled to vote. The Seigneurs right of veto was limited to Ordinances and was no more than a means by which he could ask Chief Pleas to revisit a decision. It was impossible to envisage that the power could ever be used in such a way that it would frustrate the will of the Conseillers permanently. There was no principle that a State could not comply with Article 3 unless every member of its legislative body were democratically elected. The positions of Seigneur and Seneschal had been inextricably linked with the governance of Sark over centuries, and there was no legal impediment to there being some continuation of those links. Their membership was being pursued for a legitimate aim, namely to form part of a package of measures which was most likely or at least very likely to find favour with a majority of the members of Chief Pleas as currently constituted, and to provide some link between the past and the future. The Reform Law was not in breach of Article 3 in not permitting aliens to stand for election. Wyn Williams J also decided that the combination of the judicial and other functions of the Seneschal was consistent with the duty under Article 6(1) of the Convention to establish an independent and impartial tribunal. His decision on that point was reversed by the Court of Appeal, and there was no further appeal on that point. The Court of Appeal agreed with Wyn Williams J so far as the position of the Seigneur was concerned, and by a majority (Etherton LJ dissenting) with regard to the Seneschal. The principal points made by Pill and Jacob LJJ were these: all members of the Chief Pleas entitled to vote were elected in accordance with a procedure about which there was no complaint. The power of the Seigneur to speak (but not vote) in Chief Pleas made sense in a small community such as Sark, and would not undermine the free expression of the people. The power of the Seigneur to veto Ordinances temporarily, and the requirement for the Seneschals consent to an extraordinary meeting of Chief Pleas requested in writing by nine Conseillers, might serve the democratic will in providing the opportunity at a later date for a more representative meeting, if some members of Chief Pleas were away from Sark. There was no reason to believe that the Seneschal would use his position as ex officio President to thwart the will of elected members. If his procedural powers were not acceptable to the elected members, Chief Pleas could alter the rules. Jacob LJ added that if the elected members of Chief Pleas were to decide that the continued presence and powers of the Seigneur and Seneschal in Chief Pleas were obstructive to the expression or exercise of the will of the people, there would be nothing that could be done legally to prevent Chief Pleas from voting for a change. The Reform Law did not breach Article 3 in failing to grant to aliens the right to stand for election to Chief Pleas and, in the absence of such a breach, Article 14 of the Convention did not apply. Etherton LJ dissented with respect to the role and functions of the Seneschal. His view was that an unelected President for life of a unicameral legislature, who was not appointed to office by the electorate or by the elected members of the legislature, and whom the elected members had no power to discipline or remove as President, was in principle fundamentally inconsistent with a political democracy. His procedural powers and the requirement of his consent for extraordinary meetings taken as a whole were capable of enabling suppression of free and appropriate debate within the Chief Pleas by elected members on topics they or some of them wished to raise. There was no clearly practicable means for the elected members of the Chief Pleas to control abusive or otherwise incorrect exercise by the Seneschal of his powers as President. They had no power to dismiss or suspend him. They could apply in writing to the Lieutenant Governor under section 6(2) of the Reform Law for his removal as Seneschal, but that process would be neither swift nor certain. The particular features of the Sark constitution under the Reform Law and the social and constitutional standing of the Seneschal in Sark were obvious disincentives for elected members to challenge the rulings and conduct of the Seneschal as President. In addition to serving as President of the Chief Pleas he held the following positions under the Reform Law: one of the four trustees who, subject to any direction of the Chief Pleas, manage, control and dispose of its property and who sign contracts on its behalf; the returning officer for the purposes of elections of Conseillers to the Chief Pleas and, as such, is required to do everything necessary for effectually conducting the election; critically, under the Reform Law the only court on Sark was the Court of the Seneschal in which, unless a Deputy Seneschal or a Lieutenant Seneschal is appointed to sit, the Seneschal sat alone. The elected members would doubtless bear in mind the possibility that at some point in the future they might have to appear in court before him or one of his deputies or lieutenants in civil or criminal proceedings. The issues on appeal The principal issues on this appeal are (1) whether (as the appellants contend) the position of the Seneschal and the Seigneur in the Chief Pleas of Sark, as provided for in the Reform Law, constitutes a breach of the right conferred by Article 3 of the First Protocol to participate in elections which ensure the free expression of the opinion of the people in the choice of the legislature; and (2) whether (as the appellants contend) the prohibition imposed by the Reform Law on persons who are aliens from standing for election to the Chief Pleas of Sark is a breach of the right under Article 3 of the First Protocol, read alone and/or in conjunction with Article 14 of the Convention. Although there is no cross appeal by the respondents on the issue of jurisdiction, the appellants invited the House of Lords to determine whether, had it not been accepted by the respondents that the decisions of the Committee for the Affairs of Jersey and Guernsey and the Privy Council were amenable to judicial review (because the respondents expressly advised Her Majesty to approve the Reform Law on the ground that it did not involve any breach of the international obligations of the United Kingdom under the Convention), the Human Rights Act 1998 applies to the decisions. Article 3 of the First Protocol There have been more than 50 decisions of the European Court of Human Rights on Article 3 of the First Protocol. The following principles emerge from these decisions, particularly from the relatively early case of Mathieu Mohin v Belgium (1988) 10 EHRR 1, and the recent decision of the Grand Chamber in Yumak v Turkey (2009) 48 EHRR 61. First, Article 3 of the First Protocol enshrines a characteristic principle of an effective democracy. It is of prime importance in the Convention system, of which democracy constitutes a fundamental element, and the rights guaranteed under Article 3 of the First Protocol are crucial to establishing and maintaining the foundations of an effective and meaningful democracy governed by the rule of law: Mathieu Mohin v Belgium, at para 47; Yumak v Turkey, at paras 105 and 107. See also Zdanoka v Latvia (2007) 45 EHRR 478, para 98 (Grand Chamber); Tanase v Moldova [2008] ECHR 1468, at paras 100 101. Second, although Article 3 is phrased in terms of the obligation of the Contracting States to hold elections which ensure the free expression of the opinion of the people rather than in terms of individual rights, Article 3 guarantees individual rights, including the right to vote and the right to stand for election: Mathieu Mohin v Belgium, at paras 48 51; Yumak v Turkey, at para 109(i); Zdanoka v Latvia, at para 102. Third, there is room for implied limitations on the rights enshrined in Article 3, and Contracting States must be given a wide margin of appreciation in this sphere: Mathieu Mohin v Belgium, at para 52; Yumak v Turkey, at para 109(ii). Fourth, the content of the obligation under Article 3 varies in accordance with the historical and political factors specific to each State; and for the purposes of applying Article 3, any electoral legislation must be assessed in the light of the political evolution of the country concerned, so that features which would be unacceptable in the context of one system may be justified in the context of another, at least so long as the chosen system provides for conditions which will ensure the free expression of the opinion of the people in the choice of the legislature: Yumak v Turkey at para 109(iii); Aziz v Cyprus (2005) 41 EHRR 164, para 28. Fifth, Article 3 is not (by contrast with some other Convention rights, such as those enumerated in Articles 8 to 11) subject to a specific list of legitimate limitations, and the Contracting States are therefore free to rely in general in justifying a limitation on aims which are proved to be compatible with the principle of the rule of law and the general objectives of the Convention: Yumak v Turkey, at para 109(iii); Tanase v Moldova, at para 105. Sixth, limitations on the exercise of the right to vote or stand for election must be imposed in pursuit of a legitimate aim, must not be arbitrary or disproportionate, and must not interfere with the free expression of the opinion of the people in the choice of the legislature: Yumak v Turkey, at para 109(iii) (iv). Seventh, such limitations must not curtail the rights under Article 3 to such an extent as to impair their very essence, and deprive them of their effectiveness. They must reflect, or not run counter to, the concern to maintain the integrity and effectiveness of an electoral procedure aimed at identifying the will of the people through universal suffrage. Any departure from the principle of universal suffrage risks undermining the democratic validity of the legislature and the laws which it promulgates: Mathieu Mohin v Belgium, at para 52; Yumak v Turkey, at para 109(iv). Eighth, as regards the right to stand for election, the Court accepts that stricter requirements may be imposed on the eligibility to stand for election to parliament, as distinguished from voting eligibility: Melnychenko v Ukraine (2006) 42 EHRR 784, para 57. In Zdanoka vs Latvia (2007) 45 EHRR 478, para 106 the Grand Chamber said: The Convention institutions have had fewer occasions to deal with an alleged violation of an individuals right to stand as a candidate for election, i.e, the so called passive aspect of the rights under Article 3 of Protocol no. 1. In this regard the Court has emphasised that the Contracting States enjoy considerable latitude in establishing constitutional rules on the status of members of parliament, including criteria governing eligibility to stand for election. Although they have a common origin in the need to ensure both the independence of elected representatives and the freedom of choice of electors, these criteria vary in accordance with the historical and political factors specific to each State. The multiplicity of situations provided for in the constitutions and electoral legislation of numerous member States of the Council of Europe shows the diversity of possible approaches in this area. Therefore, for the purposes of applying Article 3, any electoral legislation must be assessed in the light of the political evolution of the country concerned. Ninth, the Court takes account of the practice of members of the Council of Europe in assessing the compatibility of electoral rules with Article 3, in particular in the area of qualifications to stand for election. In Yumak v Turkey (at para 111) the Court said in relation to electoral systems that the large variety of situations provided for in the electoral legislation of numerous Member States of the Council of Europe shows the diversity of the possible options. In Melnychenko v Ukraine, at para 30, the Court, when considering whether it was compatible with Article 3 to impose a residence requirement before citizens could stand for election, referred to the fact that 19 States did not impose any such requirement for participation in elections while 21 States did so for elections to one or more of the legislative chambers. In Gitonas v Greece (1997) 26 EHRR 691 the Court decided that the disqualification in Greece of civil servants from elected office was compatible with Article 3, and at para 40 it said that equivalent provisions exist in several member States of the Council of Europe. In Sukhovetsky v Ukraine (2007) 44 EHRR 57, at para 76, the Court, in deciding that the Ukrainian rules with regard to electoral deposits were compatible with Article 3, considered the practice of the Convention States with regard to the amount of the deposit and whether it was appropriate that it should be forfeit if the candidate failed to win election irrespective of the percentage of votes cast. Examples of the operation of these principles as regards the right to vote include Yumak v Turkey, which concerned a Turkish law under which a political party had to receive at least 10% of the national vote in an election in order to obtain any seats in the Turkish parliament, and which was the highest threshold in the Contracting States. The effect was that two of the eighteen parties which had taken part in the 2002 elections had passed the 10% threshold and secured seats, with the result that 45% of the voting public were not represented in the parliament. It was held that the threshold law served the legitimate aim of avoiding excessive and destabilising parliamentary fragmentation and thus strengthening governmental stability. Although it appeared excessive, it was not disproportionate in that it did not impair the essence of the rights secured by Article 3 of the First Protocol. But a blanket disenfranchisement of convicted prisoners regardless of the nature of the offence or length of sentence was held to be disproportionate: Hirst v United Kingdom (No 2) (2006) 42 EHRR 41 (Grand Chamber). As regards the right to stand for election, it has been held that public servants could be barred from standing for election: Ahmed v United Kingdom (2000) 29 EHRR 1; Gitonas v Greece, supra; and a former member of the Communist Party could be banned from standing for election in Latvia because she could be presumed to be anti democratic: Zdanoka v Latvia (2007) 45 EHRR 478. But the requirement of a command of Latvian at the highest level from a Russian minority candidate for election was disproportionate: Podkolzina v Latvia [2002] ECHR 405. The effect of these principles is that there is no narrow focus on one particular element of democracy. The electoral rules have to be looked at in the round, and in the light of historical and political factors. The proper application of these principles leads inevitably to the conclusion that the Reform Law is not in breach of Article 3 of the First Protocol. The appellants submit that it is incompatible with the most basic principles of democracy as expressed in Article 3 of the First Protocol for unelected individuals to be members of the Chief Pleas with the power (1) in the case of the Seigneur, to speak in the Chief Pleas and to veto (even on a temporary basis) legislation and (2) in the case of the Seneschal, to preside and control proceedings in the Chief Pleas, in each case in addition to their other important functions and powers on Sark (Appellants Case, at para 58). The appellants exaggerate their case. The starting point is that only Conseillers are entitled to vote in the Chief Pleas, and therefore it is only Conseillers who determine whether legislation is to be enacted. The electorate of Sark consists of fewer than 500 voters, who choose 28 elected Conseillers by a process of casting 28 votes each and electing the 28 candidates with the largest number of votes. There is therefore one Conseiller for every 17 18 persons in the electorate. It is not easy to envisage, in the words of Article 3, conditions which are more likely to ensure the expression of the opinion of the people in the choice of the legislature. The appellants case was, in part, that to the extent that members of the legislature (implicitly including both chambers) were not elected, Article 3 was not satisfied: Appellants Case at para 63(2). That was put too widely. It is plain that the effect of Article 3 is not to require that all members of the legislature of a Contracting State be elected. A legislature may consist of two chambers, and a wholly unelected second chamber, such as the House of Lords, is not in itself incompatible with Article 3. When the First Protocol was under negotiation, the formula The High Contracting Parties undertake to hold free elections of the Legislature was proposed, but it was not acceptable to some countries, because it might be interpreted as an obligation to hold elections for both chambers of the legislature. This was unacceptable to the Governments of some States where the upper chamber was in whole or in part not elected but hereditary (such as the United Kingdom) or appointed (as in Belgium). The Committee of Ministers recorded that the original text, which was maintained, had been carefully drafted to avoid this difficulty: Collected Edition of the Travaux Prparatoires of the European Convention on Human Rights, Vol VIII (1985), pp 48 52, letter dated November 28, 1951, from Chairman of the Committee of Ministers to the President of the Consultative Assembly. It was for that reason and by reference to those documents that the Court in Mathieu Mohin v Belgium said, at para 53, that Article 3 applies only to the election of the legislature, or at least of one of its chambers if it has two or more. The European Commission for Democracy through Law (also known as the Venice Commission) was established in 1990 as the Council of Europes advisory body on constitutional matters. The Venice Commission adopted guidelines on elections as part of a code of good practice in electoral matters. Guideline 5 was that at least one chamber of the national parliament must be elected by direct suffrage. Consequently the appellants also formulated the principle for which they contended as being that all the members of a unicameral legislature must be elected: Appellants Case at para 63(3). No doubt where, as here, there is a unicameral legislature, best practice is that it should be an elected assembly. Jacob LJ observed correctly in the Court of Appeal that [i]f one were starting from scratch, there can be few who would think the new Reform Law of Sark satisfactory [T]o confer by heredity upon an unelected man the positions and powers of the Seigneur would be going too far by the standards of modern democratic governance: para 117. It does not follow, however, that as a matter of Convention law there is an invariable rule that all members must be elected irrespective of their powers and irrespective of the circumstances. The effect of the jurisprudence under Article 3 is that all the circumstances must be considered. It is not a necessary consequence, therefore, that the mere existence of some unelected members contravenes Article 3. In 2007 the Barclay brothers themselves made a representation supporting an option for constitutional change which would have continued the reservation of half of the seats for 16 Tenants elected by the Tenants. Membership of two unelected individuals in the circumstances of this case does not contravene Article 3. The purpose of Article 3 is to ensure that legislation is enacted through genuinely democratic processes. An electorate of about 500 elects 28 voting representatives. Neither the Seigneur nor the Seneschal can vote. It is true that the Seigneur can speak on matters of substance in debate. But the fact that unelected persons may influence the outcome of debate is not undemocratic, especially when the influence is open and transparent. Even if Article 3 did in principle require that even non voting members be elected, then a limitation on that principle by having two prominent non voting members would be well within the margin of appreciation in the light of the constitutional history and the political factors relevant to Sark. The position of the Seigneur dates from 1565, and the position of the Seneschal from 1675. Until 1922 the composition of the Chief Pleas reflected the feudal system in Sark. Between 1922 and 2008, the feudal Tenants dominated the Chief Pleas. Even the introduction in 1922 of a minority of elected Deputies was not easily achieved. At the time this was a very controversial change. The Lieutenant Governor told the Chief Pleas members that, unless they agreed to changes approved by the Privy Council, the Islands administration would be taken over forcibly: Sark Constitutional Review Committee, Report on the Future Constitution of the Island of Sark, January 2002, para 62. The Reform Law eventually introduced universal suffrage for the election of all those members who could vote on legislation. The fact that the Reform Law was enacted by, and therefore with the consent of, the legislature was relied on by the respondents. But that would not save it from incompatibility with the Convention. Some profoundly undemocratic laws have been enacted by democratically elected legislatures. In any event, the Reform Law was enacted by the unreformed Chief Pleas which was certainly not fully democratic. But the respondents are right in their contention that the Chief Pleas support for the Reform Law is a political factor of weight, because it offers confidence that the Reform Law will command the level of respect and legitimacy in the eyes of the people of Sark that is necessary to secure significant constitutional change. Thus even if the membership of the Seigneur and the Seneschal is to be regarded as a limitation on the peoples right to choose the legislature, then the limitation falls well within the margin of appreciation allowed by Article 3. It fulfils all the conditions suggested by the jurisprudence of the Strasbourg Court. It cannot be said to be arbitrary. Because the Seigneur and the Seneschal cannot vote, it cannot be said to be lacking in proportionality. The free expression of the opinion of the people of Sark is not impeded by it. Nor could it be plausibly suggested that their membership impairs the very essence of the peoples right to choose the legislature, or deprives the right of its effectiveness. Nor can it be argued seriously that the Seigneurs right to speak in the Chief Pleas will frustrate the free expression of the opinion of the people in the choice of the legislature. Nor is the conclusion affected by the other powers and responsibilities of the Seigneur and the Seneschal. The Seigneur has the power temporarily to veto Ordinances (but not Laws) under section 38 of the Reform Law. The effect of section 38 is that where an Ordinance has been vetoed then it is laid before the Chief Pleas again not earlier than 10 days later, but no later than 21 days later, whereupon the Chief Pleas will either confirm, or refuse to confirm, the Ordinance. The appellants argue that the existence of this power will inevitably deter the Chief Pleas from adopting a position opposed by the Seigneur, whether because the Chief Pleas wishes to avoid a veto or simply because it prefers to seek the approval, or avoid the disapproval, of the Seigneur. It is true that HM Procureur, the head of the Government legal service in Guernsey, in a letter of April 30, 2004 to the Chairman of the Sark Constitutional Steering Committee, wrote: I regret that I remain opposed to the retention by the Seigneur of any power of veto. In my opinion it is simply unacceptable in the 21st century for an unelected and unappointed citizen, whatever his civic role, or whatever his rank or position in Sark society, to be able to veto legislation passed by the (soon to be more democratically constituted) Chief Pleas, irrespective of whether that veto is absolute or limited. The Seigneur has informed me that he has no strong feelings on the Seigneurial veto. He writes: If it is a possibility that it might cause problems in the future then I am quite happy that it should be abolished The present Seigneurs evidence was that he had never used his power of temporary veto, and that he had no recollection of his predecessor (his grandmother, Dame Sybil Hathaway) having used it. His evidence was that he would only consider using it in, at most, two circumstances: (a) if an Ordinance had not been drafted by the Guernsey Law Officers and he considered that it might be ultra vires; or (b) in what he describes as the unlikely event that an ordinance were passed by a close vote at a meeting of the Chief Pleas at which only a minimal number of members were present and he were to feel that, with a normal turnout, the Ordinance might possibly have been rejected. The suggestion by the appellants that the power might have a chilling effect on the exercise of the power of the democratically elected members to legislate is wholly speculative. It is legitimate to take account of the fact that the power has not been used in modern times, and that the Seigneur has indicated that it will be used in only very limited circumstances. The use of the power if few members are present and voting will tend to ensure that the democratic will is respected by ensuring that sufficient numbers of members are present. That objective could have been achieved by different means (such as a special quorum for the passage of legislation), but the method proposed is proportionate and consistent with Article 3. The unelected House of Lords has power (subject to the Parliament Acts 1911 and 1949) to delay United Kingdom legislation, and that is a power which directly affects the process of the elected chamber. The appellants do not suggest that that power is inconsistent with Article 3. The reason why the power is compatible with Article 3 is that it has its origin in historical and political factors, it is not arbitrary or disproportionate, and it does not affect the essence of democratic rights. Indeed in R (Jackson) v Attorney General [2005] UKHL 56, [2006] 1 AC 262, para 32, Lord Bingham of Cornhill suggested that the use of the Parliament Acts to secure extension of the maximum duration of Parliament by overriding the need for the passage of legislation through the House of Lords might itself be contrary to Article 3. So also in theory Her Majesty could refuse Royal Assent, although by convention it cannot be refused except on the advice of ministers, and the power to refuse it has not been exercised since 1708: see Bradley and Ewing, Constitutional and Administrative Law, 14th ed 2007, p 21. The appellants argue that the delaying power of the House of Lords is not incompatible with Article 3 because the requirements of Article 3 are satisfied if there is one wholly elected legislative chamber. This is unpersuasive. It does not follow from the fact that Article 3 does not regulate the composition of a second chamber that there are no limitations imposed by Article 3 on the powers of the second chamber. If a second chamber had a power permanently to frustrate the will of the democratically elected chamber, and the power was not purely theoretical, like Her Majestys power to withhold Royal Assent, then there would at the least be a case for breach of Article 3. Nor are the appellants assisted by the existence of the Seigneurs other powers. Apart from the power of temporary veto of Ordinances already discussed, the only one which affects proceedings of the Chief Pleas is that the Seigneurs consent is needed for the Seneschal to summon an extraordinary meeting of the Chief Pleas: Reform Law, section 32(2)(b). The Chief Pleas has to meet four times annually: section 32(2). All three methods of summoning extraordinary meetings require the action of an unelected official: (1) at the direction of the Lieutenant Governor; (2) by the Seneschal with the consent of the Seigneur; and (3) with the consent of the Seneschal on the written request of at least nine Conseillers. The mere existence of this power does not undermine effective political democracy. If there were any serious prospect of its being abused, the Chief Pleas could amend the Reform Law. The Seigneurs other powers do not affect the democratic process. They simply underline his status on Sark. He appoints the Seneschal (with the approval of the Lieutenant Governor) and the Deputy Seneschal (in consultation with the Seneschal and with the approval of the Lieutenant Governor), and he appoints the Deputy Seigneur. He appoints the Prvt and the Greffier subject to the approval of the Lieutenant Governor. His consent is required for Guernsey police officers to attend in Sark, and his consent is required for removal of a special constable. The Seigneur is a Trustee, making him responsible, together with the other three Trustees (the Seneschal, Prvt and Greffier) for all Island Properties. It is not suggested that the existence of these powers is contrary to Article 3. So far as the position of the Seneschal is concerned, it is true that it is anomalous that the presiding officer of an elected assembly should be an unelected official appointed by another unelected (and indeed hereditary) official. Etherton LJ was right to say that it is relevant that the members of Chief Pleas have no power to dismiss or suspend the Seneschal, and that the process of applying in writing to the Lieutenant Governor under section 6(2) of the Reform Law for his removal as Seneschal would not be swift or certain. But it does not follow that legislation which provides for an unelected presiding officer is contrary to the duty to allow free elections for the choice of the legislature under Article 3 of the First Protocol. In any event, for essentially the same reasons as apply in the case of the Seigneur, the position of the Seneschal is well within the margin of appreciation, taking into account historical and political factors, and cannot realistically be said to impair the essence of the rights under Article 3 nor to deprive them of effectiveness. It is not suggested that the procedural powers themselves are contrary to Article 3. What is said is that the width of the procedural powers makes it inappropriate that they should be exercised by an unelected person. But they are powers which any presiding officer would be given or would need. It is true that they are capable of being misused, but they could equally be misused by an elected officer. If there were any abuse of the powers, the Chief Pleas could alter the procedural rules under section 36(1) of the Reform Law without the need for any consent. There is nothing in the appellants reliance on the other powers of the Seneschal. He is ex officio the returning officer for elections held under the Reform Law. He is a Trustee of Island property. In both capacities he must act according to law, and in the latter capacity on behalf and subject to the direction of the Chief Pleas: section 57. The right to stand for election The appellants do not suggest that Article 3 of the First Protocol itself gives resident aliens a right to stand for election. The primary way it is put in relation to Article 3 is that the prohibition on aliens from standing for election to the Chief Pleas advances no legitimate aim and is disproportionate, and therefore contrary to Article 3 of the First Protocol, given that (1) resident aliens may vote for elections to the Chief Pleas; and (2) the Law does not identify as eligible to stand those with sufficiently continuous or close links to, or a stake in Sark. Commonwealth citizens, British protected persons and citizens of the Republic of Ireland may stand for election to the Chief Pleas, so long as they are resident in Sark or own property there, even if they do not live there. The appellants alternative case is that if citizens have the right to vote, then the prohibition on aliens (or, perhaps, resident aliens) standing for election to the Chief Pleas is unjustifiable discrimination on grounds of nationality contrary to Article 3 of the First Protocol read with Article 14 of the Convention. The principal answer to the appellants case is that there are many decisions of the Strasbourg Court which proceed on the basis that the rights under Article 3 belong to citizens, and therefore not to aliens. In a passage in Mathieu Mohin at (1988) 10 EHRRI, para 54 repeated or referred to in many subsequent judgments, the Court referred to the principle of equality of treatment of all citizens in the exercise of their right to vote and their right to stand for election. For example, in Kovach v Ukraine [2008] ECHR 125, para 49, the Court said in the same context: In this field, Contracting States enjoy a wide margin of appreciation, provided that they ensure the equality of treatment for all citizens. In Makuc v Slovenia [2007] ECHR 523, para 206, the Court said The Court recalls that this provision guarantees individual rights, including the right to vote and to stand for election. However, these rights are not absolute but rather subject to limitations, such as citizenship citing Hirst v United Kingdom (No 2) (2006) 42 EHRR 41. The Guidelines on Elections of the Venice Commission (referred to above, para 68) said, in the context of conditions for voting and standing for election, that a nationality requirement may apply, but that it would be advisable for foreigners to be allowed to vote in local elections after a certain period of residence: Guideline 1.1.b. The Explanatory Report said (para 6.b c) that most countries legislation laid down a nationality requirement, but that the right to vote and/or the right to stand for election might be subject to residence requirements. The International Covenant on Civil and Political Rights (1966) is consistent with this interpretation of the European Convention. Article 25 grants every citizen, without any of the distinctions in Article 2 (race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status) and without unreasonable restrictions the right and the opportunity to vote and to be elected at genuine periodic elections which shall be by universal and equal suffrage . In Melnychenko v Ukraine (2006) 42 EHRR 784 the Court considered whether a residence requirement could be imposed before a refugee from the Ukraine living in the United States could stand for election to the Parliament. As mentioned above (para 61), the Court looked at the practice of some 40 Council of Europe States, all of which had a nationality requirement together with (in about half of the States) a residence requirement for participation in elections by expatriate citizens as regards at least one chamber. It treated the International Covenant as expressing the relevant international law on the subject. The Court accepted that a residence requirement was compatible with Article 3, but concluded that the electoral commissions decision that the applicant was not resident was unlawful. On the hearing of this appeal the parties did not provide any comparative material on the practice of the Contracting States, but the website of the Inter Parliamentary Union has a table of the conditions for voting and for standing for election, which confirms what was said in Melnychenko v Ukraine. There does not appear to be a single member of the Council of Europe which does not impose a citizenship requirement (in some cases coupled with a residence requirement). Py v France (2005) 42 EHRR 548 does not justify the appellants argument that the Court has implicitly recognised that a person who was not a citizen was within the scope of Article 3 of the First Protocol. New Caledonia was a French overseas territory, and as part of its move towards self determination the French Constitution was amended to provide for a referendum on self determination in the territory. A French law provided that persons resident in New Caledonia since 1988 would have the right to vote in the referendum. There was an identical qualification for obtaining citizenship. A French national was appointed to a university post in New Caledonia in 1995, and claimed the right to vote in the referendum although he had not been resident there since 1988. It was held that the residence requirement pursued a legitimate aim and that although a ten year requirement might have seemed disproportionate, local requirements (Article 63, now Article 56) justified the restrictions. There was therefore no breach of Article 3 of the First Protocol (or of Article 14 of the Convention). This is not a decision that non citizens have a right to vote or stand for election. It was simply a decision that the length of residence required by the French law as a qualification for voting in the referendum was justified by local requirements. In view of New Caledonias transitional status the right to vote was given to the population defined by reference to 10 years residence, which was identical to the citizenship requirement. The Court specifically referred (at [46]) to the need to ensure citizen participation and knowledge in framing rules on voting eligibility. Consequently both in international law, as reflected in the International Covenant and in the practice of States, and under the European Convention, as reflected in the decisions of the Strasbourg Court and in the practice of the members of the Council of Europe, it is citizens, and not non resident aliens, who have the right to vote and stand for election. There may be some exceptional cases, for example where citizenship is withheld on, for example, linguistic grounds from communities who have been settled on the territory of a State for several generations: see Venice Commission Explanatory Report, para 1.16b. But the general rule is clear. Sark is not an entity in international law and has no separate citizenship. It is entitled to restrict the right to stand for election to persons who are entitled to vote (which requires 12 months residence or registration in the rating register as the possessor of land) and who are not aliens within the meaning of United Kingdom law, where an alien is a person who is neither a Commonwealth citizen nor a British protected person nor a citizen of the Republic of Ireland: British Nationality Act 1981, section 50(1). Article 3 does not require a justification for qualifications which are stricter for standing for election than for voting. As already indicated, it is well established that stricter requirements may be imposed on the eligibility to stand for election to parliament, as distinguished from voting eligibility: Melnychenko v Ukraine (2006) 42 EHRR 39, para 57; Zdanoka vs Latvia (2007) 45 EHRR 478, para 106 (Grand Chamber). Historical and political factors have determined the definition of alien in United Kingdom law. The concept of Commonwealth citizenship is of course very wide, but eligibility is limited to those with a genuine connection with Sark in the form of residence or ownership of property. It is clear that in the light of those factors and the breadth of the margin of appreciation, the exclusion of aliens from eligibility to stand for election is justifiable. Articles 14 and 16 of the Convention Nor does Article 14 assist the appellants. Article 14 provides that the enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground The crucial element under Article 14 is that the discrimination must be in the enjoyment of the rights under the Convention. The applicant must have a Convention right before he can complain of discrimination: Moustaquim vs Belgium (1991) 13 EHRR 802, and contrast Gaygusuz vs Austria (1996) 23 EHRR 364. As the Court said in, for example, Aziz v Cyprus (2005) 41 EHRR 164, paras 35 36: The Court further observes that Article 14 has no independent existence, but plays an important role by complementing the other provisions of the Convention and the Protocols, since it protects individuals, placed in similar situations, from any discrimination in the enjoyment of the rights set forth in those other provisions. Where a substantive Article of the Convention has been invoked, both on its own and together with Article 14, and a separate breach has been found of the substantive Article, it is not generally necessary for the Court to consider the case under Article 14 also, though the position is otherwise if a clear inequality of treatment in the enjoyment of the right in question is a fundamental aspect of the case. Consequently, where there is a breach of Article 3, it has not normally been necessary to deal with Article 14: e.g. Matthews v United Kingdom (1999) 28 EHRR 361, para 68; Hirst v United Kingdom (No 2) (2006) 42 EHRR 41, para 87; Tanase v Moldova [2008] ECHR 1468, para 116. Podkolzina v Latvia [2002] ECHR 405, para 42; Sadak v Turkey (No 2) (2003) 36 EHRR 23, para 47; Melnychenko v Ukraine (2006) 42 EHRR 784, para 71. So also where the claim under Article 3 is dismissed and the complaint under Article 14 is essentially the same, it will not be necessary to consider Article 14: Mathieu Mohin (1988) 10 EHRRI, para 59; Sukhovetskyy v Ukraine (2007) 44 EHRR 57, para 76. Aziz v Cyprus (2005) 41 EHRR 164 is an example of a case where there was a separate breach of Article 14, because the applicant was excluded from the electoral register because he was a member of the Turkish Cypriot community. The complaint under Article 14 was not a mere restatement of the applicants complaint under Article 3 of the First Protocol. The applicant was a Cypriot national, resident in the Government controlled area of Cyprus. The difference in treatment in that case resulted from the very fact that the applicant was a Turkish Cypriot. The present case is not a case of discrimination in this sense. There was some discussion in argument of the relevance of Article 16 of the Convention to the present appeal. It provides that nothing in Articles 10, 11 and 14 shall be regarded as preventing the High Contracting Parties from imposing restrictions on the political activity of aliens. Article 16 is of very limited scope. It applies only to Articles 10, 11 and 14, and has been held not to apply to non nationals who are citizens of EU countries: Piermont v France (1995) 20 EHRR 301. Because aliens do not have a right under Article 3 of the First Protocol to stand for election, there is no scope for the operation of Article 16. The applicability of the Human Rights Act 1998 The respondents accept that to the extent that the Reform Law breaches Convention rights, then the appellants are entitled to relief in these proceedings. That is because the respondents expressly advised Her Majesty to approve the Reform Law on the ground that it did not involve any breach of the obligations of the United Kingdom under the Convention: R v Secretary of State for the Home Department, Ex p Launder [1997] 1 WLR 839, 867, per Lord Hope of Craighead. Consequently the decision of the Committee for the Affairs of Jersey and Guernsey and the Order in Council are subject to judicial review: R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (no. 2) [2009] 1 AC 453, para 35 (Lord Hoffmann) and para 105 (Lord Rodger of Earlsferry). The Human Rights Act 1998 contains no provision as to its territorial scope, except that section 22(6) provides that it extends to Northern Ireland. As already mentioned, amendments to extend the Act to the Channel Islands and the Isle of Man were rejected or withdrawn during the passage of the Act. The appellants contend that the courts of this country also have the power and the duty to grant relief on the basis that the respondents were acting as public authorities for the purposes of section 6 of the Human Rights Act 1998 when recommending the Order in Council by which the Reform Law was given Royal Assent. The respondents position is that the Act does not apply because (a) it was not intended to apply to obligations of the United Kingdom assumed under Article 56 (formerly Article 63) of the Convention, and Article 4 of the First Protocol, in respect of compliance with the Convention in territories for the international relations of which it is responsible; and (b) in any event the respondents were not acting as public authorities of the United Kingdom for the purposes of section 6 of the Act, but were acting to advise Her Majesty in respect of her role as sovereign of the Bailiwick of Guernsey. Wyn Williams J accepted both points: [2008] 3 WLR 867, paras 89 96. The Court of Appeal agreed with Wyn Williams J on the first point, but disagreed on the second point: Pill LJ: [2009] 2 WLR 1205, paras 106 109. The appellants accepted in the hearing before the Appellate Committee that the point was academic, but drew attention to the fact that the House of Lords was prepared to address such points if they were of general importance: R v Secretary of State for the Home Department, Ex p Salem [1999] 1 AC 450, 456 457. In R (Quark Fishing Ltd) v Secretary of State for Foreign and Commonwealth Affairs [2006] 1 AC 529 the Secretary of State had instructed the Commissioner of South Georgia to issue fishing licences to two specified vessels, which had the effect that the claimants vessel did not receive a licence. The claimant sought judicial review and damages for deprivation of a possession under Article 1 of the First Protocol. The Convention had been extended to South Georgia and the South Sandwich Islands, but not the First Protocol. The instruction was quashed on the ground of procedural unfairness: [2002] EWCA Civ 1409. The question before the House of Lords was whether the claimant could sue for damages under sections 6 and 7 of the Human Rights Act 1998. As in the present appeal, this was taken to involve two issues, failure on either of which was fatal to the claim. The first issue was whether the instruction had been issued by the Crown in right of the United Kingdom, or in right of South Georgia and the Sandwich Islands. In the latter event the Secretary of State acting on behalf of HM the Queen would not be a United Kingdom public authority for the purposes of section 6. The second issue was whether the claimant had established breach of a Convention right for the purposes of section 7 of the Human Rights Act. On the first issue it was held by a majority that the instruction had been given by the Crown acting through the Secretary of State in the context of South Georgia and the South Sandwich Islands, and Secretary of State had acted on behalf of HM the Queen in right of that territory and not of the United Kingdom. For the majority the question was the constitutional standing of the instruction: at para 19, per Lord Bingham, para 64, per Lord Hoffmann, and para 79, per Lord Hope. The argument for the claimant that the instruction was given in the interests of the United Kingdom was rejected on the basis that whether the Secretary of States decision was motivated by the wider political and diplomatic interests of the United Kingdom was unsuitable for judicial determination (at para 18, per Lord Bingham), the court was neither concerned nor equipped to decide in whose interests the act was done (at para 64, per Lord Hoffmann); or that, although the question might be justiciable, for it to be explored would give rise to great uncertainty; it was irrelevant because the question was simply in what capacity the instruction was given by the Crown: at paras 78 79, per Lord Hope. Lord Nicholls of Birkenhead and Baroness Hale, dissenting, considered that the capacity in which the Crown acted was irrelevant: paras 45 46, 94 95. Baroness Hale of Richmond said that to treat capacity as decisive, when the legality of the instruction could be raised in United Kingdom courts, and when the Secretary of State was answerable, if at all, to the United Kingdom Parliament, would be a surrender of substance to form. The authority of the majority was weakened when in R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (no. 2) [2009] 1 AC 453, para 46 Lord Hoffmann said that, in the light of Finnis, Common Law Constraints: Whose Common Good Counts? (2008) Oxford Legal Studies Research Paper 10/2008 (criticising the decision of the House of Lords in Quark and of the Court of Appeal in Bancoult [2008] QB 365), he thought that Lord Nicholls was right. Since it is agreed that this issue does not arise on the present appeal, it is not necessary to say more than that, as matters now stand, the approach laid down by the then majority of the House of Lords leads to the conclusion that the decisions of the Committee for the Affairs of Jersey and Guernsey and the Privy Council were taken as part of the constitutional machinery of the Bailiwick of Guernsey and of Sark for the approval and enactment of Laws in Sark, and that the fact that the decisions were taken by Ministers of the Crown who took into account the international obligations of the United Kingdom is irrelevant. It would be quite wrong for the approach in Quark to be revisited on an appeal (particularly with a panel of five) in which it does not arise, and in which it is not argued that Quark was wrongly decided and ought to be reconsidered. The second issue in Quark was whether the claimant had established breach of a Convention right for the purposes of section 7 of the Human Rights Act. Lord Nicholls considered that, even if the First Protocol had been extended to South Georgia and the South Sandwich Islands, the claimants would not have had a Convention right on which they claim damages under the Human Rights Act. He said at para 36: The Human Rights Act is a United Kingdom statute. The Act is expressed to apply to Northern Ireland: section 22(6). It is not expressed to apply elsewhere in any relevant respect. What, then, of Convention obligations assumed by the United Kingdom in respect of its overseas territories by making a declaration under article 56? In my view the rights brought home by the Act do not include Convention rights arising from these extended obligations assumed by the United Kingdom in respect of its overseas territories. I can see no warrant for interpreting the Act as having such an extended territorial reach. If the United Kingdom notifies the Secretary General of the European Council that the Convention shall apply to one of its overseas territories, the United Kingdom thenceforth assumes in respect of that territory a treaty obligation in respect of the rights and freedoms set out in the Convention. But such a notification does not extend the reach of sections 6 and 7 of the Act. The position is the same in respect of protocols Lord Hoffmann came to the same view on this point: The Act is concerned only with the Convention as it applies to the United Kingdom and not by extension to other territories: para 62. Lord Hope emphasised that the United Kingdom government would not be answerable in Strasbourg if the international obligation had not been extended to the overseas territory, but he said that he agreed with Lord Nicholls: para 93. Lord Bingham expressed no view on this point: para 26. Baroness Hale left the question open: para 98. Lord Hoffmann in R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (no. 2) [2009] 1 AC 453, para 48, reiterated his view, but that too was a case in which the Convention had not been extended to the overseas territory (the British Indian Ocean Territory). In R (Al Skeini) vs Secretary of State for Defence [2008] 1 AC 153 Lord Bingham said, at para 20, that it was not clear that the view of Lord Nicholls in Quark commanded majority support. But Lord Brown (with whom Lord Carswell agreed: para 96) endorsed Lord Nicholls approach. He said (at para 134): . there is a distinction between rights arising under the Convention and rights created by the Act by reference to the Convention. A plain illustration of this arises from the temporal limitations imposed by the Act . Another illustration is the Act's non applicability in article 56 cases. Consider R (Quark Fishing Ltd) v Secretary of State for Foreign and Commonwealth Affairs . Even had the UK extended article 1 of the First Protocol to [South Georgia and the South Sandwich Islands], no claim would have been available against the Secretary of State under the Act although the UK would clearly have been liable internationally for any breach. It is for the dependent territorys own legislation to give effect to Convention rights, just as for Jersey, Guernsey and the Isle of Man. I would therefore dismiss the appeal. This is a case, by contrast with those in which the point has been canvassed, where the relevant Convention obligation has been extended to a dependency. But this point does not arise for decision on this appeal for the principal reason that it was conceded that there was jurisdiction to determine the lawfulness of the decisions of the Committee and the Privy Council. It might conceivably have arisen on the question of remedy, but that too would not arise on the view of the merits expressed in this judgment. In addition there would have been a separate ground for the non applicability of the Human Rights Act, namely the capacity in which the decisions were taken. Consequently it would also be wrong for the question whether the claimant had established breach of a Convention right to be decided on an appeal where it does not arise and would be an academic question. LORD HOPE I am in full agreement with the opinion of Lord Collins. I wish to add a few comments on two points only. First, while I agree that some of what Dr Slivnik (who appeared in person) said in his brief address was not relevant to the outcome of this appeal, he did bring vividly to life what it means to live in a small island community. He said that Sark works so well because of its small size. That was why it was possible to achieve such a high degree of democracy in such a small society, where everyone knows everyone else. His experience since coming to live there was that it was possible for someone to make a much greater contribution to public life than he had found anywhere else. It was a place where one could go round and talk to people. One could have much greater direct access to the legislators. This led to two considerations which he wished to stress. The first was that it would be in conflict with democracy in a small society to vest too much power in individuals. The powers that the Reform Law gave to the Seneschal, the highest paid official on the island, were disproportionate. The second was that, as membership of the Chief Pleas was unpaid, there was a very real problem in attracting able and willing candidates for election. The fact that so few tenants had expressed an interest in standing tended to reinforce his perception that the Seneschal had too much power. He himself was keen to volunteer for public life. But he was prevented from doing so because, as an alien, he was not entitled to stand for election. He said that the greatest prospect in achieving reforms that were truly in the best interests of democracy lay in quashing the Reform Law, so that the 1951 Law could be restored and more time given to the process of reform. The answer to these points lies, as Lord Collins has explained so carefully, in the principles that are to be derived from Article 3 of the First Protocol. As he has said, electoral rules have to be looked at in the round and in the light of each states own historical and political factors. Taken in the round, having regard to the things that the Seneschal can and cannot do and to the potential means of addressing any abuse, the powers that are given to him are well within the margin of appreciation allowed by that article. Dr Slivniks frustration at not being eligible for election is readily understandable. But there is ample authority for the proposition that the Chief Pleas decision granting the right to stand for elections only to those who are citizens of Sark was well within that margin of appreciation also. I agree that the appeal must be dismissed. Second, I wish to clear up any uncertainty which my remarks in R (Quark Fishing Ltd) v Secretary of State for Foreign and Commonwealth Affairs [2006] 1 AC 529, paras 92 93 may have caused; see paras 109 110 above. As I stated in para 93 of my opinion in that case, I was in full agreement with what Lord Nicholls of Birkenhead said about the territorial scope of the Human Rights Act 1998. This extended to para 36 of his opinion, where he said that notification by the United Kingdom that the Convention was to apply to its overseas territories did not extend the reach of the Act to those territories. I would respectfully endorse the observation by Pill LJ in the Court of Appeal [2009] 2 WLR 1205, para 105 that my own remarks should not be interpreted as meaning that notification attracted the application of the Act. What I was seeking to show, as an additional reason for agreeing with Lord Nicholls, was that notification under article 56 or, as the case may be, article 4 of the First Protocol was a pre condition for a consideration of that issue and that on the facts of that case this condition could not be satisfied. LORD SCOTT I am in full agreement with the reasons Lord Collins gives for dismissing this appeal. I can add nothing useful and for the reasons he gives I would do likewise. LORD BROWN I have read Lord Collins judgment and regard it as convincing and definitive on all the issues we have to decide. With regard to the applicability of the Human Rights Act 1998, to my mind the most interesting question debated before us, tempted though I have been to address it, I am persuaded by Lord Collins (see paras 100 111 of his judgment) that it would not be right to succumb. LORD NEUBERGER I have read the magisterial judgment of Lord Collins and agree with it. Accordingly, I too would dismiss this appeal. |
On 10 June 2010 the appellants, William Hugh Lauchlan and Charles Bernard ONeill, were found guilty in the High Court of Justiciary at Glasgow of the murder of Mrs Allison McGarrigle between 21 June and 1 September 1997, and of a subsequent attempt to defeat the ends of justice by disposing of her body at sea. The charges of which they were convicted in that trial had been separated from a number of charges on the same indictment of or relating to sexual offences against children. Their trial on the sexual offence charges took place before Lord Pentland between 26 April and 12 May 2010. Their trial on the murder charges, which is the trial to which this appeal relates, took place (between 17 May and 10 June 2010) before the same judge but with a different jury. The appellants were sentenced to life imprisonment for the murder, with punishment parts of 26 and 30 years respectively, and to concurrent sentences of eight years imprisonment for attempting to defeat the ends of justice. The appellants both appealed against their convictions at the second trial and against their sentences. Lauchlan was granted leave to appeal against his conviction for murder by the sifting judges, but this was restricted to two grounds alleging errors by the trial judge. He was also given leave to appeal against sentence. ONeill too was granted leave to appeal against sentence, but the sifting judges refused him leave to appeal against his conviction for murder. The appellants applied under section 107(8) of the Criminal Procedure (Scotland) Act 1995 (the 1995 Act) for leave to appeal against their convictions for murder on certain grounds which the sifting judges had held were unarguable. On 8 February 2012 Lauchlan was refused leave to appeal on those grounds by the Appeal Court. ONeill was given leave to appeal on one ground only which alleged an error by the trial judge: [2012] HCJAC 20. The appellants then applied for leave to appeal to this court under paragraph 13 of Schedule 6 to the Scotland Act 1998 on some of the grounds on which they were refused leave on 8 February 2012. On 19 April 2012 the Appeal Court (Lord Justice Clerk Gill, Lord Hodge and Lord McEwan) gave both appellants leave to appeal on a ground alleging undue delay. It gave ONeill leave on another ground alleging apparent bias on the part of the trial judge arising out of things that had happened in the presence of the jury at the end of the first trial: [2012] HCJAC 51. The trial judge had been shown a list of the appellants previous convictions after they had been found guilty of the sexual offence charges, and he then made a comment about their character, having regard to their records and the nature of the offences of which they had been convicted. Jurisdiction This court has jurisdiction to hear appeals in relation to criminal proceedings in the High Court of Justiciary under Part II of Schedule 6 to the Scotland Act 1998 (the 1998 Act). The opening paragraph of Part II is in these terms: 3. This Part of this Schedule applies in relation to devolution issues in proceedings in Scotland. The expression devolution issue is defined in paragraph 1 of Schedule 6, which provides: 1. In this Schedule devolution issue means (a) a question whether an Act of the Scottish Parliament or any provision of an Act of the Scottish Parliament is within the legislative competence of the Parliament, (b) a question whether any function (being a function which any person has purported, or is proposing, to exercise) is a function of the Scottish Ministers, the First Minister or the Lord Advocate, (c) a question whether the purported or proposed exercise of a function by a member of the Scottish Government is, or would be, within devolved competence, (d) a question whether a purported or proposed exercise of a function by a member of the Scottish Government is, or would be, incompatible with any of the Convention rights or with EU law, (e) a question whether a failure to act by a member of the Scottish Government is incompatible with any of the Convention rights or with EU law, (f) any other question about whether a function is exercisable within devolved competence or in or as regards Scotland and any other question arising by virtue of this Act about reserved matters. The Scotland Act 2012 (the 2012 Act) made a number of important changes to this courts jurisdiction to deal with devolution issues under Schedule 6 to the 1998 Act. They came into effect on 22 April 2013: The Scotland Act 2012 (Commencement No 3) Order 2013 (2013/6 (C1). This is also the relevant date for the purposes of The Scotland Act 2012 (Transitional and Consequential Provisions) Order 2013 (2013/7 (S1)) (the 2013 Order): see article 1(2) of that Order. This appeal was heard one week later on 29 and 30 April 2013. Section 36(4) of the 2012 Act provides: In paragraph 1 of Schedule 6 (devolution issues), after sub paragraph (f) insert But a question arising in criminal proceedings in Scotland that would, apart from this paragraph, be a devolution issue is not a devolution issue if (however formulated) it relates to the compatibility with any of the Convention rights or with EU law of (a) an Act of the Scottish Parliament or any provision of an Act of the Scottish Parliament, (b) a function, (c) the purported or proposed exercise of a function, (d) a failure to act. The effect of the exclusion of questions of the kind referred in section 36(4) of the 2012 Act from the list of devolution issues in paragraph 1 of Schedule 6 to the 1998 Act is that these questions must now be dealt with as compatibility issues under the 1995 Act. Section 288ZA(2), which was inserted into the 1995 Act by section 34(3) of the 2012 Act, provides that compatibility issue means a question, arising in criminal proceedings, as to (a) whether a public authority has acted (or proposes to act) (i) in a way which is made unlawful by section 6(1) of the Human Rights Act 1998, or (ii) in a way which is incompatible with EU law, or (b) whether an Act of the Scottish Parliament or any provision of an Act of the Scottish Parliament is incompatible with any of the Convention rights or with EU law. Section 288ZB(4), which was inserted into the 1995 Act by section 35 of the 2012 Act, provides for references of compatibility issues to the Supreme Court by a court consisting of two or more judges of the High Court of Justiciary. Subsection (6) of that section provides that, on a reference to it under that section, the powers of the Supreme Court are exercisable only for the purpose of determining the compatibility issue. Subsection (7) provides that, when it has determined a compatibility issue on a reference under that section, the Supreme Court must remit the proceedings to the High Court. Section 288AA, which was inserted into the 1995 Act by section 36(6) of the 2012 Act, provides for appeals to the Supreme Court. It contains the same directions in subsections (2) and (3) as to the way this courts powers are to be exercised in the case of appeals as those in subsections (6) and (7) of section 288ZB which relate to references. Article 2 of the 2013 Order provides: (1) A convertible devolution issue is a question arising in criminal proceedings before the relevant date which (a) is a devolution issue; (b) would have been a compatibility issue had it arisen on or after that date; and (c) has not been finally determined before the relevant date. (2) But a devolution issue arising in criminal proceedings before the relevant date is not a convertible devolution issue if (a) the issue has been referred, or a determination of the issue has been appealed, to the Supreme Court under Schedule 6 to the 1998 Act; and (b) the hearing of the reference or appeal commences before the relevant date. Article 3(1) provides that, subject to qualifications which do not apply in this case, a convertible devolution issue becomes a compatibility issue for all purposes on the relevant date. The allegation of undue delay raised a devolution issue within the meaning of paragraph 1(d) of Schedule 6 to the 1998 Act. It arose in criminal proceedings before 22 April 2013, it satisfied the other tests set out in article 2(1) of the 2013 Order and the hearing of the appeal did not commence before 22 April 2013. So it was a convertible devolution issue, and it has now become a compatibility issue by virtue of article 3(1). As it has come before the Supreme Court as an appeal against the determination of that issue by the Appeal Court, it is to be treated as an appeal under section 288AA(1) of the 1995 Act: 2013 Order, articles 4(2) and 7(2). So the powers of this court must be exercised in the manner provided for by section 288AA(2) and (3) of the 1995 Act. The allegation of apparent bias was the subject of an amended note of appeal which had been lodged on ONeills behalf before the hearing before the Appeal Court of his application under section 107(8) of the 1995 Act. It made no mention of any act on the part of the Lord Advocate, so it does not appear to have raised a devolution issue at that stage. But it was submitted on ONeills behalf by his solicitor advocate when he was applying for leave to appeal to this court that this allegation did raise a devolution issue: [2012] HCJAC 51. Lord Hodge explained the position in paras 6 and 7 of the Appeal Courts opinion: 6. In additional ground 15 of his grounds of appeal Mr ONeill complained about the comments of the trial judge, Lord Pentland, at the end of the first phase of the trial. We expressed our views on this ground in paragraphs 81 to 88 of this courts opinions. Mr Carroll submitted that the challenge raised a devolution issue as the Lord Advocate had persevered with the prosecution in the face of what was evidence of an unfair trial. 7. For the reasons which we stated in those paragraphs we did not think that the points which Mr Carroll raised were arguable. We adhere to that view. But we recognise that the splitting of the trial into two phases before two juries and the resulting presentation of previous convictions and the judges remarks at the end of the first phase were very unusual circumstances. We are satisfied that it is appropriate to give leave to appeal on this ground. The way the argument on this ground of appeal proceeded in the Appeal Court suggests that, as it was not presented as a devolution issue at the stage of the application under section 107(8) of the 1995 Act, there has been no determination of that issue by that court against which there could have been an appeal under paragraph 13 of Schedule 6 to the Scotland Act 1998. But the Appeal Court had power under paragraph 11 of the Schedule to refer any devolution issue which arose in proceedings before it to this court, and that is what seems to have happened in this case. By the same process of reasoning as applies to the allegation of undue delay, this issue was a convertible devolution issue and is now a compatibility issue. This means that this court has jurisdiction to consider it, and that its powers must be exercised in the manner provided for by section 288ZB(6) and (7) of the 1998 Act. Undue delay (a) the issue The period of time relied on in this case extends from 17 September 1998, when the appellants were detained under section 14 of the 1995 Act on suspicion of conspiracy to murder, to 10 June 2010 when they were convicted. It was not until 5 April 2005 that the appellants appeared on petition at Kilmarnock Sheriff Court on charges which ultimately formed the basis for the charges in the indictment of which they were convicted. There was a further period until 10 September 2008 when the indictment was served on them, but the focus of attention at this stage is on that which occurred between 17 September 1998 and 5 April 2005. The question which this court has been asked to decide requires it to identify the right starting point for the purposes of the reasonable time guarantee in article 6(1) of the European Convention on Human Rights. The issue was focussed by Lord Hodge in the Appeal Courts opinion of 19 April 2012 in this way: 2. Mr McVicar on behalf of Mr Lauchlan sought leave to argue before the Supreme Court that the decision of that court in Ambrose v Harris (2011 SLT 1005) had the result that the starting point in the assessment of reasonable time under article 6 of the European Convention on Human Rights (ECHR) was not, as the Appeal Court had held in ONeill v HM Advocate (2010 SCCR 357), the stage when an accused person appeared on petition but the earlier stage when the accused was interviewed by the police under caution in the exercise of their powers under section 14 of the 1995 Act. Mr Carroll on behalf of Mr ONeill adopted Mr McVicars submissions. 3. We have decided to grant leave to appeal on this ground. We set out our reasoning in paragraphs 25 29 of this courts opinions but recognise that the issue raised is one which arises from statements in a decision of the Supreme Court on which that court may wish to provide further guidance. The parties agree that the issue can be formulated in this way: whether for the purposes of their right to a trial within a reasonable time in terms of article 6(1) of the European Convention on Human Rights the appellants were charged on 17 September 1998. That, say the appellants, is the date that should be taken to be the starting point. The Crown contends, on the other hand, that the correct starting point is 5 April 2005. It was suggested by the appellants in the statement of facts and issues that this court should also say whether or not the period between 17 September 1998 and 10 June 2010 when the appellants were convicted constituted an unreasonable delay in the process of determination of the charges against them. But it was accepted during the hearing of the oral argument that this issue would raise questions of fact which are best left for determination by the Appeal Court. (b) the facts The deceased, Mrs Allison McGarrigle, had a son named Robert who was subject to a residential supervision requirement under the Social Work (Scotland) Act 1968. It required him to live during the week with his father in Kilmacolm but he was permitted to visit his mother, who was divorced from his father, during the day on Saturdays. On Saturday 14 June 1997 Robert did not return to his fathers address after visiting his mother. Instead he and his mother went to Largs, where they met the appellants and went to live with them in a property which they were then occupying in that town. On or about 20 June 1997 a drinking session took place there at which a number of people including the appellants, Mrs McGarrigle and Robert were present. Mrs McGarrigle was no longer there the following morning, and she was never seen by Robert again. On 16 February 1998 she was reported to the police as a missing person by her ex husband. The exact date when she was last seen was marked as unknown, but it was noted that she had cashed a benefit cheque in Rothesay on 12 June 1997. By September 1998 the police enquiry into Mrs McGarrigles disappearance was being referred to by the Procurator Fiscal at Kilmarnock as a disappearance in suspicious circumstances, and by the Head of the Crown Office Appeals Unit and Crown Counsel as a murder enquiry. In the meantime, on 17 June 1998, the appellants were convicted of a number of sexual offences including offences against Robert McGarrigle. These offences had been committed between March 1993 and 27 July 1996 when Robert and his mother were living close to where the appellants were then living in Rothesay. On 18 August 1998 the appellants were sentenced in respect of these convictions to periods of 6 years and 8 years imprisonment respectively and became subject to notification requirements under the Sex Offenders Act 1997. They were taken to Peterhead Prison to serve their sentences. On 14 September 1998 the Procurator Fiscal at Kilmarnock wrote to the Governor of Peterhead Prison requesting that the appellants be released into the custody of the police for questioning. On 17 September 1998 they were taken from custody and detained by officers of Grampian Police under section 14 of the 1995 Act on suspicion, as that section requires, of having committed an offence punishable by imprisonment. The offence which they were suspected of having committed was conspiracy to murder. They were taken to a police station in Aberdeen where they were each questioned separately by two police officers. Lauchlan was questioned from 11.14 to 16.45 hours, with breaks between 11.51 and 12.25 hours and 15.18 and 16.01 hours. He was cautioned at the start of his interview. He made it clear when it began that, on the advice of his solicitor, he would not be answering any questions that were put to him, and he maintained that attitude throughout what was a long and unproductive interview. One or two passages are, however, of interest. During the early stages of the interview the police restricted themselves to asking a series of questions. Lauchlan remained silent in response to all of them. He was then told (Appendix 1, p 492, MS p 820): What youve got to realize here is this is not going to go away we are not going to go away. Shortly afterwards Lauchlan broke his silence and this conversation took place (Appendix 1, p 497, MS p 825): WL Look if youre going to charge me with something charge me Ive had enough. DC2 I didnt mention, I have not mentioned charging you with anything. WL If not give this up. DC2 No Im interviewing you William okay. I intend to carry out the interview with or without your co operation I intend to carry out the interview. As the interview went on the questioning became more direct. Lauchlan was asked (Appendix p 512, MS p 840): Did you murder Allison McGarrigle? He did not respond. This question was then put to him (Appendix p 515, MS p 843): DC2 I will ask you for a final time with the weight of the evidence against you and your friend knowing something about the disappearance of Allison McGarrigle will you help us to find her remains? There was no response, so the question was put to him again: DC2 Im not asking you at this stage if you killed her. Im not asking you at this stage if you know who killed her. Im asking you at this stage whether or not you would consider helping us to find her remains. Its a separate question. Are you? .Are you prepared to help us to find Allison McGarrigle yes or no? Answer that one question Ill put to you . Ill finish the interview and put the tape off. So you dont, youre not interested in helping us. Canny go any further than that Wullie As the interview drew to a close one further attempt was made to elicit a response (Appendix p 526, MS p 854): DC1 . If you did not have anything to do with Allison McGarrigles death you have no reason not to speak to us, would you agree wi that? Youre not, your refusal to speak to us. The only reason I can think of is that you have something to do with her death. or that someone very close to you had something to do with her death and that out of loyalty you will not tell us. Which is it? Which is it William? Unless you can come up with another reason why you should refuse to speak to us about it. Its got to be one of those two. So which is it? Convince me otherwise. As the interview was about to end these final questions were put (Appendix p 528, MS p 856): DC2 Did you murder Allison McGarrigle? Did you? DC1 Did you kill Allison McGarrigle? Were you present when someone else did? Lauchlan did not answer them. He remained silent. ONeill was questioned from 10.53 to 16.31 hours, with a break from 13.02 to 14.19 hours. He was cautioned at the start of the interview. He gave his name and age and said that he was unemployed. But he refused to answer any further questions, most of which were met by the words No comment. Several minutes after the opening stage of the questioning there was this exchange (Appendix p 534, MS p 862): charging me and taking me to court. O/N Youre going to charge me int you? Youd be as well just DC1 Charlie, Charlie, were here, weve explained to you what were doing and were speaking to you right. Its as simple as that. I am hoping that you might find it within yourself to give us some assistance, right. Were no up here to crucify Charlie ONeill. As the questioning went on there was no change in ONeills attitude. In the course of a long narrative of the information that was in the hands of the police he was told (Appendix p 578, MS p 906): Im asking you quite bluntly Allison McGarrigles dead, youre involved in her death, youre the only person that can say how much or how little involvement you have but from the information that we have here there is no doubt whatsoever that you are involved in her death. Im giving you the opportunity sitting here in this room the noo tae say tae me, this is what happened, this is how it happened, it may even be why it happened ah dont know and here is what you need to know. Because its no going away Charlie, itll never go away. Itll never go away. Sometime later he was asked (Appendix p 597, MS p 925): Did you kill her Charlie? Was she just too much bother for you? He made no comment in reply. In the course of the next question he was told directly that the reason why he would not answer questions was quite simple: Because you killed her. At the end of the interview one of the interviewing officers said (Appendix p 602, MS p 930): Right what well do at the minute Charlie is well stop the interview. Well need to go and seek some advice. The appellants were not arrested or charged at the conclusion of their interviews, but were returned to Peterhead Prison to continue serving their sentences. Lauchlan was released on licence on 18 January 2002. In March of the following year, in breach of the notification requirements, he travelled to Spain. ONeill was released on licence on 22 May 2003. He too travelled to Spain shortly afterwards in breach of those requirements and met Lauchlan. On 22 April 2004 they were arrested in connection with the apparent abduction of a fourteen year old boy. Steps were then taken for them to return to the United Kingdom to face charges that they were in breach of the notification requirements under the Sex Offenders Act. On 15 March 2005 they pled guilty to these charges, and on 4 April 2005 they were each sentenced to three years imprisonment. On 5 April 2005 they were charged with the murder of Allison McGarrigle and with concealing and disposing of her body in an attempt to pervert the course of justice. They appeared on petition at Kilmarnock Sheriff Court where they were committed for further examination and remanded in custody. (c) articles 6(1) and (3)(c) Article 6(1) of the Convention states that 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. In Attorney Generals Reference (No 2 of 2001) [2003] UKHL 68, [2004] 2 AC 72, para 20, Lord Bingham of Cornhill analysed the article in this way: First, the right of a criminal defendant is to a hearing. The article requires that hearing to have certain characteristics. If the hearing is shown not to have been fair, a conviction can be quashed and a retrial ordered if a fair trial can still be held. If the hearing is shown to have been by a tribunal lacking independence or impartiality or legal authority, a conviction can be quashed and a retrial ordered if a fair trial can still be held. If judgment was not given publicly, judgment can be given publicly. But time, once spent, cannot be recovered. If a breach of the reasonable time requirement is shown to have occurred, it cannot be cured. In Dyer v Watson [2002] UKPC D1, [2004] 1 AC 379, 2002 SC (PC) 89, para 73, I said that these four rights can and should be considered separately, and that a complaint that one of them has been breached cannot be answered by showing that the other rights were not breached: see also Darmalingum v The State [2000] 1 WLR 2303, 2307 2308, per Lord Steyn. Delay is therefore to be seen as affording an independent ground of relief, whether or not there was prejudice or any threat to the fairness of the trial. The fact that an accused person has been convicted after a fair hearing by a proper court cannot justify or excuse a breach of his guarantee of a disposal of the charge against him within a reasonable time: Dyer v Watson, para 94. As Lord Bingham observed in Attorney Generals Reference (No 2 of 2001), para 26, the requirement that a criminal charge be heard within a reasonable time poses the inevitable questions: when, for the purposes of article 6(1), does a person become subject to a criminal charge? When, in other words, does the reasonable time begin? That is the question to which this issue is directed. But it is necessary also to notice article 6(3), which states that everyone charged with a criminal offence has certain minimum rights, including (c) to defend himself in person or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require. This is because it has been recognised that a person has a Convention right of access to a lawyer under that article, read in conjunction with article 6(1), before answering any questions put to him by the police in circumstances where the questioning might affect his right to a fair trial: Salduz v Turkey (2008) 49 EHRR 421; Cadder v HM Advocate [2010] UKSC 43, 2011 SC (UKSC) 13, [2010] 1 WLR 2601. The question posed by article 6(1) read together with article 6(3) is a different question from that posed by the reasonable time guarantee, although both questions require a date to be identified. That it should be within a reasonable time is one of the characteristics required of a hearing by article 6(1): see para 25, above. So too is the requirement that the hearing is fair. But the answer to the question whether the hearing is fair may depend on things that happened before it is known when the hearing will take place, or whether there will be a hearing at all. So the question can be put this way: when does the person become entitled to that protection to preserve his right to a fair trial? When, in other words, is he to be taken to have been charged for the purposes of those articles? In Ambrose v Harris [2011] UKSC 43, [2011] 1 WLR 2435, 2012 SC (UKSC) 53, the questions were raised as to the correct starting point for the purposes of the right to legal advice under article 6 in accordance with the principle in Salduz. In para 62 I said: The correct starting point, when one is considering whether the persons Convention rights have been breached, is to identify the moment as from which he was charged for the purposes of article 6.1. The guidance as to when this occurs is well known. The test is whether the situation of the individual was substantially affected: Deweer v Belgium [1980] 2 EHRR 439, para 46; Eckle v Germany [1982] 5 EHRR 1, para 73. His position will have been substantially affected as soon as the suspicion against him is being seriously investigated and the prosecution case compiled: Shabelnik v Ukraine (Application No 16404/03) (unreported) given 19 February 2009, para 57. In Corigliano v Italy [1982] 5 EHRR 334, para 34 the court said that, whilst charge for the purposes of article 6.1 might in general be defined as the official notification given to the individual by the competent authority of an allegation that he has committed a criminal offence, as it was put in Eckles case 5 EHRR 1, para 73, it may in some instances take the form of other measures which carry the implication of such an allegation. As the Appeal Court indicated when it gave leave to appeal on this ground, it is with reference to this passage that further guidance is needed, as the appellants argument is that the date of their police interviews should be taken as being the date when the reasonable time begins: [2012] HCJAC 51, paras 2 and 3. Of the four cases decided by the Strasbourg court to which I referred in para 62 of Ambrose, however, only Shabelnik v Ukraine was concerned with the protection that is afforded by article 6(3)(c). Corigliano and Eckle were concerned with the reasonable time guarantee, and Deweer was concerned with the question whether the proceedings were within the scope of the article. The discussion in Shabelnik, para 52, of the manner in which articles 6(1) and (3)(c) are to be applied makes the point that article 6 may be relevant before a case is sent for trial, if and so far as the fairness of the trial is likely to be seriously prejudiced by an initial failure to comply with its provisions: see also Imbroscia v Switzerland (1993) 17 EHRR 441, para 36. In Ambrose v Harris, para 63 I said that the Lord Advocates submission that the protection of article 6(3)(c) was not engaged until the individual was taken into custody could not withstand the emphasis that the Strasbourg court puts on the consequences of an initial failure to comply with its provisions, as in Salduzs case, para 50 and Zaichenko v Russia (Application No 39660/02) (unreported) given 18 February 2010, para 35. These remarks were directed to the first of the three characteristics of a hearing required by article 6(1) that the hearing is fair not to the reasonable time guarantee. Yet the court went on in Shabelnik v Ukraine, para 52, to say this: The manner in which article 6(1) and (3)(c) is to be applied during the preliminary investigation depends on the special features of the proceedings involved and on the circumstances of the case. The moment from which article 6 applies in criminal matters also depends on the circumstances of the case, as the prominent place held in a democratic society by the right to a fair trial prompts the Court to prefer a substantive, rather than a formal, conception of the charge contemplated by article 6(1). This passage suggests, as does the first sentence of para 62 in Ambrose, that the date when a person becomes subject to a criminal charge and the reasonable time begins is the same as that when the person is charged for the purposes of article 6(3)(c): see also Yankov and Manchev v Bulgaria (Applications Nos 27207/04 and 15614/05) (unreported) given 22 October 2009, para 18, where the starting point was taken to be the date when the police took a statement from the applicant in which he confessed to taking part in the commission of the offence and not the date when a formal charge was directed against him. In some cases the same date may be equally appropriate for each of these two purposes. But they are separate guarantees, and it is not obvious that the relevant date for each of them must be the same. In Salduz v Turkey, para 50 the Grand Chamber pointed out that the right in article 6(3)(c) is one element, among others, of the concept of a fair trial in criminal proceedings in article 6(1). In para 55 it said that, in order for the right to a fair trial to remain sufficiently practical and effective, article 6(1) required that, as a rule, access to a lawyer should be provided as from the first interrogation of a suspect by the police unless there were compelling reasons to restrict that right. In Eckle v Germany, on the other hand, the court said in para 73 that in criminal matters the reasonable time referred to in article 6(1) begins to run as soon as a person is charged, and that this may occur on a date prior to the case coming before the trial court, such as the date of arrest, the date when the person was officially notified that he would be prosecuted or the date when the preliminary investigations were opened. In Attorney Generals Reference (No 2 of 2001), para 27 Lord Bingham said that as a general rule the relevant period for this purpose will begin at the earliest time at which a person is officially alerted to the likelihood of criminal proceedings against him a formulation which he hoped might be easier to apply in this country. The reasoning in paras 50 55 of Salduz v Turkey at no point examines the meaning of the word charged but concentrates instead on the requirements of a fair trial. This suggests that different approaches can be applied to the two guarantees as to what is the relevant date. Article 6(3)(c), which applies where a person is charged with a criminal offence, must now be read in a way that makes the guarantee of a fair trial practical and effective. The first interrogation of a suspect may take place, and often does, before the person is officially alerted to the likelihood of criminal proceedings against him. To wait until the stage is reached when there is sufficient evidence to bring a charge before the suspect has the right of access to a lawyer could seriously prejudice his right to a fair trial. So the focus, for the purposes of this part of article 6, is on the state of affairs when the suspect is first interrogated. Contrast that with the focus of the reasonable time guarantee in article 6(1). It is on the running of time, not on what is needed to preserve the right to a fair trial. Its rationale is that a person charged should not remain too long in a state of uncertainty about his fate: Wemhoff v Federal Republic of Germany (1968) 1 EHRR 55, para 18; Stgmuller v Austria (1969) 1 EHRR 155, para 5. As Lord Bingham said in Attorney Generals Reference (No 2 of 2001), para 16, a person who is facing conviction and punishment should not have to undergo the additional punishment of protracted delay, with all the implications that it may have for his health and family life. So the date as from which time runs is taken to be the date as from which his position has been substantially affected by the official notification. Practice as to how these matters are handled varies from state to state, but in the United Kingdom this could well be some time after the date when he was first subjected to police questioning. (d) discussion It is, of course, plain that the appellants were entitled to the protection of article 6(1) read together with article 6(3)(c) on 17 September 1998 when they were interviewed. Salduz v Turkey had not yet been decided, nor had Cadder v HM Advocate. So they were not offered the protection of having a lawyer present during the police questioning. In the event the absence of a lawyer made no difference, because the appellants knew perfectly well that they were entitled to remain silent and were able steadfastly to resist all attempts to persuade them to provide the police with answers that might incriminate them. Their position was, however, indistinguishable from that of the appellant in Cadder. Like him, they were being questioned as detainees under section 14 of the 1995 Act. They were also being questioned as suspects. In Ambrose v Harris, para 63, I said that the moment at which the individual is no longer a potential witness but has become a suspect provides as good a guide as any as to when he should be taken to have been charged for the purposes of article 6(1). For completeness I should have said for the purposes of article 6(1) read in conjunction with article 6(3)(c), as it is the guarantee of a fair trial that the Salduz protection seeks to serve. I would hold therefore that the date as from which reasonable time begins to run is the subject of a separate guarantee from the guarantee that the trial will be fair, and that it requires to be approached separately. It is not enough that the appellants were being subjected to questioning in circumstances that might have affected their right to a fair trial. The question is whether they were charged on that date, in the sense indicated by Eckle v Germany, para 73, as explained by Lord Bingham in Attorney Generals Reference (No 2 of 2001), para 27. Were they officially notified that they would be prosecuted as it was put in Eckle, or officially alerted to the likelihood of criminal proceedings against them as it was put by Lord Bingham, when they were being interviewed? The appellants were certainly not at any stage of their interviews charged in the formal sense. They both asked the police whether they were going to be charged, and they both received indications to the contrary: see paras 19 and 22, above. Lauchlan was told that he was being interviewed. In ONeills case the interviewer avoided the question. But the fact that the question was asked at all is quite revealing. The appellants had been through this process before. They knew what to expect. It must have been obvious to them that the reason why they were not being charged was that the police did not yet have enough evidence to do so. They were both asked directly whether they had killed Mrs McGarrigle. But, in the context in which these questions were being put, it cannot be said that that this amounted to an official notification that they were likely to be prosecuted. All the indications during the prolonged questioning to which they were subjected were that the police were not in a position to report the proceedings with a view to prosecution without having obtained more evidence. The attitude of the police at this stage was entirely understandable. They had not yet established that Mrs McGarrigle was dead. Her body had not been found. In the absence of any evidence to show where, when and how she had died, they were in no position to initiate criminal proceedings against the appellants for her murder. All they had were suspicions based on a volume of circumstantial evidence. That was why so much of the appellants questioning was directed to trying to establish where her body was. It was not until 5 November 1998 that the missing person investigation was scaled down due to lack of progress. The police were still seeking additional evidence by means of press releases, including publications in the Big Issue magazine in June 2002. In August 2003 they received hearsay information to the effect that the appellants had killed Mrs McGarrigle and disposed of her remains in a wheelie bin which was thrown off the back of a boat in Largs. That led to the further inquiries that resulted in their being in a position to charge the appellants on 5 April 2005. That was not the state of affairs when they were being interviewed. I would therefore hold that the date when the reasonable time began was 5 April 2005, and not 17 September 1998 when the appellants were detained and interviewed under section 14 of the 1995 Act. Apparent bias (a) the facts The indictment which was served on the appellants on 10 September 2008 contained eighteen charges, of which the first three concerned the murder of Mrs McGarrigle. The remaining charges were of, or were related to, sexual offences against children. On 17 July 2009, after a preliminary hearing, Lord Kinclaven ordered that the murder charges were to be separated from the sexual offences charges. The consequence of his determination was that the appellants were tried in 2010 in a sequence of two trials before the same judge, Lord Pentland, but before different juries and with a different Advocate Depute. The trial of the sexual offences charges took place between 26 April and 12 May 2010. The Crown accepted pleas of not guilty to some of those charges before the trial began. It withdrew the libel on a number of others at the close of the Crown case, and a submission of no case to answer was sustained with regard to one more. In the result three charges went to the jury, all of which related to sexual offences against boys who were aged 14 and 6 years old at the time of the offences. ONeill was found guilty on all three, and Lauchlan was found guilty on two of them. When the verdicts had been returned and recorded the Advocate Depute moved for sentence. He tendered a schedule of previous convictions in respect of each appellant. He drew attention to the fact that Lauchlan had been convicted in 1998 of two charges of sodomy and four charges of shameless indecency and that in 2005 he had been convicted of offences under sections 2 and 3 of the Sex Offenders Act 1997. He also drew attention to similar convictions in 1998 and 2005 in the case of ONeill. He then mentioned that the Crown had lodged an application for a lifelong restriction order, for which a risk assessment under section 210B of the 1995 Act (as inserted by section 1 of the Criminal Justice (Scotland) Act 2003) would be required, to be made in both cases. He asked that consideration of this matter be continued until the conclusion of the trial on the murder charges. He explained, for the benefit of the jury who had not been made aware of the fact that there was to be another trial, that for this reason there had been an embargo on public reporting of the trial on the sexual offence charges. He said that, as there would be a prejudice to the next trial if the judge were to do any public act at that stage, the matter should be continued. Having ascertained that the solicitor advocates for the defence had no objection to the continuation, the trial judge addressed the appellants. The judge told them first that, as he intended to make the appropriate order under the Sexual Offences Act 2003, he was required by the legislation to state to them both that they had again been convicted of sexual offences to which Part 2 of that Act applied and that they were subject to the notification requirements contained in that Act. He told them that the court had certified those facts, and that the clerk of court would give them a copy of the relevant certificate together with a notice which gave further details of the notification requirements with which they must comply. Then, while the jury were still present, he said this: Having regard to your very serious records, and to the nature of the offence of which you stand convicted on the present indictment, it is clear that you are both evil, determined, manipulative and predatory paedophiles of the worst sort. Beyond that I intend to reserve any observations which I may have to make until the outcome of the next stage of the proceedings is known; that is after you have been tried on the remaining charges to which the advocate depute has made reference. I shall therefore adjourn all questions of sentence until Friday of next week, and I shall continue consideration of the Crowns motion made under section 210B of the 1995 Act for an assessment order. No objection was made at the start of the murder trial on 17 May 2010 to the fact that Lord Pentland was to preside over that trial too, nor was any motion made that he should recuse himself. Two events occurred in the course of that trial which were later commented on. The first occurred on 27 May 2010 when an adjournment of the trial was sought on behalf of ONeill by his solicitor advocate, Mr Carroll. He was said to be suffering from a severe headache and unable to follow what was going on. This was said to be a chronic problem for which he had a prescribed medication which he required to take. The trial judge did not accede to this request immediately but closely questioned Mr Carroll and invited the Advocate Depute to make enquiries with the prison authorities. During a brief adjournment ONeill was given paracetamol and then indicated that he was fit to continue. The second event occurred when a Crown witness, DC Wilkie, became incoherent and obviously unwell while being cross examined by Mr Carroll. The judge adjourned the proceedings immediately to allow the witness to receive medical treatment. He was fit to continue and complete his evidence the next day. (b) the issue This issue was raised on behalf of ONeill only in the Appeal Court. As has already been explained in para 10 above, it was the subject of an amended note of appeal which was lodged shortly before the hearing before the Appeal Court of his application under section 107(8) of the 1995 Act. Mr McVicar did not seek to adopt it on behalf of his client Lauchlan, although he pointed out that if the argument was sound its effect would be to his clients benefit. The devolution issue seems only to have emerged in the course of oral argument in the Appeal Court when it was considering the applications for leave to appeal to this court. It decided to give leave on this issue because it was recognised that the splitting of the trial into two phases before two juries and the resulting presentation of previous convictions and the judges remarks at the end of the first phase were very unusual circumstances. Mr Carroll said that the fact that the trial judge was shown his clients previous convictions was not important to his argument, as it was not unusual for a judge to see the accuseds previous convictions before the start of or during a trial: OHara v HM Advocate 1948 JC 90; Leggate v HM Advocate 1988 JC 127; 1995 Act, section 275A (as inserted by section 10(4) of the Sexual Offences (Procedure and Evidence) (Scotland) Act 2002). But they were the trigger, as he put it, for the comments by the trial judge on his clients character. It was to those comments that he directed his argument. The issue has been focussed in the sixth issue in the statement of facts and issues on the appellants behalf in these terms: Whether (i) the conduct of the trial judge can be said to have given rise to a legitimate concern as to the appearance of an absence of impartiality in the context of the appellants right to a fair trial by an impartial tribunal in terms of article 6(1) of the European Convention on Human Rights; and (ii) if the answer to issue 6(i) is affirmative, whether the act of the Lord Advocate in persevering with the trial was incompatible with the appellants rights under article 6(1). (c) the authorities The test for apparent bias which was laid down in Porter v Magill [2001] UKHL 67; [2002] 2 AC 357 was designed to express in clear and simple language a test which was in harmony with the objective test which had been applied by the Strasbourg court. It is set out in para 103 of the judgment in that case in these terms: The question is whether the fair minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased. In Lawal v Northern Spirit Ltd [2004] 1 All ER 187, [2003] ICR 856, para 14 Lord Steyn said that the purpose and effect of the modification which it made to the common law were to bring the common law rule into line with the Strasbourg jurisprudence. Lord Bingham of Cornhill made the same observation in R v Abdroikov [2007] UKHL 37, [2007] 1 WLR 2679, para 14 when he said that there is now no difference between the common law test of bias and the requirement under article 6 of an independent and impartial tribunal. In Szypusz v United Kingdom (Application No 8400/07) (unreported) given 21 September 2010, para 39 the Strasbourg court acknowledged that its jurisprudence had been taken into account in Porter v Magill, and set out that test. It also acknowledged, in para 40, the further guidance in Helow v Secretary of State for the Home Department [2008] UKHL 62, 2009 SC (HL) 1, [2008] 1 WLR 2416 with regard to the attributes of the fair minded observer as background to the issue that it had to decide. The court is invited in this case to examine the allegation of apparent bias after the proceedings that are said to have been affected by it have taken place. But the principles to be applied are the same as those which determine the question whether, because of things he has said or done previously, the judge should recuse himself. So it may be helpful to look at cases in which it was the judges decision not to recuse himself that was in issue. In President of the Republic of South Africa v South African Rugby Football Union, 1999 (4) SA 147, 177 the Constitutional Court of South Africa made these comments on the position of judges (in that case, members of the Constitutional Court itself) who, it was said, ought to have recused themselves: The question is whether a reasonable, objective and informed person would on the correct facts reasonably apprehend that the judge has not or will not bring an impartial mind to bear on the adjudication of the case, that is a mind open to persuasion by the evidence and the submissions of counsel. The reasonableness of the apprehension must be assessed in the light of the oath of office taken by the judges to administer justice without fear or favour; and their ability to carry out that oath by reason of their training and experience. It must be assumed that they can disabuse their minds of any irrelevant personal beliefs or predispositions. They must take into account the fact that they have a duty to sit in any case in which they are not obliged to recuse themselves. At the same time it must never be forgotten that an impartial judge is a fundamental prerequisite for a fair trial and a judicial officer should not hesitate to recuse herself or himself if there are reasonable grounds on the part of a litigant for apprehending that the judicial officer, for whatever reasons, was not or will not be impartial. That passage was quoted with approval by the Court of Appeal in Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451, para 21. It referred also in paras 22 24 to three extracts from Australian authorities about the duty of the judge to hear and determine the cases allocated to him which it found to be persuasive: In re JRL, EX arte CJL (1986) 161 CLR 342, 352; In re Ebner (1999) 161 ALR 557, para 37; Clenae Pty Ltd v Australia and New Zealand Banking Group Ltd [1999] VSCA 35. In para 25 of Locabail there is an extensive discussion of the grounds on which objection to a judge could or could not reasonably be taken. While it was emphasised that every application for recusal must be decided on the facts and circumstances of the individual case, the court noted that a real danger of bias might well be thought to arise if, in a case where the credibility of any individual were an issue to be decided by the judge, he had in a previous case rejected the evidence of that person in such outspoken terms as to throw doubt on his ability to approach such persons evidence with an open mind on any later occasion. In JSC BTA Bank v Mukhtar Ablyazov (Recusal) [2012] EWCA Civ 1551, the question was whether a judge had been right not to recuse himself as the nominated judge of trial, in circumstances where he had had to hear, prior to trial, an application to commit one of the parties for contempt of court and had found a number of contempts proven, by reason of the doctrine of apparent bias in Magill v Porter. Rix LJ, delivering a judgment with which Toulson and Maurice Kay LJJ agreed, pointed out in para 65 that, although the principles of apparent bias are now well established and were not in dispute in that case, the application of them is wholly fact sensitive. In para 70 he said that it seemed to him that the critical consideration is that what the first judge does, he does as part and parcel of his judicial assessment of the litigation before him: He is judging the matter before him, as he is required by his office to do. If he does so fairly and judicially, I do not see that the fair minded and informed observer would consider that there was any possibility of bias. That was a case of civil litigation, but I do not think that there is any difference in principle between the position of a judge in a case of that type and the situation where it is said that there is apparent bias on the part of a judge in a criminal trial. In Helow v Secretary of State for the Home Department, the question was whether there was a real possibility that Lady Cosgrove was biased by reason of her membership of an association and her receipt of its quarterly publication which contained some articles which were fervently pro Israeli and antipathetic to the PLO, of which the appellant was a member. Among the reasons that were given for holding that there was not any real possibility of bias in her case were that the context is crucially important: para 4, by myself; that Lady Cosgrove was a professional judge with years of relevant training and experience: para 23, per Lord Rodger of Earlsferry; and the taking of the judicial oath, albeit as more of a symbol than of itself a guarantee of the impartiality which any professional judge is by training and experience expected to practise and display: para 57, per Lord Mance. (d) discussion What then of this case? The obvious starting point is the context. When he made his remarks, Lord Pentland was addressing the appellants in the performance of his judicial function. The fair minded and informed observer would appreciate that he was a professional judge who had taken the judicial oath and had years of relevant training and experience. He would hear and understand the context in which the remarks were made. They were made in open court from the bench while he was performing his duty as a judge at the trial. He would appreciate too, that when the judge was presiding over the next trial, he would be doing so in the performance of his duty to preside over that case. He would understand, of course, that while the facts were a matter for the jury, the judge too had functions to perform which required him to be impartial. But it would only be if the judge expressed outspoken opinions about the appellants character that were entirely gratuitous, and only if the occasion for making them was plainly outside the scope of the proper performance of his duties in conducting the trial, that he would doubt the professional judges ability to perform those duties with an objective judicial mind. The context indicates that nothing like that occurred here. The judge had just told the appellants, as he was required to do, that they were subject to the notification requirements. He had been told by the Advocate Depute that an application was to be made for a risk assessment order. He had been asked to defer consideration of it until after the conclusion of the murder trial, but the appellants were entitled to be given some indication as to what they might expect. His comments on the appellants character were directly relevant to that issue. For reasons that would have been obvious in the light of the Advocate Deputes submissions, the judge had to restrict himself to those few comments. He told them that he intended to reserve any further observations until the outcome of the next stage of proceedings was known. The observer would also understand that, if the judge had been passing sentence on the appellants, the remarks he made would have been entirely appropriate as background to the sentences which he would have been obliged to pass. There is one other circumstance which, in this case, can properly be taken into account. The appellants and their solicitor advocates were all present when the remarks were made, and they were all there again at the commencement of the murder trial. Yet no objection was made by any of them either at the end of the sexual offences trial or at the start of the murder trial to the fact that Lord Pentland was to preside over the murder trial. The fair minded and informed observer would not have overlooked this fact. It might well have seemed to him to be odd, if there was any real basis for an objection, that those with the most immediate interest did not take the opportunity of raising the point at that stage. Mr Carrolls explanation was that a challenge at that stage would not have been likely to succeed, as the judge would almost certainly have rejected it. He also said that his objection would have fallen away if the murder trial had been conducted fairly. He pointed to the contrast between the judges handling of the incident when he told the judge that his client was unwell and his handling of the incident when DC Wilkie became ill in the witness box. I am not persuaded by Mr Carrolls explanation. The point which he had to answer is not, I would stress, one of waiver. It is simply that the fair minded and informed observer would take account of the fact that it did not seem to occur to those with the most obvious interest to do so, or their advisors, that the judge had trespassed beyond the proper performance of his duties when he commented on the appellants character. As for his conduct of the trial, the judges concern that no proper reason had been given for interrupting the proceedings when he was told that the appellant was not well and his reaction to the sudden illness of DC Wilkie in the witness box were both readily understandable. I do not find here any grounds for doubting his impartiality. But the only relevant question is whether he should, or should not, have been conducting the trial at all in view of the comments he made at the end of the previous trial about the appellants character. For these reasons I cannot find any basis for the suggestion that the judge was apparently biased, and I would reject it. It follows that the Lord Advocate did not act incompatibly with the appellants article 6(1) right to a fair trial by proceeding with the appellants trial on the murder charges before Lord Pentland. We were addressed on the question whether the appellants waived their right to found on their Convention right, but I do not need to examine that issue as I do not accept that their right was breached. Conclusion (1) that the date when the reasonable time began for the purposes of the appellants article 6(1) Convention right was 5 April 2005; and (2) that the Lord Advocates act in proceeding with the trial on the murder charges was not incompatible with the appellants article 6(1) right to a trial before a tribunal that was independent and impartial. The proceedings must now be remitted to the High Court of Justiciary. I would determine the two compatibility issues that are before us by holding |
The appellant Dermot Patrick OBrien (Mr OBrien) is a retired barrister. He also held part time judicial office as a recorder appointed under section 21 of the Courts Act 1971, as amended. He claims to be entitled to a pension in respect of his part time non salaried judicial work. The case raises questions of domestic law about the status and terms of service of part time non salaried judges in England and Wales. They include chairmen and members of tribunals and others exercising judicial functions for remuneration. It also raises important questions of EU law as to which, having sought a preliminary ruling under article 267 of the Treaty for the Functioning of the European Union (the TFEU), the court has now received guidance from the Court of Justice of the European Union (the CJEU). The effect of section 3(1) of the European Communities Act 1972 is that the questions of EU law must be determined in accordance with the principles laid down in its preliminary ruling by that court. The EU law questions relate to Council Directive 97/81/EC of 15 December 1997 [1997] OLJ 14/9 (the PTWD) concerning the Framework Agreement on part time work which was concluded on 6 June 1997 between the general cross industry organisations (UNICE, CEEP and ETUC) and is annexed to the Directive (the Framework Agreement). Directives are binding as to the result to be achieved, leaving only the choice of form and methods to the Member State: article 288 TFEU. The PTWD was extended to the United Kingdom by Directive 98/23 [1998] OJL 131/10. It was transposed into domestic law by the Part time Workers (Prevention of Less Favourable Treatment) Regulations 2000, SI 2000/1551 (the 2000 Regulations), which were made under section 19 of the Employment Relations Act 1999. They came into force on 1 July 2000. Background With the encouragement of the leader of the Western Circuit, Mr OBrien, who was then in practice as a barrister, decided to apply to become a recorder. He was appointed as a recorder with effect from 1 March 1978, and he continued sitting as a recorder with regular extensions until he ceased to hold that office on 31 March 2005. The question then arose as to whether, as he was no longer the holder of a judicial office, he was entitled to a pension under the judicial pension scheme. The office of recorder is not one of the judicial offices for which provision for the payment of pensions was made in the Judicial Pensions Act 1981. Further provisions for the payment of pensions to judicial office holders are contained in the Judicial Pensions and Retirement Act 1993 (the 1993 Act). Section 2 of the 1993 Act provides that any person retiring from qualifying judicial office having attained the age of 65 and having completed at least 5 years service in qualifying judicial office is entitled to receive a pension at the appropriate annual rate. Section 1(6) provides that, for the purposes of the Act, any reference to a qualifying office is a reference to any office specified in Schedule 1 to the Act if that office is held on a salaried basis. The office of recorder is not one of the offices specified in Schedule 1. On 9 June 2005 Mr OBrien wrote to the Department of Constitutional Affairs requiring that he be paid a retirement pension on the same basis, adjusted pro rata temporis, as that paid to former full time judges who had been engaged on the same or similar work. He was informed by the Department in its reply dated 5 July 2005 that he fell outside the categories of judicial office holder to whom a judicial pension was payable. This was because the office of recorder was not a qualifying judicial office under the 1993 Act, and because there was no obligation to provide him with a pension under European law as he was an office holder, not a worker. Mr OBrien was not satisfied with the reasons he was given. On 29 September 2005 he started proceedings in the Employment Tribunal in which he claimed among other things that he was being discriminated against because he was a part time worker. His claim was brought under the Equal Pay Act 1970, the Sex Discrimination Act 1975 and the Human Rights Act 1998 together with the PTWD and the 2000 Regulations. The claim was opposed by the Department of Constitutional Affairs (now the Ministry of Justice) unsuccessfully in the Employment Tribunal, but successfully on appeal to the Employment Appeal Tribunal, on the grounds that it was out of time, as it ought to have been presented within three months of the date when he ceased to hold office, and that there was no relevant statutory extension of the time within which a claim could be presented. But it was later ordered, by consent, that the substantive issue and the time limit issue should both be heard by the Court of Appeal as a test case. On 19 December 2008 the Court of Appeal (the Chancellor, Smith and Maurice Kay LJJ) allowed Mr OBriens appeal on the time limit issue, but directed the Employment Tribunal to dismiss the claim on the issue of substance: Department of Constitutional Affairs v OBrien [2008] EWCA Civ 1448, [2009] ICR 593, [2009] 2 CMLR 15. Its findings on the substantive issue were that judges are not workers, either under the main definition in regulation 1(2) of the 2000 Regulations which requires there to be a contract or under the extended definition of worker in regulation 12 which applies to Crown employment: see paras 15 and 17, below. Mr OBrien was given permission to appeal to the Supreme Court. On 28 July 2010 this court, having considered the parties written and oral submissions and submissions for the Council of Immigration Judges as interveners, referred two questions to the CJEU for a preliminary ruling under Article 267 TFEU: see [2010] UKSC 34, [2011] 1 CMLR 36, to which reference may be made for much of the background. The questions that were referred were as follows: 1) Is it for national law to determine whether or not judges as a whole are workers who have an employment contract or employment relationship within the meaning of clause 2.1 of the Framework Agreement, or is there a Community norm by which this matter must be determined? 2) If judges as a whole are workers who have an employment contract or employment relationship within the meaning of clause 2.1 of the Framework Agreement, is it permissible for national law to discriminate (a) between full time and part time judges, or (b) between different kinds of part time judges in the provision of pensions? On 1 March 2012 the Second Chamber of the CJEU, having received the opinion of the Advocate General (Kokott) on 17 November 2011, gave judgment. It answered the questions as follows [2012] ICR 955, para 68: 1) European Union law must be interpreted as meaning that it is for the member states to define the concept of workers who have an employment contract or an employment relationship in clause 2.1 of the Framework Agreement . and in particular, to determine whether judges fall within that concept, subject to the condition that that does not lead to the arbitrary exclusion of that category of persons from the protection offered by Directive 97/81, as amended by Directive 98/23, and that agreement. An exclusion from that protection may be allowed only if the relationship between judges and the Ministry of Justice is, by its nature, substantially different from that between employers and their employees falling, according to national law, under the category of workers. 2) The Framework Agreement . must be interpreted as meaning that it precludes, for the purpose of access to the retirement pension scheme, national law from establishing a distinction between full time judges and part time judges remunerated on a daily fee paid basis, unless such a difference in treatment is justified by objective reasons, which is a matter for the referring court to determine. The effect of the questions that were referred, and of the ruling in response to them, is to divide the issues raised by Mr OBriens case into two parts. Firstly, there is the worker issue: whether the relationship between judges and the Ministry of Justice is substantially different from that between employers and persons who fall to be treated in national law as workers. The principles to which the CJEU refers are of general application. So although the argument was directed to the position of recorders like Mr OBrien, the issue is of interest to all part time judges, not just recorders. Secondly, there is the objective justification issue: whether the difference in treatment of part time judges is justified by objective reasons. The answer to this issue may differ from one kind of non salaried part time judge to another. So, in addressing it, the court will confine its attention to recorders. The question is whether there is an objective justification for treating recorders, all of whom are non salaried, differently from full time or salaried judges for the purposes of access to the retirement pension scheme. The matter came before this court for a further oral hearing on 4 July 2012, when it also had before it written submissions on behalf of the Council of Immigration Judges. In the light of the discussion at that hearing the court made a preliminary ruling that Mr OBrien was at the material time a part time worker within the meaning of clause 2.1 of the Framework Agreement, for reasons that were to be given in writing at a later date. That ruling was communicated to the parties by the Registrar on 9 July 2012. The court also gave case management directions for the future course of the proceedings. The parties were told that the court had decided not to direct an immediate remission to the Employment Tribunal on the issue of objective justification, and that remission would be appropriate only if there were significant disputed issues of fact to be determined. Directions were given for the presentation of the parties cases on the objective justification issue as it applied to recorders at a further hearing to be held on 21 November 2012, at which the court would determine what issues, if any, should be remitted and decide any issues that were not to be remitted. This judgment does two things. First, it sets out the courts reasons for its preliminary ruling on the worker issue which, together with the introduction, have been prepared by Lord Hope. Secondly, it sets out the courts reasoning and conclusions on the issue of objective justification. They have been prepared by Lady Hale. The court acknowledges and is grateful for all the work by the legal advisers on both sides in preparing a considerable volume of documentary evidence and other material against a demanding timetable. The PTWD and the Framework Agreement The PTWD contains in recital (11) a reference to the parties to the Framework Agreement wishing to establish a general framework for eliminating discrimination against part time workers and to contribute to developing the potential for part time work on a basis which is acceptable for employers and workers alike. Recital (16) is as follows: Whereas, with regard to terms used in the Framework Agreement which are not specifically defined therein, this Directive leaves Member States free to define those terms in accordance with national law and practice, as is the case for other social policy Directives using similar terms, providing that the said definitions respect the content of the Framework Agreement. Article 1 states that the purpose of the Directive is to implement the Framework Agreement. Article 2 requires Member States to transpose it into national law by 20 January 2000 at the latest. Clauses 1 and 2 of the Framework Agreement are as follows: Clause 1: Purpose The purpose of this Framework Agreement is: (a) to provide for the removal of discrimination against part time workers and to improve the quality of part time work; (b) to facilitate the development of part time work on a voluntary basis and to contribute to the flexible organization of working time in a manner which takes into account the needs of employers and workers. Clause 2: Scope 1. This Agreement applies to part time workers who have an employment contract or employment relationship as defined by the law, collective agreement or practice in force in each Member State. 2. Member States, after consultation with the social partners in accordance with national law, collective agreements or practice, and/or the social partners at the appropriate level in conformity with national industrial relations practice may, for objective reasons, exclude wholly or partly from the terms of this Agreement part time workers who work on a casual basis. Such exclusions should be reviewed periodically to establish if the objective reasons for making them remain valid. The Ministry of Justice do not place any reliance on Clause 2(2). Clause 3 contains definitions of part time worker and comparable full time worker. Clause 4 sets out the principle of non discrimination: Clause 4: Principle of non discrimination 1. In respect of employment conditions, part time workers shall not be treated in a less favourable manner than comparable full time workers solely because they work part time unless different treatment is justified on objective grounds. 2. Where appropriate, the principle of pro rata temporis shall apply. 3. The arrangements for the application of this clause shall be defined by the Member States and/or social partners, having regard to European legislation, national law, collective agreements and practice. 4. Where justified by objective reasons, Member States after consultation of the social partners in accordance with national law, collective agreements or practice and/or social partners may, where appropriate, make access to particular conditions of employment subject to a period of service, time worked or earnings qualification. Qualifications relating to access by part time workers to particular conditions of employment should be reviewed periodically having regard to the principle of non discrimination as expressed in Clause 4.1. The domestic regulations The United Kingdom gave effect to the PTWD and the Framework Agreement by the 2000 Regulations which were made on 8 June 2000 and came into force on 1 July 2000. The Regulations were made under section 19 of the Employment Relations Act 1999. Regulation 1(2) contains definitions, including: contract of employment means a contract of service or of apprenticeship, whether express or implied, and (if it is express) whether oral or in writing; worker means an individual who has entered into or works under or (except where a provision of these Regulations otherwise requires) where the employment has ceased, worked under (a) a contract of employment; or (b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual. There is no reference to employment relationship. Regulation 2 (as amended) contains definitions of a full time worker, a part time worker and a comparable full time worker. It is common ground that if Mr OBrien was a worker at all, he was a part time worker. Regulation 5 sets out the prohibition on unjustified less favourable treatment of part time workers: 5. Less favourable treatment of part time workers (1) A part time worker has the right not to be treated by his employer less favourably than the employer treats a comparable full time worker (a) as regards the terms of his contract; or (b) by being subjected to any other detriment by any act, or deliberate failure to act, of his employer. (2) The right conferred by paragraph (1) applies only if (a) the treatment is on the ground that the worker is a part time worker, and (b) the treatment is not justified on objective grounds. (3) In determining whether a part time worker has been treated less favourably than a comparable full time worker the pro rata principle shall be applied unless it is inappropriate. Part IV of the regulations is headed Special Classes of Person and contains six Regulations numbered 12 to 17. Regulation 12 (Crown employment) provides (so far as now material): (1) Subject to regulation 13, these Regulations have effect in relation to Crown employment and persons in Crown employment as they have effect in relation to other employment and other employees and workers. (2) In paragraph (1) Crown employment means employment under or for the purposes of a government department or any officer or body exercising on behalf of the Crown functions conferred by a statutory provision. Regulations 13 (Armed forces), 14 (House of Lords staff), 15 (House of Commons staff) and 16 (Police service) make similar provision for the classes of service personnel, office holders or employees to which they relate (but subject to an exception for certain types of military training under the Reserve Forces Acts). Subject to that exception, all these provisions include within the scope of the Regulations persons who would not or might not otherwise be included. By contrast regulation 17 (Holders of judicial offices) disapplies the Regulations in relation to fee paid part time judges: These Regulations do not apply to any individual in his capacity as the holder of a judicial office if he is remunerated on a daily fee paid basis. The parties take different views as to whether, in the absence of regulation 17, fee paid part time judges would have been treated as part time workers for the purposes of the Regulations. The facts Until the 1970s part time judges, variously styled as recorders, commissioners or chairmen of Quarter Sessions, were a smaller proportion of the judiciary in England and Wales than they are now. Many part time judicial officers who are now called judges were then designated by other terms such as registrars, stipendiary magistrates, tribunal chairmen and social security or tax commissioners. Professor Bell, Judiciaries in Europe (2006), p 312 records that in 1970 full time judges outnumbered part time judges by about three to one. All these part time judges were the holders of a statutory judicial office. They were remunerated by fees calculated on a daily fee paid basis. The Courts Act 1971 made major changes in the justice system and (as amended) conferred the powers under which all recorders are still appointed. Section 21 of the Courts Act 1971, as originally enacted, was in the following terms: (1) Her Majesty may from time to time appoint qualified persons, to be known as Recorders, to act as part time judges of the Crown Court and to carry out such other judicial functions as may be conferred on them under this or any other enactment. (2) Every appointment of a person to be a Recorder shall be of a person recommended to Her Majesty by the Lord Chancellor, and no person shall be qualified to be appointed a Recorder unless he is a barrister or solicitor of at least ten years standing. (3) The appointment of a person as a Recorder shall specify the term for which he is appointed and the frequency and duration of the occasions during that term on which he will be required to be available to undertake the duties of a Recorder. (4) Subject to subsection (5) below the Lord Chancellor may, with the agreement of the Recorder concerned, from time to time extend for such period as he thinks appropriate the term for which a Recorder is appointed. (5) Neither the initial term for which a Recorder is appointed nor any extension of that term under subsection (4) above shall be such as to continue his appointment as a Recorder after the end of the completed year of service in which he attains the age of 72. (6) The Lord Chancellor may if he thinks fit terminate the appointment of a Recorder on the ground of incapacity or misbehaviour or of a failure to comply with any requirement specified under subsection (3) above in the terms of his appointment. (7) There shall be paid to Recorders out of money provided by Parliament such remuneration and allowances as the Lord Chancellor may, with the approval of the Minister for the Civil Service, determine. The section has been amended from time to time. The most significant amendment, influenced by the Human Rights Act 1998, was the introduction of safeguards limiting the Lord Chancellors right to decline to extend, or to terminate, an appointment. This amendment gave effect to new terms and conditions of service promulgated by the Lord Chancellors Department in 2000. Recorders appointments are automatically extended under section 21(4) at the end of the five year appointment for further successive terms of five years, subject to the individuals agreement and the upper age limit, unless a question of cause for non renewal is raised or the individual no longer satisfies the conditions or qualifications for appointment. Since the Courts Act 1971 was enacted there has been a remarkable growth in the number and type of part time judges. The Council of Immigration Judges estimate that there are now about thirty types of fee paid part time judges in the United Kingdom, and that they are relied upon substantially in all but three specialist tribunals. Statistics in Professor Bells chapter (table 6.1a) show that there were 2,041 part time judges (recorders and deputy district judges) in 1993 and 2,414 in 2005 (including 200 female deputy district judges, up from 89 in 1993, indicating the success of the official policy of encouraging women to become part time judges). There are now almost twice as many part time judges (recorders and deputy district judges) as full time judges. These figures do not take account of remunerated chairmen and members of tribunals, the structure of which has been radically reformed by the Tribunals Courts and Enforcement Act 2007. Submissions from the Council of Immigration Judges show that in 2009 there were 145 full time immigration judges and 440 part time immigration judges (the latter group being divided between salaried part time judges and fee paid part time judges as mentioned below). The proportion of sitting days worked by fee paid judges rose from 49% in 2008 to 72% in 2010 and 2011. For about 30 years after the Courts Act 1971 all part time judges were remunerated on a fee paid basis. That was not a statutory requirement, as section 21(7) is in very general terms. It was an administrative arrangement chosen by the Lord Chancellors Department (later the Department of Constitutional Affairs, and now the Ministry of Justice). Since about 2000 there has been an increase in salaried part time judges, especially among district judges and immigration judges. As they are salaried holders of qualifying judicial offices, they are entitled to receive a judicial pension under the 1993 Act on their retirement. The Lord Chancellor has from time to time issued and amended written memoranda as to the terms and conditions of service of recorders. The memorandum current in 1978 when Mr OBrien was appointed contained 15 paragraphs covering, among other things, a requirement for attendance at sentencing conferences, and the frequency and duration of sittings and fees. There was a minimum sitting requirement of at least 20 days a year, which could be split into two periods of at least ten days. Subject to certain limitations provided for in the terms and conditions, he was not precluded from continuing in professional practice. Many recorders continued to provide services for remuneration as barristers or solicitors in addition to holding that judicial office. It was the expectation of the Lord Chancellor when preparing these memoranda that persons appointed as recorders would normally be in active practice or hold a full time judicial office. The version of the terms and conditions current at Mr OBriens retirement, which was issued in April 2000, is a more elaborate document of 49 paragraphs together with two appendices on relations with the media. Most of the new material dealt with the renewal of appointments and judicial conduct. A recorder is entitled to be offered a minimum of fifteen sitting days a year and may be required to sit for up to thirty days unless there are reasonable grounds for not sitting. The daily fee is unspecified. But in practice all part time judicial office holders are paid one 220th of the annual salary of a full time judicial office holder of the same court or tribunal. A fee at half the daily rate is paid for attending Judicial Studies Board residential conferences. The submissions for the Council of Immigration Judges state that some immigration judges work part time on a salaried basis. A substantial majority, estimated to be about 75%, work part time on a daily fee paid basis. Fee paid part time immigration judges sittings should not normally exceed 105 days a year, but for each days sitting an immigration judge is credited a further days work and pay for writing determinations and similar out of court duties. In practice they work up to 210 days per year. They are paid at about half a days fee to attend mandatory training days. Some immigration judges combine their work as a fee paid immigration judge with other fee paid judicial work in courts and other tribunals. But about half are estimated to rely on their remuneration as fee paid immigration judges as their principal income. All part time judges are entitled, where appropriate, to sick pay, maternity or paternity pay and similar benefits during service. Full time judges and salaried part time judges are entitled to pensions on retirement, subject to and in accordance with the provisions of the Judicial Pensions Act 1981 and the Judicial Pensions and Retirement Act 1993. Fee paid part time judges have no entitlement to a judicial pension on retirement. Pensions under the 1981 Act are calculated on a basis related to salary and, as already noted, references in the 1993 Act to a qualifying judicial office limit the entitlement to the holder of an office specified in Schedule 1 to the Act that is held on a salaried basis: 1993 Act, section 2(1). The worker issue The CJEU noted in paras 30 to 33 of its judgment that there is no single definition of worker in EU law. The PTWD and the Framework Agreement do not aim at complete harmonisation of national laws in this area, but only, as the agreements name indicates, to establish a general framework for eliminating discrimination against part time workers. It is for national law to determine whether a person in part time work has a contract of employment or an employment relationship: Wippel v Peek & Cloppenburg GmbH & Co KG C 313/02 [2005] 1CR 1604, para 40. The discretion given to member states is however qualified by the need to respect the effectiveness of the PTWD, and general principles of EU law: paras 34 to 38. A member state may not remove at will, in violation of the effectiveness of the directive, categories of persons from protection. In particular, the sole fact that judges are treated as judicial office holders is insufficient in itself to exclude the latter from enjoying the rights provided for by the Framework Agreement: para 41. Such an exclusion may be permitted, if it is not to be regarded as arbitrary, only if the nature of the employment relationship is substantially different from the relationship between employers and their employees which fall within the category of workers under national law. The CJEU stated in para 43 of its judgment: It is ultimately for the referring court to examine to what extent the relationship between judges and the Ministry of Justice is, by its nature, substantially different from an employment relationship between an employer and a worker. The court may, however, mention to the referring court a number of principles and criteria which it must take into account in the course of its examination. [emphasis added] The principles and criteria which it then set out include the following: (1) The term worker is used in the definition of the scope of the Framework Agreement to draw a distinction from a self employed person, and the court will have to bear in mind that this distinction is part of the spirit of the Framework Agreement on part time work: para 44, referring to para 48 of the opinion of the Advocate General. (2) The rules for appointing and removing judges must be considered, and also the way their work is organised. The fact that judges are expected to work during defined times and periods, albeit with a greater degree of flexibility than members of other professions, and that they are entitled to benefits such as sick pay are also relevant: paras 45 and 46. (3) The fact that judges are subject to terms of service and that they might be regarded as workers within the meaning of the Framework Agreement on part time work would not undermine the principle of the independence of the judiciary, or respect for the national identities of Member States. It merely aims to extend to those judges the scope of the principle of equal treatment and to protect them against discrimination as compared with full time workers: paras 47 to 49. At the hearing on 4 July 2012 there was argument about whether the case should be remitted to the Employment Tribunal for further fact finding on the issues of (i) whether Mr OBrien was a worker for EU law purposes, and (ii) objective justification. This court concluded, although only after the end of the oral argument, that it had sufficient evidence to determine the worker issue. It has also concluded that it need not, and should not, decide the very large question of whether all or any servants of the Crown have contracts of employment. Mr Allen QC for Mr OBrien pragmatically observed that his client wanted to win and that, so long as his client did so, he did not intend to press the court to express a view about the existence of a contract of employment. So the issue turns on whether there is an employment relationship in the relevant sense. Mr Allen pointed out that in making the reference to the CJEU the Supreme Court had already expressed the view that recorders are subject to the sort of terms of service referred to by Sir Robert Carswell LCJ in Perceval Price v Department of Economic Development [2000] IRLR 380. The claimants in that case were three female holders of full time judicial office. They brought claims on sex discrimination grounds, but the statutory provisions under which they were made excluded the holder of a statutory office. Giving the judgment of the court, Sir Robert Carswell pointed out that the purpose of article 119 of the Treaty and of the Equal Pay and Equal Treatment Directives was to protect against discrimination. At p 384 he said: 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 . Agreeing with these observations, this court said in para 27 of its judgment on the reference that judicial office partakes of most of the characteristics of employment. However, because domestic law could not readily be disentangled from EU law on this issue, it preferred to express no concluded view as to whether judges as a general class would qualify as workers under the Regulations, or whether Mr OBrien would qualify as a worker if regulation 17 were to be disregarded, until it had received guidance from the CJEU. Mr Allen submitted that nothing in the judgment of the CJEU tended to cast doubt on this courts provisional opinion. The argument for the Ministry of Justice is that there is no obligation to provide Mr OBrien with a pension under European law as he was a judicial office holder, not a worker. As Mr David Staff of the then Department of Constitutional Affairs explained in a statement that was shown to the Employment Tribunal, judicial office holders were seen as being in a distinct category with an entirely separate status. Fundamental to the concept of judicial independence was the fact that judicial office holders exercise their function wholly independently of influence or direction by any Minister, Government Department or agency. The CJEU has, however, made it clear that the principle that judges are independent in the exercise of the function of judging as such is not called into question by extending to part time judges the scope of the principle of equal treatment to protect them against discrimination as compared with full time workers: paras 47 49. In these paragraphs the court was, in effect, endorsing the observations of Advocate General Kokott, where she said in paras 50 51 of her opinion: 50 In this connection, I would also point out that it is difficult to determine how the rights granted by the Framework Agreement in general, and an entitlement to a retirement pension in particular, can jeopardise the essence of the independence of a judge; on the contrary, an entitlement to a retirement pension strengthens the economic independence of judges, and thus also the essence of their independence. 51 Independence in terms of the essence of an activity is not therefore an appropriate criterion for justifying the exclusion of a professional category form the scope of the Framework Agreement. In these circumstances Mr Cavanagh QC for the Ministry did not pursue the argument that the principle of the independence of the judiciary justified according a different status for the purposes of the Framework Agreement to recorders from that which governed ordinary departmental staff in the civil service. The fact that recorders are not subject to direction or control over the decisions that they take in the performance of the responsibilities of their office does not deprive them of the protection against discrimination that the Framework Agreement was designed to provide. Instead, recognising that this argument was no longer open to him, Mr Cavanagh confined his argument to addressing points of detail. He submitted that a recorders terms and conditions of service, as set out in a succession of memoranda from the Lord Chancellor, did not tell the whole story. It was, he submitted, necessary to go into the reality and substance of the matter. The issue could only be resolved if one was in possession of the full facts. In particular, evidence could usefully be heard about such matters as the way recorders were appointed and removed, the way their work was organised, whether sanctions were imposed upon recorders for sitting less than the minimum of 15 days a year and whether in practice the fixing and carrying out of sitting engagements was substantially different from the other professional commitments they undertook. He submitted that, while salaried part time judges would have a stronger case for being regarded as workers, fee paid part time judges are in a position similar to self employed persons. If the case were remitted to the Employment Tribunal, the evidence would show that the booking of judicial sittings by a recorder is similar to the booking of counsels engagements. One could not assume that the position of other judges was the same as that for recorders, although his position was that they all fell outside the definition of worker within the meaning of the Framework Agreement. As narrated in para 11, above, the court was satisfied that it was unnecessary to remit the matter to the Employment Tribunal on the worker issue, and that it should confirm its provisional view expressed in paragraph 27 of its judgment on the reference. Nothing in the judgment of the CJEU is inconsistent with that provisional view, and much of the judgment supports it. Following the guidance that the CJEU provided in para 43 of its judgment (see para 30, above), account in arriving at this decision was taken of the following matters mentioned in paras 44 46: (i) the fact that the character of the work that a recorder does in the public service differs from that of a self employed person; (ii) the rules for their appointment and removal, to which no self employed person would subject himself; (iii) the way their work is organised for them, bearing in mind that recorders, in common with all other part time judges, are expected to work during defined times and periods; (iv) their entitlement to the same benefits during service, as appropriate, as full time judges. The court does not accept that the terms and conditions laid down by the Lord Chancellor for recorders do not give a true picture of the reality of the work that is done by a recorder. On the contrary, Mr OBriens evidence shows that he was on one occasion required to explain why he had in two successive years failed to achieve the required number of sittings, and Mr OBrien had to explain and apologise. The reality is that recorders are expected to observe the terms and conditions of their appointment, and that they may be disciplined if they fail to do so. The very fact that most recorders are self employed barristers or solicitors merely serves to underline the different character of their commitment to the public service when they undertake the office of recorder. As the CJEU made clear in para 44, the spirit and purpose of the Framework Agreement requires that a distinction must be made between the category of worker and that of self employed persons. The matters referred to in the previous paragraph, taken together, really speak for themselves. The self employed person has the comparative luxury of independence. He can make his own choices as to the work he does and when and where he does it. He works for himself. He is not subject to the direction or control of others. Of course, he must adhere to the standards of his trade or profession. He must face the reality that, if he is to succeed, he must satisfy the needs and requirements of those who engage his services. They may be quite demanding, and the room for manoeuvre may be small. But the choices that must be made are for him, and him alone, to take. In Percy v Board of National Mission of the Church of Scotland [2005] UKHL 73, [2006] 2 AC 28, para 141, Lady Hale referred to the authors comment in Harvey on Industrial Relations and Employment Law, para A[4] that the distinction as to whether a person is in an employment relationship 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. This was the same distinction that in para AG48 Advocate General Kokott said must be made in order to have regard to the spirit and purpose of the Framework Agreement. In para 145 Lady Hale quoted the passage from Sir Robert Carswells judgment in Perceval Price v Department of Economic Development [2000] IRLR 380, 384, where he said that judges are not free agents to work as and when they choose as are self employed persons, and that their office partakes of some of the characteristics of employment: see para 31, above. In para 146 Lady Hale went on to say this: I have quoted those words 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 Gods word, as interpreted in the doctrine 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. As that was a case about the rights of a member of the clergy, she did not say, and did not have to say, in so many words that judges can be workers. But in their case too, and especially in the case of those who work as part time judges, the same essential distinction between the employed and the self employed can be drawn. The fact is, as the matters referred to above make clear, that they are not free agents to work as and when they choose. They are not self employed persons when working in that capacity. For these reasons the court holds recorders are in an employment relationship within the meaning of clause 2.1 of the Framework Agreement on part time work and that, as the result to be achieved by the PTWD is binding on the United Kingdom, they must be treated as workers for the purposes of the 2000 Regulations. Objective justification The Part Time Workers Directive, like the Fixed term Work Directive, is unusual in allowing the justification of direct discrimination against part time workers. Clause 4.1 of the Framework Agreement (quoted at para 14 above) prohibits treating part time workers less favourably than comparable full time workers, solely because they work part time, unless different treatment is justified on objective grounds. Regulation 5(2) of the domestic 2000 Regulations (quoted at para 17 above) is to the same effect. However, clause 4.2 of the Framework Agreement sets out the general principle that where appropriate, the principle of pro rata temporis shall apply. Regulation 5(3) is to the same effect. Hence the usual expectation is that part time workers will receive the same remuneration and other benefits as comparable full time workers, calculated on a pro rata basis, unless there are objective grounds for departing from this principle. There is, however, little guidance from the CJEU as to what might constitute such objective grounds, other than that which we have been given in this particular case, at paras 64 to 66 of the judgment of the court: 64 . the concept objective grounds . must be understood as not permitting a difference in treatment between part time workers and full time workers to be justified on the basis that the difference is provided for by a general, abstract norm. On the contrary, that concept requires the unequal treatment at issue to respond to a genuine need, be appropriate for achieving the objective pursued and be necessary for that purpose: see, by way of analogy with clause 5.1(a) of the Framework Agreement on Fixed term Work, Del Cerro Alonso [2008] ICR 145, paras 57 and 58. 65 Since no justification has been relied on during the proceedings before the court, it is for the referring court to examine whether the inequality of the treatment between full time judges and part time judges remunerated on a daily fee paid basis may be justified. 66 It must be recalled that budgetary considerations cannot justify discrimination: see, to that effect, Schnheit v Stadt Frankfurt am Main (Joined Cases C 4/02 and C 5/02 [2003] ECR I 12575, para 85, and Zentralbetriebsrat der Landeskrankenhuser Tirols v Land Tirol (Case C 486/08) [2010] ECR I 3527, para 46. The first sentence of para 64 means no more than that it is not enough for a member state to provide for the difference in treatment in its law (or enforceable collective agreement): see Adeneler v Ellenikos Organismos Galaktos (Case C 212/04) [2006] ECR I 6057. The fact that regulation 17 of the domestic Regulations excludes fee paid part time judicial officers from the protection given by the Regulations is neither here nor there. The second sentence of para 64 repeats the familiar general principles applicable to objective justification: the difference in treatment must pursue a legitimate aim, must be suitable for achieving that objective, and must be reasonably necessary to do so. The opinion of Advocate General Kokott is slightly more expansive at para 62: 62 The unequal treatment at issue must therefore be justified by the existence of precise, concrete factors, characterising the employment condition concerned in its specific context and on the basis of objective and transparent criteria for examining the question whether that unequal treatment responds to a genuine need and whether it is appropriate and necessary for achieving the objective pursued: see Del Cerro Alonso [2008] ICR 145, para 58, and Ang Serrano v European Parliament (Case C 496/08P) [2010] ECR I 1793, para 44. This court proposes to follow the guidance given by the CJEU and the Advocate General in those passages. Although the CJEU did not repeat the first part of para 62 of the Advocate Generals opinion, it is merely a longer quotation from para 58 of the judgment in Del Cerro Alonso v Osakidetza Sevvicio Vasco del Salud [2008] ICR 145 which the court did cite. The Ministry of Justice face the difficulty that they have not until now articulated a justification for their policy. It is clear from the history that when the 2000 Regulations were made the Lord Chancellor took the view that judges were not workers for this purpose, a view which was maintained until this court rejected it following the renewed hearing of this case in July 2012. This does not preclude the Ministry from now advancing a justification for maintaining the policy: see Seldon v Clarkson Wright & Jakes [2012] UKSC 16, [2012] ICR 716, para 60, citing Petersen v Berufsausschuss fr Zahnrtze fr den Bezirk Westfalen Lippe (Case C 341/08) [2010] ECR I 47. It is also clear from the history that, insofar as there was a reason for ensuring that fee paid part time judges were not covered by the 2000 Regulations, it was to save cost. By itself, of course, this cannot constitute justification. But once again, this does not preclude the Ministry from now advancing a different and better justification: see Finalarte Sociedade Construo Civil Lda v Urlaubs und Lohnausgleichskasse der Bauwirtschaft (Cases C 49/98, C 50/98, C 52/98 to C 54/98 and C 68/98 to C 71/98) [2003] 2 CMLR 11. However, in this as in any other human rights context, this court is likely to treat with greater respect a justification for a policy which was carefully thought through by reference to the relevant principles at the time when it was adopted: see Belfast City Council v Miss Behavin Ltd [2007] UKHL 19, [2007] 1 WLR 1420, paras 26 and 37; R (SB) v Governors of Denbigh High School [2006] UKHL 15, [2007] 1 AC 100, para 31. In particular, as Mummery LJ pointed out in R (Elias) v Secretary of State for Defence [2006] EWCA Civ 1293, [2006] 1 WLR 3213, at paras 128 to 132, it is difficult for the Ministry to justify the proportionality of the means chosen to carry out their aims if they did not conduct the exercise of examining the alternatives or gather the necessary evidence to inform the choice at that time. treatment complained of: In their pleaded case, the Ministry advance three inter related aims for the (i) fairness in the distribution of the States resources that are available to fund judicial pensions; (ii) to attract a sufficiently high number of good quality candidates to salaried judicial office; and (iii) to keep the cost of judicial pensions within limits which are affordable and sustainable. In Mr Cavanaghs written and oral submissions on their behalf, fairness was divided into two elements: (a) the alternative opportunities available to part timers, but denied to full timers, to make provision for their retirement; and (b) the greater contribution made by the full timers to the working of the justice system. Remission? Before considering each of these suggested justifications, it is necessary to consider whether the case should be remitted to the Employment Tribunal for the determination of any relevant disputed facts. The Ministry, Mr OBrien and the interveners have all filed extensive evidence in accordance with this courts directions in July 2012. While much is agreed, Mr Cavanagh argues that there are five key areas of dispute: (i) the extent to which Recorders also have practices as barristers or solicitors; (ii) the number of days which Recorders are required to sit in a year and the extent of the flexibility which they are allowed in order to accommodate the demands of their practices; (iii) whether the work of Recorders is in general less onerous than the work of Circuit Judges; (iv) the extent to which Recorders suffer a drop in pay if they become Circuit Judges and whether there would be a drop in high quality candidates for full time appointment if the pensions payable to full timers were reduced; and (v) how much it would cost to provide pro rata pensions to Recorders. Mr Cavanagh acknowledges that the most important areas are (i) and (iii), as these are directly relevant to the fairness justification. Once the arguments were examined in detail, however, it became apparent that resolving these factual issues would not resolve the central issue of whether the discrimination is objectively justified. To the extent that it might do so, the court was content to take the factual basis of the Ministrys case at the highest at which it could properly be put. Accordingly, the court decided not to remit for this purpose. Fairness: alternative means of providing for retirement The Ministry point out that recorders are far removed from the type of part time worker for whom the protection of the PTWD was designed. These were, it is said, low paid workers who were driven to take part time jobs by their personal circumstances, often their childcare or other domestic responsibilities, and were in a very weak bargaining position compared with their full time and more often unionised colleagues. Many of them were women. Indeed, before the PTWD, there were many cases decided where discrimination against part time workers was held to be indirect discrimination on grounds of sex because women were so much more likely to be adversely affected by it than men: see, for example, R v Secretary of State for Employment, Ex p Seymour Smith (No 2) [2000] 1 WLR 435. The aim of the Directive was to promote more flexible working patterns, by eliminating discrimination against part time workers and assisting the development of opportunities for part time working in a way which would benefit both employers and workers. Recorders, it is said, do not undertake their part time judicial work in order to prepare for retirement, reconcile professional and family life, and take up education and training opportunities (the reasons mentioned in the fifth of the General Considerations listed in the Framework Agreement for attaching importance to measures which would facilitate access to part time work). The great majority of recorders are either in practice at the Bar or as solicitors or hold other judicial offices as District or Tribunal Judges. A few may be employed, for example as academic lawyers or even Law Commissioners. The point is that they have a principal occupation which is not judging. This means that they can provide for their retirement in other ways: a sole practitioner such as a barrister can build up his own pension pot from his earnings at the Bar; a partner in a solicitors practice can take part in the firms pension scheme; an employed person can take part in his occupational or other pension arrangements. They do not need to rely upon a pension from their very limited time sitting in court. The availability of other resources has been taken into account in the justification of age discrimination: see, for example, Palacios de la Villa v Cartefiel Services SA (Case C 411/05) [2009] ICR 1111; Rosenbladt v Oellerking Gebudereinigungs GmbH (Case C 45/09) [2011] IRLR 51. Full timers, on the other hand, have hardly any opportunity for outside earnings and have no means other than the judicial pension scheme to make provision for their retirement. It is fair, therefore, that the limited sums available for judicial pensions should be allocated to the full timers (and to the salaried part timers) rather than to the fee paid part timers. The full timers need them and the part timers do not. The Ministry are able to make this argument with particular force because this case happens to be about a recorder. The great majority of recorders do have other sources of income from which to provide for their retirement. As the Council of Immigration Judges make clear, this is by no means true of many fee paid judicial officers. Some, indeed, are sitting virtually full time but on a part time fee paid basis. Some have a portfolio of fee paid offices which add up to a full time post. Some are sitting part time precisely because they need more flexible work to accommodate their domestic or other responsibilities. None of these have the opportunity to provide for their retirement out of other income. They are just the sort of people for whom the PTWD was designed. The fallacy in the Ministrys argument, it is said, is that fee paid part timers may (or may not) have the opportunity to provide for their retirement out of other earnings, but they do not have the opportunity to do so while they are engaged in their part time sittings. While engaged on judicial duties they are deprived of the opportunity to make other earnings and the pension contributions which could be made from them. Occupational pension schemes are part of the package of remuneration which goes with a particular occupation: they are often referred to as deferred pay. They are part of the price which the employer pays for the workers services. It would not be justifiable for an employer to pay a lesser daily rate to a fee paid part timer than to a full timer: indeed, recorders are paid a daily rate which is the equivalent pro rata temporis to the salary of a full time circuit judge, but without the pension element in the package. It is equally unjustifiable, it is said, to separate out the pension element in the remuneration package and refuse to apply the pro rata temporis principle to it. In this respect, it is irrelevant that the employer is the State. The Ministry should be regarded like any other employer. A private employer would not be able to justify paying part time workers less or denying them access to its occupational pension scheme and the State should be in no different position. At bottom, this is not an argument about fairness. It is premised on there being a limited pot of money available to fund judicial pensions. That, it is said, is an impermissible premise: budgetary considerations cannot justify discriminatory treatment. Fairness: the greater contribution made by full timers Another aspect of fairness, argue the Ministry, is that recorders generally do the less onerous work in the Crown and county courts. They only sit for a limited period each year and so cannot try the longer and more complicated cases, nor do they generally have to do the paperwork which the full time judges have to do. There are also a few, very limited, powers which are statutorily reserved to circuit judges. Against that, and with those very limited exceptions, it is said that the statutory jurisdiction of recorders is exactly the same as the jurisdiction of a circuit judge (as indeed the jurisdiction of a deputy district judge is exactly the same as the jurisdiction of a district judge). Certain types of work require a ticket for example, to try serious sexual offences, for child care cases, or for Technology and Construction Court work. But some recorders have such tickets (Mr OBrien, for example, was ticketed to do Technology and Construction Court work) and many circuit judges do not. Some recorders, especially if they sit in the smaller courts, may also be required to do paperwork. If circuit judges do undertake tasks which recorders are not required to undertake, the proper response is to reward these with extra responsibility payments, not to make a whole sale and indiscriminate exception to the pro rata temporis principle. A further aspect of this fairness argument, which tells against the Ministry, is that it suits Her Majestys Courts and Tribunals Service to have a cadre of fee paid part timers who can be flexibly deployed to meet the varying demands of court business. If all the work was done by full timers, there would have to be enough judges to cater for the busiest times. Inevitably, some would not have enough to do at other times. But once a judge is appointed to a full time post, it is not possible to dismiss him for redundancy. Appointing a large number of fee paid part timers enables the system to respond economically and flexibly to the fluctuations in demand for the courts services. Like a bank of agency nurses or supply teachers, it is an efficient method of working which benefits everyone. This efficiency should not be purchased at a price which discriminates against the part timers. Recruitment The Ministry argue that (even with the recent and proposed changes) the judicial pension scheme is a substantial incentive for high quality practitioners to seek and accept a full time appointment. It is a matter of general public importance that the remuneration package of circuit judges is sufficiently appealing to attract a sufficient number of high quality candidates. Barristers and solicitors in private practice frequently suffer a drop in income when they are appointed to the Bench. The pension sweetens the pill. This argument does, of course, assume that the persons best qualified to serve as circuit judges are the barristers and solicitors who have been most successful in private practice. Even assuming that to be the case, however, it is difficult to see why denying pensions to recorders increases the attractions of full time appointment. (It has echoes of the argument that denying the benefits of marriage to same sex couples increases the attractions of marriage to couples of opposite sexes.) The effect of paying pensions to part timers would be to increase their remuneration package for the limited number of days on which they sit. For recorders in particular, it would come nowhere close to making proper provision for their retirement. The pension entitlement attached to a full time appointment would still present a significant attraction, especially to a practitioner who had not already built up a very substantial pension pot of his own. Further, the Ministry do not argue that the recent and proposed changes to the judicial pension scheme, which will significantly reduce its attractiveness to the most successful practitioners, have had any impact upon the quantity and quality of applications for the full time Circuit bench. Quite the reverse. Their assessment of the impact of the introduction of contributions last year was that this would not have a significant effect upon recruitment. Promoting a high quality judicial system is of course a legitimate aim but it applies just as much to the part timers as to the full timers. Both must be of a high standard, so it is not an aim which divides them. While there is no evidence that the lack of a pension deters good quality candidates from applying to be recorders, the same may not be true of those parts of the justice system which rely upon fee paid part timers to do the great majority of the work. The Ministry accept that cost alone cannot justify discriminating against part time workers. But they argue that cost plus other factors may do so. This is a subtle point which is not without difficulty. The starting point for the discussion of this issue is the statement of the ECJ in MA de Weerd (Roks) v Bestuur Van de Bedrijfsvereniging voor de Gezondheid, Geestilijke en Maatschappelijke Belangen (Case C 343/92) [1994] 2 CMLR 325, a case about sex discrimination in social security benefits, at para 35: 35although budgetary considerations may influence a Member States choice of social policy and affect the nature or scope of the social protection measures it wishes to adopt, they cannot in themselves constitute the aim pursued by that policy and cannot, therefore, justify discrimination against one of the sexes. In other words, richer states may have more generous benefits systems than do poorer states. Cost may inform how much the state will spend upon its benefits system, but the choices made within that system must pursue policy aims other than saving cost. The court continued: 36 Moreover, to concede that budgetary considerations may justify a difference in treatment as between men and women which would otherwise constitute indirect discrimination on grounds of sex . would be to accept that the application and scope of as fundamental a rule of Community law as that of equal treatment between men and women might vary in time and place according to the state of the public finances of the Member States. It is one thing to set benefits at a particular level for budgetary reasons. It is another thing to pay women less than men because it is cheaper so to do. Sex discrimination is wrong whether the state (or the employer) is rich or poor. But, say the Ministry, the fact that a social policy aim is affected by budgetary considerations does not invalidate it if it is otherwise justified. Mr Cavanaghs best case is Jrgensen v Foreiningen af Speciallaeger and Sygesikringens Forhandlingsudvalg (Case C 226/98) [2000] IRLR 726. Mrs Jrgensen, a specialist rheumatologist, complained about a rule which meant that, if she sold her practice, it would, because of its turnover, be treated as a part time practice and subject to a cap on the fees it could receive from the Danish national health authorities. She argued that this was indirectly discriminatory on grounds of sex, because her lower turnover was the result of her domestic responsibilities, which affected many more women than men. The aim of the scheme which imposed the cap was to limit the exercise of part time specialist practice, it being considered that many doctors who worked principally in a hospital and part time in their own practices neglected the former for the sake of the latter. Among other questions, the Danish court asked the ECJ whether considerations relating to budgetary stringency, savings or medical practice planning might be regarded as objective considerations justifying a measure which adversely affected a larger number of women than men. In answering the question, the court repeated (at para 39) paragraphs 35 and 36 of Roks (see para 64 above) but agreed with the Commission that reasons relating to the need to ensure sound management of public expenditure on specialised medical care and to guarantee peoples access to such care are legitimate (at para 40). Their answer to the question was that budgetary considerations cannot in themselves justify discrimination on grounds of sex. However, measures intended to ensure sound management of public expenditure on specialised medical care and to guarantee peoples access to such care may be justified if they meet a legitimate objective of social policy, are appropriate to attain that objective and are necessary to that end (at para 42). If this is the Ministrys best case on budgetary considerations, it can be said, then it does not take them very far. Sound management of the public finances may be a legitimate aim, but that is very different from deliberately discriminating against part time workers in order to save money. In European Commission v The Netherlands (Case C 542/09), the Commission complained that imposing a residence requirement upon migrant workers and their families for eligibility for student support for courses outside the Netherlands breached the principle of non discrimination against migrant workers. The Netherlands argued that the requirement was necessary in order to avoid an unreasonable financial burden which could have consequences for the very existence of the assistance scheme (para 56). The court reiterated (at paras 57 and 58), mutatis mutandis, the principles set out in Roks (see para 64 above) and concluded that the objective pursued by the Kingdom of the Netherlands of avoiding an unreasonable financial burden cannot be regarded as an overriding reason relating to the public interest, capable of justifying the unequal treatment of workers from other Member States as compared with Netherlands workers (para 69). As Advocate General Sharpston had put it in her opinion, Any conditions attached to [the scheme] in order to keep expenditure within acceptable limits must be borne equally by migrant workers and Netherlands workers (para 89). On the other hand, the court held that the aim of promoting student mobility was legitimate and a residence requirement was an appropriate means of achieving that aim, as only students resident in the Netherlands would need to be encouraged to study elsewhere; but the Netherlands had not succeeded in establishing that the particular residence rule adopted did not go beyond what was necessary in order to achieve that objective. So a completely different aim might have been capable of justifying the policy. Hence the European cases clearly establish that a Member State may decide for itself how much it will spend upon its benefits system, or presumably upon its justice system, or indeed upon any other area of social policy. But within that system, the choices it makes must be consistent with the principles of equal treatment and non discrimination. A discriminatory rule or practice can only be justified by reference to a legitimate aim other than the simple saving of cost. No doubt it was because the CJEU foresaw that the Ministry would seek to rely upon considerations of cost when the case returned to the national courts that it took care to reiterate that budgetary considerations cannot justify discrimination (para 66). Our attention was drawn to some domestic authorities, and in particular to Woodcock v Cumbria Primary Care Trust [2012] EWCA Civ 330, [2012] ICR 1126. This was an age discrimination case, in which the claimant complained that the trust had deliberately failed to comply with a requirement to consult before declaring him to be redundant, so that his employment would cease before he reached the age which would trigger a higher severance payment. The Court of Appeal held that the dismissal notice was not served with the simple aim of dismissing him before his 49th birthday but in order to give effect to a genuine decision that his position was redundant. It was justifiable to implement that decision in a way which saved money. This court must, however, take its guidance from the jurisprudence of the CJEU, and in particular the guidance which we have been given in this very case. In the circumstances it is unnecessary for us to express a view upon whether the case of Woodcock was rightly decided. Conclusions We agree with the arguments advanced on behalf of Mr OBrien. The Ministry have struggled to explain what they are seeking to achieve by denying a pension to part timers while granting one to full timers. One aim seems to be to give a greater reward to those who are thought to need it most. This might be a legitimate aim, but (as Advocate General Kokott explained) the unequal treatment of different classes of employees must be justified by the existence of precise, concrete factors, characterising the employment condition concerned in its specific context and on the basis of objective and transparent criteria. An employer might devise a scheme which rewarded its workers according to need rather than to their contribution, but the criteria would have to be precise and transparent. That is not so here. Some part timers will need this provision as much as, if not more than, some of the full timers. On examination, this objective amounts to nothing more than a blanket discrimination between the different classes of worker, which would undermine the basic principle of the PTWD. Similarly (but inconsistently), an employer might aim to give a greater reward to those who make the greater contribution to the justice system, but the Ministry have failed to demonstrate that fee paid part timers, as a class, make a lesser contribution to the justice system than do full timers, as a class. Once again, the criteria for assessing such contributions are not precise and transparent. They amount to nothing more than a blanket discrimination between the two classes of worker. The proper approach to differential contributions is to make special payments for extra responsibilities. The argument also fails to take into account the benefits to the system in having a cadre of fee paid part timers who can be flexibly deployed to meet the changing demands upon it. The aim of recruiting a high quality judiciary is undoubtedly legitimate, but it applies to the part time judiciary as much as it applies to the full timers. Nor has it been shown that denying a pension to the part timers has a significant effect upon the recruitment of full timers. In effect, the arguments presented to us are the same as the arguments presented by the Kingdom of the Netherlands in Commission v The Netherlands: that if recorders get a pension, then the pensions payable to circuit judges will have to be reduced. That is a pure budgetary consideration. It depends upon the assumption that the present sums available for judicial pensions are fixed for all time. Of course there is not a bottomless fund of public money available. Of course we are currently living in very difficult times. But the fundamental principles of equal treatment cannot depend upon how much money happens to be available in the public coffers at any one particular time or upon how the State chooses to allocate the funds available between the various responsibilities it undertakes. That argument would not avail a private employer and it should not avail the State in its capacity as an employer. Even supposing that direct sex discrimination were justifiable, it would not be legitimate to pay women judges less than men judges on the basis that this would cost less, that more money would then be available to attract the best male candidates, or even on the basis that most women need less than most men. It follows that no objective justification has been shown for departing from the basic principle of remunerating part timers pro rata temporis. Although this case is concerned only with the case of a recorder, it seems unlikely that the Ministrys argument could be put any higher than it has been. The court holds that the appellant is entitled to a pension on terms equivalent to those applicable to a circuit judge. Disposal Trinity Term [2010] UKSC 34 On appeal from: [2008] EWCA Civ 1448 JUDGMENT O'Brien (Appellant) v Ministry of Justice (Formerly the Department for Constitutional Affairs) (Respondents) Lord Hope, Deputy President before Lord Walker Lady Hale Lord Clarke Lord Dyson 28 July 2010 JUDGMENT GIVEN ON Heard on 14 and 15 June 2010 Appellant Robin Allen QC Rachel Crasnow (Instructed by Browne Jacobson LLP) Respondent John Cavanagh QC Sarah Moore Holly Stout (Instructed by Treasury Solicitor) Intervener (Council of Immigration Judges) Ian Rogers (Instructed by Underwood Solicitors LLP) LORD WALKER (delivering the judgment of the court) Introductory 1. This appeal raises questions of EU law relating to Council Directive 97/81/EC of 15 December 1997 (the PTWD) concerning the Framework Agreement on part time work concluded by UNICE, CEEP and ETUC (the Framework Agreement) which the Court considers it necessary to refer to the Court of Justice under article 267 of the Treaty on the Functioning of the European Union. The appeal also raises questions of domestic law, as to the status and terms of service of judges in England and Wales (the term judges being here used as a compendious term so as to include, in general, chairmen and members of tribunals and others exercising judicial functions for remuneration, but not lay magistrates). The domestic law questions cannot easily be disentangled from the questions of EU law, partly because of the Marleasing principle (see Marleasing SA v La Comercial Internacional de Alimentacion SA C 106/89 [1991] I ECR 4135) and partly because Clause 2(1) of the Framework Agreement refers to employment contract or employment relationship as defined by the law, collective agreement or practice in force in each Member State. 2. This judgment is in five sections. The first section summarises the relevant parts of the PTWD, the Framework Agreement and the regulations transposing these EU measures into domestic law. The second and third sections set out the (largely undisputed) facts both as to the wider factual context (including the growing importance of part time judges in the English legal system) and as to Mr OBriens claim against the Ministry of Justice. The fourth section considers and gives this Courts opinion on the relevant principles of domestic law, but with the important qualification that (because of their entanglement with EU issues) some of the Courts conclusions must be treated as provisional, and may have to be revisited in the light of the Court of Justices preliminary ruling. The fifth and final section explains why a preliminary ruling is necessary, and sets out the questions referred to the Court of Justice. I The PTWD, the Framework Agreement and the domestic regulations 3. The PTWD contains in recital (11) a reference to the parties to the Framework Agreement wishing to establish a general framework for eliminating discrimination against part time workers and to contribute to developing the potential for part time work on a basis which is acceptable for employers and workers alike. Recital (16) is as follows: Whereas, with regard to terms used in the Framework Agreement which are not specifically defined therein, this Directive leaves Member States free to define those terms in accordance with national law and practice, as is the case for other social policy Directives using similar terms, providing that the said definitions respect the content of the Framework Agreement. Article 1 states that the purpose of the Directive is to implement the Framework Agreement. Article 2 requires Member States to transpose it into national law by 20 January 2000 at latest. 4. Clauses 1 and 2 of the Framework Agreement are as follows: Clause 1: Purpose The purpose of this Framework Agreement is: (a) to provide for the removal of discrimination against part time workers and to improve the quality of part time work; (b) to facilitate the development of part time work on a voluntary basis and to contribute to the flexible organization of working time in a manner which takes into account the needs of employers and workers. Clause 2: Scope 1. This Agreement applies to part time workers who have an employment contract or employment relationship as defined by the law, collective agreement or practice in force in each Member State. 2. Member States, after consultation with the social partners in accordance with national law, collective agreements or practice, and/or the social partners at the appropriate level in conformity with national industrial relations practice may, for objective reasons, exclude wholly or partly from the terms of this Agreement part time workers who work on a casual basis. Such exclusions should be reviewed periodically to establish if the objective reasons for making them remain valid. The Ministry of Justice does not place any reliance on Clause 2(2). Clause 3 contains definitions of part time worker and comparable full time worker. Clause 4 sets out the principle of non discrimination: Clause 4: Principle of non discrimination 1. In respect of employment conditions, part time workers shall not be treated in a less favourable manner than comparable full time workers solely because they work part time unless different treatment is justified on objective grounds. 2. Where appropriate, the principle of pro rata temporis shall apply. 3. The arrangements for the application of this clause shall be defined by the Member States and/or social partners, having regard to European legislation, national law, collective agreements and practice. 4. Where justified by objective reasons, Member States after consultation of the social partners in accordance with national law, collective agreements or practice and/or social partners may, where appropriate, make access to particular conditions of employment subject to a period of service, time worked or earnings qualification. Qualifications relating to access by part time workers to particular conditions of employment should be reviewed periodically having regard to the principle of non discrimination as expressed in Clause 4.1. 5. The PTWD did not initially apply to the United Kingdom. But Council Directive 98/23/EC of 7 April 1998 provided for it to apply to the United Kingdom with 7 April 2000 being substituted for 20 January 2000 as the final date for transposition. 6. The United Kingdom gave effect to the PTWD and the Framework Agreement by the Part time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (SI 2000 No.1551) (the Regulations) which were made on 8 June 2000 and came into force on 1 July 2000. The Regulations were made under section 19 of the Employment Relations Act 1999. 7. Regulation 1(2) contains definitions, including: contract of employment means a contract of service or of apprenticeship, whether express or implied, and (if it is express) whether oral or in writing; worker means an individual who has entered into or works under or (except where a provision of these Regulations otherwise requires) where the employment has ceased, worked under (a) a contract of employment; or (b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual. There is no reference to employment relationship. Regulation 2 (as amended) contains definitions of a full time worker, a part time worker and a comparable full time worker. It is common ground that if Mr OBrien was a worker at all, he was a part time worker. 8. Regulation 5 sets out the prohibition on unjustified less favourable treatment of part time workers: 5. Less favourable treatment of part time workers (1) A part time worker has the right not to be treated by his employer less favourably than the employer treats a comparable full time worker (a) as regards the terms of his contract; or (b) by being subjected to any other detriment by any act, or deliberate failure to act, of his employer. (2) The right conferred by paragraph (1) applies only if (a) the treatment is on the ground that the worker is a part time worker, and (b) the treatment is not justified on objective grounds. (3) In determining whether a part time worker has been treated less favourably than a comparable full time worker the pro rata principle shall be applied unless it is inappropriate. Part IV of the Regulations is headed Special Classes of Person and 9. contains six Regulations numbered 12 to 17. Regulation 12 (Crown employment) provides (so far as now material) (1) Subject to regulation 13, these Regulations have effect in relation to Crown employment and persons in Crown employment as they have effect in relation to other employment and other employees and workers. (2) In paragraph (1) Crown employment means employment under or for the purposes of a government department or any officer or body exercising on behalf of the Crown functions conferred by a statutory provision. Regulations 13 (Armed forces), 14 (House of Lords staff), 15 (House of Commons staff) and 16 (Police service) make similar provision for the classes of service personnel, office holders or employees to which they relate (but subject to an exception for certain types of military training under the Reserve Forces Acts). Subject to that exception all these provisions include within the scope of the Regulations persons who would not or might not otherwise be included. 10. By contrast Regulation 17 (Holders of judicial offices) disapplies the Regulations in relation to fee paid part time judges: These Regulations do not apply to any individual in his capacity as the holder of a judicial office if he is remunerated on a daily fee paid basis. The parties take different views as to whether, in the absence of Regulation 17, fee paid part time judges would have been treated as part time workers for the purposes of the Regulations. II The facts: the part time judiciary 11. Until the 1970s the English judicial system had relatively few part time judges, variously styled recorders, commissioners or chairmen of quarter sessions. All these part time judges were remunerated by fees calculated on a daily basis (fee paid). Professor Bell (Judiciaries in Europe (2006) p312) records that in 1970 full time judges outnumbered part time judges by about three to one. Many judicial officers who are now called judges were then designated by other terms such as registrars, stipendiary magistrates and social security or tax commissioners. 12. The Courts Act 1971 made major changes in the justice system and (as amended) conferred the powers under which all recorders are still appointed. Section 21 of the Courts Act 1971, as originally enacted, was in the following terms: (1) Her Majesty may from time to time appoint qualified persons, to be known as Recorders, to act as part time judges of the Crown Court and to carry out such other judicial functions as may be conferred on them under this or any other enactment. (2) Every appointment of a person to be a Recorder shall be of a person recommended to Her Majesty by the Lord Chancellor, and no person shall be qualified to be appointed a Recorder unless he is a barrister or solicitor of at least ten years standing. (3) The appointment of a person as a Recorder shall specify the term for which he is appointed and the frequency and duration of the occasions during that term on which he will be required to be available to undertake the duties of a Recorder. (4) Subject to subsection (5) below the Lord Chancellor may, with the agreement of the Recorder concerned, from time to time extend for such period as he thinks appropriate the term for which a Recorder is appointed. (5) Neither the initial term for which a Recorder is appointed nor any extension of that term under subsection (4) above shall be such as to continue his appointment as a Recorder after the end of the completed year of service in which he attains the age of 72. (6) The Lord Chancellor may if he thinks fit terminate the appointment of a Recorder on the ground of incapacity or mis behaviour or of a failure to comply with any requirements specified under subsection (3) above in the terms of his appointment. (7) There shall be paid to Recorders out of money provided by Parliament such remuneration and allowances as the Lord Chancellor may, with the approval of the Minister for the Civil Service, determine. The section has been amended from time to time. The most significant amendment, influenced by the Human Rights Act 1998, was the introduction of safeguards limiting the Lord Chancellors right to decline to extend, or to terminate, an appointment. This amendment gave effect to new terms and conditions of service promulgated by the Lord Chancellors Department (the predecessor to the Ministry of Justice) in 2000. 13. Since the Courts Act 1971 there has been a remarkable growth in the number of part time judges. Statistics in Professor Bells chapter (table 6.1a) show that there were 2,041 part time judges (recorders and deputy district judges) in 1993 and 2,414 in 2005 (including 200 female deputy district judges, up from 89 in 1993, indicating the success of the official policy of encouraging women to become part time judges). There are now almost twice as many part time judges (recorders and deputy district judges) as full time judges. These figures do not take account of remunerated chairmen and members of tribunals, the structure of which has been radically reformed by the Tribunals Courts and Enforcement Act 2007. Submissions from the Council of Immigration Judges show that in 2009 there were 145 full time immigration judges and 440 part time immigration judges (the latter group being divided between salaried part time judges and fee paid part time judges as mentioned below). 14. For about thirty years after the Courts Act 1971 all part time judges were remunerated on a fee paid basis. That was not a statutory requirement (section 21(7) is in very general terms) but it was the administrative arrangement chosen by the Lord Chancellors Department (later the Department of Constitutional Affairs, and now the Ministry of Justice). Since about 2000, however, there has been an increase in salaried part time judges, especially among district judges and immigration judges. 15. The Lord Chancellor has from time to time issued and amended written memoranda as to the terms and conditions of service of recorders. The memorandum current in 1978 (when Mr OBrien was appointed) contained fifteen paragraphs covering (among other things) the requirement for attendance at sentencing conferences, the frequency and duration of sittings (at least twenty days a year, which could be split into two periods of at least ten days) and fees (60 a day). The version (issued in April 2000) current at his retirement is a more elaborate document of 49 paragraphs together with two appendices (on relations with the media). Most of the new material dealt with the renewal of appointments and judicial conduct. A recorder was entitled to be offered a minimum of fifteen sitting days a year and might be required to sit for up to thirty days. The daily fee was unspecified but in practice was (and still is) 1 220th of the salary of a full time circuit judge. A fee at half the daily rate is paid for attending Judicial Studies Board residential conferences. The CIJs submissions state that fee paid part time immigration judges sittings should not normally exceed 105 days a year, and that for each days sitting an immigration judge is credited a further days work and pay for writing determinations and similar out of court duties. 16. All part time judges are entitled (where appropriate) to sick pay, maternity or paternity pay, and similar benefits during service. Full time judges and salaried part time judges are entitled to pensions on retirement, subject to and in accordance with the provisions of the Judicial Pensions Act 1981 as amended and the Judicial Pensions and Retirement Act 1993 as amended. Fee paid part time judges have no entitlement to a judicial pension on retirement. That is what Mr OBrien complains of in these proceedings. His complaint is founded on the PTWD and the Framework Agreement. III Facts relevant to Mr OBriens complaint 17. Mr OBrien was born in 1939 and called to the bar in 1962. From about 1970 his practice was in civil (as opposed to criminal) work on the western circuit. He was appointed Queens Counsel in 1983. 18. With the encouragement of the leader of the western circuit Mr OBrien applied to become a recorder and was appointed as a recorder with effect from 1 March 1978. He then continued sitting as a recorder until 31 March 2005, with regular extensions, the last extension being in 1999. In 1986 and 1987 he was unable to comply with his sitting requirement because he was engaged in a heavy case in Hong Kong. For this he received what he called a polite but firm reprimand from the Lord Chancellors Department. In 1998 the Department adopted the policy, set out in its memorandum of terms and conditions, of not renewing a recorders appointment beyond the year in which he or she attained the age of 65. From 2000 the policy was for recorders terms to be five years, automatically renewable except in the case of incapacity or misbehaviour. 19. Mr OBrien started proceedings in the Employment Tribunal on 29 September 2005. Initially his claim was opposed by the Department of Constitutional Affairs (now the Ministry of Justice) unsuccessfully in the Employment Tribunal, but successfully on appeal to the Employment Appeal Tribunal, on the ground that it was out of time. But it was later ordered, by consent, that the substantive issue and the time limit issue should both be heard by the Court of Appeal as a test case. On 19 December 2008 the Court of Appeal (the Chancellor and Smith and Maurice Kay LJJ) [2008] EWCA Civ 1448, [2009] ICR 593 allowed Mr OBriens appeal on the time limit issue, but directed the Employment Tribunal to dismiss the claim on the issue of substance. 20. Mr OBrien was given permission to appeal to the Supreme Court and this Court heard submissions on 14 and 15 June 2010. As often happens, each sides primary submission to the Court was that the matter was acte clair in its favour, and its secondary submission was that if the Court did not accept its primary submission, a reference under Article 267 was necessary. For the reasons set out at V below the Court accepts each sides secondary submission. IV Domestic law issues 21. Mr OBrien makes two main alternative submissions, described by his counsel as his high ground and low ground positions. These submissions were developed at length but essentially both are founded on the contention that as a recorder appointed under section 21 of the Courts Act 1971 (as amended) Mr OBrien worked for remuneration subject to terms and conditions akin to an employment contract. Either it was a contract, Mr OBrien says, of a type falling within the definition of worker in Regulation 1(2) of the Regulations (his high ground position) or there was an employment relationship falling within Clause 2(1) of the Framework Agreement (his low ground position). 22. By contrast the position of the Ministry of Justice is that Mr OBrien was not a person working under any sort of contract. He was, it is said, the holder of an office and (as the independence of the judiciary demands) was not subject to the direction of any employer. The fact that he was subject to income tax under Schedule E is of no assistance to him since income tax under Schedule E is charged on the earnings of an office or employment (Income Tax (Earnings and Pensions) Act 2003 section 5). 23. Both sides referred to numerous authorities, the most important being the decision of the House of Lords in Percy v Board of National Mission of the Church of Scotland [2005] UKHL 73 [2006] 2 AC 28. That case concerned a claim for sex discrimination by a female associate minister of the Church of Scotland. Her claim was made under the Sex Discrimination Act 1975, section 82(1) of which contains a definition of employment substantially similar (in its requirement of a contract of service or a contract for personal execution of work or labour) to that in the Regulations. The House of Lords, by a majority of four (Lord Nicholls, Lord Hope, Lord Scott and Lady Hale) to one (Lord Hoffmann) allowed Ms Percys appeal, holding that she was in employment and that the Employment Tribunal had jurisdiction to hear her claim. In Percy the majority held that tenure of an office does not necessarily 24. exclude employment, especially where there is a wide statutory definition of that term (see especially Lord Nicholls at paras 18 22, concurred in by Lord Scott and Lady Hale). Employment may extend beyond the traditional concept of a contract of service between master and servant (Lord Nicholls at para 13, Lord Hope at para 113, Lady Hale at para 141; compare Lord Hoffmann in dissent at para 66). The degree of control exercised over the employee is therefore less important, and in any case Ms Percy was, in that case, conducting her ministry under the control of a senior minister (Lord Nicholls at para 13, Lord Hope at para 127, Lady Hale at paras 145 146 and 148). 25. Lord Hoffmann (at para 73) and Lady Hale (at para 145) referred to the principle laid down by the Court of Justice in Lawrie Blum v Land Baden Wurttenberg C66/85 [1986] ECR 2121, para 17: That concept [worker] must be defined in accordance 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. That was a case on free movement of workers under what was then article 48 of the Treaty. The claimant was a trainee teacher working in Germany. As the Court of Justice was concerned with a fundamental freedom, the term worker had to be given an autonomous Community meaning, and the concept was to be interpreted broadly (para 16). 26. Lady Hale, at paras 143 148, gave detailed consideration to the decision of the Court of Appeal of Northern Ireland in Perceval Price v Department of Economic Development [2000] IRLR 380, a claim on sex discrimination grounds brought by three female holders of full time judicial office (two were chairmen of tribunals and one was a social security commissioner). Their claims were made under statutory provisions which excluded the holder of a statutory office, but the Court of Appeal of Northern Ireland disregarded the exclusion as being inconsistent with the Equal Treatment Directive 76/207/EEC of 9 February 1976 (which had direct effect). Sir Robert Carswell LCJ, giving the judgment of the court, pointed out that the purpose of article 119 of the Treaty and the Equal Pay and Equal Treatment Directives was to protect against discrimination and continued (p384): 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 . The Supreme Court agrees with these observations. 27. A recorder appointed under section 21 of the Courts Act 1971 (as amended) undoubtedly holds an office. Judicial office is one of the oldest and most important offices known to English law. That office is marked by a high degree of independence of judgment, as it must be in order to satisfy the requirements of Article 6 of the European Convention on Human Rights for an independent and impartial tribunal. A recorder, unlike the associate minister of religion in Percy, is not subject to the directions of any superior authority as to the way in which he or she performs the function of judging. Nevertheless recorders (and all judges at every level) are subject to terms of service of the sort referred to by Sir Robert Carswell LCJ. Indeed judicial office partakes of most of the characteristics of employment. However, because domestic law cannot readily be disentangled from EU law on this issue the Court prefers to express no concluded view, as to whether judges (as a general class) would qualify as workers under the Regulations, and as to whether Mr OBrien would qualify as a worker if regulation 17 were to be disregarded (in the same way as part of a domestic measure was disregarded in Perceval Price v Department of Economic Development). V The need for a reference to the Court of Justice 28. In approaching the EU issues this Court considers that three general points are clear. First, there is no single definition of worker which holds good for all the purposes of Community law: Martinez Sala v Freistaat Bayern C 85/96 [1998] ECR I 2691 para 31; Allonby v Accrington and Rossendale College C 256/01 [2004] ICR 1328. Second, in contrast to the position under other Directives (where references to workers have an autonomous European meaning) the effect of Clause 2(1) of the Framework Agreement, read together with Recital (16) of the PTWD, is to make domestic law relevant to the interpretation of the expression worker. Thirdly, however, domestic law is not to oust or trump the principles underlying the EU legislation in such a way as to frustrate them. Its underlying purposes must be (as Recital (16) puts it) respected. 29. The Court has heard sharply conflicting submissions as to how these general points, which are not in dispute, should be applied to the circumstances of Mr OBriens case. In particular the Court has heard detailed submissions on three comparatively recent decisions of the Court of Justice, that is Landeshauptstadt Kiel v Jaeger C 151/02 [2004] ICR 1528, Wippel v Peek & Cloppenburg GmbH & Co KG C 313/02 [2005] ICR 1604 and Del Cerro Alonso v Osakidetza (Servicio Vasco de Salud) C 307/05 [2008] ICR 145. 30. Jaeger was concerned with the application of the definition of working time in para 2(1) of the Working Time Directive 93/104/EC of 23 November 1993 to time spent on call by junior doctors in German hospitals: working time shall mean any period during which the worker is working, at the employers disposal and carrying out his activity or duties, in accordance with national laws and/or practice. The doctors had to be on call at the hospital, but when not actually working could sleep in accommodation provided for them at the hospital. 31. The Advocate General (Colomer) stated in para 36 of his opinion: despite the fact that article 2(1) of Directive 93/104 provides that the three criteria used to define working time are to be specifically delimited in accordance with national laws and/or practice, that stipulation does not mean that member states may refrain from applying those criteria and rely on rules of national law . However a member state may not rely on its own legislation to support the view that a doctor who carries out periods of duty on call in a hospital is not at the employers disposal at times when he is inactive but is waiting for his services to be called on again. 32. The Court of Justice stated (paras 58 and 59 of the judgment): In any event the concepts of working time and rest period within the meaning of Directive 93/104 may not be interpreted in accordance with the requirements of the various legislations of the member states, but constitute concepts of Community law which must be defined in accordance with objective characteristics by reference to the scheme and purpose of that Directive as the Court did in SIMAP, at p1147, paras 48 50. Only such an autonomous interpretation is capable of securing for that Directive full efficacy and uniform application of those concepts in all the member states. Accordingly, the fact that the definition of the concept of working time refers to national laws and/or practice does not mean that the member states may unilaterally determine the scope of that concept. Thus, those states may not make subject to any condition the right of employees to have working periods and corresponding rest periods duly taken into account, since that right stems directly from the provisions of that Directive. Any other interpretation would frustrate the objective of Directive 93/104 of harmonising the protection of the safety and health of workers by means of minimum requirements: see United Kingdom of Great Britain and Northern Ireland v Council of the European Union (Case C 84/94) [1999] ICR 443, 506, 510, paras 47 and 75. That passage has been adopted in another case on the Working Time Directive, Pfeiffer v Deutsches Rotes Kreuz C 397 403/01 [2005] ICR 1307, para 99. 33. These decisions seem to show that the need to make some reference to domestic law cannot be permitted to frustrate the overriding Community purpose of safeguarding the health and safety of workers. The Ministry of Justices written submissions (para 109) contend that a claim under the PTWD does not engage any fundamental Community right. But the aim of the PTWD and the Framework Agreement is to eliminate inequality and discrimination. As the Advocate General (Sharpston) stated in Istituto Nazionale della Previdenza Sociale v Bruno & Pettini C 395/08, para 119: The prohibition on discrimination in Clause 4 of the Framework Agreement is a particular expression of the general principle of equality. It must therefore be interpreted in accordance with that principle. Any national implementing measures must likewise respect the general principles of Community law, including the principle of equal treatment. The elimination of inequality and discrimination is at least as important a Community principle as the health and safety of workers. 34. Wippel was concerned with an Austrian part time worker whose contract was of an exiguous character in that she was not entitled to be offered any minimum amount of work, nor was she bound to accept work if it was offered. Nevertheless the Austrian Oberster Gerichtshof, in making its reference, stated that the claimant was recognised as a worker by domestic law. She was therefore within para 2(1) of the Framework Agreement. 35. In that case the Advocate General (Kokott) stated (para 45): Consequently, for the purposes of the Framework Agreement, the term worker is not a Community law concept. Indeed, the personal scope of application of the Framework Agreement is defined by reference to the national law applicable in each case. The term worker therefore has to be defined in reliance on the law, collective agreements and practices in force in each member state. The member states have wide discretionary powers in this respect. Only the very broadest limits can be determined in this respect by reference to Community law. It could therefore constitute a breach of the duty of co operation (article 10 EC) if a member state were to define the term worker so narrowly under its national law that the Framework Agreement on part time work were deprived of any validity in practice and achievement of its purpose, as stipulated in Clause 1, were greatly obstructed. However, there is no sign of that here. The Ministry of Justice relies heavily on this passage, as did the Court of Appeal ([2008] EWCA Civ 1448, para 46) following Elias J in Christie v Department of Constitutional Affairs [2007] ICR 1553, para 40. The Court of Justice reached the same conclusion as the Advocate General, but its judgment on the first question (paras 35 40) appears to give no support to her statement that member states have wide discretionary powers or that only the very broadest limits can be set by reference to Community law. 36. Del Cerro Alonso was concerned with workers in the Basque health service who were initially classified as temporary regulated staff but were then regraded as permanent staff. They were refused length of service allowances in respect of their service in the temporary grade and made complaints under Council Directive 99/70/EC of 28 June 1999 concerning the Framework Agreement on fixed term work. Their claims were resisted by the health service on the ground of objective justification, but the Kingdom of Spain intervened to contend that the regulated staff, as public sector workers, were completely outside the scope of the Directive (which contained a definition of worker in terms very similar to that in Clause 2(1) of the Framework Agreement under the PTWD). 37. The Advocate General (Poiares Maduro) considered this point in a long passage in his opinion (paras 11 15). It is sufficient to cite the conclusion in para 15: That conditional renvoi appears to me to be the process which is most faithful to both the letter and the spirit of the Community legislation. The effect of it is that the member state cannot merely rely on the formal or special nature of the rules applicable to certain employment relationships in order to exclude the latter from the benefit of the protection afforded by the Framework Agreement. If that were the case, there would be grounds for concern that the Framework Agreement could be rendered completely redundant. If it were the case, it would be open to any member state to make the contract staff of the public authorities subject to special rules in order to call in question the decisions adopted by the Court of Justice in Adeneler v Ellinikos Organismos Galaktos (ELOG) (Case C 212/04) [2006] ECR I 6057; Marrosu v Azienda Ospedaliera Ospedale San Martino di . Genova . (Case C 53/04) [2006] ECR I 7213 and Vassalo v Azienda Ospedaliera Ospedale San Martino di Genova . (Case C 180/04) [2006] ECR I 7251. Consequently, the exclusion of public servants from the scope of Directive 99/70 cannot be accepted unless it is demonstrated that the nature of the employment relationship between them and the administration is substantially different from that between employees falling, according to national law, within the category of workers and their employers. 38. The Court of Justice observed (para 29 of the judgment): The mere fact that a post may be classified as regulated under national law and has certain characteristics typical of the Civil Service in the member state in question is irrelevant in that regard. Otherwise, in reserving to member states the ability to remove at will certain categories of persons from the protection offered by Directive 99/70 and the Framework Agreement, the effectiveness of those Community instruments would be in jeopardy as would their uniform application in the member states: see, by analogy, Landeshauptstadt Kiel v Jaeger (Case C 151/02) [2004] ICR 1528, paras 58 and 59, and Pfeiffer v Deutsches Rotes Kreuz (Joined Cases C 397 403/01) [2005] ICR 1307, para 99. As is clear not only from the third paragraph of article 249 EC, but also from the first paragraph of article 2 of Directive 99/70, in light of recital (17) of the preamble to that Directive [which is identical to recital (16) of the PTWD] the member states are required to guarantee the result imposed by Community law: Adeneler [2006] ECR I 6057, para 68. 39. For the Ministry of Justice, the high point of these citations is the statement by Advocate General Kokott in Wippel that member states have wide discretionary powers (a statement not endorsed by the Court of Justice). For Mr OBrien the high point is the passage (set out in the last paragraph) from the judgment of the Court of Justice in Del Cerro Alonso. The jurisprudence of the Court of Justice appears to give little clear guidance as to what type of national deviation from the Community norm shows a lack of respect (Recital (16) of the PTWD), or is justified by the nature of the post or office being substantially different from that of normal workers (para 15 of the opinion of Advocate General Poiares Maduro in Del Cerro Alonso). 40. Accordingly the Supreme Court of the United Kingdom seeks guidance as to whether the permissibility of a national deviation from the Community norm should be judged by some or all of the following considerations: (1) the number of persons affected (large numbers of doctors and healthcare workers must have been affected by the issues raised in Jaeger and Del Cerro Alonso); or (2) the special position of the judiciary, for whose work independence of judgment, is an essential feature; or (3) the degree to which a particular exclusion under national law appears to have been effected with a particular Community measure in mind. In connection with this last point it is a particular cause for concern that the exclusion of fee paid part time judges by Regulation 17 of the Regulations has some appearance of being a deliberate ad hoc exclusion of a particular category while their full time or salaried part time colleagues, doing the same or similar work, will be entitled to judicial pensions on retirement. 41. The Supreme Court has therefore concluded that it is necessary to refer the following questions to the Court of Justice: (1) Is it for national law to determine whether or not judges as a whole are workers who have an employment contract or employment relationship within the meaning of clause 2.1 of the Framework Agreement, or is there a Community norm by which this matter must be determined? (2) If judges as a whole are workers who have an employment contract or employment relationship within the meaning of clause 2.1 of the Framework Agreement, is it permissible for national law to discriminate (a) between full time and part time judges, or (b) between different kinds of part time judges in the provision of pensions? For these reasons the appeal is allowed and the order of the Court of Appeal of 19 December 2008 is set aside. Working out exactly what this conclusion entails will not be without its difficulties. The case will be remitted to the Employment Tribunal for the determination of the amount of the pension to which Mr OBrien is entitled under the Regulations in accordance with this judgment. |
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. |
This is the first case under the Mental Capacity Act 2005 to come before this Court. That Act provides for decisions to be made on behalf of people who are unable to make decisions for themselves. Everyone who makes a decision under the Act must do so in the best interests of the person concerned. The decision in this case could not be more important: the hospital where a gravely ill man was being treated asked for a declaration that it would be in his best interests to withhold certain life sustaining treatments from him. When can it be in the best interests of a living patient to withhold from him treatment which will keep him alive? On the other hand, when can it be in his best interests to inflict severely invasive treatment upon him which will bring him next to no positive benefit? The facts The patient, David James, was admitted to hospital in May 2012 aged around 68 because of a problem with a stoma he had had fitted in 2001 during successful treatment for cancer of the colon. The problem was soon solved but he acquired an infection which was complicated by the development of chronic obstructive pulmonary disease, an acute kidney injury and persistent low blood pressure. He was admitted to the critical care unit and placed on a ventilator. He remained in the critical care unit and dependent on ventilator support until the hearing before Peter Jackson J on 5 and 6 December 2012: [2012] EWHC 3524 (COP). His condition between May and December fluctuated. There were some severe setbacks, including a stroke, which left him with right sided weakness and contracture of his legs, and a cardiac arrest which required six minutes of advanced cardio pulmonary resuscitation (CPR) to save him. He had recurring infections, leading to septic shock and multiple organ failure. In between, there were efforts to liberate him from the ventilator and onto a lesser form of supported breathing (CPAP). A tracheostomy was performed for this purpose. At the time of the hearing, he was not on antibiotics or other medication and able to tolerate at least 12 hours of CPAP a day. He received clinically assisted nutrition and hydration through a nasogastric tube. The judge accepted the evidence of Dr Grant, a consultant in critical care medicine, on behalf of the ten consultants and senior nursing staff who had been responsible for Mr James care, as to the diagnosis and prognosis. The patient suffered from gross muscle wasting, owing to his prolonged period of near immobility, so could not sit or stand for himself. He also suffered from contractures, similar to very severe cramps, causing grimacing, raised pulse, breathing and blood pressure, indicating distress and pain. He had suffered a stroke, with severe neurological damage. He was completely dependent on artificial ventilation and required regular tube suction. His kidney function was extremely fragile, with a maximum function of 20% or so, although he had not so far required renal therapy. It was almost inevitable that he would face further infections leading to lowered blood pressure and the prospect of further multi organ failure. Daily care tasks could cause discomfort, pain and suffering. Overall, his prospects of leaving the critical care unit, let alone the hospital, were extremely low. The Official Solicitor, acting on Mr James behalf, had instructed an independent specialist, Dr Danbury, to investigate. His diagnosis and prognosis were consistent with that of the other doctors. As to Mr James mental faculties, he suffered a marked deterioration in his neurological state in July, after which he was considered to lack the capacity to make decisions about his medical treatment. A Wessex Head Injury Matrix assessment in November indicated severe neurological impairment. Nevertheless, the judge recorded the observations in November of Dr Danbury, of Ms Baker, the Official Solicitors case manager, and of the medical and nursing staff. These indicated, positively, that he recognised and was pleased to see his wife and his son when they visited; kissed his wife when she leaned into him; looked at her when she moved round the bed; mouthed what appeared to be words in answer to his wife, Ms Baker and nursing staff; turned the pages of a newspaper, smiling while he did so, although it was not clear to the doctor whether he was actually reading any of the articles or looking at the pictures; put on and took off his glasses while doing so; and appeared to enjoy watching videos on his sons phone. The judge accepted that he qualified for a diagnosis of being in a minimally conscious state. But, as Baker J had pointed out in W v M [2011] EWHC 2443, [2012] 1 WLR 1653, there is a spectrum of minimal consciousness extending from patients who are only just above the vegetative state to those who are bordering on full consciousness. Peter Jackson J added that to that extent the word minimal in the diagnostic label may mislead. Mr James current level of awareness when not in a medical crisis might more accurately be described [as] very limited rather than minimal (para 38). Mr James had been a talented professional musician, spending over 50 years in the music business. He was also a devoted family man. He and his wife had celebrated their golden wedding anniversary in September when their daughter said that he had been very alert. They have three children, three grandchildren and many friends. Family and friends visited him regularly in hospital and his daughter felt that he got a lot of enjoyment from seeing them. She herself visited for four hours every day. The proceedings In September 2012, the hospital trust issued proceedings in the Court of Protection, seeking declarations (1) that Mr James lacked capacity to consent to or refuse treatment of any kind (this was uncontentious); and (2) that it would be in his best interests for four specified treatments to be withheld in the event of a clinical deterioration. Originally, those four treatments included intravenous antibiotics for further infectious complications but the trust did not pursue that. Nor was there any suggestion that the current treatment, ventilation and clinically assisted nutrition and hydration, should be withheld. The three treatments in question, as described by the judge (para 8), were as follows: (1) Invasive support for circulatory problems. This meant the administration of strong inotropic or vasopressor drugs in order to correct episodes of dangerously low blood pressure. The process is painful, involving needles and usually the insertion of a central line. The drugs have significant side effects and can cause a heart attack. They had previously been used to treat Mr James. (2) Renal replacement therapy. This meant haemofiltration, filtering the blood through a machine to make up for the lack of kidney function. It too requires a large line to be inserted and an anti coagulant drug which brings the risk of bleeding or a stroke. It can be very unpleasant for the patient and may cause intense feelings of cold. Mr James had not so far required this treatment. (3) Cardiopulmonary resuscitation (CPR). This aims to make a heart which has stopped beating start beating again. So the decision has to be taken at once. It can take various forms, including the administration of drugs, electric shock therapy and physical compression of the chest and inflation of the lungs. To be effective, it is deeply physical and can involve significant rib fractures. CPR had successfully been given to Mr James when his heart had stopped beating in August. The unanimous view of the clinical team was that it would not be in Mr James best interests to receive these treatments, should his condition deteriorate to the extent that he needed them (that was what was meant by a clinical deterioration). The judge commented that these views were the result of careful thought and bound to carry considerable weight. Dr Danbury took the same view. But the judge did not attach additional weight to his assessment, because in his first report he had said that it was not appropriate to continue even with the current treatment, because there was no prospect of Mr James being able to function again as a musician. He later withdrew this, but the judge did not feel able to rely upon his later assessment, given what the judge regarded as this false start. The family took a different view from the clinicians. They felt that every time Mr James had had an infection he had pulled through. The gaps between episodes of infection had become wider. While he would never recover his previous quality of life, he got a lot of enjoyment from seeing his family and close friends. He had been determined to beat his cancer and the family believed that he would feel the same about his current predicament. Counsel agreed the following list of considerations both for and against treatment in the event of a deterioration (para 79). In favour were: Life itself is of value and treatment may lengthen Mr James life. He currently has a measurable quality of life from which he gains pleasure. Although his condition fluctuates, there have been improvements as well as deteriorations. It is likely that Mr James would want treatment up to the point where it became hopeless. His family strongly believes that this point has not been reached. It would not be right for him to die against a background of bitterness and grievance. Against treatment were: The unchallenged diagnosis is that Mr James has sustained severe physical and neurological damage and the prognosis is gloomy, to the extent that it is regarded as highly unlikely that he will achieve independence again; his current treatment is invasive and every setback places him at a further disadvantage. The treatment may not work. The treatment would be extremely burdensome to endure. It is not in his interests to face a prolonged, excruciating and undignified death. Despite the unanimous medical views, backed by the Official Solicitor, the judge concluded that it would not be appropriate to make the declarations sought (para 84). He was not persuaded that treatment would be futile or overly burdensome or that there was no prospect of recovery (it will be necessary later to consider the meaning he gave to these terms). The arguments in favour undervalued the non medical aspects of Mr James situation: his family life was of the closest and most meaningful kind. Care had to be taken when making declarations in circumstances which were not fully predictable or fluctuating. He recognised that leaving things as they were, for discussion and decision should the need arise, did not sit easily with an emergency decision about CPR, and for what it is worth I think it unlikely that further CPR would be in Mr James best interests. But the case for making that an absolute decision at that time did not exist (para 86). The trust appealed and the hearing took place only 15 days later, on 21 December. The trust were given permission to put in further evidence, in the shape of a letter dated 19 December from Dr Cope on behalf of the clinical team. This showed that Mr James had suffered a significant deterioration on 5 December and since 14 December had been completely dependent on mechanical ventilation. On 18 December he suffered a further dramatic deterioration such that it was difficult to achieve adequate mechanical ventilation. This was accompanied by a fall in blood pressure which required intravenous vasopressors. His renal function had deteriorated further. In this setting of progressive deterioration, attempting CPR was highly unlikely to be successful, and in that unlikely event it was likely to leave him with greater brain damage in addition to other organ damage. He was comatose, or semi comatose, but efforts to support his breathing and blood pressure on 18 December had clearly caused him great distress and discomfort. He was extremely weak and unable to move. The clinical team remained convinced that it would not be in his interests to provide the listed treatments and would cause him greater suffering whilst conveying extremely limited benefit. The Court of Appeal allowed the appeal and made a declaration in similar terms to that sought by the trust. In the early hours of 31 December 2012, Mr James suffered a cardiac arrest and he died. The Court of Appeal handed down their written reasons on 1 March 2013: [2013] EWCA Civ 65, [2013] Med LR 110. Although Mr James has died, this Court gave his widow permission to appeal, in view of the importance of the issues and the different approaches taken by the trial judge and the Court of Appeal to the assessment of the patients best interests in these sensitive and difficult cases. The law This application was made for a declaration under section 15 of the 2005 Act. Section 15(1) provides that the court may make declarations as to whether a person has or lacks capacity, either in relation to a specified decision or in relation specified matters, and as to the lawfulness or otherwise of any act done, or yet to be done, in relation to that person. Section 15(2) expressly provides that act includes an omission and a course of conduct. The application was for a declaration that it would be lawful to withhold the three specified treatments should Mr James condition deteriorate to the extent that he needed them. It is tempting therefore to approach the case as if the question is whether it would be in Mr James best interests to withhold those treatments should they become necessary in order to sustain his life. But is that in fact the right question? Whatever may be the position in relation to declarations about matters other than medical treatment, there are some basic principles relating to medical treatment which may help us to identify how these cases ought to be approached. The judge began in the right place. He was careful to stress that the case was not about a general power to order how the doctors should treat their patient. This Act is concerned with enabling the court to do for the patient what he could do for himself if of full capacity, but it goes no further. On an application under this Act, therefore, the court has no greater powers than the patient would have if he were of full capacity. The judge said: A patient cannot order a doctor to give a particular form of treatment, although he may refuse it. The courts position is no different (para 14). In Re J (A Minor) (Child in Care: Medical Treatment) [1991] Fam 33, at 48, Lord Donaldson MR held that the court could not require the [health] authority to follow a particular course of treatment. What the court can do is to withhold consent to treatment of which it disapproves and it can express its approval of other treatment proposed by the authority and its doctors. He repeated that view in Re J (A Minor)(Child in Care: Medical Treatment) [1993] Fam 15, at 26 27, when it was clearly the ratio decidendi of the case. To similar effect is R v Cambridge District Health Authority, ex p B [1995] 1 WLR 898, where the court would not interfere with the health authoritys decision to refuse to fund further treatment of a child with leukaemia. More recently, in R (Burke) v General Medical Council [2005] EWCA Civ 1003, [2006] QB 273, Lord Phillips MR accepted the proposition of the General Medical Council that if a doctor concludes that the treatment which a patient wants is not clinically indicated he is not required (ie he is under no legal obligation) to provide it (para 50), and Ultimately, however, a patient cannot demand that a doctor administer a treatment which the doctor considers is adverse to the patients clinical needs (para 55). Of course, there are circumstances in which a doctors common law duty of care towards his patient requires him to administer a particular treatment, but it is not the role of the Court of Protection to decide that. Nor is that Court concerned with the legality of NHS policy or guidelines for the provision of particular treatments. Its role is to decide whether a particular treatment is in the best interests of a patient who is incapable of making the decision for himself. However, any treatment which the doctors do decide to give must be lawful. As Lord Browne Wilkinson put it in Airedale NHS Trust v Bland [1993] AC 789, which concerned the withdrawal of artificial hydration and nutrition from a man in a persistent vegetative state, . the correct answer to the present case depends upon the extent of the right to continue lawfully to invade the bodily integrity of Anthony Bland without his consent. If in the circumstances they have no right to continue artificial feeding, they cannot be in breach of any duty by ceasing to provide such feeding (p 883). Generally it is the patients consent which makes invasive medical treatment lawful. It is not lawful to treat a patient who has capacity and refuses that treatment. Nor is it lawful to treat a patient who lacks capacity if he has made a valid and applicable advance decision to refuse it: see 2005 Act, sections 24 to 26. Nor is it lawful to treat such a patient if he has granted a lasting power of attorney (under section 10) or the court has appointed a deputy (under section 16) with the power to give or withhold consent to that treatment and that consent is withheld; but an attorney only has power to give or withhold consent to the carrying out or continuation of life sustaining treatment if the instrument expressly so provides (section 11(8)) and a deputy cannot refuse consent to such treatment (section 20(5)). Those cases aside, it was recognised by the House of Lords in Re F (Mental Patient: Sterilisation) [1990] 2 AC 1 that where a patient is unable to consent to treatment it is lawful to give her treatment which is necessary in her best interests. Section 5 of the Mental Capacity Act 2005 now provides a general defence for acts done in connection with the care or treatment of a person, provided that the actor has first taken reasonable steps to establish whether the person concerned lacks capacity in relation to the matter in question and reasonably believes both that the person lacks capacity and that it will be in his best interests for the act to be done. However, section 5 does not expressly refer both to acts and to omissions, the giving or withholding of treatment. The reason for this, in my view, is that the fundamental question is whether it is lawful to give the treatment, not whether it is lawful to withhold it. In Bland, Lord Goff (with whose judgment Lord Keith and Lord Lowry expressly agreed) pointed out that the question is not whether it is in the best interests of the patient that he should die. The question is whether it is in the best interests of the patient that his life should be prolonged by the continuance of this form of treatment (p 868). To the same effect was Lord Browne Wilkinson, at p 884: . the critical decision to be made is whether it is in the best interests of Anthony Bland to continue the invasive medical care involved in artificial feeding. That question is not the same as, Is it in Anthony Blands best interests that he should die? The latter question assumes that it is lawful to perpetuate life: but such perpetuation of life can only be achieved if it is lawful to continue to invade the bodily integrity of the patient by invasive medical care. Hence the focus is on whether it is in the patients best interests to give the treatment, rather than on whether it is in his best interests to withhold or withdraw it. If the treatment is not in his best interests, the court will not be able to give its consent on his behalf and it will follow that it will be lawful to withhold or withdraw it. Indeed, it will follow that it will not be lawful to give it. It also follows that (provided of course that they have acted reasonably and without negligence) the clinical team will not be in breach of any duty towards the patient if they withhold or withdraw it. Deciding upon best interests A person who has the capacity to decide for himself can of course make decisions which are not in his own best interests and no doubt frequently does so. Indeed, the Act provides that a person is not to be treated as unable to make a decision simply because he makes an unwise one: section 1(4). But both at common law and under the Act, those who act or make decisions on behalf of a person who lacks capacity must do so in his best interests: section 1(5). How then is it to be determined whether a particular treatment is in the best interests of the patient? The Act gives some limited guidance. Section 4 relevantly provides: (2) The person making the determination [for the purposes of this Act what is in a persons best interests] must consider all the relevant circumstances and, in particular, take the following steps. (3) He must consider(a) whether it is likely that the person will at some time have capacity in relation to the matter in question, and (b) if it appears likely that he will, when that is likely to be. (4) He must, so far as reasonably practicable, permit and encourage the person to participate, or to improve his ability to participate, as fully as possible in any act done for him and any decision affecting him. (5) Where the determination relates to life sustaining treatment he must not, in considering whether the treatment is in the best interests of the person concerned, be motivated by a desire to bring about his death. (6) He must consider, so far as is reasonably ascertainable(a) the person's past and present wishes and feelings (and, in particular, any relevant written statement made by him when he had capacity), (b) the beliefs and values that would be likely to influence his decision if he had capacity, and (c) the other factors that he would be likely to consider if he were able to do so. (7) He must take into account, if it is practicable and appropriate to consult them, the views of . (b) anyone engaged in caring for the person or interested in his welfare, . as to what would be in the person's best interests and, in particular, as to the matters mentioned in subsection (6). (8) The duties imposed by subsections (1) to (7) also apply in relation to the exercise of any powers which. (b) are exercisable by a person under this Act where he reasonably believes that another person lacks capacity. (9) In the case of an act done, or a decision made, by a person other than the court, there is sufficient compliance with this section if (having complied with the requirements of subsections (1) to (7)) he reasonably believes that what he does or decides is in the best interests of the person concerned. (10) "Life sustaining treatment" means treatment which in the view of a person providing health care for the person concerned is necessary to sustain life. (11) "Relevant circumstances" are those(a) of which the person making the determination is aware, and (b) which it would be reasonable to regard as relevant. This approach follows very closely the recommendations of the Law Commission in their Report on Mental Incapacity (1995, Law Com No 231) on which the 2005 Act is based. It had been suggested in Re F that it might be enough if the doctor had acted in accordance with an accepted body of medical opinion (the Bolam test for medical negligence). However, as the Court of Appeal later recognised in Re S (Adult Patient: Sterilisation) [2001] Fam 15, there can only logically be one best option. The advantage of a best interests test was that it focused upon the patient as an individual, rather than the conduct of the doctor, and took all the circumstances, both medical and non medical, into account (paras 3.26, 3.27). But the best interests test should also contain a strong element of substituted judgment (para 3.25), taking into account both the past and present wishes and feelings of patient as an individual, and also the factors which he would consider if able to do so (para 3.28). This might include altruistic sentiments and concern for others (para 3.31). The Act has helpfully added a reference to the beliefs and values which would be likely to influence his decision if he had capacity. Both provide for consultation with carers and others interested in the patients welfare as to what would be in his best interests and in particular what his own views would have been. This is, as the Explanatory Notes to the Bill made clear, still a best interests rather than a substituted judgment test, but one which accepts that the preferences of the person concerned are an important component in deciding where his best interests lie. To take a simple example, it cannot be in the best interests to give the patient food which he does not like when other equally nutritious food is available. Section 4(5) and (10) was an addition while the Bill was passing through Parliament: in considering whether treatment which is necessary to sustain life is in the patients best interests, the decision maker must not be motivated by a desire to bring about the patients death. Like much else in the Act, this reflects the existing law. Beyond this emphasis on the need to see the patient as an individual, with his own values, likes and dislikes, and to consider his best interests in a holistic way, the Act gives no further guidance. But section 42 requires the Lord Chancellor to prepare a code or codes of practice for those making decisions under the Act. Any person acting in a professional capacity or for remuneration is obliged to have regard to the code (section 42(4)) and a court must take account of any provision in or failure to comply with the code which is relevant to a question arising in any civil or criminal proceedings (section 42(5)). The Mental Capacity Act Code of Practice was published in 2007. Lord Pannick QC, on behalf of the trust, accepts that if there is any conflict between what it says and what is said in the guidance given by the General Medical Council under section 35 of the Medical Act 1983 (Treatment and care towards the end of life: good practice in decision making, 2010) or by the British Medical Association (Withholding and Withdrawing Life prolonging Medical Treatment: Guidance for decision making, 3rd edition 2007), then the Mental Capacity Act Code must prevail. The Mental Capacity Act Code deals with decisions about life sustaining treatment in this way: 5.31 All reasonable steps which are in the person's best interests should be taken to prolong their life. There will be a limited number of cases where treatment is futile, overly burdensome to the patient or where there is no prospect of recovery. In circumstances such as these, it may be that an assessment of best interests leads to the conclusion that it would be in the best interests of the patient to withdraw or withhold life sustaining treatment, even if this may result in the person's death. The decision maker must make a decision based on the best interests of the person who lacks capacity. They must not be motivated by a desire to bring about the person's death for whatever reason, even if this is from a sense of compassion. Healthcare and social care staff should also refer to relevant professional guidance when making decisions regarding life sustaining treatment. 5.32 As with all decisions, before deciding to withdraw or withhold life sustaining treatment, the decision maker must consider the range of treatment options available to work out what would be in the person's best interests. All the factors in the best interests checklist should be considered, and in particular, the decision maker should consider any statements that the person has previously made about their wishes and feelings about life sustaining treatment. 5.33 Importantly, section 4(5) cannot be interpreted to mean that doctors are under an obligation to provide, or to continue to provide, life sustaining treatment where that treatment is not in the best interests of the person, even where the person's death is foreseen. Doctors must apply the best interests' checklist and use their professional skills to decide whether life sustaining treatment is in the person's best interests. If the doctor's assessment is disputed, and there is no other way of resolving the dispute, ultimately the Court of Protection may be asked to decide what is in the person's best interests. (Emphasis supplied.) It is important to read these paragraphs as a whole. As paragraph 5.33 makes clear, doctors have to decide whether the life sustaining treatment is in the best interests of the patient. Section 4(5) does not mean that they have to provide treatment which is not in the patients best interests. Paragraph 5.31 gives useful guidance, derived from previous case law, as to when life sustaining treatment may not be in the patients best interests. Both the judge and the Court of Appeal accepted them as an accurate statement of the law and so would I. However, they differed as to the meaning of the words in italics. The Code is not a statute and should not be construed as one but it is necessary for us to consider which of them was closer to the correct approach. How the judge and the Court of Appeal interpreted the patients best interests In concluding that he was not persuaded that treatment would be futile or overly burdensome or that there was no prospect of recovery, Peter Jackson J said this: (a) In Mr James case, the treatments in question cannot be said to be futile, based on the evidence of their effect so far. (b) Nor can they be said to be futile in the sense that they could only return Mr James to a quality of life which is not worth living. (c) Although the burdens of treatment are very great indeed, they have to be weighed against the benefits of a continued existence. (d) Nor can it be said that there is no prospect of recovery: recovery does not mean a return to full health, but the resumption of a quality of life that Mr James would regard as worthwhile. The references, noted above, to a cure or a return to the former pleasures of life set the standard unduly high. In the Court of Appeal, Sir Alan Ward regarded the real question as whether the judge correctly applied the guidance and in particular whether he was right to find that the treatments could not be said to be futile. He considered that futility had to be judged against the goal which was sought to be achieved. He listed six possible goals, ending with this: The goal may be to secure therapeutic benefit for the patient, that is to say the treatment must, standing alone or with other medical care, have the real prospect of curing or at least palliating the life threatening disease or illness from which the patient is suffering. (para 35) In his view, this was the goal against which futility should be judged (para 37). The judge had adopted too narrow a view of the futility of treatment. He should have had regard, not just to its effectiveness in coping with the current crisis, but to the improvement or lack of improvement which the treatment would bring to the general health of the patient (para 38). He also took the view that the judge was wrong to conclude that the three treatments in question were not overly burdensome (para 40). Moreover, the judge had applied the wrong test of a recovery. In his view, the focus was on the medical interests of the patient. In a case where life was ebbing away, no prospect of recovery means no prospect of recovering such a state of good health as will avert the looming prospect of death if the life sustaining treatment is given (para 44). Having held that the judge had applied the wrong test, the Court of Appeal went on to reach its own decision. Sir Alan accepted that his conclusion that the treatment would be futile, overly burdensome and that there was no prospect of recovery was only one pointer. The term best interests encompassed more than merely medical issues. It included the patients welfare in the widest sense as well as his wishes and feelings. But his wishes, if they were to be the product of fully informed thought, would have to recognise the futility of treatment, its burdensome nature and the fact that he would never go home. In the overall assessment, therefore, his wishes must give way to what is best in his medical interests (para 47). Laws LJ agreed with Sir Alan Ward. Arden LJ reached the same result but by a different route. She thought that the starting point was the patients wishes. But if the court had any doubt as to an individuals wishes or as to whether treatment should be given, it should proceed on the basis that the individual would act as a reasonable person would act (para 50). Agreeing with Sir Alan Ward that the treatment would be unduly burdensome, she considered that a reasonable individual would reject it. Hence it was not in his best interests. Discussion The authorities are all agreed that the starting point is a strong presumption that it is in a persons best interests to stay alive. As Sir Thomas Bingham MR said in the Court of Appeal in Bland, at p 808, A profound respect for the sanctity of human life is embedded in our law and our moral philosophy. Nevertheless, they are also all agreed that this is not an absolute. There are cases where it will not be in a patients best interests to receive life sustaining treatment. The courts have been most reluctant to lay down general principles which might guide the decision. Every patient, and every case, is different and must be decided on its own facts. As Hedley J wisely put it at first instance in Portsmouth Hospitals NHS Trust v Wyatt [2005] 1 FLR 21, The infinite variety of the human condition never ceases to surprise and it is that fact that defeats any attempt to be more precise in a definition of best interests (para 23). There are cases, such as Bland, where there is no balancing exercise to be conducted. There are cases, where death is in any event imminent, where the factors weighing in the balance will be different from those where life may continue for some time. Nevertheless, there has been some support for a touchstone of intolerability in those cases where a balancing exercise is to be carried out. In Re B (A Minor) (Wardship: Medical Treatment) [1981] 1 WLR 1421, authorising an operation which was necessary to save the life of a baby with Downs syndrome, Templeman LJ said that the question was whether the life of this child is demonstrably going to be so awful that in effect the child must be condemned to die, and Dunn LJ said that there was no evidence that this childs short life is likely to be an intolerable one. Taylor LJ, in Re J (Wardship: Medical Treatment) [1991] Fam 33, also adopted a test of whether life would be intolerable to the child. However, Lord Donaldson and Balcombe LJ did not see demonstrably so awful or intolerable as laying down a quasi statutory test which would apply in all circumstances. And in Portsmouth Hospitals NHS Trust v Wyatt [2005] EWCA Civ 1181, [2005] 1 WLR 3995, the Court of Appeal considered that observations on intolerability in W Healthcare NHS Trust v H [2005] 1 WLR 834 were obiter, given that the judge had correctly decided the case by a careful balance of all the factors in the welfare equation (para 84). In Re J, Lord Donaldson stated that account had to be taken of the pain and suffering and quality of life which the child would experience if life were prolonged and also of the pain and suffering involved in the proposed treatment. Here we can see a possible genesis for the references in the Code of Practice to the prospect of recovery and the overly burdensome nature of the treatment. Similarly in Bland, Lord Goff referred to the class of case where having regard to all the circumstances (including the intrusive nature of the treatment, the hazards involved in it, and the very poor quality of life which may be prolonged) it may be judged not in the best interests of the patient to initiate or continue life prolonging treatment (p 868). But he expressed no view as to the precise principles applicable to such cases, because Anthony Blands case was in a different category, where the treatment was of no benefit to him at all. Here there was no weighing operation to be performed because treatment was useless: I cannot see that medical treatment is appropriate or requisite simply to prolong a patients life when such treatment has no therapeutic purpose of any kind, as where it is futile because the patient is unconscious and there is no prospect of any improvement in his condition (p 869). Here we can see a possible genesis of the word futile in the Code of Practice and in that case it referred to treatment which was of no benefit at all to the patient. The most that can be said, therefore, is that in considering the best interests of this particular patient at this particular time, decision makers must look at his welfare in the widest sense, not just medical but social and psychological; they must consider the nature of the medical treatment in question, what it involves and its prospects of success; they must consider what the outcome of that treatment for the patient is likely to be; they must try and put themselves in the place of the individual patient and ask what his attitude to the treatment is or would be likely to be; and they must consult others who are looking after him or interested in his welfare, in particular for their view of what his attitude would be. In my view, therefore, Peter Jackson J was correct in his approach. the genesis of the concepts used in the Code of Practice, he was correct to consider whether the proposed treatments would be futile in the sense of being ineffective or being of no benefit to the patient. Two of the treatments had been tried before and had worked. He was also correct to say that recovery does not mean a return to full health, but the resumption of a quality of life which Mr James would regard as worthwhile. He clearly did consider that the treatments in question were very burdensome. But he considered that those burdens had to be weighed against the benefits of a continued existence. He was also correct to see the assessment of the medical effects of the treatment as only part of the equation. Regard had to be had to the patients welfare in the widest sense, and great weight to be given to Mr James family life which was of the closest and most meaningful kind. Perhaps above all, he was right to be cautious about making declarations in circumstances which were not fully predictable or fluctuating. The judge was invited to address the question whether it would be lawful to withhold any or all of these treatments. But if he had been asked the right question, whether it would be in the patients best interests to give any or all of them should the occasion arise, his answer would clearly have been to the same effect. He would have said, as he was entitled to say that, on the evidence before him, it was too soon to say that it was not. That conclusion is quite consistent with his statement that for what it is worth he thought it unlikely that further CPR would be in the patients best interests. That is not to say that I would have reached the same conclusion as the judge in relation to each of these treatments. There was no question of withdrawing clinically supported nutrition and hydration or ventilation or other supported breathing or, by the time of the hearing, intravenous antibiotics. The treatments in question were all highly invasive. I might have drawn a distinction between them. Invasive support for circulatory problems had been used successfully in the past and the patient had rallied. Renal replacement therapy had not so far been needed and so it might be difficult to predict both its effectiveness and its impact upon the patients overall wellbeing. Cardiopulmonary resuscitation, on the other hand, although it had been used successfully in the past, is designed to restart a heart which has stopped beating or lungs which have stopped breathing, in effect to bring the patient back to life. I can understand why the judge thought it premature to say that it should not be attempted. But given the particular nature of this treatment, given its prospects of success, and particularly given the risk that, if revived, the patient would be even more seriously disabled than before, I would probably have declared that it would not be in the patients best interests to attempt it. But if the judge has correctly directed himself as to the law, as in my view this judge did, an appellate court can only interfere with his decision if satisfied that it was wrong: Re B (A Child) (Care Proceedings: Appeal) [2013] UKSC 33, [2013] 1 WLR 1911. In a case as sensitive and difficult as this, whichever way the judges decision goes, an appellate court should be very slow to conclude that he was wrong. It follows that I respectfully disagree with the statements of principle in the Court of Appeal where they differ from those of the judge. Thus it is setting the goal too high to say that treatment is futile unless it has a real prospect of curing or at least palliating the life threatening disease or illness from which the patient is suffering. This phrase may be a partial quotation from Grubb, Laing and McHale, Principles of Medical Law (3rd edition 2010), para 10.214, where the authors suggest that Treatment can properly be categorised as futile if it cannot cure or palliate the disease or illness from which the patient is suffering and thus serves no therapeutic purpose of any kind. Earlier, they had used the words useless or pointless. Given its genesis in Bland, this seems the more likely meaning to be attributed to the word as used in the Code of Practice. A treatment may bring some benefit to the patient even though it has no effect upon the underlying disease or disability. The Intensive Care Society and the Faculty of Intensive Medicine, who have helpfully intervened in this appeal, supported the test proposed by Sir Alan Ward. But this was because they believed that it reflected clinical practice in which futility would normally be understood as meaning that the patient cannot benefit from a medical intervention because he or she will not survive with treatment. That is much closer to the definition adopted by the judge than by Sir Alan. I also respectfully disagree with the statement that no prospect of recovery means no prospect of recovering such a state of good health as will avert the looming prospect of death if the life sustaining treatment is given. At least on the evidence before the judge, this was not, as Sir Alan Ward put it, a situation in which the patient was actively dying. It was accepted in Burke (as it had been earlier) that where the patient is close to death, the object may properly be to make his dying as comfortable and as dignified as possible, rather than to take invasive steps to prolong his life for a short while (see paras 62 63). But where a patient is suffering from an incurable illness, disease or disability, it is not very helpful to talk of recovering a state of good health. The patients life may still be very well worth living. Resuming a quality of life which the patient would regard as worthwhile is more readily applicable, particularly in the case of a patient with permanent disabilities. As was emphasised in Re J (1991), it is not for others to say that a life which the patient would regard as worthwhile is not worth living. Finally, insofar as Sir Alan Ward and Arden LJ were suggesting that the test of the patients wishes and feelings was an objective one, what the reasonable patient would think, again I respectfully disagree. The purpose of the best interests test is to consider matters from the patients point of view. That is not to say that his wishes must prevail, any more than those of a fully capable patient must prevail. We cannot always have what we want. Nor will it always be possible to ascertain what an incapable patients wishes are. Even if it is possible to determine what his views were in the past, they might well have changed in the light of the stresses and strains of his current predicament. In this case, the highest it could be put was, as counsel had agreed, that It was likely that Mr James would want treatment up to the point where it became hopeless. But insofar as it is possible to ascertain the patients wishes and feelings, his beliefs and values or the things which were important to him, it is those which should be taken into account because they are a component in making the choice which is right for him as an individual human being. However, in my view, on the basis of the fresh evidence which was before them, the Court of Appeal were correct to allow the appeal and make the declarations they did (which were in the present tense). There had been such a significant deterioration in Mr James condition that the prospect of his regaining even his previous quality of life appeared very slim. The risk that cardiovascular resuscitation would make matters even worse appeared great. The time had indeed come when it was no longer premature to say that it would not be in his best interests to attempt to restart his heart should it stop beating. Indeed, had the judge been asked to reach a decision on the basis of the evidence then available, it seems clear on the basis of his reasoning that he would have done the same. Conclusions There are some additional comments to be made. First, the interveners have argued that to allow this appeal would be to change the law as previously understood. As I have endeavoured to show, upholding the judges view of the law does not in any way change the law as previously understood. If anything, it was the Court of Appeal which did that. Second, there is nothing in this judgment which is inconsistent with the sensible advice given by the General Medical Council in their guidance on Treatment and care towards the end of life: good practice in decision making. Third, if the clinical team are unable to reach agreement with the family or others about whether particular treatments will be in the best interests of the patient, they may of course bring the question to court in advance of those treatments being needed. But they may find that, as here, the court is unable to say that when they are needed, they will not be in the patients best interests. Fourth, it is important to be precise in framing the terms of the declarations sought. In this case, in the event of a clinical deterioration in fact meant should his condition deteriorate to the extent that they become necessary and it would have been helpful to say so. It follows that I would dismiss this appeal on the ground that the Court of Appeal reached the right result but for the wrong reasons, while the trial judge had reached a result which was open to him having correctly directed himself as to the law. |
The issue in this case is whether the Secretary of State for Work and Pensions can continue to recoup Social Fund loans and benefit overpayments by deduction from current benefit payments during the moratorium period after the making of a Debt Relief Order (DRO) under Part 7A of the Insolvency Act 1986. The present state of the law is untidy, to say the least. Cranston J in the High Court and a majority of the Court of Appeal (Smith and Toulson LJJ) have held in this case that the Secretary of State cannot continue to make these deductions: [2010] EWHC 2162 (Admin), [2010] BPIR 1389 and [2010] EWCA Civ 1431, [2011] 1 WLR 1723. But Keene J in the High Court has held that such deductions can continue to be made between the making of a bankruptcy order and the bankrupts discharge from bankruptcy: R v Secretary of State for Social Security, Ex p Taylor and Chapman [1997] BPIR 505. The House of Lords has reached the same conclusion in the context of the rather different Scottish bankruptcy law: Mulvey v Secretary of State for Social Security 1997 SC (HL) 105. Once a bankrupt is discharged, however, the Court of Appeal has held that the liability to repay the Secretary of State is also discharged: R (Balding) v Secretary of State for Work and Pensions [2007] EWCA Civ 1327, [2008] 1 WLR 564. The Secretary of State would like to introduce coherence into the scheme in two ways: firstly by assimilating the position during the moratorium after a DRO with the position after a bankruptcy order; and secondly by reversing Balding, so that the debt can continue to be recouped after a bankrupts discharge. Ideally, the same would apply at the end of the DRO moratorium period. The claimants, on the other hand, would ideally introduce coherence by holding that the Secretary of States deduction power does not survive the making either of a DRO or of a bankruptcy order. Balding was correctly decided and the same principle applies at the end of the moratorium period. The facts The facts of the two test cases before us are typical of many. Mrs Payne was made a Social Fund loan of 843 in September 2007 in order to replace her washing machine and cooker. The Secretary of State did not start to recover this by deduction from her benefits at that stage. But in August 2009, she obtained a DRO listing the loan among her qualifying debts. When she informed the Secretary of State of this, he began deducting 23.59 per week from her income support, although this was reduced in December to 11.64 per week. These proceedings for judicial review of the legality of the deductions were begun in March 2010. In August 2010, the one year moratorium period came to an end and the debt was discharged. Ms Cooper is in receipt of incapacity benefit and disability living allowance. In August 2009, the Secretary of State determined that she had been overpaid incapacity benefit in the sum of 1,195.07 and in December 2009 he began recovering this from her by deducting 128.44 from her benefits every four weeks. In January 2010, Ms Cooper obtained a DRO which listed the overpayment as one of her qualifying debts. In March 2010, she too began proceedings to challenge the continued deductions from her benefits. In January 2011, the one year moratorium ended and the debt was discharged. The power to deduct The Secretary of State is entitled to recover benefits which have been overpaid because of misrepresentation or non disclosure: Social Security Administration Act 1992 (SSAA), section 71(1). Before he can do so, the erroneous award of benefit must have been reversed or varied on appeal, or revised or superseded by a fresh award under section 9 or 10 of the Social Security Act 1998: SSAA, section 71(5A). Amounts recoverable under section 71(1) may, without prejudice to any other method of recovery, be recovered by deduction from prescribed benefits: SSAA, section 71(8). All kinds of benefits, whether contributory or non contributory, income related or payable irrespective of means, are prescribed: see Social Security (Payments on account, Overpayments and Recovery) Regulations 1988, SI 1988/664, reg 15. However, not only is this without prejudice to any other method of recovery, but it is also expressly provided that overpayments can be recovered by execution issued from the county court as if they were payable under an order of that court (and equivalent provision is made for Scotland): SSAA, section 71(10). Section 71 is also applied with modifications to overpayments from the Social Fund: SSAA, section 71ZA. In the same way, if a Social Fund award is recoverable that is, a loan then Without prejudice to any other method of recovery, the Secretary of State may recover an award by deduction from prescribed benefits: SSAA, section 78(2). Equivalent provision is made for the recovery of any amount of housing benefit paid in excess of entitlement: SSAA, section 75(4). Her Majestys Revenue and Customs (HMRC) also have equivalent powers to recover overpayments of working tax credit and child tax credit by deduction from payments of any tax credit: Tax Credits Act 2002, section 29(4). We are told that considerable sums of money owed to HMRC, the Secretary of State and other public bodies are listed in DROs. The figures quoted to us were respectively nearly 9m to HMRC, nearly 8m to the Secretary of State, of which over 6m was in respect of Social Fund loans, and 20.7m to other public bodies. Whether these include other debts as well as loans, overpaid benefits and tax credits was not clear. Nor were we told how much has currently to be written off at the end of the moratorium period. Debt Relief Orders To put it shortly, debt relief orders (DROs) are a new and simplified way of wiping the slate clean for debtors who are too poor to go bankrupt. As Toulson LJ explained in the Court of Appeal, they were the product of two consultation papers: the first was issued by the Department for Constitutional Affairs in 2004, entitled A Choice of Paths Better options to manage over indebtedness and multiple debt. This proposed a new scheme for people with no income, no assets who were unable to pay their debts. The second was issued by the Insolvency Service in 2005, entitled Relief for the Indebted An Alternative to Bankruptcy, and suggested criteria for such a scheme and how it was intended to operate. The new scheme was introduced into the Insolvency Act by the Tribunals, Courts and Enforcement Act 2007 and came into force in February 2009. Application is made, not to a court, but to the official receiver through a qualified intermediary (such as a specialist debt adviser): Insolvency Act (IA) 1986, section 251B. The debtor must fulfil certain prescribed conditions: IA 1986, section 251C(5), Schedule 4ZA, Insolvency Rules (SI 1986/1925), Part 5A, and Insolvency Proceedings (Monetary Limits) Order 1986 (SI 1986/1996), as amended. For example, her monthly surplus income must not exceed the prescribed amount, currently 50; the total value of her property (leaving out such things as clothes, furniture and household equipment, tools of the trade and a modest domestic motor vehicle) must not exceed the prescribed amount, currently 300; and her overall indebtedness must not exceed the prescribed amount (currently 15,000). To avoid people repeatedly running up debts and having them wiped out by an order, it is not possible to get another DRO within six years. The DRO is made in respect of qualifying debts. A debt qualifies if it is for a liquidated sum payable either immediately or at some certain future time and is not excluded: IA 1986, section 251A(2). It does not qualify to the extent that it is secured: IA 1986, section 251A(3). Excluded debts are those which are prescribed in the Insolvency Rules 1986, rule 5A.2. These include student loans but do not include Social Fund loans or overpaid benefits. It is not suggested that the liability to repay these is not a debt for the purpose of section 251A. The application has to list the debts to which the debtor is subject at the date of the application: section 251B(2)(a). The official receiver can ask for further information from the debtor but does not at this stage give notice to the creditors. When the order is made, it must list the debts which the official receiver is satisfied were qualifying debts at the application date: section 251E(3). When the order is made, a moratorium commences on the effective date for a debt relief order in relation to each qualifying debt specified in the order: IA section 251G(1). What does the moratorium mean? This is governed by section 251G(2): During the moratorium, the creditor to whom a specified qualifying debt is owed (a) has no remedy in respect of the debt, and (b) may not (i) commence a creditors petition in respect of the debt, or (ii) otherwise commence any action or other legal proceedings against the debtor for the debt, except with the permission of the court and on such terms as the court may impose. During the moratorium period, the creditors may object to the making of the order, or the inclusion of a debt in the order, or the details of the debt specified in the order: IA 1986, section 251K. The official receiver has power to revoke or amend the order: IA 1986, section 251L. If the order continues throughout the moratorium period of one year (which may be extended in certain circumstances), the debtor is discharged from all the qualifying debts specified in the order: IA 1986, section 251I(1). This does not apply to debts incurred as a result of fraud or if a court later revokes the DRO: IA 1986, section 251I(3), (5). Otherwise the slate is wiped clean. On the face of it, then, as Social Fund loans and benefit overpayments have not been excluded from the qualifying debts, the creditor has no remedy in respect of them during the moratorium period and they are discharged after it has run its course. The issue, therefore, is whether recovery by deduction from benefits (or tax credits) is a remedy in respect of the debt for this purpose. To understand the argument that it is not, it is necessary to turn to the authorities under the bankruptcy regime. The authorities They begin with Bradley Hole v Cusen [1953] 1 QB 300. The creditor was a tenant of rent controlled premises who had been charged too much rent by his landlord. Section 14(1) of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920 provided that the overpaid rent was recoverable by the tenant and may, without prejudice to any other method of recovery, be deducted by the tenant . from any rent . payable by him to the landlord . The landlord went bankrupt and the trustee in bankruptcy claimed to be entitled to the full amount of the recoverable rent since the bankruptcy from the tenant. The trustee argued that the claim in respect of overpaid rent had been converted into a right to prove the debt in the bankruptcy any other method of recovery was barred by the predecessor to what is now section 285(3) of the Insolvency Act 1986: After the making of a bankruptcy order no person who is a creditor of the bankrupt in respect of a debt provable in the bankruptcy shall (a) have any remedy against the property or person of the bankrupt in respect of that debt, or (b) before the discharge of the bankrupt, commence any action or other legal proceedings against the bankrupt except with the leave of the court and on such terms as the court may impose. The Court of Appeal rejected that argument. The property passed to the trustee in the same plight and condition in which it was in the bankrupts hands and that included the right of the tenant to live there rent free until the overpaid rent had been recouped. The tenants rights included the right to be considered as having paid rent in advance up to the amount of the excess. The argument was repeated in R v Secretary of State for Social Security, Ex p Taylor and Chapman [1997] BPIR 505. Like the respondents in this case, the applicants were respectively the recipient of a Social Fund loan and a claimant who had been overpaid benefit. Both were declared bankrupt. After that, the Secretary of State began to recover the loan and overpayment by deduction from their current benefits. They argued that he was unable to do so because of section 285(3) of the Insolvency Act: the right of deduction was a remedy against the property or person of the bankrupt in respect of that debt. Keene J took the view that Bradley Hole applied. The tenant was not exercising a remedy against the property of the landlord but simply refraining from making a payment to which the pre existing debt would be a defence if he were sued. Even if that were not so, the Secretary of State was not seeking to go against the property of the bankrupt. Their entitlement was only to the net amount of benefit after deduction of the loan or overpayment and not to the full amount. Taylor and Chapman was decided after the decision of the Inner House in the Scottish case of Mulvey v Secretary of State for Social Security 1996 SC 8 and before the decision of the House of Lords in that case 1997 SC(HL) 105. Keene J saw considerable force in the approach of Lord Clyde, to the effect that the right to recover by deduction was but one element in the calculation of the benefit to which the claimant was entitled. This approach has been characterised by the Secretary of State in this case as the net entitlement principle. Mulvey was a case about loans from the Social Fund which were being repaid by deduction from the claimants income support when her estate was sequestrated under the Scottish bankruptcy laws. The claimant argued that continuing to make the deductions amounted to an attempt to set off a pre sequestration debt against a post sequestration obligation, which was impermissible at common law. So their Lordships were not concerned with the interpretation of a statutory provision such as section 285(3) of the IA 1986. There appears to be no exact equivalent in the Bankruptcy (Scotland) Act 1985 and certainly none was discussed in either the Inner House or the House of Lords. Section 37 of the 1985 Act limits the rights of creditors shortly before and after the sequestration, but not in the same sort of terms as sections 251G and 285(3) of the IA 1986. Section 32(5) prohibits diligence against the debtor against the after sequestration income, which is preserved for her under section 32(1), in respect of debts from which she will be released when discharged from the bankruptcy. In the House of Lords, Lord Jauncey remarked that By no stretch of the imagination could the respondents exercise of his statutory right be described as diligence for the purpose of the law of Scotland (1997 SC (HL) 105, at 109F). Nor would it be right to apply the common law rule: The deductions made by the respondent were not, as in the normal case of compensation in bankruptcy, a result of the bankruptcy, but were made in pursuance of a statutory scheme which was already in operation at the time of sequestration and with which the permanent trustee can have no concern. Prior to sequestration, the appellant had no right to receive by way of income support benefit more than her gross entitlement under deduction of such sum as had been notified to her by the respondent prior to payment of the award by the respondent. This was the result of the statutory scheme and she could not have demanded more. Mr Sheldon QC, for the Secretary of State, understandably places some weight on the net entitlement principle there enunciated by Lord Jauncey. For completeness, although it is concerned with what happens at the end of the process, we should consider R (Balding) v Secretary of State for Work and Pensions [2007] EWHC 759 (Admin), [2007] 1 WLR 1805, [2008] EWCA Civ 1327, [2008] 1 WLR 564, decided in the Divisional Court after the House of Lords decision in Mulvey. Section 281 of the IA 1986 provides that (with qualifications which have no bearing on the case) . where a bankrupt is discharged, the discharge releases him from all the bankruptcy debts, . The question, therefore, was whether the claimants liability to repay overpaid benefit was a bankruptcy debt. Section 382(1)(a) defines this, inter alia, as any debt or liability to which he is subject at the commencement of the bankruptcy. Section 382(3) gives a very wide meaning to debt or liability, it being immaterial whether it is present or future, certain or contingent, liquidated or unliquidated, or capable of being ascertained by fixed rules or as a matter of opinion (compare the definition of a qualifying debt for the purpose of the DRO scheme, at para 9 above). Section 382(4), except in so far as the context otherwise requires, defines liability to mean a liability to pay money or moneys worth, including any liability under an enactment . Not surprisingly, both the Divisional Court and the Court of Appeal held that the liability to repay was a bankruptcy debt. In doing so, Davis J had this to say of the net entitlement argument (para 46): [Counsels] approach in any event seems to assume that the individual is only ever entitled to the net benefit after deduction. But in my view that is not right. That will no doubt be so if the Secretary of State has actually elected as he did in this case to recoup the overpaid benefit by deduction at source from subsequent prescribed benefits. But the Secretary of State may in other cases decide to effect recovery by other means. As I see it, the liability to repay cannot be said to be not a bankruptcy debt (as defined) if one form of recovery . is adopted but can be a bankruptcy debt if another form of recovery is adopted. The liability arising under section 71 of the 1992 Act, upon determination made prior to bankruptcy, either is or is not on a subsequent bankruptcy a bankruptcy debt, as defined. In my view, it is. The Court of Appeal agreed for the same reasons. It followed that the debt was wiped out when the bankrupt was discharged. The argument For the Secretary of State, Mr Sheldon does not argue that the liability to repay under SSAA section 71(1) and its equivalents is not a qualifying debt (that point would in any event have been better taken by challenging its inclusion in the list before the official receiver and then the court). He argues that the right of recovery under SSAA section 71(8) is not a remedy in respect of the debt for the purpose of the moratorium in section 251G(2). He argues for a coherent and harmonious approach to the construction of the bankruptcy and DRO schemes, which are to be found within the same legislation. He points to a long list of similarities between the two regimes. The statutory power of deduction is not a remedy but an adjustment to the level of benefit which the claimant is entitled to receive. She is only ever entitled to the net sum. The overpayment is to be regarded as payment in advance of future benefit. Bradley Hole and Taylor and Chapman were rightly decided and Mulvey reaches the same result. He also argues that Balding was wrongly decided. Where the Secretary of State elects to recover by deduction, it is not a debt or liability to pay but an adjustment to the amount of benefit to which she is entitled because of the net entitlement principle. Lord Jauncey left the point open in Mulvey at p 109E. The broad definition of a liability in section 382(4) can be qualified because the policy imperatives mean that the context otherwise requires. Mr Drabble QC, for the respondent claimants, challenges the so called net entitlement principle as a heresy. Only if the overpayment is being recouped from current payment of the same benefit is it even possible to regard it as an advance payment of the current benefit. But loans and overpayments can be recouped from a wide range of wholly unrelated benefits, which may have come into payment long after the liability was incurred, of which the loan or overpayment cannot possibly be regarded as a payment in advance. The natural meaning of remedy clearly encompasses the power to deduct. If need be, bankruptcy can be distinguished. Firstly the wording of section 285(3) is different it refers to any remedy against the property or person of the bankrupt in respect of that debt. Secondly, the purpose of the moratorium in the DRO scheme is different from the purpose of the period between order and discharge in bankruptcy. In bankruptcy, the purpose is for the trustee to gather in all the assets of the bankrupt and distribute the proceeds equitably among the creditors. In the DRO, there is no trustee, there are no assets to be distributed, and there is no potential dividend for the creditors. The moratorium is simply there because the creditors have not had an opportunity to dispute the amount or the inclusion of their debt before the order is made and also because there may be other inquiries and challenges to the order. It was these distinctions which persuaded the majority of the Court of Appeal to uphold the decision of Cranston J to distinguish the two. Finally, Balding is clearly rightly decided. The same liability cannot either be a debt or not be a debt according to the method of recovery chosen by the creditor from time to time. Whether or not there is a prescribed benefit from which to deduct the liability, whether or not the Secretary of State chooses to make those deductions, the Secretary of State is always free to enforce the liability by other means. If he does so, it is plainly a bankruptcy debt and will be wiped out when the bankruptcy is discharged. The liability is also a qualifying debt for the DRO scheme and also wiped out when the moratorium has run its course. Discussion This Court is in the fortunate position of being able to adopt a coherent approach which it would have been difficult for the courts below to achieve. In my view, there is no such thing as the so called net entitlement principle. The claimant to any kind of social security benefit has a statutory entitlement to the amount of benefit which she is awarded by the Secretary of State or a tribunal. The members of this Court are, for example, statutorily entitled to the state retirement pension should they choose to claim it. Some claimants may have a prior liability to repay previously overpaid benefits, whether of the same or an entirely different kind, or they may have taken out a Social Fund loan which they are liable to repay. By no stretch of the imagination does a Social Fund loan to buy a cooker amount to an advance payment of retirement pension to which the claimant later becomes entitled. It could more plausibly be regarded as an advance payment of future income support. But at the point when the loan is made and the liability to repay arises it cannot be known whether the claimant will continue to be reliant on income support. She may get a job, marry a rich man, or win the lottery. The liability to repay arises independently of her entitlement to any benefit from which the Secretary of State may later decide to recoup it. In any ordinary use of language, the power to recover the debt by deduction from benefit is a remedy in respect of the debt. Moreover, if self help remedies such as this were not included in the concept of a remedy, it is difficult to see why both section 251G(2)(b) and section 285(3)(b) specifically prohibit the use of court proceedings to enforce the debt. They would be otiose if the only remedies contemplated by the prohibition of any remedy were court proceedings. There is no sense in a scheme which prohibits recovery of the liability by one method but allows it by another. Furthermore, I do not see any reason to distinguish between the DRO scheme and bankruptcy in this respect. There is a minor difference between the language of section 251G(2) and section 285(3) but this is readily explicable by the antiquity of the latter provision. It can be traced back to the time when remedies against the person of the debtor were universally applicable (and not restricted to certain statutory creditors as they are today). There is, as the majority of the Court of Appeal pointed out, a major difference between the purpose of the waiting periods in each scheme. But this does not affect the analysis of the nature of the liability to repay and of the Secretary of States power to recoup. It is just as much a remedy against the property of the bankrupt as it is a remedy in respect of a debt listed in a DRO. For my part, therefore, I would hold that Taylor and Chapman was wrongly decided. The Secretary of State loses the power to recoup overpayments and Social Fund loans on the making of a bankruptcy order just as he does on the making of a DRO. This result is inconsistent with the result reached in Mulvey. But Mulvey depended on the Scottish common law of bankruptcy together with the Bankruptcy (Scotland) Act 1985, which has no exact equivalent of the English provisions with which we are concerned. In those circumstances, it cannot be for this Court in an English case to over turn the decision of the House of Lords in a Scottish case. We can merely place a question mark against that element in the reasoning which has been referred to as the net entitlement principle. Nor is it necessary for us to question the decision of the Court of Appeal in Bradley Hole. In that context, it makes some sense to regard the overpayment as giving the tenant the right to live rent free in the property until the overpayment is exhausted, a right to which the landlords and thus the trustees right to the reversion is subject. The analogy was drawn with the deserted wifes personal right to continue to live in the former matrimonial home (a right recognised by the Court of Appeal in Bendall v McWhirter [1952] 2 QB 466 which survived the denial of her so called equity against third parties in National Provincial Bank Ltd v Ainsworth [1965] AC 1175). Finally, it is clear that Balding was rightly decided and that the principle applies equally to the DRO scheme. It is worth noting, therefore, that the impact of this decision is not as great as might have been thought. All those liabilities to repay overpaid benefits, tax credits and Social Fund loans listed in DROs (see para 6 above) will in any event be wiped out at the end of the moratorium period. We are talking about the power to continue to deduct during that period. The sums involved, though not insignificant, will be much less than the total of the liabilities involved. It would, of course, be open to the Government to promote delegated legislation to exclude these liabilities from the definition of qualifying debts in the DRO scheme altogether (and, indeed, to seek corresponding amendment to section 382 with regard to bankruptcy debt), but that would raise policy issues which are not for this Court. I would therefore dismiss the appeal. LORD BROWN I am in full agreement with Lady Hales judgment. Its logic appears irresistible and its conclusion inevitable. One might have preferred to arrive at the contrary view: as Lord Mance points out (para 44), larger social security benefits will now be payable to those made bankrupt or subject to a DRO scheme than they would otherwise have received and, indeed, the Social Fund (a fund of limited resource designed to be replenished by repayment and thereby enabled to provide financial assistance to others in particular need) will be diminished. But a contrary view could only be reached by torturing the statutory language and by creating or reinforcing absurd and anomalous distinctions both between the DRO and bankruptcy regimes and between the debtors situation respectively before and after the end of the moratorium period/discharge from bankruptcy. As both Lady Hale (para 26) and Lord Mance (para 44) observe, it must now be for Government to consider whether or not to achieve a different result by amending legislation. It will hardly be surprising if they do. LORD MANCE It is with some misgivings that I concur in the dismissal of this appeal. Viewing the statutory provisions in the abstract, I would find no difficulty in doing this. Against the background of relevant prior authority, I do, however, doubt whether the legislator can have contemplated the result at which the Supreme Court now finds itself obliged to arrive. The result will create apparent anomalies as between different recipients of social security benefit and may cost the Exchequer, or potential beneficiaries of the limited Social Fund, quite dearly. It may necessitate legislative reconsideration for the future. The relevant prior authority relates primarily to the context of bankruptcy. There is, as Lady Hale says at para 23, no real reason to distinguish between the provisions applicable in that context and in the present context of a debt relief order (DRO). For bankruptcy purposes, it is clear that a liability to refund an overpayment of social security benefits or to refund a Social Fund loan constitutes a bankruptcy debt within the extended meaning of section 382 of the Insolvency Act 1986. Under section 382(4) that meaning includes both debt and liabilities and in particular any liability under an enactment, and so, on the face of it, covers a liability to repay overpaid social security benefits or a Social Fund loan. The DRO scheme, introduced as section 251A et seq of the same Act by the Tribunals, Courts and Enforcement Act 2007, applies to a more limited class of qualifying debts, defined as meaning a debt which is for a liquidated sum payable either immediately or at some certain future time and which is not an excluded debt. However, as Lady Hale notes at paras 9 and 19, the Secretary of State has not suggested that a liability to repay an overpayment of social security benefits or to refund a Social Fund loan is not a qualifying debt within that definition. On that basis, essentially the same question arises in respect of both bankruptcy and a DRO. Where the Secretary of State is recovering an overpayment or loan by deductions up to the permitted limits from future prescribed benefits as and when these become payable, is the Secretary of State able to continue to do so after the onset of bankruptcy or the making of a DRO? The argument against any such ability is that the making of any such deduction would involve the exercise of a remedy in respect of the debt, contrary in the case of bankruptcy to section 285(3) or in the case of a DRO to section 251G(2) of the 1986 Act. As a matter of language and logic, the argument is difficult to resist. In law, the making of deductions is no more than one way in which the Secretary of State may recoup such an overpayment or loan. The payment of future social security benefits depends on the circumstances from time to time, as does the making of deductions. The commencement of bankruptcy or the making of a DRO does not exclude all possibility that some other means of recoupment might become available. Each deduction is separate from any prior deduction, even if the Secretary of State has given prior notice of an intention to make continuing deductions from future payments of social security benefits. For this reason, viewing the statutory wording by itself, I agree that its natural effect is, as explained by Lady Hale, that in making each and any deduction the Secretary of State is exercising a remedy in respect of the debt constituted by the overpayment or loan. However, the 1986 Act and the DRO scheme introduced in 2007 should be seen against the background of any relevant prior authority. In Bradley Hole v Cusen [1953] 1 QB 300 the Court of Appeal was concerned with a tenants right to recover overpaid rent. Section 14(1) of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920 made such overpaid rent recoverable without prejudice to any other method of recovery by deduction from any rent payable by him to the landlord. The rent recoverable was clearly a debt. But the landlord went bankrupt, and the predecessor of section 285(3) of the 1986 Act precluded the tenant from having any remedy in respect of that debt after the making of the bankruptcy order. Could the tenant continue to deduct the overpaid rent from the rent otherwise due after the making of the bankruptcy order? The Court held that he could, suggesting that the overpayment could be regarded as the payment of rent in advance. As Lady Hale recounts in paras 14 15, in R v Secretary of State for Social Security, Ex p Taylor and Chapman [1997] BPIR 505, Keene J applied parallel reasoning under section 285(3) of the 1986 Act in relation to deductions from social security benefits in respect of prior overpayments of benefit and an unpaid Social Fund loan. Moreover, this was after Lord Clyde in the Inner House had in Mulvey v Secretary of State for Social Security referred to the right to recover by deduction as but one element in the calculation of benefit which the claimant was to receive: 1996 SC 8 (Ct of Sess), 15G 16A; and Lord Clydes approach appears to me to have received full endorsement in the House of Lords at 1997 SC(HL) 105, 109F H in the passage from Lord Jaunceys speech quoted by Lady Hale in para 16. It is of interest to note that Lord Jauncey went on expressly to invoke in support of his analysis the case of Bradley Hole v Cusen: p 110A B. Further, Lord Jauncey found it unnecessary in deciding the position during the bankruptcy to determine what the position might be when the bankrupt came to be discharged (p 109E). In the light of these authorities, there is a considerable case for saying that Parliament, when it enacted the DRO scheme in 2007, must have had in mind that, during bankruptcy and by parity of reasoning during the running of a DRO scheme, deductions in respect of any prior overpayment or un repaid Social Fund loan could continue to be made, as before, without infringing the rule that no remedy may be exercised in respect of any outstanding debt. In reality, the Court of Appeal in Bradley Hole was adopting a beneficent fiction, when it spoke of the overpayment there as a payment of rent in advance. The fiction had in that case the particular attraction that the overpayment was of rent, and it was being deducted from future rent. But in law the overpayment was a debt, which the tenant was free to recover in any way he could and which he could have recovered as a debt, even if for some reason it proved not to be covered by or capable of deduction from future rent. Nevertheless, the tenants choice to make deductions on a continuing basis was sufficient to persuade the Court of Appeal to treat the overpayment as a payment of rent in advance. So here also, it would be possible to say that the Secretary of States choice to make deductions on a continuing basis entitles the court to treat the outstanding debts, arising from prior overpayments and unpaid Social Fund loan amounts, as payments on account of future social security benefits. However, I do not think it either sensible or possible to focus solely on what might be a possible solution in relation to the position during the currency of a bankruptcy or a DRO. It seems to me necessary also to consider the position which would exist on discharge from bankruptcy and at the end of the moratorium period. In each case, that normally occurs after one year: see sections 279(1) and 251H(1) respectively. The statutory language is in this context framed in terms of release or discharge from debts. In particular, on discharge of a bankrupt the bankrupt is released from all bankruptcy debts under section 281(1), and as at the end of the moratorium period a person subject to a DRO scheme is discharged from all outstanding DRO debts under section 251I(1). Accordingly, unless it can be said that no such debt exists in either case, the position remains incoherent if the analysis set out in para 39 above is accepted. The debtor would remain subject to deductions during the currency of the bankruptcy or DRO scheme, but would be released or discharged from the outstanding balance after one year when it ended. I do not think that we can overlook the potential incongruity, even though the House appears to have been prepared to do so in Mulvey. In R (Balding) v Secretary of State for Work and Pensions [2007] EWHC 759 (Admin), [2007] 1 WLR 1805, [2008] EWCA Civ 1327, [2008] 1 WLR 564, the Divisional Court and the Court of Appeal concluded that the existence of a bankruptcy debt could not depend upon whether or not the creditor was choosing to recover it by deduction from social security benefits. Further, in the present case, the Secretary of State has accepted that there is an outstanding debt within the scope of the DRO. We would have to overrule Balding and to hold that the Secretary of States concession was wrong, before we could conclude that the right to deduct survived the discharge from bankruptcy or the end of the moratorium period under a DRO. I see no real basis on which we would do this. The beneficent fiction of a payment in advance cannot be stretched to the point of a conclusion that no debt at all exists. Nor can a debt exist for some purposes (recovery other than by way of deduction), but not exist in so far as it is recovered by deductions. A position whereby deductions can continue to be made during the currency of a bankruptcy or moratorium period, but the remainder of the outstanding debt is extinguished at its conclusion has little to commend it. I am forced to the conclusion that the natural meaning of the statutes must be given effect. I reach this conclusion with misgivings, as I said at the outset. It will mean that those who have received overpayments or failed to repay Social Fund loans, but have become bankrupt or subject to a DRO scheme, will now receive larger social security benefit payments larger than they did prior to the bankruptcy or DRO and larger also than the social security benefits received by persons subject to such deductions who have avoided bankruptcy or a DRO scheme; it will also diminish the amount available in the limited Social Fund for the benefit of all potential claimants on that Fund. It must be questionable whether any of this is sensible or desirable, but that is a matter for the legislature to consider, if it wishes. LORD WILSON I agree that the appeal should be dismissed for the reasons given by Lady Hale but I wish also to associate myself with the remarks made by Lord Brown and Lord Mance in their concurring judgments. |
This appeal concerns the correctness of two of the most important decisions on the law of limitation of recent times: the decisions of the House of Lords in Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 (Kleinwort Benson) and Deutsche Morgan Grenfell Group plc v Inland Revenue Comrs [2006] UKHL 49; [2007] 1 AC 558 (Deutsche Morgan Grenfell). It arises in the course of long running proceedings known as the Franked Investment Income (FII) Group Litigation. explain how it is structured. Matters are dealt with in the following order: In view of the length of this judgment, it may be helpful at the outset to (1) General introduction (paras 3 17) (2) The history of the proceedings (paras 18 56) (3) Res judicata, estoppel and abuse of process (paras 57 101) (4) The background to section 32(1)(c) of the Limitation Act 1980 (paras 102 140) (5) The Limitation Act 1980 (paras 141 142) (6) Kleinwort Benson (paras 143 164) (7) Deutsche Morgan Grenfell (paras 165 171) (8) Discussion of Deutsche Morgan Grenfell (paras 172 212) (9) Deutsche Morgan Grenfell: Summary (paras 213 214) (10) Discussion of Kleinwort Benson (paras 215 241) (11) Kleinwort Benson: Summary (para 242 243) (12) The Practice Statement of 26 July 1966 (paras 244 253) (13) Application to the present proceedings (paras 254 256) (14) Conclusion (para 257) General introduction The FII Group Litigation was established by a Group Litigation Order (GLO) made on 8 October 2003 (the FII GLO). The claimants within the FII GLO are companies which belong to groups which include UK resident companies and non resident subsidiaries. The defendants are Her Majestys Commissioners for Revenue and Customs (the Revenue). The purpose of the FII GLO is to determine a number of common or related questions of law arising out of 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 those questions concern, first, the system of advance corporation tax (ACT) and, secondly, the taxation of dividend income from non resident sources under section 18 (Schedule D, Case V) of the Income and Corporation Taxes Act 1988 (ICTA) (the DV provisions). The relevant provisions of 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. Under the FII GLO, certain claims were selected as test claims, and the remaining claims were stayed. The test claimants case is that the differences between their tax treatment and that of wholly UK resident groups of companies breached the provisions of article 43 (freedom of establishment) and article 56 (free movement of capital) of the EC Treaty and their predecessor articles. They seek the repayment of the tax so far as it was unlawful under EU law, dating back in some cases to the accession of the UK to the EU in January 1973 and the introduction of ACT in April of that year (expressions such as the EU and EU law will be used in this judgment, anachronistically but conveniently, to include earlier incarnations of what is now known as the EU). In the alternative, they seek an award of damages under the principles of EU law established in Francovich v Italy (Case C 479/93) [1995] ECR I 3843, given effect in our domestic law in R v Secretary of State for Transport, Ex p Factortame (No 5) [2000] 1 AC 524. The system of corporate taxation relating to dividends which underlies the FII Group Litigation has also given rise to litigation managed under a number of other GLOs, including the ACT GLO. Whereas the focus of the ACT Group Litigation is on the UK 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 is on UK parented groups with foreign subsidiaries, and on the tax treatment of dividends coming into the UK from abroad. Although the present litigation is therefore concerned with factual situations which are different from those which have given rise to the ACT Group Litigation, some of the most important legal questions are common to both sets of proceedings. The ACT Group Litigation followed the decision of the Court of Justice of the European Union, as the court is now known (the Court of Justice), in the Hoechst case (Metallgesellschaft Ltd v Inland Revenue Comrs, Hoechst AG v Inland Revenue Comrs (Joined Cases C 397/98 and C 410/98) [2001] ECR I 1727; [2001] Ch 620). The ACT Group Litigation includes the decision in Deutsche Morgan Grenfell. A number of other sets of proceedings have also raised issues which arise in the FII Group Litigation. One is the Controlled Foreign Companies (CFC) and Dividend Group Litigation, which also concerns claims that the tax treatment of dividends paid by foreign subsidiaries to UK resident companies was incompatible with EU law. The principal difference from the FII Group Litigation is that the CFC and Dividend Group Litigation includes claims concerned with portfolio holdings of less than 10% of the shares of the relevant companies. Another is the Foreign Income Dividends (FID) Group Litigation, which concerns claims by pension funds or life companies that the absence of a tax credit in respect of foreign income dividends, in contrast to domestic dividends, was contrary to EU law. Another is the Stamp Taxes Group Litigation, which concerns claims that stamp taxes on issues or transfers of chargeable securities to clearance or depositary services are contrary to EU law. Other relevant proceedings include the Littlewoods proceedings, which concern claims to restitution based on the payment of VAT which was paid under a mistaken understanding of the relevant EU law. Since the payments with which these various proceedings are concerned go back, in most if not all cases, to the UKs entry into the EU in 1973, a central issue in the proceedings has been the limitation of actions. Restitutionary claims for the recovery of money are normally subject under English law to a limitation period of six years from the date when the cause of action accrued, on the basis that they are founded on simple contract within the meaning of section 5 of the Limitation Act 1980 (the 1980 Act). Francovich claims to damages are subject to the same time limit, on the basis that they are founded on tort within the meaning of section 2 of that Act. Far more than six years had passed between the date when much of the tax was paid, and the right to its recovery therefore accrued, and the date when the claims were brought. As a result, a large element of the claims, together with interest on it over a period of decades, was potentially time barred. The only way around that problem was to rely on section 32(1)(c) of the 1980 Act, which applies to an action for relief from the consequences of a mistake, and postpones the commencement of the limitation period until the plaintiff has discovered the mistake or could with reasonable diligence have discovered it. Section 32(1)(c) has therefore been central to all these proceedings. They have all been based on the propositions that (a) a restitutionary claim lies for the recovery of money, including tax, paid under a mistake of law, (b) such a claim falls within the ambit of section 32(1)(c), and (c) the effect of that provision is to postpone the commencement of the limitation period in respect of such a claim until the true state of the law is established by a judicial decision from which there lies no right of appeal. Each of these propositions was novel to English law. However, the colossal amounts of money at stake in these proceedings have made it worthwhile for every arguable point to be taken, not least points which might affect the applicable limitation period. The result has been a very protracted series of related proceedings. During the many years since these various proceedings were begun, the relevant principles of English law have been undergoing development, largely driven by those proceedings themselves. It may be helpful to note at this stage the principal milestones along the road, beginning with two decisions of the House of Lords which preceded the bringing of these claims, but set the scene for what followed. In 1992 the House of Lords held that a taxpayer was entitled to recover tax which was paid in response to an unlawful demand: Woolwich Equitable Building Society v Inland Revenue Comrs [1993] AC 70 (Woolwich). In 1998 the House of Lords held that a claim for restitution lay in respect of money paid under a mistake of law, and that such a claim fell within the scope of section 32(1)(c) of the 1980 Act: Kleinwort Benson [1999] 2 AC 349. On 8 March 2001, in the ACT Group Litigation, the Court of Justice issued its judgment in Hoechst [2001] Ch 620, establishing the incompatibility with EU law of the UK tax treatment of dividends paid by UK resident subsidiaries to foreign parents. In July 2003, at a later stage in the ACT Group Litigation, Park J gave judgment in Deutsche Morgan Grenfell, holding that the principles established in Kleinwort Benson applied to tax paid under a mistake of law, including tax paid in ignorance of the fact that the legislation under which it was charged was incompatible with EU law: [2003] EWHC 1779 (Ch); [2003] 4 All ER 645. In accordance with Kleinwort Benson, he also held that the limitation period applicable to such claims was that laid down by section 32(1) of the 1980 Act, namely six years from the date on which the mistake was or could with reasonable diligence have been discovered. That date, he held, was the date on which the Court of Justice gave judgment in Hoechst, establishing the incompatibility of the legislation in question with EU law. On 8 September 2003 the Government announced proposed legislation to exclude the application of section 32(1)(c) in respect of all mistake claims made on or after that date which related to an Inland Revenue taxation matter. Legislation to that effect was enacted in July 2004, in the form of section 320 of the Finance Act 2004 (FA 2004). In February 2005 the Court of Appeal reversed Park Js decision in Deutsche Morgan Grenfell: [2005] EWCA Civ 78; [2006] Ch 243. In October 2006 the House of Lords gave judgment in Deutsche Morgan Grenfell [2007] 1 AC 558, reversing the judgment of the Court of Appeal and restoring the decision of Park J. It also decided 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. The consequence was that claims in the ACT Group Litigation could be brought for the restitution of tax paid as far back as 1973, provided that the claim had been issued prior to the deadline of 8 September 2003 imposed by section 320 of the FA 2004. Following the decision of the House of Lords in Deutsche Morgan Grenfell, the Government applied to the Court of Justice for the reopening of the hearing of the first reference in the FII Group Litigation so that it could argue for a temporal restriction on the effect of the Court of Justices judgment, which had not yet been handed down. On 6 December 2006 the Court of Justice rejected the Governments application: Order (Case C 446/04) EU:C:2006:761. On the same day, the Government announced proposed legislation excluding the application of section 32(1)(c) of the 1980 Act in respect of mistake claims made before 8 September 2003 and relating to an Inland Revenue matter. A few days later, in the first reference in the FII Group Litigation, the Court of Justice held that the UK tax treatment of dividends paid by foreign subsidiaries to UK resident parents was incompatible with EU law: Test Claimants in the FII Group Litigation v Inland Revenue Comrs (Case C 446/04) [2006] ECR I 11753; [2012] 2 AC 436 (FII (CJEU) 1). In 2007, at a further stage of the ACT Group Litigation, the House of Lords decided that compound interest was payable on the amounts awarded, whether in damages or in restitution: Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Comrs [2007] UKHL 34; [2008] 1 AC 561 (Sempra Metals). Taken together with Deutsche Morgan Grenfell, this meant that interest could be compounded for a period stretching back to 1973. The day after judgment was delivered in Sempra Metals, the legislation announced in December 2006 was enacted as section 107 of the Finance Act 2007 (FA 2007). In 2012, in the FII Group Litigation, this court held that a Woolwich claim could lie in the absence of a demand (ACT being self assessed), but that, in order for a claim to fall within the ambit of section 32(1)(c) of the 1980 Act, a mistake must constitute an essential element of the cause of action, and not merely form part of the context: Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs) [2012] UKSC 19; [2012] 2 AC 337 (FII (SC) 1). The consequence was that section 32(1)(c) did not apply to the Woolwich ground of restitution. The taxpayer could however seek recovery of tax paid in ignorance of the fact that the legislation under which it was charged was incompatible with EU law, on the basis that it had been paid under a mistake. The case was argued and decided on the assumption that the decisions in Kleinwort Benson and Deutsche Morgan Grenfell were correct. The court also held that section 107 of the FA 2007 was incompatible with EU law. The court referred to the Court of Justice the question whether section 320 of the FA 2004 was also incompatible with EU law in so far as it had retrospective effect. In 2013 the Court of Justice held that it was: Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs) (Case C 362/12) [2014] AC 1161 (FII (CJEU) 3). These decisions represented a series of defeats for the Revenue. In more recent times, however, they enjoyed greater success. In 2017, in a test case concerned with the restitution of VAT charged incompatibly with EU law, this court reined in the increasingly expansive approach to restitutionary claims which had followed the adoption of the theory of unjust enrichment in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 and Banque Financire de la Cit v Parc (Battersea) Ltd [1999] 1 AC 221: see Investment Trust Companies v Revenue and Customs Comrs [2017] UKSC 29; [2018] AC 275. Later that year, in the Littlewoods proceedings, this court held that common law claims to restitution of VAT, together with any right to compound interest based on Sempra Metals, and the limitation regime imposed by the 1980 Act, had been effectively excluded by the statutory provisions governing the recovery of VAT: Littlewoods Ltd v Revenue and Customs Comrs [2017] UKSC 70; [2018] AC 869. In 2018, in the CFC and Dividend Group Litigation, this court held, having regard to Investment Trust Companies, that Sempra Metals had been incorrectly decided in requiring compound interest to be paid on restitutionary awards, and departed from it: Prudential Assurance Co Ltd v Revenue and Customs Comrs [2018] UKSC 39; [2019] AC 929 (Prudential). The principal question raised by the present appeal is whether, as the Revenue contend (drawing to a considerable extent on Dr Samuel Beswicks articles, The discoverability of mistakes of law (2019) Lloyds Maritime and Commercial Law Quarterly 112, and Discoverability Principles and the Laws Mistakes (2020) 136 Law Quarterly Review 139), this court should now depart from the decision of the House of Lords in Deutsche Morgan Grenfell in relation to section 32(1)(c) of the 1980 Act. The Revenue were also granted permission to appeal on the question whether the decision in Kleinwort Benson, so far as relating to limitation, was correct. Ultimately, we did not understand the Revenue to press that point, but the court received submissions upon it, partly at its own request, in view of the bearing of the decision on that subsequently taken in Deutsche Morgan Grenfell. Before considering the question whether the limitation issues in those two cases were correctly decided, however, the court has first to consider whether, as the test claimants contend, the Revenue are barred in the light of the history of these proceedings, including their failure to raise that question in FII (SC) 1, from now raising the question in these proceedings against the test claimants (whatever impact it might have on the claims of other claimants who are party to the FII GLO), because it is res judicata, or because of an estoppel, or because their doing so amounts to an abuse of process. The history of the proceedings The test claims These proceedings have a long history. That reflects their exceptional complexity and novelty, and the need to make no fewer than three references to the Court of Justice. What follows is not a complete account, but covers the stages in the proceedings which are relevant to the present appeal. The FII GLO was made on 8 October 2003, and has been repeatedly amended since then. It defined the type of claims falling within the scope of the GLO, identified the initial claimants, and provided a procedure enabling further claimants to be added. It set out the common issues of fact or law which arose for determination, without prejudice to the power of the High Court to add to or vary them. It also laid down a procedure for selecting claims to proceed as test cases and for amending, removing and adding to the common issues. Claims not selected as test claims were stayed. The claim on behalf of various members of the British American Tobacco (BAT) group was selected as a test claim in relation to a number of issues set out in the GLO, including Issue P: From what date does the limitation period commence? A claim by members of the Aegis group was chosen as the test claim in relation to Issue Q, which concerned the effect of section 320 of the FA 2004. As explained above, that provision disapplied section 32(1)(c) of the 1980 Act in relation to claims relating to an Inland Revenue taxation matter which were brought on or after 8 September 2003. It did not apply to the BAT claim, which had been issued on 18 June 2003. The BAT claim sought inter alia the restitution of tax payments made between 1973 and the issue of the claim, with compound interest, on the basis that the tax had been paid pursuant to a mistake of law or unlawful demands. In its defence, the Revenue pleaded inter alia that any right to restitution or damages which accrued more than six years before the claim form was issued (ie prior to 18 June 1997) was barred by the 1980 Act. The first reference to the Court of Justice On 28 June 2004 the trial of the BAT claim began, but it was immediately apparent that a preliminary reference to the Court of Justice would be needed on the numerous issues of EU law arising. Without delivering a judgment, Park J directed that a reference be made. It included a number of questions concerning the compatibility of domestic tax provisions with EU law, and also questions concerning the classification under EU law of the claims arising in consequence of any incompatibility. On 12 December 2006 the Court of Justice gave its judgment on the reference (FII (CJEU) 1 [2012] 2 AC 436). It said at para 184 that [i]t is clear from case law that any less favourable treatment of foreign sourced dividends in comparison with nationally sourced dividends must be regarded as a restriction on the free movement of capital in so far as it is liable to make the acquisition of holdings in companies established in other member states less attractive. The cases cited as establishing that proposition were Staatssecretaris van Financin v BGM Verkooijen (Case C 35/98) [2000] ECR I 4071 (Verkooijen), para 35; Lenz v Finanzlandesdirektion fr Tirol (Case C 315/02) [2004] ECR I 7063 (Lenz), para 21 and Proceedings brought by Manninen (Case C 319/02) [2004] ECR I 7477; [2005] Ch 236 (Manninen), para 23. In the absence of EU legislation, it was for the domestic legal system to lay down the relevant procedural rules governing actions for safeguarding EU rights, including the classification of claims, subject to the obligation of national courts and tribunals to ensure that individuals should have an effective legal remedy enabling them to obtain reimbursement of the tax unlawfully levied on them and the amounts paid to the member state or withheld by it directly against that tax. In relation to the Francovich claims for compensation, and the requirement that the breach of EU law by the member state must be sufficiently serious before such a claim will lie, the Court of Justice stated at [2012] 2 AC 436, paras 215 216: 215. in a field such as direct taxation, the consequences arising from the freedoms of movement guaranteed by the Treaty have been only gradually made clear, in particular by the principles identified by the Court of Justice since delivering judgment in Commission of the European Communities v French Republic (Case 270/83) [1986] ECR 273. Moreover, as regards the taxation of dividends received by resident companies from non resident companies, it was only in [Verkooijen, Lenz, and Manninen] that the Court of Justice had the opportunity to clarify the requirements arising from the freedoms of movement, in particular as regards the free movement of capital. 216. Apart from cases to which Directive 90/435/EEC [the Parent/Subsidiary Directive] applied, Community law gave no precise definition of the duty of a member state to ensure that, as regards mechanisms for the prevention or mitigation of the imposition of a series of charges to tax or economic double taxation, dividends paid to residents by resident companies and those paid by non resident companies were treated in the same way. It follows that, until delivery of the judgments in the Verkooijen, Lenz and Manninen cases, the issue raised by the order for reference in the present case had not yet been addressed as such in the case law of the Court of Justice. Procedure following the first reference Following the judgment of the Court of Justice, Rimer J directed that consecutive trials of the BAT and Aegis test claims should proceed. They would try all GLO issues raised by the test claims, including liability for restitution, save in so far as those issues concern causation or quantification (para 12 of Rimer Js order). Directions were also given for the service of amended pleadings and for preparation for trial, including the agreement of a list of questions to be decided by the court. The BAT claimants amended their particulars of claim on 13 December 2007 so as to aver that they had made the ACT payments by reason of their mistaken beliefs (i) that the ACT provisions were lawful and enforceable, and/or (ii) that the claimants were lawfully obliged to make those payments. A similar averment was also made in relation to the DV payments. The BAT claimants also set out detailed averments in support of their reliance on section 32(1)(c) of the 1980 Act. In relation to the ACT payments, the BAT claimants averred that they discovered their mistakes when the Court of Justice gave its judgment in FII (CJEU) 1 on 12 December 2006, and could not with reasonable diligence have discovered their mistakes any earlier than then, or alternatively any earlier than 8 March 2001, when the Court of Justice gave its decision in Hoechst. In relation to the DV payments, they averred that the fact that those payments were made by mistake depended upon the final determination of the issues in the proceedings, and could not with reasonable diligence be known or discovered at any other time or in any other way. In other words, although they were bringing a claim for the repayment of the DV tax on the basis that it had been paid under a mistake, they submitted that they could not discover the mistake until the question whether the DV provisions were enforceable had been determined by the court in those proceedings. They also added averments explaining why, in their submission, the application of section 107 of the FA 2007 to their claim would be contrary to EU law. As part of their argument that section 107 should not be applied to their claim, they also averred that the Revenue were estopped from denying that section 32 of the 1980 Act applied to their claim, stating that until 6 December 2006 at the earliest (the date when the Revenue announced their proposal that Parliament should enact what became section 107 of the FA 2007), the parties had proceeded on the common understanding that section 32 applied. Alternatively, they averred that, in failing to propose that there be a separate issue within the GLO as to whether section 32 applied to claims commenced before 8 September 2003 (ie claims falling outside the ambit of section 320 of the FA 2004), the Revenue represented that section 32 applied to the BAT claim and others issued before that date. In response, the Revenue amended their defence on 21 December 2007. In relation to limitation, they denied that the BAT claimants were entitled to rely on section 32(1)(c) of the 1980 Act, and referred to section 107 of the FA 2007. They averred that any right to restitution which accrued more than six years before the date of issue of the claim form was barred by the 1980 Act. They denied that the parties had proceeded on a common understanding that section 32 applied to the BAT claim, averring that the law in that regard was not fully clarified until 25 October 2006 at the earliest (the date of the decision of the House of Lords in Deutsche Morgan Grenfell [2007] 1 AC 558). In fact, they averred, it was their explicit position at all times prior to that date, as advanced in Deutsche Morgan Grenfell, that section 32 did not apply. In the light of the amended claim and defences, Henderson J amended Issue Q so as to include the effect of section 107 of the FA 2007 as well as section 320 of the FA 2004. Issue P remained unchanged. The BAT claim became an additional test claim in relation to Issue Q so far as relating to section 107 of the FA 2007, as well as remaining a test claim in relation to other issues, including Issue P. Henderson Js first judgment The trial proceeded over 13 days in July 2008, and Henderson Js judgment was delivered in November of that year: Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs) [2008] EWHC 2893 (Ch); [2009] STC 254 (FII (HC) 1). The Revenue were recorded as arguing inter alia that the DV claims were excluded by the statutory provisions for recovery of tax overpaid in section 33 of the Taxes Management Act 1970, and that the ACT and DV payments had not in any event been made under any mistake of law. Those arguments were rejected. Henderson J characterised the mistake of law as a mistake as to the lawfulness of the ACT regime or the Case V charge (para 262): a characterisation which was not strictly accurate, since an incompatibility with EU law does not render a United Kingdom statute unlawful under domestic law, but requires the court to disapply the incompatible provision to the extent which is necessary to comply with EU law: R v Secretary of State for Transport, Ex p Factortame Ltd (No 2) [1991] 1 AC 603. The inaccuracy was however immaterial in the present context, since a mistaken belief that the provisions were enforceable, and that the claimants were therefore obliged to make the payments, would equally be a relevant mistake of law for the purposes of a restitutionary claim based on Kleinwort Benson and Deutsche Morgan Grenfell. On the facts, the judge found that a mistake had been made. In relation to the ACT claims, he was satisfied on the evidence that the mistake was not obvious to anybody within the BAT group at the time [when the payments were made], since everybody proceeded on the footing that the tax in question was lawfully due and payable ([2009] STC 254, para 267). The position in relation to the DV claims was said to be similar (para 275). The evidence bearing on this point was discussed at a later point in the judgment. At para 391, the judge said: [I]t is the evidence of the claimants own witnesses that they paid all of the tax in dispute on the footing that they believed it to be lawfully due, and had no reason to suspect the contrary before June 2000 at the earliest. So, for example, Mr Anthony Cohn, who was a Tax Manager with BAT Holdings, said in his first witness statement dated 13 May 2004: The first time we considered that the denial of [FII] treatment of foreign dividends might be a breach of EC law was when we discussed internally the Verkooijen judgment shortly after it was published on 6 June 2000. Following this, we spent a considerable amount of time considering our options and waiting to see how EC law would develop. Following discussions with our tax advisers, PricewaterhouseCoopers and our solicitors, Dorsey & Whitney in the spring and early summer of 2003, we decided to issue the claim. Mr Hardman, who was the head of taxation at BAT Industries, confirmed the accuracy of that evidence. The judge said that he saw no reason to doubt it. He found that nobody within the BAT group questioned the lawfulness of the relevant UK legislation at any time before June 2000 (when the Verkooijen judgment was delivered), and that accordingly [a]ll the disputed tax which was paid up to that date was paid in the firm belief that it was lawfully due (para 393). That evidence was consistent with other evidence adduced in relation to the Francovich claim. In that regard, the judge noted the Report of the Committee of Independent Experts on Company Taxation (the Ruding Committee), established by the European Commission in 1990 to evaluate the need for greater harmonisation of tax. In its Report, published in 1992, the Committee noted the adverse impact on overseas investment caused by discriminatory taxation of dividends from profits earned in another member state. There was, however, no suggestion that the discrimination was contrary to EU law. The same was true of the first draft of a paper by the Adam Smith Institute entitled An Act Against Trade UK Tax Prejudice Against Trading Abroad: The Problem of Surplus ACT and its Solution, which was sent to Mr Etherington, the Head of Tax for the BAT Group, in 1989 by the Director of the Institute. Reference was also made to a number of published articles on the subject by tax lawyers. The last of the articles, published in 1998, was the only one to raise the question whether the difference in treatment constituted a violation of EU law (Lodin, The Imputation Systems and Cross Border Dividends the need for new solutions, EC Tax Review, 1998, p 229). The author concluded that there was very little guidance to be found in earlier decisions of the Court of Justice, and that the outcome of any challenge was difficult to predict. The judge commented that that assessment reflected the uncertainty acknowledged by the Court of Justice in the present proceedings, which continued at least until the decision in Verkooijen in June 2000 (para 391). He concluded that, prior to that date, there was admittedly discrimination between the way in which UK tax law treated domestic dividends and foreign dividends, with domestic dividends receiving the more favourable treatment, but whether this form of discrimination involved a breach of articles 43 and 56 remained unclear until the decision in Verkooijen ([2009] STC 254, para 395). In relation to limitation, the judge considered the effect of section 320 of the FA 2004 and section 107 of the FA 2007, that is to say, Issue Q in the GLO, and concluded that it was not open to the Revenue to rely on either provision as a defence to the test claims. The judge also identified a number of issues on which a further reference to the Court of Justice was necessary. None of those issues concerned limitation. Henderson Js order, dated 12 December 2008, included a declaration (Declaration 17) that [t]o the extent that claimants paid unlawfully levied ACT and/or corporation tax under Schedule D Case V, such ACT and/or corporation tax was paid under a mistake. It also ordered (Order 1) that: The following claims are successful in relation to the GLO issues determined in the trial: (a) claims for repayment of corporation tax paid on or after 1 January 1973 on dividends received from companies resident in other EU member states; (b) claims for the repayment of surplus ACT (including ACT purportedly utilised against unlawful corporation tax on dividends under l(a)), or the time value of ACT utilised against lawful corporation tax or ACT refunded under the FID [foreign income dividends] regime, paid on or after 1 January 1973, by claimants which received dividend income from subsidiaries in other member states in so far as the ACT would not have been payable if dividend income from other EU member states had been treated as franked investment income; (c) claims for the time value of ACT on third country FIDs paid on or after 1 July 1994 and refunded under the FID regime; (d) claims under l(a), (b) or (c). claims for the repayment of interest based on The judge had not, however, addressed in his judgment the question of when the limitation period began to run Issue P in the GLO and said nothing in his judgment about the reasoning in Kleinwort Benson and Deutsche Morgan Grenfell relating to section 32(1)(c) of the 1980 Act. The first appeal to the Court of Appeal Both the test claimants and the Revenue appealed. It was common ground in the appeal that section 32(1)(c) of the 1980 Act applied in principle to the test claims for money paid under a mistake of law, following the decisions of the House of Lords in Kleinwort Benson and Deutsche Morgan Grenfell. The only point arising in relation to limitation was whether the application of section 32(1)(c) was precluded by section 320 of the FA 2004 in relation to the Aegis claim, and by section 107 of the FA 2007 in relation to the BAT claim. The Court of Appeal concluded that EU law did not preclude the application of either provision, since the claimants continued to have Woolwich claims (subject to a six year limitation period), and those claims were sufficient to meet the requirements of EU law: [2010] EWCA Civ 103; [2010] STC 1251 (FII (CA) 1). The court also directed that a further reference should be made to the Court of Justice, in order to seek clarification of its judgment in FII (CJEU) 1 [2012] 2 AC 436. Accordingly, the order of the court, dated 19 March 2010, varied Henderson Js Order 1 so as to exclude claims falling within the scope of the issues to be referred to the Court of Justice. Order 4 was also varied so as to state that all claims made outside the applicable limitation periods were unsuccessful. The first appeal to the Supreme Court In November 2010 this court granted both parties permission to appeal on a number of issues, including the question whether the availability of the Woolwich claims sufficed to meet the requirements of EU law. The second reference was then made to the Court of Justice, and it gave its ruling in 2012: Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs) (No 3) (Case C 35/11) [2013] Ch 431 (FII (CJEU) 2). In their submissions in the appeal to this court, the Revenue accepted that section 32(1)(c) of the 1980 Act applied to the test claimants claims for restitution on the basis of mistake, subject to the effect of section 320 of the FA 2004 and section 107 of the FA 2007. The argument in relation to limitation was therefore concerned with the effect of those provisions, and with the question whether section 32(1)(c) also applied to the Woolwich claims, as the test claimants submitted. The judgments proceeded on the same basis. As explained earlier, the court held that, in order for a claim to fall within the ambit of section 32(1)(c) of the 1980 Act, a mistake must constitute an essential element of the cause of action, and that the provision did not therefore apply to a Woolwich claim: FII (SC) 1 [2012] 2 AC 337. In so holding, the court upheld the earlier decision of Pearson J in Phillips Higgins v Harper [1954] 1 QB 411 (Phillips Higgins). As Lord Walker of Gestingthorpe pointed out at para 63, if that approach were to be departed from, there would be no principled stopping place for the expansion of the scope of section 32(1)(c) until it overrode the common law rule that ignorance of the existence of a cause of action does not prevent time from running. The consequence would be that the leading case of Cartledge v E Jopling & Sons Ltd [1963] AC 758 would be seen to have missed the point, and the limits and rationale of sections 11 and 14A of the 1980 Act (which extend the limitation period for actions of damages for personal injuries, and other actions of damages for negligence, respectively, until the facts constituting the cause of action are known) would have to be revisited. The court also held that section 107 of the FA 2007 was incompatible with EU law, and referred two questions to the Court of Justice, including a question concerning the compatibility with EU law of section 320 of the FA 2004. The Court of Justice delivered its judgment in December 2013: FII (CJEU) 3 [2014] AC 1161. In the light of that judgment, this court held in April 2014 that neither section 320 of the FA 2004 nor section 107 of the FA 2007 could be applied to the test claims. The quantification trial In the meantime, in May 2013 Henderson J ordered that the trial of the BAT claim be resumed to determine all remaining issues of liability and quantification, apart from a few issues, not relating to limitation, which had been referred to the Court of Justice. Henderson J laid down a timetable for the amendment of the pleadings and the agreement of a list of issues to be decided at the resumed trial. In their amended particulars of claim, the BAT claimants continued to plead mistakes of law as set out at para 26 above, and those averments were admitted by the Revenue. In relation to limitation, the BAT claimants averred: 18. As set out above, the claimants claim relief from the consequences of mistakes within the meaning of section 32(1)(c) of the Limitation Act 1980 (section 32) and, in relation to their claims seeking such relief whether in restitution or as damages or howsoever arising (mistake claims), the claimants are entitled to rely on that provision. l8A. Accordingly, the six year period of limitation does not begin to run until the claimants have discovered their mistake or could with reasonable diligence have discovered it. In this regard: (a) The claimants discovered their mistakes relating to the ACT Payments when the ECJ gave its judgment on 12 December 2006. The claimants could not with reasonable diligence have discovered these mistakes any earlier than they did, alternatively any earlier than when the ECJ gave its decision in Metallgesellschaft Ltd v Inland Revenue Comrs and Hoechst AG v Inland Revenue Comrs (Joined Cases C 397/97 and C 410/98) on 8 March 2001. (b) The claimants discovered their mistakes relating to the FID enhancements when the ECJ gave its judgment on 12 December 2006. The claimants could not with reasonable diligence have discovered these mistakes any earlier than they did. (c) The fact that the DV Corporation Tax Payments, to the extent of their unlawfulness, and the payments connected with DV Corporation Tax and identified in paragraphs 17B(a)(ii) above were made by mistake depends upon the final determination of the issues in these proceedings. In the premises, the claimants could not with reasonable diligence have discovered these mistakes at any other time or in any other way. 18B. In the premises, the claimants mistake claims are not time barred. Following the decisions in FII (SC) 1 and FII (CJEU) 3, those paragraphs were admitted by the Revenue. Nevertheless, the Revenue informed the BAT claimants that they wished to argue at trial that the relevant date was not 12 December 2006 (the date of the judgment in FII (CJEU) 1) but 8 March 2001 (the date of the judgment in Hoechst). Accordingly, the parties agreed that one of the issues to be decided at the trial was Issue 28: When did the claimants discover (or could with reasonable diligence have discovered) their mistake? Accordingly, in respect of which payments and periods do the claimants have valid mistake claims? Henderson Js second judgment Following a 16 day trial, Henderson J delivered his judgment in December 2014: Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2014] EWHC 4302 (Ch); [2015] STC 1471 (FII (HC) 2). In relation to Issue 28, he noted that the question as to when the claimants could first have discovered their mistake had been left undecided in FII (HC) 1 [2009] STC 254, and that it was of no practical significance to the BAT claimants, since their claim form was issued on 18 June 2003. That date was within the relevant six year period, whether that period began on 8 March 2001, as the Revenue argued, on 25 October 2006 (the date of the judgment in Deutsche Morgan Grenfell), as the judge was inclined to think, or on 12 December 2006, as the claimants argued. The issue might, however, be relevant to other claims in the FII GLO. He observed at para 454 that there was what might at first sight appear to be an insuperable logical difficulty in the claimants case on this issue: how could it be said that they neither had discovered, nor with reasonable diligence could have discovered, their mistake until 12 December 2006, when they had already started the present action three and a half years earlier? But, he said, that position necessarily followed from the courts jurisprudence. By parity of reasoning with the decision of the House of Lords in Deutsche Morgan Grenfell [2007] 1 AC 558, he considered that it was strongly arguable that it was only when that judgment was delivered, on 25 October 2006, that time began to run against the BAT claimants. That judgment was pertinent, in his view, because it was the first time an appellate court had determined that a restitutionary claim lay for the recovery of tax on the ground that it had been paid under a mistake of law. Although Park J had decided the same point three years earlier, it was only the decision of the House of Lords which achieved finality on the issue. However, in the light of the majority judgments in FII (SC) 1 [2012] 2 AC 33, particularly that of Lord Walker, he concluded that the date when the claimants discovered (or could with reasonable diligence have discovered) their mistake was 8 March 2001, when the Court of Justice delivered its judgment in Hoechst [2001] Ch 620. In that regard, Henderson J referred to Lord Walkers discussion of legitimate expectations, in the course of which he had observed at [2012] 2 AC 337, para 103 that, until the Court of Justice issued its judgment in Hoechst, there was no general appreciation that the UK corporation tax regime was seriously open to challenge as infringing the Treaty, and had stated at para 104 that, after the date of the judgment in Hoechst, a well advised multi national 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). It is relevant to note that, when the parties received the judgment in draft, counsel for the claimants complained to the judge that, if the Revenue wished to argue Issue 28, they must apply to amend their pleadings, and satisfy the court that such an amendment should be permitted. In response, counsel for the Revenue noted that no pleading point had been taken until the draft judgment was released, and stated that the Revenue had not sought to amend their pleadings in the test claim because the issue was of no significance in relation to that claim (ie the BAT claim). Both parties had, however, recognised the significance of the issue for other claims (which had been stayed before being pleaded out), and had agreed that it should be included in the list of issues to be decided at the trial. The judge rejected the complaint, noting that the point was included in the agreed list of issues, and observing that the pleaded position as between the test claimants and the Revenue was not relevant to this issue, since both parties agreed that it made no difference so far as they were concerned. (Declaration 24) in the following terms: In his order, dated 30 January 2015, Henderson J granted a declaration Issue 28 is answered as follows: A. The date when the claimants discovered (or could with reasonable diligence have discovered) their mistake is 8 March 2001 when the ECJ delivered its judgment in Hoechst/Metallgesellschaft. It is common ground that on any view the BAT claimants started their mistake claims within the extended limitation period. As a result, all of the mistake claims of the BAT claimants dating back to 1973 are in time. The test claimants were granted permission to appeal against Declaration 24A. There was no appeal against Declaration 24B. The second appeal to the Court of Appeal In the course of the hearing before the Court of Appeal, in June 2016, counsel for the Revenue observed that the central issue in all of the cases concerned with claims for the restitution of money paid under a mistake was whether section 32(1)(c) does apply to mistakes of law. He also observed that this critical issue might be a matter for this court in the present proceedings. That appears to have been the first indication, in the papers before this court, that the decisions in Kleinwort Benson and Deutsche Morgan Grenfell might be challenged. The hearing proceeded, however, on the basis that the Court of Appeal was bound to follow the decisions of the House of Lords, and the argument focused on the effect of Deutsche Morgan Grenfell. In November 2016 the Court of Appeal allowed the test claimants appeal on Issue 28: Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2016] EWCA Civ 1180; [2017] STC 696 (FII (CA) 2). Declaration 24A was amended so as to read: The date when the claimants discovered (or could with reasonable diligence have discovered) their mistake is 12 December 2006 [the date of the judgment in FII (CJEU) 1]. In their judgment, delivered in November 2016, the Court of Appeal noted at paras 348 349 the position on the pleadings. After quoting paras 18 and 18B of the amended particulars of claim (para 44 above), they noted that the Revenue had admitted those paragraphs, and observed that [t]hat no doubt reflected the fact that even on the basis of the fall back reasonable discoverability date of 8 March 2001 the BAT claimants claims were comfortably in time since proceedings had been commenced in 2003. As they noted, however, other claimants had not commenced proceedings until much later, and the Revenue had made it plain that, although pleadings had not been required in the cases of those claimants, it would be raising a limitation defence in them. So it had been agreed that Issue 28 should be determined. In relation to that issue, the court noted at para 372 that they were bound by the decision of the House of Lords in Deutsche Morgan Grenfell [2007] 1 AC 558, which in their view established that in the case of a point of law which is being actively disputed in current litigation the true position is only discoverable, for the purpose of section 32(1)(c) of the 1980 Act, when the point has been authoritatively determined by a final court. An authoritative determination of a related point by a final court in earlier proceedings would only start time to run, in their view, if it necessarily meant that the same conclusion would follow in the instant proceedings. The provisions in issue in Hoechst were not the same as those in issue in the FII GLO, and it was not contended that the decision in Hoechst necessarily meant that the latter provisions also infringed EU law. On that basis, the court concluded that the limitation period began to run for the test claimants only on the date when judgment was delivered in FII (CJEU) 1: that is to say, 12 December 2006, three and a half years after they had issued their claims. The second appeal to the Supreme Court Thereafter, the Revenue sought permission to appeal to this court on a multiplicity of grounds, including Issue 28, and invited the court to depart from that decision in Deutsche Morgan Grenfell. That ground of appeal was directed at the test claimants (ie the BAT claimants) as well as other claimants. Further submissions were filed following this courts decision in Prudential [2019] AC 929 (para 15 above), inviting the court also to depart from the decision in Kleinwort Benson as to the scope of section 32(1)(c) of the 1980 Act. Following an oral hearing, permission to appeal on Issue 28 was granted, without prejudice to the test claimants entitlement to argue that, even if the court were to hold that those decisions should be departed from, that decision should not affect the outcome of the present case, whether by reason of res judicata, issue estoppel, abuse of process or otherwise. The court also directed that the appeal on Issue 28 should be heard in advance of the appeal and cross appeal on all remaining grounds. In the event, and partly at the invitation of the court, the arguments at the hearing of the appeal involved a comprehensive consideration of the decisions in Kleinwort Benson and Deutsche Morgan Grenfell, so far as relating to limitation. The Finance (No 2) Act 2015 In 2015 Parliament again responded to restitution claims relating to taxation in the Finance (No 2) Act 2015 (F(No 2)A 2015). In section 38 of that Act Parliament introduced Part 8C of the Corporation Tax Act 2010, which imposed a higher rate of Corporation Tax (45%) on the interest paid on restitution claims for overpaid tax, if the interest was not simple interest at a statutory rate. This measure, which counsel described as a windfall tax, was Parliaments response to the large claims which were being made against the Exchequer. In section 52 of F(No 2)A 2015 Parliament also provided that the rates of interest payable on tax related judgment debts were those set out in tax legislation. Res judicata, estoppel and abuse of process Until June 2016 the Revenue appear to have given no indication that they might seek to challenge the decisions in Kleinwort Benson and Deutsche Morgan Grenfell and argue that section 32(1)(c) does not apply to mistakes of law: para 51 above. Issue 28 itself (para 45 above) assumes that section 32(1)(c) does so apply, and in the courts below that issue was directed to a debate on whether 8 March 2001 or 12 December 2006 is the relevant date under that subsection for the start of the limitation period. The emergence of the challenge to the decisions in both Kleinwort Benson and Deutsche Morgan Grenfell in this court after such extensive and costly legal proceedings has, unsurprisingly, caused the claimants to advance a vigorous case in which they argue that the Revenue cannot and, in any event, should not be allowed to make this challenge. The claimants primary position is that this court should dismiss the appeal in relation to Issue 28 on the grounds of res judicata, estoppel and abuse of process. Alternatively, they submit that the appeal should be limited to the identification of the relevant date under section 32(1)(c), because the wider challenge would contradict the Revenues concessions in the courts below, would amount to an abuse of process and would cause the claimants unfair prejudice. As a fall back, the claimants argue that the court should decline to entertain the appeal on Issue 28 in relation to the test claimants and the other claimants whose claims were issued within six years of 8 March 2001, or order that its determination does not apply to those claimants. The rules or concepts of res judicata, estoppel, and abuse of process support the same legal policies, namely that there should be finality in litigation and that a party should not be twice vexed in the same matter: Johnson v Gore Wood & Co [2002] 2 AC 1, p 31, per Lord Bingham of Cornhill. Lord Bingham went on to state: This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The other members of the Committee, except Lord Millett who delivered a concurring speech, agreed in terms with Lord Bingham on this rationale. Similarly, in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46; [2014] AC 160 (Virgin Atlantic Airways), para 55 Lord Neuberger of Abbotsbury stated: The purpose of res judicata is not to punish a party for failing to take a point, or for failing to take a point properly, any more than to punish a party because the court which tried its case may have gone wrong. It is to support the good administration of justice, in the public interest in general and the parties interest in particular. That common purpose does not alter the fact that each rule or concept has its own rules, and each must be considered in turn. The claimants in their pleadings on this appeal use the term res judicata not as a portmanteau term to describe the different legal principles of which Lord Sumption spoke in Virgin Atlantic Airways Ltd (above), but equate it with cause of action estoppel. Lord Sumption in that case (para 17) described cause of action estoppel thus: The first principle is that once a cause of action has been held to exist or not to exist, that outcome may not be challenged by either party in subsequent proceedings. (Emphasis added) He stated that it is a form of estoppel precluding a party from challenging the same cause of action in subsequent proceedings (emphasis added). In his exposition of the law in relation to res judicata, with which the other Justices agreed, Lord Sumption quoted the speech of Lord Keith of Kinkel in Arnold v National Westminster Bank plc [1991] 2 AC 93 (Arnold) which described this estoppel in these terms (p 104D E): Cause of action estoppel arises where the cause of action in the later proceedings is identical to that in the earlier proceedings, the latter having been between the same parties or their privies and having involved the same subject matter. In such a case the bar is absolute in relation to all points decided unless fraud or collusion is alleged, such as to justify setting aside the earlier judgment. The discovery of new factual matter which could not have been found out by reasonable diligence for use in the earlier proceedings does not, according to the law of England, permit the latter to be re opened. Cause of action estoppel extends also to points which might have been but were not raised and decided in the earlier proceedings for the purpose of establishing or negativing the existence of a cause of action. Lord Keith quoted from the judgment of Sir James Wigram V C in Henderson v Henderson (1843) 3 Hare 100, 114 115: In trying this question, I believe I state the rule of the court correctly, when I say, that where a given matter becomes the subject of litigation in, and adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. Lord Keith ([1991] 2 AC 93) observed that this passage has frequently been treated as settled law and referred to the advice of the Judicial Committee of the Privy Council in two cases: Hoystead v Commissioner of Taxation [1926] AC 155 and Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581. He stated: It will be seen that this passage appears to have opened the door towards the possibility that cause of action estoppel may not apply in its full rigour where the earlier decision did not in terms decide, because they were not raised, points which might have been vital to the existence or non existence of a cause of action. (Emphasis added) In Virgin Atlantic Airways Ltd (above) Lord Sumption stated ([2014] 160, para 22) that Arnold was authority for the following propositions: (1) Cause of action estoppel is absolute in relation to all points which had to be and were decided in order to establish the existence or non existence of a cause of action. (2) Cause of action estoppel also bars the raising in subsequent proceedings of points essential to the existence or non existence of a cause of action which were not decided because they were not raised in the earlier proceedings, if they could with reasonable diligence and should in all the circumstances have been raised. (Emphasis added) From these authorities it is clear that cause of action estoppel operates only to prevent the raising of points which were essential to the existence or non existence of a cause of action. The claimants complaint in short is that the Revenue had conceded both in their pleadings and in counsels submissions that section 32(1)(c) applied to mistakes of law and that BAT (and by implication other claimants which had raised proceedings within six years after 8 March 2001) faced no limitation defence. Those concessions relate to the defence of limitation. The effect of limitation is to render an otherwise valid claim unenforceable to the extent that the claim relates to periods beyond the period of limitation. The concessions had and have no bearing on the existence or non existence of the cause of action which is a claim for restitution based on the payment of tax which was paid under a mistaken understanding of the relevant law. The Revenue therefore are not barred from their challenge by cause of action estoppel. The second estoppel which we must consider is issue estoppel. This expression, which appears to have been coined by Higgins J in the Australian case of Hoystead v Federal Taxation Comr (1921) 29 CLR 537, 561 and adopted by Diplock LJ in Thoday v Thoday [1964] P 181, 197 198, concerns the principle which Lord Sumption in Virgin Atlantic Airways Ltd (above), para 17 described as: the principle that even where the cause of action is not the same in the later action as it was in the earlier one, some issue which is necessarily common to both was decided on the earlier occasion and is binding on the parties. In Thoday (above), p 198, Diplock LJ observed that issue estoppel was an extension of the public policy underlying cause of action estoppel and described it in these terms: There are many causes of action which can only be established by proving that two or more conditions are fulfilled. Such causes of action involve as many separate issues between the parties as there are conditions to be fulfilled by the plaintiff in order to establish his cause of action; and there may be cases where the fulfilment of an identical condition is a requirement common to two or more different causes of action. If in litigation upon one such cause of action any of such separate issues as to whether a particular condition has been fulfilled is determined by a court of competent jurisdiction, either upon evidence or upon admission by a party to the litigation, neither party can, in subsequent litigation between one another upon any cause of action which depends upon the fulfilment of the identical condition, assert that the condition was fulfilled if the court has in the first litigation determined that it was not, or deny that it was fulfilled if the court in the first litigation determined that it was. In Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630, 642 Diplock LJ expressed the view that in an action in which certain questions of fact or law are tried and determined before others and an interlocutory judgment is given, the parties are bound by the determination of that issue in subsequent proceedings in the same action and their only remedy is to appeal the interlocutory judgment. He saw this as an example of issue estoppel. In Arnold (above), p 105 Lord Keith said that issue estoppel may arise where a particular issue forming a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant one of the parties seeks to re open that issue. He referred to the passage in Diplock LJs judgment in Thoday which we have quoted above and, by reference to Diplock LJs judgment in Fidelitas Shipping (above), observed that issue estoppel had been extended to cover the case where in subsequent proceedings it is sought to raise a point which might have been but was not raised in the earlier proceedings ([1991] 2 AC 93, p 106). Lord Sumption in Virgin Atlantic Airways (above), para 21, explained Lord Keiths judgment in Arnold (above) in relation to issue estoppel. In the case of that estoppel it was in principle possible to challenge a previous decision on an issue not only by taking a new point which could not reasonably have been taken in the earlier proceedings but also (in contrast to cause of action estoppel) to reargue in materially altered circumstances an old point which had previously been rejected. In para 22 he stated that Arnold was authority for the following proposition: (3) Except in special circumstances where this would cause injustice, issue estoppel bars the raising in subsequent proceedings of points which (i) were not raised in the earlier proceedings or (ii) were raised but unsuccessfully. If the relevant point was not raised, the bar will usually be absolute if it could with reasonable diligence and should in all the circumstances have been raised. The claimants did not argue in their written case that there is an issue estoppel, but Mr Daniel Margolin QC raised the possibility in his oral submissions and we must address it. The answer to this challenge lies in the terms of the GLO and the way in which the proceedings developed. The question of limitation was raised in Issue P in the GLO (From what date does the limitation period commence?) and the BAT claim was the test claim in relation to that issue: para 20 above. Issue P was not argued or determined in Henderson Js first judgment (FII (HC) 1 [2009] STC 254) or in the appeals which arose out of that judgment. The only question relating to a limitation defence which was decided in the first trial was Issue Q, which concerned the effect of section 320 of the FA 2004 and section 107 of the FA 2007: paras 29 and 35 above. This is unsurprising, as in the first phase of the litigation the Revenues only limitation defence to BATs mistake of law claims was its reliance on those statutory provisions to exclude the application of section 32(1)(c). In the period leading up to the second trial before Henderson J the BAT claimants asserted in their revised pleadings that the mistake claims were not time barred, and the Revenue admitted those assertions: para 44 above. Notwithstanding that admission in relation to the BAT claimants, the Revenue wished to argue that the relevant date under section 32(1)(c) was 8 March 2001 because that date would support a limitation defence in relation to some of the other claims. As a result, the parties agreed that Issue 28 be decided at the second trial: para 45 above. It would not have been possible for the Revenue to argue at first instance or in the Court of Appeal that either Kleinwort Benson or Deutsche Morgan Grenfell was wrongly decided. But until June 2016 the Revenue gave no indication and made no reservation that they might seek to advance such an argument if the case were to return to the Supreme Court. With the benefit of hindsight, that is unquestionably unfortunate. But it does not give rise to an issue estoppel in circumstances where Issue P had to be determined in the second phase of the proceedings and the argument which the Revenue now wish to advance could be raised only in the Supreme Court. The claimants advance a closely related argument that this court has no jurisdiction to address the challenge which the Revenue now seek to mount. This is because Henderson J in his second judgment (FII (HC) 2 [2015] STC 1471) made the declaration (Declaration 24) which we have set out in para 50 above. That declaration answered Issue 28 by stating two things. First, in Declaration 24A it stated that the date at which the BAT claimants could have discovered their mistake was 8 March 2001. Secondly, in Declaration 24B it stated: It is common ground that on any view the BAT claimants started their mistake claims within the extended limitation period. As a result, all of the mistake claims of the BAT claimants dating back to 1973 are in time. There was no appeal against Declaration 24B. The BAT claimants now argue that by failing to appeal that declaration, the Revenue cannot raise the arguments which they wish to raise against them and the other claimants whose claims were issued within six years of 8 March 2001 because this court has no jurisdiction to consider a challenge to a court order which has not been appealed. We reject this argument. The failure to appeal the declaration in question does not exclude the jurisdiction of this court. The declaration is not a judicial determination but records an agreed position at that time. Such an order is not readily the subject of an appeal. The issue to which the declaration of the common position gives rise is whether the Revenue should be allowed to depart from that common position by withdrawing their concession at this late stage in the proceedings. That is a matter which we address in paras 83 100 below. The claimants alternative argument is that the Revenue, by seeking to extend Issue 28 into an argument that Kleinwort Benson and Deutsche Morgan Grenfell were wrongly decided, are guilty of an abuse of process. The principle of abuse of process was first formulated by Wigram V C in Henderson v Henderson (above) and more recently was analysed by the House of Lords in Johnson v Gore Wood & Co [2002] 2 AC 1. In that case Lord Bingham (at p 31B E) stated: The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. Lord Bingham then rejected the submission that the rule in Henderson v Henderson did not apply when an action had been settled by compromise. He stated, pp 32 33: An important purpose of the rule is to protect a defendant against the harassment necessarily involved in repeated actions concerning the same subject matter. A second action is not the less harassing because the defendant has been driven or thought it prudent to settle the first; often, that outcome would make a second action the more harassing. Lord Goff of Chieveley, Lord Cooke of Thorndon and Lord Hutton agreed in terms with Lord Binghams analysis. Lord Milletts speech is consistent with Lord Binghams analysis. He described the doctrine of res judicata as a rule of substantive law and contrasted that with the Henderson v Henderson doctrine which he described as a procedural rule based on the need to protect the process of the court from abuse and the defendant from oppression ([2002] 2 AC 1, p 59D E). The abuse of process doctrine is not confined to the raising of subsequent proceedings after the completion of an action but can apply to separate stages within one litigation. See, for example, Tannu v Moosajee [2003] EWCA Civ 815. In Virgin Atlantic Airways Ltd (above) Lord Sumption agreed with Lord Milletts analysis of the relationship between on the one hand the estoppels which come within the law of res judicata and on the other the abuse of process doctrine, stating ([2014] AC 160, para 25): Res judicata is a rule of substantive law, while abuse of process is a concept which informs the exercise of the courts procedural powers. In my view, they are distinct although overlapping legal principles with the common underlying purpose of limiting abusive and duplicative litigation. While the concept of abuse of process informs the exercise of the courts procedural powers, it is not a question of the exercise by the court of a discretion: Aldi Stores Ltd v WSP Group plc [2017] EWCA Civ 1260; [2008] 1 WLR 748, para 16 per Thomas LJ, para 38 per Longmore LJ. If the court, on making the broad, merits based judgment of which Lord Bingham spoke, concludes that a claim, a defence, or an amendment of a claim or of a defence involves an abuse of process or oppression of the opposing party, it must exclude that claim, defence or amendment. A finding of abuse of process operates as a bar. Thus, as Lord Wilberforce stated in delivering the judgment of the Judicial Committee of the Privy Council in Brisbane City Council v Attorney General for Queensland [1979] AC 411, 425, the doctrine ought only to be applied when the facts are such as to amount to an abuse: otherwise there is a danger of a party being shut out from bringing forward a genuine subject of litigation. From these authorities it is clear that for the court to uphold a plea of abuse of process as a bar to a claim or a defence it must be satisfied that the party in question is misusing or abusing the process of the court by oppressing the other party by repeated challenges relating to the same subject matter. It is not sufficient to establish abuse of process for a party to show that a challenge could have been raised in a prior litigation or at an earlier stage in the same proceedings. It must be shown both that the challenge should have been raised on that earlier occasion and that the later raising of the challenge is abusive. Applying that test to the circumstances of this appeal, we are not persuaded that it is an abuse of process for the Revenue to challenge the decisions of the House of Lords in Kleinwort Benson and Deutsche Morgan Grenfell at this stage of the GLO proceedings. We have reached this view for the following four reasons. First, the FII Group Litigation has involved novel and developing legal claims raising legal issues of unparalleled complexity, causing the claimants and the Revenue to amend their pleadings in the light of developments of both EU law and domestic law. Henderson J in FII (HC) 2 [2015] STC 1471, para 468) correctly spoke of a complex and evolving legal landscape. The claims were and are located at the interface of two developing systems of law: see paras 9 15 above. In English law the right to claim restitution for money paid under a mistake of law was first recognised only in 1998 and the courts, including this court, have been dealing with the ramifications of that decision since then. This is the second occasion on which the FII claims have reached this court and the claims have been materially affected by the judgment of the House of Lords in Sempra Metals [2008] 1 AC 561 and more recently by the judgments of this court in Littlewoods [2018] AC 869 and Prudential [2019] AC 929. On the European plane, the Court of Justice first recognised the incompatibility of the UK corporation tax legislation with EU law in the ACT Group Litigation in Hoechst in 2001, and the FII claims have since then generated no less than three judgments in references to the Court of Justice in 2006, 2012 and 2013. The claimants in the FII Group Litigation, in the ACT Group litigation, and in similar actions seeking the recovery of tax paid under a mistake of law, have been pursuing their claims at the frontier of legal developments. This in part explains the complexity of the legal proceedings, and why legal questions which are of central importance to those claims have only recently been decided or have not yet been determined. The question whether there has been an abuse of process involves a broad merits based judgment against this very unusual background. Secondly, the FII Group Litigation has been the subject of case management by the court, which has determined the order in which the questions of legal principle which the parties had identified have been addressed. In the first phase of the litigation 20 issues were sent to trial for determination by Henderson J. As Mr Margolin QC forcefully submitted, it was intended at that stage of the litigation that the first trial before Henderson J would determine all GLO issues relating to the test claims, including liability for restitution, except in so far as the issues concerned causation or quantification of the claims. It is also clear that at that stage the Revenue did not dispute that section 32(1)(c) would have applied to the mistake of law claims but for Parliaments intervention by enacting section 320 of the FA 2004 and section 107 of the FA 2007 to exclude the operation of that section in relation to mistake claims relating to Inland Revenue taxation matters. But Issue P (From what date does the limitation period commence?) was not determined in the first phase of the litigation, because, as the parties then presented their cases, it made no difference to the outcome of the BAT claims. The question raised by Issue P remained to be addressed in a later phase of the litigation. Thirdly, it is readily understandable why in the first phase of the litigation the Revenue focused on the statutory provisions which Parliament had enacted, namely section 320 of the FA 2004 and section 107 of the FA 2007. Those provisions would have established in domestic law the Revenues limitation defence that all claims accruing more than six years before the date of issue of the relevant claim forms were barred by the 1980 Act, but the provisions were held to be incompatible with EU law in so far as they had retrospective effect. Had the Revenue succeeded in establishing the legal enforceability of those statutory responses to the legal developments, they would not have needed to mount a challenge to Kleinwort Benson and Deutsche Morgan Grenfell. In the context of these actions in a developing area of law, we are satisfied that the Revenues failure to raise the wider questions relating to section 32(1)(c), while unfortunate, involved no culpability. Fourthly, it is not disputed that until the first phase of the FII Group Litigation reached this court in 2012, the Revenue could not have raised a challenge to the decisions in Kleinwort Benson and Deutsche Morgan Grenfell as only this court could review those judgments. The Revenue did not do so. Indeed, in response to a question from this court at that hearing, their counsel disavowed any intention to do so in those proceedings. But, at that time, the Revenues defence based on the statutory provisions enacted in 2004 and 2007 was still a live issue and Issue P had not been addressed. With the benefit of hindsight, it would have been better if the issue which the Revenue seek to raise in this hearing had been raised before this court in 2012, not least because the BAT claimants estimate that the limitation defence, if successful, would exclude a very large proportion of the value of their claims. But we do not think that it can be said that in the circumstances which prevailed in 2012 the Revenue should have raised the wider issue then. In the context of a very complex group litigation raising many novel questions of law in which the court had left Issue P for a later phase, the Revenue did not act abusively in not mounting the wider challenge then. There is therefore no bar arising from an estoppel, lack of jurisdiction or the doctrine of abuse of process which prevents this court from considering the Revenues challenge to Kleinwort Benson and Deutsche Morgan Grenfell. There remains the difficult question of the exercise of this courts discretion in deciding whether to allow the Revenue to advance the arguments which they now seek to deploy. The claimants argue with no little force that the Revenue in the second phase of the FII Group Litigation never stated that they wished to reserve the right to mount a broader attack in their limitation defence, which included a challenge to the Kleinwort Benson and Deutsche Morgan Grenfell decisions. On the contrary, the Revenue admitted in the pleadings in the BAT test case that BATs mistake claims were not time barred: para 44 above. Issue 28 in the second phase, which we have set out in para 45 above, is sufficiently broad to support one of the arguments which the Revenue have advanced in this court, namely that a taxpayer could with reasonable diligence have discovered a mistake of law at the date when the tax was mistakenly paid. But in the context of the Revenues admissions, which are reflected in Henderson Js statement of the common position of the parties in Declaration 24B (para 50 above), the agreed focus of that issue was on the Revenues argument that 8 March 2001, which is the date on which the CJEU handed down the Hoechst judgment ([2001] Ch 620), was the relevant date under section 32(1)(c), as Henderson J held in Declaration 24A. The claimants also argue that they have suffered very serious unfair prejudice by the emergence of the challenge to the Kleinwort Benson and Deutsche Morgan Grenfell decisions so late in these proceedings. We discuss this in paras 91 100 below. These are matters which the court must consider in the exercise of its discretion, as the Revenues broader challenge involves not only the withdrawal of a concession and a pleaded admission as against the BAT claimants, but also the raising of a new point of law on appeal. Several cases illustrate the established approach of the courts to the exercise of this discretion. In Pittalis v Grant [1989] QB 605 the Court of Appeal addressed an application by the landlord appellants to withdraw a legal concession made at first instance and to amend their grounds of appeal to argue for a different interpretation of a provision in the Rent Act 1977 from that which had been argued at first instance. The Court of Appeal allowed the application. Nourse LJ, who delivered the judgment of the court, stated the rule of procedure which operates as a norm, by quoting from the judgment of Sir George Jessel MR in Ex p Firth, In re Cowburn (1882) 19 Ch D 419, 429: the rule is that, if a point was not taken before the tribunal which hears the evidence, and evidence could have been adduced which by any possibility would prevent the point from succeeding, it cannot be taken afterwards. You are bound to take the point in the first instance, so as to enable the other party to give evidence. Nourse LJ stated that although the court has a discretion to refuse an application to raise on appeal a pure question of law which had not been raised at first instance, the normal practice was to allow the legal point to be taken where the court could be confident that the other party (i) had had an opportunity of meeting it, (ii) had not acted to his detriment by reason of the earlier omission to take the point and (iii) could be adequately compensated in costs: p 611C F per Nourse LJ. In Jones v MBNA International Bank (30 June 2000) [2000] EWCA Civ 514; [2000] Lexis citation 3292, Peter Gibson LJ (para 38) summarised the practice of the Court of Appeal in these terms: It is not in dispute that to withdraw a concession or take a point not argued in the lower court requires the leave of this court. In general the court expects each party to advance his whole case at the trial. In the interests of fairness to the other party this court should be slow to allow new points, which were available to be taken at the trial but were not taken, to be advanced for the first time in this court. That consideration is the weightier if further evidence might have been adduced at the trial, had the point been taken then, or if the decision on the point requires an evaluation of all the evidence and could be affected by the impression which the trial judge receives from seeing and hearing the witnesses. Indeed it is hard to see how, if those circumstances obtained, this court, having regard to the overriding objective of dealing with cases justly, could allow that new point to be taken. That summary, and particularly the reference to the difficulty of allowing a new point to be taken if further evidence would have been adduced at the trial, reflects longstanding practice: see, for example, The Tasmania (1890) 15 App Cas 223, 225 per Lord Herschell; Ex p Firth, In re Cowburn (above) per Sir George Jessel MR. As May LJ also made clear in his concurring judgment in Jones (para 52), the court has established a general procedural principle in the interests of efficiency, expediency and cost and in the interest of substantial justice in the particular case. There is no absolute bar against the raising of a new point of law even if a ruling on a new point of law necessitates the leading of further evidence, but, as the case law reveals, the court will act with great caution. In Grobelaar v News Group Newspapers Ltd [2002] UKHL 40; [2002] 1 WLR 3024, the House of Lords had to interpret the verdict of a jury, and addressed an application by the claimants counsel to withdraw a concession which he had made in the Court of Appeal as to the inferences of fact to be taken from the jurys award of damages for libel in favour of his client. He was allowed to do so for reasons which are not material to this appeal, but in a passage on which the test claimants rely, Lord Bingham stated (para 21): Only rarely, and with extreme caution, will the House permit counsel to withdraw from a concession which has formed the basis of argument and judgment in the Court of Appeal. A similar note of appellate caution was sounded in Singh v Dass [2019] EWCA Civ 360 in which a claimant sought to raise a new argument under the 1980 Act which he had not advanced at first instance. Haddon Cave LJ, who gave the judgment of the court, summarised the relevant principles in these terms: 16. First, an appellate court will be cautious about allowing a new point to be raised on appeal that was not raised before the first instance court. 17. Second, an appellate court will not, generally, permit a new point to be raised on appeal if that point is such that either (a) it would necessitate new evidence or (b) had it been run below, it would have resulted in the trial being conducted differently with regards to the evidence at the trial (Mullarkey v Broad [2009] EWCA Civ 2, paras 30 and 49). 18. Third, even where the point might be considered a pure point of law, the appellate court will only allow it to be raised if three criteria are satisfied: (a) the other party has had adequate time to deal with the point; (b) the other party has not acted to his detriment on the faith of the earlier omission to raise it; and (c) the other party can be adequately protected in costs (R (Humphreys) v Parking and Traffic Appeals Service [2017] EWCA Civ 24; [2017] PTR 22, para 29). Haddon Cave LJs second principle reflects the judgment of the Court of Appeal in Jones (above), paras 38 and 52, and his third principle is a paraphrase of what Nourse LJ stated in Pittalis v Grant (above) p 611. In Notting Hill Finance Ltd v Sheikh [2019] EWCA Civ 1337; [2019] 4 WLR 146 the Court of Appeal, in a judgment delivered by Snowden J, stated that an appellate court has a general discretion whether to allow a new point to be taken on appeal (para 21) and considered and analysed the practice set out in Pittalis and Singh: 26. These authorities show that there is no general rule that a case needs to be exceptional before a new point will be allowed to be taken on appeal. Whilst an appellate court will always be cautious before allowing a new point to be taken, the decision whether it is just to permit the new point will depend upon an analysis of all the relevant factors. These will include, in particular, the nature of the proceedings which have taken place in the lower court, the nature of the new point, and any prejudice that would be caused to the opposing party if the new point is allowed to be taken. The court then spoke of a spectrum of cases. At one end, where there had been a full trial involving live evidence and the new point might have changed the course of the evidence or required further factual enquiry, there was likely to be significant prejudice to the opposing party and the policy arguments in favour of finality would be likely to carry great weight. At the other end, where the point to be taken was a pure point of law which could be argued on the facts as found by the judge, the appeal court was far more likely to permit the point to be taken, provided that the other party had had time to meet the new argument and had not suffered any irremediable prejudice in the meantime (paras 27 and 28). The challenge which the Revenue seek to advance has the potential to affect the quantification of the claims very significantly, and it is raised at a late stage in a complex group litigation. It involves this court making a ruling on a question of law. But the claimants argue that they have acted to their detriment and will suffer serious prejudice if the Revenue were to be allowed to widen Issue 28 into a challenge to the authority of Kleinwort Benson and Deutsche Morgan Grenfell and were to succeed in that challenge. Such an outcome would, as we discuss below, require the parties to amend their pleadings and conduct a further trial on the quantification of the test claimants claim. Counsel argues that if the BAT claimants had known that the Revenue might seek to withdraw their admission that the claims which pre dated 8 March 2007 were not time barred, they would not have appealed Henderson Js Declaration 24A (para 50 above) on behalf of the eight claimants who were adversely affected by the decision that the relevant date for the calculation of the limitation period was 8 March 2001. Secondly, they submit that there was a clear demarcation in the phases between liability and quantification and the question of limitation properly belonged to the first phase. Thirdly, the claimants would suffer enormous prejudice if the Revenues new case on limitation were to succeed, because the test claimants had expended very substantial resources in the past six years in litigating legal issues relating to the quantification of their claims in the second phase of the Group Litigation and also in challenging the windfall tax imposed by the F(No 2)A 2015. Counsel estimated that the claimants had incurred costs of about 9.8m, net of recovery through awards of costs, on the FII Group Litigation and the windfall tax challenge. Fourthly, if the Revenue were to succeed, this might necessitate a retrial of questions of quantification. The test claimants also assert that they have been prejudiced because this court in its judgments in Littlewoods [2018] AC 869 and Prudential [2019] AC 929, which have a materially adverse effect on the quantification of their claims by excluding compound interest on those claims, was influenced by the disruption to public finances which the application of section 32(1)(c) to claims for the repayment of tax would entail. We consider this challenge to be the most difficult to determine of the claimants preliminary challenges to the scope of this appeal. With hindsight, there is no doubt that it would have been better if the Revenue at the start of the second phase of the FII Group Litigation had reserved their right to mount the challenge which they seek to make in this court. It is important that there be discipline in the conduct of actions which are the subject of Group Litigation Orders and it is important that there be finality in the determination of issues raised in such actions. An appellate court, in the interests of justice, will normally seek strenuously to avoid an outcome which results in the parties, who have already gone to trial on the quantification of a claim, having to amend their pleadings and to adduce further evidence to apply its ruling on a new issue of law to the facts of their case. In a normal litigation, the need for a re trial would be a strong and normally determinative pointer against allowing a party to withdraw a concession which had influenced the way in which a litigation had been conducted. There are nonetheless several factors which point in the other direction which make it appropriate not to apply the normal rule. The court is being asked to exercise a discretion not in an individual case but in the context of a group litigation order, a procedural phenomenon which did not exist when Lord Herschell wrote his speech in The Tasmania (1890) 15 App Cas 223. One must also have regard to the nature and subject matter of this group litigation and the manner in which it has been conducted. It is not suggested that the BAT claimants have not had time to deal with the legal challenge. We do not accept that, as the FII Group Litigation progressed, there was a complete demarcation between liability and quantum in the first and second phases: the BAT claimants accept that in the second phase, 19 of the 29 issues related to quantification. The others did not. Issue P, which became Issue 28, remained to be resolved and Issue 17 (namely whether the tax credits given to shareholders for ACT prevented the Revenue from being enriched) raised an issue of principle which could have had a material effect on the quantification of the claims. Because Kleinwort Benson and Deutsche Morgan Grenfell were rulings by the House of Lords, the Revenue could not have mounted the challenge in the courts below in the second phase; the Revenue could only have given notice that such a challenge might be made. If such notice had been given, how far would the BAT claimants have acted differently? We are persuaded that Henderson Js Declaration 24A would have been appealed. In the context of the FII Group Litigation, the starting date of the six year limitation period was of material importance to the claimants who were prejudiced by Henderson Js determination. Any one of those claimants could have applied for permission to appeal that declaration under CPR Part 19, rule 19.12(2). It is important to bear in mind the context of this litigation in which this court is asked to make rulings on issues of legal principle which will affect directly or indirectly other claimants besides the BAT claimants, both within and outside the particular GLO. In that context, the loss of the opportunity for the BAT claimants to secure a procedural advantage to close off the issue so far as it related to their claims and those of the other 18 claimants who were not prejudiced by Henderson Js determination by not appealing against Declaration 24A is a consideration which carries only limited weight. It is possible that the BAT claimants approach to the sequencing of the issues in Phase 2 of the litigation, and in particular the quantification of their claims, would have been different. They might have wished the challenge to Kleinwort Benson and Deutsche Morgan Grenfell to be resolved before they expended time and money on quantification. But the claimants in the FII GLO would still have substantial claims, which the Revenue estimate to be between 80m and 130m, if the limitation challenge which the Revenue now seek to pursue were to succeed; and they needed to complete the litigation to establish those claims. Further, the BAT claimants and the other claimants were prepared to incur the costs in relation to quantification when there was no final determination of issues such as Issue 17 and when the question whether there was an entitlement to compound interest, which was determined adversely to their interest by this court in Littlewoods and Prudential, had yet to be conclusively resolved. It is therefore mere speculation on the information before this court for us to say what the claimants might have done if the Revenue had reserved their position on Kleinwort Benson and Deutsche Morgan Grenfell. Insofar as the BAT claimants are able to persuade the court that they have suffered prejudice by incurring costs which they would not have incurred but for the admission that there was no time bar defence in relation to the BAT claimants and (by implication) the 18 other claimants who commenced proceedings before 8 March 2007, it may be possible to provide a remedy by revising the orders for costs which have been made in the proceedings or by making a further order for costs. We do not consider that the costs which the claimants have incurred in their challenge to the windfall tax in the F(No 2)A 2015 are a relevant consideration as that is a separate litigation relating to different statutory provisions. That legislation was enacted before several decisions which have materially affected the value of the claimants claims had been determined. It predated this courts judgments in Littlewoods and Prudential, which excluded claims for compound interest as a component of a claim for restitution. We cannot know whether Parliament would have acted differently in 2015 if the Revenue had reserved a right to challenge the Kleinwort Benson and Deutsche Morgan Grenfell decisions before this court at a future date. We also consider that the points which we have made in para 78 above in relation to the abuse of process claim are both relevant and of great weight when considering the exercise of this discretion. The nature of the claims, depending as they do on a developing area of law, means that it is important that this court address the legal questions which the Revenue wish to raise. The size of the claims and their impact on the public purse are also relevant considerations, as it would be wrong to uphold such claims if they are based on an incorrect understanding of the law. As we have said, even if the Revenues challenge to the application of section 32(1)(c) succeeds, the claimants will have claims of substantial value. The legal question is also of great importance to other claimants outside the FII Group Litigation, including claimants in the litigations to which we have referred in paras 5 6 above, who also have claims of high value. In the end, the task for the court is to make an evaluation of what justice requires in the circumstances of this group litigation. We are persuaded for the reasons set out above that we should allow the Revenue to withdraw their concession and to amend their pleadings to remove the admission on which the test claimants found. The final preliminary matter which we must consider is the test claimants application that, in the event that the court allows the Revenue to withdraw their concession and mount the challenge, the court should decline to entertain the appeal in relation to the 19 claimants whose claims were issued within six years after 8 March 2001 or, by analogy with CPR rule 19.12, order that any judgment or order which it makes shall not be binding on those claims. For the reasons which we have set out in paras 94 100 above (other than the effect of the determination on claimants outside the FII Group Litigation) and in particular that, if we were to hold that either Kleinwort Benson or Deutsche Morgan Grenfell was wrongly decided in relation to the interpretation of section 32(1)(c) of the 1980 Act, those claims would to that extent be based on an incorrect understanding of the law, we are not persuaded that the interests of justice require this court to make such orders. The background to section 32(1)(c) of the Limitation Act 1980 The 1980 Act is a consolidation statute, designed to consolidate the 1939 Act and a number of subsequent enactments. Section 32(1), in particular, is a re enactment of section 26(b) of the Limitation Act 1939 (the 1939 Act), subject to a minor amendment which appears in section 32(1)(b). Nevertheless, as its interpretation raises questions of substantial difficulty, it is both permissible (Farrell v Alexander [1977] AC 59, 72 73) and necessary to consider the previous law in some detail, as the House of Lords did in Kleinwort Benson and as this court did in FII (SC) 1 [2012] 2 AC 33. The law prior to the Limitation Act 1939 The common law When considering the state of the law prior to the 1939 Act, in so far as it related to action[s] for relief from the consequences of a mistake, and the limitation period applicable to such actions, it is necessary to distinguish between actions at law and claims for equitable relief. So far as common law actions are concerned, there were a number of types of action which might be described as action[s] for relief from the consequences of a mistake. But the mistake was invariably one of fact, rather than law. In particular, it had been established for almost 200 years that no claim lay at common law for the recovery of money paid under a mistake of law: see, for example, Bilbie v Lumley (1802) 2 East 469. That was settled law in 1939, and continued to be so until the decision in Kleinwort Benson. As Atkinson J pointed out in Anglo Scottish Beet Sugar Corpn Ltd v Spalding Urban District Council [1937] 2 KB 607, 615 616, in most cases of payment by mistake the person paying has paid because of a mistake as to his legal right or obligation, and whether the payment can be recovered or not depends upon whether that mistake as to legal right is due to a mistake of fact or a mistake of law. The distinction between these alternatives gave rise to disputes in borderline cases, and was considered in a multitude of authorities, in which fine distinctions were sometimes drawn. There were a number of statutes concerned with limitation in relation to common law actions. The most important for present purposes was the Limitation Act 1623 (21 Jac 1, c 16), as amended by the Administration of Justice Act 1705 (4 & 5 Anne c 16) and the Mercantile Law Amendment Act 1856 (19 & 20 Vict, c 97) (the 1623 Act). It imposed time limits of 20 years on the bringing of real actions and six years, running from the accrual of the cause of action, on the bringing of certain personal actions, including trespass, trover, replevin, actions of account, action on the case and actions of debt. It is apparent from the names of the forms of action to which the statute applied, and from the fact that they were referred to as actions, that the only proceedings barred were actions at law. Actions on the case included actions of indebitatus assumpsit on a count for money had and received, which was the relevant form of action for restitution of money paid under a mistake. In such cases, the cause of action accrued on the date of the payment: Baker v Courage & Co Ltd [1910] 1 KB 56. The limitation period therefore began to run on that date. Equity The position in equity is more complex. As Lord Walker observed in FII (SC) 1 [2012] 2 AC 337, para 62, the authorities are rather short on clear exposition of the relevant principles of equity. It is also necessary to bear in mind that cases which involved a mistake also often involved other factors which formed the justification for equitable relief, such as fraud, misrepresentation or abuse of a fiduciary position. For present purposes, in the light of the decision in FII (SC) 1, it is also necessary to distinguish between cases where mistake was an essential element of the claim for relief, and cases where it was not. The law as it was understood in the 1930s is broadly summarised in Snells Equity, 21st ed (1934), p 428: Mistake may be on a matter either of law or of fact, and it is generally said that whereas relief can be obtained against mistake of fact, no relief can be given against mistake of law. Neither part of this proposition can, however, be accepted without considerable qualification, for not every mistake of fact is the subject of relief, and, on the other hand, relief is sometimes granted even against mistakes of law. Snell listed four kinds of case in which equitable relief could be given from the consequences of a mistake. First, mistake was accepted as being a ground in some circumstances for refusing specific performance of a contract. Secondly, mistake could in some circumstances justify the exercise of an equitable jurisdiction to grant rescission of a contract (it is unnecessary to consider in this appeal whether such a jurisdiction survived the decision in Bell v Lever Bros Ltd [1932] AC 161: a question considered in Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] EWCA Civ 1407; [2003] QB 679). It is relevant to note that in a leading case of common mistake where equity intervened, a distinction was drawn between ignorance of the general law, which could not justify rescission, and a mistake as to private rights of ownership, which could, but was categorised as a mistake of fact: Cooper v Phibbs (1867) LR 2 HL 149, 170 (where the plaintiff contracted to purchase property from the defendant which, unknown to either of them, the plaintiff already owned in equity). Thirdly, equity could provide relief where a written contract failed to express correctly the parties antecedent agreement, by providing the remedy of rectification. Fourthly, although it was a general rule in equity, as at common law, that money paid under a mistake of law could not be recovered, there were said to be certain exceptions. The general rule was stated in Snells discussion of mistake at pp 439 440: money paid under a mistake of law cannot be recovered, this being perhaps the only type of relief where it can be regarded as absolutely clearly established by way of general rule that ignorantia legis non excusat. The authorities cited in support of that statement included Rogers v Ingham (1876) 3 Ch D 351, which was a case of alleged overpayment by an executor of one legatee at the expense of the other, as the result of an error in the construction of a will. The allegedly underpaid legatee sought to recover the money from the recipient. As is explained at para 116 below, such cases generally fall within the scope of a principle relating to the administration of estates which enables recovery to be obtained, regardless of whether there has been a mistake or not. However, the case fell outside the scope of that principle, because the payment in question had been authorised by the legatee who later sought to challenge it. Consequently, the only basis for recovery was that the payment had been made under a mistake of law. It was held that no claim lay either in equity or in law for recovery on that basis. James LJ, whose every word on a question of equitable principle is weighty (Ministry of Justice v Simpson [1951] AC 251, 272), stated at pp 355 356: I have no doubt that there are some cases which have been relied on, in which this court has not adhered strictly to the rule that a mistake in law is not always incapable of being remedied in this court; but relief has never been given in the case of a simple money demand by one person against another, there being between those two persons no fiduciary relation whatever, and no equity to supervene by reason of the conduct of either of the parties. Snell mentioned a number of supposed exceptions to the general rule. As Snell noted at p 440, the first supposed exception, where the mistake was as to foreign law, was merely apparent, since foreign law was treated as a matter of fact. The second supposed exception was where money was paid to an officer of the court, such as a trustee in bankruptcy, under a mistake of law. It was held that the court could prevent its officer from taking advantage of the mistake: see, for example, Ex p James, In re Condon (1874) LR 9 Ch App 609 and Ex p Simmonds, In re Carnac (1885) 16 QBD 308. In these cases, however, the grant of relief was not based on mistake, but on the courts jurisdiction to enforce high ethical standards on the part of its officers. Vaughan Williams LJ explained this in In re Tyler, Ex p The Official Receiver [1907] 1 KB 865. Referring to Ex p James, he said at p 869: In that case the money had been paid under such a mistake of law that it could not be recovered by any judicial process whatsoever whether in law or equity. When James LJ says [in Ex p James at p 614] that the trustee [in bankruptcy] has in his hands money which in equity belongs to somebody else, he is not referring to an equity which is capable of forensic enforcement in a suit or action, but he is referring to a moral principle which he describes when he says that the Court of Bankruptcy ought to be as honest as other people. In Ex p Simmonds Lord Esher states exactly the same principle [at p 312]. Buckley LJ said at p 873 that James LJ had referred to equity in Ex p James in a popular sense, and not in the sense of money which in a court of equity would belong to someone else. More recent authorities are to the same effect: see, for example, Lehman Bros Australia Ltd v MacNamara [2020] EWCA Civ 321; [2020] 3 WLR 147. The third supposed exception was where the mistake was induced by fraud or by the breach of a fiduciary duty. The authorities cited by Snell (British Workmans and General Insurance Co v Cunliffe (1902) 18 TLR 425, Harse v Pearl Life Assurance Co [1904] 1 KB 558 and Phillips v Royal London Mutual Assurance Co (1911) 105 LT 136) were concerned with claims for the return of premiums, brought by persons who had entered into contracts of insurance which were illegal and void (for want of an insurable interest) as a result of misrepresentations made by or on behalf of the insurance company. Where the misrepresentation was innocent, the money was irrecoverable. Where the misrepresentations were fraudulent, relief was granted, but on the basis of fraud, not mistake: see Harse v Pearl Life Assurance Co at p 563, where Sir Richard Collins MR indicated that relief might also be granted in cases of duress or oppression, or where the defendant stood in a fiduciary relationship towards the plaintiff. Accordingly, the authorities provide examples of equitable relief being given where there had been mistakes of law as well as mistakes of fact. However, Snell provides no example of a money claim for relief from the consequences of a mistake of law, where the occurrence of the mistake was an essential element of the claim. The judgments in cases such as Rogers v Ingham and In re Tyler, Ex p The Official Receiver indicate that a money claim could not be brought on that basis. As was mentioned earlier, it is necessary in the light of FII (SC) 1 to distinguish between cases where mistake is an essential ingredient of the cause of action, and cases where there may have been a mistake but the claim has another legal basis. There were by the 1930s a number of established types of claim in equity which fell into the latter category, in addition to those already mentioned. One was a claim for an account, based on a duty to account arising from the relationship between the parties, but where the claim might have been prompted by the discovery of a mistake. Another example, although not a claim at all, was the correction of errors of account between trustees and beneficiaries: the courts would allow a trustee or personal representative to deduct sums overpaid under a mistake of law from future instalments due to the overpaid beneficiary. On the other hand, there does not appear to be any reported case where a trustee or personal representative recovered money paid under a mistake of law from the recipient, and there are dicta to the effect that such a claim must fail because of the general rule barring such recovery. Another example of a claim which might be brought where a mistake had occurred, but where the mistake was not the justification for the grant of relief, was a claim brought where an executor administering the estate of a deceased person paid out funds to someone other than the person to whom they were properly due, and that person then sought to recover them from the recipient. The remedy available to the person to whom the money was legally due lay in the first instance against the executor, but he could also recover from the recipient any amount which he was unable to recover from the executor. Such a claim was not, however based on mistake: it was, as the Court of Appeal said in In re Diplock [1948] Ch 465 (In re Diplock), p 502, an equitable claim independent of a mistake of fact or of any mistake. It was based, rather, on the fact that the payment had been made by the executor to a person who was not entitled to it, in breach of the rights of the person to whom it was legally due, as Lord Davey explained in Harrison v Kirk [1904] AC 1, 7. So far as limitation is concerned, there was not before 1833 any statute which explicitly barred any suit in equity. In so far as the Court of Chancery applied statutes of limitation, it did so by analogy, as explained below. From 1833 onwards, however, a number of statutes were enacted which imposed limitation periods on the bringing of particular types of suit in equity. For example, the Real Property Limitation Acts of 1833 and 1874 introduced limitation periods in respect of equitable proceedings to recover interests in land, and the Trustee Act 1888 established a limitation period for certain claims against trustees. Many types of equitable proceedings remained subject to no limitation period: for example, there was no provision imposing a time limit on proceedings to rescind transactions induced by undue influence or innocent misrepresentation, and no time limit within which proceedings for rectification must be brought. The statutes did not modify the equitable doctrines of laches and acquiescence. Where equity provided a remedy corresponding to a remedy at law, and the latter was subject to a limitation period, the courts of equity (or after the Judicature Acts, courts asked to give equitable relief) applied the statutes of limitation by analogy, as Lord Westbury explained in Knox v Gye (1872) LR 5 HL 656, 674 675: Where a Court of Equity frames its remedy upon the basis of the Common Law, and supplements the Common Law by extending the remedy to parties who cannot have an action at Common Law, there the Court of Equity acts in analogy to the statute; that is, it adopts the statute as the rule of procedure regulating the remedy it affords. The common law courts were bound to apply the statutes according to their terms, but the Court of Chancery, when it applied them by analogy, developed a principle that a defendant whose unconscionable conduct had denied the plaintiff the opportunity to sue in time should not in conscience be permitted to plead the statute to defeat the plaintiffs claim, provided the claim was brought timeously once the plaintiff discovered or should have discovered the basis of his claim. Accordingly, where the plaintiffs claim in equity was founded on the fraud of the defendant, time did not begin to run against the plaintiff until he discovered the fraud or had a reasonable opportunity of discovering it. This equitable rule received partial recognition in section 26 of the Real Property Limitation Act 1833 (the lineal ancestor of section 26 of the 1939 Act and section 32 of the 1980 Act), under which the right to bring a suit in equity for the recovery of land or rent of which the claimant or his predecessors were deprived by concealed fraud was deemed to have accrued at and not before the time at which such fraud shall or with reasonable diligence might have been first known or discovered. In cases where the claim for equitable relief arose in circumstances where the claimant had been unaware of the matter in question as the result of a mistake, and where equity applied the statutes of limitation by analogy, allowance was similarly made for the period before the mistake was or could with reasonable diligence have been discovered. The point is illustrated by the judgment of Alderson B in Denys v Shuckburgh (1840) 4 Y & C Ex 42, where the profits of a mine had for many years been distributed between the parties under a mistake as to their respective shares. When the mistake was discovered, the plaintiff filed a bill for an account, and the question arose whether more than six years profits could be recovered in equity. The plaintiff relied on Alderson Bs earlier judgment in Brooksbank v Smith (1836) 2 Y & C Ex 58, where the court applied the 1623 Act by analogy but held that time did not run until the mistake was discovered, since it was only then that laches commenced. In Denys v Shuckburgh, on the other hand, Alderson B explained at p 53 that the position was different where the mistake could reasonably have been discovered earlier than it was: 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 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. In this context, a distinction was drawn between a mistake as to the facts supporting a claim for equitable relief, and ignorance that known facts gave rise to a claim. Knight Bruce LJ observed in Stafford v Stafford (1857) 1 De G & J 193, 202 that [g]enerally, when the facts are known from which a right arises, the right is presumed to be known. Similar observations were made by Sir Richard Collins MR in Molloy v Mutual Reserve Life Insurance Co (1906) 94 LT 756, 761, in a judgment which is discussed at paras 204 208 below. The Report of the Law Revision Committee In 1934 the Law Revision Committee was invited to consider various aspects of the law of limitation, including the scope of the rules on concealed fraud. The Committee reported in 1936 (Fifth Interim Report, on Statutes of Limitation, Cmd 5334), and its Report formed the background to the 1939 Act. The passages in the Report which are relevant for present purposes begin with the Committees explanation of the limitation of claims for equitable remedies, at paragraph 13: Equitable claims are in some cases directly governed by a statute of limitations, such as claims to land or rent charges. In other cases, such as specific performance or rescission of contracts on the ground of innocent misrepresentation, or setting aside gifts on the ground of undue influence, no period applies, but the plaintiff must act promptly and may be disqualified by laches. In other cases, where a remedy in equity corresponds to a similar remedy in law, equity follows the analogy of the statute which applies to the corresponding common law remedy (Knox v Gye (1872) LR 5 HL 656), except that in applying equitable remedies to cases of fraud or mistake, the period of limitation is not reckoned until the fraud or mistake is or could, with reasonable diligence, have been discovered. The concluding words in that passage described what the Committee later referred to as the equitable rule. As will be explained, it was the Committees recommendation to extend that rule to common law claims which resulted in the enactment of section 26 of the 1939 Act, effectively re enacted as section 32 of the 1980 Act. In relation to cases of fraud, the Committee noted at paragraph 22 the problem that [a]s a general rule it is no answer to a plea of the Statutes of Limitation to say that the plaintiff was unaware of the existence of his cause of action until after the expiry of the statutory period. Exceptions to that general rule included section 26 of the Real Property Limitation Act 1833, and the equitable doctrine that a plaintiff is not to be affected by the lapse of time where his ignorance is due to the fraud of the defendant, and he has had no reasonable opportunity of discovering such fraud before bringing his action. It also noted that, following the Judicature Act 1873, there were inconsistent decisions as to whether the equitable doctrine applied to actions in which a court of law would previously have had exclusive jurisdiction. The Committee considered that the position should be clarified so as to prevent defendants from relying on a lapse of time which was due to their fraudulent conduct. It also considered that exception created by the equitable rule should be extended so as to apply not only where a cause of action was founded on a concealed fraud, but also where a cause of action unconnected with fraud was fraudulently concealed from the plaintiff or someone through whom he claimed. The Committee then turned to cases of mistake, and stated at paragraph 23: A somewhat similar position arises in cases where relief is sought from the consequences of mistake, eg, when money is paid on property transferred under a mistake. The equitable rule is that the time should only run under the Statutes of Limitation from the time at which the mistake was, or could with reasonable diligence have been, discovered. At present this rule does not apply in cases which formerly fell within the exclusive cognisance of a court of law (Baker v Courage [1910] 1 KB 56). It only applies to cases which were formerly only actionable in a court of equity, or were within the concurrent jurisdiction of the two systems (In re Mason [1928] Ch 385, and [1929] 1 Ch 1; In re Blake [1932] 1 Ch, para 54). It was held in Baker v Courage (supra) that the Judicature Acts had not altered the common law rule. This position appears to us as unsatisfactory as the position with regard to the effect of concealed fraud, and accordingly we recommend that in all cases when relief is sought from the consequences of a mistake, the equitable rule should prevail and time should only run from the moment when the mistake was discovered, or could with reasonable diligence have been discovered. We desire 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. In such cases it appears to us to be wrong that the right should be defeated by the operation of the Statutes of Limitation. When, in that passage, the Committee stated that the mere fact that a plaintiff is ignorant of his rights is not to be a ground for the extension of time, it did not have in mind a situation in which a mistake of law gave rise to a cause of action falling within the scope of statutory limitation, directly or by analogy: as we have explained, no such cause of action existed at that time, and therefore the possibility of such a situation did not arise. It was, as we understand it, reaffirming the principle stated in Stafford v Stafford and Molloy v Mutual Reserve Life Insurance Co (para 122 above) that, whereas allowance could be made for a mistake where it formed one of the ingredients of a cause of action, allowance could not be made, where the ingredients of a cause of action were known, for ignorance that those circumstances gave rise to a cause of action. Accordingly, in relation to cases involving fraud or mistake, the Committee recommended at paragraph 37: (18) that in all cases where a cause of action is founded on fraud committed by the defendant or his agent, or where a cause of action is fraudulently concealed by him or his agent, time should only run against the plaintiff from the time when he discovered the fraud or could with reasonable diligence have discovered it (para 22); (19) that in actions for relief in respect of mistake time should only run from the date when the mistake was, or could with reasonable diligence have been, discovered (para 23). It is to be noted that the recommendations in respect of fraud addressed two situations: (a) where the cause of action was founded on fraud, and (b) where a cause of action not founded on fraud was fraudulently concealed. The recommendation in respect of mistake addressed only one situation: where there was an action for relief in respect of mistake. In the light of the authorities as they stood at the time of the Report, this court concluded in FII (SC) 1 [2012] 2 AC 33 that, as Lord Walker stated at para 59, 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. The Limitation Act 1939 The 1939 Act gave effect to those recommendations, and also made other changes to the law. Part I laid down periods of limitation for different classes of action, subject under section 1 to the provisions of Part II, which provide for the extension of the periods of limitation in the case of disability, acknowledgment, part payment, fraud and mistake. Section 2(1) laid down a six year limitation period, running from the date on which the cause of action accrued, for a number of categories of action, including (a) actions founded on simple contract or on tort. Section 2(7) provided: This section shall not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief, except in so far as any provision thereof may be applied by the court by analogy in like manner as the corresponding enactment repealed by this Act has heretofore been applied. Other provisions of Part I laid down limitation periods for other types of action, including actions in respect of a claim to the personal estate of a deceased person, which were made subject to a 12 year limitation period (section 20). In Part II, section 26 provided, so far as material: 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 his agent or of any person through whom he claims or his agent, or (b) any such person as aforesaid, or (c) a mistake, the action is for relief from the consequences of the right of action is concealed by the fraud of the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it. Part III contained general provisions. Section 29 preserved the equitable jurisdiction to refuse relief on the ground of acquiescence or otherwise. Section 34 repealed all relevant subsisting statutory provisions for limitation. The effect of section 26 of the Limitation Act 1939 It is apparent from the opening words of section 26 of the 1939 Act that it was concerned only with actions for which a period of limitation was prescribed by the Act. Section 26(c), which applied where the action is for relief from the consequences of a mistake, was therefore confined to actions meeting that description for which a period of limitation was prescribed by the Act. It had to be construed in the light of section 2(7), and therefore extended to claims for equitable relief for which a period prescribed in section 2 applied by analogy, in the same way as the earlier statutes of limitation (repealed by section 34) were previously applied. It follows that section 26(c) applied to claims for the recovery of money paid under a mistake of fact. Actions at law of that kind had previously fallen within the ambit of section 3 of the 1623 Act, and were intended by Parliament to fall within the scope of section 2(1) of the 1939 Act, as the Court of Appeal held in In re Diplock at p 514. Equivalent claims in equity (eg where the plaintiff was not the person who made the payment under a mistake) fell within the ambit of section 2(7). However, section 26(c) was not understood to apply to actions for the recovery of money on the ground that it had been paid under a mistake of law, since no action of that description, whether in law or in equity, was recognised until long after the 1939 Act had been repealed. The 1939 Act was considered in two cases which are relevant in the present context. The first was In re Diplock. The proceedings were brought after executors distributed the residue of an estate in accordance with a provision in the will directing them to hold it in trust and divide it between such charitable or benevolent objects as they might think fit, without further specification. The next of kin challenged the validity of the trust, and it was held by the House of Lords to be void for uncertainty. More than six years (but less than 12 years) after the distributions had been made, the next of kin sought a declaration that the recipients of the money were liable to refund it to them. The claims were made on two bases. The first was a claim in personam based on the right of an unpaid beneficiary to recover money wrongly paid to a stranger to the estate. The second was a claim in rem, based on tracing the trust assets into the hands of the defendants. It is unnecessary to consider the latter aspect. At first instance, the judge failed to recognise that the personal claims fell within the ambit of the principle relating to the wrongful distribution of estates, and instead treated them as claims for money had and received. On that basis, he held that no claim was available, either at law or in equity, since the mistake was one of law: In re Diplock [1947] Ch 716. The judges decision on that point was reversed on appeal: [1948] Ch 465. The Court of Appeal correctly held that an equitable claim lay against a recipient who was paid more than he was entitled to receive under a will, regardless of whether the overpayment was made under a mistake, either of fact or of law. As discussed in para 116 above, the court explained that the basis of equitable relief was not mistake, but the receipt of a share or interest in the estate to which the recipient was not entitled, at the expense of the person entitled to it. The primary claim lay however against the executors, and the equitable cause of action was therefore for recoupment of such amounts as were irrecoverable from them. The Court of Appeal further held that limitation was governed in such a case by section 20 of the 1939 Act, and not by section 2(1) or (7). Since section 20 laid down a 12 year period, it followed that the claims were not time barred. However, the court went on to consider, obiter, the position if, contrary to their view, the claims fell within the scope of section 2(7). On that hypothesis, the court considered that section 26(c) would be relevant, on the basis that the claims sought relief from the consequences of a mistake. This obiter dictum preceded the line of authority, culminating in the decision in FII (SC) 1, which entailed that a claim such as that in In re Diplock, for which a mistake was not an essential ingredient of the cause of action, did not fall within the scope of section 26(c) of the 1939 Act or section 32(1)(c) of the 1980 Act. The Court of Appeals decision was affirmed by the House of Lords: Ministry of Health v Simpson [1951] AC 251. In a speech with which the other members of the Appellate Committee expressed agreement, Lord Simonds emphasised at p 265 that the particular branch of the jurisdiction of the Court of Chancery with which we are concerned relates to the administration of assets of a deceased person. Lord Simonds next cited the dictum of Lord Davey in Harrison v Kirk which was mentioned in para 116 above, and stated at p 266: The importance of this statement is manifold. It explains the basis of the jurisdiction, the evil to be avoided and its remedy: its clear implication is that no such remedy existed at common law: it does not suggest that it is relevant whether the wrong payment was made under error of law or of fact: it is immaterial whether those who have been wrongly paid are beneficiaries under the will or next of kin, it is sufficient that they derive title from the deceased. (Emphasis added) The argument that this jurisdiction was limited to payments made under a mistake of fact, rather than law, was rejected by Lord Simonds at pp 269 270, on the basis that the equitable doctrine was not based on the existence of a mistake at all, but on the making of a wrongful payment. As he said at p 270, a legatee does not plead his own mistake or his own ignorance but, having exhausted his remedy against the executor who has made the wrongful payment, seeks to recover money from him who has been wrongfully paid. In relation to limitation, Lord Simonds agreed with the Court of Appeal that the claims were governed by section 20 of the 1939 Act. He added at p 277 that it was unnecessary to say anything about section 26 by way of approval or disapproval of what fell from the Court of Appeal. He observed that it was a section which presented many problems. The other case from this period which should be noted is Phillips Higgins v Harper [1954] 1 QB 411, a decision of Pearson J. The plaintiff brought a claim for an account and payment of money due under a contract over a period of 13 years. The defendant argued that as more than six years had passed since the initial payments were due, it followed that the claim was to that extent time barred, under section 2(2)(a) and (7) of the 1939 Act. In response, the plaintiff relied on section 26(c), arguing that she had not known that the money that had been paid to her was less than was due under the contract, and was therefore seeking relief from the consequences of a mistake. That argument was rejected by the judge. As he noted, section 26 dealt differently with fraud and mistake. In relation to fraud, provision was made for two situations: first, where (a) the action is based upon fraud, and secondly, where (b) the right of action is concealed by fraud. It followed that, in cases falling within (b), the action need not be based upon fraud. In relation to mistake, on the other hand, provision was made for only one situation: where (c) the action is for relief from the consequences of a mistake. In the judges view, that wording was carefully chosen to indicate a class of action where a mistake has been made which has had certain consequences and the plaintiff seeks to be relieved from those consequences (p 418). No provision was made for the situation where the right of action was concealed by a mistake. In the instant case, the plaintiffs claim was to recover money due to her under a contract. The fact that she had been unaware of the right of action by reason of a mistake was insufficient to bring her within the ambit of section 26(c). The judge expressed the opinion at p 419 that [p]robably provision (c) applies only where the mistake is an essential ingredient of the cause of action. He added (ibid) that it was no doubt 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. That reasoning, subsequently approved in FII (SC) 1, entailed that section 26(c) could not apply to a claim of the kind considered in In re Diplock, since such a claim was not based on mistake, as explained in paras 116 and 137 138 above. The Limitation Act 1980 As previously mentioned, the 1980 Act is a consolidation statute, designed to consolidate the 1939 Act and a number of subsequent enactments. Section 5 lays down a six year limitation period for actions founded on simple contract. Like section 2 of the 1939 Act, it has been held to apply to claims for the recovery of money on the ground that it was paid under a mistake: Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 4 All ER 890, 942 943; Aspect Contracts (Asbestos) Ltd v Higgins Construction plc [2015] UKSC 38; [2015] 1 WLR 2961, para 25. Section 32(1) of the 1980 Act corresponds to section 26 of the 1939 Act, subject to the deletion (originally effected by the section 7 of the Limitation Amendment Act 1980) of the reference to concealment by fraud and the substitution in section 32(1)(b) of the concept of deliberate concealment of relevant facts. It provides (so far as material): the action is based upon the fraud of the (1) Subject to subsection (3) below, where in the case of any action for which a period of limitation is prescribed by this Act, either (a) defendant; or (b) any fact relevant to the plaintiffs right of action has been deliberately concealed from him by the defendant; or (c) a mistake; the action is for relief from the consequences of 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. In relation to equitable claims, section 36 corresponds to sections 2(7) and 29 of the 1939 Act (paras 129 and 131 above). Kleinwort Benson The case of Kleinwort Benson [1999] 2 AC 349 concerned claims by a bank for the recovery of sums which it had paid to local authorities under interest rate swap agreements which it had believed to be valid, but which were subsequently held, initially by the Divisional Court and subsequently by the House of Lords, to be ultra vires and therefore void: Hazell v Hammersmith and Fulham London Borough Council [1992] 2 AC 1. The bank then recovered, in a first set of proceedings, such sums as had been paid within the six years preceding the issue of its writ, on the ground that there had been a failure of consideration. In a second set of proceedings, the bank sought to recover the sums which had been paid more than six years previously, by relying on section 32(1)(c) of the 1980 Act to postpone the commencement of the limitation period. A preliminary issue arose as to (1) whether the bank had a cause of action based on mistake, and (2) if so, whether the bank could rely on section 32(1)(c). There was no reasoned judgment at first instance, the judge concluding on issue (1) that he was compelled by authority to deny liability. For the same reason, the leapfrog procedure was employed to bypass the Court of Appeal. Before the House of Lords, the bank sought first to establish that there was a cause of action to recover money paid under a mistake of law, and that its claim could be brought on that basis, on the footing that the payments had been made under the mistaken belief that the contracts were legally valid. In response, the local authorities did not attempt to defend the rule that money paid under a mistake of law was irrecoverable, but argued that recovery should not lie where a payment was made in accordance with a settled understanding of the law which was later changed by a judicial decision. The better course, it was argued, was to leave the law to be altered by Parliament, particularly in view of the problems arising in relation to the law of limitation. Since the Government had accepted the Law Commissions recommendations on the issue, it would be wrong for the courts to pre empt legislative reform. In reply, the bank accepted (as was noted at pp 362 and 391) that a payment made on the basis of a settled understanding of the law would not be made under a mistake, even if the law was later changed by a judicial decision, but argued that the law on the issue in question had not been settled prior to the House of Lords decision in Hazell. By a majority of three to two, the Appellate Committee accepted the banks argument, and went beyond it by holding that the right to recover payments made under a mistake of law applied whether or not the basis on which the payment was made was in accordance with settled law. Lord Goff, in his final speech before his retirement, focused on the retrospective effect of judicial decisions. He accepted that the question whether a payment was made under a mistake was determined as at the time when the payment was made (Baker v Courage at p 66), and observed that when the judges state what the law is, their decisions have a retrospective effect (p 378). It was because of that retrospective effect, he asserted, that it was plain (p 379) that a previous understanding of the law which was overturned by a judicial decision was mistaken as at the time when the payment was made. The cause of action for the recovery of money paid under such a mistake of law therefore accrued on the date when the payment was made (p 386). That was so even though Lord Goff disavowed the declaratory theory of judicial decision making, with the consequence that the previous understanding might be regarded as having been correct as the law stood at the time of the payment: a situation which Lord Hoffmann described as a deemed mistake. It is unnecessary for present purposes to consider the merits of that reasoning. It was disputed by Lord Browne Wilkinson and Lord Lloyd of Berwick, and has been criticised by a number of academic commentators (and approved by others), but is not challenged in these proceedings. On that basis, Lord Goff and the other members of the majority rejected the argument that cases where the court departed from a previous decision, or from a settled practice, should be distinguished from cases where the court determined the law for the first time. In each of those events, the courts decision had a retrospective effect: that was an inevitable attribute of judicial decision making (p 379). In each event, the effect of the courts decision was to falsify the belief or assumption which had caused the claimant to make the payment, and that was sufficient to create a restitutionary claim based on mistake. The next step in the banks argument was to establish that the cause of action for the recovery of money paid under a mistake of law fell within the scope of section 32(1)(c) of the 1980 Act. In that regard, counsel for the bank relied on the obiter dicta of the Court of Appeal in In re Diplock, discussed at paras 136 138 above, and argued that, even if such a claim would not have been recognised at the time when the provision was enacted, it should be construed in accordance with the always speaking principle of statutory interpretation (referring to R v Ireland [1998] AC 147). On that basis, counsel argued that section 32(1)(c) extended to mistakes of law once the law recognised such mistakes as giving rise to a right of action. In response, counsel for the local authorities argued that section 32(1) should be construed as at the moment of its enactment, when it could only have applied to mistakes of fact. Furthermore, the language of section 32(1) was not apt to apply to mistakes of law, since the law could rarely be said to be objectively ascertainable, so as to be capable of being discovered with reasonable diligence. The majority of the Appellate Committee decided this issue in favour of the bank, and the minority concurred, on the hypothesis (contrary to their opinion) that there was an actionable mistake. The reasons the majority gave for reaching that conclusion were brief and rested principally on what appears to us, with respect, to have been an inaccurate understanding of the pre 1939 law. The statutory concept of discoverability was not discussed. The proceedings had not reached the stage at which it was necessary to determine when the mistake of law was discovered, or could with reasonable diligence have been discovered, and only the two judges in the minority considered the question. Lord Goff did not refer to the banks argument based on the always speaking principle, but briefly addressed the local authorities argument concerning the language of section 32(1), stating at pp 388 389: In my opinion, however, this verbal argument founders on the fact that the pre existing equitable rule applied to all mistakes, whether they were mistakes of fact or mistakes of law: see eg Earl Beauchamp v Winn (1873) LR 6 HL 223, 232 235 and the dicta from In re Diplock to which I have already referred [ie at pp 515 516]. By the pre existing equitable rule, Lord Goff meant the rule stated in paragraph 23 of the Report of the Law Reform Commission, which he had mentioned in his speech at p 388. Paragraph 23 was cited at para 126 above. As was explained at paras 118 124 above, the rule was of limited scope, and applied where a remedy in equity corresponded to a similar remedy in law, and the statutes of limitation were applied by analogy. Contrary to Lord Goffs observation, the rule did not apply to all mistakes, whether of fact or law. In particular, it did not apply to claims for the recovery of money on the ground that it had been paid under a mistake of law, since no such claim appears to have been recognised in equity any more than at law: see paras 110 116 above. The first of the authorities which Lord Goff cited, Earl Beauchamp v Winn (1873) LR 6 HL 223, was a similar case to Cooper v Phibbs, mentioned in para 109 above. It concerned a bill seeking the equitable rescission of a contract for the exchange of property, on the ground of common mistake as to the parties respective rights to the properties in question. The principal issues were whether there had been a common mistake, and if so, whether relief was barred either by the impossibility of restitutio in integrum or on the ground that the appellant could readily have discovered the true position before entering into the agreement, having the relevant title deeds in his possession but having failed to read them. The passage in the speech of Lord Chelmsford which Lord Goff cited was concerned with three matters. The first, as Lord Chelmsford put it at p 233, was the principle that where a party is put upon inquiry, and by reasonable diligence he might have obtained knowledge of a fact of which he remained in ignorance, Equity would not relieve him. The second, as it was put at p 234, was the objection, that the mistake (if any) was one of law, and that the rule Ignorantia juris neminem excusat applies. In that regard, Lord Chelmsford followed Cooper v Phibbs in distinguishing between ignorance of a well known rule of law and ignorance of the true construction of a deed. The third issue was the equitable doctrine of acquiescence. In the event, after these objections had been considered and rejected, there was held to have been no mistake. There was no discussion of the statutes of limitation, or of the equitable rule mentioned by the Law Reform Committee, or of the question whether it might have any application to mistakes of law. Lord Goff also cited the obiter dictum of the Court of Appeal in In re Diplock. As was explained in para 136 above, that dictum proceeded on the hypothesis that personal claims against the wrongful recipient of property during the administration of an estate fell within the scope of section 2(7) of the 1939 Act rather than section 20. The Court of Appeal had already rejected that hypothesis, and the House of Lords also rejected it, on appeal, in Ministry of Health v Simpson, as explained at para 138 above. Furthermore, since the right of action with which In re Diplock was concerned was not based on a mistake, as explained in paras 116 and 137 138 above, it followed from the decision in Phillips Higgins v Harper [1954] 1 QB 411, later endorsed in FII (SC) 1 [2012] 2 AC 33, that it could not fall within the ambit of section 26(c) of the 1939 Act, or section 32(1)(c) of the 1980 Act: see paras 41 and 140 above. Lord Goff did not discuss the local authorities argument that the law could rarely be said to be objectively ascertainable, so as to be capable of being discovered with reasonable diligence. As the decision in Kleinwort v Benson itself illustrates, points of law present a problem for a test of discoverability, if discovery requires the ascertainment of the truth. On the assumption that it did, the local authorities argued in Kleinwort Benson that the test of discoverability could not be applied to mistakes of law, and that they therefore fell outside the scope of section 32(1). As will appear, the House of Lords, proceeding on the same assumption, decided in Deutsche Morgan Grenfell that the truth could not be discovered until it had been established by an authoritative judicial decision, and that time could not therefore begin to run under section 32(1) until such a decision had been taken. It will be necessary to consider at a later point whether the underlying assumption, that the test of discoverability requires the ascertainment of the truth, is well founded. Before summarising his conclusions, Lord Goff stated at p 389: I recognise that the effect of section 32(1)(c) is that the cause of action in a case such as the present may be extended for an indefinite period of time. I realise that this consequence may not have been fully appreciated at the time when this provision was enacted, and further that the recognition of the right at common law to recover money on the ground that it was paid under a mistake of law may call for legislative reform to provide for some time limit to the right of recovery in such cases. The Law Commission may think it desirable, as a result of the decision in the present case, to give consideration to this question; indeed they may think it wise to do so as a matter of some urgency. With great respect to an eminent judge, that statement suggests that some important matters were insufficiently considered. The fundamental purpose of limitation statutes is to set a time limit for the bringing of claims. As the Law Reform Committee stated at paragraph 7 of its Report, the purpose of the statutes [of limitation] goes further than the prevention of dilatoriness; they aim at putting a certain end to litigation and at preventing the resurrection of old claims, whether there has been delay or not. Lord Goffs statement accepts that the result of the majoritys decision as to the effect of section 32(1)(c) is that the cause of action in a case such as the present may be extended for an indefinite period of time. That is also a possibility in the case of mistakes of fact, but it may be argued that the risk is potentially higher, and the consequences potentially more serious, in the case of a mistake of law arising retrospectively as a result of a judicial decision. Lord Goffs statement that this consequence may not have been fully appreciated at the time when this provision was enacted lays the responsibility at Parliaments door. But the question which the Appellate Committee should itself have considered was whether the result of its decision would be consistent with Parliaments intention in enacting the 1980 Act. It is the duty of the court, in accordance with ordinary principles of statutory construction, to favour an interpretation of legislation which gives effect to its purpose rather than defeating it. Lord Goff did not, however, undertake any analysis of section 32(1), and made no attempt to give it a purposive interpretation. It will be necessary to return to this issue, after section 32(1) has been examined in the light of the decision in Deutsche Morgan Grenfell [2007] 1 AC 558. Turning to the other majority judgments, Lord Hoffmann, like Lord Goff, rejected the possibility of distinguishing in the law of restitution between cases where a judicial decision changed a settled view of the law, or settled what was previously an unsettled view, on the one hand, and cases where the mistake of law lacked any retrospective element, on the other hand. In Lord Hoffmanns view, there was no basis in principle for drawing such a distinction. In relation to limitation, Lord Hoffmann stated at p 401: I accept that allowing recovery for mistake of law without qualification, even taking into account the defence of change of position, may be thought to tilt the balance too far against the public interest in the security of transactions. The most obvious problem is the Limitation Act, which as presently drafted is inadequate to deal with the problem of retrospective changes in law by judicial decision. But I think that any measures to redress the balance must be a matter for the legislature. This may suggest that your Lordships should leave the whole question of the abrogation of the mistake of law rule to the legislature, so that the change in the law and the necessary qualifications can be introduced at the same time. There is obviously a strong argument for doing so, but I do not think that it should prevail over the desirability of giving in this case what your Lordships consider to be a just and principled decision. Like Lord Goff, Lord Hoffmann therefore construed section 32(1) as applying to claims for the recovery of money paid under a mistake of law, despite considering that the Act was inadequate to deal with the resulting problems. If that was indeed the position, then the correct conclusion to draw, consistently with the Appellate Committees constitutional duty to give effect to Acts of Parliament, purposively construed, was that section 32(1) did not apply to such claims. As Lord Hoffmann himself observed in Johnson v Unisys Ltd [2001] UKHL 13; [2003] AC 518, para 37: [J]udges, in developing the law, must have regard to the policies expressed by Parliament in legislation The development of the common law by the judges plays a subsidiary role. Their traditional function is to adapt and modernise the common law. But such developments must be consistent with legislative policy as expressed in statutes. The courts may proceed in harmony with Parliament but there should be no discord. Lord Hope of Craighead also rejected the possibility of distinguishing between different kinds of mistake of law for the purposes of the law of restitution, because of the difficulty of establishing a clear and principled approach. He identified a number of situations in which there might be said to be a mistake of law. The mistake might be caused by a failure to take advice, by omitting to examine the available information, or by misunderstanding the information which had been obtained. Or it might be due to a failure to predict correctly how the court would determine issues which were unresolved at the time of the payment, or to foresee that there was an issue which would have to be resolved by the court. Within the latter categories, there might be cases where the court overturned an established line of authority, and cases where there was no previous decision on the point. He concluded, at p 411, that it was preferable to avoid being drawn into a discussion as to whether a particular decision changed the law or was merely declaratory, since [i]t would not be possible to lay down any hard and fast rules on this point. In relation to limitation, Lord Hope observed at p 417 that the word mistake appeared in section 32(1) without qualification, and that there was nothing in the words used which restricted the application of the subsection to mistakes of fact. More questionably, he added that the origin of the section, in paragraph 23 of the Report of the Law Revision Committee, suggested that the absence of restriction was intentional. No other member of the Appellate Committee supported that reading of the Report, and we can find no indication of such an intention in paragraph 23 or elsewhere: see in particular para 126 above. Lord Hope also noted that in In re Diplock the Court of Appeal had said that section 26(c) of the 1939 Act would operate to postpone the running of time in the case of an action to recover money paid under a mistake of fact. He continued, at p 417: But the distinction between mistake of fact and mistake of law as a ground for recovery is not absolute. Relief is available where the mistake of law relates to private rights: Earl Beauchamp v Winn, LR 6 HL 223. Private agreements made under a mistake of law may be set aside, and relief will be given in respect of payments made under such agreements. Other examples may be given where a cause of action for relief will be available although the mistake was one of law. In R v Tower Hamlets London Borough Council, Ex p Chetnik Developments Ltd [1988] AC 858, 874H 877C Lord Bridge of Harwich referred to a substantial line of authority showing circumstances in which the court would not permit the mistake of law rule to be invoked. These include payments made under an error of law to or by a trustee in bankruptcy as an officer of the court: Ex p James, In re Condon (1874) LR 9 Ch App 609. It is hard to see why in those cases the equitable rule which allows for the postponement of the limitation period should not apply, to the effect that time will not run until the claimant knew of the mistake or ought with reasonable diligence to have known of it. If the postponement can apply in these examples of mistake of law, I think that it ought to apply to mistakes of law generally. The authorities cited in that passage might be regarded as illustrating the fine distinctions sometimes drawn between mistakes of fact and of law, but they did not dissolve the distinction. They were not, in particular, concerned with claims for the recovery of money on the basis that it had been paid under a mistake of law. Nor were they concerned with limitation. For the reasons explained at paras 150 151 above, Earl Beauchamp v Winn does not in our opinion offer any guidance in relation to the application of section 32(1)(c) of the 1980 Act to claims of the kind with which Kleinwort Benson was concerned. Cases concerned with the recovery of payments made under an error of law to a trustee in bankruptcy as an officer of the court, such as Ex p James, also appear to us to have no bearing on the point. As was explained in paras 111 112 above, claims to recovery in cases of that kind were not based on mistake, and did not question that both the legal and the equitable title had passed. The case of R v Tower Hamlets London Borough Council, Ex p Chetnik Developments Ltd [1988] AC 858 also appears to us to offer no assistance, except in explaining the principle underlying the line of authority including Ex p James. It was a case in public law, concerned with the exercise of a statutory discretion to repay rates which had been paid in the absence of any liability to pay. In relation to the risk that the decision of the majority would result in serious problems, Lord Hope stated at p 417: The objection may be made that time may run on for a very long time before a mistake of law could have been discovered with reasonable diligence, especially where a judicial decision is needed to establish the mistake. It may also be said that in some cases a mistake of law may have affected a very large number of transactions, and that the potential for uncertainty is very great. But I do not think that any concerns which may exist on this ground provide a sound reason for declining to give effect to the section according to its terms. The defence of change of position will be available, and difficulties of proof are likely to increase with the passage of time. I think that the risk of widespread injustice remains to be demonstrated. to the Governments willingness It will be necessary to return to the points made in that passage. Like Lord Goff, Lord Hope considered (p 418) that any need for further restriction of the limitation period was best considered by the Law Commission, evincing a level of optimism about implement Law Commission recommendations which has not been borne out by experience. By contrast, Lord Browne Wilkinson considered that, if the law recognised claims for the recovery of money paid under a mistake of law, including claims arising retrospectively as the result of a judicial decision, then the disruption of legal certainty resulting from the application of section 32(1)(c) would be so great that the Appellate Committee ought not to develop the law so as to recognise such claims. He observed at p 364 that [o]n every occasion in which a higher court changed the law by judicial decision, all those who had made payments on the basis that the old law was correct (however long ago such payments were made) would have six years in which to bring a claim to recover money paid under a mistake of law. Since all the members of the Appellate Committee accepted that this position could not be cured save by primary legislation altering the relevant limitation period, he concluded that the correct course would be for the House to indicate that an alteration in the law is desirable but leave it to the Law Commission and Parliament to produce a satisfactory statutory change in the law which, at one and the same time, both introduces the new cause of action and also properly regulates the limitation period applicable to it. Similar views were expressed by Lord Lloyd of Berwick (p 398). The decision in Kleinwort Benson in relation to section 32(1) does not stand or fall on the persuasiveness of the speeches. It will be necessary to return at a later point in this judgment to the question as to whether, on a proper understanding of section 32(1), the decision was correct. First, however, it is necessary to consider the construction of section 32(1), which was one of the matters examined in Deutsche Morgan Grenfell. Deutsche Morgan Grenfell The case of Deutsche Morgan Grenfell concerned legislation under which, where a company paid a dividend, it was liable to pay ACT, calculated as a proportion of the dividend, which could later be set off against its liability to pay mainstream corporation tax on its profits. The Revenue thereby obtained early payment of the tax and, in cases where the ACT exceeded the mainstream corporation tax, the payment of tax which would not otherwise have been due. Where, however, the dividend was paid to a parent company, and both the company paying the dividend and its parent were resident in the UK, a group income election could be made. The result of such an election was that the subsidiary did not pay ACT, but instead paid the appropriate amount of mainstream corporation tax when it became due. Deutsche Morgan Grenfell (DMG) was a UK subsidiary of a German parent and was therefore unable to make an election. As a result, it paid tax, in the form of ACT, earlier than it would have done if an election had been possible. In Hoechst [2001] Ch 620, the Court of Justice held that the legislation was incompatible with EU law in so far as it denied to the subsidiaries of non UK resident parents the ability to make a group income election. That decision endorsed the opinion of the Advocate General, promulgated six months earlier. A month after the Advocate Generals opinion was promulgated, and five months before the decision of the Court of Justice, DMG began proceedings to recover compensation for its early payment of the tax. Its claim was based on the proposition that it paid the tax when it did under a mistake of law, and was therefore entitled to restitution in accordance with the principle established in Kleinwort Benson: a principle which, it argued, applied to payments of tax as it did to other payments, notwithstanding the availability of a right to recover undue tax under the Woolwich principle. On the other hand, the Revenue argued that the reasoning in Kleinwort Benson did not apply to payments of tax, and that the only common law cause of action to recover tax was that based on the decision in Woolwich [1993] AC 70. It is unnecessary for us to consider the Appellate Committees decision on those questions, which is not in issue in the present appeal. DMG also argued that the mistake was not discoverable until the decision in Hoechst (although it had begun its action before then), and that section 32(1) of the 1980 Act postponed the commencement of the limitation period until then. In reply, the Revenue argued that the mistake was discovered when DMG learned in 1995, six years before the decision in Hoechst, that the relevant provisions were the subject of serious legal challenge in the Hoechst proceedings and might not be lawful. DMGs arguments on that question were accepted by the House of Lords ([2007] 1 AC 558), by a majority of three to two. In considering the application of section 32(1)(c), Lord Hoffmann stated at para 31 that the reasonable diligence proviso depended upon the true state of affairs being there to be discovered: In this case, however, the true state of affairs was not discoverable until the Court of Justice pronounced its judgment. One might make guesses or predictions, especially after the opinion of the Advocate General. This gave DMG sufficient confidence to issue proceedings. But they could not have discovered the truth because the truth did not yet exist. In my opinion, therefore, the mistake was not reasonably discoverable until after the judgment had been delivered. This statement is based on a number of premises. One is that a mistake of law is a mistake within the meaning of section 32(1)(c), as had been held in Kleinwort Benson, and therefore falls within the ambit of the discoverability test. It will be necessary to return to that point. Lord Hoffmanns statement also assumes that discovery, within the meaning of section 32(1), means the ascertainment of the truth, and that, as a consequence of the abandonment of the declaratory theory, judicial decisions which establish a point of law thereby bring the truth into existence for the first time. It will be necessary to examine those assumptions in the context of the dissenting speech of Lord Brown of Eaton under Heywood. Lord Hope emphasised at para 71 that DMGs claim was disputed by the Revenue until the matter was finally decided in DMGs favour by the Court of Justice: It is plain, as the judge recognised, that if DMG had submitted a claim for group income relief under section 247(1) the revenue would have pointed to the clear terms of the statute and rejected it. It has never been suggested that they would have conceded in a question with DMG the point which they were resisting so strongly in their litigation with Hoechst The issue, which was one of law, was not capable of being resolved except by litigation. Until the determination was made the mistake could not have been discovered in the sense referred to in section 32(1) of the 1980 Act. Although DMG had learned of Hoechsts challenge to the ACT regime in 1995, six years before the Court of Justice delivered its judgment, it was not then obvious that the payments might not be due. Lord Walker concurred, stating at para 144 that it was the judgment of the Court of Justice in Hoechst that first turned recognition of the possibility of a mistake into knowledge that there had indeed been a mistake. Like Lord Hope, he emphasised that, until that judgment, the Revenue denied that DMG had a cause of action: Perusal of the report in that case suggests that the United Kingdom Government tenaciously defended the ACT regime on every available ground. At no time before the judgment did the Government concede that the ACT regime was (in discriminating between national and multi national groups) contrary to EU law and unlawful. It was the judgment that first turned recognition of the possibility of a mistake into knowledge that there had indeed been a mistake. Lord Walker added, however (ibid) that there may be cases where a party may be held to have discovered a mistake without there being an authoritative pronouncement directly on point on the facts of that case by a court, let alone an appellate court. Lord Brown dissented, on the view that DMG discovered the mistake, within the meaning of section 32, when it first became aware of the Hoechst proceedings. It will be necessary to return to Lord Browns speech. Lord Scott of Foscote also dissented, on the view that DMGs cause of action properly lay in tort, and therefore fell outside the ambit of section 32(1)(c) of the 1980 Act. Discussion of Deutsche Morgan Grenfell We shall begin our discussion of the two decisions placed in question in the present appeal by considering Deutsche Morgan Grenfell, on the hypothesis that the decision in Kleinwort Benson, that mistakes of law fall within the ambit of section 32(1)(c), was correct. We shall then consider Kleinwort Benson [1999] 2 AC 349. We approach the decisions in that order because it was only in Deutsche Morgan Grenfell [2007] 1 AC 558 that the Appellate Committee considered how section 32(1) operated in practice, in relation to discoverability, if mistakes of law fell within its scope. It is best to consider that issue, in the light of the contrasting views of the majority and of Lord Brown, before attempting to answer the question whether such mistakes do fall within the scope of the provision, purposively construed. A logical paradox A paradox results from the approach adopted in Deutsche Morgan Grenfell, most clearly articulated by Lord Hoffmann: a claimant can be unable to discover the existence of his cause of action even after he has brought his claim: he cannot discover it until his claim succeeds. The paradox is well illustrated by the Court of Appeals decision in FII (CA) 2 [2017] STC 696, based on the application of Deutsche Morgan Grenfell. As was explained in para 54 above, the court held that the decision in Deutsche Morgan Grenfell established that in the case of a point of law which is being actively disputed in current litigation the true position is only discoverable, for the purpose of section 32(1)(c) of the 1980 Act, when the point has been authoritatively determined by a final court. On that basis, the court concluded that time began to run for the test claimants only on the date when judgment was delivered in FII (CJEU) 1, three and a half years after they had issued their claims. The paradox is particularly striking because the test claimants were successful before the Court of Justice. Its decision confirmed that they had been correct when they issued their claim form in 2003, asserting that they had paid tax under a mistake of law. It was the Revenue who were mistaken. That result illustrates the illogicality inherent in the reasoning in Deutsche Morgan Grenfell: the test claimants were able to identify correctly a mistake of law for the purpose of pleading a cause of action, while supposedly being unable to discover it for the purpose of the limitation period applicable to that cause of action. That illogicality results from a specific difference between Lord Hoffmanns approach to the accrual of a cause of action based on mistake, on the one hand, and his approach to the limitation period applicable to that cause of action, on the other hand. Where a payment has been made at time T1 on the basis of the law as it stood at that time, and the law is subsequently changed (as Lord Hoffmann would describe it) by a judicial decision taken at time T2, Lord Hoffmann says that the effect of the decision at T2 is that the law at T1 retrospectively becomes what it was decided to be at T2. The consequence is that the payment at T1 is retrospectively deemed to have been made under a mistake. A cause of action is therefore retrospectively deemed to have accrued at T1. However, when it comes to limitation, a different approach is adopted. The change in the law which is said to have been brought about by the decision at T2 is treated as occurring at T2, and therefore as being discoverable only at that time. Thus the mistake of law which, for the purpose of the accrual of a cause of action, is deemed to have occurred at T1, is simultaneously deemed not to have occurred at TI, but at T2, for the purpose of the law governing the discoverability of the mistake. It is because T2 occurs after the claim has been brought, and at the point when it is finally decided, that the paradox arises, that the mistake which forms the basis of the claim is not discoverable unless and until the claim succeeds. It is for the same reason that there arises the equally paradoxical result, that a limitation period applicable to the commencement of proceedings cannot begin to run until the proceedings have been completed. Paradoxical is indeed a generous term. One might say more candidly that this approach has consequences which are illogical and which frustrate the purpose of the legislation. One possible response, arguably consistent with the abandonment of the declaratory theory, would be to argue that a deemed mistake is in reality no mistake at all. That is not, however, being argued in the present case. In any event, any attempt to draw a clear and principled distinction between deemed and actual mistakes faces real difficulties. As Lord Hope, in particular, indicated in his speech in Kleinwort Benson [1999] 2 AC 349, determining whether a particular decision changed the law or was merely declaratory would be a difficult exercise, not merely evidentially, but at a much deeper level. For example, when the House of Lords held in Murphy v Brentwood District Council [1991] 1 AC 398 that the case of Anns v Merton London Borough Council [1978] AC 728 had been wrongly decided (per Lord Keith of Kinkel at p 472), was the law changed, or was there a non fictional sense in which the law at the time of Anns was other than the House of Lords had then declared it to be? Ultimately, the drawing of a line between deemed and actual mistakes, and even the question whether such a distinction can be drawn, depends on a theory of the nature of judicial decision making, and indeed of the nature of law. The resultant scope for argument as to where the line should be drawn in any particular case would undermine one of the basic objectives of limitation statutes, namely to produce certainty as to the time limit for the bringing of a claim. In any event, the issue raised by Lord Hoffmanns reasoning is not confined to deemed mistakes, or conditional on his rejection of the declaratory theory. Judges cannot avoid having to decide at T2 what the law was at T1, and if their decision does not reflect how the law was understood by the claimant at T1, then it will ordinarily be uncontroversial to say that the claimant was mistaken at T1. The consequence, following the decision on the law of restitution in Kleinwort Benson, is that a cause of action accrued at T1 if a payment was made then on the basis of the mistaken understanding, regardless of the date of T2. On the limitation side of the analysis, on the other hand, the concept of discoverability is designed to protect claimants who could not reasonably be expected to know of the existence of the circumstances giving rise to their cause of action until sometime after it accrued. It must therefore be concerned with discoverability in reality, at a date which may be later than T1. It does not, however, follow that the discoverability of a mistake of law, within the meaning of section 32(1), must necessarily be tied to the date of a judicial decision, ie T2. The problems identified in para 174 above suggest that tying discoverability to the date of a judicial decision is a mistake. It will be necessary to return to that point in the context of Lord Browns dissenting speech in Deutsche Morgan Grenfell [2007] 1 AC 558. 2. Judicial decisions and the development of the law That thought is reinforced by other considerations. Section 32(1) applies where the claimant does not know and cannot reasonably be expected to discover a mistake which forms an essential ingredient of his cause of action. Its effect is that the limitation period commences not on the date when the cause of action accrues, but on the date when the claimant discovers, or could with reasonable diligence discover, the mistake in question. The result of that postponement of the commencement date of the limitation period is to postpone the deadline for the bringing of a claim, so that the time during which the claimant was disadvantaged by the mistake does not count against him. Lord Hoffmanns approach, whereby the limitation period does not begin until the truth has been established by a final judicial decision, does not merely extend the limitation period to the extent necessary to overcome the disadvantage arising from the mistake, but has the remarkable consequence of excusing the claimant from the necessity of bringing a claim until he can be certain that it will succeed: indeed, until it has in fact succeeded. This places the claimant in a case based on a mistake of law in a uniquely privileged position, since other claimants are required to bring their claims at a time when they have no such guarantee: the limitation period runs alike for claims which fail as for claims which succeed. If the limitation period can begin to run at a time when a claim is uncertain of success, then, in addition to the logical problem discussed earlier, there is also a lack of realism in treating the date of a judicial decision authoritatively establishing the true state of the law as the earliest date when the claimant discovers, or could with reasonable diligence discover, the mistake in question. In the first place, the courts do not act on their own initiative, but only when their jurisdiction is invoked: normally, by the issuing of a claim. A point of law could often have been decided earlier, if a claim had been brought at an earlier time. Secondly, thinking about the law evolves over time. Developments in judicial thinking, in particular, do not take place in a vacuum. Judgments are the culmination of an evolution of opinion within a wider legal community, to which practitioners, universities, legal journals and the judiciary all contribute. And it is not only judges who are influenced by that evolving body of opinion. Claimants and their advisers respond to the same developments in their understanding of the state of the law, and their decisions as to whether or not worthwhile claims may exist. It is therefore possible to investigate how legal thinking on a particular question (for example, in the present case, whether the UK tax treatment of dividends received by UK resident companies from non resident subsidiaries was compatible with EU law) developed over time, and to ascertain, by means of evidence, the time by which a reasonably diligent person in the position of the claimant (such as, in the present case, a UK based multi national company) could have known of a previous mistake of law, to the extent of knowing that there was a real possibility that such a mistake had been made, and that a worthwhile claim could therefore be made on that basis. This line of thought suggests that the focus of attention under section 32(1) of the 1980 Act should not be on judicial decisions, but on the claimants ability to discover that he had a worthwhile claim. Giving effect to the intention of Parliament Finally, in relation to Lord Hoffmanns reasoning, it is also, with great respect, susceptible to the criticism that it pays insufficient regard to the principle of statutory construction that legislation should be given a purposive interpretation. If section 32(1) is interpreted in accordance with Kleinwort Benson as applying to mistakes of law, and if those mistakes of law are not considered to be discoverable within the meaning of the provision until after a final judgment has been delivered, as was held in Deutsche Morgan Grenfell [2007] 1 AC 558, then the object of the limitation statute is defeated. That object is to set a time limit for the bringing of claims. That object is frustrated if the limitation period does not begin to run until the proceedings have been completed. It is true that the limitation period so set will not be completely pointless in a situation where other people have identical claims which are not being pursued in the same proceedings, since time will begin to run for the bringing of those other claims. But in more usual situations, where an individual claim is brought, or where multiple claims are brought together in a group litigation (as in Deutsche Morgan Grenfell itself, which was a test case in the ACT Group Litigation), this approach to limitation defeats Parliaments purpose in enacting limitation periods. It is therefore a result which Parliament cannot have intended when it enacted the 1980 Act. 4. Consistency with the treatment of fraud under section 32(1) As we have explained, Lord Brown dissented in Deutsche Morgan Grenfell [2007] 1 AC 558 on the view that DMG discovered the mistake, within the meaning of section 32, when it first became aware of the Hoechst proceedings and recognised that there was a serious challenge to the legality of the ACT regime under EU law. He stated at para 165: I would hold that as soon as a paying party recognises that a worthwhile claim arises that he should not after all have made the payment and accordingly is entitled to recover it (or, as here, to compensation for the loss of its use), he has discovered the mistake within the meaning of section 32; and, by the same token, I would hold that if he makes any further payments thereafter, they are not to be regarded as payments made under a mistake of law. Lord Brown thus challenged the fundamental assumption underlying the approach adopted by the majority in Deutsche Morgan Grenfell: that discovery, within the meaning of section 32(1), means the ascertainment of the truth, and that a mistake of law is therefore only discoverable when the point of law in question has been authoritatively decided by a final court. On the approach which he adopted, a mistake is discovered when the claimant recognises that a worthwhile claim arises. Lord Brown noted that DMG had continued to make payments of ACT after July 1995, when they learned that Hoechst had issued proceedings, and that they had issued their own claim five months prior to the decision of the Court of Justice in Hoechst [2001] Ch 620. Referring to Lord Hopes statement that, when DMG paid the ACT, it was not then obvious that the payments might not be due, Lord Brown commented at para 172 that he had some difficulty with that conclusion: Surely, when DMG learned in July 1995 that there was a serious legal challenge to the legality of the ACT regime, it must then have been obvious to them that these payments might not after all be due. Of course they could not be sure and of course nothing short of a final judgment from the European Court of Justice would have persuaded the revenue to accept any claim by DMG here for group income relief. But it does not seem to me to follow that DMG paid under a mistake of law. In support of his views, Lord Brown pointed first, at para 167, to the parallel treatment in section 32 of fraud, deliberate concealment and mistake: Once a plaintiff recognises that he has a worthwhile case on the facts to pursue a claim in fraud or to extend the limitation period for a particular claim because of the defendants deliberate concealment of a fact relevant to his cause of action, time surely then starts to run against him under section 32: he could not successfully argue that time starts running only when the court eventually comes to reject the defendants denial of wrongdoing and to find fraud (or, as the case may be, deliberate concealment) established. The view expressed in that passage is supported by a number of authorities concerned with the application of section 32(1) in cases of fraud. The first which might be mentioned is the judgment of Arden LJ, with which Aldous and Robert Walker LJJ agreed, in Biggs v Sottnicks [2002] EWCA Civ 272. In deciding when the appellants could with reasonable diligence have discovered a fraud, for the purposes of section 32(1) of the 1980 Act, her Ladyship treated the relevant date as the correct date when the appellants solicitors had sufficient information in their hands for the purposes of this deceit claim (para 62), that is to say, the date when the appellants were in a position to plead their own case (para 64). A similar approach was adopted in Law Society v Sephton & Co [2004] EWHC 544 (Ch); [2004] PNLR 27, para 44, where the court proceeded on the basis of the parties agreement that a claimant did not discover a fraud until he had material sufficient to enable him properly to plead it. Reference should also be made to the judgment of Lord Hoffmann NPJ, with which the other members of the Hong Kong Court of Final Appeal agreed, in Peconic Industrial Development Ltd v Lau Kwok Fai [2009] HKCFA 16; [2009] WTLR 999. The case raised the question, under a legislative provision in the same terms as section 32(1) of the 1980 Act, whether the claimants could with reasonable diligence have discovered a fraud committed more than six years before proceedings were issued. Lord Hoffmann stated at para 56: In any case, it is not necessary that [the claimants] should have known facts which put [the fraudsters] participation in the fraud beyond all reasonable doubt. The purpose of the inquiry into whether [the claimants] could with reasonable diligence have discovered his fraud is to establish when they could reasonably have been expected to commence proceedings. For that purpose, they needed only to know facts which amounted to a prima facie case. The approach adopted in those cases differs from that proposed by Lord Brown only in its focus on the date when the claimant (or his lawyers) had sufficient material properly to plead a claim in fraud. Lord Brown put the matter differently in paras 165 and 167 of his judgment in Deutsche Morgan Grenfell [2007] 1 AC 558, when he treated the mistake as being discovered as soon as the claimant recognises that a worthwhile claim arises, or that he has a worthwhile case to pursue a claim. It will be necessary to return to this point. As will be explained, Lord Browns approach is consistent with that adopted authoritatively in analogous contexts where fraud was not in issue, and is also in accordance with principle. What is more important for present purposes, however, is that the approach adopted in these cases of fraud, like that proposed by Lord Brown for cases of mistake, treats the relevant date, for the purposes of the commencement of the limitation period, not as the date when the claimant knows or can establish the truth, but as the date when he can recognise that a worthwhile claim arises, in Lord Browns formulation, or can plead a statement of claim, in the formulation preferred in the fraud cases. 5. Consistency with other analogous provisions of the 1980 Act Lord Brown also found support for his position in Deutsche Morgan Grenfell in authorities concerned with the interpretation of other provisions of the 1980 Act which postpone the commencement of the limitation period until the claimant knows or could reasonably have known the facts forming the basis of his cause of action. That approach is applied, for example, to actions for damages in respect of torts causing personal injuries, by section 11 of the 1980 Act. Under section 11(4), read together with section 14(1), the limitation period generally runs from the date on which the cause of action accrued, or, if later, the date on which the person injured had knowledge that the injury was significant and was attributable to the act or omission relied on, and knowledge of the identity of the defendant. For these purposes, knowledge is defined as including knowledge which he might reasonably have been expected to acquire (section 14(3)). The language of these provisions differs from section 32(1) in that they refer to having knowledge, rather than discovering. But that is on its face an insubstantial difference, since discovery ordinarily refers to the acquisition of knowledge. And sections 11, 14 and 32 have the same rationale, namely that the limitation period should only run from the time when the claimant knows or could reasonably have known of the existence of his cause of action. Sections 11 and 14 are explicitly concerned with knowledge of the facts forming the cause of action, and not with their legal consequences. But the same is true of section 32(1), even in its application to mistakes of law. As is explained below, the relevant fact that has to be discovered, in that context, is the fact that the claimant made a mistake, that being an essential ingredient of his cause of action. A claimants ignorance of the legal consequences of the facts forming his cause of action is not something with which section 32(1) is concerned, as Lord Walker made clear in FII (SC) 1 [2012] 2 AC 33, para 63 (para 41 above). That is consistent with the intention of the Law Revision Committee, as was explained at para 127 above. Sections 11 and 14 were considered by this court in AB v Ministry of Defence [2012] UKSC 9; [2013] 1 AC 78, where proceedings were begun by the claimants at a time when they believed that their injuries had been caused by their exposure to radiation by the defendant, but had no objective basis for their belief. Their contention that they did not then have knowledge of the facts forming the basis of their cause of action was rejected. The court held, by a majority, that knowledge did not mean knowing for certain and beyond possibility of contradiction, but that mere suspicion was not enough; that in order to amount to knowledge a belief had to be held with sufficient confidence to justify embarking on the preliminaries to issuing proceedings; and that it was, therefore, a legal impossibility for a claimant to lack knowledge for the purposes of section 14(1) at a time after he had issued his claim. In relation to the last of those points, Lord Wilson, Lord Walker, Lord Brown and Lord Mance all made it clear that, in deciding whether a claim was statute barred, the court had to assume that, when the claimant issued his claim, he had knowledge of the facts necessary to support his pleaded cause of action. Lord Wilson stated at para 6 that it was heretical that a claimant could escape the requirement to assert his cause of action for personal injuries within three years of its accrual by establishing that, even after his claim was brought, he remained in a state of ignorance entirely inconsistent with it. Lord Walker said at para 67 that he did not see how a claimant who had issued a claim form could be heard to suggest that he did not, when it was issued, have the requisite knowledge for the purposes of the 1980 Act. Lord Brown said at para 71 that once a claimant issues his claim, it is no longer open to him to say that he still lacks the knowledge necessary to set time running. Lord Mance agreed, observing at para 84 that a claimant bringing proceedings necessarily asserts that he or she has a properly arguable claim. Considering more precisely the point in time at which a claimant acquires knowledge for the purposes of sections 11(4) and 14(1) of the 1980 Act, the majority of the court in AB v Ministry of Defence endorsed the test earlier approved by the House of Lords in relation to claims falling under section 14A (inserted by the Latent Damage Act 1977), which applies to actions for damages for negligence, other than those involving personal injuries. In Haward v Fawcetts [2006] UKHL 9; [2006] 1 WLR 682, para 9, Lord Nicholls of Birkenhead stated: Lord Donaldson of Lymington MR gave valuable guidance in Halford v Brookes [1991] 1 WLR 428, 443. He noted that knowledge does not mean knowing for certain and beyond the possibility of contradiction. It means knowing with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence: Suspicion, particularly if it is vague and unsupported, will indeed not be enough, but reasonable belief will normally suffice. In other words, the claimant must know enough for it to be reasonable to begin to investigate further. The formulation adopted in Halford v Brookes [1991] 1 WLR 428, Haward v Fawcetts and AB v Ministry of Defence places the commencement of the limitation period slightly earlier than the fraud cases discussed earlier. The relevant time is when the claimant knows with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, rather than the point in time when he could plead a statement of claim. This is not the occasion on which to review the formulation used in the fraud cases, which reflects the special standards applicable to the pleading of fraud. The formulation used in Halford v Brookes, Haward v Fawcetts and AB v Ministry of Defence is, however, consistent with the way in which the point was expressed by Lord Brown in Deutsche Morgan Grenfell (para 180 above) and by Lord Walker in FII (SC) 1 [2012] 2 AC 33 (para 48 above). It is also consistent with principle. The limitation period normally begins to run on the date when the cause of action accrues. It is not postponed until the claimant has consulted a solicitor, carried out investigations, and is in a position to plead a statement of claim. For example, a pedestrian who is knocked down and injured by a car while using a zebra crossing has a cause of action against the driver, which accrues on the date of the accident. It will take time before he can issue a claim: he will need to consult solicitors, and counsel may have to be instructed to draft the claim. There may be many matters which have to be investigated, and that may take time. And it may be that his claim will fail in the end, if, for example, it is found that he suddenly ran into the path of the car, or that the driver had a heart attack and lost control of the vehicle. Nevertheless, the limitation period begins to run on the date of the accident. It is not postponed until he has completed his investigations, or until he knows that his claim is guaranteed to succeed. The purpose of the postponement effected by section 32(1) is to ensure that a claimant is not disadvantaged, so far as limitation is concerned, by reason of being unaware of the circumstances giving rise to his cause of action as a result of fraud, concealment or mistake. That purpose is achieved, where the ingredients of the cause of action include his having made a mistake of law, if time runs from the point in time when he knows, or could with reasonable diligence know, that he made such a mistake with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence; or, as Lord Brown put it in Deutsche Morgan Grenfell [2007] 1 AC 558, he discovers or could with reasonable diligence discover his mistake in the sense of recognising that a worthwhile claim arises. We do not believe that there is any difference of substance between these formulations, each of which is helpful and casts light on the other. It is true that Haward v Fawcetts [2006] 1 WLR 682 and AB v Ministry of Defence [2013] 1 AC 78 were not concerned with section 32, but with other provisions of the 1980 Act, expressed in different language: sections 14(3) and 14A(10) are concerned with knowledge which [the claimant] might reasonably have been expected to acquire, whereas section 32(1) is concerned with what he could with reasonable diligence have discovered. It is also true that sections 14 and 14A explicitly provide that knowledge that any acts or omissions did or did not, as a matter of law, involve negligence, is irrelevant. They are, however, concerned with the same problem as section 32(1), namely that a cause of action can accrue before the claimant comes to know of it, and they address that problem in a similar way, by postponing the commencement of the limitation period until the claimant knew, actually or constructively, the facts on which the cause of action is based. The close connection between sections 11, 14, 14A and 32 of the 1980 Act was made clear by Lord Walkers reasoning in FII (SC) 1, para 63 (para 41 above). In those circumstances, it appears to us to be impossible to reconcile the reasoning in Haward v Fawcetts and AB v Ministry of Defence with that in Deutsche Morgan Grenfell and the cases which have followed it. The former line of authority proceeds on the basis that the commencement of the limitation period is postponed until the claimant knows, actually or constructively, the essential facts on which the cause of action is based, with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence. The dissenting judgment of Lord Brown in Deutsche Morgan Grenfell is consistent with that approach: time does not begin to run until the claimant knows, actually or constructively, that he made a mistake (that being an essential ingredient of the cause of action), to the standard that a worthwhile claim arises. The latter line of authority, on the other hand, proceeds on the basis that the limitation period does not run until a court has authoritatively established that the claimants assertion that he made a mistake of law is true. Mistakes of law are thus treated differently from mistakes of fact, and the difficult and much criticised distinction between the two remains of crucial importance. Furthermore, only the former line of authority is consistent with the rationale of limitation periods. It is in the nature of litigation that facts and law are commonly disputed. It is the function of courts to resolve those disputes. Until the court has done so, the parties can, at best, have only a reasonable belief that their assertions are correct. If a limitation period is to serve its purpose, in fixing a time within which claims must be brought, it can therefore only be concerned with beliefs, and not with the truth established by judicial decisions, whether in the proceedings in question, or in other proceedings. That is reflected in Lord Donaldsons statement in Halford v Brookes [1991] 1 WLR 428, endorsed by Lord Nicholls in Haward v Fawcetts [2006] 1 WLR 682 (para 190 above) and by Lord Wilson in AB v Ministry of Defence [2013] 1 AC 78, para 11, that reasonable belief will normally suffice. 6. Consistency with discovery in another statutory context Returning to Deutsche Morgan Grenfell [2007] 1 AC 558, Lord Brown found further support for his argument in an authority concerned with the meaning of discover in the context of tax legislation. The Income Tax Act 1918 (and later tax statutes) contained a provision enabling additional assessments to be issued where it was discovered that profits chargeable to tax had been omitted from an initial assessment. In Earl Beatty v Inland Revenue Comrs [1953] 1 WLR 1090, the assessments under appeal were made under that provision, at a time when the Commissioners had a strong suspicion that there had been an undeclared transfer of assets by the appellant or his wife. It subsequently transpired that there had indeed been undeclared transfers, not by the appellant or his wife, but by his brother acting on his behalf. The assessments were challenged on the ground that they were not based on a discovery within the meaning of the legislation, since a suspicion, especially if inaccurate, did not amount to a discovery. The argument was rejected, the judge observing at p 1095: I think that the discovery need not be a complete and detailed or accurate discovery and that when the Commissioners find out, or think that they have found out, the existence of an omission or other error it is not necessary for them to have probed the matter to its depths or to define precisely the ground upon which they have made the assessments. Like a claim form, an assessment is not a statement of established verities. It is a formal statement of a claim made by the Commissioners and forms the basis of an inquiry into the facts in the event that it is challenged. In those circumstances, the test of discovery could not sensibly require that the truth had already been established. The same is true in the present context. Discovery and ascertainment of the truth 7. The approach adopted in the fraud cases discussed in paras 180 186 above, and in the cases concerned with analogous provisions of the 1980 Act, discussed in paras 187 196 above, is consistent with the nature of a plea of limitation: it is legally distinct from the merits of the claim in question, and is often conveniently dealt with as a preliminary issue. The 1980 Act proceeds on the basis that a cause of action has accrued, without concerning itself with the question whether or not the action is well founded. Section 32(1)(a) applies where the action is based upon the fraud of the defendant, and section 32(1)(c) applies where the action is for relief from the consequences of a mistake. If the action runs its full course, it may transpire that there was no fraud or mistake, indeed no cause of action at all. But where, at the stage of an inquiry into the defendants plea that the action is time barred, the claimant relies on section 32(1)(a) or (c), the question is not whether there was in reality any fraud or mistake: that will not be established unless and until the court issues a judgment on the merits of the case. The question under section 32(1)(a) and (c) of the 1980 Act is whether, upon the assumption that there was fraud or mistake, as identified by the claimant in the way in which he pleads his case, it was discovered or could with reasonable diligence have been discovered at such a time as would render the claim time barred. One might compare the approach adopted to the issue of laches in Earl Beauchamp v Winn (1873) LR 6 HL 223, where Lord Chelmsford stated at p 233 that in considering this part of the case it has been assumed, for the purpose of the argument, that the late Earl was under a mistake as to his interest Mr Winn, upon this assumption, was also under a mistake The case must be dealt with, therefore, as one of mutual mistake. Once the issue of laches had been disposed of on that basis, the House of Lords went on to hold that there had in fact been no mistake. Hence the situation which may seem paradoxical, but sometimes arises in practice (as, for example, in Law Society v Sephton & Co [2004] EWHC 544 (Ch); [2004] PNLR 27), where in a trial on limitation the defendant disputes the claimants assertion that he could not have known or discovered a fact which, in relation to the merits of the claim, the defendant denies is a fact at all. There is in reality no paradox, because at the stage of an inquiry into limitation the existence of the cause of action, and therefore the truth of the facts relied on by the claimant to establish it, is not the relevant issue. Put in general terms, the question is not whether the claimant could have established his cause of action more than six years (or whatever other limitation period might be relevant) before he issued his claim, but whether he could have commenced proceedings more than six years before he issued his claim. The existence of the constituents of the cause of action such as fraud or mistake as verified facts is not the issue. That point emerges clearly from the majority judgments in AB v Ministry of Defence [2013] 1 AC 78. Lord Wilson, for example, stated at para 2, in relation to section 11(4) of the 1980 Act: The subsection refers, at (a), to the cause of action notwithstanding that, if the action is to continue, it may well transpire that the claimant has no cause of action. When the subsection turns, at (b), to the date of knowledge (if later) and so requires the court to appraise the claimants knowledge of the four facts specified in section 14(1), which relate to, although do not comprise all elements of, his cause of action, the assumption that indeed he has a cause of action remains In the decision of the Court of Appeal in Halford v Brookes [1991] 1 WLR 428 the trial judge, Schiemann J, is quoted, at p 442H, as having referred to the bizarre situation when a defendant asserts that the plaintiff had knowledge of a fact which the plaintiff asserts as a fact but which the defendant denies is a fact. The situation may indeed seem bizarre until one remembers that, at the stage of an inquiry under section 11, the exercise requires the existence of the fact to be assumed. Were the action to continue, the defendant might well deny it; but he does not do so at that stage. It is for that reason that, contrary to the views seemingly held by Lord Hope and Lord Walker in Deutsche Morgan Grenfell [2007] 1 AC 558 (paras 169 and 170 above), the fact that the defendant disputes an element of the cause of action does not mean that the commencement of the limitation period is postponed until that dispute has been resolved. 8. Reasonable diligence That approach is also consistent with the well established test for determining whether, for the purposes of section 32(1), the claimant could with reasonable diligence have discovered a fraud. Authoritative guidance on that topic was given by Millett LJ in Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400, 418: The question is not whether the plaintiffs should have discovered the fraud sooner; but whether they could with reasonable diligence have done so. The burden of proof is on them. They must establish that they could not have discovered the fraud without exceptional measures which they could not reasonably have been expected to take. In this context the length of the applicable period of limitation is irrelevant. In the course of argument May LJ observed that reasonable diligence must be measured against some standard, but that the six year limitation period did not provide the relevant standard. He suggested that the test was how a person carrying on a business of the relevant kind would act if he had adequate but not unlimited staff and resources and were motivated by a reasonable but not excessive sense of urgency. I respectfully agree. Neuberger LJ added in Law Society v Sephton & Co [2004] EWCA Civ 1627; [2005] QB 1013, para 116, that it is inherent in section 32(1) that there must be an assumption that the claimant desires to discover whether or not there has been a fraud: Not making any such assumption would rob the effect of the word could, as emphasised by Millett LJ, of much of its significance. Further, the concept of reasonable diligence carries with it the notion of a desire to know, and, indeed, to investigate. The test explained in those dicta has nothing to do with judicial decisions establishing disputed truths after trial. It is concerned with the steps which a person in the position of the claimant could reasonably have been expected to take before issuing a claim. 9. The pre 1939 equitable rule The foregoing approach is also supported by the pre 1939 principle of equity on which section 26 of the 1939 Act and section 32(1) of the 1980 Act were modelled. In that regard, the decision of the Court of Appeal in Molloy v Mutual Reserve Life Insurance Co (1906) 94 LT 756 is particularly helpful. The plaintiff took out a life assurance policy after being told by the insurers agent that, under the policy, the premiums would remain at a fixed rate. When the insurer later increased the premiums, the plaintiff brought proceedings in the County Court to recover the overpayments. The County Court held, however, that the insurer was entitled under the policy to charge the increased premiums. Several years later, another policy holder brought similar proceedings in the High Court, in which he succeeded. That decision was overturned on appeal, but the Court of Appeal, and ultimately the House of Lords, held that the contract should be rescinded, and the premiums returned, on the ground of fraudulent misrepresentation. The plaintiff (in the Molloy case) was by then out of time to bring a common law claim for the return of his premiums, but instead brought proceedings in equity for rescission, an account of the premiums paid (as a consequence of the setting aside of the contract), and payment of the amount found due on the account. Since the claim to an account was subject by analogy to the statutory limitation period, the plaintiff sought to rely on the equitable principle allowing for its extension in a case of fraud, and argued that he had been unable to discover that he had a cause of action prior to the decision of the House of Lords. That argument was accepted by Swinfen Eady J, who considered that time did not begin to run while the plaintiff waited to be fully informed as to what his legal rights were, and [until] the position was definitely and finally ascertained: (1906) 94 LT 756, 759. The Court of Appeal (Sir Richard Collins MR, Romer and Cozens Hardy LJJ) disagreed. The Master of the Rolls gave several reasons at p 761 for rejecting the argument. First, he pointed out that the plaintiff had known the facts which were essential to his cause of action long before the House of Lords gave its decision. The limitation period ran from the time when the plaintiff discovered the facts essential to his cause of action. It was immaterial that he did not understand their legal significance, or that it was only the decision of the House of Lords as to the construction of the policy that put that element of the cause of action beyond dispute: First of all, it rather assumes that the point of time at which the Statute of Limitations is to run is not the time at which the plaintiff ascertains the facts, but the time when he put the true legal construction upon them. Now, I dispute that. I do not think that the policy of the Statute of Limitations is that it is not to begin to run until a person has satisfied himself as to the exact legal inferences to be drawn from a number of facts which he has perfectly ascertained. The policy of the Statute of Limitations is based on the old maxim, Expedit reipublica ut sit finis litium. Therefore the object of it was really to put an end to actions after a lapse of time. [T]he plaintiff knew the facts, and, even although he was not able from his education and attainments to draw the proper legal inferences from them, the Statute of Limitations was not prevented from running That is equally true in a situation where one of the facts essential to the cause of action is that the claimant has made a mistake, whether of fact or of law. The fact that he has made a mistake needs to be discoverable (in the relevant sense) with reasonable diligence, but he does not need to know that he is consequently entitled to bring a claim. As the Law Revision Committee stated, the mere fact that a plaintiff is ignorant of his rights is not to be a ground for the extension of time (para 126 above). That is why, on the facts of Kleinwort Benson [1999] 2 AC 349, the relevant matter which needed to be discoverable was that the swaps contracts were ultra vires, as had been established in Hazell, and not that a cause of action lay for payments made under a mistake of law, as was established in Kleinwort Benson itself. For the same reason, Henderson J was in error in FII (HC) 2 [2015] STC 1471, in favouring the view (para 47 above) that it was only when the House of Lords gave judgment in Deutsche Morgan Grenfell [2007] 1 AC 558 that time began to run against the BAT claimants, since that was the first time an appellate court had held that a restitutionary claim lay for the recovery of tax on the ground that it had been paid under a mistake of law. The relevant fact was that the belief that the tax was payable had been mistaken; not that there was a right to restitution. The second reason given by the Master of the Rolls for rejecting the plaintiffs argument is also relevant to these proceedings: On that argument it would follow logically that the Statute of Limitations had not begun to run until such time within six years as anybody might, in any proceedings raising the same question, get a decision from the House of Lords on the matter [H]e gives himself the right of beginning to count the running of the Statute of Limitations from the time when he ascertains not by the result of anything done by himself at all, but by some chance proceedings taken by somebody else, aliunde what his true position is in point of law. Then, and not until then, according to his contention, the Statute of Limitations begins to run. I think that it would be quite against the policy of the Statute of Limitations altogether to allow such considerations to come in. One might contrast that reasoning with the decision of the majority in Deutsche Morgan Grenfell, according to which time did not begin to run for DMG until Hoechst [2001] Ch 620 had established the same point of law in a final decision in other proceedings. The practicality of the suggested approach It remains to consider whether the test of discoverability suggested at para 193 above, taken together with the standard of reasonable diligence discussed at para 203, provides an approach to the application of section 32(1) to mistakes of law which is likely to be reasonably practical and certain in its operation. To recap: (1) As was explained, the suggested test of discoverability is that a mistake of law is discoverable when the claimant knows, or could with reasonable diligence know, that he made such a mistake with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence; or, as Lord Brown put it in Deutsche Morgan Grenfell, he discovers or could with reasonable diligence discover his mistake in the sense of recognising that a worthwhile claim arises. We do not believe that there is any difference of substance between these formulations, each of which is helpful and casts light on the other. (2) The standard of reasonable diligence is how a person carrying on a business of the relevant kind would act, on the assumption that he desired to know whether or not he had made a mistake, if he had adequate but not unlimited staff and resources and was motivated by a reasonable but not excessive sense of urgency. The question is not whether the claimant should have discovered the mistake sooner, but whether he could with reasonable diligence have done so. The burden of proof is on the claimant. He must establish on the balance of probabilities that he could not have discovered the mistake without exceptional measures which he could not reasonably have been expected to take. In practice, the application of that approach will depend on the circumstances of the case. For example, in cases where the claimant has made a payment on the basis of a mistaken understanding of the law which has resulted from ignorance, the mistake will normally have been discoverable immediately, by seeking legal advice. Section 32(1) only has effect where a mistake could not have been discovered at the time of the payment with the exercise of reasonable diligence. On the other hand, where the payment was made in reliance on a precedent that was subsequently overruled, or an understanding of the law that was later altered by a judicial decision, the question will be whether the claim was brought within the prescribed period beginning on the date when it was discoverable by the exercise of reasonable diligence that the basis of the payment was legally questionable, so as to give rise to a worthwhile claim to restitution. Depending on the circumstances, it may be difficult to identify a specific date, but doubtful cases can be resolved by bearing in mind that the burden of proof lies on the claimant to prove that his claim was brought within the prescribed limitation period. Clearly, where a payment was made in accordance with the law as it was then understood to be, the point in time at which the claimant could, with reasonable diligence, have discovered that the basis of the payment was legally questionable, so as to give rise to a worthwhile claim to restitution, will have to be established by evidence. The focus of that evidence is likely to be upon developments in legal understanding within the relevant category of claimants and their advisers, as explained in para 178 above. Thus, in the circumstances of the present case, Lord Walker referred in FII (SC) 1 [2012] 2 AC 33 (para 48 above) to there being a reasonable prospect that the limitation period could be deferred until the time when a well advised multi national 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. This point is considered in greater detail in para 255 below. Evidence in relation to matters of this kind may well include expert evidence concerning the state of understanding of the law within the relevant categories of professional advisers during the relevant period. It is true that this approach involves a more nuanced inquiry than a mechanical test based on the date on which an authoritative appellate judgment determined the point in issue. But it would be unduly pessimistic to conclude at this stage that it will prove to be unworkable in practice, or too uncertain in its operation to be acceptable. Deutsche Morgan Grenfell: Summary Taking stock of the discussion so far, the position can be summarised as follows: (1) Limitation periods set a time limit for issuing a claim, which normally begins to run when the cause of action accrues. They apply whether the substance of the claim is disputed or not. They apply to claims regardless of whether there is in truth a well founded cause of action. (2) Section 32(1) of the 1980 Act postpones the running of time beyond the date when the cause of action accrues, in cases where the claimant cannot reasonably be expected to know at that time the circumstances giving rise to the cause of action, by reason of fraud, concealment or mistake. Its effect is that the limitation period commences not on the date when the cause of action accrues, but on the date when the claimant discovers, or could with reasonable diligence discover, the fraud, concealment or mistake. (3) Consistently with (1) above, section 32(1) cannot be intended to postpone the commencement of the limitation period until the claimant discovers, or could discover, that his claim is certain to succeed. (4) Consistently with (1) above, section 32(1) cannot be intended to postpone the commencement of the limitation period until the proceedings have been completed. (5) In tying the date of discoverability of a mistake of law in section 32(1) to the date when the truth as to whether the claimant has a well founded cause of action is established by a judicial decision, the decision in Deutsche Morgan Grenfell [2007] 1 AC 558 contravenes (3) above, and is therefore inconsistent also with (1) above. (6) In tying the date of discoverability to the date of a judicial decision, with the consequence that the limitation period for issuing a claim may not begin to run until the proceedings have been completed, the decision in Deutsche Morgan Grenfell also contravenes (4) above, and is for that reason also inconsistent with (1) above. (7) Tying the date of discoverability to the date of a decision by a court of final jurisdiction, as the House of Lords appear to have done in Deutsche Morgan Grenfell, and as the Court of Appeal held in FII (CA) 2, compounds the mistake (para 54 above). (8) In tying the date of the discoverability of a mistake of law to the date of a judicial decision which establishes that a mistake was made, the decision in Deutsche Morgan Grenfell also has the illogical consequence that mistakes are not discoverable by a claimant until after he has issued a claim on the basis of the mistake: (paras 173 174 above). (9) The decision in Deutsche Morgan Grenfell therefore frustrates Parliaments intention in enacting section 32(1) (para 179 above). (10) The decision in Deutsche Morgan Grenfell is also inconsistent with authorities concerned with section 32(1) in relation to fraud (paras 180 186 above). (11) The decision in Deutsche Morgan Grenfell is also inconsistent with authorities at the highest level concerned with analogous provisions of the 1980 Act (paras 187 196 above). (12) The decision in Deutsche Morgan Grenfell is also inconsistent with the meaning given by the courts to discovery in another statutory context (paras 197 198 above). (13) The purpose of the postponement effected by section 32(1) is to ensure that the claimant is not disadvantaged, so far as limitation is concerned, by reason of being unaware of the circumstances giving rise to his cause of action as a result of fraud, concealment or mistake. That purpose is achieved, where the ingredients of the cause of action include his having made a mistake of law, if time runs from the point in time when he knows, or could with reasonable diligence know, that he made such a mistake with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence; or, as Lord Brown put it in Deutsche Morgan Grenfell, he discovers or could with reasonable diligence discover his mistake in the sense of recognising that a worthwhile claim arises (paras 193 and 209). (14) By tying the concept of discovery to the ascertainment of the truth, the decision in Deutsche Morgan Grenfell contradicts the principle that limitation periods apply to claims regardless of whether they are ill or well founded. The claimant cannot be required to have ascertained the truth, in order for a limitation period to apply. Consistently with authorities concerned with analogous provisions of the 1980 Act, a reasonable belief will normally suffice (para 196). (15) Tying the concept of discovery to the ascertainment of the truth is also inconsistent with the nature of a plea of limitation. The question under section 32(1) is not whether there was in reality any fraud, concealment or mistake as the claimant has pleaded, but whether, upon the assumption that there was, it was discovered, or could with reasonable diligence have been discovered, at such a time as would render the proceedings time barred. The existence of a mistake as a verified fact is not the issue (paras 199 202). (16) Authorities concerned with the meaning of reasonable diligence in section 32(1) also indicate that it is concerned with the steps which a person could reasonably be expected to take before issuing a claim (para 203 above). The standard of reasonable diligence is how a person carrying on a business of the relevant kind would act, on the assumption that he desired to know whether or not he had made a mistake, if he had adequate but not unlimited staff and resources and was motivated by a reasonable but not excessive sense of urgency. The question is not whether the claimant should have discovered the mistake sooner, but whether he could with reasonable diligence have done so. The burden of proof is on the claimant. He must establish on the balance of probabilities that he could not have discovered the mistake without exceptional measures which he could not reasonably have been expected to take (para 209). (17) Authorities concerned with the pre 1939 equitable rule on which section 32(1) is based also support the view that the limitation period runs from the time when the claimant discovers the facts essential to his cause of action, and not from the date of a judicial decision supportive of his claim (paras 204 208 above). (18) In adopting a different approach to the discoverability of mistakes of law from that which applies to mistakes of fact, the decision in Deutsche Morgan Grenfell perpetuates the problem of distinguishing between the two, contrary to the intended effect of the decision in Kleinwort Benson (para 195 above). It follows, for all these reasons, that even if it is accepted that Kleinwort Benson was correctly decided, Deutsche Morgan Grenfell [2007] 1 AC 558, so far as it concerned limitation, was not. Discussion of Kleinwort Benson We have not yet considered a more fundamental issue: the argument that an action for the recovery of money paid under a mistake of law, unlike an action for the recovery of money paid under a mistake of fact, is not an action for relief from the consequences of a mistake within the meaning of section 32(1)(c), and therefore falls outside the ambit of the discoverability test. This argument challenges the correctness of the decision in Kleinwort Benson [1999] 2 AC 349, so far as it related to limitation. As we have explained, at the time when section 26(c) of the 1939 Act was enacted, and equally at the time when section 32(1)(c) of the 1980 Act was enacted, the only recognised actions for which a period of limitation was prescribed, and which fitted the description of an action for relief from the consequences of a mistake, were common law actions based on mistakes of fact, such as actions for the recovery of money paid under a mistake of fact, and analogous equitable claims also based on mistakes of fact. In our opinion, that is the effect of the pre 1939 authorities, notwithstanding the contrary views expressed in Kleinwort v Benson and discussed at paras 149 152 and 159 161 above. Although there were some recognised forms of equitable relief from the consequences of mistakes of law, such as rectification, they were not subject to statutory limitation either directly or by analogy prior to 1939; and that position was preserved by the 1939 and 1980 Acts: see paras 117 118, 123, 129, 131 and 142 above. When the House of Lords recognised in Kleinwort Benson [1999] 2 AC 349 the existence of an action for the recovery of money paid under a mistake of law, it recognised another action which fitted the description of an action for relief from the consequences of a mistake, if those words are construed according to their ordinary meaning. The question nevertheless arises whether that construction is in accordance with the purpose of the provision. It is debatable, but ultimately does not matter, whether this question should be approached by focusing specifically on the always speaking principle, as counsel for the bank did in Kleinwort Benson. That somewhat vague expression is commonly used in connection with statutory terms which change in their connotations over time, such as family (Fitzpatrick v Sterling Housing Association Ltd [2001] 1 AC 27). The case of R v Ireland [1998] AC 147, cited by counsel in Kleinwort Benson, was of a similar kind. The question was whether the words bodily harm, in the Offences Against the Person Act 1861, should be interpreted in the light of contemporary knowledge as applying to psychiatric injury. The always speaking principle is also invoked where the question arises whether a statutory expression should be interpreted as including a novel invention or activity which does not naturally fall within its meaning, and was not envisaged at the time of its enactment, but which may nevertheless fall within the scope of its original intention. Examples of the latter kind of case include Victor Chandler International Ltd v Customs and Excise Comrs [2000] 1 WLR 1296, which concerned the question whether a teletext fell within the scope of the statutory term document, and R (Quintavalle) v Secretary of State for Health [2003] UKHL 13; [2003] 2 AC 687, which concerned the question whether an embryo created by the novel technique of cloning, rather than by the traditional method of fertilisation, fell within the scope of the statutory expression embryo where fertilisation is complete. Another well known example is the case of Royal College of Nursing of the United Kingdom v Department of Health and Social Security [1981] AC 800, where the question was whether the statutory expression a pregnancy terminated by a registered medical practitioner should be interpreted as including a novel technique of termination which was carried out by a nurse acting on the instructions of a medical practitioner. The question in the present case is not of precisely the same kind. The cause of action recognised in Kleinwort Benson undoubtedly falls within the scope of the language used in section 32(1)(c), if that language is given its ordinary meaning. A mistake of law was understood to be a mistake in 1939, and in 1980, just as much as it is today. Nevertheless, the decision taken in Kleinwort Benson to recognise a cause of action for the recovery of money paid under a mistake of law could not have been foreseen in 1939 or 1980. The question therefore arises whether section 32(1)(c) applies to those unforeseen circumstances: a question which ultimately boils down to the same issue as arises when considering the always speaking principle, and indeed in all cases concerned with statutory interpretation: what is the construction of the provision which best gives effect to the policy of the statute as enacted? A number of points can be made in support of a construction which would accommodate mistakes of law. First, and most importantly, the purpose of section 32(1)(c) is to postpone the commencement of the limitation period in respect of a claim for relief from the consequences of a mistake where, as a result of the mistake, the claimant could not reasonably have known of the circumstances giving rise to his cause of action at the time when it accrued. The effect of section 32(1)(c) is that the time when the claimant could not reasonably have known about those circumstances does not count towards the limitation period. Those were also the rationale and effect of the equitable rule applicable prior to 1939, and of the recommendation made in the Report of the Law Reform Committee. The equitable rule did not apply where the claimant had been aware of all the relevant circumstances at the time when his cause of action accrued and had merely been ignorant that those circumstances gave rise to a cause of action: see para 122 above. That aspect was also reflected in the Committees Report: see paras 126 and 127 above. As we have explained, when section 32(1) was enacted, it could only have applied to claims in respect of mistakes of fact, since those were the only mistakes which gave rise to an action for relief from the consequences of a mistake. However, the law subsequently developed in Kleinwort Benson so as to allow claims to be brought for relief from the consequences of mistakes of law. That development has to be addressed in the law of limitation in a way which is consistent with the legislative policy of the 1980 Act and avoids discord in the law, as Lord Hoffmann explained in Johnson v Unisys [2003] AC 518 (para 157 above). In principle, it is consistent with the purpose of section 32(1)(c) for it to apply to claims brought on that basis. The rationale of section 32(1) to postpone the commencement of the limitation period in respect of a claim for relief from the consequences of a mistake where, as a result of the mistake, the claimant could not reasonably have known of the circumstances giving rise to his cause of action at the time when it accrued applies with equal force to a mistake of law as to a mistake of fact. To construe the provision in a sense which excluded such claims would not be consistent with Parliaments intention to relieve claimants from the necessity of complying with the time bar which would apply in the absence of section 32(1), at a time when they could not reasonably be expected to do so. Nor would such a construction reflect the ordinary meaning of the language which Parliament used: a mistake of law is, and always was, a mistake in the ordinary sense of the word. For similar reasons, it would not be consistent with the intention of Parliament to exclude deemed mistakes from the ambit of section 32(1)(c), even assuming (contrary to the conclusion reached at paras 175 176 above) that a principled and workable distinction could be drawn between deemed and actual mistakes. There would, in the first place, be no warrant in the language of the provision for drawing such a distinction; and the court cannot effectively amend the legislation under the guise of interpretation. Furthermore, to draw such a distinction would undermine the purpose of the provision: a provision which, as explained earlier, has its origins in equity. The person who has made a deemed mistake is no less deserving of an extension of the time permitted for bringing a claim, until he could have discovered his mistake, than a person who has made a mistake in circumstances where, on any view, the law has remained unchanged. In the latter situation, the person could at least have discovered his mistake at the time if he had consulted a lawyer. It is also relevant to note that there is some authority in other jurisdictions accepting that provisions equivalent to section 32(1)(c) apply to restitutionary claims based on mistakes of law. The question arose in an Australian case in relation to section 27(c) of the Limitation of Actions Act (Vic), which is materially identical to section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act. In the case of Paciocco v Australia and New Zealand Banking Group Ltd [2014] FCA 35; (2014) 309 ALR 249, Gordon J held at para 365 that the concept of a mistake, within the meaning of section 27(c), included a mistake of law. On appeal, the Full Court expressed their agreement with that conclusion, obiter: [2015] FCAFC 50; (2015) 236 FCR 199, paras 192, 396 and 398. In particular, Besanko J considered the question whether the provision should be construed as what is sometimes termed a fixed time provision, which must be construed in the sense in which it would have been applied at the time of its enactment, or as a provision which is always speaking and can be given an ambulatory construction. He concluded that the latter view was to be preferred. On a further appeal to the High Court of Australia, only Nettle J considered the point, again obiter, and agreed with the views expressed in the courts below: [2016] HCA 28; (2016) 90 ALJR 835, para 374. Although the point does not appear to have been specifically considered elsewhere, that conclusion is consistent with the application, in a number of other jurisdictions, of provisions materially identical to section 32(1)(c) of the 1980 Act to claims based on a mistake of law. That can be seen, for example, in the Hong Kong case of Ho Kin Man v Comr of Police [2012] HKCFI 1064; [2013] 1 HKC 13, and in a number of decisions of the Supreme Court of India, including Assistant Engineer (D1) Ajmer Vidyut Vitran Nigam Ltd v Rahamatullah Khan Alias Rahamjulla [2020] INSC 188. Nevertheless, it is necessary to consider whether construing section 32(1)(c) in that way would have other consequences which would be contrary to Parliaments intention. As we have explained, the reasoning in Deutsche Morgan Grenfell would indeed have that effect, since the mistake of law was, according to that reasoning, undiscoverable until it had been established by an authoritative judicial decision, which might not occur until the proceedings in question had been completed: a result which defeats the object of limitation. That is not, however, the effect of section 32(1)(c) if it is construed in accordance with the test proposed in Deutsche Morgan Grenfell [2007] 1 AC 558 by Lord Brown, and consistently with the approach established in Haward v Fawcetts [2006] 1 WLR 682, AB v Ministry of Defence [2013] 1 AC 78 and Paragon Finance plc v DB Thakerar & Co. Even so, there are a number of arguments which need to be considered: notably, that to construe section 32(1)(c) as applying to mistakes of law would be destructive of legal certainty, and therefore contrary to the policy of Parliament; that previous decisions have indicated that section 32(1) should be restrictively construed; and that to treat mistakes of law as falling within the scope of section 32(1)(c) would undermine this courts ability to reverse decisions of the Court of Appeal and to depart from its own decisions in accordance with the 1966 Practice Statement (Practice Statement (Judicial Precedent) [1966] 1 WLR 1234). In relation to legal certainty, Lord Goff was correct in stating in Kleinwort Benson [1999] 2 AC 349 at p 389 that the cause of action in a case such as the present may be extended for an indefinite period of time; and Lord Hope was right to acknowledge at p 417 that [t]he objection may be made that time may run on for a very long time before a mistake of law could have been discovered, and that [i]t may also be said that in some cases a mistake of law may have affected a very large number of transactions, and that the potential for uncertainty is very great. In that regard, it is relevant to note that mistakes of law differ from mistakes of fact in that the facts are fixed at the relevant point in time, even if they may remain undiscovered until much later, whereas the law can be altered from time to time by judicial decisions. For these reasons, it can be argued with force that to apply section 32(1)(c) to mistakes of law undermines the basic purpose of limitation statutes, namely putting a certain end to litigation and preventing the resurrection of old claims, as the Law Reform Committee stated at paragraph 7 of its Report. A number of points can be made in response. First, section 32(1)(c), like the equitable rule which preceded it, necessarily qualifies the certainty otherwise provided by limitation periods. It means that the 1980 Act does not pursue an unqualified goal of barring stale claims: its pursuit of that objective is tempered by an acceptance that it would be unfair for time to run against a claimant before he could reasonably be aware of the circumstances giving rise to his right of action. Even as it applies to mistakes of fact, section 32(1)(c) (like sections 14 and 14A) has the consequence that the cause of action may be extended for an indefinite period of time. The point can be illustrated by the facts of In re Baronetcy of Pringle of Stichill [2016] UKPC 16; [2016] 1 WLR 2870, where DNA evidence established in 2016 that a person born in 1903 had wrongly succeeded to a title in 1919, with the effect of impugning the title inherited by successive generations of his descendants. The position would have been the same if he had been born centuries earlier. Secondly, the uncertainty which is liable to result from the application of section 32(1)(c) to mistakes of law should not be exaggerated. In most cases where a mistake of law is made, the application of section 32(1)(c) will not produce disruptive consequences. That is because the mistake will normally have been discoverable at the time of the transaction in question by the exercise of reasonable diligence, by obtaining legal advice. The commencement of the limitation period will not, therefore, be postponed. Cases where advice as to the correct state of the law was not reasonably available at the time of the transaction, and where a right to restitution might in principle be available, are likely to be unusual. One example is the class of cases where the mistake of law is the retrospective result of a judicial decision which upsets an established rule of law on the basis of which payments have been made: what Lord Hoffmann described as a deemed mistake. Cases of that kind should, however, be highly unusual, as courts do not often overturn established rules of law, and in considering whether to do so they attach particular importance to the security of settled transactions. The present proceedings, and the other proceedings mentioned in paras 5 and 6 above, are not however concerned with deemed mistakes but with actual mistakes arising from a unique set of circumstances: the UKs entry into the EU, with supranational laws which had to be given priority over domestic statutes, resulting in the gradual application of the EU principles of freedom of establishment and free movement of capital in the field of taxation, and the eventual realisation that UK tax legislation might be incompatible with those principles. Such circumstances are of a wholly exceptional nature. Thirdly, to the extent that this objection to the result of Kleinwort Benson is based on policies attributed to Parliament, we would refer to the discussion of the intention of Parliament at paras 219 222 above. Furthermore, it is reasonable, 22 years after the decision in Kleinwort Benson [1999] 2 AC 349, to note that Parliament has evinced no concern about its consequences, except in relation to tax. Recommendations for reform were made by the Law Commission in a Report published almost 20 years ago (Limitation of Actions (2001) (Law Com No 270), HC 23), and were accepted in principle by the Government in 2002 (Hansard, HL Deb, 16 July 2002, col 127 WA), but in 2009 the Government announced that reform of the law of limitation would not after all be taken forward (Hansard, HC Deb, 19 November 2009, col 13 WS). In relation to tax, the legislative measures introduced in section 320 of the FA 2004 have succeeded in protecting public revenues prospectively with effect from 8 September 2003. In relation to tax levied before that date, Parliament acted to mitigate the impact on public revenues in the F(No 2)A 2015 (para 56 above). That impact was further reduced, dramatically, by the decision in Prudential [2019] AC 929, and will be reduced further if this court departs from Deutsche Morgan Grenfell and adopts instead the interpretation of section 32(1) which was explained in para 209 above. With the exception of claims in relation to tax that was unlawful under EU law, there has been no noticeable surge of claims for restitution of money paid under mistakes of law. Were such claims to be made after a long lapse of time, the defence of change of position might well be available, as it has been held to be in the present proceedings (FII (CA) 1 [2010] STC 1251), albeit not made out on the facts because of the absence of a clear relationship between tax receipts and public expenditure (FII (CA) 2 [2017] STC 696). Another argument for holding that section 32(1) should not be interpreted as applying to mistakes of law is that the courts have made clear the risks involved in giving the provision a broad interpretation, in Phillips Higgins [1954] 1 QB 411 and FII (SC) 1 [2012] 2 AC 33: see paras 41 and 139 above. In those cases, however, what was being rejected was an attempt to extend section 32(1)(c) to cases where mistake was not an essential ingredient of the cause of action, but where the claimant had merely been ignorant that he had a cause of action: an extension which is not being suggested in this judgment, and which would be inconsistent with the Law Reform Committees intention that the mere fact that a plaintiff is ignorant of his rights is not to be a ground for the extension of time (para 126 above). That is not, however, a reason for excluding from the scope of section 32(1) cases where a mistake of law is an essential ingredient of the cause of action. That is because, in such cases, ignorance that he made a mistake renders the claimant unaware of one of the facts giving rise to his cause of action, just as a claimant who is ignorant that he made a mistake of fact is unaware of one of the facts giving rise to a cause of action based on a mistake of fact. In neither case is the limitation period postponed merely because the claimant is ignorant of his rights. Were matters otherwise, FII (SC) 1 could hardly have been decided as it was, since the claim based on Kleinwort Benson would then have been struck at just as much as the claim based on Woolwich [1993] AC 70. A closely related argument is that discoverability is concerned with the facts which are essential to a cause of action, and not with their legal consequences. The principle is well illustrated by Knight Bruce LJs statement in Stafford v Stafford (1857) 1 De G & J 193, 202 that [g]enerally, when the facts are known from which a right arises, the right is presumed to be known, and by Sir Richard Collins MRs judgment in Molloy 94 LT 756 (para 206 above). As we have explained, the reforms recommended by the Law Revision Committee were not intended to impinge upon that principle. The principle is reflected in the terms of sections 14(1)(d) and 14A(9) of the 1980 Act, which specifically provide that knowledge that the relevant acts or omissions involved negligence or other breaches of duty is irrelevant. Although Parliament did not set out a corresponding provision in section 32(1), the same principle nevertheless permeates section 32(1) just as much as it does the remainder of the 1980 Act. It might be argued, on that basis, that mistakes of law fall outside the ambit of section 32(1)(c). The cause of action created by Kleinwort Benson depends on the claimant having had a mistaken understanding of the law at the time when the payment was made, and on a causal relationship between that mistaken understanding and the making of the payment. Those are the relevant facts, as discussed in para 207 above. Once those facts are or could with reasonable diligence be discovered, the limitation period begins to run. It is not postponed because the claimant, with actual or constructive knowledge of those facts, is ignorant that they give rise to an entitlement to restitution. In those circumstances, to treat the cause of action recognised in Kleinwort Benson as falling within the scope of section 32(1) involves no breach of the general principle that when the facts are known from which a right arises, the right is presumed to be known. Nor, recalling Sir Richard Collins MRs judgment in Molloy, is there any inconsistency with his statement that: I do not think that the policy of the Statute of Limitations is that it is not to begin to run until a person has satisfied himself as to the exact legal inferences to be drawn from a number of facts which he has perfectly ascertained. Nor is there any contradiction of the Law Revision Committees statement that the mere fact that a plaintiff is ignorant of his rights is not to be a ground for the extension of time. The limitation period is not postponed until the claimant has discovered his rights. It is postponed until he has discovered (or could with reasonable diligence have discovered) that he made a payment at some point in the past because of a mistaken understanding of the law as it then stood. A further argument is that to treat mistakes of law as falling within the scope of section 32(1)(c) would undermine this courts ability to reverse decisions of the Court of Appeal or to depart from its own decisions in accordance with the 1966 Practice Statement, since to do so might trigger widespread liabilities under the law of restitution. The first point to be made in response is that Parliament cannot have had the Practice Statement in mind in 1939. Nor can it bear on the interpretation of a 1939 provision which is re enacted in a consolidation statute in 1980, since no change in meaning is taken to have been intended. The Practice Statement has to be operated within a framework established by statute, including the 1939 and 1980 Acts, rather than the Practice Statement affording guidance as to how those statutes should be interpreted. Secondly, as we have indicated, courts, including this court, do not often overturn settled rules of law, and in considering whether to do so they attach particular importance to the security of settled transactions. The decisions in Kleinwort Benson and Sempra Metals [2008] 1 AC 561 were exceptional in their readiness to overturn centuries of authority, as the House of Lords enthusiastically adopted the theory of unjust enrichment. Those decisions were criticised by this court in Prudential [2019] AC 929 at para 63 because of their disregard of the need for judicial development of the law to be justifiable by reference to existing legal principles. Normally, as was stated in a recent judgment of this court, [i]n order to preserve legal certainty, judicial developments of the common law must be based on established principles, building on them incrementally rather than making the more dramatic changes which are the prerogative of the legislature: R (Elgizouli) v Secretary of State for the Home Department [2020] UKSC 10; [2020] 2 WLR 857, para 170. Considering the Practice Statement in particular, it states specifically that the court will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property, and fiscal arrangements have been entered into. This court, like the House of Lords before it, has followed that practice. Thirdly, the potential problem which concerned the minority in Kleinwort Benson is significantly alleviated if the approach to discoverability which was adopted in Deutsche Morgan Grenfell is departed from, as suggested above. For example, Lord Browne Wilkinson posited at p 358 a case where the law was established by a decision of the Court of Appeal in 1930. In 1990 the claimant made a payment which was only due if the Court of Appeal decision was good law. In 1997 the House of Lords overruled the decision of the Court of Appeal. Lord Browne Wilkinson commented at p 359: [A]t that date [the date of the payment] there could be no question of any mistake. It would not have been possible to issue a writ claiming restitution on the grounds of mistake of law until the 1997 decision had overruled the 1930 Court of Appeal decision. Therefore a payment which, when made, and for several years thereafter, was entirely valid and irrecoverable would subsequently become recoverable. This result would be subversive of the great public interest in the security of receipts and the closure of transactions. Applying the approach to discoverability discussed above, however, it does not follow from the fact that the Court of Appeal decision was overruled in 1997 that it was only then that a writ could have been issued claiming restitution. The proceedings before the House of Lords, in which the decision of the Court of Appeal was challenged, must themselves have been commenced by issuing a writ some years earlier. Why could Lord Browne Wilkinsons hypothetical claimant not have done the same? It does not follow from the fact that the House of Lords reached its decision in 1997 that the hypothetical claimant could not have discovered his mistake before then. Furthermore, as was explained at para 232 above, in considering whether the overturning of a precedent might result in restitutionary claims going back for long periods of time, it is necessary to bear in mind the defence of change of position. The circumstances which led to the rejection of that defence in the present case the absence of any demonstrable connection between the tax paid and public expenditure were unusual. In the event, such claims have not been a notable feature of the period since Kleinwort Benson was decided. Kleinwort Benson: Summary Taking stock of the discussion of Kleinwort Benson [1999] 2 AC 349, the position can be summarised as follows: (1) The decision in Kleinwort Benson, that claims for the restitution of money paid under a mistake of law fall within the ambit of section 32(1)(c) of the 1980 Act, was not supported by convincing reasoning (paras 148 161 above). (2) When section 32(1)(c) was enacted, it was not contemplated that it might extend to actions for the restitution of money paid under a mistake of law: no such action was recognised at that time. (3) Nevertheless, giving the words used in section 32(1)(c) their ordinary meaning, they include such actions. That is not, however, conclusive. The provision has to be construed consistently with its purpose. (4) The purpose of section 32(1)(c) is to postpone the commencement of the limitation period in respect of a claim for relief from the consequences of a mistake where, as a result of the mistake, the claimant could not reasonably have known of the circumstances giving rise to his cause of action at the time when it accrued (para 220 above). (5) If, after the enactment of section 32(1)(c), the law developed so as to allow actions to be brought for relief from the consequences of a mistake of law, then in principle it would be consistent with that purpose for section 32(1)(c) to apply to such claims. To construe the provision in a sense which excluded such claims would not be consistent with Parliaments intention to relieve claimants from the necessity of complying with the time bar which would apply in the absence of section 32(1), at a time when they could not reasonably be expected to do so (para 221 above). (6) That argument applies equally to deemed mistakes of law as to actual mistakes, even assuming that a principled and workable distinction can be drawn between the two (para 222 above). (7) The construction of section 32(1)(c) as applying to mistakes of law as well as of fact also gains some support from the case law of other jurisdictions (paras 223 224 above). (8) On the other hand, it can be argued that such a construction of section 32(1)(c) undermines the primary policy of the 1980 Act as a whole, namely to put a certain end to litigation (para 227 above). (9) A number of points can be made in answer to that argument: (i) Section 32(1)(c) necessarily qualifies the certainty otherwise provided by limitation periods, in recognition of the unfairness of allowing time to run against a claimant before he could reasonably be aware of the circumstances giving rise to his right of action (para 228 above). (ii) Nevertheless, in most cases where a mistake of law is made, the application of section 32(1)(c) will not produce disruptive consequences. The correct state of the law is normally ascertainable at the time of a transaction. Cases where it is not, and where a right to restitution might in principle be available, are likely to be unusual. In particular, cases where the courts upset an established rule of law with retrospective effect, so as to affect settled transactions, should be highly unusual. The present proceedings arise from a unique set of circumstances (para 229 above). (iii) The policy consequences have not prompted legislation, except in relation to tax. On the contrary, the Government has declined to implement reforms recommended by the Law Commission (para 230 above). (iv) In relation to tax, the consequences of Kleinwort Benson have been addressed by Parliament, and have also been mitigated by subsequent judicial decisions. They will be mitigated further if this court departs from Deutsche Morgan Grenfell (para 231 above). (v) Other than in relation to tax, the decision in Kleinwort Benson has not resulted in a surge of stale claims. Were such claims to be made, a defence of change of position might well be available (para 232 above). (10) It can also be argued that section 32(1)(c) should be restrictively construed, consistently with dicta in Phillips Higgins and FII (SC) 1. However, those cases were concerned with attempts to extend section 32(1)(c) to cases where mistake was not an essential ingredient of the cause of action, but where the claimant had merely been ignorant that he had a cause of action. Claims for the restitution of money paid under a mistake of law do not fall into that category. On the contrary, such a claim was regarded as unobjectionable in FII (SC) 1 (para 233 234 above). (11) It can also be argued that to apply section 32(1)(c) to claims for restitution of money paid under a mistake of law contravenes the principle that ignorance of the law is not a ground for the extension of the limitation period. However, that is a mistaken view. The commencement of the limitation period is postponed while the claimant is unaware of the fact that he had a defective understanding of the law at the time when he made the payment. It is not postponed because he is ignorant that, in those circumstances, he has a right to restitution (paras 234 237 above). (12) It can also be argued that to treat mistakes of law as falling within the scope of section 32(1)(c) would undermine this courts ability to reverse decisions of the Court of Appeal or to depart from its own decisions. The force of that argument appears to us to be diminished, however, when regard is had (a) to the importance which this court attaches in any event to legal certainty and to the security of settled transactions, (b) to the significance of adopting the approach to discoverability discussed above, and (c) to the importance of the defence of change of position (paras 239 241 above). (13) The claimant seeking restitution of money paid under a mistake of law does not, therefore, come within the scope of section 32(1) because he is unaware of his rights. He comes within it where, and during the period that, he is unaware that his understanding of the law at some point in the past was defective (the mistake in question being one which forms an essential element of a cause of action). He ceases to come within it at the point when he knows, or could with reasonable diligence know, that he made such a mistake with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence; or, as Lord Brown put it in Deutsche Morgan Grenfell, he discovers or could with reasonable diligence discover his mistake in the sense of recognising that a worthwhile claim arises. For these reasons, although there is undeniable force in the argument that section 32(1)(c) should be construed as being confined to mistakes of fact, the balance of the arguments in our view favours giving the language of section 32(1)(c) its ordinary meaning, so that it is applicable also to actions for relief from the consequences of a mistake of law. That approach to the construction of the provision best gives effect to Parliaments intention to relieve claimants from the necessity of complying with a time limit at a time when they cannot reasonably be expected to do so, and does not have unacceptable consequences for the legal certainty which the 1980 Act is primarily designed to protect. That is only so, however, if the court departs from the reasoning in Deutsche Morgan Grenfell [2007] 1 AC 558, since that reasoning would defeat Parliaments intention. On that basis, we consider that this court should adhere to the decision in Kleinwort Benson, so far as relating to limitation. The Practice Statement of 26 July 1966 We must also give due weight to the importance of maintaining legal certainty by the preservation of precedent. The use of precedent, as the 1966 Practice Statement acknowledges, is an indispensable foundation upon which judges decide what the law is and apply the law in individual cases. It is, in Lord Goffs words in Kleinwort Benson (p 379), the cement of legal principle providing stability to the common law. As is well known, this court has held that the Practice Statement has effect as much as it did before the Appellate Committee in the House of Lords: Austin v Southwark London Borough Council [2010] UKSC 28; [2011] 1 AC 355, para 25 per Lord Hope. It is necessary therefore to consider with care whether it is appropriate for this court to depart from prior decisions of the House of Lords. It is unquestionable that there is a general public interest in certainty in the law. It is not a sufficient basis for this court to reverse a previous decision which it or the House of Lords has made that this court considers that a previous decision was wrong. As Lord Reid stated in R v Knuller (Publishing, Printing and Promotions) Ltd [1973] AC 435, 455, In the general interest of certainty in the law we must be sure that there is some very good reason before we so act. Lord Reid explained his understanding of the rationale of the Practice Statement in R v National Insurance Comr, Ex p Hudson [1972] AC 944, 966 when he stated that there were a number of reported decisions which were impeding the proper development of the law or which led to results which were unjust or contrary to public policy. Some situations, such as a fundamental change in circumstances, or where a decision has resulted in unforeseen serious injustice, have been recognised as permitting a departure from precedent: Rees v Darlington Memorial NHS Trust [2003] UKHL 52; [2004] 1 AC 309, para 31 per Lord Steyn. In Horton v Sadler [2006] UKHL 27; [2007] 1 AC 307, para 29, Lord Bingham considered that too rigid adherence to precedent might cause injustice in a particular case and unduly restrict the development of the law. But, in the same paragraph, he acknowledged that the power had been exercised rarely and sparingly. In view of this well established approach to precedent, would it be right for this court to depart from Kleinwort Benson or Deutsche Morgan Grenfell in relation to the law of limitation on this appeal? Kleinwort Benson effected a radical change in the law of restitution by opening up claims for the recovery of money paid under a mistake of law. By applying section 32(1)(c) of the 1980 Act to such claims it created the potential that a cause of action may be extended for an indefinite period of time and thereby undermine security of transactions, as each of the majority, Lord Goff, Lord Hoffmann and Lord Hope, expressly recognised (paras 154, 157 and 162 above). The minority, Lord Browne Wilkinson and Lord Lloyd, saw this potential as a basis for leaving the proposed change of law to Parliament (para 163 above). But there has been little evidence of any surge of claims for restitution of money paid under mistakes of law. The most significant claims have been in the field of taxation, such as the various group litigations which we have mentioned in paras 5 and 6 above. Those challenges have exposed the Exchequer to claims which go back many years and involve very large sums of money. But Parliament has intervened, as we have explained, by enacting section 320 of the FA 2004 which, while ineffective to undermine claims under EU law retrospectively, has protected public revenues prospectively with effect from 8 September 2003 (paras 10 and 14 above). There is therefore no apparent danger of similarly large claims arising in future in the field of taxation which have the potential to disrupt the fiscal planning of the executive. In paras 242 and 243 above, we have summarised our position in relation to Kleinwort Benson. The considerations stated there and those in para 248 above suggest to us that preserving the authority of Kleinwort Benson would not be contrary to principle or give rise to serious uncertainty in the law. Upholding Kleinwort Benson would be unlikely to give rise to serious injustice in individual cases in the future, and it would not impede the proper development of the law. On the other hand, from our discussion which we have summarised in para 213 above, it is clear that the decision in Deutsche Morgan Grenfell [2007] 1 AC 558 on the question of discoverability in section 32(1)(c) has very unfortunate consequences. Several matters are of particular relevance to the application of the Practice Statement. The decision defeats the purpose of limitation, and in so doing appears to be contrary to the intention of Parliament in enacting the 1939 and 1980 Acts. It creates incoherence in interpretation both within section 32(1) and between that section and analogous provisions of the 1980 Act. It creates the legal paradox to which we have referred (paras 173 174 above). It also perpetuates the problem of distinguishing between matters of fact and matters of law, a result which, as we have discussed, is contrary to the intended effect of Kleinwort Benson [1999] 2 AC 349. In so doing, it impedes the coherent development of the law. It is necessary to balance against those considerations the possibility that a departure from Deutsche Morgan Grenfell, in relation to discoverability, will itself result in some claims to restitution. Such claims may be made on the basis that payments have been made under a mistake of law, because the claims for restitution, which that decision supported and which led to those payments, were, on a proper understanding of the law, already subject to a limitation defence on the interpretation of section 32(1)(c) which we favour. That would be unfortunate. But we would not expect the number of claims to be significant for two reasons. First, there has not been a surge of claims for restitution of money paid under mistakes of law, following the Kleinwort Benson decision, outside the tax litigation to which we have referred. Secondly, the recipients of such payments made in restitution may have a defence of change of position if the payer, such as the Revenue, were to seek to recover them. We are not persuaded that the possibility of such claims should deter us from departing from Deutsche Morgan Grenfell in relation to discoverability if that is the only way in which to promote coherence in the law of limitation. When the Appellate Committee determined the appeal in Deutsche Morgan Grenfell [2007] 1 AC 558 in 2006, Lord Hope (para 68) suggested that the legislature could intervene to stop time running indefinitely in all mistake cases, if there was a problem. There was then some prospect that Parliament would consider a reform of the law of limitation of actions. As we have explained (para 230 above), the Government initially accepted the Law Commissions recommendations to reform the law of limitation and proposed to legislate, but by 2009 it had announced that it would not take forward those reforms. There is therefore now no prospect that Parliament will enact a legislative solution to remove the anomalies which the Deutsche Morgan Grenfell judgment has created. In these circumstances, we are persuaded that this is an appropriate case in which to depart from the decision in Deutsche Morgan Grenfell in relation to discoverability in section 32(1)(c) of the 1980 Act. Application to the present proceedings This appeal is brought against the decision of the Court of Appeal in FII (CA) 2 [2017] STC 696, and this judgment is concerned with the appeal only in so far as it relates to Issue 28: the issue of limitation. As was explained at para 54 above, the decision of the Court of Appeal on Issue 28 was based on the application of the approach established in Deutsche Morgan Grenfell. For the reasons we have explained, that approach cannot be upheld, and the appeal on Issue 28 must therefore be allowed. This court cannot, however, determine in the abstract the point in time when the test claimants could with reasonable diligence have discovered, to the standard of knowing that they had a worthwhile claim, that they had paid tax under a mistaken understanding that they were liable to do so. That depends on an examination of the evidence. As we have explained, EU law, in relation to tax regimes which discriminated between companies based in one member state and companies based in another, developed through a series of judgments of the Court of Justice, including Verkooijen [2000] ECR I 4071 (2000), Lenz [2004] ECR I 7063 (2004) and Manninen [2005] Ch 236 (2004), discussed at paras 24 and 33 34 above, Hoechst [2001] Ch 620 (2006) and FII (CJEU) 1 [2012] 2 AC 436 (2006). Each of those judgments was itself the result of a claim made some years earlier. In Hoechst, for example, the claim was filed in 1995, 11 years before the judgment of the Court of Justice. DMG was aware of the claim almost immediately, and it was for that reason that, in Deutsche Morgan Grenfell, Lord Brown considered that time began running for DMG in July 1995. But the date when the claimant became aware of another claim, and appreciated its potential implications for its own situation, is not conclusive, if a claimant acting with reasonable diligence could have discovered that it had a worthwhile claim at an earlier time. Equally, the answer to the question arising under section 32(1) does not depend upon the characteristics of the particular claimant: whether, for example, it was inclined to await further developments, and to allow other taxpayers to make the running. The standard is could, as Millett LJ emphasised in Paragon Finance (para 203 above). And the test is objective, as Millett LJ explained in the same passage of his judgment, and as Lord Walker made clear in FII (SC) 1 [2012] 2 AC 33, when he referred (para 48 above) to the time when a well advised multi national 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. In the circumstances of the present proceedings, if the date of commencement of the limitation period requires to be judicially determined, that matter will have to be decided by the High Court, after the parties have had an opportunity to amend their pleadings. Conclusion We would allow the appeal on Issue 28 and would make an order remitting that issue to the High Court to allow the parties to amend their pleadings on discoverability of the mistake and to determine the date of commencement of the limitation period. LORD BRIGGS AND LORD SALES: (dissenting) (with whom Lord Carnwath agrees) In large measure we agree with the judgment of Lord Reed and Lord Hodge, which sets out the issues and explains this litigation and the course of the previous litigation in this area with such admirable clarity. The issue on which we find ourselves in respectful disagreement is whether this court should overrule Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 as regards the interpretation of section 32(1)(c) of the Limitation Act 1980 and hold that it does not apply in relation to payments made on the basis of a mistake of law. In our view, we should do so. In outline, we have reached that view for three main reasons. First, we are convinced that the House of Lords was plainly wrong in Kleinwort Benson to interpret section 32(1)(c) as extending to mistakes of law. Secondly, we do not consider that the large inroads upon the overall purpose of the Limitation Act in undermining legal certainty in relation to settled transactions, recognised by all their lordships in that case, are sufficiently addressed by the limited departure from Deutsche Morgan Grenfell Group plc v Inland Revenue Comrs [2006] UKHL 49; [2007] 1 AC 558 which the majority propose. The outcome will, we fear, place a serious brake upon judicial modernisation of the common law which we are sure Parliament cannot have intended. This issue has to be confronted in this court, because the hopes of their lordships in Kleinwort Benson that Parliament would legislate to deal with the problem have not been fulfilled. Thirdly, we have serious reservations about whether the test proposed by the majority, based upon Lord Browns dissenting speech in Deutsche Morgan Grenfell, will prove to be workable in practice. It is not in our view plausible to infer that Parliament intended that section 32(1)(c) should be read as being subject to such a test. Although the 1980 Act is a consolidation statute, in construing section 32(1)(c) the House of Lords in Kleinwort Benson and this court in Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs) [2012] UKSC 19; [2012] 2 AC 337 (FII (SC) 1) found it necessary to look at the background and intended effect of the predecessor provision in the Limitation Act 1939, section 26(c). As was made clear in Farrell v Alexander [1977] AC 59, where there is significant doubt about the meaning and effect of a provision in a consolidation statute it is appropriate to investigate the meaning and effect of the earlier legislation from which it is derived. Lord Reed and Lord Hodge set out the law as regards limitation of actions as it stood prior to 1939 at paras 103 to 122 above. In summary, statute set out periods of limitation for claims arising at common law while generally equity applied the doctrines of laches (which included reference to statutory limitation periods in relation to equitable claims which were analogous to claims at law) and acquiescence. For the purposes of those doctrines, in certain circumstances time did not run where a claimant was labouring under a mistake until the mistake was discovered, or could with reasonable diligence have been discovered. A claim would arise at common law where money was paid to another by reason of a mistake of fact by way of an action for money had and received, which had historically been vindicated using the old form of action known as indebitatus assumpsit. The time limit for bringing such a claim was six years from the date of the payment: Baker v Courage & Co Ltd [1910] 1 KB 56. It had been established by the case of Bilbie v Lumley (1802) 2 East 469 that this form of action was not available, and hence this type of claim did not arise, to claim back money paid under a mistake of law. By 1939 this was a well established rule of law. On the other hand, equity never provided relief in relation to money paid away by reason of a simple mistake, whether of law or fact, without more. Equity granted relief to vindicate certain underlying property rights, or rights arising under a trust or in relation to the execution of a will. Mistake, including in some cases a mistake of law, was just a relevant factor to be taken into account in deciding whether equity would intervene to vindicate those rights in a particular case. As Lord Reed and Lord Hodge observe (para 119), in cases of fraud the equitable rule was that time would not run by analogy with statute until the claimant could with reasonable diligence have discovered the fraud, since it would be unconscionable for a defendant in such a case to rely on the statute to defeat the claim. Clearly, that reasoning does not apply in a case where a claimant labours under a mistake which the defendant has done nothing to induce. But in Brooksbank v Smith (1836) 2 Y & C Ex 58 Alderson B expressed the view that the rule in cases of fraud should apply in cases of mistake as well, without explaining why. In 1936 the Law Revision Committee (the LR Committee) produced its Fifth Interim Report on the law of limitation: see paras 123 128 above. Its recommendations were enacted in the 1939 Act. The LR Committee rejected the idea of a general power of extension of limitation periods, on the grounds that it might be impossible to predict how such a power would be exercised, in which case the fundamental benefit conferred by statutes of limitation, namely the elimination of uncertainty, would be prejudiced (para 7). At paragraph 13 the LR Committee recommended leaving the equitable doctrines of laches and acquiescence in place. At paragraphs 22 and 23 the LR Committee examined the merits of applying equitable principles to common law claims; in doing so, it discussed fraud claims and mistake claims separately. The inference from the way in which the LR Committee separated its discussion of fraud and mistake for common law claims is that it recognised that the equities between the parties and the policy issues arising in the two cases are very different. In FII (SC) 1 Lord Walker (para 63) and Lord Sumption (paras 183 185) explain the contrasting policy issues and the risks of uncertainty attendant on an over broad extension of limitation periods in cases of mistake as distinct from fraud. At paragraph 22 the LR Committee recommended adopting the equitable rule regarding extension of time for the purposes of common law claims based on fraud. It identified two ways in which fraud might have an impact (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) and observed, [i]t is obviously unjust that a defendant should be permitted to rely upon a lapse of time created by his own misconduct. Its recommendation was that time should not start to run in either case until the fraud was or could with reasonable diligence be discovered. This recommendation was followed in section 26(a) and (b) of the 1939 Act (re enacted as section 32(1)(a) and (b) of the 1980 Act), reflecting the two ways in which fraud could operate, respectively: see FII (SC) 1, paras 179 180 (Lord Sumption). The equities are, of course, entirely different in cases of ordinary mistake where the defendant has done nothing unconscionable to create the delay before the claimant seeks to litigate. At para 23 the LR Committee recommended adopting the equitable rule regarding extension of time in relation to the common law action for relief from the consequences of a mistake. This recommendation was carried into the 1939 Act at section 26(c). As explained in FII (SC) 1, at paras 42 63 (Lord Walker) and paras 177 185 (Lord Sumption), the LR Committees recommendation was limited to cases where the mistake itself gave rise to a cause of action. Given the established state of the law in 1936, this meant that the recommendation was confined to cases where a payment was made by reason of a mistake of fact. As Pearson J said in the leading case on the ambit of section 26(c), 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 (Phillips Higgins v Harper [1954] 1 QB 411, 419, cited with approval by Lord Sumption in FII (SC) 1, para 183). The LR Committee did not recommend any change in the substantive law regarding claims at common law based on mistake and did not make any recommendation which addressed the very different policy issues which would arise in respect of a claim to recover a payment based on a mistake of law. That such a claim might be recognised was something entirely outside its contemplation. Further, the LR Committee was at pains to state 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. A mistake of law occurs where a claimant is ignorant of his rights. The only right to relief from the consequences of a mistake which was in the contemplation of the LR Committee was where there was a mistake of fact. It was fundamental to the approach of the LR Committee that it regarded the need to protect past payments from claims for repayment many years later by persons alleging ignorance of their rights as being satisfied by the absence of any cause of action, either in law or in equity, for repayment on the ground of mistake of law. In terms of the policy issues which arise, we consider that no sensible distinction can realistically be drawn between ignorance of the right to restitution on the ground of mistake of law and ignorance of the underlying rights which constitutes the mistake of law on which that right depends: cf para 220 above. Accordingly, with respect, we do not agree that cases of mistake of fact and cases of mistake of law can be equiparated (see para 236 above) so far as concerns the policy and effect of either the equitable rule or the recommendation of the LR Committee. It follows that, where, implementing the recommendation of the LR Committee, section 26(c) was enacted referring to an action for relief from the consequences of a mistake, Parliament meant by that phrase an action for relief from the consequences of a mistake of fact: see para 133 above. In neither the 1939 Act nor the 1980 Act, when section 26(c) was re enacted as section 32(1)(c), did Parliament attempt to address the distinct policy issues regarding limitation which arise when a claim is recognised for recovery of money paid under a mistake of law, as happened in Kleinwort Benson [1999] 2 AC 349. With that change in the law, the question arose for the first time whether the phrase action for relief from the consequences of a mistake in section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act covered not only claims for recovery based on mistake of fact but also claims based on mistake of law. The Appellate Committee in Kleinwort Benson held that it did, but proceeded on a mistaken understanding as to the state of the law prior to the enactment of the 1939 Act: paras 148 163 above. The only substantive reasoning in support of construing section 32(1)(c) as extending to claims for recovery of money paid under a mistake of law was by Lord Goff and Lord Hope. It is a remarkable feature of the case that the reasoning of all members of the Appellate Committee implicitly recognised that the effect of reading section 32(1)(c) as including claims for recovery based on mistake of law as well as mistake of fact would dramatically undermine the intention of Parliament in the 1939 Act and the 1980 Act to set out clear and readily applicable periods of limitation. We consider that the House of Lords erred in Kleinwort Benson in giving section 32(1)(c) this interpretation. Lord Reed and Lord Hodge question whether it is appropriate to consider this issue through the prism of the doctrine that statutes are to be taken to be always speaking. We think that it is helpful and appropriate to do so but, as they observe, nothing really turns on this. The guidance regarding the ambit of the always speaking doctrine is in fact concerned with the fundamental underlying issue of whether Parliament can be taken to have intended by a statutory provision passed at one point in time, using language directed to the circumstances at that time, to cover a new set of circumstances which has come into existence since then. As we understand it, Lord Reed and Lord Hodge agree that this is the fundamental issue raised by the decision in Kleinwort Benson regarding the application of section 32(1)(c): see paras 155 and 157 above. The issue of how broadly one should construe the language of the statutory provision to cover new matters arising after its enactment necessarily involves consideration of what inferences can be drawn from the language used and the circumstances of the enactment as to Parliaments policy intention in promulgating the provision. If the inference can be drawn that Parliaments policy intention was broad and the new matters are aligned with that broad intention and are covered by it, a court will be justified in concluding that the provision applies; conversely, if there is not sufficient congruence between the policy issues raised by the new matters and Parliaments intention as expressed when it enacted the provision, the provision does not apply. Since the case law on the always speaking doctrine addresses this question, we will make reference to it. In our view, the question to be posed is whether the phrase using the term mistake in section 26(c) of the 1939 Act (and re enacted in section 32(1)(c) of the 1980 Act), where in the legal context in 1939 and 1980 the word could only refer to a mistake of fact, should in the light of the change in legal doctrine made in Kleinwort Benson now be taken to include also a mistake of law. The ambit of the always speaking doctrine was explained by 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 Parliaments 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 courts should be less willing to extend expressed meanings if it is clear that the Act in question was designed to be restrictive or circumscribed in its operation rather than liberal or permissive. They will be much less willing to do so where the subject matter is different in kind or dimension from that for which the legislation was passed. In any event there is one course which the courts cannot take, under the law of this country; they cannot fill gaps; they cannot by asking the question What would Parliament have done in this current case not being one in contemplation if the facts had been before it? attempt themselves to supply the answer, if the answer is not to be found in the terms of the Act itself. See also R (Quintavalle) v Secretary of State for Health [2003] 2 AC 687. In certain contexts it may be improper to give an extended interpretation to a word or phrase to treat it as applying to something outside Parliaments contemplation at the time of enactment. As Lord Steyn pointed out in R v Ireland [1998] AC 147, 158 with reference to The Longford (1889) 14 PD 34, [s]tatutes dealing with a particular grievance or problem may sometimes require to be historically interpreted. As read in light of the LR Committees Report on limitation periods on which the 1939 Act was based, the Act had two features which are relevant for present purposes. First, as a matter of general policy, in the interests of predictability, certainty and security of transactions, it re enacted the previous six year time limit for actions at common law for the recovery of money paid under a mistake. This was a continuation of the established policy of the Statute of Limitations of 1623 to promote finality, certainty and security of receipt of money, as emphasised by Sir Richard Collins MR in Molloy v Mutual Reserve Life Insurance Co (1906) 94 LT 756, 761 (see para 206 above). It also represents the principal policy to which effect was given in the 1939 Act, in light of which any derogation falls to be interpreted on a restrictive basis: see paras 263 266 above. It was in line with the general policy of the 1939 Act to enact and regulate limitation periods on a comprehensive and coherent basis. This policy objective was recognised in In re Diplock [1948] Ch 465, 514, where the Court of Appeal noted that the wording of section 2(1)(a) of the 1939 Act, which enacts a six year limitation period for claims in contract, was not entirely apt to cover claims in quasi contract to recover money paid under a mistake (or in unjust enrichment, as it would be categorised today), but nonetheless concluded that it should be so interpreted. In other words, the court considered that the policy of the 1939 Act to introduce certainty in relation to limitation was so strong that such claims were to be treated as falling within the scope of this provision. Secondly, section 26(c) of the 1939 Act was directed to addressing a very specific issue, ie modifying the ruling in Baker v Courage & Co Ltd regarding the time limit for an action at law to claim recovery of money paid under a mistake of fact, but on a narrow basis. The restriction of that common law action to recovery of money paid under a mistake of fact was well established in 1939; there was no equivalent claim in equity; and there was no call at the time for the ambit of the common law action to be expanded to cover recovery of money paid under a mistake of law. Even in equity, the courts were at pains to emphasise the difference between the sort of error of law which might be relevant to a claim for equitable relief (ie error of law as to private rights, where the analogy with mistake of fact was very close: see Cooper v Phibbs (1867) LR 2 HL 149, 170 per Lord Westbury; Earl Beauchamp v Winn (1873) LR 6 HL 223, 234 per Lord Chelmsford; and Ministry of Health v Simpson [1951] AC 251, 268 270), and error regarding general law. At paragraph 23 of its Report, the LR Committee made it clear that it was not recommending that limitation should be extended where a party had made a mistake about his rights. Therefore, it was not in Parliaments contemplation that the common law could be changed in the direction taken in Kleinwort Benson [1999] 2 AC 349. Moreover, the policy issues which would arise in relation to limitation if section 26(c) applied in respect of recovery of money paid under a mistake of law are of a wholly different scale and character from those which were confronted and debated by the LR Committee in its Report, focused as it was on the existing common law claim for recovery of money paid under a mistake of fact. The speeches in Kleinwort Benson itself make the difference plain. It flows from the process by which the common law develops and changes over time while at the same time adhering to a declaratory theory of the law according to which decisions have retrospective effect (see in particular [1999] 2 AC 349, 377 379 and 381 382 per Lord Goff). In our view, the House of Lords in Kleinwort Benson [1999] 2 AC 349, by changing the law to bring a new type of legal claim into existence, created a new state of affairs which did not fall within the intention or purpose of Parliament in enacting section 26(c) of the 1939 Act: (i) The new state of affairs did not fall within the same genus of facts as those by reference to which the expressed policy had been formulated. Mistake of law is something very different from mistake of fact. Mistake of law is a concept liable to change over time as the common law develops and changes, and to do so with retrospective effect, thereby wholly undermining the central policy of the 1939 Act and other Limitation Acts of achieving certainty after a fixed period of time. By contrast, mistake of fact is something fixed in time by reference to the facts which really were in existence at the time when the cause of action arose. As Lord Lloyd put it in Kleinwort Benson [1999] 2 AC 349 (p 393), [f]acts are immutable, law is not. The scale of disruption to the central policy of the Limitation Acts is completely different in the two cases; It is not possible to detect a clear purpose in the legislation which can (ii) only be fulfilled if the extension is made. On the contrary, interpreting mistake in the phrase the action is for relief from the consequences of a mistake as it applies to the common law action for recovery of money paid under a mistake to cover a mistake of law as well as a mistake of fact would defeat the clear primary purpose of the legislation, to produce certain time limits within which claims may be brought. It would also undermine the policy intention expressed in paragraph 23 of the LR Committees Report that time should not be extended in cases of ignorance of rights; (iii) The nature of the 1939 Act, to produce a comprehensive and effective limitation regime, as its principal policy, and the narrow and precise phraseology employed in section 26(c) (see paras 265 266 above), are both strong indications that the word mistake cannot, on a purposive construction, be construed to apply to a common law claim for recovery of money paid under a mistake of law. It is clear that this particular provision was designed to be restrictive and circumscribed in its operation rather than liberal or permissive, and much more circumscribed than the equitable doctrine of laches, which did not depend upon the claim in equity being founded upon mistake, in the sense of it being an integral part of the cause of action. Further, the language in section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act of a mistake being discovered, or discovered with reasonable diligence, in the context of a common law claim, is not apt to cover a mistake of law of a general kind, to which the common law claim now extends, pursuant to Kleinwort Benson. That is also true in relation to mistake of law in equity, where the emphasis was always on the analogy between mistake as to private rights and mistake of fact. Contrary to the observation of Lord Goff in Kleinwort Benson [1999] 2 AC 349, 388H 389A, the pre existing equitable rule did not apply to all mistakes, whether of fact or law. Equity was more nuanced than that, and it did not include a claim for simple recovery of money paid under a mistake of law: see Rogers v Ingham (1876) 3 Ch D 351, 355 per James LJ; (iv) The subject matter, an action at common law for money paid under a mistake of law, is different in kind and in the dimension of its implications from that for which the legislative provision was passed, to cover an action at common law for money paid under a mistake of fact. The debate regarding the merits of a change in the substantive law to allow recovery for mistake of law, reviewed in Kleinwort Benson, itself reveals the different issues of principle which arise in the two cases: see [1999] 2 AC 349, 371E 372A per Lord Goff ( as the majority judgments in Brisbane v Dacres [5 Taunt 143] show, the rule [in Bilbie v Lumley] was perceived, after due deliberation, to rest on sound legal policy the difficulties now faced in formulating satisfactory limits to a right to recover money paid under a mistake of law reveal that there was more sense in the rule than its more strident critics have been prepared to admit). Lord Reed and Lord Hodge have explained how Lord Goff and Lord Hope misunderstood the legal position as it existed when Parliament legislated in 1939. This had the effect that their reasoning in Kleinwort Benson regarding the interpretation of section 26(c) in relation to the new claim to recover money paid under a mistake of law was flawed, because they did not properly understand the limited object which Parliament sought to achieve in 1939 in enacting that provision: see para 272 above. Kleinwort Benson provides no other basis for applying section 26(c) of the 1939 Act and then section 32(1)(c) of the 1980 Act to mistakes of law. This flaw was compounded by their failure to appreciate that the major degree of uncertainty in the law which would be introduced by interpreting section 32(1)(c) of the 1980 Act and its predecessor section 26(c) of the 1939 Act as covering the new type of claim, which all members of the Appellate Committee identified would be the consequence, showed that such an interpretation was completely at odds with the policy and intent of both statutes. This latter point deserves emphasis. In Kleinwort Benson [1999] 2 AC 349, Lord Browne Wilkinson considered (p 364) that, on the footing that Lord Goff was correct in holding that section 32(1)(c) of the 1980 Act applies to actions for recovery of money paid under a mistake of law, the disruption to settled entitlements every time the law was changed or developed by judicial decision would be so great that the House of Lords ought not to make the change to the substantive law which the majority decided upon, to allow recovery of money paid under a mistake of law. He took that view even though he thought that would be a desirable reform of substantive law. As he said, the consequence would be that [o]n every occasion in which a higher court changed the law by judicial decision, all those who had made payments on the basis that the old law was correct (however long ago such payments were made) would have six years in which to bring a claim to recover money paid under a mistake of law; as a result, in his judgment the correct course would be for the House to indicate that an alteration in the law is desirable but leave it to the Law Commission and Parliament to produce a satisfactory statutory change in the law which, at one and the same time, both introduces the new cause of action and also properly regulates the limitation period applicable to it. In other words, Lord Browne Wilkinson recognised that the change in the substantive law, if the limitation position was as stated by Lord Goff, would be massively disruptive of settled transactions and would unduly undermine security of receipt of money on a very wide scale. Lord Lloyd of Berwick agreed with him. He emphasised the intense uncertainty which would follow from the conclusion of the majority in the case to change the substantive law, with transactions unsettled and liable to be reopened, a consequence which he viewed with alarm: [1999] 2 AC 349, 397 398. In our view, however, the logical conclusion should have been that the change in the substantive law was of such a character as fell outside the policy and intent of the 1939 Act and the 1980 Act and outside the meaning of section 26(c) and section 32(1)(c) respectively, on a purposive, always speaking, construction. Lord Reed and Lord Hodge challenge Lord Browne Wilkinsons reasoning on this point, on the footing that if their view that section 32(1)(c) is subject to a test of the discoverability of a mistake of law is accepted, the extent of disruption contemplated by him is reduced: para 240 above. But if, as we think, that test cannot plausibly be said to be part of the meaning which Parliament intended section 32(1)(c) to have, we fear that their challenge is misplaced. Indeed, it is in our view revealing that such an interpretation of section 32(1)(c) did not occur to any member of the Appellate Committee, who were addressing the meaning of the provision for the first time and without any preconceptions. In any event, it does not seem to us that their proposed reading of section 32(1)(c) does adequately deal with the points made by Lord Browne Wilkinson and Lord Lloyd. Clearly, there may be many cases where there is a long period of time, far exceeding the usual six year limitation period, between a payment being made on the basis of some settled common law rule and some later development in legal opinion which calls that rule into question to the threshold standard of discoverability which Lord Reed and Lord Hodge endorse. We consider that Lord Browne Wilkinsons point remains a good one. In our view, to apply section 32(1)(c) to payments made under mistake of law would give rise to levels of uncertainty which conflict with the policy objective stated by the LR Committee (see paragraph 7 of its Report) and the underlying policy of the 1939 Act and the 1980 Act as limitation statutes, and could not have been regarded by Parliament as acceptable. Lord Goff made the statement set out at para 154 above in which he recognised that great uncertainty in the law would arise from the application of section 32(1)(c) to claims for recovery of money paid under a mistake of law. We agree with the criticism of this passage by Lord Reed and Lord Hodge at para 155. With respect to Lord Goff, he omitted to consider the question of the application of section 32(1)(c) in terms of the object of the 1980 Act and to adopt a purposive construction in the light of that. In our view, if that had been done, he would have been constrained to accept that the points he himself made showed that to treat that provision as applicable would clearly undermine the policy of the 1980 Act, with the result that section 32(1)(c) could not bear the interpretation he sought to place on it. As he said, the dramatic consequences produced by a combination of the recognition of the new cause of action in Kleinwort Benson and an extended interpretation of section 32(1)(c) had not been appreciated at the time of the enactment (indeed, they were completely outside what was in Parliaments contemplation when it passed both the 1939 Act and the 1980 Act), and were of such a profound character as to call for legislative reform to provide for some time limit, as opposed to (in practice) a wholly indefinite limit. But this serves only to emphasise that his proposed reading of that provision was contrary to the policy of the enactments. Lord Hoffmann made similar points at p 401, in the passage set out at para 157 above. He noted that the combination of the change in substantive law to allow claims for recovery of payments made under a mistake of law and the application of section 32(1)(c) might be said to go too far in undermining security of transactions, and observed in that regard that [t]he most obvious problem is the Limitation Act, which as presently drafted is inadequate to deal with the problem of retrospective changes in law by judicial decision. We agree with the comment about this by Lord Reed and Lord Hodge at para 157. Thus, faced with the same dilemma as Lord Browne Wilkinson, Lord Hoffmann favoured changing the law on recovery of payments made under a mistake of law, notwithstanding that he recognised that the Limitation Act was inadequate to deal with retrospective changes of the law by judicial decision. But in our view this was a false dilemma. The proper conclusion to be drawn from this assessment was that section 32(1)(c) should not be construed to cover the new form of claim. It clearly fell outside the policy of the Act in relation to that provision, which was addressed specifically to claims for recovery of payments made under mistake of fact. Construing the provision as referring only to such claims, and not claims for recovery of money paid under mistake of law, would serve to maintain a proper balance of the public interest in the security of transactions, which would be assured after a limitation period of six years from the date of payment. Lord Hope indicated (p 417) that he thought the LR Committee intended the word mistake to extend to all mistakes of law, but this is not correct: see para 159 above. A proper reading of the Report leads to the opposite conclusion. Later in his speech (pp 417 418) he made the statement set out at para 162 above. Although he accepted that time may run on for a very long time before a mistake of law could have been discovered with reasonable diligence and there was potential for uncertainty, in his view this was a problem for the legislature to resolve. He observed that the problem did not arise under the statutory limitation regime for Scotland, since the relevant prescriptive period of five years could be extended only where the creditor was induced to refrain from making a claim by fraud or error induced by the debtors words or conduct or was under a legal disability. Similar points may be made about this part of Lord Hopes reasoning as in relation to Lord Goffs speech. In our view, Lord Hopes own account indicates why his interpretation of section 32(1)(c) is contrary to the policy of the 1980 Act, read as a whole and also specifically in relation to the provision itself. As he acknowledged, his interpretation of the provision creates very long periods before limitation could apply (and, of course, since there will be new judicial decisions in future, any of which might effect a relevant change in the law, any limitation period which appears to be closed could always be reopened to run again). The potential for uncertainty thereby created was indeed very great. The conclusion from this ought to be that mistake of law as a ground of recovery of money paid, in an action at common law, was never contemplated by Parliament to be capable of falling within section 32(1)(c) and that a purposive interpretation of that provision, in its statutory context, means that it cannot be construed in that way. The comparison with the position in Scotland underlines this point, for it is difficult to see why Parliament would have wished to produce such a radical difference of limitation outcome in the two jurisdictions in relation to a cause of action of a character which is equally viable and capable of vindication on both sides of the border (unlike purely equitable claims in English law). Moreover, in our view, when the context of the 1939 Act and the 1980 Act as limitation statutes designed to produce reasonably determinate limits for the bringing of claims and the specific purpose of section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act are brought into account, the argument based on the language of those provisions and the use of the word discovered, although dismissed by Lord Goff, acquires particular force as indicating that the provisions were not intended to apply to cases of payment under mistake of law. It can readily be seen that the language of discovery is apt in the context of a limitation statute when speaking of discovery of a mistake of fact. It is far more difficult to square it with a deemed mistake of law produced by the retrospective effect of a later judicial decision. This is indeed what led to the conundrums debated in Deutsche Morgan Grenfell [2007] 1 AC 558 and then again in the judgment of Lord Reed and Lord Hodge. In our judgment, therefore, there was a clear misstep by the House of Lords in Kleinwort Benson [1999] 2 AC 349 when it construed section 32(1)(c) as it did. In our view, the decision that section 32(1)(c) applies to common law claims based upon mistake of law was wrong, as a matter of construction of the provision. This is where, with respect, we part company with Lord Reed and Lord Hodge. In the next part of their judgment (paras 165 and following) they consider the decision of the House of Lords in Deutsche Morgan Grenfell [2007] 1 AC 558. Since no one in that case raised the issue of whether the House of Lords in Kleinwort Benson was right to construe section 32(1)(c) as applying to payments under a mistake of law, the members of the Appellate Committee all proceeded on the footing that it did so apply. The question therefore was when such a mistake, as produced by the retrospective effect of a court decision delivered after the payment was made, could be regarded as being capable of discovery for the purposes of the section. The majority view in Deutsche Morgan Grenfell was that the mistake could only be discovered when the later court decision was made. Lord Brown dissented, saying that the possibility of a mistake (ie the possibility of the reversal of the rule of law on the basis of which the claimant made a payment) would be capable of being identified before the reversal by the later court decision actually occurred and it was from when it could be discovered that the prospect of this occurring was sufficiently developed that the limitation period would run. Upon reconsideration of this point, Lord Reed and Lord Hodge prefer the solution proposed by Lord Brown. They conclude that this reflects the proper interpretation of section 32(1)(c) on a purposive approach in line with Parliaments intention in enacting section 26(c) of the 1939 Act. That is to say, section 32(1)(c) does apply to claims for recovery of payments made under a mistake of law, but on the basis that where the mistake arises from the retrospective effect of a later court decision the mistake is to be taken to have been capable of discovery when the prospect that the law would be changed was sufficiently well developed. In this way, Lord Reed and Lord Hodge seek to develop a new argument, not set out in Kleinwort Benson, why the word mistake in the critical phrase in section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act should be interpreted to cover claims based on mistake of law as well those based on mistake of fact, albeit that was the only type of claim to which these provisions were directed when enacted. We do not agree that this is the correct interpretation of section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act. Ingenious though the reasoning is to square the concept of discoverability of a mistake with the effect produced by the retrospective effect of a change in the law, in our opinion it still produces a result which is seriously at odds with the policy and intent of those provisions. Further, it seems to us, with respect, that the argument presented in support of this interpretation (see para 236(3) above) is excessively linguistic. The ordinary meaning of words, to which Lord Reed and Lord Hodge make appeal, is an inadequate tool for this process of construction, when the words in question cannot possibly have had the meaning now contended for when enacted. Instead, as set out above, the focus should be on purposive construction of the provision, arrived at in light of consideration of the policy of the limitation statutes in which it appeared and the object Parliament sought to pursue in enacting the particular provision in that context. Although in Kleinwort Benson [1999] 2 AC 349 the House of Lords decided that for the purposes of the law of unjust enrichment there was no sufficient difference between mistake of fact and mistake of law to justify distinguishing them as the basis for recovery of money paid, that was a matter of judicial policy in the development of the common law. It did not reflect any legislative policy adopted by or attributable to Parliament relating to the Limitation Acts. When Parliament enacted section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act it addressed the law as it stood at the time, in which the only cases in which recovery was possible was where the payment had been made on the basis of a mistake of fact. Parliament has never addressed the distinct and difficult policy issues which arise in the context of these provisions when one moves from recovery in the case of mistake of fact to recovery in the case of mistake of law, and in our view it is not possible to assume that its policy in enacting those provisions covered the latter type of case. There are three striking features of the latter class of case to which, in our view, Lord Reed and Lord Hodge do not give sufficient weight. First, any application of section 32(1)(c) to mistakes of law which include judicial rewriting of the law is bound to risk opening up very old claims indeed. This was not possible prior to Kleinwort Benson, because the claim would have had to have been based on mistake of fact. Although section 32(1)(c) involves some departure from a clear and certain limitation cut off of six years in that sort of case, this is a very modest extension the potential for application of which is likely to narrow considerably as time goes by and the underlying true facts come to light. The opposite is true in the case of mistakes of law identified by retrospective application of later judicial decisions which change the law. Particularly in the field of the common law, the scope for the law to be changed by judicial decision increases as time goes by and the law is perceived as no longer reflecting social values or legal policy, a gradual head of steam builds up among judges and commentators calling for it to be changed and then the courts eventually respond. No purposive interpretation of section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act or application of the always speaking doctrine could lead to the conclusion that Parliament intended, by a new provision in a Limitation Act, to open up such stale claims. One example serves to illustrate the point. In 2018, in Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24; [2019] AC 119, this court was asked to depart from the much criticised decision of the House of Lords in Foakes v Beer (1884) 9 App Cas 605. The doctrine from which the court was asked to depart had only reluctantly been affirmed out of loyalty to the Court of Appeal in Pinnels case (1602) 5 Co Rep 117a. If the court had departed from Foakes v Beer, this would have undermined settled payments made for over 130 years, or 416 years if Pinnels case had also been overruled. But claimants for repayment (or their estates if individuals) would have had until 2024 to bring their claims, with no limitation defence to impede them. In Kleinwort Benson [1999] 2 AC 349 Lord Lloyd gave a number of other examples (p 393). The decision in that case to depart from the rule of law laid down in 1802 in Bilbie v Lumley is itself a further example. Lord Reed and Lord Hodge seek to meet this point by saying that mistakes of fact might emerge after a long period of time, and give the example (at para 228) of In re Baronetcy of Pringle of Stichill [2016] UKPC 16; [2016] 1 WLR 2870. It was not a case about a common law claim in mistake nor about the interpretation of section 32(1)(c). We would make three points about this example. (i) The case arose in unusual circumstances and is one of the most extreme forms of mistake of fact case one can imagine. The more usual type of mistake of fact case is one where the mistake is liable to emerge after a much shorter period, by contrast with what happens in relation to mistake of law: para 290 above. (ii) It seems to us that the reasoning of Lord Hodge for the Board of the Privy Council in this case tends to demonstrate that Parliament cannot have intended section 32(1)(c) to apply in the case of mistakes of law. It involved a very late challenge to entitlement to the honour of a baronetcy in which the modern discovery of DNA and the use of DNA testing to determine parentage had the effect of unsettling the operation of various rules of law which previously would have made such a challenge very difficult indeed after the baronetcy had been held by an individual for a very long period. The particular form of claim was not one to which any limitation period had been enacted by Parliament, either in English law (para 39) or Scots law (paras 50 61). The policy concern at potential disruption of property transactions in other cases was so obvious that the Board felt that it should call attention to the lacuna in the limitation statutes (para 85). Yet the reasoning of Lord Reed and Lord Hodge in the present case would have the effect of exacerbating this problem by extending the application of section 32(1)(c) to cover mistakes of law. (iii) Most importantly, if one imagined a relevant common law claim arising from facts similar to those in the Stichill Baronetcy case, although it would be an unusual case it would fall squarely within the meaning which Parliament intended section 32(1)(c) to have, as involving a mistake of fact. But the question in the current case is different. It is whether a mistake of law, which has arisen only because of a change in the law long after a relevant payment was made, falls within the intention of Parliament in the legislation it enacted, even though Parliament could never have contemplated that it did. In our view, for the reasons we have given, it is not possible to draw such an inference. The unusual circumstances of the Stichill Baronetcy case were such as to unsettle only one transaction, the inheritance of the baronetcy, and one small set of people were interested in that question. But the extension of section 32(1)(c) to cover payments made under mistake of law will tend to unsettle whole classes of transactions, such as were governed by rules of law of general application. Secondly, the phenomenon of judicial decisions changing the law occurs across a wide range of cases. As was pointed out by Lord Browne Wilkinson and Lord Lloyd in Kleinwort Benson [1999] 2 AC 349 (at pp 363 364 and 393 394, respectively), it extends from situations in which rules of the common law are derived from practice and the understanding of lawyers skilled in the field, through decisions of lower courts being overturned by superior courts (a very common feature of the legal system), to this court deciding in comparatively rare cases to re open and overturn previous decisions of itself or the House of Lords. The law is often settled by a decision of the Court of Appeal, or even at first instance, as was thought to have happened in relation to floating charges in Siebe Gorman & Co Ltd v Barclays Bank Ltd [1979] 2 Lloyds Rep 142: see In re Spectrum Plus Ltd (in liquidation) [2005] 2 AC 680, paras 1 17 per Lord Nicholls. If this court (or the Court of Appeal, in the case of a first instance decision) concludes that the earlier decision is wrong, then it will overrule it, and with retrospective effect, with little scope for considering the risks to the security of settled transactions. In Kleinwort Benson the House of Lords departed from law which had been settled by a lower court in Bilbie v Lumley. Again, it seems to us that neither a purposive interpretation of the relevant provisions nor the application of the always speaking doctrine could lead to the conclusion that Parliament intended that such uncertainty and potential for undermining the security of transactions should be introduced into the law across such a wide range of cases, least of all in a Limitation Act, the general object of which is to achieve the opposite effect: see para 271 above. The extent of the contradiction between the uncertainty created by alterations in the law made by the courts and the policy of the Limitation Acts was already great in 1939, since common law rules established by professional practice or decisions of courts up to and including the Court of Appeal could always be changed. The extent of the contradiction has been greatly increased with the 1966 Practice Statement (Practice Statement (Judicial Precedent) [1966] 1 WLR 1234), which has the effect that even rules established by the House of Lords or the Supreme Court can now be changed with retrospective effect. Therefore, in our view, the reasons why section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act cannot be construed as applying to mistakes of law have become even stronger than they were in 1939. Lord Reed and Lord Hodge say that the 1966 Practice Statement was not in the mind of Parliament in 1939 and suggest that reference to it is therefore inapposite: para 238. We respectfully doubt that. The court has to infer what should be regarded as the true intention of Parliament in enacting section 26(c) of the 1939 Act (and then re enacting that provision in section 32(1)(c) of the 1980 Act) as to whether it should apply in new circumstances which Parliament did not have in its contemplation in 1939. To do that, the court has to take account of the entire impact of the new circumstances on the policy underlying Parliaments choice to enact section 26(c) in the terms it did. It seems to us that the major transformation of the legal landscape produced by the 1966 Practice Statement and the major change in doctrine in Kleinwort Benson both have to be brought into consideration to address that question. We note that Lord Reed and Lord Hodge at para 241 refer in similar fashion (correctly in our view, as a matter of principle) to the change of position defence, which also developed after 1939. So far as that defence is concerned, we do not consider that it provides an adequate answer to the policy objections to treating section 32(1)(c) as covering mistake of law. We cannot see how the merits of an alleged change of position could be examined over intervening decades or centuries. Moreover, many public authority defendants, including the Revenue, may be unlikely in practice to be able to rely on it. The majority in Kleinwort Benson likewise referred to the new defence of change of position as a possible answer to, or at least amelioration of, the problems of injustice and uncertainty to which their interpretation of section 32(1)(c) gave rise. However, experience, including claims in the field of tax as affected by EU law for recovery of payments made under mistakes of law dating back to 1973, has shown that this hope has not been realised. Thirdly, as is clear from the LR Committees Report, section 26(c) of the 1939 Act (and now section 32(1)(c) of the 1980 Act) enacts what was previously largely an equitable principle, namely that relief should be available in the occasional case where the particular circumstances of the claimant would otherwise render the rigid application of the law unconscionable. Thus it would be unconscionable for claimants to have time running against them when, either because they were labouring under a fraud or, because of a mistake as to the facts, they were unaware of their cause of action. The occasional claimant thus disadvantaged could rely upon the exceptional extension of the running of time. But if section 32 is applied to extend time where there has been a retrospective judicial change in the law, then every potential claimant is benefitted by the exception. By definition every potential claimant was suffering from the same deemed mistake when making the relevant payment. In the make believe world view necessitated by the need to give retrospective effect to judicial law making, no one knew what the law then really was on the point in issue. It seems to us that to extend the application of these provisions to this class of case goes well beyond the narrow equitable principle which was intended to apply. As we have noted, the equitable principle grew from the idea of the unconscionability of a defendant relying on his own fraud and was given a modest extension to cover individual cases of mistake of fact. By contrast, a claim based on a deemed mistake which has arisen only because of a retrospective change in the law and which affects all cases within the purview of the rule of law which is overruled lies very far indeed from any concept which could be grounded in the equitable principle which the LR Committee identified and which Parliament intended to apply to common law claims. In our view, the approach of Lord Brown in Deutsche Morgan Grenfell [2007] 1 AC 558, which Lord Reed and Lord Hodge endorse, does not provide an answer to these objections. Plainly, there may be a very long period when a rule of law is taken to be established by professional practice or judicial decisions before the threshold of discoverability proposed by Lord Brown to suggest it might be wrong is crossed. Accordingly, even though Lord Browns approach ameliorates to some degree the conflict between section 32(1)(c) and the basic object of the Limitation Acts which arises when that provision is taken to apply to mistakes of law, it does so only to a very limited and inadequate extent. There are several additional reasons which reinforce our view that it is not plausible to identify Lord Browns interpretation of section 32(1)(c) as representing the intention of Parliament in any genuine sense, including the extended sense to which the always speaking doctrine refers: (i) The meaning which Parliament intended section 26(c) of the 1939 Act and then section 32(1)(c) of the 1980 Act to bear is clear from consideration of the context in which they were enacted. Having identified that the House of Lords in Kleinwort Benson [1999] 2 AC 349 erred in departing from that meaning, it seems to us that the proper course is to correct the error by reinstating the meaning Parliament intended. In our opinion it is not appropriate for this court to devise a half way house position which falls short of fidelity to Parliaments intention, and which only nibbles at the edge of the problems of unlocking very stale claims to which the mistaken interpretation gives rise; (ii) Section 32(1)(c) is an exception to the general object of the Limitation Act, and as such should be given a restrictive construction; (iii) The test of discoverability proposed by Lord Brown is itself very uncertain, in a way that the test for discoverability of whether there has been a mistake as a matter of fact is not. The identification of a point in time, earlier than when the relevant claim was actually launched, when such a claim became worth pursuing requires a deeply speculative process of hypothetical fact finding. It is not plausible to suppose that Parliament intended to adopt this as the criterion to be applied in a Limitation Act, ie in a statute which has the object of producing certainty by application of simple rules which also offer the prospect of resolution of disputes without the need for litigation. In any given case it may be very difficult to say whether Lord Browns threshold of discoverability has been crossed or not. The application of his test will often require a wide ranging investigation at trial of something as inherently vague and intangible as the state of professional opinion as it changes year by year over what may be a very long period. It is unclear whether expert evidence would be of much assistance for such a speculative investigation into legal history. Moreover, the more one focuses on what was reasonable to expect of one claimant or particular type of claimant, as distinct from the general understanding of the legal profession, the greater the range of cases in which the court will have to produce speculative and uncertain judgments as to whether the relevant threshold of discoverability has been passed. Again, therefore, this tends to undermine the principle of certainty which Parliament and the LR Committee intended should be upheld; (iv) As the discussions in Kleinwort Benson, Deutsche Morgan Grenfell and FII (SC) 1 demonstrate, the concept of discoverability becomes very strained when applied in relation to mistake of law produced by the retrospective application of a later judicial decision which changes the law. It has to be taken to a very rarefied and abstract level to adapt it to apply in such a case. It is an odd kind of discoverability when the thing being discovered, or revealing the supposed mistake, has not yet happened when the relevant payment is made. It is not plausible to suppose that Parliament intended the Limitation Act to operate on this basis. The analogy with mistake of fact is not at all persuasive: see para 274(i) above. In the case of an alleged mistake of fact, the fact either has or has not occurred; its occurrence does not depend upon retrospective effects of judicial acts in the future; (v) It is no comfort that in those cases where the law has not changed section 32(1)(c) is unlikely to cause limitation difficulties, because the true law will usually have been reasonably discoverable by taking legal advice. This just indicates that the reality is that there is only practical scope for section 32(1)(c) to have an effect when the law is changed retrospectively by judicial decision, so Parliaments intention as to its meaning and effect should properly be tested by reference to that class of case; (vi) The interpretation of section 32(1)(c) proposed by Lord Brown produces arbitrary and unfair distinctions which we do not consider Parliament can have intended to be drawn. Claimants who are by a retrospective change in the law enabled for the first time to make a claim in contract or in tort get no benefit at all from the provision. They must bring their claim within the primary limitation period running from the date when they first had a cause of action. This is because their claim will not be based upon mistake of law, as an essential element in the cause of action, which is all that section 32(1)(c) applies to. Nonetheless a deemed mistake of law occurring in this way may well be the reason why they did not claim sooner. Our conclusion regarding the proper interpretation of section 32(1)(c) would open the door to a departure from Kleinwort Benson [1999] 2 AC 349 on that issue under the 1966 Practice Statement. In our view, it would be appropriate for the Practice Statement to be applied to restore the proper interpretation of section 32(1)(c) which we consider Parliament intended, as set out above. We express our views shortly, as we are in a minority so far as concerns reversing Kleinwort Benson by construing mistake in section 32(1)(c) to mean only a mistake of fact, in accordance with the law as it stood in 1939 and 1980. In our judgment, for the reasons we have set out, the decision in Kleinwort Benson that section 32(1)(c) applies to mistakes of law was wrong for reasons of much greater solidity and significance than a mere intellectual difference of opinion. The reasoning in Kleinwort Benson is in our respectful view gravely undermined by an underlying view of the equitable antecedents to what is now section 32(1) which cannot be squared with previous authority and by an apparent failure to weigh in the balance how serious a departure from the overall policy of the 1980 Act is involved in a conclusion that section 32(1)(c) does apply to claims based upon a mistake of law. Furthermore the readiness of the House of Lords in both Kleinwort Benson and Deutsche Morgan Grenfell to acknowledge common law claims based on mistake of law where settled law had been changed with retrospective effect, and that section 32(1)(c) applied to such claims, was heavily based upon a hope that Parliament would remedy the unsatisfactory consequences, a hope which has now clearly been shown to have been misplaced, save to a limited degree in relation to tax. An important consideration underlying the Practice Statement is that where possible past transactions should not be rendered uncertain or insecure. As the Practice Statement says, in deciding whether it is right to depart from a previous decision of the House of Lords (or, now, this court) the court will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property and fiscal arrangements have been entered into . The greater the degree of such disruption, the less will it be regarded as acceptable for the court to change the law for the future. It is possible that some past transactions might be unsettled by changing the interpretation of section 32(1)(c) adopted in Kleinwort Benson; however, for the reasons we have explained, the application of section 32(1)(c) to cases of mistake of law will unsettle past transactions and will generate such uncertainty to a very much greater degree. Changes in the law produced by higher courts reversing decisions of lower courts or correcting professional practice are commonplace. The period of time before such a decision is produced, and in which parties will have entered transactions on the basis of the previous understanding of the law, may be very long. Further, this open ended prospect of unravelling past transactions without limit of time is likely to act as a very serious and chilling constraint upon any departure from an earlier decision by the House of Lords or this court under the 1966 Practice Statement. The older the decision from which departure is being considered, the greater the peril to settled transactions, and the greater the difficulty which this court will face in assessing whether that peril is sufficient to prohibit an otherwise worthwhile change. The speeches of Lord Browne Wilkinson and Lord Lloyd in Kleinwort Benson [1999] 2 AC 349 illustrate this point. Absent their concerns about the absence of an effective limitation cut off, they would both have wished to support the substantive change in the law of unjust enrichment produced by the majority. The new circumstances in which the proper interpretation of section 32(1)(c) falls to be assessed as a statutory provision which is always speaking include not just the change in the law in Kleinwort Benson but the change in the practice of the House of Lords effected by the 1966 Practice Statement. Parliament cannot have intended that section 32(1)(c) should have the practical effect of acting as a serious impediment to desirable judicial modernisation of the common law pursuant to the 1966 Practice Statement. Accordingly, it is our view that correction of the wrong turn taken in Kleinwort Benson regarding the true interpretation of section 32(1)(c) is justified pursuant to the Practice Statement. It would tend to reduce, rather than promote, insecurity of transactions across time. It would also secure the ability of this court to review and amend substantive legal doctrine in the interests of promoting doctrinal coherence and keeping the law broadly in line with changing social expectations and values. Finally, since our view regarding the proper interpretation of section 32(1)(c) is not accepted by Lord Reed and Lord Hodge and the majority in the court, we address the position which arises under the Practice Statement if their interpretation of section 32(1)(c) prevails, as it does. On their interpretation, there is still considerable scope for uncertainty in the law to arise and unsettle transactions dating far back in time. Their interpretation, following Lord Browns approach in Deutsche Morgan Grenfell [2007] 1 AC 558, is also productive of a degree of uncertainty because of the test of discoverability of a mistake which they say should apply. To that extent, therefore, it seems to us that the argument for applying the Practice Statement in relation to both Kleinwort Benson and Deutsche Morgan Grenfell is weakened. Nonetheless, we consider that their interpretative approach better reflects the legislative purpose in the context of the Limitation Act of securing a degree of certainty in relation to past transactions than does that of the majority in Deutsche Morgan Grenfell [2007] 1 AC 558 and the approach which the Appellate Committee in Kleinwort Benson assumed would apply. Therefore, on the footing that the interpretation of section 32(1)(c) preferred by Lord Reed and Lord Hodge must be accepted, we agree that it is appropriate to apply the Practice Statement in relation to those decisions and in favour of now adopting their interpretation. |
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